Friday, 30 April 2010

A Greek bailout is only the first step to a solution

The Australian, April 30, 2010

BEIJING, not Berlin, holds the long-term solution to Greece's economic crisis. Yet while Germany will eventually be forced to help bail out its European Union partner, there is scant evidence China will come to the party any time soon. Instead, Greece, not to mention the rest of Europe, and in fact the rest of the world, will remain vulnerable to the huge global imbalances of savings and debt that lie behind the crisis, and which Beijing must now address.

The immediate causes of Greece's travails are, of course, years of economic mismanagement and lack of productivity, plus a gaming of the eurozone's rules on debt and deficit levels that allowed the government to keep borrowing its way out of trouble. Blame Brussels. Blame the euro. Blame Goldman Sachs. All played their part in the story that ends with Greece drowning under debt of E300 billion, a debt-to-GDP ratio of 124 per cent, and a budget deficit of 13.6 per cent of GDP. Without the constraints of a single European currency, which denied Athens the option of adjusting the drachma to help work its way out of the crisis, and without Wall Street providing camouflage via derivatives for the country's failure to meet EU targets, Greece may have stopped the rot. But look elsewhere for the deeper cause of the turmoil: to the oceans of cheap money available to a struggling economy that blithely piled up debt rather than attack the fundamental flaws in its system. That availability of cheap credit was underpinned in large part by a China determined to keep its currency low enough to generate a massive market for its exports and then happy to recyle that surplus back to the US and the rest of the world to fund excessive spending. China's currency fix created growth that lifted hundreds of millions of its people out of poverty in recent years. There are many hundreds of millions more waiting for a similar transformation. Thus China's logic collides with the global demand for a rebalancing of debtor and surplus economies. This is not to deny the part played by the US in contributing to these imbalances, as it continues to run a large budget deficit.

(...) [artículo aquí]

Thursday, 29 April 2010


India Real Time, April 29, 2010

The prime ministers of India and Pakistan will meet today on the sidelines of a regional summit in Bhutan, but don’t expect the tete-a-tete to give any impetus to stalled peace talks between the frosty neighbors.

Prime Minister Manmohan Singh of India has expended considerable political capital in the past 12 months trying to get relations with Pakistan on a firmer footing after the November 2008 Mumbai attacks led to a suspension of the peace process.

Mr. Singh’s last meeting of substance with Pakistan Prime Minister Yousuf Raza Gilani, in July 2009, backfired when members of his own Congress party claimed India was giving up too much ground to Pakistan in its bid to push the talks forward.

Critics said Mr. Singh erred in that meeting by allowing Pakistan to bring up allegations that India is interfering in a separatist struggle in the Pakistani province of Baluchistan. Some in India’s ruling Congress party say Pakistan uses the Baluchistan issue to deflect its failure to crack down on its own Islamist terrorists.

For its part, Pakistan says it has taken serious measures against Islamic militant groups blamed for the attacks on Mumbai, including arresting members of the banned Lashkar-e-Taiba miltia. Now it’s time for India to reciprocate with the resumption of wide-ranging peace talks, including the issue of Baluchistan and other issues like a growing rift over shared water resources, Pakistan thinking goes.

(...) [artículo aquí]

Wednesday, 28 April 2010


Kartik Goyal and Bibhudatta Pradhan

Bloomberg, April 28, 2010

India’s Congress party-led government needed the backing of a regional powerbroker to win a key budget vote, underlining how dependent Prime Minister Manmohan Singh remains on smaller parties to govern.

“The victory gives us greater confidence,” Salman Khurshid, corporate affairs minister said after lawmakers cast their votes late yesterday. “The agendas of the coalition remain intact and we will pursue those.”

Hours before the ballot, Singh and Finance Minister Pranab Mukherjee obtained the backing of Mayawati, leader of a party that draws support from those at the bottom of the Hindu caste hierarchy and has 21 members in the lower house of Parliament. Congress and its allies defeated motions sponsored by the opposition that sought to roll back measures imposed in February’s budget by 88 votes.

A year after Congress achieved its biggest election win in two decades the reliance on minority partners has stalled legislation that would allow Wal-Mart Stores Inc. to open retail outlets and Prudential Plc to sell more insurance. Mayawati in 2007 ordered the closure of Reliance Industries Ltd.’s retail branches in two cities in Uttar Pradesh, where she is chief minister, after protests by owners of small shops.

(...) [artículo aquí]

Tuesday, 27 April 2010


Indrajit Basu

Asia Times, April 27, 2010

KOLKATA - Bharti Airtel's planned US$10.7 billion acquisition of Kuwait-based Zain Group's African telecom operations will, if completed, set a milestone as the largest telecom deal yet by an Indian company.

The purchase by Bharti, India's largest private-sector telecom company, is also the latest example of the rapid strides the country is taking towards developing interests in Africa.

Indian companies are now doing business in more than 20 African countries, while the Indian government has given more than $2 billion worth of grants and credit to African countries over the past six years for various projects. Indian companies are "helping the Indian government to develop closer economic and political ties with Africa as well as contributing incredibly to society by helping the African people to improve their quality of their lives," said Shipra Tripathy, head Africa desk of the industry lobby Confederation of Indian Industry.

Bharti is following other Indian corporations ranging from Tata Group to Dr Reddy's Labs that have invested close to $6 billion in Africa over the past few years. Others involved in the continent are Videocon, Suzlon, Godrej, Mahindra and Mahindra, UB Group, Cipla, NIIT, Kirloskar and Essar.

(...) [artículo aquí]

Sunday, 25 April 2010


China Real Time Report, April 26, 2010

China’s central bank governor, Zhou Xiaochuan, spent the weekend in Washington, D.C., hobnobbing with other luminaries of the global economy at the spring meetings of the International Monetary Fund and World Bank. Along the way he delivered a statement to the IMF’s International Monetary and Financial Committee—aka the IMF’s IMFC —a gathering of leaders that oversees the fund’s work. The document doesn’t need translating from Chinese (there’s a PDF English version on the IMF Web site) but here we’ve interpreted some of the key sections from the language of global high finance into something more understandable. (And no, he didn’t say anything about China’s currency policy.)

Zhou said: Driven by the large-scale stimulus policies of various countries, the global economy is exhibiting positive recovery momentum, but there are pronounced differences in the speed and strength of the recovery in various countries and regions. The recovery is strong in emerging markets and developing countries, while in developed countries the recovery is relatively slow… At present, the primary risks to the global economy come from developed countries. Sovereign debt risk has become a major and real threat to global financial stability and economic recovery, and its potential systemic effects deserve a high degree of attention and concern.

In other words: We’re doing our part to help the global economy recover from the crisis, but the U.S. and Europe just keep causing more problems.

(...) [artículo aquí]


The Economic Times, 25 Apr 2010

WASHINGTON: India and China will maintain high growth rates this year and Asia will continue to lead the global recovery despite challenges of inflation and excessive capital flows, IMF officials say.

India and China will grow at the rates of 8.8 and 10 percent respectively.

"By the end of 2009, output in most of Asia returned to pre-crisis levels even in those economies that were hit hardest by the crisis. After the deepest recession in recent history globally, we know that Asia is leading this global recovery," Anoop Singh, International Monetary Fund's Director of the Asia and Pacific Department, told reporters Saturday. "

In fact, activity in Asia has rebounded fairly swiftly over the past year and in the first quarter of 2010."

While the pattern of recovery has varied in Asia, "both the more domestically-oriented economies such as China, India and Indonesia as well as the more export-oriented economies are experiencing strong upturns," Singh added.

Asked if rising inflation in South Asia will pose a serious threat to the region's recovery, Singh said it is not surprising that inflation has begun to turn up as output gaps in much of Asia have begun to narrow.

(...) [artículo aquí]

Saturday, 24 April 2010


Supunnabul Suwannakij and Daniel Ten Kate

Bloomberg, April 24, 2010

Thai protesters offered to end their demonstrations if Prime Minister Abhisit Vejjajiva holds an election three months from now, easing tensions in a six-week standoff that has killed 26 people and paralyzed Bangkok.

“We’re willing to open a new round of negotiations under new conditions,” leader Veera Musikapong told supporters yesterday from the protest site. About 6,000 demonstrators remained camped out in Bangkok’s shopping and tourist district today, army spokesman Sansern Kaewkamnerd said.

At least five grenades exploded this week on Silom Road, a business artery that is home to several of the nation’s largest banks. Talks last month collapsed after Abhisit rejected the group’s demands to dissolve parliament immediately, offering instead to call an election by year’s end.

The proposal for negotiations may lead to a peaceful solution as rising tensions prompted the U.S. and United Nations to call for dialogue. A failed effort to disperse protesters on April 10 killed 25 people and left more than 800 injured.

“The best way out for both sides right now is to sit down together and agree on the timing of the election,” said Somchai Phagaphasvivat, a lecturer at Bangkok’s Thammasat University. “A lasting solution for the Thai conflict will still take a few years,” he said.

(...) [artículo aquí]

Friday, 23 April 2010


Choe Sang-hun

The New York Times, April 23, 2010

SEOUL — North Korea confiscated five South Korean-owned facilities at a jointly operated mountain resort on Friday, while calling the president of South Korea a “traitor” and accusing him of defaming the North’s most important holiday.

The unilateral seizures and harsh comments were indicative of the tensions that have been rising between the two Koreas since a South Korean warship sank in a mysterious explosion on March 26.

Although he has not yet blamed the North for the sinking, and while vowing to find the cause of the incident, President Lee Myung-bak of South Korea has aired unusually harsh criticisms of the Pyongyang regime amid a growing suspicion in the South that the ship may have been hit by a North Korean torpedo.

North Korea has denied any involvement in the sinking, which killed 39 South Korean sailors. Seven seamen are still missing and presumed dead.

(...) [artículo aquí]

Thursday, 22 April 2010


Richard Lloyd Parry

The Times, April 22, 2010

The South Korean naval ship sunk last month was hit by a North Korean torpedo, according to reports today.

The claim will heap more pressure on Lee Myung Bak, the South Korean President, to respond to one of the worst military acts of provocation since the Korean War.

The South Korean Defence Ministry declined to comment on the claim by the Yonhap news agency, the latest in a series of reports suggesting that the mysterious sinking of the naval corvette, Cheonan, last month was a deliberate and unprovoked attack by North Korea.

Forty-six sailors are dead or missing after the attack, which cut the 1,200 tonne vessel in two.

President Lee’s government appears to be struggling to find an appropriate response that would demonstrate its resolve in the face of aggression but stop short of a costly and unpredictable war.

“Military intelligence has made the report to the Blue House [the presidential office] and to the Defence Ministry immediately after the sinking of the Cheonan that it is clearly the work of North Korea’s military,” a military source told Yonhap.

(...) [artículo aquí]

Wednesday, 21 April 2010


Wu Zhong

Asia Times, April 21, 2010

HONG KONG - In China, the present is often talked about with reference to history. It is therefore no wonder that a eulogy written by Prime Minister Wen Jiabao to the late reform-minded Communist Party chief, Hu Yaobang, has immediately drawn wide attention.

The article was published in the People's Daily, the party's flagship newspaper, on April 15 - the 21st anniversary of Hu's death. Speculation has been rife since about the hidden messages Wen intended to deliver.

There are unwritten rules of the party. For example, a senior official such as Wen, who is number three leader of the party and the state, cannot publish such articles without the collective consent of the power center - the politburo or its standing committee.

Thus, some analysts are interpreting the article's publication as the sign of a subtle change in the political climate. In China's officialdom, Hu Yaobang still remains a divisive figure even though he passed away 21 years ago.

Handpicked by Deng Xiaoping, Hu was named as head of the Chinese Communist Party in mid-1981. Deng once described Hu and Zhao Ziyang (then premier) as his "left and right hands" in economic reform and opening up. Hu quickly won popularity, especially among intellectuals, for his liberal thinking and down-to-earth work style. Today, he is remembered for his rehabilitation of hundreds of thousands, if not millions, of cadres and intellectuals purged during the Cultural Revolution (1966-1976) and the anti-rightist campaign in the late 1950s.

(...) [artículo aquí]

Tuesday, 20 April 2010


People’s Daily, April 20, 2010

With rapid economic development in China, energy shortages, especially due to the tension between oil supply and demand, have become increasingly common. Figures show the consumption of crude oil in China increased from 241 million tons in 2000 to 388 million tons in 2009, with an average yearly increase of 6.78 percent. And the imports of crude oil grew from 59.69 million tons to 199 million tons.

China's growing dependence on energy imports from only a handful of countries will intensify China's energy insecurity.

China is the world's second largest oil consumer and importer. Demand and imports will inevitably grow, while the production of crude oil has shown a downward trend, decreasing 0.4 percent in 2009, according to He Lunzhi, professor of economics with Xinjing University.

China was an oil exporter to Japan and other countries before 1992 and became an oil importer starting in 1993. But now China imports more than 100 million tons of oil and oil products every year. Besides the expansion of economic scale, the change in consumption structure is also one of the major factors driving oil demand, said Gao Xincai, president of the School of Economics at Lanzhou University.

While China has taken measures, such as improving the exploitation of oil, to increase oil output, resources are still limited. As of the end of 1999, the proven oil reserves totaled over 20 billion tons, but the remaining recoverable oil storage was only 2 billion tons. Furthermore, the increasing difficulty and cost in exploitation and the surplus labor caused by resource exhaustion also pose a challenge to China.

(...) [artículo aquí]

Monday, 19 April 2010


Keith B. Richburg

The Washington Post, April 19, 2010

As China's largest city prepares to open the most expensive world's fair in history, the 2008 Beijing Olympics provides both a model and a cautionary tale.

As with the extravagant Olympics, Chinese officials see the World Expo, which begins next month and runs through October, as another chance to showcase China's rising clout and prosperity to a global audience. Shanghai has been constructing lavishly for the event, including new subway lines and an additional airport terminal.
But more than a year and a half after the Beijing Games awed the world, some of the most iconic venues have fallen into disuse.

The "Bird's Nest" stadium, site of the lavish opening ceremonies, hosted just three concerts and two B-list sporting events last year, and nothing in recent months. The "Water Cube," an engineering marvel where American swimmer Michael Phelps made Olympic history, has not been used for a competition since, and has been closed for renovations since October as officials try to transform it into an entertainment complex.

So far, the huge maintenance costs of those venues is being sustained by Chinese tourists, who pay for tickets to visit them and relive a bit of China's glory. But officials said interest is beginning to wane.

(...) [artículo aquí]

Sunday, 18 April 2010


B. R. Myers, Ri Myong-Su and Ri Pyong-Jo

The New York Times, April 18, 2010

NEVER mind the chronic food shortage: North Korea’s propaganda apparatus is partying like it’s 99 — and over there, it is. Year 1 of the Juche Calendar (named after “Juche Thought,” the regime’s official pseudo-ideology) was 1912, the birth year of the state’s founder, Kim Il-sung, whose birthday was celebrated last week. The new century will therefore be celebrated next year with all the requisite hoopla, which must then be outdone in 2012 for the 100th anniversary of Kim’s birth. The approach of back-to-back centennials, each symbolic of a national coming-of-age, puts great pressure on Kim’s successor and son, Kim Jong-il, to improve living conditions for the masses.

So far, his response recalls the Soviet joke about Leonid Brezhnev “fixing” his stalled train by pulling the curtains and pretending it was moving. The North Korean regime, having been relatively cautious in its economic propaganda for decades, now boldly promises that the North will attain the status of a “strong and prosperous country” by 2012.

The drastic transformation is said to be already under way, thanks largely to production increases effected by “C.N.C., ” or computerized numerical control. The English-language acronym, an incongruous sight in this most xenophobic of countries, now turns up in everything from wall posters to children’s songs.

(...) [artículo aquí]

Saturday, 17 April 2010


Pepe Escobar

Asia Times, April 17, 2010

The BRIC countries (Brazil, Russia, India and China) got together in the Brazilian capital, Brasilia, on Thursday with a bang. After meeting Chinese President Hu Jintao, and once again condemning an "asymmetric, dysfunctional globalization", Brazilian President Luiz Inacio Lula da Silva was at his ebullient best: "A new global economic geography has been born." Well, not quite. Not yet.

Anyone across the world fed up with Somali pirates in Zegna suits disrupting global trade is interested in what the BRICs are (potentially) up to. The world's largest developing countries, bound to be the engine of the global economy for the next four decades, are essentially up to what then Russian president Vladimir Putin outlined in his famous speech in Munich in 2007; forming a new global consensus. Call it the rise of the periphery (the "Second" and "Third" worlds). Call it the dawn of the post-Washington consensus.

It's nothing short of ironic that major players in the current global financial architecture are being forced to acknowledge that the global "economic and political tectonic plates are shifting". No, that was not Lula, but the George W Bush-appointed head of the World Bank, Robert Zoellick. Zoellick even felt compelled to deliver the coup de grace to the patronizing concept of "Third World".

Is the World Bank finally waking up to the real world(s)? The BRICs met in Brazil roughly one week before the World Bank and International Monetary Fund annual love fest in Washington. The old order may resent it, but the BRIC voice is and will continue to be ever more insistent. No wonder; they are shelling more funds to the IMF, thus they should have more say on where the money is going. They want an antithesis of Wall Street: transparency. The 2008 financial crisis - which by no means is over - was unleashed by a Wall Street-biased financial casino.

(...) [artículo aquí]

Friday, 16 April 2010


The Economic Times, April 16, 2010

BRASILIA: The BRIC countries, represented by the leaders of Brazil, Russia, India and China in a summit here on Thursday, represent a locomotive of world growth in the wake of last year's global downturn.

Together, the four nations account for nearly 50 percent of growth and 16 percent of world economic output. They are also home to 40 percent of the world's population.

Taken separately, though, the profiles of the countries show marked differences from one other.

Russia, for instance, contrasted dramatically with the economic resilience of the other BRIC members in the downturn, after seeing its economy in 2009 shrink a startling 7.9 percent.

It also has the smallest population -- just 140 million, a little over 10 percent of the 1.3 billion boasted by China.

India has a population of 1.2 billion, and Brazil 193 million.

China easily outranks the others in terms of gross domestic product, estimated to be worth $5.3 trillion in 2010.

Brazil's economy is worth an estimated $1.7 trillion this year, Russia's $1.3 trillion and India $1.2 trillion, according to the International Monetary Fund.

(...) [artículo aquí]

Thursday, 15 April 2010


The Guardian, April 15, 2010

The news that Chinese GDP grew by 11.9% year on year in the first three months of 2010 has raised fears that the country could be overheating. Some economists, though, believe that while interest rates may rise this year, China is still in a strong position.

Mark Williams, senior china economist at Capital Economics
At first glance, today's GDP data might suggest that China is overheating. However, the acceleration in year-on-year growth in Q1 was entirely due to weakness a year ago. Growth has continued to slow in year-on-year terms and the economy is now expanding at what is, for China, an unremarkable pace. Price pressures too seem to be easing. While we expect policy tightening over the coming quarter, there is no need for dramatic measures.

In the long-run, China would be better served by structurally higher interest rates – they are currently far too low for moderate rate adjustments to make any difference to loan demand. This means that the People's Bank has an incentive to raise them (we forecast two 27bp hikes to the benchmark 12m lending rate this year with the first move in May) with little reason to fear that doing so would endanger the recovery. Limited rate hikes may also be desirable to keep inflation expectations in check – the State Council statement said it thought expectations were still rising.

(...) [artículo aquí]

Tuesday, 13 April 2010


The New York Times, April 13, 2010

Washington and Beijing are, rightly, eager to lower tensions. After President Obama met President Hu Jintao of China at the White House on Monday, officials said they had agreed to work together to come up with new sanctions on Iran. That is good news.

Mr. Obama also must squarely acknowledge — and protest — the Chinese leadership’s continuing, ruthless stifling of any serious political dissent. That is bad news for China and the world.

The most recent reminder came when Gao Zhisheng, a crusading human rights lawyer, resurfaced last month. For more than a year, he had disappeared into the clutches of the government security network and many people had feared that he was dead.

Mr. Gao was a dynamic advocate, pushing constitutional reform and representing controversial cases like the Falun Gong spiritual movement. But in a sometimes tearful interview with The Associated Press last week, he announced that he would abandon activism in hopes of being able to reunite with his family. “I don’t have the capacity to persevere,” he said.

(...) [artículo aquí]

Monday, 12 April 2010


The Independent, April 12, 2010

China has worked actively and seriously to tackle global climate change and build capacity to respond to it. We believe every country has a stake in dealing with climate change and every country has a responsibility for the safety of our planet. We're at a critical stage of building a moderately prosperous society on all fronts, and a key stage of accelerated industrialisation and urbanisation.

Yet, despite the huge task of developing the economy and improving people's lives, we have joined global actions to tackle climate change with the utmost resolve and acted in line with the principle of common but differentiated responsibilities established by the UN. China voluntarily stepped up efforts to eliminate backward capacity in 2007, and has since closed a large number of heavily polluting small coal-fired power plants, small coal mines and enterprises in the steel, cement, paper-making, chemical and printing and dyeing sectors. Moreover, in 2009, China played a positive role in the success of the Copenhagen conference on climate change and the ultimate conclusion of the Copenhagen Accord.

(...) [artículo aquí]

Sunday, 11 April 2010

The coming competition is between two ideologies within China - not with India

K. Subrahmanyan

Business Standard, April 11, 2010

India and China marked the 60th anniversary of India’s recognition of the People’s Republic of China with a visit to Beijing by the Minister for External Affairs S M Krishna. India was the first non-socialist country to recognise the People’s Republic. In his speech at the China Institute of International Studies, Krishna said, “As rising powers, India and China are often projected to have a competitive relationship. In the final analysis, we all are what we want to be. It is up to us to disprove such scenarios, not through platitudes and wishful thinking, but by concrete examples of cooperation.... But there is more to our prospects than issue-based cooperation. Our rise promises to alter the configurations of the global order as we have known it in a fundamental manner. We cannot accept incremental change in the way the world is currently run. The G-20 represents the first step in a new direction. Our combined efforts can help reform the systems of international financial governance much more effectively than we could by working alone. We have yet to find the right common denominators in many areas. If India and China work purposefully in this direction, the whole world stands to benefit.”

How much of this is hope and wishful thinking and how much is realisable even if both sides desire this denouement?

A few months ago, there was a sense of rising tension in the media of the two countries and thanks to the efforts of the two governments that media-generated sense of confrontation has been reversed. There is, at present, a realistic appreciation in both countries that the issues between the two countries are not worth generating the risk of a conflict in the age of nuclear weapons and globalisation involving extensive energy imports subject to vulnerabilities in transit across oceans.

(...) [artículo aquí]

Saturday, 10 April 2010


Aidan Foster-Carter

Asia Times, April 10, 2010

It's now almost two weeks since the Republic of Korea navy corvette Cheonan mysteriously exploded and sank close to Baengnyeong, South Korea's northwestern-most island, late on Friday night, March 26. Fifty-eight of its 104 man crew were swiftly plucked from the chilly waters, but 46 drowned - although only two bodies had been found as of April 8.

Since then 10 more have died: one navy diver, and nine fishermen on a boat commandeered to help the search after it was apparently in collision with a Cambodian-registered freighter. The original explosion was powerful enough to tear this substantial vessel - 88 meters long, 1,200 tonnes - in half. Strong currents, which are still hampering investigations, swept the bow section fully six kilometers southeastward from the stern. Fortunately both are in fairly shallow waters; meaning salvage of the wreck should be feasible though may take weeks.

So what happened? Summoned to a BBC studio for instant punditry, still struggling to take in what little we knew in those first hours, I feared the worst. I mean, just look at the map. Baengnyeong was in Southern hands when the Korean War ended - only with an armistice: there is still no peace treaty - in 1953, but geographically it's an outlier: far from the South Korean mainland, nearer to Pyongyang than to Seoul, and close to the North Korean coast.

(...) [artículo aquí]

Friday, 9 April 2010

It dismisses defiance by the ousted leader and offers assurance to the U.S. on an air base.

Peter Leonard

The Philadelphia Inquirer/Associated Press, April 9, 2010

BISHKEK, Kyrgyzstan - Consolidating their victory after a bloody uprising, opposition leaders declared Thursday that they would hold power in Kyrgyzstan for six months and assured the United States it can keep its air base here - at least for now.

But there were signs of instability as deposed President Kurmanbek Bakiyev, speaking from a southern stronghold, refused to relinquish power.

At least 75 people died and hundreds were wounded as government forces attacked protesters the day before.

Gunfire broke out after nightfall in the capital, Bishkek. With darkness descending, bands of armed marauders trawled the streets of the capital, despite warnings from the new leadership that looters would be shot.

The former Soviet nation is home to a U.S. military base supporting the fighting in Afghanistan that opposition figures have in the past said they want to see shut down. Kyrgyzstan also hosts a Russian base. It is the only nation where both former Cold War foes have bases.

(...) [artículo aquí]

Thursday, 8 April 2010


Sameera Anand

Finance Asia, April 8, 2010

East Asia, led by China, has emerged stronger after the financial crisis, but a continuation of structural reform is needed to maintain the growth momentum, finds the World Bank.

On the back of a recovery in demand, ongoing stimulus in developing East Asia and a rebound in consumer spending, the World Bank has raised its projection for real GDP growth for the region in 2010 to 8.7%, almost one percentage point higher than its forecast in November 2009. The research is part of the World Bank's latest East Asia & Pacific Economic Update, a biannual assessment of the economies in the region, which was released yesterday.

The World Bank attributes East Asia's "remarkable recovery" primarily to: a large and timely policy stimulus; renewed inventory restocking; the return of buoyant demand abroad and improving consumer sentiment. Also contributing, it said, are solid economic fundamentals, including high foreign exchange reserves; well-capitalised banks; and modest levels of household, corporate and government debt.

The World Bank estimates that growth in the region slowed to 7% in 2009 from 8.5% in 2008, and notes that the reason why the slowdown wasn't more pronounced was because China maintained its growth momentum. According to the report, China's GDP growth slowed to 8.7% in 2009 from 9.6% in 2008.

(...) [artículo aquí]

Wednesday, 7 April 2010


Michael T Klare

Asia Times, April 7, 2010

Think of it as a tale of two countries. When it comes to procuring the resources that make industrial societies run, China is now the shopaholic of planet Earth, while the United States is staying at home. Hard-hit by the global recession, the United States has experienced a marked decline in the consumption of oil and other key industrial materials. Not so China. With the recession's crippling effects expected to linger in the US for many years, analysts foresee a slow recovery when it comes to resource consumption. Not so China.

In fact, the Chinese are already experiencing a sharp increase in the use of oil and other commodities. More than that, anticipating the kind of voracious resource consumption that goes with anticipated future growth, and worried about the availability of adequate supplies, giant Chinese energy and manufacturing firms - many of them state-owned - have been on a veritable spending binge when it comes to locking down resource supplies for the 21st century. They have acquired oil fields, natural gas reserves, mines, pipelines, refineries, and other resource assets in a global buying spree of almost unprecedented proportions.

Like most other countries, China suffered some ill effects from the great recession of 2008. Its exports declined and previously explosive economic growth slowed from record levels. Thanks to a well-crafted US$586 billion stimulus package, however, the worst effects proved remarkably short-lived and growth soon returned to its previous high-octane pace. Since the beginning of 2009, China has experienced significant jumps in car ownership and home construction - along with worries about the creation of a housing bubble - among signs of returning prosperity. This, in turn, has generated a rising demand for oil, steel, copper, and other primary materials.

(...) [artículo aquí]

Monday, 5 April 2010


Jeff Walters & Hubert Hsu

Forbes, April 5, 2010

In 2005, a consumer company doing business in 70 locations (cities and counties) in China could reach 70% of consumers in the middle and affluent classes. To achieve the same coverage today, a company must be in nearly 240 locations. By 2020, that number will exceed 400. A dramatic shift in the geographic distribution of consumer spending power is under way in China. The middle classes are expanding out beyond the largest cities more rapidly and in greater numbers than any market has ever witnessed.

China's growth will bring close to 100 million households earning at least 60,000 yuan per year (about $9,000) into the middle- and affluent-class (MAC) segments from 2010 to 2020--roughly the same number of MAC-equivalent households as in the United States today. The increase in MAC households will double consumer spending power in nearly a quarter of China's cities and counties over the next decade. Such a dynamic environment has implications for companies at all levels and positions. Companies currently enjoying growth need to ensure that their economic model is sustainable. Laggards can capitalize on market dynamics and catch up to the leaders by winning in newly important locations.

Given that prospect, it's no wonder that many consumer goods and retail companies--including Procter & Gamble, Inditex, and Tesco--are making major investments in China. Yet their success in this culturally complex and geographically massive market is by no means guaranteed. Our latest analysis indicates that the rapid increase in disposable household income across China has magnified the complexity that companies encounter when deciding where to expand. Consider the prospect that by 2020, there will be nearly 800 urban locations with real disposable income per capita greater than Shanghai's today--meaning that in 2020, a city with per capita income that equals Shanghai's today will be too poor to be counted among China's top 800 urban locations. Even rural China will be an attractive market for some companies and an engine for growth after most of urban China has been reached. But with the highest incomes in some rural areas as much as 30 times greater than the lowest, picking the right markets to enter is critical.

(...) [artículo aquí]

Sunday, 4 April 2010


Pablo Bustelo

El País (Negocios), 4 de abril de 2010

Muchas de las críticas que se hacen, especialmente en EE UU, al régimen cambiario chino pasan por alto varios aspectos esenciales. En primer lugar, lo que importa no es el tipo de cambio bilateral del yuan con el dólar, sino su tipo de cambio efectivo (TCE), esto es, ponderado por las monedas de los principales socios comerciales de China. Pues bien, el TCE del yuan ha aumentado el 10% en los dos últimos años y creció el 20% entre marzo de 2008 y marzo de 2009, una apreciación masiva en plena crisis, cuando las monedas de otros países asiáticos estaban cayendo y en un contexto de fuerte disminución de las exportaciones chinas. En todo el debate sobre el yuan conviene no olvidar que el TCE de otras economías asiáticas, como Taiwan, Filipinas o India, ha caído sustancialmente desde el inicio de la crisis global, favoreciendo su competitividad a expensas de la de China. Tampoco hay que perder de vista que las exportaciones chinas se redujeron nada menos que el 16% en 2009 y que se están recuperando lentamente, por lo que es muy difícil que se produzca una apreciación rápida y sustancial del yuan.

En segundo término, el superávit por cuenta corriente de China ha mostrado una corrección notable: ha pasado del 11% del PIB en 2007 al 5,5% del PIB en 2010. Esa caída, a la mitad, es superior a la reducción del déficit corriente de EE UU, del 5,2% del PIB en 2007 al 3,5% del PIB en 2010. Esto es, China se está ajustando más rápidamente que EE UU. La razón, claro está, es que la evolución de la demanda interna ha sido muy diferente en uno y otro país. En 2009 creció mucho (el 12,3%) en China y cayó el 2,6%, quizá de manera insuficiente, en EE UU.

En tercer lugar, el tipo de cambio del yuan con el dólar es asunto de dos. Hay economistas chinos que afirman que el dólar está sobrevalorado y que, por tanto, debería caer para ayudar a corregir los desequilibrios globales que subsisten y que seguramente volverán a crecer después de la crisis. En otras palabras, ¿por qué pretender que todo el ajuste cambiario lo haga el eslabón más débil?

(...) [artículo aquí]

Saturday, 3 April 2010


Emily Wax

The Washington Post, April 3, 2010

CHELEBAAK, AFGHANISTAN -- Along a rugged stretch of road in the shadow of the snow-covered Hindu Kush mountains, villagers in mud-brick huts praised the newest addition to their vista: a series of massive steel towers that reach into the clouds.

The towers, part of a $1.3 billion aid package from India, carry electricity to a crippled region that has long gone without. They also represent an intense competition between India and arch-rival Pakistan for influence in whatever kind of Afghanistan emerges from the U.S.-led war.

To blunt India's eager courtship of Afghanistan, Pakistan is pouring $300 million of its own money and resources into a nation it also views as key to the stability of volatile South Asia, as well as a potentially lucrative business partner.

The economic stakes are especially enormous for India, the far richer nation, as it seeks energy to fuel its rise as a global economic power. Afghanistan is a bridge to Central Asia's vast gas and oil reserves, which are coveted by India and Pakistan, both of which have nuclear weapons but barely enough electricity.

India's efforts have come at a cost: It has suffered four attacks on its interests in Afghanistan in the past two years, which have killed at least 101 people and wounded 239. Attacks on two Kabul guesthouses in February killed seven Indians, including a visiting musician and the chief engineer of the Chelebaak electricity project.

For U.S. officials, India's increasing presence in Afghanistan is causing new security and diplomatic problems in a country where more than 1,000 American troops have died in more than eight years of war. Washington also fears upsetting the delicate balance in its relations with Islamabad.

(...) [artículo aquí]

Thursday, 1 April 2010


The Telegraph (Calcutta), April 2, 2010

The gradual rise of India and China as major economic and political powers could be “the greatest geopolitical challenge facing the international system in the twenty-first century”. So said Ronald Findlay and Kevin O’Rourke in their 2008 book, Power and Plenty: Trade, War, and the World Economy in the Second Millennium. Even before the global financial crisis, others wrote about the shift in economic power from the West to the East. Some of that has been through the acquisition of natural resources globally. China has been acquiring natural resources in Africa, apart from an attempt to buy Rio Tinto, a minerals conglomerate; it is even acquiring what are predominantly Western brands, from IBM’s personal computer business to the iconic American sport utility vehicle, the Hummer.

India is, too, even if it has been a late starter. Its companies have acquired coal mines in Indonesia, and also brands: Tata Motors owns Jaguar Land Rover, for instance. Other companies, including large information technology firms, have acquired smaller ones in the United States of America as a way of accessing Western markets. They have been less fortunate with European companies, but even that may be a matter of time. In the last few years, Suzlon acquired REpower, a wind turbine company based in Germany. Vedanta Resources is a minerals company operating out of the United Kingdom, but its principal assets and ownership are Indian.

(...) [artículo aquí]


Vivienne Walt

Time, April 1, 2010

It's hardly news that Afghanistan's huge opium crops supply more than 90% of the world's heroin. But now U.N. officials say Afghanistan is also the world's biggest producer of another drug — hashish. In its first attempt to calculate how much cannabis is grown in the country, the U.N. Office of Drugs and Crime says in a report released in Kabul on Wednesday that Afghan farmers earned up to $94 million last year from selling between 1,500 and 3,500 tons of hash — the resin extracted from cannabis crops.

U.S. and NATO officials believe that at least part of this revenue goes to insurgent groups to finance their attacks against coalition forces in southern Afghanistan, where almost all of the 139 soldiers killed this year have died. The report found that farmers grow about 17,000 hectares (about 42,000 acres) of cannabis in half of the country's 34 provinces — largely in the south. That is where Afghanistan's most fertile land is, the report says, and its rich soil produces an "astonishing yield" of potent hashish of about 320 pounds per hectare — more than three times the yield from cannabis grown in Morocco, another big hash producer. "Afghanistan is using some of its best land to grow cannabis," says Antonia Maria Costa, director of the U.N. drug office in Vienna. "If they grew wheat instead, insurgents would not have money to buy weapons and the international community would not have to spend hundreds of millions of dollars on food aid."

That might be true. But the U.N.'s findings show how daunting a task it is for Afghan and NATO officials to persuade thousands of farmers to switch from growing drugs to food. Farmers can earn nearly three times as much money growing cannabis than wheat: about $3,900 per hectare compared with $1,200 per hectare. What's more, cannabis is even more lucrative to grow than opium poppies, which yield about $3,600 a hectare. It's also far cheaper to grow cannabis than poppies, needing little sophisticated cultivation. The report says it is an almost ideal crop for desperately poor farmers, who lack fertilizers and tractors and who need every penny they can squeeze from their land. Because of this, the farmers have not been deterred by a government ban against growing hash. "The high sale price of cannabis and the relatively low costs of cultivation were the most frequently mentioned reasons for cultivating cannabis," says the report.

(...) [artículo aquí]