Tagged: China’s Rise Implies US Decline

China car sales pass 12 million

BBC NEWS | 2009/12/07 | 09:05:26 GMT

Chinese annual car sales and production both exceeded 12 million units in the first 11 months of the year, state media has said. The China Association of Automobile Manufacturers expects car sales and output to top 13 million for the full year, the Xinhua News Agency reported. China has never produced more than 10 million cars in one year before. Despite the downturn and falling sales at most global carmakers, demand for cars in China is booming. In November alone, sales reached 1.35 million units, according to the preliminary figures.

The country’s largest carmaker, Shanghai Automotive Industry, sold 2.44 million cars to the end of November, a rise of more than 50% compared with the same period a year earlier, Xinhua said. State incentives, such as tax cuts on small cars, have boosted sales in China. Like many other governments around the world, China has also introduced subsidies to trade in older vehicles. Previously, only the US and Japan had produced 10 million cars in a single year. Domestic Chinese car sales overtook those in the US for the first time in December of last year.

NATO allies to add 7000 to surge 

BBC NEWS | 2009/12/04 | 12:15:33 GMT

AFGHANISTAN SURGE

  • US calling for about 10,000 extra foreign troops
  • NATO expects 7,000 troops from 25 of 43 nations in Afghanistan
  • Not all have gone public with their intentions
  • Britain has pledged extra 500; Italy “about 1,000”; Poland 600; Portugal 150; Spain 200; Slovakia 250; Macedonia 80
  • Non-NATO member Georgia sending 900, South Korea 500
  • France still considering response; Germany may delay decision until January 2010

NATO’s top official says countries will send at least 7,000 extra troops to support the US surge in Afghanistan. Speaking at a NATO summit in Brussels, Anders Fogh Rasmussen said there would be “more [troops] to come.” “At least 25 countries will send more forces to the mission in 2010,” the NATO secretary general told reporters. US Secretary of State Hillary Clinton described the response from NATO allies as “positive,” and urged them to rally behind the US’s new Afghan strategy. Some major countries are holding back, however. France and Germany, for instance, have not yet committed themselves to sending extra troops.

‘Solidarity in action’

Earlier this week, US President Barack Obama announced he was sending an additional 30,000 troops to help battle the Taliban insurgency. The US is calling on allies among the 43 nations with troops in Afghanistan to send about 10,000 extra soldiers. Speaking at the Brussels talks,      Continue reading →

Consumer Spending in US Rises More Than Forecast 

Bloomberg | November 25, 2009 | 09:17 EST

Spending by U.S. consumers rebounded in October more than anticipated, an indication that mounting unemployment has yet to stifle American’s willingness to buy. The 0.7 percent increase in purchases was larger than the median estimate of economists surveyed by Bloomberg News and followed a 0.6 percent September drop, Commerce Department figures showed today in Washington. Incomes climbed 0.2 percent, also exceeding expectations. A jobless rate that is projected to exceed 10 percent through the first half of next year means households will probably contribute less to growth as the economy recovers. Nonetheless, retailers such as J.Crew Group Inc. are among companies seeing improving demand heading into the holiday shopping season.

“People have been too negative for too long on the consumer,” said John Herrmann, chief economist at Herrmann Forecasting in Summit, New Jersey, who accurately forecast the gain in spending. “We’re seeing very positive spending signals for November.” A separate report from the Labor Department today showed the number of Americans filing claims for unemployment benefits fell last week to the lowest level since September 2008. Claims declined to 466,000 in the week ended Nov. 21 from 501,000 a week earlier, the report showed.         Continue reading →

China Should Consider Raising Rates, World Bank’s Kuijs Says 

Bloomberg | November 24, 2009 | 04:23 EST

China should consider raising interest rates to help prevent excessive liquidity in the financial system from creating asset-price bubbles, World Bank economist Louis Kuijs said. The “pros of higher interest rates seem to outweigh the cons,” the lender’s senior Beijing-based economist said in an e-mailed note today. The comments were first posted on his blog on the World Bank’s Web site on Nov. 19. Unprecedented lending by Chinese banks and a benchmark one- year lending rate at a five-year low of 5.31 percent have helped to fuel the nation’s economic rebound this year. The loose fiscal and monetary policies could lead to an asset bubble similar to Japan’s in the 1980s, according to BNP Paribas.

“Some are reluctant to tighten monetary policy because of low inflation, the traditional trigger for monetary policy action,” Kuijs said. “However, the recent global financial crisis has shown the dangers of neglecting asset-price increases in monetary and financial policy making.” In countries where capital inflows are a big problem, interest-rate increases may be counter-productive because extra money from       Continue reading →

Surprise fall in US home building 

BBC NEWS | 2009/11/18 | 14:21:13 GMT

The construction of new homes and apartments in the US showed a surprise fall in October. New US housing starts tumbled 10.6% to an annual rate of 529,000 homes – the lowest level since April. The decline in construction was led by a fall in demand for both single-family and multi-family occupancies. Separately, a report showed prices edging up in October. The consumer price index rose 0.3%, pushed up by higher energy prices.

‘A weak number’

The housing figures are a blow to recent signs of recovery in the market. David Resler from Nomura Securities in New York said they were “really disappointing.” “I had convinced myself that we had turned the corner on housing,” he added. “I am no longer convinced. This is really a quite weak number.” Congress has voted to extend a tax credit of up to $8,000 for first-time buyers. It had been due to expire at the end of November. Some analysts said that the uncertainty over whether it would be renewed could have held back construction.     Continue reading →

Asia Trip Helped Usher in a New Era of American Engagement -Obama 

November 21, 2009 | 6:01 AM | abc news

President Obama hailed his recently concluded Asia trip a success, saying the trip helped to facilitate “a new era of American engagement.” In his weekly address, taped earlier this week while in Seoul, South Korea, the president said that a major focus of the trip was to support and encourage economic recovery in the United States. “As we emerge from the worst recession in generations, there is nothing more important than to do everything we can to get our economy moving again and put Americans back to work, and I will go anywhere to pursue that goal,” President Obama said. In facilitating the economic recovery, the president said that international trade is an important component. “We … need to place a greater emphasis on exports that we can build, produce and sell to other nations – exports that can help create new jobs at home and raise living standards throughout the world,” the president said. Furthermore, the president said that by increasing our exports to Asia by 5 percent, the U.S. could create hundreds of thousands of jobs. Looking forward, President Obama pointed to a forum on job creation with U.S. business leaders on Dec. 3 as a continuation of his commitment to focus on job creation. The president said that while progress has been made, there is more that remains to be done. “I will not let up until businesses start hiring again, unemployed Americans start working again and we rebuild this economy stronger and more prosperous than it was before,” President Obama said.       Continue reading →

World economies rebound but China set for best growth

BBC NEWS | 2009/11/19 | 11:55:56 GMT

The Organisation for Economic Co-operation and Development (OECD) says growth and recovery are expected in 2010 in just about all world regions. For its 30 member countries, rich nations including the US and UK, it has more than doubled its growth forecast to 1.9% for next year, from 0.7%. But the OECD warns developed nations not to expect a smooth ride. It said growth was being “held back by still substantial headwinds” and would be “modest” for some time. The very measures that are helping richer nations to recover pose risks to that recovery, the OECD says. The UK, for example, needed to come up with a concrete plan to ease concerns about the stability of the public finances, it added. The OECD said the effectiveness of the UK’s asset purchase programme – the so-called quantitative easing programme – was uncertain.

Jobless recovery?

The main danger for rich countries is unemployment, according to the OECD’s economic outlook. In the US, people are expected to continue to lose their jobs at a faster rate than new ones are created until sometime in the first part of next year. For the European Union, the picture is even worse. Unemployment may continue to rise in that region until 2011. A very different economic outlook is forecast for key emerging nations. China can expect to grow by 10%, India by more than 7%. The other two stand-out nations are Brazil and Russia. The OECD expects Brazil’s economy to rebound and expand by almost 5% after stagnating this year. Russia is also predicted to see that kind of economic improvement next year. But its turnaround will be even more dramatic. This year, it has experienced one of the worst economic slumps in the world – contracting by almost 9%. But those four so-called Bric countries are not part of the 30-strong OECD club. The one member nation whose economy should perform vigorously in 2010 is also an eastern one: South Korea should rebound to grow by 4.5% in both 2010 and 2011, after ending this year with almost no growth.

Bankers poised to help China’s richest invest $7.6 trillion – group 

Reuters | Yahoo News | Thursday November 19 | 02:00 PM

Bankers poised to help China's richest invest $7.6 trln - group

The number of U.S.-dollar millionaires in China is expected to nearly double in five years, luring private bankers eager to help them invest an expected combined wealth over $7.6 trillion by 2013, Boston Consulting Group (BCG) said on Thursday. Global wealth declined last year for the first time since 2001, the consultancy said, but the number of Chinese individuals with household financial wealth of more than $1 million may grow to 788,000 by 2013 from 417,000 in 2008.

“We believe that China’s wealth market offers an attractive window of opportunity for banks,” Frankie Leung, a BCG partner in Hong Kong, told reporters in Beijing. “How banks should act to capture the opportunities and establish competitive positions would be a key strategic issue to explore.” Foreign banks, including HSBC Holdings Plc, Citigroup Inc and Bank of East Asia, have all started private banking businesses in China, competing for affluent clients with local rivals such as Bank of China. According to the consultancy’s definition, financial wealth includes cash, equities and bonds but excludes real estate and privately owned enterprises.

Globally, total assets of rich individuals declined by 11.7 percent to $92.4 trillion in 2008 due to the global financial crisis, the first decline since 2001, but BCG expects growth to resume over the next few years. “It will take roughly five years for the wealth pools to recover from the crisis and to reach a level that is comparable to wealth growth in 2007,” said Holger Michaelis, a partner and managing director of the firm. He added that the financial crisis has made rich people abandon complex products in favor of simple, less risky investments to protect, rather than grow their wealth.

Trade talks end Obama China trip 

BBC NEWS | 2009/11/18 | 10:10:44 GMT

CHINA AND US TIES

  • Veto holders on five-member UN Security Council
  • China is the biggest foreign investor in US treasury bonds, owning about $770bn (£457bn)
  • China is the world’s biggest greenhouse gas producer at 20.7% of global emissions, followed by the US with 15.5%
  • US imports from China dwarf its exports, stoking trade tensions

US President Barack Obama has met Chinese Premier Wen Jiabao on the last day of his much-watched visit to the rising Asian house. Trade disputes were expected to be on the agenda during Mr.. Obama’s lunch with China’s third-highest leader, who is responsible for the economy. Reports quoted the Chinese premier as having urged a “steady balancing” of trade with the US during the talks. Mr.. Obama later visited China’s Great Wall, before heading to South Korea. The US president, who is on a week-long tour of East Asia, is expected to focus on North Korea’s nuclear ambitions during talks in Seoul.

Protectionism

Before Wednesday’s meeting with the Chinese prime minister, Mr.. Obama said the Washington-Beijing relationship was now about more than trade and economics. He said it also covered climate, security and other matters of international concern, the Associated Press news agency   Continue reading →

Highlights of Obama-Hu joint news conference in Beijing 

Reuters | Tue Nov 17, 2009 | 1:01pm IST

Following are key quotes by U.S. President Barack Obama and his Chinese counterpart, President Hu Jintao, from their joint statement to the media in Beijing on Tuesday.

ECONOMY

HU JINTAO: “We reiterated that we will continue to increase dialogue and cooperation on macroeconomic and financial policies and continue to consult, on an equal footing, to properly resolve and address economic and trade frictions, in a joint effort to uphold the sound and steady growth of our business ties and trade. I stressed to President Obama that under the current circumstances our two countries need to oppose all kinds of trade protectionism even more strongly.”

BARACK OBAMA: “Going forward we agreed to advance the pledge made at the G20 summit in Pittsburg and pursue a strategy of more balanced economic growth. A strategy where America saves more spends less, reduces our long-term debt and where China makes adjustments across a broad range of policies to rebalance its economy and spur domestic demand. “I was pleased to note the Chinese commitment made in past statements to move toward a more market-oriented exchange rate over time.”

CLIMATE CHANGE

OBAMA: “We’ve agreed to a series of important new initiatives in this area. As President Hu indicated, we are creating a joint clean energy research centre and have achieved agreements on energy efficiency, renewable energy and cleaner uses of coal, electric vehicles and shale     Continue reading →

NY Fed ‘paid AIG banks too much’ 

BBC NEWS | 2009/11/17 | 10:26:48 GMT

Regulators involved in the rescue of AIG may have overpaid other banks when cutting a deal, a report says. The New York Fed paid AIG’s business partners face value for securities so they would cancel insurance-like contracts AIG had written. But officials used a weak negotiating strategy, Special Inspector General Neil Barofsky’s report said. AIG was initially bailed out for $85bn (£50bn), but its total rescue package eventually amounted to over $180bn. The report criticised both the Federal Reserve Bank of New York and the US Federal Reserve for failing to use their “considerable leverage” to force AIG’s counterparties to accept less than the full amount for the assets. As a result, 16 banks, including Goldman Sachs, Deutsche Bank, Societe Generale and Royal Bank of Scotland, were paid more than $62bn. The initial bail-out “was done with almost no independent consideration of the terms of the transaction or the impact that those terms might have on the future of AIG,” the report said. It also criticised the New York Fed, chaired at the time by current Treasury Secretary Timothy Geithner, for insisting that all banks be treated equally in negotiations and for not treating US banks differently from foreign institutions.         Continue reading →

China and US ‘to work together’ 

BBC NEWS | 2009/11/17 | 08:42:04 GMT

US Trade Deficit with China for Sep '09

The presidents of China and the US have agreed to work together to tackle some of the world’s most pressing problems. On climate change, Barack Obama said both sides agreed on the need for a comprehensive global deal in Copenhagen next month, not a political statement. Mr. Obama and Hu Jintao also agreed to push for North Korea to re-enter stalled talks on its nuclear programme. But underlying tensions were referred to, with Hu Jintao calling for joint opposition to trade protectionism. The two leaders held two hours of talks in Beijing’s Great Hall of the People, on the edge of Tiananmen Square. Both leaders then held a joint media event at which they read out statements, but took no questions from listening journalists.

Mr. Obama came to China for his first visit as president emphasising that China was now a major player on the world stage – and he turned to that point again in Beijing. “The major challenges of the 21st Century from climate change to nuclear proliferation to economic recovery are challenges that touch both our nations, and challenges that neither of our nations can solve by acting alone,” he said. With world leaders, meeting in Copenhagen next month to discuss how to tackle global warming, climate change is perhaps the most pressing issue to resolve. Mr. Obama appeared to raise hopes that a deal could be struck in Copenhagen. “Our aim there is not a partial accord or a political declaration, but   Continue reading →

World Out of Balance –Paul Krugman 

PAUL KRUGMAN | NYT | November 16, 2009

International travel by world leaders is mainly about making symbolic gestures. Nobody expects President Obama to come back from China with major new agreements, on economic policy or anything else. But let’s hope that when the cameras aren’t rolling Mr. Obama and his hosts engage in some frank talk about currency policy. For the problem of international trade imbalances is about to get substantially worse. And there’s a potentially ugly confrontation looming unless China mends its ways. Some background: Most of the world’s major currencies “float” against one another. That is, their relative values move up or down depending on market forces. That doesn’t necessarily mean that governments pursue pure hands-off policies: countries sometimes limit capital outflows when there’s a run on their currency (as Iceland did last year) or take steps to discourage hot-money inflows when they fear that speculators love their economies not wisely but too well (which is what Brazil is doing right now). But these days most nations try to keep the value of their currency in line with long-term economic fundamentals.

China is the great exception. Despite huge trade surpluses and the desire of many investors to buy into this fast-growing economy — forces that should have strengthened the renminbi, China’s currency — Chinese authorities have kept that currency persistently weak. They’ve done this mainly by trading renminbi for dollars, which they have accumulated in vast quantities. And in recent months, China has carried out what amounts to a beggar-thy-neighbor devaluation, keeping the yuan-dollar exchange rate fixed even as the dollar has fallen sharply against other major currencies. This has given Chinese exporters a growing competitive advantage over their rivals, especially producers in other     Continue reading →

Stronger Yuan Needed for Global Rebalancing – IMF Chief 

Reuters | 15 Nov 2009 | 9:48 PM ET

A stronger Chinese Yuan is part of the reforms that Beijing needs to implement to increase domestic consumption and help ease global imbalances, the head of the International Monetary Fund said on Monday. IMF Managing Director Dominique Strauss-Kahn said the countries at the heart of global imbalances needed to take various measures to ease them. In the case of China, that means an increasing emphasis on domestic demand, especially private consumption, Strauss-Kahn said in remarks prepared for a financial conference in Beijing. “A stronger currency is part of the package of necessary reforms,” he said. “Allowing the renminbi (Yuan) and other Asian currencies to rise would help increase the purchasing power of households, raise the labour share of income and provide the right incentives to reorient investment.” His remarks come as U.S. President Barack Obama is in Shanghai on the first leg of a four-day visit that will grapple with economic imbalances and the future of the Yuan. Strauss-Kahn noted that Chinese authorities were already taking steps to boost household consumption, including health care reforms. “But more can be done to secure a lasting, structural shift towards consumption, by expanding the scope of social policies, moving ahead on financial sector reform, and undertaking corporate governance reforms,” he said.     Continue reading →

Obama presses China over rights

BBC NEWS | 2009/11/16 | 10:29:50 GMT

US President Barack Obama has told China that individual rights and freedoms should be available to all. He told an audience of Chinese students that certain freedoms were universal – and not just limited to Americans. Speaking at a question and answer session in Shanghai, Mr. Obama added that China and the US were not destined to be adversaries. He has now arrived in the Chinese capital, Beijing, where he is to meet President Hu Jintao.

Freedom of expression

In his speech at the Shanghai Science and Technology Museum, the US president praised China’s efforts in lifting millions of people out of poverty, saying it was “unparalleled” in human history. But according to a BBC correspondent in Beijing, Michael Bristow, Mr. Obama also made comments that his hosts would have been less pleased to hear. Although he was careful not to attack the Chinese government directly, he declared that certain rights and freedoms were universal. China is an authoritarian country in which there are no elections for the country’s national leaders. Media outlets and the internet are heavily censored, and those who speak out against the government are often imprisoned. “We do not seek to impose any system of government on any other nation, but we also don’t believe that the principles we stand for are unique to our nation,” he said. “These freedoms of expression and worship, of access to information and political participation – we believe are universal rights.” Mr. Obama added: “They should be available to all people, including ethnic and religious minorities, whether they are in the    Continue reading →