Wednesday 30 November 2011

INDIA’S SLOWDOWN

Bloomberg_logo

INDIA’S ECONOMY GROWS SLOWEST SINCE 2009 AS FASTEST BRIC INFLATION BITES

Kartik Goyal

Bloomberg, November 30, 2011

India’s economy grew last quarter at the slowest pace in more than two years after the nation’s central bank raised interest rates by a record to tame the fastest inflation among so-called BRIC nations.

Gross domestic product rose 6.9 percent in the three months through September, the Central Statistical Office said in a statement in New Delhi today. That’s the weakest expansion since the second quarter of 2009, and matches the median of 6.9 percent in a Bloomberg News survey of 24 economists.

Prime Minister Manmohan Singh’s efforts to stimulate growth are being hamstrung by corruption scandals that have stalled legislation for a year, and political outcry against foreign investment in retail. The Reserve Bank of India has also been constrained in supporting the economy as it struggles with inflation that’s almost twice the rate in China and higher than in Brazil and Russia.

“High interest rates, uncertainty about reforms, allegations of corruption and recessionary global conditions are casting a deep shadow over India’s growth story,” said Rohini Malkani, a Mumbai-based economist at Citigroup Inc. “What is worrying is that growth prospects do not seem sunny for the next year either.”

Citigroup this week cut its estimate for the Indian economy’s expansion to 7.1 percent for the year ending March 31 from 7.6 percent earlier.

(...) [artículo aquí]

Tuesday 29 November 2011

CHINA’S SOFT POWER GAP

The Huffington Post

A CHINESE CENTURY? NOT QUITE

Tom Doctoroff

The Hufftington Post, November 29, 2011

In the narrowest sense, a superpower has the military might to force the world to acquiesce to hegemonic resolve (for example, the Soviet Union). Then there are economic superpowers that influence capital flows and global growth rates. When they struggle, the world does too. Finally, there are soft superpowers, nations that "own" universal values.

American strengths and weaknesses. In response to the brouhaha over the American debt ceiling, a correspondent for the German newspaper Die Welt wrote in July, 2011: "Out of the American twenty-first-century crisis could come the downfall of the dominant power of the twentieth century." His sentiments, perhaps overheated, are a reminder that nothing lasts forever. It is to be hoped that America's disorientation, triggered by the rise of China, political polarization, and a hangover of material self-indulgence, is not permanent. Even if GDP growth slows due to protracted deleveraging, the combination of a growing population and high per capita income ensures continued economic sway. America's military budget, currently eight times that of China, will continue to underpin geopolitical clout, even as the country's status of as an 800-pound gorilla diminishes in a multi-polar world.

American values -- as opposed to its political system -- will have global appeal for generations. Individualism -- the encouragement of society to define oneself independent of society -- does not travel well, but respect for the dignity of the common man touches all hearts. Iconic American brands such as Nike and Coke, vessels of hope, will never go out of style. American pop culture will not be challenged. Superstars -- from Lady Gaga to Michael Jackson to Angelina Jolie to Johnny Depp -- epitomize self-actualization, an aspiration that transcends culture.

(...) [artículo aquí]

Monday 28 November 2011

A COLLAPSE IN CHINA?

LAT logo DEF3

PREDICTIONS OF AN ECONOMIC COLLAPSE IN CHINA ARE IN VOGUE

Once-unbridled optimism is giving way to fears that slowing GDP growth, rising public debt and stubbornly high inflation are signs of bigger problems to come.

David Pierson

Los Angeles Times, November 28, 2011

Not long ago, those who predicted that China's economy was headed for a fall were in a lonely place.
U.S. economist Nouriel Roubini, widely praised for calling the U.S. housing meltdown, was dismissed as a serial contrarian when it came to his pessimistic China views. So was well-known hedge fund manager Jim Chanos. Lawyer and author Gordon Chang was derided as a Chicken Little for his 2006 book "The Coming Collapse of China."

Suddenly they're all Nostradamus.

Backed by data showing a slowdown in the world's second-largest economy, doomsayers have taken center stage. Unbridled optimism has given way to fears over widening cracks in the Chinese economic miracle.

The gloomy sentiment has spilled into financial markets, whose investors have been running for the exits.

The Hang Seng China Enterprises Index, which tracks the stock performance of major mainland companies listed in Hong Kong, is down 26% so far this year, making it the worst-performing market gauge in Asia.

The practice of short-selling — betting that a stock will fall in value — has become so pervasive among traders of Chinese equities that analysts at French banking firm Societe Generale deemed China the "world's most crowded short." For instance, nearly a third of the shares of China Overseas Land & Investment Ltd. were shorted in August and September, signaling doubts about the prospects of China's largest property developer.

"There's growing sentiment that the Chinese story doesn't make sense," said Chang, who is now invited to investor conferences and remains convinced of a looming crash.

Bears like Chang see slowing GDP growth, rising public debt and stubbornly high inflation as evidence China's problems are about to get bigger.

Skepticism runs especially deep when it comes to real estate, which represents about a fifth of China's economic output, by some estimates. In a pattern eerily similar to the U.S. housing boom, easy financing in recent years unleashed a Chinese development frenzy that sent prices soaring. Eager home buyers camped out for the chance to buy into planned developments, sight unseen. The typical 1,000-square-foot apartment in Shanghai costs $335,000, about 45 times the average resident's annual salary.

Now China's housing bubble is deflating. Home prices reversed in October for the second consecutive month as cash-strapped developers became desperate to unload homes. An index of 35 major cities showed 29 had experienced a decline in sales from a year ago; sales plunged more than 50% in six of them, including Beijing.

The Chinese government says it's all part of the plan. After loosening the credit spigot during the financial crisis to keep the economy humming, it's now tightening lending and clamping down on speculators.

(...) [artículo aquí]

Sunday 27 November 2011

WEI QI VS CHESS

DNA

CAN INDIA BEAT CHINA AT ITS OWN GAME?

Aditya Kaul

DNA, November 27, 2011

The Chinese play a game called Wei qi. It is like chess, but with a different philosophy. While a chess player seeks absolute victory by checkmating the opponent’s king, a Wei qi player seeks a strategic edge by encircling the opponent’s pieces. In chess, you have the advantage of knowing the placement of all your opponent’s pieces. But, in Wei qi, strategy unfolds gradually. Pieces are deployed as the game progresses.

In making the comparison between the two strategy games in his recent work, On China, former US secretary of state Henry Kissinger traces the origins of China’s “distinctive military theory” to a period of upheaval, when ruthless struggles between rival kingdoms decimated China’s population.

Reacting to this slaughter, Chinese thinkers, he says, developed strategic thought that placed a premium on “victory through psychological advantage” and “preached the avoidance of direct conflict.” What makes China’s case more of an enigma is that it still invokes its millennia old strategic principles in its dealings with the modern world, and fiercely adheres to them.

Wei qi originated in China, and chess in India. As chants for an India-China ‘showdown’ grow louder, a senior Indian diplomat cautions that “nobody has a good understanding of China.”

Global power

The two sides were expected to sit across the table from Monday in New Delhi for the 15th time for Special Representatives’ talks on the border dispute, but there has been a last minute postponement and new dates are yet to be announced. Last year too, India had suspended the talks after China denied a visa to Northern Army Commander Lt Gen BS Jaswal because he came from the “sensitive” J&K, which China considers “disputed territory”, a pro-Pakistan shift from its earlier stand that J&K is an India-Pakistan bilateral dispute.

Outwardly, there appears little movement between Beijing and New Delhi. “China’s primary objective,” says former national security advisor, Brajesh Mishra, “is to have no rival in Asia. Otherwise, how can they claim to be a global power of the standing of the United States?”

(...) [artículo aquí]

Saturday 26 November 2011

CHINA’S LANDING

Money Morning

CHINA’S ECONOMY: SOFT LANDING, HARD LANDING OR CRASH LANDING?

Shae Smith

Money Morning, November 26, 2011 

There’s no escaping the Eurozone crisis. It even managed to keep China away from the headlines. However, in recent days China’s economy has fought its way back to the front page.

Why?

Because China’s about to lose its biggest export market.

As the Euro crisis grows, European consumption is rapidly falling. Meaning China will be hit where it hurts… their manufacturing sector.

Which also means… China’s soft landing could now be China’s hard landing …moving into a devastating crash landing.

According to Bloomberg News, ‘China’s exports rose at the slowest pace in almost two years in October as Europe’s deepening debt crisis crimped demand.’

Crimped demand? Demand from Europe has tanked since August.

In August, export growth was a robust 22.3%. Less than a month later, it had tumbled to a tiny 9.8% (that’s tiny for China).

And there’s worse to come. Lu Ting an economist with Bank of America says export growth will fall further.

In total, Ting believes export growth to Europe could be just 10%… for the whole of 2012.

(...) [artículo aquí]

Friday 25 November 2011

JAPAN’S CONTAGION RISK

The Australian

EUROPE DEBT CRISIS POSES GRAVE RISK TO JAPAN, SAYS FURUKAWA

Mitsuro Obe

The Australian, November 25, 2011

The Japanese government today said it is prepared for any contingencies that may result from the widening sovereign debt crisis in Europe, and is in lockstep with the Bank of Japan in dealing with potential contagion risks.

"The recent spread of credit woes to Italy poses a grave risk to the Japanese economy," said economic and fiscal policy minister Motohisa Furukawa in a press conference. "The government and the Bank of Japan share strong concerns and have agreed to work closely with each other."

The statement came after the Cabinet Office yesterday disclosed that Japan's financial institutions have the most exposure to Italian sovereign debt among foreign banks after those of France and Germany.

The government and the BoJ are studying how the crisis could play out and how they should respond, according to a Cabinet Office official. "They are also exchanging information to stay ahead of the curve," the official said in an attempt to reassure financial markets about Japan's ability to handle such a crisis. The official noted that after the financial crisis that began in the US in 2008, Japan swiftly enacted economic stimulus measures with the support of massive liquidity injections from the BoJ.

The statement was adopted in a meeting of senior government and BoJ officials today to review the progress of measures to cope with the strong yen that were introduced last month.

In the meeting, Deputy BoJ Governor Hirohide Yamaguchi noted that "the crisis of confidence has reached major economies of Europe and has caused a failure in a bond auction in Germany", according to officials present at the meeting

(...) [artículo aquí]

Wednesday 23 November 2011

CHINA’S FALTERING EXPORTS

Business Espectator logo

CHINA'S LOPSIDED BALANCING ACT

John Lee

Business Spectator, November 24, 2011

Over the weekend the Chinese vice-premier, Wang Qishan, who is responsible for overseeing the country’s financial sector predicted that the global economy could slump into a long-term recession, and urged China to speed up reforms to cope with any possible fallout. Wang would have known ahead of time what the HSBC Purchasing Managers Index (PMI) revealed on Wednesday – namely the lowest recording of industrial activity over the month of November for almost three years. In response, the Australian all ordinaries index fell 1.86 per cent, while share prices for mining giants BHP Billiton and Rio Tinto fell 3.05 per cent and 3.41 per cent respectively.

Given that 23 cents in every dollar worth of our exports goes to China, the local sharemarket response is predictable. But Australian investors, who generally invest for the short- or medium-term, are getting it wrong and displaying a worrying lack of understanding as to how the Chinese political economy actually works. In fact, the data coming out of China over the past week ought to delight all but the longer-term investors in our big miners.

The November PMI figure of 48 indicates that industrial activity has actually shrunk since a figure of 50 represents stagnation. The index is derived from responses from surveys sent to around 400 executives of manufacturing companies. It is important to realise that the companies surveyed consist overwhelmingly of foreign-invested or foreign-owned export manufacturers in China. If we examine the PMI figures since 2004, the index’s correlation with the demand for Chinese exports in the major global consumer markets of the European Union and the United States is almost perfect. Therefore, the disappointing PMI figure for November tells us what we already know – that demand for Chinese exports in the industrialised world is faltering, especially in the EU.

(...) [artículo aquí]

ASIA’S RESILIENCE

Finance Asia

ASIA CAN WEATHER THE GLOBAL STORM

Emerging countries in Asia should prove resilient again if the global economy worsens, according to a report published by Fitch Ratings this week.

Rupert Walker

FinanceAsia, November 23, 2011

Economies in Asia are well placed to withstand a further worsening of the global economy, according to a report released by Fitch Ratings this week. In general, healthy trade and fiscal balances, policy flexibility and their resilience in 2009 suggests that most countries in the region are well-protected against contagion from further shocks from Western Europe and the US.

The report — “Emerging Asian sovereign pressure points” — noted that Thailand combines high exposure to a global slowdown with limited scope for monetary policy stimulus, but in contrast, Indonesia has a track record of resilience to global economic shocks and has the most scope for a policy response. Meanwhile, China and India are less exposed to a global growth shock, but also have little tolerance for policy stimulus should things go badly wrong.

A sudden worsening in global market liquidity is likely to hurt Indonesia, Korea and Malaysia most, but would have a limited impact on China, Taiwan and the Philippines. But, “emerging Asian exposure to a sudden stop in external financing ... appears limited, with only Sri Lanka and India running deficits on their basic balances (current account balance plus net foreign direct investment inflows)”.

The report looked at several metrics to assess the potential exposure of emerging Asian economies and their sovereign credit-worthiness to a further deterioration in the global economy and heightened stress in the financial system. However, the rating agency stressed that these contingencies do not reflect its base case scenario.

Fitch pointed out that the threat to the real economy from a potential sharp worsening in the global economy can be determined through trade openness and the scale of the deviation seen in 2009 GDP growth compared with the preceding five-year average growth rate. The three countries that experienced the largest shock to growth — Malaysia, Mongolia and Thailand — are among the most open to trade in the region, while those least open to trade suffered smaller shocks to GDP growth in 2008 to 2009.

(...) [artículo aquí]

Tuesday 22 November 2011

ASIA FACING THE EUROPEAN DEBT CRISIS

Bloomber - BWok

WORLD BANK SEES CHINA SOFT LANDING, ASIA STIMULUS ROOM: ECONOMY

Shamin Adam

BusinessWeek, November 22, 2011

The World Bank said China is heading for a soft landing of growth in excess of 8 percent next year, and with most Asian nations has fiscal scope to cushion its economy from an escalation in Europe’s debt crisis.

Developing East Asia, which excludes Japan, Hong Kong, Taiwan, South Korea, Singapore and India, will see its expansion moderate to 7.8 percent in 2012 from 8.2 percent this year, the Washington-based development lender said in a semiannual report today. While China faces the risk of a “strong” impact from a real-estate correction, its gross domestic product will rise 8.4 percent next year and about that pace thereafter, the bank said.

The report signals that Asia, which led the world out of the 2008-2009 recession, is poised to withstand the blows from any slump in demand for its exports or pull-back in credit by European banks. The World Bank said countries with high investment rates, such as China, should focus on boosting consumer spending in any fiscal stimulus, such as with social security and pension provision.

“Clearly the region is being affected by Europe and the global environment has weakened,” Bert Hofman, the World Bank’s chief economist for the East Asia and Pacific region, said in an interview with Bloomberg Television. At the same time, “imports into China are holding up quite nicely and it is becoming increasingly a market for consumption goods of manufacturing countries in the region.”

(...) [artículo aquí]

Monday 21 November 2011

CHINA’S PROPERTY PRICES

afp_logo

CHINA SEEN EASING PROPERTY CURBS IN 2012: REPORT

AFP, November 21, 2011 

SHANGHAI — China will likely relax some property market curbs next year due to concerns that slumping prices could hurt economic growth, a prominent Chinese university said in a report published Monday.

China has introduced a range of measures aimed at bringing down property prices in the last year, such as bans on buying second homes in some cities, hiking minimum down payments for buyers and introducing property taxes.

But Beijing-based Renmin University has forecast that the government would likely relax limits on bank lending to the property sector and purchases of new homes in the third quarter of 2012, said the report published in the state-run China Securities Journal.

Industry officials and analysts are divided over when the government might ease curbs, originally put in place to cool the red-hot property sector after a surge in prices put homes out of the reach of many.

Chinese Premier Wen Jiabao recently dashed hopes of any change in the short term, saying housing prices should return to "reasonable levels".

But cash-strapped local governments are heavily reliant on revenue from land sales, and the central government will likely intervene to prevent property prices from falling more than 25 percent, Renmin University said.

(...) [artículo aquí]

Sunday 20 November 2011

CHINA: No. 1 IN 2027

TelegraphLogo

JIM O'NEILL: CHINA COULD OVERTAKE US ECONOMY BY 2027

Jim O'Neill, the head of Goldman Sachs Asset Management, has predicted that China could overtake the United States as the world's largest economy by 2027 and urged a fundamental rethink of the operation of the G7 which he believes is too dominated by the West.

Kamal Ahmed

The Telegraph, November 20, 2011

In his long awaited update to his seminal 2001 paper on the BRIC economies of Brazil, India, Russia and China, Jim O'Neill says that the economies he highlighted have exceeded even his expectations in the way they have become global powerhouses.

Mr O'Neill says that the four countries should no longer be considered "emerging" economies but rather "growth" economies and should be given their rightful place as the top table of power.

A decade ago, Mr O'Neill sparked a new way of looking at the global economy when he coined the term BRIC. A decade on, his new book The Growth Map reveals the next stages in the progress of the non-Western economies which have come to dominate corporate life across the world.

The book is serialised in The Sunday Telegraph today with further extracts in tomorrow and Tuesday's Daily Telegraph and online at telegraph.co.uk. "Our updated research suggests that China's economic output – its gross domestic product – could match that of the US as early as 2027, and perhaps even sooner," he writes.

(...) [artículo aquí]

Saturday 19 November 2011

CHINA’S SCIENCE AND THE WEST

montreal_gazette_logo

KEEPING UP WITH CHINA IN SCIENCE IS KEY TO WEST'S ECONOMIC FUTURE

Michel Maziade

The Montreal Gazette, November 19, 2011

The U.S. economy is declining. China's economy is ascending. What to do?

The answer lies not to the right, not to the left, but upward: Science must be brought into the equation.

The new Knowledge Economy will soon see an incredible acceleration in the commerce of ideas, and science will be the master driving force of this economy. According to Jacques Attali, an international "Peaceful War" to control the worldwide economy is now well under way. China already controls much of the world's manufacturing and has the world's secondlargest economy, after the United States. Will the West lose its supremacy in science and innovation to China within the next decade?

Over the past 40 years, Canada has built a resilient scientific base. Though we are not necessarily at a standstill, we should be asking ourselves whether the speed of our progress will be sufficient to meet the coming challenges. Aggressive science policies have helped China to grow exponentially. The signposts are everywhere. For example, the Chinese are dedicating $87 billion per year to science (1.7 per cent of GDP) and are increasing their budget by 20 per cent annually, leaving Canada in the dust with its mere $25 billion per year (less than 2 per cent of GDP).

France has reacted to the Juppé-Rocard report by voting 35 billion euros to accelerate its innovation programs, to stimulate higher learning and to consolidate its scientific strengths. In contrast, China repatriates 70,000 of its young PhDs per year and can now offer the same training on its own. With 1.4 million scientists, China has caught up with both North America and Europe. In comparison, Canada produces fewer than 6,000 PhD graduates per year. Also, China has gone from publishing fewer than two per cent of all scientific publications worldwide 10 years ago to today's 10 per cent, and is now in second place, after the United States, as a "producer of science."

(...) [artículo aquí]

Friday 18 November 2011

CHINA’S GREEN JOBS

The Guardian OK

CHINA'S GREEN GROWTH POTENTIAL 'COULD CREATE 9.5M NEW JOBS'

Report urges China to replace dirty, energy intensive industries with renewable technology and other 'green' businesses

Jonathan Watts

The Guardian, November 18, 2011

China can make a net gain of 9.5m jobs over the next five years if it phases out its dirtiest, energy intensive industries and replaces them with renewable technology and other "green" businesses, according to an influential advisory body.

The potential for green growth was flagged up in a report that highlights the "Jeckyl and Hyde" nature of the environmental situation in China, which can claim both the world's biggest investment in new energy and the most dangerous levels of pollution. The report was released this week by the China Council of International Co-operation on Environment and Development, which is headed by Li Keqiang – widely tipped to become the next prime minister – and includes 200 domestic and overseas experts and leading figures in the United Nations and other world bodies.

On the economics of a shift to a more sustainable development path, it is brimful of ambition and optimism. The council advises the government to spend 5.8 trillion yuan (£61bn) on measures to save energy, protect the environment and replace polluting industries with hi-tech firms. It estimates this would create 10.6m jobs, boost GDP by 8 trillion yuan and result in energy savings worth another 1.4 trillion yuan. These gains, it says, would far exceed the costs of eliminating the dirtier sectors of the economy, which are calculated as a loss of 950,000 jobs and 100bn yuan in output.

(...)[artículo aquí]

Thursday 17 November 2011

THE US AS A PACIFIC POWER (II)

Economic Times logo OK

COUNTERING CHINA, OBAMA ASSERTS US A PACIFIC POWER

The Economic Times, November 17, 2011

CANBERRA: Signaling a determination to counter a rising China, President Barack Obama vowed Thursday to expand US influence in the Asia-Pacific region and “project power and deter threats to peace'' in that part of the world even as he reduces defense spending and winds down two wars.

”The United States is a Pacific power, and we are here to stay,” he declared in a speech to the Australian Parliament, sending an unmistakable message to Beijing.

Obama's bullish speech came several hours after announcing he would send military aircraft and up to 2,500 Marines to northern Australia for a training hub to help allies and protect American interests across Asia. He declared the US is not afraid of China, by far the biggest and most powerful country in the region.

China immediately questioned the US move and said it deserved further scrutiny.

Emphasizing that a US presence in the Asia-Pacific region is a top priority of his administration, Obama stressed that any reductions in US defense spending will not come at the expense of that goal.
``Let there be no doubt: in the Asia Pacific in the 21st century, the United States of America is all in,'' he said.

From Canberra, Obama flew to the northern city of Darwin, where some of the US Marines bound for Australia will be based. His visit marked the first time a sitting US president has been to Darwin, where US and Australian forces were killed in a Japanese attack during World War II. He opened his quick stop there by laying a wreath at a memorial for the USS Peary, a Navy destroyer that was sunk during that battle.

(...) [artículo aquí]

Tuesday 15 November 2011

THE US AS A PACIFIC POWER

WashPost logo3

U.S. FOREIGN POLICY TURNS TOWARD ASIA

The Washington Post, November 16, 2011

The theme of President Obama’s eight-day tour of Asia is what the administration describes as a foreign policy “pivot” from the messy and costly wars of Iraq and Afghanistan to a new era of engagement with the booming economies of the Far East . “The United States is, and always will be, a Pacific power,” Mr. Obama said as he opened a news conference Monday in Hawaii. The region, he added, “is absolutely vital not only for our economy but also for our national security.”

The president is right, of course, and his vision is, in many ways, a beguiling one. Many Asian countries are eager for greater economic, political and military engagement with the United States because of their wariness of China. Eight signed up over the weekend for the administration’s new Trans-Pacific Partnership, a free-trade plan; Australia announced its agreement to a permanent U.S. military presence. Not that war is on the horizon: Though China’s growing military power must be watched, there are no ugly land battles to fight in Asia, and the threat of terrorism is small.

Yet it was telling that the first question Mr. Obama fielded after summing up the 21-nation summit he hosted was not about the trade deal or the summit or even China. It was about Iran’s nuclear program, which is threatening to trigger yet another war in the Middle East. The message to the president was unintentional but fitting: “Pivoting” to Asia won’t make the threats to U.S. security in the Near East — or the urgency of addressing them — go away.

Mr. Obama is not the first U.S. president who hoped to focus on Asia: Both George W. Bush and Bill Clinton tried pivoting, too. But Mr. Obama has more opportunities to carry out his plan, in part because growing Chinese power has made even those countries that once kept their distance from Washington, such as Vietnam, eager for closer ties. The administration appears to have a robust and multifaceted strategy, which includes a somewhat tougher approach to Beijing. “When it comes to their economic practices there are a range of things [the Chinese] have done that disadvantage not just the United States but a whole host of their trading partners and countries in the region,” Mr. Obama said at his news conference. “The United States and other countries, I think understandably, feel that enough is enough.”

(...) [artículo aquí]

US REDISCOVERING ASIA?

StraitsTimes

RE-ORIENTING AMERICA

Richard N. Haass

The Straits Times, November 15, 2011

Some 40 years ago, when I entered Oxford University as a graduate student, I declared my interest in the Middle East. I was told that this part of the world came under the rubric of 'Oriental Studies,' and that I would be assigned an appropriate professor. But when I arrived for my first meeting at the professor's office, his bookshelves were lined with volumes bearing Chinese characters. He was a specialist in what was, at least for me at the time, the wrong Orient.

Something akin to this mistake has befallen American foreign policy. The United States has become preoccupied with the Middle East - in certain ways, the wrong Orient - and has not paid adequate attention to East Asia and the Pacific, where much of the twenty-first century's history will be written.

The good news is that this focus is shifting. Indeed, a quiet transformation is taking place in American foreign policy, one that is as significant as it is overdue. The US has rediscovered Asia.

'Rediscovered' is the operative word here. Asia was one of the two principal theaters of World War II, and again shared centrality with Europe during the Cold War. Indeed, the period's two greatest conflicts - the wars in Korea and Vietnam - were fought on the Asian mainland.

But, with the end of the Cold War and the demise of the Soviet Union, Asia receded from American interest. In the first decade of the post-Cold War era, the US trained much of its attention on Europe. American policymakers focused primarily on enlarging Nato to encompass many of the former Warsaw Pact countries, and on contending with the post-Yugoslav wars.

The second phase of the post-Cold War era began with the 9/11 terror attacks. What followed was a decade of US focus on terrorism and the large-scale commitment of American military forces to Iraq and Afghanistan. The two conflicts have claimed more than 6,000 American lives, cost more than US$1 trillion (S$1.3 trillion), and consumed countless hours for two presidents and their senior staff.

(...) [artículo aquí]

Monday 14 November 2011

JAPAN’S RETURN TO GROWTH

Bloomberg_logo

JAPAN EMERGES FROM POST-QUAKE SLUMP

Andy Sharp

Bloomberg, November 14, 2011

Japan’s economy expanded for the first time in four quarters as exports recovered from a record earthquake, an expansion that is already slowing because of weakening overseas demand.

Gross domestic product grew at an annualized 6 percent in the three months ending Sept. 30, the fastest pace in 1 1/2- years, the Cabinet Office said today in Tokyo. At 543 trillion yen ($7 trillion), economic output was back to levels seen before the March 11 earthquake, the report showed.

Japan’s return to growth after three quarters of contraction was driven by companies including Toyota Motor Corp. making up for lost output from the disaster. A sustained rebound will depend on how much reconstruction demand can offset a slowdown in global growth as Europe’s debt crisis damps global confidence and an appreciating yen erodes profits.

“GDP will slow very sharply in the current quarter,” said Kiichi Murashima, chief economist at Citigroup Global Markets Japan Inc. in Tokyo. A yen trading near World War-II highs and Europe’s fiscal woes are “very strong headwinds” for the nation’s manufacturers, he said.

Expansions in Asian nations from China to South Korea to the Philippines are already showing signs of cooling. International Monetary Fund Managing Director Christine Lagarde said on Nov. 12 that Japan needed to swiftly implement reconstruction spending.

(...) [artículo aquí]

Sunday 13 November 2011

CHINA OR GERMANY?

Global Economic Intersection

GERMANY MUST DO IT, NOT CHINA

Michael Pettis

Global Economic Intersection, November 13, 2011

I have already discussed last month why I think the desperate attempts by Europe to get China and other Asian and BRIC countries to bail out the weak sovereign borrowers is absurd, but the topic has become so important in the past two weeks, at least judging by the number of calls I have received from journalists, that I thought I would reproduce a discussion I recently had in a forum among a number of China specialists (the forum is Rick Baum’s estimable ChinaPol).

We were discussing an article that recently appeared in the New York Times calling for a Chinese bailout of Europe.  According to the author, Arvind Subramanian, at the Peterson Institute, “Europe is drowning and needs a lifeline.”  That lifeline is effectively a bail-out package from China.

Bad politics

Although I agree with Subramanian that China should use current events to play a bigger and more decisive role in global finance, and I certainly agree that as a surplus nation it is very much in China’s interest provide financing to the eurozone, I am not sure it makes sense for China to do anything that actually helps Europe.

In fact I found the article a little bizarre, but not at all out of step with the thinking in Europe. I think the request for assistance from China and other developing countries shows how confused Europe’s leaders are and reinforces the claim made by Beth Simmons in her book (Who Adjusts) on the politics of the 1930s European debt crisis. Simmons argues that one of the problems with a debt crisis is that when debt levels are perceived as being too high, major stakeholders are forced into behaving in ways that reinforce credit deterioration and exacerbate the debt problem.

(...) [artículo aquí]

Saturday 12 November 2011

INDIAN GDP IN 2050

Economic Times logo OK

WITH $85 TRILLION, HOW INDIA CAN BECOME WORLD'S LARGEST ECONOMY

Minhaz Merchant

The Economic Times, November 12, 2011

According to a study by US banking group Citi, India will be the world's largest economy within 39 years. Indian GDP in 2050, measured by purchasing power parity (PPP), will be $85.97 trillion. China, in second place, will have a GDP of $ 80.02 trillion and the US $ 39.07 trillion (see chart).

With an estimated population in 2050 of 1.63 billion, India will thus have a per capita income of over $53,000 - in the range of today's wealthiest countries like Switzerland and Norway. Sounds too good to be true? Of course it is.

On paper - mathematically - Indian poverty should disappear by 2050. The reason it won't is that huge inequalities in income will persist unless we rapidly implement second-generation economic reforms which deliver real benefits to the bottom of India's socio-economic pyramid.

The first chart in our three-chart collage shows the ranking of the top five countries by GDP in 2050 as per Citi's projections. Indian GDP in 2011 is estimated at $4.45 trillion (PPP). To reach $85.97 trillion in 2050, the Indian economy will have to grow at an average annual rate of 8.1% a year for the next 39 years. Optimistic? Perhaps, but not overly so.

The Citi study relies heavily on India's two dividends - demographic and democratic. The demographic dividend will ensure that India has the largest number of working-age people in the world (over 800 million) between 2015 and 2035 before tapering off as our population reaches a plateau of just over 1.60 billion and starts ageing (as China's already is). Fertility rates of increasingly educated urban and rural Indian women will dip from today's 2.6 to 1.7, which is when a country's birth and death rates equalise.

(...) [artículo aquí]

Friday 11 November 2011

ASIA AND THE EUROZONE CRISIS

afp_logo

US URGES ASIA TO HELP SAVE GLOBAL ECONOMY

Andrew Gully

AFP, November 11, 2011

HONOLULU, Hawaii — The United States urged Asia to do more to stimulate growth to offset the eurozone crisis, ahead of a summit in which Washington is seeking to shape the rules for the emerging Pacific region.

Police sealed off Honolulu's usually laid-back Waikiki Beach as Chinese President Hu Jintao became the latest leader to arrive for the weekend summit that will be led by US President Barack Obama, a Hawaii native.

US Treasury Secretary Tim Geithner, chairing talks on Thursday of finance ministers from the APEC bloc, said that the meeting was dominated by how to make growth more balanced and sustainable, given the crisis in Europe.

"Asian economies will need to do more to stimulate domestic demand growth -- both so they are less vulnerable to slowdowns, such as the situation in Europe, and so they can continue to contribute to global growth," he said.

The 21 members of APEC, or the Asia-Pacific Economic Cooperation forum, account for about 40 percent of the world's population, more than 50 percent of its gross domestic product and 44 percent of global trade.

"While APEC economies are the most vulnerable to a global slowdown, they can also play the greatest role in contributing to the global recovery and establishing the foundations of strong, sustainable, and balanced future growth," Geithner said.

(...) [artículo aquí]

Thursday 10 November 2011

CHINA’S REBALANCING ACT

Economic Times logo OK

CHINA WELL PLACED SHOULD EUROPE DERAIL

Clyde Russell

The Economic Times, November 10, 2011

It's becoming very hard to sustain a bearish view of China's economy with data showing solid demand in commodity imports offsetting some weakness in manufactured exports.

The main takeaway from Thursday's trade numbers is that the Chinese economy appears to be successfully balancing away from export-led growth to a more sustainable path based on domestic investment and consumption.

But let's be honest, the unfolding train wreck that is Europe is currently drowning out any positive news from Asia, and the new concern for the world's main economic bright spot is that it will be unable to escape the fallout from a potential messy break up of the euro currency bloc.

It would be silly to pretend that a prolonged crisis in Europe won't impact China, so the question becomes how well-placed is the world's largest commodity user to handle the increasing likelihood of a renewed recession in its largest trading partner.

Firstly, Chinese exports to Europe won't drop off a cliff in all but the doomsday scenario.

What is likely is that the growth in exports will decline, as indicated by the October trade figures, where shipments to Europe increased by 7.5 percent year-on-year, the lowest since February and well below the overall rate of 15.9 percent for all exports.

That overall rate was also possibly a disappointment, coming in shy of the forecast gain of 16.5 percent and the 17.1 percent jump recorded in September.

But imports surged in October, jumping 28.7 percent on the year, comfortably beating the forecast for a 23 percent jump and September's 20.9 percent increase.

(...) [artículo aquí]

Wednesday 9 November 2011

CHINA COOLING

Bloomberg_logo

CHINA INFLATION, OUTPUT COOLS ON EUROPE CRISIS

Bloomberg News

Bloomberg, November 9, 2011

China’s inflation slowed by the most in almost three years, giving officials more room to support growth as industrial production and the property market cool and Europe’s crisis threatens exports.

Consumer prices rose 5.5 percent in October from a year earlier, the statistics bureau said on its website today. The 0.6 percentage point decline from September’s rate was the biggest since February 2009. Industrial output growth slowed to 13.2 percent.

Most economists expect Premier Wen Jiabao’s government to loosen fiscal or monetary policy without cutting interest rates as inflation stays above a full-year target of 4 percent, a Bloomberg News survey showed this week. HSBC Holdings Plc said today that “targeted easing” may include measures to support smaller businesses and the construction of public housing and infrastructure.

“The combination of easing inflationary pressures, a protracted euro debt crisis and a potential property market slump has set the scene for an imminent policy easing,” said Liu Li-Gang, a Hong Kong-based economist with Australia & New Zealand Banking Group Ltd. “The time is right” for a cut in lenders’ reserve requirements, he said.

Industrial output growth was the least in a year and compared with a 13.8 percent gain in September, Bloomberg data show. Economists’ median estimate was for a 13.4 percent gain.

Housing transactions fell 25 percent from September, today’s data showed, with Credit Suisse Group AG analyst Jinsong Du saying that “sluggish” volumes are a risk for developers.

(...) [artículo aquí]

Tuesday 8 November 2011

THE NAXALITE INSURGENCY IN INDIA

Midday

HOW MUCH OF INDIA IS MAOIST-AFFECTED?

Sushant Singh

Midday, November 8, 2011

How often have you heard that one-third of India is gripped with Naxals, or Maoists, or LWE-afflicted (LWE stands for Left Wing Extremism in government parlance)? One-third! Is it one-third area, or one-third population, or one-third districts, or one-third of India's states?

One-third of India actually creates an impression that one-third of India's geographical area -- and thus one-third of India's population -- is under the grip of Maoists. That sounds really horrible. Precisely why it is used by those who wish to portray India in poor light internationally.Where does this figure of one-third come from? India has a total of 640 districts and The Economist magazine (July 22nd, 2010) suggested that 200 of them are affected by Naxal insurgency. This brings us an approximate figure of one-third. International wire agency AFP (May 15, 2010) claimed that 20 of India's 28 states are affected by Naxalite conflict. By that yardstick, 70 percent of India is threatened by Maoists. Other media reports talk of a 'Red Corridor', which covers 40 percent of India's geographical area. 33, 40 or 70 percent -- take your pick.

What are the official figures for LWE-affected areas? There is no single official figure for LWE-affected districts released by the Government of India. In its annual report for the year 2010-11, Home Ministry doesn't mention the expanse threatened by the Maoists. However, there are some official data points which can help us assess the real extent of the Maoist challenge.

The first among these is the Integrated Action Plan (IAP), devised by the Planning Commission, which has provided Rs 65 crore directly in the hands of district officials for accelerated development works. Initially proposed for 35 Maoist-affected districts, political jockeying resulted in a plan for 60 districts, all of which are not Maoist affected. The plan has thus been christened as 'IAP for Selected Tribal and Backward Districts', and is not an accurate indicator of the expanse over which the Maoists hold sway.
Next is the list of SRE (Security Related Expenditure) districts. These are 83 districts in nine states where all the expenses incurred on security in these districts are reimbursed by the union Home Ministry. These districts, where incidents of Maoist violence are more than 20 per cent of all the incidents in that district, are identified after a survey.

Notwithstanding that precondition, full reimbursement by the centre has led to a clamour from all states for including more districts in the SRE list. While politics may eventually lead to an expansion of this list, it currently seems to be the best estimate of the number of districts affected by Maoist insurgency.

(...) [artículo aquí]

Monday 7 November 2011

COMMODITIES IN INDIA

commodityonlinelogo

EMERGING GLOBAL COMMODITY MARKET REFORMS, LESSONS FROM INDIA

B C Khatua

Commodity Online, November 7, 2011

The global financial markets have been literally in a churn since early 2008,which became more pronounced after the collapse of Lehman Brothers. Apart from the housing bubble and bankruptcies caused by excessive speculative investments by investment banks in high-risk, complex structured products, the role of excessive speculation in select commodities by high return seeking fund houses, viz., Hedge Funds, Private Equity Funds, long-only funds etc in causing this crisis, first in US and then in the whole global economy, has been well chronicled over the last 3 years.

The massive public funds spent by the US and other governments to bail out these entities in crisis may have saved them, but the aftermath of the crisis persists in terms of high rates of unemployment , persistent high inflation in many economics including India, high interest rates to combat inflation resulting in slow economic recovery and slowing of the GDP growths. The debt crisis in European Countries , viz., Greece, Spain, Ire Land, Portugal, Italy etc. has cast a heavy shadow on the global sentiments apart from plunging the Eurozone into a tailspin. Stock markets are crashing and commodities are plunging. That the food prices in India buck the trend and are causing sleepless nights to the government and the poor alike is another paradox which needs another article to explain.

The touching faith of the likes of Mr. Alan Greenspan, in the ability of the markets to self-regulate in the midst of the scorching growth of the financial markets in the 1990s and early years of the 21st century, lies shattered. The proof of limitlessness of human greed ( in the form of investment bankers and high return seeking HNIs) has been laid bare once again. The efforts of the US Government to rein them in have not shown any significant change in their attitude or behavior, thanks to the easing of the crisis and their leverage in influencing the political legislative process and lobbying ability. The "occupy wall street " movement of those adversely effected by the crisis is a manifest reaction to this phenomenon.

(...) [artículo aquí]

Sunday 6 November 2011

INDONESIA

El País

JAKARTA CRECE SIN FRENO

El PIB de Indonesia se elevará un 6,5% este año en medio de la recaída de la crisis financiera mundial

Fernando Cano

El País (Negocios), 6 de noviembre de 2011

La economía indonesia no para de mejorar. Los últimos datos del banco central hablan de un alza del PIB del 6,6% en el tercer trimestre y de un crecimiento anual idéntico para 2011. La industria manufacturera se ha convertido en el verdadero motor de la producción industrial con una subida del 6,1% entre abril y junio, con alzas de dos dígitos en sectores como la automoción, bienes químicos, metales y tabaco. En plena recaída del comercio internacional y ante la probable contracción de Europa y Estados Unidos, el país aumentará este año un 25% sus exportaciones.

La primera economía del sureste asiático -y la quinta del continente después de China, Japón, India y Corea del Sur- ha sido una de las más dinámicas del mundo en la última década, con un crecimiento medio del 5,2%, y ha sido de las pocas que crecieron en 2009 -un 4,6%-, mientras las principales economías mundiales entraban en recesión. Con un tamaño similar al de España, Indonesia basa su rendimiento en un dinámico sector exportador y en su boyante consumo interno.

Con 240 millones de habitantes, la clave está precisamente en la fortaleza de su mercado interno. La diferencia con los países de su entorno como Tailandia, Vietnam, Singapur o Malasia es que la demanda doméstica representa casi un 60% de todo su PIB, y las exportaciones, solo un 17%. Los bajos niveles de desempleo, que este año llegará al 7,1%, sumado a los controlados estímulos fiscales para superar la crisis han mantenido el crecimiento del gasto de los hogares y de los niveles de crédito. Esta coyuntura ha permitido contener el frenazo del comercio internacional y la inestabilidad financiera mundial.

(…) [artículo aquí]

Saturday 5 November 2011

INDONESIA AND THE EU CRISIS

The Jakarta Post

DEBT CRISIS AND THE FUTURE OF EUROPE: IS INDONESIA SAFE?

Winarno Zain

The Jakarta Post, November 5, 2011

The Greek drama surrounding its debt crisis is still unfolding, and it is clear by the day that the crisis is more severe than expected.

The resolution of the crisis will take several years and will be very costly and the magnitude of that cost will be beyond the financial ability of the eurozone governments.

Efforts to make decisions to resolve the crisis are facing the risk of being obstructed by policy paralysis resulting from political uncertainties that grip several euro countries.

All these were evident after eurozone leaders finished their summit on Oct. 27 in Brussels. They claimed to have crafted a “comprehensive policy” to contain the European debt crisis. But markets think the policy lacks meaningful details and leaves many questions. It reflects the daunting task of the eurozone leaders.

The problem is getting more serious as the amount of Greek debt that needs to be written off turns out to be larger than previously forecasted. In July, it was estimated that a 21 percent write down of Greek sovereign bonds would be sufficient to give some relief for the Greek government. But the Greek economy deteriorated rapidly, as austerity measures have caused a deeper recession than expected.

(…) [artículo aquí]

Friday 4 November 2011

TAIWAN AND NUCLEAR ENERGY

The China Post

EXISTING NUCLEAR PLANTS TO BE SHUT DOWN: MA

Grace Soong

The China Post, November 4, 2011

President Ma Ying-jeou promised yesterday that the licenses of the existing three nuclear power plants will not be renewed after they expire, and if the fourth power plant begins stable operations before 2016, early shutting down of the first nuclear power plant will be considered.

Ma, who is running for presidential re-election in 2012, held a press conference yesterday to explain the steps which his administration would take to reduce the use of nuclear power, and eventually attain the “nuclear-free” goal. The process will be gradual, and “safety will always be of top concern,” he pledged.

Because of Taiwan's geographical nature — surrounded by oceans and located in the seismic zone — power generation is doomed to be challenging, Ma said, pointing out that currently, 99 percent of Taiwan's energy supply is imported. As the government promotes new policies on energy and pushes for the operation of the fourth nuclear plant, maximized safety precautions will be conducted.

If any natural disasters were to leave Taiwan's nuclear reactors beyond safety standards, the facilities would be suspended or scrapped, he proposed, reasoning that Taiwan cannot afford any nuclear disasters, and “We would never opt for nuclear power generation at the expense of safety.”

(...) [artículo aquí]

Thursday 3 November 2011

INDIA AND THE G20

Economic Times logo OK

INDIA READY TO SUPPORT FALTERING EUROPE UNDER IMF UMBRELLA

The Economic Times, November 3, 2011

CANNES: The big emerging economies, Brazil, Russia, India and China (BRIC), are likely to meet ahead of the G20 summit beginning Thursday to chalk out a joint strategy as the leaders of the world's biggest economies confront two surprise developments.

Embattled Greek Prime Minister George Papandreou called a referendum to approve the October 27 bailout package hammered out by European leaders even before the realisation of its inadequacy had sunk in.

The other development emanated outside Europe, when Japan intervened earlier this week to stem the rise of yen, effectively saying it had no faith in the G20 to offer a co-ordinated solution.

The referendum, a call on Greece's continuance in the Euro zone, and the simmering currency issue has completely altered the agenda of the G20, leaving it with the difficult task of assuring the global financial markets that it has the firepower to prevent the world from slipping into another recession. “We are not sure of the outcome because the nature of the crisis has changed,” said a government official.

The official is accompanying Prime Minister Manmohan Singh on his visit to the French resort to attend the meeting of heads of countries that together command over 85% of the world's GDP.

Global equities gave up a chunk of their October gains, crude retreated, euro dropped and Italian bond yields firmed as financial markets came to grips with the fact that the $130-billion third bailout package for Greece may not help contain the European debt crisis. &quotWe don't know whether the G20 will be able to deliver," said the Indian official, indicating the summit declaration could well be a general statement of intent that would be short on ways to address specific issues.

(...) [artículo aquí]

Wednesday 2 November 2011

CHINA IN CANNES

China Daily 3

THE G20 WISHLIST FOR CHINA IN CANNES

China Daily, November 2, 2011

BRUSSELS - The stunning call by Greek Prime Minister George Papandreou of a national referendum on aid packages for the debt-laden country made the idea of a China rescue to the European crisis all the more appealling.

After hours of tough negotiations which dragged on to the early hours on Thursday, European leaders had hoped to be joined by heads of other world major economies at the G20 summit this week on an optimistic note.

They had some reasons to: they halved Athens' debt burden, bolster its bailout fund and laid down plans to shore up its banks, in their latest "comprehensive solution" designed to dispel the crisis that has crippled the single-curency zone for nearly two years.

It was the third such comprehensive package this year, each of its predecessors made the debt problem in the euro area even worse.

Nevertheless, the eurozone and markets alike briefly hailed the in-principle success of the European Union (EU).

In an upbeat statement, European Commission President Jose Manuel Barroso said Europe would show its partners in the G20 proposals for a "community way out of this crisis." He added, "We are ready to complete our monetary union with a true economic union."

(...) [artículo aquí]

Tuesday 1 November 2011

CHINA’S SPACECRAFT

The Guardian

CHINA SENDS UNMANNED CRAFT INTO SPACE

Dawn rocket launch from Gobi desert marks step forward in Chinese plans to master docking and set up space station

Tania Branigan

The Guardian, November 1, 2011

A Chinese Long March rocket has blasted off, propelling an unmanned spacecraft into orbit in the next step towards the country's ambitious plans for a manned space station.

The Shenzhou 8 was launched at dawn from the north Gobi desert, entering orbit successfully, the official Xinhua news agency reported. It should dock with the Tiangong 1 module within two days, more than 200 miles above Earth.

"Mastering the technology of rendezvous and docking will lay a firm foundation for China to build a space station," Zhou Jianping, the chief designer of China's manned space engineering project, told Xinhua.

"Once we have mastered this technology, we will possess the basic technology and capacity to build a space station, and this will open up possibilities for even larger activities in space."

But he added: "Since we have never conducted a similar test before and the system is so complicated, we have many unknowns."

Wu Ping, spokeswoman for China's manned space programme, warned: "It is fairly difficult and risky to link up two vehicles travelling at high speeds in orbit, with a margin of error of no more than 20cm."

(...) [artículo aquí]