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China Says Local-Level Debt Soars, Stirring Fear

The total debt of local governments in China has soared to nearly $3 trillion as the country’s addiction to credit-fueled growth has deepened in recent years, according to the findings of a long-awaited report released on Monday by the central auditing agency. In the report, which is likely to further raise concerns about China’s debt problem, the National Audit Office found that local governments across the country had accumulated 17.89 trillion renminbi, or $2.95 trillion, worth of debt obligations as of the end of June. That was an increase of 12.7 percent from December 2012, when local government debt stood at 15.88 trillion renminbi, the report said. The June figure also represented a sharp increase of 67 percent from the end of 2010, when an earlier report by the Audit Office estimated local government debt at 10.71 trillion renminbi. Other reports have estimated local government debt […]

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China’s growth may hit 7.6 percent

China’s economic growth is likely to stand at 7.6 percent this year, slightly down from 7.7 percent in 2012, said a State Council report on Wednesday. Economic growth has been higher than expected since 2011 despite a declining trend, said a mid-term evaluation report on the implementation of the 12th five-year development plan (2011 to 2015). The report was submitted by the State Council, China’s cabinet, to the bi-monthly session of the Standing Committee of the National People’s Congress (NPC). The five-year plan set an annual growth target of gross domestic product (GDP) at 7 percent between 2011 and 2015. GDP growth was 9.3 percent in 2011, 7.7 percent in 2012 and 7.6 percent in the first half of this year, according to the report. "We can not deny a downward pressure on economic growth," said Xu Shaoshi, minister in charge of the National […]

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China's growth may hit 7.6 percent

China’s economic growth is likely to stand at 7.6 percent this year, slightly down from 7.7 percent in 2012, said a State Council report on Wednesday. Economic growth has been higher than expected since 2011 despite a declining trend, said a mid-term evaluation report on the implementation of the 12th five-year development plan (2011 to 2015). The report was submitted by the State Council, China’s cabinet, to the bi-monthly session of the Standing Committee of the National People’s Congress (NPC). The five-year plan set an annual growth target of gross domestic product (GDP) at 7 percent between 2011 and 2015. GDP growth was 9.3 percent in 2011, 7.7 percent in 2012 and 7.6 percent in the first half of this year, according to the report. "We can not deny a downward pressure on economic growth," said Xu Shaoshi, minister in charge of the National […]

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China cash squeeze worsens despite central bank efforts

China’s cash squeeze worsened on Monday despite the central bank’s repeated attempts to calm financial markets with emergency money injections. The seven-day bond repurchase rate, an important gauge of short-term liquidity, climbed to 8.8 per cent in early trading, up about 60 basis points from its average on Friday, a signal that banks are still hoarding cash . The continued tightening of monetary conditions in the face of the central bank’s liquidity injections raises the spectre of a repeat of the Chinese cash crunch earlier this year that exposed fragility in the world’s second-biggest economy and spooked global investors. Traders and analysts have praised the central bank’s more aggressive response to the current liquidity squeeze, but concerns are mounting as its actions appear to have been largely ineffectual so far. Late on Friday the People’s Bank of China announced it had conducted Rmb300bn ($49bn) of “short-term liquidity operations” , […]

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China Rates Approach Crisis Levels Despite Central Bank Measures

An exceptional bid by China’s central bank to curb soaring interest rates and relieve pressure on the financial system appeared to have come up short on Monday, as Chinese money market rates shrugged off the measure and continued to approach the crisis levels seen in June. The central bank, the People’s Bank of China, said late Friday that it had provided more than 300 billion renminbi, or about $50 billion, in short-term funds to selected banks over a three-day period that week. Rates continued to surge on Monday, however, in China’s money markets — a key source of short-term funding for commercial banks and also for financial institutions engaged in risky, off-balance-sheet shadow lending. One key rate, the seven-day repurchase rate, rose as high as 10 percent on Monday. That was double the rate of a week earlier and the highest level since June, when the […]

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Beijing to “resolutely control” population growth

Curbing the explosive growth of its population will be a top priority for the Beijing municipal government, Mayor of the Chinese capital Wang Anshun has said. "To resolutely control the population’s excessive growth is the key to solving multiple problems, such as traffic and environmental problems," said Wang on Sunday at a session of the Communist Party of China (CPC) Beijing committee. Beijing will give full play to the restructuring of industries and upgrading of service industries to slow down population growth, he added. Since 2000, Beijing’s permanent population has increased by an average of nearly 600,000 annually to reach 20.69 million at the end of 2012, far exceeding the previously planned target of keeping the population at 18 million by 2020. The population of Beijing is about 2.6 times that of London and 2.5 times that of New York. The metropolis faces traffic […]

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Beijing to "resolutely control" population growth

Curbing the explosive growth of its population will be a top priority for the Beijing municipal government, Mayor of the Chinese capital Wang Anshun has said. "To resolutely control the population’s excessive growth is the key to solving multiple problems, such as traffic and environmental problems," said Wang on Sunday at a session of the Communist Party of China (CPC) Beijing committee. Beijing will give full play to the restructuring of industries and upgrading of service industries to slow down population growth, he added. Since 2000, Beijing’s permanent population has increased by an average of nearly 600,000 annually to reach 20.69 million at the end of 2012, far exceeding the previously planned target of keeping the population at 18 million by 2020. The population of Beijing is about 2.6 times that of London and 2.5 times that of New York. The metropolis faces traffic […]

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China reveals Rmb300bn cash injection to calm lenders

China has made a fresh attempt to head off a cash squeeze by announcing the injection of Rmb300bn of emergency money into its financial system, in an uncomfortable echo of a crunch earlier this year which rattled global markets. China’s central bank said it had provided funds to cash-strapped lenders over three consecutive days, disclosing more detail than on Thursday when it first confirmed it had made the highly unusual move of “short term liquidity operations”. China’s interbank lending rates soared dangerously high on Friday. Fears of a Chinese “hard” economic landing are top of many international investors’ 2014 worry lists, but financial markets have so far seen little danger of the country’s growth prospects being seriously derailed. Global stocks have been buoyed instead this week by the smooth launch of US Federal Reserve plans to “taper” , or scale back its asset purchases. “This may put China back […]

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US growth of 4.1% validates Fed move

The US economy grew at its fastest rate in nearly two years in the third quarter of 2013 after revisions boosted the annualised rate of expansion from 3.6 to 4.1 per cent , days after the Federal Reserve said it would start scaling back its $85bn-a-month monetary stimulus. Critically, almost all of the upward revision was due to stronger consumption, which grew at an annualised rate of 2 per cent rather than 1.4 per cent. This suggests greater underlying momentum in the economy. US stocks reacted strongly to put the S&P 500 on pace for its biggest weekly gain in two months, while the dollar was stronger and Treasury yields hovered just below two-year peaks. The S&P was up 0.5 per cent to close at 1,818.31 in New York. The revision in growth adds to a series of recent data that suggests the US economy is accelerating and validates […]

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Fed Dials Back Bond Buying, Keeps a Wary Eye on Growth

Ben Bernanke gave the U.S. economy a nod of approval just a month before he leaves the Federal Reserve, moving the central bank to begin winding down a bond-buying program meant to boost growth with the recovery on firmer footing. The Fed has pulled back its stimulus efforts before, only to restart them when the economy disappointed, and new challenges loom, including a surprising slowdown in inflation. But Mr. Bernanke said in his final news conference as Fed chairman that the economy was getting to a point where it needs less help. "Today’s policy actions reflect the [Fed’s] assessment that the economy is continuing to make progress, but that it also has much farther to travel before conditions can be judged normal," Mr. Bernanke said. After months of wringing their hands about the implications of less Fed stimulus, investors resoundingly approved of the latest action to begin paring the […]

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Coal group’s woes threaten China’s trust industry

A Chinese mining boss who threw a multimillion-dollar wedding for his daughter last year is now struggling under a pile of debts that threaten to trigger a major default in the country’s shadow banking industry. Until a few weeks ago Xing Libin was known as the wealthiest man in Liulin, a county in northern China that struck it rich over the past decade thanks to bulging coal deposits. Looking more like a tousled professor than a slick tycoon, Mr Xing acquired mining rights for what local media said was “the price of a cabbage” and built his unlisted company, Liansheng Resources Group, into a big player in the Chinese coal industry. Mr Xing put his success on display in March 2012 at a Rmb70m ($11m) party to jointly celebrate his daughter’s wedding and his company’s 10th anniversary. He rented three aircraft to fly family and friends to the resort […]

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China's manufacturing PMI eases to 3-month low: HSBC

China’s manufacturing activity expanded in December, but growth slowed to a three-month low, according to HSBC’S preliminary purchasing managers’ index (PMI) released on Monday. The HSBC flash manufacturing PMI for December eased to 50.5, compared to 50.8 in November and 50.9 in October. However, the figure still remained above the boom-bust line of 50, HSBC said in a report. Growth in the new order and new export order sub-indices increased at a faster pace, while employment decreased at a faster rate compared with the preceding month, it said. According to Qu Hongbin, chief China economist with HSBC, the December HSBC flash manufacturing PMI reading slowed marginally from November’s final reading, but stands above the average reading for the third quarter, "implying that the recovering trend of the manufacturing sector starting from July still holds up." "We expect China’s GDP growth to stabilize at around […]

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China’s manufacturing PMI eases to 3-month low: HSBC

China’s manufacturing activity expanded in December, but growth slowed to a three-month low, according to HSBC’S preliminary purchasing managers’ index (PMI) released on Monday. The HSBC flash manufacturing PMI for December eased to 50.5, compared to 50.8 in November and 50.9 in October. However, the figure still remained above the boom-bust line of 50, HSBC said in a report. Growth in the new order and new export order sub-indices increased at a faster pace, while employment decreased at a faster rate compared with the preceding month, it said. According to Qu Hongbin, chief China economist with HSBC, the December HSBC flash manufacturing PMI reading slowed marginally from November’s final reading, but stands above the average reading for the third quarter, "implying that the recovering trend of the manufacturing sector starting from July still holds up." "We expect China’s GDP growth to stabilize at around […]

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Insight: Wall Street's energy rivals – Big Oil, a French utility, the Koch brothers

As a historic oil and gas boom transforms the U.S. energy sector, Wall Street is losing the battle to remain the partner of choice for energy producers and major consumers seeking to protect themselves against volatile prices. In the thriving Texas Permian oil patch and beyond, banks are being edged out by a handful of the world’s biggest corporations including BP Plc, Cargill and Koch Industries. With Wall Street hamstrung by growing regulatory restrictions, a recently finalized ban on proprietary trading and increased capital requirements, these corporate behemoths are leveraging their robust balance sheets and savvy global trading desks to capture as much as a quarter of the global multibillion-dollar market for hedging commodity prices. New risks have arisen this year that could tilt the scales further, as the Federal Reserve considers limiting banks’ ability to trade in real physical markets, the kind of deals […]

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Insight: Wall Street’s energy rivals – Big Oil, a French utility, the Koch brothers

As a historic oil and gas boom transforms the U.S. energy sector, Wall Street is losing the battle to remain the partner of choice for energy producers and major consumers seeking to protect themselves against volatile prices. In the thriving Texas Permian oil patch and beyond, banks are being edged out by a handful of the world’s biggest corporations including BP Plc, Cargill and Koch Industries. With Wall Street hamstrung by growing regulatory restrictions, a recently finalized ban on proprietary trading and increased capital requirements, these corporate behemoths are leveraging their robust balance sheets and savvy global trading desks to capture as much as a quarter of the global multibillion-dollar market for hedging commodity prices. New risks have arisen this year that could tilt the scales further, as the Federal Reserve considers limiting banks’ ability to trade in real physical markets, the kind of deals […]

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In China, Western Companies Cut Jobs as Growth Ebbs

After years of rapid expansion in China, some Western companies are shedding jobs as the world’s second-largest economy grows at its lowest rate in more than 20 years. Hewlett-Packard Co. says it is laying off a small percentage of its workforce in China, which the company calls one of its most important markets. Johnson & Johnson is cutting its pharmaceutical sales force by an undisclosed amount, people close to the company say. Software-services provider Bsquare Corp. BSQR -1.21% BSQUARE Corp. U.S.: Nasdaq $ 3.26 -0.04 -1.21% Dec. 12, 2013 3:59 pm Volume (Delayed 15m) : 11,225 P/E Ratio N/A Market Cap $37.07 Million Dividend Yield N/A Rev. per Employee $382,303 More quote details and news » BSQR in Your Value Your Change Short position is shutting its Beijing office, the Bellevue, Wash., company said in October, two months after telling analysts that "sales productivity was not up to […]

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Strong China retail data defy predictions of slowdown

As China GDP Figures Are Released China’s economy is riding its strong momentum into the end of the year, with retail sales accelerating and industrial output slowing just a touch in November. Following on previous figures that showed a jump in exports and subdued inflation, the data published on Tuesday confirmed that the world’s second-largest economy remained in good health and had once again defied predictions for a more pronounced slowdown . Just a few months ago, analysts had expected that Chinese economic growth would tail off more sharply in the fourth quarter, but for now it appears to be close to its 7.8 per cent year-on-year pace of the third quarter. Industrial output increased 10 per cent in November from a year earlier, down from 10.3 per cent in October but above its average this year. Annual growth in fixed-asset investment edged down to […]

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China's 2014 growth in focus as leaders met on reform plans

China’s leaders began mapping out their economic and reform plans for 2014 behind closed doors on Tuesday, and would have drawn confidence from data showing the economy has sustained momentum from a mid-year pick-up into the final quarter. Even as the government’s 7.5 percent growth target for this year looks increasingly secure, some advisors think it may not issue a specific target for 2014 in order to have more room to pursue reforms intended to lead to more sustainable growth. The government has repeatedly said it has the appetite to overhaul the world’s second-largest economy, and last month outlined an ambitious agenda for the next decade, but it has also shown a distaste for growth slowing towards 7 percent. Top government think tanks, which make policy proposals, were still debating whether the growth target should be cut to 7 percent in 2014 from this year’s 7.5 […]

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China’s 2014 growth in focus as leaders met on reform plans

China’s leaders began mapping out their economic and reform plans for 2014 behind closed doors on Tuesday, and would have drawn confidence from data showing the economy has sustained momentum from a mid-year pick-up into the final quarter. Even as the government’s 7.5 percent growth target for this year looks increasingly secure, some advisors think it may not issue a specific target for 2014 in order to have more room to pursue reforms intended to lead to more sustainable growth. The government has repeatedly said it has the appetite to overhaul the world’s second-largest economy, and last month outlined an ambitious agenda for the next decade, but it has also shown a distaste for growth slowing towards 7 percent. Top government think tanks, which make policy proposals, were still debating whether the growth target should be cut to 7 percent in 2014 from this year’s 7.5 […]

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Heinberg: Snake Oil and the End of Growth

The last newsletter of 2013 brings together an essay, an interview, and a blog post, all with the common theme of the intersection between economic growth and energy. Thank you for your support in 2013, and my very best wishes for the Holidays and the New Year. Richard Preface to the Romanian edition of Snake Oil In the United States, fracking is widely regarded as the biggest energy development in decades, a revolution that is making America self-sufficient in oil and natural gas. Now the petroleum industry wants to bring fracking to Europe, and promises equally grand results. But there is a problem: if we look beyond mere claims and promises, and examine the actual data on environmental impacts and on oil and gas production potential, the shale revolution in America is revealed to be a costly, destructive project whose benefits are short-lived. […]

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China inflation slows on lower food prices

Chinese shoppers Inflation in China slowed in November, giving the government more room to push ahead with its slate of financial reforms. The consumer price index rose 3 per cent year-on-year, down from its 3.2 per cent pace in October and comfortably below the official 3.5 per cent target for 2013. A drop in food prices from a month earlier was the main source of downward pressure on inflation in November. Producer prices remained in deflationary territory, dropping 1.4 per cent year-on-year, though that was up slightly from October’s 1.5 per cent decline. Weak commodity prices have suppressed factory-gate inflation this year. When Chinese financial institutions unleashed a flood of credit earlier this year, there were concerns that the country would eventually face higher inflation. But the central bank began to act in June to withdraw excess cash from the financial system, and the subdued inflation readings are testament […]

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BP wins battle to limit Gulf payouts

BP won a big victory in its battle to limit the cost of compensation for its 2010 oil spill in the Gulf of Mexico after an appeals court called for an injunction to suspend payments to businesses that had not suffered losses as a result of the disaster. BP has argued that the compensation settlement over the spill that it agreed last year is being misinterpreted to allow businesses that have not suffered any harm to claim for apparent losses. A majority on a three-judge panel of the Fifth Circuit appeals court ruled that a lower district court should draw up an injunction “tailored so that those who experienced actual injury traceable to loss from the Deepwater Horizon accident continue to receive recovery, but those who did not do not receive their payments until this case is fully heard and decided”. The decision gave BP the suspension of payments […]

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Beijing must pull off a mix of Mao and markets

The plenum sets out a bold agenda and makes clear who is in charge, writes Robert Zoellick The plenum in Beijing may be a landmark . Most early commentary has focused on its economic reforms. But it has been little noted that the political signal is a mix of Mao and markets. The good news is that China ’s leaders recognise that the country needs to make a structural shift in its growth model – from export and investment-led growth to increased consumption and a stronger service sector. No one should underestimate the plenum’s boldness. After 30 years of almost 10 per cent annual growth, it is no small matter to change plans. Most countries dither until crisis or slowdowns compel change. Of the 101 economies that the World Bank considered middle-income in 1960, only 13 were high-income by 2008. The not so good news is that the previous […]

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Insight: No quick exit from West’s economic malaise

Ending the Great Stagnation that is taxing Western policy makers may depend as much on the Chinese Communist Party as it does on the world’s leading central banks. Six years after the global financial crisis erupted, there is any number of explanations why Europe cannot shake off a Japan-style balance-sheet recession and why the United States is experiencing sub-par growth and high unemployment. Governments and households racked up too much debt to sustain living standards. Demographic tailwinds have turned into headwinds as baby boomers retire and the surge of women entering the workforce has run its course. Many banks are still ailing and are building up capital instead of lending freely. But two other factors cannot be overlooked. Firstly, there is an excess of global savings, which has lowered the natural real rate of interest that equalizes savings and investment. The result is a liquidity trap. […]

Posted On : Published By : Tom Whipple
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Insight: No quick exit from West's economic malaise

Ending the Great Stagnation that is taxing Western policy makers may depend as much on the Chinese Communist Party as it does on the world’s leading central banks. Six years after the global financial crisis erupted, there is any number of explanations why Europe cannot shake off a Japan-style balance-sheet recession and why the United States is experiencing sub-par growth and high unemployment. Governments and households racked up too much debt to sustain living standards. Demographic tailwinds have turned into headwinds as baby boomers retire and the surge of women entering the workforce has run its course. Many banks are still ailing and are building up capital instead of lending freely. But two other factors cannot be overlooked. Firstly, there is an excess of global savings, which has lowered the natural real rate of interest that equalizes savings and investment. The result is a liquidity trap. […]

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Iran sanctions eased, but pinch still felt

The sanctions relief offered to Iran by the U.S. and five world powers has begun to get the gears of commerce slowly turning again in an economy that remains in shambles. The Obama administration estimates relief from some sanctions in exchange for a temporary pause in Iran’s nuclear enrichment program will amount to just $7 billion. That’s a meager amount for the economy of a nation of nearly 80 million people – it’s less than one month’s worth of Iran’s oil production and just 7 percent of Iran’s overseas cash that remains frozen under the sanctions. Still, Iranians see the move as a much needed step toward a more normal economy after years of crippling inflation and job losses. “Markets operate on a psychological basis,” says Ray Takeyh, an Iran expert at the Council on Foreign Relations and former […]

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Iraq Signs $690M Barrier Contract With S.Korea’s Daewoo

raq said on Tuesday it had signed a 511 million euro ($690 million) contract with South Korea’s Daewoo to build a sea barrier at its planned Grand Faw port in the south of the country. Under the contract, Daewoo will build the barrier, known as a “breakwater” within 30 months, Iraq’s Transport Ministry said in a statement on its website. It said Daewoo was one of four companies which had bid for the contract to build the barrier at Grand Faw, which is located in Basra, Iraq’s southern oil hub. Grand Faw is one of several projects which Iraqi authorities hope will create a transportation corridor between the Middle East and Europe that will bypass the Suez Canal. ($1 = 0.7404 euros) (Reporting by Raheem Salman; Editing by Louise Heavens)

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Iraq Signs $690M Barrier Contract With S.Korea's Daewoo

raq said on Tuesday it had signed a 511 million euro ($690 million) contract with South Korea’s Daewoo to build a sea barrier at its planned Grand Faw port in the south of the country. Under the contract, Daewoo will build the barrier, known as a “breakwater” within 30 months, Iraq’s Transport Ministry said in a statement on its website. It said Daewoo was one of four companies which had bid for the contract to build the barrier at Grand Faw, which is located in Basra, Iraq’s southern oil hub. Grand Faw is one of several projects which Iraqi authorities hope will create a transportation corridor between the Middle East and Europe that will bypass the Suez Canal. ($1 = 0.7404 euros) (Reporting by Raheem Salman; Editing by Louise Heavens)

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Auto sales boom spawns a used car market in China

As car enthusiasts converge on the annual Guangzhou auto show, few have anything except a shiny new set of wheels in mind. But explosive growth that transformed China into the world’s largest auto market is also giving life to a new industry here: used cars. Chinese started buying new cars in huge numbers about four years ago, about the average length of time analysts say drivers will stick with a vehicle before trading it in for a fresh model. The secondhand market is already taking off, with sales growth last year outpacing that for new vehicles. By volume it is still dwarfed by new cars, which outsold used vehicles three to one. In countries such as the U.S., that ratio is reversed, highlighting the secondhand market’s vast potential to make car ownership affordable for millions more Chinese. The challenge in China is to […]

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World agricultural output continues to rise, despite predictions of decline

Many say agricultural output is headed for decline, but 2013 continues a 50-year rise. The year 2013 has been a great year for global agriculture. Record world production of rice and healthy production of wheat and corn produced strong harvests across the world. These gains were achieved despite continuing predictions that world agricultural output is headed for a decline. The US Department of Agriculture (USDA) reports that world rice harvests for 2012/2013 were a record 469 million metric tons. Corn and wheat harvests were also strong, following record harvests for both grains during the 2011/2012 season. The USDA is now projecting world record harvests for corn, wheat, and rice for 2013/2014. These numbers cap a 50-year trend of remarkable growth in world grain production. Since 1960, global wheat and rice production has tripled, and corn production is almost five times higher. For decades, […]

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Pipeline Deaths Put China's Urbanization in Focus

Explosions at a pipeline that left dozens dead and upended cars and sidewalks in a busy Chinese port city have renewed focus on industrial facilities in densely populated areas—an issue of rising importance as Beijing pushes an ambitious urbanization plan. Regulators and the pipeline’s operator, China’s largest refining company, began exchanging blame on Monday over the Friday incident in the eastern city of Qingdao, which drew widespread attention across the country and prompted a visit by President Xi Jinping to a local hospital to meet with victims. Authorities on Monday raised the death toll to 55, with 136 injured and nine still missing. Chinese authorities said Monday that the blasts exposed problems caused by human error and that the accident was a “very serious dereliction of duty,” China’s official Xinhua news agency said, citing Yang Dongliang, director of the State Administration of Work Safety. Mr. Yang said the problems […]

Posted On : Published By : Tom Whipple
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Pipeline Deaths Put China’s Urbanization in Focus

Explosions at a pipeline that left dozens dead and upended cars and sidewalks in a busy Chinese port city have renewed focus on industrial facilities in densely populated areas—an issue of rising importance as Beijing pushes an ambitious urbanization plan. Regulators and the pipeline’s operator, China’s largest refining company, began exchanging blame on Monday over the Friday incident in the eastern city of Qingdao, which drew widespread attention across the country and prompted a visit by President Xi Jinping to a local hospital to meet with victims. Authorities on Monday raised the death toll to 55, with 136 injured and nine still missing. Chinese authorities said Monday that the blasts exposed problems caused by human error and that the accident was a “very serious dereliction of duty,” China’s official Xinhua news agency said, citing Yang Dongliang, director of the State Administration of Work Safety. Mr. Yang said the problems […]

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Putin Bets on Gazprom Purge as Slowdown Threatens Legacy

Vladimir Putin wasn’t having a great day. The Russian president had spent the August morning in a helicopter over Khabarovsk, near the Chinese border, surveying flood damage that had left tens of thousands of people homeless. Then he met with senior advisers who were on the trip, for a briefing on economic issues. They drew parallels to another brewing storm: The energy-export model Putin had relied on to restore Russia’s economic strength had run its course, he was told, said two officials on the trip. The state-dominated economy needed a shock, and, to prevent stagnation as growth slowed, a reset. Something had to be done. The solution Putin chose will ripple through the entire Russian economy starting next year: He elected to freeze prices at such powerful state companies as OAO Gazprom (GAZP) and OAO Russian Railways. The plan is to set off a chain reaction that will lead […]

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No one wants Russia to implode but optimists have their work cut out

No one wants Russia to implode but optimists have their work cut out For the state of Russia’s economy is parlous. A couple of weeks ago, the Russian ministry of economy slashed its forecast for average annual growth between now and 2030 from 4pc to 2.5pc. In fact, Russia’s economy has recently been extremely weak. It fell into technical recession in the first half of the year and it looks likely to post growth of only about 1pc this year, down from an average over the past decade of just under 5pc. Russia’s previously strong growth earned her inclusion in the group of countries known as the BRICs. In fact, this gave a misleading impression of Russia’s underlying dynamism. Russia’s strong past growth reflected a series of one-off factors which cannot be repeated. Most importantly, over the past 10 years, higher oil prices have increased Russia’s export earnings, and […]

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China Announces That It Is Going To Stop Stockpiling U.S. Dollars

China just dropped an absolute bombshell, but it was almost entirely ignored by the mainstream media in the United States.  The central bank of China has decided that it is “no longer in China’s favor to accumulate foreign-exchange reserves”.  During the third quarter of 2013, China’s foreign-exchange reserves were valued at approximately $3.66 trillion .  And of course the biggest chunk of that was made up of U.S. dollars.  For years, China has been accumulating dollars and working hard to keep the value of the dollar up and the value of the yuan down.  One of the goals has been to make Chinese products less expensive in the international marketplace.  But now China has announced that the time has come for it to stop stockpiling U.S. dollars.  And if that does indeed turn out to be the case, than many U.S. analysts are […]

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China Fires Shot Across Petrodollar Bow: Shanghai Futures Exchange May Price Crude Oil Futures In Yuan

Page added on November 21, 2013 With the US shale revolution set to make America the largest exporter of crude, however briefly, the influence of Saudi oil is rapidly declining. This has been felt most recently in the cold shoulder the US gave Saudi Arabia and Qatar first over the Syrian debacle, and subsequently in its overtures to break the ice with Iran over the stern objections of Israel and the Saudi lobby (for a good example of this the most recent soundbites by Prince bin Talal ). But despite the shifting commodity winds and the superficial political jawboning, the reality is that nothing threatens the US dollar’s hegemony in what many claim is the biggest pillar of the currency’s reserve status – the petrodollar, which literally makes the USD the only currency in which energy-strapped countries can transact in to purchase energy. This may be changing soon following […]

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New report: jobs from shale gas development greatly exaggerated by industry

There’s a new report out from the  Multi-State Shale Research Collaborative , which consists of independent, nonpartisan research and policy organizations in New York, Ohio, Pennsylvania, Virginia, and West Virginia that monitor employment trends, tax policy, economic development, and the community impacts of energy extraction in the Marcellus and Utica Shale region. The Collaborative has an advisory committee of academic experts. The new report is entitled: Exaggerating the Employment Impacts of Shale Drilling : How and Why . It contains a lot of great data and important analysis. Among the key findings: Between 2005 and 2012, an estimated 3.7 jobs were created for every well […]

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Krugman Goes Splat

I was fairly amazed to read Paul Krugman’s latest op-ed in the New York Times, titled “ A Permanent Slump? ” He seemed to be coming remarkably close to saying what several of us have been trumpeting for the past few years—that world economic growth is ending and we’d better retool accordingly. “What if the world we’ve been living in for the past five years is the new normal?,” he writes. “What if depression-like conditions are on track to persist, not for another year or two, but for decades?” Wow. That’s a gutsy statement, given that it’s coming from one of the high priests of the Religion of No Limits (otherwise known as economics). What’s even more remarkable is that Krugman’s sudden insight was evidently triggered by comments from Larry Summers (who was almost nominated to be the next Fed Chairman), in a speech at a recent IMF conference […]

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Raw Sewage and Anger Flood Gaza’s Streets as Electricity Runs Low

Raw sewage has flooded streets in a southern Gaza City neighborhood in recent days, threatening a health disaster, after a shortage of electricity and cheap diesel fuel from Egypt led the Hamas government to shut down Gaza’s lone power plant, causing a pump station to flood. Three more sewage stations in Gaza City and 10 others elsewhere in the Gaza Strip are close to overflowing, sanitation officials here said, and 3.5 million cubic feet of raw sewage is seeping into the Mediterranean Sea daily. The sanitation department may soon no longer be able to pump drinking water to Gaza homes. “Any day that passes without a solution has disastrous effects,” Farid Ashour, director of sanitation at the Gaza Coastal Municipalities Water Utility, said Tuesday in an interview. “We haven’t faced a situation as dangerous as this time.” The sewage crisis is the most acute of an […]

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To tackle pollution, China to drop pursuit of growth at all costs

* Govt officials no longer to be judged solely on economic growth * "Unified regulation" pledge could augur stronger ministry in new year By David Stanway BEIJING, Nov 18 (Reuters) – China will steer local governments away from the pursuit of economic growth at all costs and beef up their powers to punish polluters as part of a campaign to reverse the damage done by three decades of unchecked expansion. In wide-ranging economic and social reforms unveiled last week, the ruling Communist Party said it would put more emphasis on environmental protection when assessing officials, and would also hold local authorities directly responsible for pollution. The document, which also pledged to relax its "one-child policy" and further free up its markets, said China would draw an "ecological protection red line" that would limit the economic development of environmentally vulnerable regions. Three decades of industrialisation and double-digit growth in China […]

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Japan Trade Deficit Widens as Fossil Fuel Imports Surge: Economy

Oil Refinery Japan posted its biggest October trade deficit on record, as a revival in exports to the U.S. and China was overwhelmed by the nation’s soaring costs for imported fuel in the wake of the nuclear industry’s shutdown. The shortfall of 1.09 trillion yen ($10.9 billion) extended a record run of deficits to 16 months, and was larger than all 28 forecasts in a Bloomberg News survey, a finance ministry report showed today in Tokyo . Imports (JNTBIMPY) climbed 26.1 percent from a year earlier, while exports gained 18.6 percent. The yen’s slide has helped boost profit forecasts and pushed up stock prices of exporters such as Toyota Motor Corp, while at the same time raising the cost of imports. The deficits are likely to continue and may drag on growth in the world’s third-largest economy, according to economist Norio Miyagawa . “Exports are rebounding on a pick-up […]

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China on path to further reform one-child policy-spokesman

BEIJING (Reuters) – China will further ease its family planning laws after announcing last week that it would allow millions of families to have two children, a senior official from the government’s family planning commission said on Tuesday. "I can only say that the direction is definite, but as to what kind of specific strategy will be chosen, we have to wait for the experts’ verification of the situation at that time," said Mao Qun’an, the spokesman for the National Health and Family Planning Commission. The commission executes and advises the government on family planning policy, and as a senior official at the agency, Mao would be privy to the direction of the recommendations. The government said last week that it would allow couples in which one of the parents is an only child to have a second child. It was the most significant relaxation of the one-child policy […]

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Beijing Rethinks Formula for GDP

BEIJING—China is studying new ways to measure the size of its economy to reflect ambitious reform plans to make it easier for farmers to sell their land and to take into account property values. The new methods, which dovetail with an economic blueprint for reforms agreed on at a key meeting of Communist Party leaders that ended last week, are likely to increase the size of China’s economy, already the world’s second largest, according to the National Bureau of Statistics. “We need to revise the method of calculating the size of our domestic economy to make it conform with a new economic structure, the latest economic developments and…international standards,” the statistics bureau said. Officials didn’t specify how much the new calculations might change China’s headline numbers, or whether it is likely to speed up or slow growth rates. The statistics bureau will announce gross-domestic-product estimates using the new method […]

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Analysts wary as reform euphoria sweeps China markets

Trading on a loosening of China ’s one-child policy would seem relatively straightforward: buy all things baby-related. Investors did just that on Monday, sending shares in milk formula producer Yashili up almost 10 per cent and adding more than 4 per cent to crib manufacturer Goodbaby International. After almost a week during which investors lamented the lack of reform detail from China’s gathering of the Communist party leadership, Chinese equities appear to have regained their mojo. A sweeping policy package , announced late on Friday, has lifted China’s post-plenum depression. Though the easing of the one-child policy was the most headline-grabbing change, the Decision – as the document is called – included a wide variety of amendments to economic, social and financial policy, in what Dong Tao, chief regional economist at Credit Suisse, calls “the most comprehensive and ambitious reform plan in the history of the People’s Republic”. Chinese […]

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Analysts Hail China’s Plan to Overhaul Economy

If the initial summary of China’s highly anticipated economic policy plan disappointed analysts last week, the far more detailed plan that was released by the Chinese authorities late on Friday more than made up for it. The reaction among investors and analysts to the more than 21,000-character document that laid out the Chinese Communist Party’s decisions on how to overhaul the Chinese economy was overwhelmingly positive. ‘‘The breadth of the reform plan has certainly exceeded most expectations,’’ commented Wang Tao, chief China economist at UBS. The document, said the China economists at Goldman Sachs, ‘‘showed high reform conviction and lifted reform expectations and targets.’’ And Yao Wei, an economist in the Hong Kong office of Société Générale, said, ‘‘The new leaders really delivered and promised a number of concrete changes. China’s reform boat has finally set sail.’’ The stock markets echoed the overall sentiment: On Monday, the Shanghai composite […]

Posted On : Published By : Tom Whipple