Asiana21

CHINA AND THE US IN THE ASIA-PACIFIC REGION

2012-02-01T00:47:00.001-08:00

RISING CHINA MUST TREAD CAREFULLY

Frank Ching

The China Post, February 1, 2012

The United States has recently, and repeatedly, made clear that its new defense policy is to put greater emphasis on the Asia-Pacific region, with a view to playing a leadership role in Asia, to China's evident discomfiture.

U.S. President Barack Obama personally proposed a “leaner” military strategy, with almost half a trillion dollars in spending cuts over the next 10 years, while calling for a larger U.S. military presence in Asia.

The new policy was embodied in a “Defense Strategic Guidance” report issued by the Pentagon.

It said, in part, that “over the long term, China's emergence as a regional power will have the potential to affect the U.S. economy and our security in a variety of ways.”

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CHINA CAUTIOUS ON MONETARY EASING

2012-01-30T00:48:00.001-08:00

CHINA PRESERVES AMMUNITION WITH RESERVE-RATIO ON HOLD: ECONOMY

Bloomberg News

Business Week, January 30, 2012

China held off on a reduction in bank reserve requirements that some economists had predicted would come before a week-long holiday ending Jan. 28, suggesting officials are cautious on more monetary easing.

Barclays Capital Asia Ltd., JPMorgan Chase & Co. and Industrial Bank Co. said this month that ratios were likely to fall ahead of the Lunar New Year festival, which boosts demand for cash. The central bank instead used reverse-repurchase contracts to add money to the financial system.

Premier Wen Jiabao seeks to steer the world’s second- biggest economy through a property market slowdown and the weakest export growth since 2009 without re-inflating asset bubbles or driving up consumer prices. The central bank has left benchmark interest rates unchanged for the past six months, while making a single cut to reserve requirements, the first since 2008, that became effective in December.

“The central bank aims to ease policies prudently and pace loan growth at the beginning of the year so as to avoid a replay of the credit explosion in 2009 and 2010 and prevent inflation from rebounding,” said Lu Zhengwei, a Shanghai-based economist at Industrial Bank. Lu now sees a reserve-ratio cut in February to add liquidity and spur growth after the reverse-repurchase contracts expire.

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IS THE HIGH GDP THRICKLING DOWN IN SRI LANKA?

2012-01-29T00:42:00.000-08:00

SRI LANKA’S GDP DILEMMA

The Synday Times, January 29, 2012

Sri Lanka is the world’s second-best performing economy in the world after China, we are told. According to Economic Development Minister Basil Rajapaksa, an IMF study has showed that Sri Lanka was the second-best performing economy in the world, growing at a rate of over 8 %. He also told reporters this week that Sri Lanka is growing this year by 8 % when other countries have reduced growth rates.

However many economists, following these comments, have been ‘Googling’ the web but unable to trace any such report or study from the International Monetary Fund. IMF officials here were also unable to provide any clues to this so-called study.

On the face of it however, Sri Lanka’s GDP growth is comparable to the best in the world. According to the tradingeconomics website (www.tradingeconomics.com), China, which by 2050 will overtake the US as the world’s largest economy, grew by 8.9 % in 2011 and India by 6.9 %. Others – mostly Sri Lanka’s main buyers of garments and other products – slowed down considerably with Canada’s growth being 3.4%, Germany-Australia-France in the 2 to 2.5% range while the US grew by 1.5 % and the UK by a marginal 0.7%.

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HOW MUCH DOES THE US DEPEND ON CHINA?

2012-01-28T01:44:00.001-08:00

AMERICA'S CHINA SYNDROME

Kevin Rafferty

The Japan Times, January 28, 2012

HONG KONG — How much does the United States depend on China's willingness to buy U.S. treasuries to pay for American profligacy? How much do spendthrift Americans rely on China to feed their greedy habit for cheap consumer goods? If you were to ask the average American, and probably the average world-aware Chinese, you would probably get a high number, say 40 or 50 percent — surely not below 20 percent.

The correct answers are so low as to make you blink. China, including Hong Kong, holds about 7.5 percent of U.S. treasuries totaling $14 trillion, according to calculations based on U.S. Treasury reports. China's share of U.S. consumption expenditure is just 2.7 percent based on "Made in China" imports. If you think that's low, the actual figure is lower, a paltry 1.2 percent if you strip out the value of the work done in the U.S. to put "Chinese" goods on American shop shelves.

These figures should make politicians and opinion-makers think hard about the implications of the way in which they approach economic relationships. The lessons are that they need to be more careful about slinging mud about unfair trade practices or demanding protection.

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PHILIPPINES-US DEFENCE TIES

2012-01-27T01:38:00.001-08:00

PHILIPPINES SEEKS TO STRENGTHEN US DEFENCE TIES

The Philippines has confirmed that it is discussing ways to "maximise" defence ties with the US amid territorial disputes in the region.

BBC News, January 27, 2012

In a statement, the foreign affairs secretary cited the need for more joint military exercises to protect national interests.

The statement was in response to a Washington Post story alleging a possible return of US bases.

Officials are currently in Washington discussing defence issues.

The Washington Post on Wednesday reported that officials were possibly in the early stages of negotiating the return of US bases to the country, "the latest in a series of strategic moves aimed at China".

Philippine Foreign Affairs Secretary Albert Del Rosario, however, did not address the issue of China in his statement.

"It is to our definite advantage to be exploring how to maximise our treaty alliance with the United States in ways that would be mutually acceptable and beneficial," he said.

He added that in the event of possible threats to national interest, "in terms of, say, territorial disputes", a "minimum credible defence" was needed in addition to dealing with the issues diplomatically.

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US MULTINATIONALS AND CHINA

2012-01-26T08:09:00.001-08:00

COOLING CHINA WORRIES SOME MULTINATIONALS

Nick Zieminski

Reuters, January 26, 2012

Slowing growth in China is emerging as a concern in some of this quarter's earnings reports from U.S. multinationals that have long relied on strong growth in China and other emerging markets to drive their profits.

Though China's economic growth is still well above that in other economies, its efforts to cool that growth -- for example, by restricting credit -- are now translating into weaker sales at some U.S. companies that do business there.

The trend is not yet widespread and companies are quick to stress the many advantages of China's market, but the commentary this earnings season has taken a more cautious tone than in the past.
3M Co's Asia-Pacific sales rose 3 percent in the latest quarter, weaker than in recent results, reflecting softer demand in China.

"The Chinese government successfully slowed activity to stem inflation," 3M Chief George Buckley said on a conference call with analysts. "Our China team anticipate continued below trend growth in the first half of 2012."

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JAPAN’S FIRST TRADE DEFICIT SINCE 1980

2012-01-25T00:27:00.001-08:00

JAPAN SEES FIRST TRADE GAP SINCE 1980

Toru Fujioka, Andy Sharp and Eleanor Warnock

Bloomberg, January 25, 2012

Japan’s first annual trade gap since 1980, driven by an energy-import surge as nuclear plants shut down and by a shift of manufacturing overseas, threatens to undermine the nation’s status as the world’s largest creditor.

A third straight monthly merchandise trade deficit in December capped an annual shortfall of 2.49 trillion yen ($32 billion), the finance ministry said in Tokyo today. The data reflect the impact of the record earthquake in March, which sparked a nuclear crisis that shut most reactors, as well as longer-term shifts such as Nissan Motor Co.’s decision to move some production to lower-cost Thailand.

“This is more than hollowing out -- the government hasn’t found any solutions to electricity and at this point I don’t see that we’re going to have nuclear power back again,” said Masaaki Kanno, chief economist in Tokyo at JPMorgan Securities Japan Co. The deficit will “expand in coming years,” he said.

Money flowing out through trade may erode investors’confidence that Japan’s creditor status makes it a haven for investment, complicating the government’s efforts to manage the world’s largest public debt. Policy makers have said the country’s shrinking population means it will need to turn increasingly to foreign investors to buy its bonds.

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KIN JONG-NAM AND CHINA

2012-01-24T02:28:00.001-08:00

CHINA 'PROTECTING KIM JONG-NAM'

Kim Jong-nam, the oldest son of North Korea's late leader, is being protected by China as a fallback option if the regime of his half-brother, Kim Jong-un, collapses.

Julian Ryall

The Telegraph, January 24, 2011

The elder Kim, who lives in exile in Beijing and Macao, said in interviews for a book released on January 20 that he feels "suffocated" in the Chinese capital because he is never alone.

"If there is trouble anywhere near him, he said that suddenly a number of people appear around him," said Yoji Gomi, a journalist and author of 'My Father, Kim Jong-il, and I: Kim Jong-nam's Exclusive Confession'.

"Even when nothing is happening, he feels their presence," Gomi added. "He said he does not know if he is being protected or monitored, but it is always like that."

It appears that China is taking care of him for its own aims, he added.

"Having the son of the former leader of a neighbouring country under their protection could be a political card that the Chinese could use at some time in the future," he said.

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SOCIAL DEVELOPMENT AND GDP GROWTH

2012-01-23T03:06:00.001-08:00

REDISCOVERY OF INDIA

The time is right for India to make dramatic and continuous improvements in health, education and public services to keep pace with the high GDP growth rate

N. S. Ramnath and Udit Misra

Forbes India, January 23, 2012

In the late 1950s, Ved Mehta, a blind writer from Oxford, spent a summer in India, a good part of it going around the country with the poet Dom Moraes. One of the high points of his trip was a meeting with the then prime minister, Jawaharlal Nehru. He had lunch with Nehru and his family (his daughter Indira Gandhi and his ‘two quiet grandsons in their teens’) and a long chat later on. His account of that conversation—published in a book Walking the Indian Streets—is marked by youthful optimism. “I am left feeling that the problems we are facing are of epic proportions, and that men who wish to do their duty must measure up to the heroic possibilities. While heroism seems to be playing out in the West, it is just beginning in the East.”

Mehta was not the only one to see the heroic possibilities those days. India seemed to be a huge canvas and a giant laboratory—coaxing people to think big. It was in this spirit that Milton Friedman, in 1955, wrote a memo at the invitation of the Indian government. “The great untapped resource of technical and scientific knowledge available to India for the taking is the economic equivalent of the untapped continent available to the United States 150 years ago,” he wrote and went on to prescribe policies that would yield a higher growth rate, and to criticise the path India seemed to be taking.

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CHINA’S SLOWDOWN

2012-01-22T01:06:00.001-08:00

SIGNIFICANT SLOWDOWN IS LIKELY IN CHINA: ROUBINI

Bloomberg

Taipei Times, January 22, 2012

China’s economy will slow this year, prompting policymakers to reduce interest rates and loosen lending restrictions, said Nouriel Roubini, the economist who predicted the 2008 financial crisis.

“It’s going to be a significant growth slowdown this year,” Roubini, co-founder of Roubini Global Economics LLC, said in a Bloomberg TV interview yesterday.

“Housing is deflating. Export growth is slowing down. If they don’t do something — stimulus in monetary and fiscal credit — the risk is that the growth will slow down well below 8 percent,” he said.

China’s GDP increased 9.2 percent last year, matching the slowest pace since 2002, as the housing market cooled and the European debt crisis eroded export demand.

The central bank cut the amount banks must keep in reserve last month for the first time in three years and the government has allowed its five biggest banks to boost first-quarter lending and may relax capital requirements, people with knowledge of the matter said this week.

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AIR POLLUTION IN BEIJING

2012-01-21T05:56:00.001-08:00

BEIJING RELEASES KEY DATA EXPECTED TO INDICATE EXTENT OF ITS AIR POLLUTION

Associated Press

The Washington Post, January 21, 2012

BEIJING — Caving to public pressure, Beijing environmental authorities started releasing more detailed air quality data Saturday that may better reflect how bad the Chinese capital’s air pollution is.
The initial measurements were low on a day where you could see blue sky. After a week of smothering smog, the skies over the city were being cleared by a north wind.

The readings of PM2.5 — particulate matter less than 2.5 micrometers in size or about 1/30th the average width of a human hair — were being posted on Beijing’s environmental monitoring center’s website. Such small particulates can penetrate deep into the lungs, so measuring them is considered a more accurate reflection of air quality than other methods.

It is the first time Beijing has publicly revealed PM2.5 data and follows a clamor of calls by citizens on social networking sites tired of breathing in gray and yellow air. The U.S. Embassy measures PM2.5 from a device on its rooftop and releases the results, and some residents have even tested the air around their neighborhoods and posted the results online.

Beijing is releasing hourly readings of PM2.5 that are taken from one monitoring site about 4 miles (7 kilometers) west of Tiananmen Square, the monitoring center’s website said Saturday. It said the data was for research purposes and the public should only use it as a reference.

The reading at noon Saturday was 0.015 mg/m3, which would be classed as “good” for a 24-hour exposure at that level, according to U.S. Environmental Protection Agency standards. The U.S. Embassy reading taken from its site on the eastern edge of downtown Beijing said its noon reading was “moderate.” Its readings are posted on Twitter.

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AUSTRALIA AND THE ASIAN CENTURY

2012-01-20T01:59:00.001-08:00

A LONG WAIT FOR THE ASIAN CENTURY

Andrew Shearer

Business Spectator, January 20, 2012

Dr Ken Henry and his team are busy preparing the federal government's White Paper on 'Australia in the Asian Century', due to be released in the middle of this year.

In Australian academic, business and media circles there is breathless excitement about the rise of China (and the US decline they assume as its inevitable corollary). But one of the points I would make to the White Paper team is that it would be a major error to write out the US (as the White Paper's title seems to imply), and that we may yet prove to be living in the Asia Pacific century, or indeed the Indo-Pacific century.

Following President Obama's November visit and his historic address to the Australian parliament, a number of influential academic, business and political figures expressed concern about moves (supported by both the major parties) to further strengthen the Australia-US alliance.

In essence, their concern was that stationing a relatively small number of US Marines in Australia's north for half the year might feed the concerns of our largest trading partner that we are part of a US-led strategy to 'contain' it.

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ACCOUNTABILITY AND GOVERNANCE IN CHINA

2012-01-19T03:07:00.001-08:00

GLOBAL IMPLICATIONS OF CHINA'S CHALLENGES

The Wukan event reveals the mounting challenges to China’s authoritarian resilience

Asia Sentinel, January 19, 2012

During the last few weeks of December, the Guangdong village of Wukan, located some 200 miles northeast of Hong Kong, earned a place in the history books. Outraged by the death of a local leader in police custody following angry protests against land grabbing and corruption, villagers drove out Communist Party and government officials, refusing to yield unless their demands were met.

In a sense, there is nothing unique about the Wukan event – one of the tens of thousands taking place in China – but it catches in a microcosm multiple elements of China’s evolving drama and is a serious reminder of the widening gap between the CCP and the people. As the protests spread to other towns and with the whole world watching, the party had no choice but to negotiate a compromise and Guangdong’s reform-minded Party Secretary Wang Yang, dispatched his immediate deputy to reach an agreement with elected protest leaders.

After a deal was reached, Prime Minister Wen Jiabao in Beijing declared: “We can no longer sacrifice farmers’ land ownership right to reduce urbanization and industrialization costs.” The prime minister was touching a raw nerve in the system. According to recent estimates, land grabbing may generate 40 percent of local government incomes, in addition to being a major source of corruption. The problem has grown more serious as construction has expanded to levels rarely seen anywhere in the world. Recent estimates put China’s property construction at 13 percent of GDP.

As a consequence, land prices have been rocketing, as developers have acquired ever more land for investments, creating their own land banks. However, during the last few months the bubble has begun to burst as housing and land prices have fallen, leaving land auctions without bids. For local government, a major source of income is threatening to dry up.

In sum, the Wukan incident and the ad hoc manner in which “mass incidents” are handled raise fundamental questions about accountability and governance.

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A MORE UNBALANCED CHINA

2012-01-18T03:02:00.001-08:00

NO REAL SLOWDOWN, BUT CHINA'S MORE UNBALANCED THAN EVER

Tom Holland

South China Morning Post, January 18, 2012

All the attention yesterday was focused on the modest slowdown in the mainland's economic growth rate towards the end of last year

But dig a little deeper and there was far more interesting information to be found in the slew of economic data released by Beijing.

Despite the reams of comment and analysis devoted to the mainland's headline figure, in truth the moderation in growth to an 8.9 per cent rate in the fourth quarter of last year from 9.1 per cent in the third quarter doesn't tell us much.

Some slowdown in the year-on-year numbers was only to be expected given the wilting demand for China's exports in Europe and the United States, coupled with Beijing's relatively tight monetary stance and the government's determination to bring down property prices.

But don't read too much into it. The authorities have already begun easing policy, and according to the economists at Goldman Sachs, growth actually accelerated towards the end of the year on a quarter-on-quarter basis, rising to an annualised 9.1 per cent rate from 8.5 per cent in the previous quarter.

In other words, the numbers released yesterday don't tell us whether the mainland economy is slowing or not.

But they do tell us other things. For example, they tell us there is no sign that the long-awaited rebalancing of the economy away from investment and towards private consumption is under way.

That might sound like a strange assertion, given that we are constantly being bombarded by stories of slowing construction and of booming consumer demand.

What's more, China's current account surplus with the rest of the world - widely regarded as a key indicator of excessive domestic savings and weak consumer demand - has dropped steeply since the start of the global financial crisis.

As the first chart shows, the surplus has contracted from a massive 10.5 per cent of gross domestic product in mid-2007 to less than 2 per cent in the last quarter of 2011.

But although its external imbalances have shrunk, yesterday's data indicates that the mainland economy's internal distortions are as pronounced as ever.

It's true that private consumption is growing rapidly. Retail sales grew by 17 per cent last year, and growth in overall consumption, from both the government and households, accounted for a higher share of the mainland's total growth than at any time in the past 10 years.

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CHINA’S GROWTH IN 2011Q4

2012-01-17T02:22:00.001-08:00

CHINA'S GROWTH AT 8.9PC IS WEAKEST IN TWO-AND-A-HALF YEARS

China's economy expanded at its weakest pace in two-and-a-half years in the final quarter as slowing Western demand for its exports and government efforts to curb inflation held back growth.

The Telegraph, January 17, 2012

GDP grew 8.9pc in the fourth quarter, the National Bureau of Statistics said, slower than in the third quarter, but still beating analyst expectations.

"It's slowing, even though it's not particularly aggressive. The economy seems to be surprisingly resilient so far," said Stephen Green, regional head of research for Greater China at Standard Chartered Bank in Hong Kong.

Beijing had set a growth target of around 8pc for 2011.

Annual growth was 9.2pc suggesting the world's second largest economy could avoid a hard landing despite falling demand from key export markets in the US and Europe, analysts said.

The figure, down from 10.4pc the previous year, also meant that the Chinese central bank was less likely to ease credit in the short-term to boost the world's second-largest economy.

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MA YING-JEOU AND CHINA

2012-01-16T03:15:00.001-08:00

MA BALANCES TAIWAN’S CONCERNS ABOUT AUTONOMY WHILE BACKING TIES WITH CHINA

Michael Forsythe and Tim Culpan

Bloomberg, January 16, 2012

Taiwan President Ma Ying-jeou was re-elected emphasizing his success easing tensions with China. Now comes the hard part: building on those gains in his final four-year term without diluting the island’s autonomy.

After signing economic deals in his first term, Ma will face more difficult issues such as China’s military buildup and Taiwan’s political status with the mainland, which claims sovereignty over the island, said Abe Denmark, a former China desk officer at the U.S. Defense Department.

“There is some concern that the progress between the mainland and Taiwan has been low-hanging fruit,” said Denmark, now with the Washington-based National Bureau of Asian Research. Addressing the military buildup and Taiwan’s status “will be harder for both Taiwan and Beijing.”

Continued success in building links with the mainland keeps the relationship from infecting ties between the U.S. and China, the world’s two biggest economies, and may bolster financial markets as improved relations draw investors. Ma must balance that progress against concerns voiced by the Taiwanese opposition that many of the island’s 23 million people don’t want cooperation with the mainland to infringe on their sovereignty and economy.

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NUCLEAR SECURITY IN INDIA

2012-01-15T02:50:00.001-08:00

INDIA SCORES LOW ON NUCLEAR SECURITY: US STUDY

The Economic Times, January 15, 2012

NEW DELHI: Weeks ahead of the nuclear security summit in Seoul, India has been dealt a blow on its famed nuclear reputation. In the first-ever index of security of nuclear materials, India almost brings out the rear - just above Iran, Pakistan and North Korea.

The index, compiled by a US nuclear think-tank Nuclear Threat Initiative (NTI) and Economist Intelligence Unit (EIU), "is the first Nuclear Materials Security Index, a rating and ranking of the security framework in 32 nations that possess one kilogram or more of weapons-usable nuclear materials."

In its summary, the study says this index "is not a facility-by-facility review of "guns, guards, and gates". Instead, the authors of the study say they assessed each state on "publicly available indicators of a state's nuclear materials security practices and conditions". The index is an embarrassment as India is hosting the sherpas for the nuclear security summit in New Delhi on Monday. India takes a leading position on nuclear security issues, and is also scheduled to establish a centre of excellence for nuclear security in Haryana.

While many in the Indian nuclear sector may scoff at the index, it is being used as a pressure point - the think-tank is even asking Australia to reconsider its decision to sell uranium to India because of New Delhi's score. Australia and the UK have the highest scores in the index.

Countries were scored on the following indicators: quantities and sites, which included material production and transportation; security measures, particularly on-site protection; accession to global norms, including taking on voluntary commitments; domestic commitments and capacity.

The last may prove to be a trifle controversial because it judges countries on "societal factors", which include political instability and corruption.

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US-INDIA-JAPAN CONSULTATIONS

2012-01-14T01:05:00.001-08:00

ASIA'S NEW TRIPARTITE ENTENTE

Brahma Chellaney

The Japan Times, January 14, 2012

NEW DELHI — The launch of trilateral strategic consultations among the United States, India and Japan, and their decision to hold joint naval exercises this year, signals efforts to form an entente among the Asia-Pacific region's three leading democracies. These efforts — in the world's most economically dynamic region, where the specter of a power imbalance looms large — also have been underscored by the Obama administration's new strategic guidance for the Pentagon. The new strategy calls for "rebalancing toward the Asia-Pacific" and support of India as a "regional economic anchor and provider of security in the broader Indian Ocean region."

At a time when Asia is in transition and troubled by growing security challenges, the U.S., India, and Japan are seeking to build a broader strategic understanding to advance their shared interests. Their effort calls to mind the pre-World War I Franco-British-Russian "Triple Entente" to meet the threat posed by the rapid rise of an increasingly assertive Germany.

This time, the impetus has been provided by China's increasingly muscular foreign policy. But unlike the anti-German entente a century ago, the aim is not to contain China. Rather, U.S. policy is to use economic interdependence and China's full integration into international institutions to dissuade its leaders from aggressively seeking Asian hegemony.

Indeed, the intention of the three democratic powers is to create an entente cordiale without transforming it into a formal military alliance, which they recognize would be counterproductive. Yet this entente could serve as an important strategic instrument to deter China's rising power from sliding into arrogance. The three partners also seek to contribute to the construction of a stable, liberal, rules-based regional order.

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TAIWAN’S ELECTIONS

2012-01-13T00:47:00.001-08:00

EXCITING TIMES FOR TAIWAN

Joe Thomas Karackattu

Institute for Defence Studies and Analyses , January 13, 2012

Taiwan President Dr. Ma Ying-jeou is seeking a second four-year team and is running against his main opponent DPP Chairperson Dr. Tsai Ing-wen. Even though the polls post a three-way contest, it is largely a two-way one as the PFP candidate, Dr. James Soong, would likely be engaged in a tug-of-war with the KMT electoral base (pulling away a lot of undecided voters), rather than hurting the decidedly DPP-camp voter. Ma Ying-jeou’s campaign is largely driven on the plank of economic gains promised to the people of Taiwan, chiefly through the signing of the Economic Cooperation Framework Agreement (ECFA) in July 2010 (tariff reductions beginning w.e.f. January 2011) between the People’s Republic of China (PRC) and Taiwan. It is true that Taiwan, like many other countries, has faced the double-dip recession in the US and Europe with creditable success, and the ECFA was responsible for some of this economic gain. Taiwan’s real GDP grew by 10.72 per cent in 2010 (believed to be the highest GDP growth rate since 1987), and the growth rate for the first half of 2011 was 5.54 per cent. Steps such as permits to Mainland tourists brought in over $2 billion into Taiwan in tourism alone. Despite lagging global recovery, the Directorate-General of Budget, Accounting and Statistics projects the economic growth forecast for 2012 at 4.19 per cent, with per capita GDP at $20,472.

However, the implementation of the ECFA early harvest programme in the last year has included only a limited set of products, and the real effects of the agreement would only be realised in the second stage which commences this year (tariffs on 94.5 per cent of listed items would be reduced to zero by the end of the year involving 437 of the 500 Taiwan product categories). Also, the 2010 growth figures belie the low baseline of the 2009 growth statistics from a post-recession year and hence should not be overhyped. Recent surveys such as the one by Commonwealth Magazine indicate that 45.5 per cent of Taiwan’s top 1000 CEOs surveyed believe that the ECFA has not yet had any influence on Taiwanese companies but is expected to help in the future; 34.9 per cent said ECFA has had no impact on gains for Taiwan. With or without the ECFA, there have been no noticeable gains on gathering more economic and political space internationally - relations with ASEAN, and with other countries outside the region have been in the ‘business as usual’ mode.

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MALNUTRITION IN INDIA

2012-01-12T00:01:00.001-08:00

INDIA’S CHRONIC BATTLE WITH MALNUTRITION

Ruth Fremson

The New York Times, January 12, 2012

Malnutrition in India is worse than in many African nations, stunting the growth of children like this girl in Shivpuri, photographed in November 2008.

“It is unrealistic to expect any major breakthroughs in dealing with the diets of impoverished Indians,” a correspondent wrote in The New York Times in an article on Oct. 23, 1981.

While the words were written thirty years ago, they might have been written this week.

Prime Minister Manmohan Singh said Tuesday that India faced “national shame” because 42 percent of children below the age of five are underweight. The survey he referred to also found that India has failed to significantly improve the diet of almost half of its children, despite two decades of economic growth, because of everything from lack of coordination between government departments to continued lack of maternal education.

Just as it did thirty years ago, malnutrition looms large in India, and by some measures seems to be getting worse. In the twenty years preceding 1981, “per capita intake of calories has dropped from 93 percent of daily requirements to 91 percent,” The New York Times wrote. At the time, India’s population was 680 million.

Despite the recent boom years of the 1990s and 2000s, there has been little improvement in overall nutrition in India, according to United Nations data. About 20 percent of India’s over 1 billion population remained “undernourished” during that time, meaning their “food intake regularly provides less than their minimum energy requirements.” The most recent “Global Hunger Index” shows that two-thirds of the 122 developing countries studied had reduced hunger levels in recent years, but that hunger levels in India have increased.

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NORTH KOREA’S MILITARY THREATS

2012-01-11T00:16:00.001-08:00

SOUTH KOREA THINK-TANK WARNS OF NORTH'S "MILITARY ADVENTURISM"

Jeremy Laurence

Reuters, January 11, 2012

SEOUL (Reuters) - North Korea's young new leader Kim Jong-un will likely order a third nuclear test or another missile launch later this year to boost his military image and consolidate his grip on power, a government think-tank in Seoul said on Wednesday.

The foreign ministry institute warned of "military adventurism" by the young Kim, and predicted the tests in the second half of this year or early 2013 around the time of the South's presidential election.

"North Korea could raise tension by test-launching a missile and conducting a third nuclear test as Kim Jong-un needs to demonstrate his leadership and consolidate his grip on the regime," the Institute for Foreign Affairs and National Security (IFANS) said in the report.

The young Kim, named the "great successor" after his father Kim Jong-il's death last month, has focused quickly on promoting a hardline image to win the backing of the military.

Analysts say Kim is intent on proving he will stick by his father's "songun," or military-first, doctrine, which steers most of the country's limited finances toward running the 1.2 million-strong army, even as much of the rest of the population goes hungry.

On Sunday -- a day believed to be Kim Jong-un's birthday -- state television broadcast a 50-minute documentary showing the new "supreme leader" mixing with generals and ordinary soldiers, driving a tank and brandishing a rifle.

In the video the then leader Kim Jong-il lauded his son's outstanding military strategies. He is quoted as describing him as a "genius among geniuses."

The footage of the young Kim directing and mingling with military figures dated back to at least 2009, and coincided with a long-range rocket launch and second nuclear test in that year. Analysts say those tests were in some part planned by the young Kim and designed to shore up the military's support for his succession.

Video showed him shaking hands with officials at the launch site, and quoted him as saying he would have waged "a real war if the enemies" had shot down the rocket, which the North said was carrying a satellite.

Japan had threatened to shoot down any down any debris heading towards its territory.

The outside world viewed the launch as disguise for a test of a long-range missile, designed to reach Alaska States. It failed to enter orbit.

Washington warned last year that North Korea is becoming a direct threat to the United States and could develop an inter-continental ballistic missile within five years.

(...) [artículo aquí]

THE SLOWDOWN OF CHINA’S TRADE

2012-01-10T00:10:00.001-08:00

CHINA TRADE GROWTH SLOWS TO 2-YEAR LOWS IN DECEMBER

Koh Gui Qing

Reuters, January 10, 2012

BEIJING (Reuters) - China's exports and imports grew at their slowest pace in more than two years in December as foreign and domestic demand ebbed, data showed on Tuesday, bolstering expectations of more policy action from Beijing to support the world's number two economy.

Annual export growth of 13.4 percent in December was in line with expectations, albeit the slowest since November 2009 except for a February distortion caused by Lunar New Year holidays.

But it was a big downside surprise for import growth that caught investor attention, sinking to a 26-month low of just 11.8 percent year-on-year versus the 17 percent forecast by economists in the benchmark Reuters poll.

"We thought imports would surprise quite a bit on the downside and generally the implication is negative. Domestic demand is slowing down very quickly," Zhang Zhiwei, chief China economist at Nomura in Hong Kong, told Reuters.

Zhang said the scale of drops in annual import growth for domestic consumption, at 13.5 percent in December versus November's 27.4 percent, and imports for processing trade at 6.2 percent versus about 11 percent in November, were crucial.

"That means going forward for the next couple of months exports will decline with a very high certainty," he said. "This trade data basically confirms our view that the first quarter is going to be very tough."

The December trade data is a key link in a series of activity indicators to be published by China over the next two weeks, including fourth-quarter gross domestic product that is likely to show the world's second-largest economy suffering its worst quarter in 2- years.

Financial markets took the data in their stride, with hopes that it will prompt a relaxation of monetary policy offsetting fears over slowing growth.

Gains in Chinese stocks accelerated modestly after the data, with Shanghai's main index up around 1.6 percent by 0515 GMT, broadly in line with other Asian markets outside Japan, while the yuan strengthened to 6.3122 per dollar.

(...) [artículo aquí]

A CHINESE SLUMP?

2012-01-09T01:05:00.001-08:00

IS A CHINESE ECONOMIC SLUMP ON THE HORIZON?

Robert J. Samuelson

The Washington Post, January 9, 2012

Even China? Could the world’s economic juggernaut, having grown an average of 10 percent annually for three decades, face a slowdown or what for China would be a recession? Does it have a real estate “bubble” about to “pop”? What would be the global consequences? Treasury Secretary Timothy Geithner visits China and Japan this week. These questions form a backdrop. With Europe’s slump and America’s sluggish economy, a sizable Chinese slowdown would be bad news.

China inspires ambivalence. Its policies — especially its undervalued exchange rate — are skewed to give it an advantage on world markets. This has cost jobs in the United States, Europe and developing countries. Still, China is now such a powerful economic force that an abrupt slowdown would ripple beyond its borders. Trade would suffer. China’s protectionism might intensify to offset job loss. If surpluses of steel and other commodities were dumped on world markets, prices and production elsewhere would fall.

There are warning signs. Economist Nicholas Lardy of the Peterson Institute cites three. First, Europe’s slump has weakened China’s trade; Europe buys about a fifth of its exports. Second, housing is showing signs of a bubble and is deflating. Finally, China’s government will have a harder time deploying a stimulus than during the 2008-09 financial crisis. Government debt rose from 26 percent of gross domestic product in 2007 to 43 percent of GDP in 2010.

How all this affects China’s growth is controversial. “Most likely, China will have a soft landing,” says Justin Yifu Lin, the World Bank’s chief economist. “Growth goes to 8 percent or 8.5 percent.” That’s down from about 9 percent in 2011. Government debt is still low enough to permit ample stimulus, Lin thinks. Many forecasts agree.

(...) [artículo aquí]

CHINA’S CHALLENGES IN 2012

2012-01-08T00:48:00.001-08:00

CHINA’S 2012 CHALLENGES

From slowing economic growth, to inflation and mass incidents, China faces some big challenges in 2012.

Andrew S. Erickson & Gabe Collins

The Diplomat, January 8, 2012

China enters the New Year confronting challenges and opportunities that will be shaped in turn by how its government and populace respond to them. Here outlined are twelve key items and issues that will help define 2012 for China, both at home and abroad. 2012 will be a “two-level” year in which internal and external factors are linked ever-more-clearly. As a new generation of leadership prepares to govern China, millions of citizens and netizens and their foreign counterparts will be watching Beijing’s actions more closely than ever before.

1) The run-up to Beijing’s once-in-a-decade political transition in October 2012 is likely to generate intensified clampdowns internally and assertive rhetoric abroad as China faces rising domestic challenges, and finds itself constrained internationally. Fearful neighbors may further strengthen ties with the United States. Pariah/failed state “allies” North Korea, Pakistan, and Iran will likely experience problems that affect China’s own interests. Externally, China is likely to be more intransigent than before. Internally, Beijing will resist making difficult decisions about economic reforms, particularly reforms that might harm key state-owned enterprises and monopolistic/oligopolistic concerns connected with families of political elites. Domestically and internationally, Chinese leaders will attempt to postpone difficult policy decisions until after the transition.

(...) [artículo aquí]

JAPAN’S POPULAR CULTURE

2012-01-07T00:52:00.001-08:00

WHAT'S REALLY COOL ABOUT JAPAN

Hanscom Smith

The Japan Times, January 7, 2012

Japanese Foreign Minister Koichiro Gemba's recent visit to Beijing included a stop at the Japan Animation Festival, part of the government's ongoing series of public events designed to showcase Japan's popular culture. Since 2007, the Foreign Ministry has established an International Manga Award and named an Anime Ambassador, among other initiatives designed to capitalize on foreign interest in Japan's vibrant cultural scene. There is certainly nothing wrong with Doraemon, Super Mario, and other "Made in Japan" pop icons.

The use of cultural exchange to improve Sino-Japanese relations, in particular, should be welcomed by everyone in the region. And increasing the exposure of Japanese products is definitely good for their corporate parents' bottom line. A heavy official emphasis on "Cool Japan", however, risks diluting the potency of the "Japan Brand" hip factor — while at the same time distracting attention from the real source of Japan's attraction.

You can't capture "cool" in a bottle. When governments try to identify themselves with trends prevalent among youth, they may inadvertently undermine the counter-culture ethos that so often sparks creativity.

(...) [artículo aquí]

CHINA’S SLOWER GROWTH

2012-01-06T00:42:00.001-08:00

LEARNING FROM EXPERIENCE

China's economy is entering a period of slower growth and the government should heed the lessons of other countries

Liu Shijin

China Daily, January 6, 2012

China's economy has enjoyed an annual growth of 10 percent over the past 30 years, but how long can such high-speed growth last?

According to studies by the Development Research Center of the State Council, China's growth pattern is similar to that of Germany, which experienced a slowdown in the late 1960s, Japan, which experienced a slowdown in the early 1970s: and South Korea, which experienced a slowdown in the late 1990s. There are already signs emerging that China's growth rate will slow in the next few years.

First, infrastructure investment, the most important engine of growth, is declining as a proportion of total investment. In 2006, it was more than 30 percent, while it dropped to around 22 percent in 2011. As China's high growth rate is mainly driven by its huge investment in infrastructure, if infrastructure investment drops, growth rate will slow.

Second, in the last three years, the growth rate of the provinces and municipalities with good economic performance along the southeast coast, whose total GDP accounts for more than half of the national GDP, has lagged behind other regions.

Third, people are worried about potential risks in local governments' financing platforms and in the real estate market. To be more specific, people are concerned whether their investments in these areas will pay off. According to our research, the potential gains in these areas are not particularly great.

Taking all these signs into consideration, it seems the transition from high-speed growth to intermediate-speed growth may have already begun.

(...) [artículo aquí]

INDIA’S POLITICAL ECONOMY

2012-01-05T00:54:00.001-08:00

REVERSING INDIA'S DOWNWARD TRAJECTORY

Shyam Ponappa

Rediff, January 5, 2012

The welter of confusing pulls and pushes on India's political economy makes finding the way forward really difficult.

The government apparently cannot sustain economic reform initiatives, and does not have the finances for a stimulus package.

The private sector is sitting on cash, but cannot invest because it is facing slowing growth and reducing margins. Known problem areas in infrastructure cannot absorb investment despite critical shortages in output - power generation and distribution is an example.

Is there really nothing that can be done but to wait and watch while everything slowly grinds down?

The circumstances are formidable: a cantankerous Opposition using scorched-earth tactics, an anarchic citizenry usurping law-making functions after the abdication by the government and the Opposition, and an administration stupefied by the CAG phantom and other witch-hunts, with media Rottweilers searching through the carnage for the scandal-of-the-day.

This article identifies critical factors at the heart of the matter, and suggests remedial action. Slowing growth is the primary problem, and can be reversed without political manoeuvring.

Some underlying factors that drive everything else need to be recognised and dealt with. For India at this stage, growth is all-important. This is the issue to be recognised and addressed.

(...) [artículo aquí]

THE DIVERSITY OF THE BRICS

2012-01-04T00:38:00.001-08:00

BRICS STRONGER, BUT NOT ALWAYS IN UNISON

Fin24, January 4, 2012

Sao Paulo - A slow but steady shift in the global balance of power toward the China-led Brics club of emerging nations was confirmed in 2011, but it will take some time before its members can speak with one voice, experts say.

The Brics - Brazil, Russia, India, China and South Africa - now account for roughly 18% of the world's GDP, 40% of its population, 15% of global trade and hold 40% of global currency reserves.

With a combined GDP totaling nearly $14 trillion, their economies have accounted for 30% of global economic growth since Goldman Sachs coined the BRIC acronym in 2001.

Intra-Brics trade, which stood at $230bn in 2010, now amounts to 8% of global trade.

The London-based Center for Economics and Business Research (CEBR) said in a report last month that Brazil has supplanted Britain as the sixth largest economy behind the United States, China, Japan, Germany and France.

(...) [artículo aquí]

INDIA’S NATIONAL SECURITY

2012-01-03T00:01:00.001-08:00

INDIA IN 2012: STRATEGIC AND SECURITY CHALLENGES BECKON

The greatest challenge to India is that its political class seems oblivious to the challenges of the big picture and national security does not receive the attention it warrants in Parliament

C Uday Bhaskar

Rediff, January 03, 2012

For India, the year that has dawned will have to address a complex set of security and related strategic challenges. Appropriate lessons will have to be astutely gleaned from the tainted year that has ended which has been one of great contrast for India.

A series of scandals involving high-profile public figures had rocked the country over the last six months and December witnessed the Indian political establishment in great tumult, even as Parliament remained locked in a bitter, arid, struggle over the issue of corruption and the most appropriate way of dealing with it, as symbolised by the ruckus over the Lokpal Bill.

The last sitting in the Rajya Sabha reveled in cynical legislative obfuscation and at year-end, Indian democracy was diminished.
Yet 2011 began with India being hailed as an island of political and economic stability even while other nations and regions were in ferment -- from the Arab Spring to fiscal convulsions in Europe, turbulence in the Af-Pak region and Iran and the growing social unrest in China.

However, notwithstanding the current domestic political contestation between the Congress and the Bharatiya Janata Party, it may be reasonable to suggest that India's political stability is not in dire danger -- this government is unlikely to be toppled in a hurry -- though the ignominy of poor and corruption-tainted governance will be a cross that the United Progressive Alliance II will have to bear till the next general election in 2014.

(...) [artículo aquí]

THE ASIAN ECONOMIES IN 2012

2012-01-02T00:04:00.001-08:00

ASIA-PACIFIC MARKETS POISED FOR GROWTH IN 2012: REPORT

A Moody Analytics report looks at how the global slowdown will impact the Asian economies.

The Economic Times, January 2, 2012

Asian economies enter 2012 in the middle of a global economic slowdown due to tighter domestic monetary conditions and weaker export demand from Europe and the US. However, according to Moody Analytics, Asia-Pacific economies will grow in 2012, especially in the second half. This is because the region's fundamentals are sound and its policymakers have ample ammunition to support growth.

The major driver of the growth in Asia is China, as it is the number one export destination for regional countries. Though recent Chinese data confirm that the economy is slowing, it is a government engineered one. The stiff monetary conditions, fiscal tightening and property restrictions are slowing the economy at a manageable rate. Moody Analytics expects the country's GDP growth at 8.7% in 2012 driven by public infrastructure spending and firm domestic demand.

However, Asia's small export-led economies remain vulnerable. Taiwan, Singapore and Hong Kong are among the most trade-exposed and will tip back into recession if the global economy slows significantly in 2012. South Korea is in the unique position of producing what fast-growing emerging markets want and at a price point they can afford. For Thailand, the fourth quarter floods knocked out autos and electronics production, which could have an impact on the Japanese economy. This is because many flood-affected firms are suppliers for Japanese industry.

(...) [artículo aquí]

CHINA’S SLOWDOWN

2012-01-01T01:42:00.001-08:00

CHINA FACTORIES STRUGGLE, POLICY ACTION SEEN AHEAD

Kevin Yao

Reuters, January 1, 2012

BEIJING (Reuters) - China's big manufacturers narrowly avoided a contraction in December a survey showed on Sunday, but downward risks persist and suggest the world's second's second-largest economy will need fresh policy support to counter a slowdown in growth.

The official purchasing managers' index, complied by the China Federation of Logistics and Purchasing on behalf of the National Bureau of Statistics, rose to 50.3 in December from 49 in November.

That indicated a slight expansion in business activity in China's vast factory sector, but the reading was barely above the flatline of 50 that demarcates expansion from contraction which the index fell below in November for the first time since early 2009.

Analysts had expected the official PMI to be at 49.1 in December.
"The rebound in the December PMI shows that there will be no big slowdown in the Chinese economy," Zhang Liqun, a researcher with the Development Research Centre of the State Council, wrote in the CFLP statement.

The economy faces downward pressure but there are positive elements that could underpin growth, Zhang said.

The new orders sub-index rose to 49.8 in December from 47.8 in November while the sub-index for new export orders rose to 48.6 from November's 45.6.

A similar survey on Friday by HSBC and UK-based data provider, Markit, which captures data from smaller factories, inched up to 48.7 in December from a 32-month low of 47.7 in November but still signalled a modest contraction in activity on the month, reinforcing the case for pro-growth policies.

(...) [artículo aquí]

CHINA’S ECONOMY IN 2012

2011-12-31T00:03:00.001-08:00

WHY CHINA'S ECONOMY WILL GROW STRONGLY IN 2012

John Ross

China.Org, December 31, 2011

As 2011 draws to an end, it is a suitable moment to look at China's economic prospects for next year. The overall perspective is clear – China's economy will continue to grow strongly, remaining the world's fastest growing major economy, and it will outperform Western pessimists predictions on the upside. This is overall the same prediction this column made for the last two years and results showed this to be factually correct - as opposed to the opposite perspective. Given accurate or inaccurate predictions do not depend on the personal characteristics of those making them, but of different fundamental analyses, what therefore leads to such repeatedly correct and incorrect projections regarding the growth path of China's economy?

The core issue is simple but difficult for many non-Chinese analysts to admit, despite constant confirmation by the facts and repeated falsified predictions of serious slowdown. The core is that statements by Chinese analysts that China has a stronger economic structure to the US and Europe, and that this therefore produces stronger economic performance, is not a boast but actually factually correct. As this stronger character of China's economic structure is not understood by many Western analysts, they therefore systematically, and each year, underestimate China's economic growth potential. However as a difficulty for non-Chinese analysts is that sometimes explanations of this economic strength are posed solely in terms of specifically 'Chinese characteristics,' it is therefore worth spelling out more generally why China has a stronger economic structure than the US and Europe, and how this relates to economic issues that will be faced in 2012.

(...) [artículo aquí]

INDIA’S ECONOMIC DIFFICULTIES

2011-12-30T00:02:00.001-08:00

ALL FALL DOWN

The Indian economy can no longer build castles in the air

Ashok Mitra

The Telegraph (Kolkotta, India), December 30, 2011

It was going to happen sooner or later; it has now happened. The gross domestic product growth party, all signs indicate, is over. Refusal to recognize this hard reality serves no good to either the government or the puffed-up India Incorporated. Indian economic growth over the past couple of decades is basically the narrative of a dependent economy. The economy has grown because the export sector has expanded at a spectacular pace. Even as late as in the early 1980s, the country’s exports were barely around 5 per cent of the GDP. A restrictive regime tried to keep imports, too, down to the same limit. The stress in policy-making since Independence was on promoting growth via import substitution. The rationale behind that policy had enough of credibility. The country had ample reserves of natural, including mineral, resources; it had almost unlimited supply of labour; it also had an infrastructure of scientific and technological skills which, while still narrowly based, promised to be capable of both improvisation and innovation. It was silly to export raw materials and minerals when these could be utilized at home for industrial processing, thereby propelling growth and creating employment.

(...) [artículo aquí]

ROACH ON INDIA AND CHINA

2011-12-29T00:09:00.001-08:00

WHY INDIA IS RISKIER THAN CHINA

But while the latter is in better shape, neither economy is likely to implode on its own

Stephen S Roach

Today, Dec 29, 2011

Asia's developing and newly industrialised economies grew at an 8.5 per cent average annual rate over 2010-11 - nearly triple the 3 per cent growth elsewhere in the world. If China and India are next to fall, Asia would be at risk, and it would be hard to avoid a global recession.

In one important sense, these concerns are understandable: Both economies depend heavily on the broader global climate.

China is sensitive to downside risks to external demand - more relevant than ever since crisis-torn Europe and the United States collectively accounted for 38 per cent of total exports in the past year. But India, with its large current-account deficit and external funding needs, is more exposed to tough conditions in global financial markets.

(…) [artículo aquí]

TAIWAN AND CROSS-STRAIT RELATIONS

2011-12-28T00:01:00.001-08:00

TAIWAN’S MA STAKES RE-ELECTION ON CHINA TIES

Janet Ong and Robyn Meredith

Bloomberg, December 28, 2011

Taiwan President Ma Ying-jeou said his rapprochement with China will encourage other nations to strengthen trade with the island and make it less dependent on the mainland, rebutting opposition criticism that he’s left the economy more vulnerable.

“Taiwan has transformed its role from a troublemaker to a peacemaker,” Ma, vying for a second four-year term in Jan. 14 elections, said in an interview in his Taipei office. “We’re seeing more windows and doors being opened for Taiwan because of improved cross-strait relations. They have lowered their concerns in developing relations with us, the logic being: If Beijing can develop better relations with Taiwan, why can’t we?”

Ma’s lead with voters has narrowed as slower growth in the export-reliant economy deepens concern over a wealth gap the opposition blames in part on Taiwanese jobs going to the mainland. Victory at the polls may turn on how close Taiwanese want China ties to be, said Alexander Huang, a professor of strategy and war-gaming at Tamkang University’s Graduate Institute of International Affairs.

With the impact of Europe’s debt woes contributing to the weakest gain in exports in two years last month, Ma said in the Dec. 23 interview that he expects the crisis to worsen in the first quarter. In the hour-long session, he called on China to remove missiles still pointed at Taiwan, said his administration isn’t considering investing in Chinese bonds and cautioned against overreacting to the death of Kim Jong-Il in North Korea.

(...) [artículo aquí]

INDIA AND JAPAN

2011-12-27T00:03:00.001-08:00

IT’S WIN-WIN FOR INDIA AND JAPAN

Rohit Viswanath

DNA, December 27, 2011

Japanese Prime Minister Yoshihiko Noda arrives in New Delhi today to participate in the Sixth Annual Summit between the two countries. The visit comes at a crucial juncture in contemporary geopolitics. It closely follows the first trilateral meeting between the United States, India and Japan held in Washington, DC on December 19. The Washington meet was clearly aimed at containing China, which is being perceived as becoming increasingly aggressive in the Indo-Pacific, a region of great significance to the three countries. Further, the death of Kim Jong Il, the North Korean leader who led the country to become an intimidating nuclear power, has led to further uncertainty in the region.

With the West reeling under severe financial crisis, Asia is being looked upon as the propeller of the global economy. It now accounts for 35% of the world’s GDP, up from less than 20% in 1980. Over the last 30 years, developing Asia has surpassed the rest of the world in recording a phenomenal GDP growth of 7.2 per cent. Japan perhaps may well be the fastest growing developed economy in 2012.

India and Japan have strengthened bilateral relations in recent years through new initiatives in the spheres of economic and cultural linkages to defence and security co-operation. It is hence no surprise that Japan and India’s leaders will devote considerable attention to reviewing this Strategic and Global Partnership. The two have shared interests in maintaining the security of sea lanes from Djiboiti in the Horn of Africa to Port Blair all the way up to the East China Sea. Cooperation for fighting international crime, terrorism, piracy and proliferation of weapons of mass destruction is of vital importance to them.

(…) [artículo aquí]

AN INDO-PACIFIC CENTURY?

2011-12-26T00:28:00.001-08:00

PUTTING CHINA IN ITS PLACE: TOWARDS AN INDO-PACIFIC CENTURY

Rajeev Srinivasan

Firstpost, December 26, 2011

There have been a number of events, including a few unexpectedly dexterous moves by India, in the recent past that suggest a new set of strategic imperatives may well be emerging in Asia. In sum, there has been, for the first time, a mild pushback against the rampaging Chinese. But the Chinese may yet have the last laugh, though.

The Indian role in all this is a little surprising, but welcome nonetheless. Whether India suddenly grew a bit of a spine – after 50 years of supine “bhai-bhai” drivel – or whether Uncle Sam gave it some Dutch courage through pep-talk is not clear. Nevertheless, it is a welcome move, because of the usual Chinese modus operandi: make outrageous claims; if challenged, retreat; if not, push the claim further.

There are two aspects to all this: one, is there anything tangible and real about the moves, or is it all smoke and mirrors? And two, the importance of marketing and branding that Indians seem blissfully ignorant about, and implications for soft power.

(...) [artículo aquí]

INDIA’S ECONOMY, 1991-2011

2011-12-25T00:01:00.001-08:00

ZERO REFORM SOCIETY: HAS THE ECONOMY GONE TO THE DOGS?

Srivatsa Krishna

The Times of India, December 25, 2011

An unprecedented fiscal deficit heading northwards of 5.4% of GDP; probably the highest ever-current account deficit in India's modern economic history; a crisis in the Middle Eastand rising oil prices; huge governance and institutional challenges with a weak minority government, along with a paralysis of decision-making and reforms.

Did you think i was talking about 2011? No! I was actually talking about 1991; exactly 20 years ago and the similarities couldn't be eerier or starker. So is India's economic miracle getting over?

From 1991 till today the progress has been remarkable. An infrastructure-constrained, foreign capital inflows-starved, democracy-adjusted economy moved to a 8-9% rate of growth, reduced poverty from about 46% to 31%; savings rate shot up from 22% to 36%, and per capita income moved from $300 to $1800 during these two decades. Not at all an unimpressive achievement, considering the fact that the period has seen five, 24 or 25-party coalition governments, and yet the direction of reforms so far has been by and large progressive.

(...) [artículo aquí]

CHINA IN THE SEYCHELLES

2011-12-23T01:55:00.001-08:00

CHINA'S RISE GETS A NEW DIMENSION: MILITARY BASES ABROAD

China realises that its maritime strength will give it the strategic leverage it needs to emerge as the regional hegemon and a potential superpower.

Harsh V Pant

Rediff News, December 23, 2011

So finally it is out in the open. China will be setting up its first military base abroad in Seychelles to "seek supplies and recuperate" facilities for its Navy.

Seychelles has defended its decision by suggesting that it has invited China to set up a military base to tackle piracy off its coast and Beijing has played it down by underlining that it is standard global practice for naval fleets to re-supply at the closest port of a nearby state during long-distance missions. But there should be no ambiguity for the rest of the world: Chinese footprint in the Indian Ocean has got bigger and will continue to get bigger in the coming years.

China's foreign policy thinkers and political establishment have long been trying to convince the world that Beijing's rise is meant to be a peaceful one, that China has no expansionist intentions, that it will be a different kind of great power. Of course, the very nature of power makes this largely a charade, but more surprising is that western and Indian liberals have tended to take these assertions at face value. There is an entire industry in the West as well as in India that would have us believe that China is actually a different kind of a great power and that if the west could simply give China a stake in the established order, Beijing's rise would not create any complications.

(...) [artículo aquí]

LA SUCESIÓN EN COREA DEL NORTE

2011-12-22T00:08:00.001-08:00

ESCENARIOS ABIERTOS EN LA TRANSICIÓN

Pablo Bustelo

El País, 22 de diciembre de 2011

La muerte de Kim Jong-il abre un periodo de transición potencialmente peligroso no solo para la península coreana, sino para toda la región del noreste de Asia y sus delicados equilibrios de seguridad. Las razones son bien conocidas. En primer lugar, las ambiciones nucleares de Corea del Norte, que, de mantenerse, pueden generar proliferación en la zona, además del riesgo, siempre presente, de accidentes en instalaciones vetustas. En segundo término, el comportamiento agresivo del régimen de Pyongyang, como se vio el año pasado, con el hundimiento de la corbeta Cheonan (46 muertos) y el bombardeo de la isla de Yeonpyeong (4 muertos).

La desaparición del Querido Líder en 2011 no es comparable a la de Kim Il-sung en 1994. El país es más pobre y más inestable. El sucesor de entonces tenía 53 años y llevaba 14 preparándose para tomar las riendas del país. El de ahora, de 29 años, fue nombrado sucesor en septiembre de 2010 y no tiene ninguna experiencia política o militar.

(...) [artículo aquí]

WILL KIM JONG-UN HELP NORTH KOREA?

2011-12-21T02:14:00.001-08:00

HERE’S HOPING A YOUNGER KIM WILL HELP NORTH KOREA

Gordon Houlden

The Globe and Mail, December 21, 2011

The passing of Kim Jong-il constitutes a political earthquake in the Democratic People’s Republic of Korea. The North Korean transition is being accompanied by the ritualized mourning that followed the death of his father, Kim Il-sung, in 1994. But this period immediately following Kim Jong-il’s death is also being closely scrutinized by foreign ministries and intelligence agencies, who will be alert to the implications for the stability of the Korean Peninsula given the million-strong Korean People’s Army, whose nuclear and missile capacity threatens South Korea, Japan and U.S. forces in East Asia.

Kim Jong-il was never as robust as his father, who served 46 years as top leader in North Korea until being named “Eternal President” in the DPRK constitution following his death. Kim Jong-il never achieved the same profile as his father, either within North Korea or internationally, but neither was he pushed aside by party or military rivals as many observers had expected he would be.

North Korea’s achievement of nuclear weapons status took place on Kim Jong-il’s watch, and perhaps more remarkably, a regime that many had predicted would collapse in the early 1990s following the collapse of the Soviet Union managed to survive, outlasting almost all communist states.

What Kim Jong-il never managed to do was to undertake a reform of North Korea’s feeble economic base. During visits to North Korea over two decades, I found little interest in reform of any sort. China repeatedly organized tours for him of China’s reformed state enterprises, and lively commercially focused cities, but with no significant or successful subsequent uptake by Pyongyang.

Surrounded by states that are either prosperous or en route to prosperity, North Korea maintained its brittle stability through self-imposed isolation from the international community. North Koreans are dependent on the scraps of information that filter through the official media, and are closely supervised by agents of the ruling Workers’ Party of Korea.

(...) [artículo aquí]

NK: POWER IN THE DARKNESS

2011-12-20T00:19:00.001-08:00

ANALYSIS - THE POWER BEHIND THE THRONE IN NORTH KOREA

Jack Kim

Reuters, December 20, 2011

SEOUL (Reuters) - Real power in North Korea now probably belongs to a coterie of advisers following the death of Kim Jong-il, not his youngest son, an untested man in his 20s who has been anointed the "Great Successor."

These advisers will decide whether North Korea launches military action against South Korea to strengthen the succession around Kim Jong-un -- or seeks a peaceful transition.

Confucian respect for age and the influence of the military means the younger Kim lacks the untrammelled authority of his father or grandfather, North Korean founder Kim Il-Sung.

The most powerful adviser is Jang Song-thaek, 65, brother-in-law of Kim Jong-il.

Jang is a survivor of the bloody tradition of purge and political rehabilitation that kept the two elder Kims in power for more than six decades.

"Jang has played a considerable role during Kim Jong-il's illness of managing the succession problem and even the North's relations with the United States and China," said Yang Moo-jin of the University of North Korean Studies.

"Jang is in overall charge of the job of making it formal for Kim Jong-un to be the legal and systematic leader by pulling together the party and the military."

Jong-un is Kim Jong-il's third known son and was given official titles only last year. He was hailed by state media this week as the "Great Successor" to his father, who died on Saturday of a heart attack.

Jang had the full backing of his brother-in-law, who named him to the National Defence Commission in 2009, the supreme leadership council Kim Jong-il led as head of the military state.

That appointment was part of a flurry of moves Kim Jong-il made following a stroke in 2008 which probably brought home the reality that, unlike his father at his death in 1994, he was unprepared for a trusted son to take over.

The commission has been the pinnacle of power in North Korea and which Kim had used to preach his own version of political teaching called Songun, or "military first."

The naming of Jang as a vice chairman of the commission effectively catapulted him to the second most powerful position in the country.

(...) [artículo aquí]

THE DEATH OF KIM JONG IL

2011-12-19T00:33:00.001-08:00

KIM JONG IL’S NUCLEAR AMBITIONS, THREATS STOKED WORLD SECURITY FEARS

Associated Press

The Washington Post, December 19, 2011

SEOUL, South Korea — Kim Jong Il, the mercurial and enigmatic North Korean leader whose iron rule and nuclear ambitions dominated world security fears for more than a decade, has died. He was 69.

Kim’s death 17 years after he inherited power from his father was announced Monday by the state television from the North Korean capital, Pyongyang. The country’s “Dear Leader” — reputed to have had a taste for cigars, cognac and gourmet cuisine — was believed to have had diabetes and heart disease.

North Korea has been grooming Kim’s third son to take over power from his father in the impoverished nation that celebrates the ruling family with an intense cult of personality.

Kim’s longtime pursuit of nuclear weapons and his military’s repeated threats to South Korea and the U.S. have stoked fears that war might again break out or that North Korea might provide weapons of mass destruction to terrorist movements.

South Korea put its military on “high alert” and President Lee Myung-bak convened a national security council meeting after the news of Kim’s death. The two Koreas remain technically in a state of war more than 50 years after the peninsula’s Cold War-era armed conflict ended in a cease-fire.

Kim is believed to have suffered a stroke in 2008 but he had appeared relatively vigorous in photos and video from recent trips to China and Russia and in numerous trips around the country carefully documented by state media.

(...) [artículo aquí]

KOREA, JAPAN AND THE “COMFORT WOMEN” ISSUE

2011-12-18T00:02:00.001-08:00

LEE URGES JAPAN TO 'MUSTER UP COURAGE' TO RESOLVE 'COMFORT WOMEN' ISSUE

Chang Jae-soon

Yonhap News

South Korean President Lee Myung-bak urged Japan Sunday to "muster up courage" and resolve long-running grievances over Tokyo's wartime sexual enslavement of Korean women, calling the issue a "stumbling block" to the improvement in relations between the two countries.

Lee made the appeal during summit talks with Japanese Prime Minister Yoshihiko Noda held in this ancient Japanese city of Kyoto under the shadow of fresh tensions over the issue of the so-called "comfort women."

Historians say that tens of thousands of Asian women, mostly Koreans, were forced to work at front-line brothels for Japanese soldiers during the war. Korea was a colony of Japan from 1910 to 1945.

"South Korea and Japan should become true partners for peace and stability in the region, and for that, we need to have the genuine courage of resolving as a priority the issue of military comfort women, which has been a stumbling block between the two countries," Lee said at the start of the meeting.

(...) [artículo aquí]

CHINA’S NEW ENERGY STRATEGY

2011-12-17T00:40:00.001-08:00

CHINA TO UNVEIL NEW ENERGY CONSUMPTION STRATEGY

Lan Lan

China Daily, December 17, 2011

BEIJING - China is set to unveil a plan to impose controls on total energy consumption, said Zhang Ping, director of the National Development and Reform Commission (NDRC) on Friday.

The new plan, together with an energy-intensity target that has already been set for the period between 2011 and 2015, will provide policy guidelines for energy conservation and the reduction of emissions, said Zhang, without outlining a timetable.

"We need to achieve a better balance between economic growth, economic transformation, energy conservation and emissions reduction," said Zhang, at the NDRC's annual work meeting, which came on the back of an extended two-week conference on climate change, held in Durban, South Africa.

In Durban, emerging nations such as China were put under greater pressure to shoulder more responsibility for cutting emissions.

"It will be an unavoidable dilemma that China will have to deal with in the coming years - continuing the processes of industrialization and urbanization while coming under pressure to act more in cutting emissions," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

China has set a target of cutting energy intensity - which is calculated as units of energy for each unit of GDP - by 16 percent by 2015 from the 2010 level.

(...) [artículo aquí]

INDIA’S GROWTH STORY

2011-12-16T00:27:00.001-08:00

9-10% GDP GROWTH IS HISTORY FOR INDIAN ECONOMY: RICHARD ILEY, BNP PARIBAS

India's economy has entered a phase of deteriorating growth-inflation equilibrium, says Richard Iley , chief Asia economist with BNP Paribas. In an exclusive interview to Rishi Shah , Iley says 9-10% growth is now history and India should brace itself for a 6.5% GDP growth in the current fiscal.

The Economic Times, December 16, 2011

What is your view on India's growth story?

In a way, it is the essence of my latest 'Eye on the Tiger' report. I think the underlying story is that the growth/inflation trade off has deteriorated quite appreciably. My concern is that foreign investors haven't fully priced in this deterioration in the economy's performance. I would quantify that by saying that before the crisis of 2008-09, GDP was growing by roughly 15%, with the split between growth and inflation being 9-10% for growth and 4-5% for inflation.

Clearly, the days of 9-10% growth are in the rear view mirror and we are seeing a marked deterioration in inflation performance. The new trade off for Indian growth and inflation could be a 7-7 split. Even though the GDP would still be growing at a very rapid 15%, the growth/inflation trade off would have significantly deteriorated. The trade off may be worse in the short term.

What is your forecast of GDP growth in the current year?

GDP growth in the September quarter fell to 6.9%. This is likely to be trimmed further when the export data is revised. A range of indicators suggest that the economy lost further momentum in the last three months of 2011. My base assumption is that second half growth will average about 6%, maybe a little lower. That would leave us with a 6.5% average for the whole year.

(...) [artículo aquí]

CHINA’S INTERNATIONAL INVESTMENT POSITION

2011-12-15T00:07:00.001-08:00

UPS AND DOWNS AHEAD OF CHINESE ECONOMY

China Daily, December 15, 2011

Catherine Shu-Ling Tan, Steffen Dyck and Syetarn Hansakul

China's financial integration into the world economy progressed rapidly between 2004 and 2010, mostly through accumulation of reserve assets and direct investment. A study of China's international investment position, an important holistic indicator of the extent of its financial integration into the world, sheds light on the strategy and motivation behind China's growing importance in the global financial system.

China's overseas assets and liabilities both grew strongly during 2004-2010. Its net foreign assets increased more than six-fold from $276.4 billion in 2004 to $1.79 trillion in 2010, which translates into 36.5 percent compound annual growth rate (CAGR).

This was primarily driven by the growth of reserve assets, which increased at 29.5 percent CAGR during the same period. China ranks among the world's major creditors in contrast to the United States, which had an external net debtor position of $2.47 trillion in 2010.

By component, reserve assets represent the lion's share of China's total assets, with the share fluctuating between 65 and 70 percent. The second largest component on its assets side is "other investment", which comprises trade credits, loans, currency and deposits and other assets, accounting for 16 percent of the total assets in 2010.

The stock of outward portfolio investment (6 percent of total assets) exceeded that of inward portfolio investment. In the case of direct investment, the opposite was true: the stock of inward foreign direct investment (FDI) far exceeded outward direct investment (ODI), which made up 7.5 percent of the total assets.

The profile of China's international investment position can be characterized as "long debt, short equity". While this phenomenon is not unusual among emerging markets with capital flow restrictions for residents, the return differential between equity and debt carries a cost. Specifically in China's case, its sizeable holdings of foreign governments' debts mean that it pays more on its equity liabilities (that is, inward FDI) than it earns on its debt assets. In addition, China is vulnerable to credit risks such as the downgrade of developed markets' sovereign debt ratings.

(...) [artículo aquí]

CHINA AND THE WORLD ECONOMY

2011-12-14T00:51:00.001-08:00

CHINA MAKES GROWTH GUARANTEE DESPITE GRIM GLOBAL ECONOMY

Koh Gui Qing and Zhou Xin

International Business Times, December 14, 2011

(Reuters) China pledged to guarantee growth in the face of an "extremely grim" outlook for the global economy in 2012, as its annual policy-setting conference closed on Wednesday with a series of commitments to deliver economic stability.

Laying out a blueprint for the world's second-biggest economy in the year ahead, Beijing promised to keep monetary policy "prudent" and fiscal policy "pro-active" while ensuring stable consumer prices -- language broadly in line with previous commitments.

But it was China's view on the global economic backdrop that was a sign of the policy challenge that could lie ahead.

"Looking into next year, the trend in the global economy on the whole is grim and complicated. Uncertainties are rising around a recovery in the world economy," said a statement published on the official Xinhua news agency after the end of the annual conference.

Beijing's wish to downplay those risks domestically was apparent in all the economic plans outlined, which broadly endorsed a decision by China's top leaders last week to avoid big policy changes before a critical leadership succession in 2012 that will see the nation's top two leaders retire.

"Stability means to maintain basically steady macro-economic policy, relatively fast economic growth, stable consumer prices and social stability," one of several statements carried by the official Xinhua news agency said.

(...) [artículo aquí]

MYANMAR AND THE NLD

2011-12-13T02:46:00.001-08:00

MYANMAR LEGALIZES SUU KYI’S POLITICAL PARTY AHEAD OF PLANNED BY-ELECTIONS

Daniel Ten Kate

Bloomberg, December 13, 2011

Myanmar’s government granted legal status to Aung Sang Suu Kyi’s political party in a further sign of reforms before planned by-elections in which the democracy advocate will run for parliament for the first time.

Suu Kyi’s National League for Democracy plans to submit its policies and constitution to authorities in Naypyidaw, Myanmar’s capital, after being permitted to register, party spokesman Nyan Win said by phone. The NLD voted last month to formally re- register after boycotting 2010 elections won by allies of the former ruling junta.

“We received permission to register and we decided to run in the by-elections,” Nyan Win said by phone from Yangon, the former capital. “It’s a good sign.”

Suu Kyi’s participation in yet-to-be-scheduled elections would build on President Thein Sein’s efforts to ease political repression and end the country’s international isolation. Secretary of State Hillary Clinton said Dec. 2 she was “cautiously hopeful” after completing the highest-level U.S. visit to Myanmar in more than five decades.

Derek Mitchell, a special U.S. envoy to Myanmar, met with Chinese foreign ministry officials yesterday in an effort to coordinate policies. U.S. sanctions in place for more than two decades have left Myanmar dependent on neighbors China, India and Thailand, which have poured more than $25 billion into ports, power plants, and oil and gas pipelines.

(...) [artículo aquí]

ECONOMIC GROWTH IN PAKISTAN

2011-12-12T00:03:00.001-08:00

PUTTING GROWTH ON TOP OF THE AGENDA

Pakistan is creating conditions that could produce political and social upheaval in the not-too-distant future.

Shahid Javed Burki

The Express Tribune, December 12, 2011

A developing country without robust economic growth cannot know social peace and political tranquillity. This is especially so, if the country also has a high rate of population increase. This is certainly the case with Pakistan. Currently, the rate of GDP increase is stuck in the three to 3.5 per cent range, while the country’s population is still increasing at a rate of close to two per cent a year. This means that the income per head of the population is growing at a rate of no more than 1.5 per cent per annum. The rate of increase could be as low as one per cent a year. Since the distribution of income is becoming increasingly unequal, much of the growth in national income is being captured by the rich and the very rich. The poor and the not-so-poor are left with very little. There cannot be any doubt that the number of people living in absolute poverty is increasing at a rate higher than the rate of increase in population. Therefore the proportion of the poor in the population is increasing — perhaps increasing very rapidly. Pakistan is creating conditions that could produce political and social upheaval in the not-too -distant future.

The only way to address this problem is to move the economy forward at a rate much higher than the one at the present. This could be done but, it will need serious reflection on the part of policymakers and hard work by people in power. It would not be too ambitious to aim at a rate of growth twice the present rate — to set the goal at 6.5 to 7 per cent a year. This leads me to ask two obvious questions. Is such acceleration possible? If it is possible, how soon can this target be reached? I will take up the second question first.

My own six-year experience with Latin America at the World Bank, from late 1993 to late 1999, left me with some understanding about how fast economies that had faltered can recover. This can happen once policies are set right and once the right kind of people begin to walk the corridors of power. I saw the economies of Argentina, Brazil and Mexico recover rapidly when the policymakers began to pursue the right set of objectives with the right sets of policies. In all three cases, the command of the economy was taken over by new groups who could quickly reorient their economies. In other words, sluggish economies can bounce back reasonably quickly.

(...) [artículo aquí]

CHINA, INDIA AND THE EXTENDED KYOTO PROTOCOL

2011-12-11T01:51:00.001-08:00

CHINA, INDIA PLEDGE POLLUTION CUTS IN CLIMATE PACT

Kim Chipman and Alex Morales

Bloomberg, December 11, 2011

Developing nations led by China and India pledged they’d work toward an agreement that would limit their fossil fuel emissions for the first time, the biggest advance in the fight against global warming in 14 years.

Envoys from more than 190 nations also extended the Kyoto Protocol, the only ratified treaty limiting greenhouse gases. They will develop document with “legal force” by 2015 that would curb pollution for all nations, according to a text adopted today in Durban, South Africa.

The move breaks a division enshrined in the United Nations- led discussions since 1992 that allowed the poorest nations to escape commitments on burning coal and oil while requiring industrial nations to clean up the atmosphere. That rift prevented the U.S. from ratifying Kyoto, which is the heart of the international effort to protect the environment.

“Historic is the word,” Grenadian ambassador Dessima Williams, lead negotiator for a coalition of 42 island nations, said in an interview. “The idea that we got everybody to agree to take some form of legal commitment is a major outcome.”

The talks dragged more than 28 hours past their scheduled Dec. 9 finish as a division emerged between a coalition of more than 120 nations backing a road map to a legally-binding deal and China and India, which sought weaker language on the eventual legal form of the pact. It was the longest meeting since the climate talks began in 1992.

(...) [artículo aquí]

CHINA: FROM RESTRICTION TO STIMULUS

2011-12-10T00:04:00.001-08:00

FOR CHINA, STIMULUS SEEMS TO BE THE HARDEST WORD

Don Durfee and Nick Edwards

Reuters, December 10, 2011

BEIJING (Reuters) - The managers of Chongqing Changan Automobile could be forgiven for wishing it was 2008 again.

China's No. 4 car maker was one of the obscure winners of Beijing's decision to release a flood of cash into its economy during the darkest moment of the global financial crisis.

But when the stimulus stopped, particularly incentives for car buyers earlier this year, so did the company's runaway growth.

After car sales growth of 46 percent in 2009 and 32 percent in 2010, the maker of the squat Ben Ben mini car and Changan Star van saw a modest 3 percent rise in the first 10 months of 2011. It also watched its share price plunge.

If Changan is hoping for a repeat of the 4 trillion yuan that China spent on roads and rails and other projects, it may be in for a long wait.

"China's leaders understand that safeguarding growth is very important, but in 2008 the government had more policy tools they could use," said Liang Youcai, a senior economist at the State Information Centre, a top government think-tank in Beijing.

"They won't unveil a large-scale economic stimulus anywhere close to the 4 trillion yuan programme."

Beijing has reasons to steer clear of big stimulus, including the need to avoid firing up inflation, which remains relatively high.

A local government debt crisis is an awkward side effect of the government incentives in 2008, making stimulus a loaded word.

And a looming 2012 political transition that will see top leaders step down, leaves policymakers aiming for stability, not a big fiscal injection of cash into the economy.

Furthermore, China may have the fiscal leeway to do enough for the economy anyway, with the "fine tuning" that Premier Wen Jiabao has said will keep its economic engine running smoothly, analysts say.

(...) [artículo aquí]

CHINA’S COOLING

2011-12-09T00:10:00.001-08:00

CHINA INFLATION DROPS TO 4.2 PCT IN NOVEMBER

Elaine Kurtenbach

Associated Press, December 9, 2011

SHANGHAI (AP) — China's economy is losing steam, with industrial production dropping to its slowest pace in two years last month and inflation also cooling — raising the likelihood of fresh moves to keep growth on track.

A decline in inflation to 4.2 percent in November from 5.5 percent the month before, reported Friday, will allow authorities more flexibility in easing policies that were imposed to cool the overheated economy but now may pose a threat to growth.

The National Bureau of Statistics reported that industrial output rose 12.4 percent in November, its slowest increase in two years.

China's ability to help offset the malaise in Europe and the U.S. will depend on its ability to support growth while avoiding a relapse into higher inflation that undermines the economic gains underpinning support for the ruling Communist Party.

A recent surge in labor unrest and public dissatisfaction over the widening gap between rich and poor, corruption, pollution and other issues have added to jitters as the party prepares for a transition next year to a new generation of leadership.

Moves toward an easier monetary stance may come as early as next week at an annual economic work conference in Beijing that will set policy for the coming year. But the support will be tempered by concern that too much stimulus could touch off another round of excess investment and inflation.

In one indication of that risk, the statistics bureau reported retail sales rose 17.3 percent year-on-year in November, up slightly from October, suggesting sustained demand in China's domestic market even as exports to crisis-stricken Europe falter

(...) [artículo aquí]

CHINA: A BANK CRISIS WITHIN THE NEXT FIVE YEARS?

2011-12-08T00:03:00.001-08:00

POLL: INVESTORS PREDICT CHINA BANK CRISIS

David J. Lynch

Bloomberg, December 8, 2011

Most global investors predict China will face a banking crisis within the next five years, paring their appetite for the nation’s shares and eroding confidence in its leadership, a Bloomberg Global Poll indicated.

Sixty-one percent of respondents said they anticipate a crash in the financial industry by late 2016, and only 10 percent were confident China’s banks will escape trouble, according to the quarterly poll of 1,097 investors, analysts and traders who are Bloomberg subscribers conducted Dec. 5-6.

Evidence of slowing growth in China -- including the weakest manufacturing performance in more than two years, falling home sales and ebbing export growth -- has stoked concern that non-performing loans will climb in the world’s second-largest economy. The risk is a legacy of a record 17.6 trillion-yuan ($2.8 trillion) lending boom unleashed by Premier Wen Jiabao in 2009-2010 amid the global recession.

“The deep-seated misallocation of resources, particularly in the real estate and banking sectors, will lead to a combination of political and economic instability,” says Lance Depew, managing director of UPI Management LLC in Santa Barbara, California, and a participant in the poll. “I expect further macroeconomic weakness and sub-par returns in the stock market for the foreseeable future.”

(...) [artículo aquí]

CHINA’S MILITARY RELATIONS WITH THE US

2011-12-07T00:18:00.001-08:00

CHINA, US HOLD MILITARY TALKS

AFP, December 7, 2011

BEIJING — Chinese and US defence officials opened military talks in Beijing on Wednesday after ties were strained by American arms sales to Taiwan and a planned US troop deployment in Australia.

The talks, led by US undersecretary of defence for policy Michele Flournoy and her Chinese counterpart Ma Xiaotian, come a day after China's President Hu Jintao urged the navy to prepare for military combat.

They are the first ministry-level talks between the two nations since September, when Washington announced a $5.85 billion upgrade to Taiwan's fleet of F-16 fighter jets, angering Beijing, which considers the island a breakaway province.

China's official Xinhua news agency said military relations between the two powers, the situations in the Korean Peninsula and the South China Sea and the sale of US arms to Taiwan would be on the agenda.

Several Asian nations have competing claims over parts of the South China Sea, a strategically vital area believed to encompass huge oil and gas reserves, while China claims it all.

One-third of global seaborne trade passes through the maritime area and Vietnam and the Philippines have accused Chinese forces of increasing aggression there, ratcheting up tensions in the region.

(...) [artículo aquí]

ADB’S FORECASTS FOR 2012

2011-12-06T00:29:00.001-08:00

ASIA FACES ‘MUCH GREATER’ RISKS ON GLOBAL SLOWDOWN, ADB SAYS

Bloomberg

Bloomberg BusinessWeek, December 06, 2011

Asian economies are facing “much greater downside risks” now because of the possibility of a recession in the U.S. and Europe and the threat of destabilizing capital flows, the Asian Development Bank said.

The biggest challenge for policy makers in emerging East Asian nations is to safeguard growth against the threat of another global economic crisis, the Manila-based lender said in its Asia Economic Monitor report today. Uncertainty over the world economy means officials in the region must have “sufficient flexibility” to adjust policies quickly, it said.

“The cautiously optimistic outlook for emerging East Asia is subject to much greater downside risks now than just a few months ago,” the ADB said. “The global economic recovery could flounder if the euro zone and the U.S. fall back into recession, causing another global financial crisis. Large and destabilizing capital flows could complicate the region’s macroeconomic management and jeopardize economic growth.”

Asian policy makers have shifted their focus to shielding growth, rather than stemming inflation, as Europe’s debt woes and a struggling U.S. economy increase the risk of another global recession. Australia lowered borrowing costs for a second straight month today and Indonesia and Thailand cut interest rates last month, while the Philippines in October unveiled a fiscal stimulus package to spur the economy.

Asia stocks fell for the first time in seven days today after Standard & Poor’s put 15 European nations on watch for potential ratings downgrades. The MSCI Asia Pacific Index retreated 1.3 percent as of 1:13 p.m. in Tokyo.

(...) [artículo aquí]

CHINA’S ECONOMY SLOWING QUICKLY

2011-12-05T12:56:00.001-08:00

CHINA SLOWDOWN SPREADING, HSBC SERVICES PMI SHOWS

Zhou Xin and Nick Edwards

Reuters, December 5, 2011

China's services sector cooled in November to its weakest growth in three months, an HSBC purchasing managers' index showed on Monday, the latest data portraying an economy slowing quickly and in need of policy support.

The index fell to 52.5, a sharp decline given that October's reading was 54.1 -- the highest in four months -- though the index remains above the 50 level that separates expansion from contraction in the sector.

Expectations for new business dropped to their lowest level in three months too, but remained firmly above 50.

"With price pressures easing further, Beijing can and should use policies that are targeted on small businesses and service sectors to keep GDP growth at above 8 percent for the coming year," Qu Hongbin, HSBC's chief China economist, said in a statement.

China's official PMI for its non-manufacturing sector, released on Saturday, fell to 49.7 in November from 57.7 in October, the China Federation of Logistics and Purchasing said.

The readings mirror similar weakness in the country's giant manufacturing sector and underline expectations that Beijing will ease monetary policy further to cushion the blows of the global economy.

PMI data in the past week has shown that both domestic and export orders are weakening, helping explain the central bank's decision last week to cut bank reserve requirements for the first time in three years.

The move to free up cash was a signal that the central bank was shifting toward loosening monetary policy to support the economy, which is widely expected to grow next year at less than 9 percent for the first time in a decade, economists said.

(...) [artículo aquí]

MORE BRICS

2011-12-04T00:04:00.001-08:00

SOME BRICS BUILT BUT MORE STILL NEEDED

Jim O'Neill

The Khaleej Times, December 4, 2011

Wednesday, November 30 was the 10th anniversary of when I first mentioned the Bric acronym when I published GS Global Economics Paper No: 66, “Building better global economic Brics.” In this week’s Viewpoints I decided to highlight some of the major observations involving the Bric development over the past decade, as well as some key issues related to ongoing recent events.

The 2001 paper didn’t create a lot of attention at the time. It was not really until after the publication in 2003 of GS Economics Paper No: 99, “Dreaming with Brics: The path to 2050,” authored by Dominic Wilson and Roopa Purushothaman, that the theme really caught on. The fact that many large multinationals started to embrace the Bric concept around this time and, of course, the happiness of the four Bric countries themselves, helped give the theme such a push.

(...) [artículo aquí]

CHINA AND EUROPE’S BAILOUT

2011-12-03T00:23:00.001-08:00

CHINA SHOULD NOT SAVE EUROPE

By Andy Xie

China.org, December 3, 2011

There are five reasons why participation in any bailout plan for the Eurozone area is not in China's best interest.

First, the fiscal payback is not good. So far, no fruit has been borne by China's financial adventures in overseas markets. Investments in the Blackstone Group, Morgan Stanley and Rio Tinto Group have all failed. Since state-owned financial institutions mix business and politics, decision-making is often arduous. These failures have proven, thus far, that China's state financial system is not capable of selecting and operating overseas investments.

Secondly, Europe will not repay China's assistance politically. Although multinational corporations like BMW, Mercedes-Benz and Carrefour make huge profits in China, the European media and politicians blame China for their unemployment woes. The European Union's refusal to recognize China's market economy is solid proof of prevalent attitudes towards China in the region. The EU's discontent with China is growing with the worsening of Eurozone debt crisis. Assistance in a bailout may result in further worries about China's true intentions, harboring even stronger opposition from critics.

Thirdly, China's assistance would greatly weaken German influence in Europe, and imbed China in the quagmire of European politics. China needs at least ten more years before it will be poised take on issues related to handling of European affairs.

(...) [artículo aquí]

CHINA’S SLOWDOWN

2011-12-02T00:02:00.001-08:00

CHINA PMI SHRINKS FOR 1ST TIME IN 3 YRS AS ECONOMY SLOWS DOWN

The Economic Times, December 2, 2011

The Chinese economy is headed for troubled waters, with its manufacturing sector shrinking in November for the first time in nearly three years, in a fresh sign of a further economic slowdown that may prompt it to loosen its monetary policy.

The purchasing managers' index (PMI), a gauge of manufacturing activity, tumbled to 49 from 50.4 in October, according to the China Federation of Logistics and Purchasing.

A PMI under 50 indicates a contraction of manufacturing activity, a situation that hasn't been seen in China since February, 2009.

The sub-index for export orders fell sharply to 45.6 in November from 48.6 in October, indicating that the spreading euro zone debt crisis and weakened demand from the United States were hurting growth in the world's second-largest economy.

Some analysts said a lull in China's property market also contributed to the economic slowdown, with both prices and sales dropping significantly following the last round of credit tightening.

“It reinforces our view that China's economy will fall sharply in the months ahead as the property sector has reached a tipping point," Zhang Zhiwei, an economist with Nomura Securities, said.

The risk of a sharp deterioration of GDP growth in the first quarter next year is rising significantly, he told state-run China Daily today.

The poor PMI data released on Thursday came one day after the Chinese government slashed the reserve ratio for the country's commercial lenders to improve money supply.

“The message is clear: the economy is slowing much faster than expected and the government has stepped into the ring. The loosening campaign has begun," Alistair Thornton, an analyst with IHS Global Insight, was quoted as saying by the China Daily

(...) [artículo aquí]

MYANMAR’S OPENING

2011-12-01T00:28:00.001-08:00

BURMESE SEE PROS AND CONS TO OPEN ECONOMY

SouthEastAsiaRealTime, December 1, 2011

Businesses in Myanmar are beginning to realize they may have a looming problem on their borders — and this time it’s not cheap goods from China.

As the country’s economy begins to open up further, it is clear to many entrepreneurs here that decades of isolation have led them to lag far behind competitors in places such as Thailand and Singapore. That’s worrying to some, as firms from across the region, including Japan and South Korea, step up their presence here, especially after the severe floods that have shut down much of Thailand’s manufacturing base in the last few months. There also are some Europeans and Americans waiting in the wings to do more business in the country if Western sanctions against the Myanmar government are eventually dropped.

“A lot of us feel we might be swept away — we can’t compete because we’ve been locked away for so long,” said Maung Maung Lay, vice president of the Federation of Chambers of Commerce and Industry in Yangon and the proprietor of a business that distributes medical equipment. “We might all just end up being the employees of foreign companies.”

He says there is little risk of a backlash against the globalization of Myanmar’s economy, though, mainly because most people realize Myanmar desperately needs investment, even if it creates some growing pains.

“It’s part of what we’ve been waiting for — to become part of the international family of nations instead of relying too heavily on one country, China, for support, which is not healthy,” Dr. Maung Maung Lay said. “We need to improve our human development indices, and foreign investment can help us.”

With U.S. Secretary of State Hillary Clinton visiting Myanmar this week, anticipation is growing that long-standing sanctions against the country’s military-backed rulers will sooner or later be dropped, though many dissidents remain wary of easing them too soon. U.S. officials have made clear they’re not ready to ease just yet, but they’ve been pleasantly surprised by a series of reforms this year, including easing of press restrictions and new laws to allow protests and labor unions.

(...) [artículo aquí]

INDIA’S SLOWDOWN

2011-11-30T01:03:00.001-08:00

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]

CHINA’S SOFT POWER GAP

2011-11-29T01:10:00.001-08:00

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]

A COLLAPSE IN CHINA?

2011-11-28T00:42:00.001-08:00

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]

WEI QI VS CHESS

2011-11-27T01:26:00.001-08:00

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]

CHINA’S LANDING

2011-11-26T01:06:00.001-08:00

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]

JAPAN’S CONTAGION RISK

2011-11-25T00:07:00.001-08:00

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]

CHINA’S FALTERING EXPORTS

2011-11-23T23:39:00.001-08:00

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

2011-11-23T00:26:00.001-08:00

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]

ASIA FACING THE EUROPEAN DEBT CRISIS

2011-11-22T01:39:00.001-08:00

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]

CHINA’S PROPERTY PRICES

2011-11-21T01:51:00.001-08:00

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]

CHINA: No. 1 IN 2027

2011-11-20T05:34:00.001-08:00

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]

CHINA’S SCIENCE AND THE WEST

2011-11-19T09:54:00.001-08:00

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]

CHINA’S GREEN JOBS

2011-11-18T13:08:00.001-08:00

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]

THE US AS A PACIFIC POWER (II)

2011-11-17T01:35:00.001-08:00

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]

THE US AS A PACIFIC POWER

2011-11-15T23:57:00.001-08:00

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?

2011-11-15T03:16:00.001-08:00

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]

JAPAN’S RETURN TO GROWTH

2011-11-14T01:24:00.001-08:00

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]

CHINA OR GERMANY?

2011-11-13T01:54:00.001-08:00

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]

INDIAN GDP IN 2050

2011-11-12T01:52:00.001-08:00

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]

ASIA AND THE EUROZONE CRISIS

2011-11-11T03:15:00.001-08:00

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]

CHINA’S REBALANCING ACT

2011-11-10T01:06:00.001-08:00

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]

CHINA COOLING

2011-11-09T00:59:00.001-08:00

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]

THE NAXALITE INSURGENCY IN INDIA

2011-11-08T00:26:00.001-08:00

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]

COMMODITIES IN INDIA

2011-11-07T01:00:00.001-08:00

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]

INDONESIA

2011-11-06T01:51:00.001-07:00

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]

INDONESIA AND THE EU CRISIS

2011-11-05T07:41:00.001-07:00

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]

TAIWAN AND NUCLEAR ENERGY

2011-11-04T01:54:00.001-07:00

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]

INDIA AND THE G20

2011-11-03T02:22:00.001-07:00

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]

CHINA IN CANNES

2011-11-02T01:32:00.001-07:00

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]

CHINA’S SPACECRAFT

2011-11-01T02:16:00.001-07:00

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]

CHINA’S ATTRACTION

2011-10-31T03:47:00.001-07:00

WHAT EXPLAINS CHINA'S HYPNOTIC SPELL?

B. S. Raghavan

The Hindu Business Line, October 31, 2011

There is an unceasing flood of academic and journalist writings, as also seminars and workshops, on China, with no end in sight. The irresistible attraction the country holds for governments, think-tanks and institutions of learning all over the globe is without precedent. Every bit of everything that emanates from there is dissected, scrutinised, analysed, discussed and written upon in the form of books, articles, papers, op-ed pieces, columns and commentaries. What explains this extraordinary phenomenon?

It cannot surely be China's GDP ranking or the prospect of its heading soon for the top position overtaking the US and Japan in purchasing power parity terms. Nor can it be its huge foreign exchange holdings, nor the fact of the US being in its debt to the extent of a trillion dollars. These provoke interest but do not account for the veritable hypnotic spell cast by China.

One can only grope for an answer. If one wants to be facetious, one can repeat the answer of George Mallory who, when asked why he was so particular about climbing Everest, promptly retorted: “Because it's there!” China is not only there, looming large like Everest, but, in many respects, fits the famous picturisation of Russia by Winston Churchill as “a riddle wrapped in a mystery inside an enigma”.

There are familiar rule books by which most countries of the world have for centuries worked out their domestic policies and economic frameworks, and played their geopolitical and diplomatic games with the outside world. But they are of no use in unravelling what China's decision or action will be in a given situation.

(...) [artículo aquí]

B2B AND P2P INSTEAD OF ARMS BUILDUPS

2011-10-30T03:59:00.001-07:00

OBSERVATIONS ON CHINA'S 'PEACEFUL' RISE

Fidel V. Ramos

The Manila Bulletin, October 30, 2011

The Pearl River Delta mega-cluster

We were in South China last week, principally in Zhuhai City, Guangdong Province (one of China’s most productive in terms of total GDP-contribution), as head of a Philippine delegation of some 60 entrepreneurs, professionals, and sportspeople to meet with Chinese partners under the auspices of the China-Philippines Chamber of Commerce (CPCC).

Organized on 25 January 2005, the CPCC was given the mandate by the PRoC’s Ministry of Commerce and Ministry of Civil Affairs to promote Philippines-China bilateral trade and economic cooperation. CPCC serves as a valuable network for addressing trade and investment issues, and is an active link of private and state-owned companies among themselves, as well as with government agencies in the Philippines and China. Chaired by Filipino-Chinese Joseph Lim, CEO of the Solid Electronics Group, CPCC counts among its corporate members various pioneering and successful Filipino companies operating in China, principally: Solid Industrial Co., Premix Inve Nutrition Corporation, Handyware China Co., Liwayway Marketing Co., Atlanta Industries Co., and Richfield Corp.

Zhuhai, a prefecture-level city on the southern coast of Guangdong Province, borders Macau SAR and is considered one of China’s modern “windows” to East Asian countries, particularly because of its Formula One hi-speed motor racetrack and annual Aviation Show. Together with nine other cities of Guangdong and the SARs of Hong Kong and Macau, Zhuhai forms part of the so-called Pearl River Delta (PRD) mega-cluster.

Creating economies of scale

Three decades ago, the People’s Republic of China adopted the strategy of clustering its contiguous industrial centers to create economies of scale as well as enhance efficiency in the production and distribution of goods. This move proved to be a huge success and continues to be highly effective in exhibiting China’s progress to the world.

The interconnected, cross-border combination of Macau and Hong Kong SARs with the megacities of the Pearl River Delta notably Guangzhou, Shenzhen, Zhuhai, Dongguan, and China’s eastern seaboard, have a combined population of 660 million and accounts for a GDP of more than USD300 billion.

According to experts, this PRD mega-cluster can attain a GDP of USD500 billion (roughly the equivalent of the economic performance of the 10th to 12th largest world economies) in 6-8 years. Other high-growth cross-border mega-aggrupations include the Cross-Taiwan Straits Economic Zone and the Pan-Beibu Gulf Economic Cooperation (which is the official gateway at Nanning City to the China-ASEAN Free Trade Area).

This set-up provides the Philippines easy access to China’s huge eastern seaboard and southern markets with excellent opportunities for partnerships in trade, tourism, SMEs, services, education, technology exchange, and other business endeavors which should now be fully tapped and exploited.

(...) [artículo aquí]

INDONESIA: No. 10 IN 2020?

2011-10-28T23:34:00.001-07:00

INDONESIA – THE RISING STAR

Cecilia Kok

The Star, October 29, 2011

It may not be getting as much attention from the world as China and India, but make no mistake, every business expert and economist are well aware of the economic potential of Indonesia.

With renewed vigour after the 1997/98 Asian Financial Crisis, that the tiger economy is now roaring back, emerging as a star performer in the region and drawing international interest.

The latest endorsement came from renowned economist and New York University professor Nouriel Roubini (aka Dr Doom or Dr Realist.) Roubini told the Jakarta Globe over the week he was impressed by what he saw the moment he stepped foot on Indonesia, and that he was bullish about the country's economy because of its overall policy framework and its government's commitment to reform.

Roubini was quoted as saying: “They know what needs to be done and there's a willingness to do it and at a speed that it needs to be done.”

Resource-rich Indonesia, with a population of about 245.6 million, is the largest economy in South-East Asia. According to the World Bank, the country's gross domestic product (GDP) or the total value of goods and services produced in its economy was worth US$706.6bil in 2010. This made it the fifth largest economy in Asia, and the 18th in the world.

Roubini believes Indonesia could rise to be the 10th largest economy in the world by the end of the decade and the sixth largest by 2030. The country's huge domestic consumption, low debt levels and young demographics are among some of the main factors in its favour.

(...) [artículo aquí]

CHINA TO THE RESCUE

2011-10-28T00:51:00.001-07:00

EUROZONE SEEKS BAILOUT FUNDS FROM CHINA

BBC News, October 28, 2011

The head of the eurozone's bailout fund is beginning attempts to persuade China to invest in a scheme to help rescue member countries facing debt crises.

After meeting Chinese leaders, Klaus Regling said there were no formal negotiations and would be no deal now.

It is thought China may pay about 70bn euros ($100bn) into the fund, which is expected to be boosted to 1tn euros.

Meanwhile French President Nicolas Sarkozy said debt-ridden Greece's entry to the eurozone was a mistake.

Greece was "not ready" when it joined in 2001, he said, adding that it could be rescued thanks to a new deal on the debt crisis.

European leaders worked into the early hours of Thursday in Brussels to secure an agreement aimed at preventing the crisis from spreading to larger eurozone economies.

The deal triggered a worldwide shares rally.

'Regular buyer'

Beijing has made it clear that it will demand strong guarantees on the safety of any contribution it might make.

While the head of the fund, Klaus Regling, described this as a regular meeting, it is being seen as the start of a process which could yield an agreement.

With vast reserves, Beijing is certainly in a position to invest but like any other investor China will want to make sure its money is safe.

In the past, overseas investments made by China's sovereign funds have soured leading to criticism back home.

Mr Regling, who is chief executive of the European Financial Stability Facility (EFSF), said he was not negotiating with China as a potential investor but holding consultations to decide the terms for raising the money.

(...) [artículo aquí]

CHINA AND THE EFSF

2011-10-27T06:53:00.001-07:00

SARKOZY WINS CHINA COOPERATION PLEDGE

Jonathan Stearns and Helene Fouquet

Bloomberg, October 27, 2011

French President Nicolas Sarkozy conferred with his Chinese counterpart Hu Jintao as European policy makers seek to build support for an enlarged rescue fund designed to resolve the region’s sovereign-debt crisis.

Hu hopes that the measures will help to stabilize markets, state-owned China Central Television reported. The phone call between the leaders came hours after a euro-region summit ended with an agreement to boost the European Financial Stability Facility to about $1.4 trillion, leveraging existing guarantees by as much as five times. Japan plans to support the increase, and is waiting to hear from European officials on details for the program, according to a person familiar with the matter.

Sarkozy’s outreach precedes a Group of 20 summit he will host next week, with Europeans seeking to bolster the role of the International Monetary Fund in overcoming the euro-region’s woes. Australia’s finance chief said that while it’s “appropriate” to look at the IMF’s resources, Europeans must look to themselves first for bailout money.

“The Europeans have their back against the wall and China is the lender of last resort,” Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong, said in a Bloomberg Television interview before Sarkozy’s call.

The French president’s office said in a statement that Sarkozy and Hu “agreed to cooperate closely to ensure the G20 can make a decisive contribution to ensure growth and global stability.”

(...) [artículo aquí]

DISTURBING SIGNS COMING OUT FROM CHINA

2011-10-26T03:35:00.001-07:00

10 DISTURBING NUMBERS FROM CHINA (WHILE ALL EYES REMAIN ON EUROPE)

Brett Jensen

Seeking Alpha, October 26, 2011

After selling off significantly over the summer, the market has had one of its best months in decades during October. The commodity stocks that helped lead the selloff on concerns about Chinese demand growth have recovered but are still off substantially from their pre-selloff highs.

One of myriad reasons for the overall market rally has been the better than expected manufacturing and other economic reports coming from the Middle Kingdom. However, while all eyes are on Europe there are disturbing signs still coming out of China that point to a huge property/lending bubble that could be the next headwind to rock the equity markets worldwide.

10 disturbing numbers from China:

1. 6.1% - The reported inflation rate as of September.

2. 9-11% - The probable real rate of inflation in the country.

(…) [artículo aquí]

LOW GROWTH AND HIGH INFLATION IN SOUTH KOREA

2011-10-25T07:33:00.001-07:00

KOREAN ECONOMY HEADING FOR STAGFLATION?

Slowing growth coupled with price rises poses dilemma for policymakers

The Korea Herald, October 25, 2011

The Bank of Korea froze its key interest rate at 3.25 percent a year for a fourth consecutive month in October in a move that analysts said placed worries over growing external uncertainties ahead of inflation concerns.

A report by the central bank said at the time the downside risks to the economy were increasing due to worsening external factors such as the eurozone’s sovereign debt crisis and slowdowns in major countries.

Announcing the widely-expected decision, however, BOK Governor Kim Choong-soo attempted to put a lid on expectations of high inflation

“Our policy direction toward monetary normalization remains unchanged,” he said, adding that there was no discussion on rate cuts during a meeting of monetary committee members.

Consumer prices rose by an average of 4.5 percent for the first nine months of this year, exceeding the central bank’s target ceiling of 4 percent. In September, the consumer price index climbed by 4.3 percent, easing from 5.3 percent a month earlier. But analysts noted that the slower pace was attributed mainly to seasonal factors, saying the remainder of the year is likely to see upward pressure due to planned hikes in public service fees and higher import prices resulting from the weakening of the Korean won against the U.S. dollar.

(…) [artículo aquí]

ASIAN RESILIENCE

2011-10-24T01:51:00.001-07:00

ASIA ECONOMIC RESILIENCE SEEN IN CHINA MANUFACTURING GAUGE, JAPAN EXPORTS

Bloomberg News

Bloomberg, October 24, 2011

China’s manufacturing may expand in October for the first time in four months, snapping the longest contraction since 2009, after a preliminary index of purchasing managers showed a rebound in new orders and output.

The reading of 51.1 for the index released by HSBC Holdings Plc and Markit Economics today was the highest in five months and compares with the final reading of 49.9 for September and August. A reading above 50 indicates expansion.

The Chinese report, along with Japanese data today showing an increase in exports exceeding economists’ forecasts, signaled that Asia’s largest two economies are withstanding Europe’s sovereign debt crisis. Shares and currencies in the region advanced as the figures, and a plan by European leaders to contain the region’s financial woes, buoyed investor confidence.

“As long as Europe and the U.S. see very weak growth but not an outright recession, Asia in general and larger, more domestic-demand driven economies such as China, India and Indonesia in particular, should hold up,” said Louis Kuijs, Hong Kong-based chief Asia economist at MF Global Holdings Ltd., who previously worked in Beijing at the World Bank. “The PMI data today underlines just how well China’s industrial sector is holding up against the global slowdown.”

The MSCI Asia Pacific Index climbed 2.6 percent as of 5:19 p.m. in Tokyo. Stocks in China rallied after the data. The benchmark Shanghai Composite Index rose 2.3 percent to 2,370.33 at the 3 p.m. close. The gauge declined earlier after Premier Wen Jiabao signaled over the weekend that policy makers will maintain an anti-inflation monetary stance.

(…) [artículo aquí]

IS CHINA EXPORTING INFLATION?

2011-10-23T01:47:00.001-07:00

THE ERA OF CHEAP CHINESE IMPORTS MAY COME TO AN END

The Economic Times, October 23, 2011

The great Chinese-led deflation in goods prices may have come to an end.

Beginning in the 1990s, the emergence of China as a major exporter first depressed and then held down the prices of many goods, helping to improve U.S. living standards. But recently, prices have begun to rise.

The change can be seen clearly in the Consumer Price Index for apparel. Because prices can be volatile, three-month moving averages are used to smooth the trends.

Prices are still well below where they were in 1991, a performance that no one would have expected at the time. Over the previous two decades, beginning in 1971, that index doubled.

But in the past few months, the index has begun to rise at the fastest rate in many years. This spring, prices were still about 9 percent lower than in late 1991. Now the prices are just 5 percent below the level of two decades ago.

The 12-month change in the index is now up to 3.6 percent, the highest since 1992. Over the past six months, the three-month average has risen at an annual rate of 7.6 percent.

Prices for apparel were broadly steady for most of the 1990s, before beginning a sharp descent in 1998 that continued until 2003. Much of the decline was because of imports from China, which forced down prices and allowed Chinese suppliers to supplant companies from many other countries. The declines continued at a slower pace for several more years, but prices now appear to have hit bottom in 2007.

(…) [artículo aquÍ]