Showing posts with label china. Show all posts
Showing posts with label china. Show all posts
Saturday, April 04, 2009
Back in the early stages of the financial crisis, wags joked that our trade with China had turned out to be fair and balanced after all: They sold us poison toys and tainted seafood; we sold them fraudulent securities.
But these days, both sides of that deal are breaking down. On one side, the world’s appetite for Chinese goods has fallen off sharply. China’s exports have plunged in recent months and are now down 26 percent from a year ago. On the other side, the Chinese are evidently getting anxious about those securities.
But China still seems to have unrealistic expectations. And that’s a problem for all of us.
The big news last week was a speech by Zhou Xiaochuan, the governor of China’s central bank, calling for a new “super-sovereign reserve currency.”
The paranoid wing of the Republican Party promptly warned of a dastardly plot to make America give up the dollar. But Mr. Zhou’s speech was actually an admission of weakness. In effect, he was saying that China had driven itself into a dollar trap, and that it can neither get itself out nor change the policies that put it in that trap in the first place.
Some background: In the early years of this decade, China began running large trade surpluses and also began attracting substantial inflows of foreign capital. If China had had a floating exchange rate — like, say, Canada — this would have led to a rise in the value of its currency, which, in turn, would have slowed the growth of China’s exports.
Read the full article HERE
But these days, both sides of that deal are breaking down. On one side, the world’s appetite for Chinese goods has fallen off sharply. China’s exports have plunged in recent months and are now down 26 percent from a year ago. On the other side, the Chinese are evidently getting anxious about those securities.
But China still seems to have unrealistic expectations. And that’s a problem for all of us.
The big news last week was a speech by Zhou Xiaochuan, the governor of China’s central bank, calling for a new “super-sovereign reserve currency.”
The paranoid wing of the Republican Party promptly warned of a dastardly plot to make America give up the dollar. But Mr. Zhou’s speech was actually an admission of weakness. In effect, he was saying that China had driven itself into a dollar trap, and that it can neither get itself out nor change the policies that put it in that trap in the first place.
Some background: In the early years of this decade, China began running large trade surpluses and also began attracting substantial inflows of foreign capital. If China had had a floating exchange rate — like, say, Canada — this would have led to a rise in the value of its currency, which, in turn, would have slowed the growth of China’s exports.
Read the full article HERE
Will The Global Financial Crisis Halt The Rise Of Emerging Economies?
0 comments Posted by PD at 9:32 AMNOBODY talks about “decoupling” any more. Instead, emerging economies are sinking alongside developed ones. In 2008 emerging stock markets fell by more than those in the rich world, and financial woes forced countries such as Hungary, Latvia and Pakistan to go cap in hand to the IMF. Taiwan’s exports have plunged by 42% over the past year, and South Korea’s by 17%; even China’s have shrunk. Singapore’s GDP fell by an annualised 12.5% in the fourth quarter of 2008, its biggest drop on record. Is this the end of the emerging-market boom?
Over the five years to 2007, emerging economies grew by an annual average of more than 7%. But in the past three months their total output may have fallen slightly, according to JPMorgan, as the fall in exports was exacerbated by a sudden drying up in trade finance. For 2008 as a whole, average growth in emerging economies was still above 6%, but recent private-sector forecasts suggest that this could slip to less than 4% this year. That is grim compared with the recent past, though still robust set against an expected 2% decline in the GDP of the G7 countries.
Over the five years to 2007, emerging economies grew by an annual average of more than 7%. But in the past three months their total output may have fallen slightly, according to JPMorgan, as the fall in exports was exacerbated by a sudden drying up in trade finance. For 2008 as a whole, average growth in emerging economies was still above 6%, but recent private-sector forecasts suggest that this could slip to less than 4% this year. That is grim compared with the recent past, though still robust set against an expected 2% decline in the GDP of the G7 countries.
Short-term pain is only to be expected. But some economists argue that emerging markets’ longer-term prospects have been badly hurt by the global financial crisis. From Brazil to China, they claim, the boom was driven largely by exports to American consumers, easy access to cheap capital and high commodity prices. All three props have now collapsed. In particular, as America’s housing bust causes households to save more, they will import less over the coming years. This could reduce emerging economies’ future growth rates.
Read the full article HERE
Friday, April 03, 2009
Just making a bullet list of all the items that developing countries and poor nations got at the 2009 G20 summit in London.
- India and other developing nations to get a greater say in the international organizations such as IMF and World Bank.
- After 2011, the US could lose its veto power at those institutions and Western countries could find their voting rights severely reduced.
- The convention that an American heads the World Bank and a European heads the IMF will also now be abandoned, the G20 leaders say.
- The G20 also created a new Financial Stability Board, incorporating all members of the G20 for the first time, to replace the current Financial Stability Forum, which mainly consists of the central banks and finance ministries of US and European countries.
Funding Pledges:
- $500bn for the IMF to lend to struggling economies
- $250bn to boost world trade
- $250bn for a new IMF "overdraft facility" countries can draw on
- $100bn that international development banks can lend to poorest countries
- IMF will raise $6bn from selling gold reserves to increase lending for the poorest countries
If IMF have more money to lend then it means that poor countries are less reliant on Western nations when they get into trouble and need aid. Poor countries will also be less reliant on the value of the US dollar because IMF has its own accounting currency, SDR, which is a basket of major currencies such as dollar, euro, yen and pound.
Source: BBC
JAPAN developed rapidly after American gunboats opened it to trade in the late 19th century. Within 40 years, Emperor Meiji led his once-feudal country into the modern world economically (and, alas, militarily). To do so, the state bought Western technology such as factory machines, railroads and telegraph lines. But until the turn of the 20th century it did so by eschewing foreign loans, which were equated with a loss of sovereignty.
How did a poor country like Japan obtain the foreign currency to pay for such products? The answer was exports: first, of light industrial goods such as raw silk and pottery; later, of heavier materials, including steel and chemicals. It was a huge success. In the 1860s Japan’s small-scale cotton-textile industry was nearly decimated by European imports. By 1914, however, after buying automated cotton spinners, the country sold half of its yarn production abroad, which accounted for one-quarter of the world’s cotton yarn exports.
Thus the “Asian model” of export-led growth was born. The region was inspired by Japan’s lead before the second world war and its economic resurrection afterward. In the 1960s Asia’s four “tiger economies” (Singapore, Hong Kong, Taiwan and South Korea) imitated Japan and flourished. South Korea’s bureaucrats, for example, protected domestic firms and funneled them cheap loans under the condition that they exported their wares.
China also boomed after opening its economy in 1978. Its “special economic zones” were designed to attract foreign capital—initially from Chinese businessmen in Hong Kong and Taiwan—to build factories for export production. Malaysia, Thailand, Indonesia and later Vietnam all forged similar export-led paths to growth.
Read the full article HERE
How did a poor country like Japan obtain the foreign currency to pay for such products? The answer was exports: first, of light industrial goods such as raw silk and pottery; later, of heavier materials, including steel and chemicals. It was a huge success. In the 1860s Japan’s small-scale cotton-textile industry was nearly decimated by European imports. By 1914, however, after buying automated cotton spinners, the country sold half of its yarn production abroad, which accounted for one-quarter of the world’s cotton yarn exports.
Thus the “Asian model” of export-led growth was born. The region was inspired by Japan’s lead before the second world war and its economic resurrection afterward. In the 1960s Asia’s four “tiger economies” (Singapore, Hong Kong, Taiwan and South Korea) imitated Japan and flourished. South Korea’s bureaucrats, for example, protected domestic firms and funneled them cheap loans under the condition that they exported their wares.
China also boomed after opening its economy in 1978. Its “special economic zones” were designed to attract foreign capital—initially from Chinese businessmen in Hong Kong and Taiwan—to build factories for export production. Malaysia, Thailand, Indonesia and later Vietnam all forged similar export-led paths to growth.
Read the full article HERE
Wednesday, April 01, 2009
A McKinsey Global Institute documentary probes the opportunities and policy choices posed by the biggest urbanization wave in history.
Long Yongtu, China’s former chief trade negotiator, brokered China’s accession to the World Trade Organization in 2001. In this video from a November 2008 McKinsey conference in Beijing, Mr. Long reflects on the distance China still needs to travel in order to become a truly global player in business.
Monday, March 30, 2009
A Chinese view of governance and the financial crisis: An interview with ICBC's chairman
0 comments Posted by PD at 9:24 PMRegulators struggling to fix the world’s troubled financial institutions may take heart from the experience of China’s large state-owned banks. In the late 1990s, Chinese state lenders were all but insolvent, with nonperforming loan ratios at many banks exceeding 50 percent. A decade later, China’s state banks have found their footing—and have managed to keep it amid a global financial crisis that has their European and US counterparts reeling. The bad-loan ratio has been reduced, and this year China’s state banks expect solid profits and continued rapid growth—despite the global downturn. What’s more, top bank executives express confidence in their capacity to heed government instructions to boost lending while effectively controlling credit risk.
Industrial and Commercial Bank of China (ICBC) is generally regarded as the strongest of China’s state-owned bank giants. It is also the largest bank by market capitalization and total profits—both in China and the world—with total assets of more than $1.4 trillion. ICBC chairman Jiang Jianqing met recently with McKinsey’s Dominic Barton, Yi Wang, and Mei Ye to share his thoughts on corporate governance, risk management, and the origins of the financial crisis.
Read the full article HERE. You may need to register at the McKinsey website. Its Free.
Industrial and Commercial Bank of China (ICBC) is generally regarded as the strongest of China’s state-owned bank giants. It is also the largest bank by market capitalization and total profits—both in China and the world—with total assets of more than $1.4 trillion. ICBC chairman Jiang Jianqing met recently with McKinsey’s Dominic Barton, Yi Wang, and Mei Ye to share his thoughts on corporate governance, risk management, and the origins of the financial crisis.
Read the full article HERE. You may need to register at the McKinsey website. Its Free.
Tuesday, March 24, 2009
China's central bank governor Zhou Xiaochuan has suggested that a new currency should be created in order to reduce the dependence on dollar. As most of the world trade is done in the Dollar, Euro and Yen, there is growing concern that world has become a hostage to these currencies. Mr. Zhou argues that most nations concentrate their assets in those reserve currencies(Show below), which exaggerates the size of flows and makes financial systems overall more volatile.
Moving to a reserve currency that belongs to no individual nation would make it easier for all nations to manage their economies better, he argued, because it would give the reserve-currency nations more freedom to shift monetary policy and exchange rates. It could also be the basis for a more equitable way of financing the IMF, Mr. Zhou added. China is among several nations under pressure to pony up extra cash to help the IMF.
Mr. Zhou's proposal is surely going to spark a debate in the coming G20 summit in London.
You can read the full article at Wall Street Journal HERE
Monday, March 23, 2009
OK it took me a long time to compile and to properly present this data. The data shows all the countries holding the US treasury securities as of Jan 2009. Showing the data not in a meaningful way would have defeated the purpose. So I am showing on three parameters.
1. By dollar value
2. By % change from Jan 2008
3. By % of nominal GDP(2008)
1. By dollar value
2. By % change from Jan 2008
3. By % of nominal GDP(2008)
The conclusions that I would draw from these three charts are
CHART1: The countries having largest foreign exchange reserves are buying the US treasury securities are the largest holders
CHART2: Countries whose economies are relatively smaller in GDP terms and are doing relatively OK in the current market don't mind holding more US treasury holders. China is an exception here.
CHART3: Countries that need more money at home are selling the US treasury securities and hence reduced their holdings since Jan 2008
Please do share what you conclude from the data and these charts.
Though I also looked at various government sources of many countries individually but this data has been complied primarily from www.ustreas.gov, wikipedia.org, www.cia.gov (the world factbook) and www.imf.org
CHART1: The countries having largest foreign exchange reserves are buying the US treasury securities are the largest holders
CHART2: Countries whose economies are relatively smaller in GDP terms and are doing relatively OK in the current market don't mind holding more US treasury holders. China is an exception here.
CHART3: Countries that need more money at home are selling the US treasury securities and hence reduced their holdings since Jan 2008
Please do share what you conclude from the data and these charts.
Though I also looked at various government sources of many countries individually but this data has been complied primarily from www.ustreas.gov, wikipedia.org, www.cia.gov (the world factbook) and www.imf.org
Economist published a special report on entrepreneurship. Though I haven't read all of the articles in the report but I though of sharing with you guys before me reading it all. :-)
Here are all the articles of this report:
- Heroic entrepreneurs
- Managing entrepreneurship
- Time for entrepreneurship
- The United States of Entrepreneurs
- Entrepreneurs in India and China
- Lands of opportunity
- The formula for entrepreneurship
- Entrepreneurs doing good
- The entrepreneurial society
China and India: The power of complementary cultures - An Interview with Tarun Khanna (Harvard Professor)
0 comments Posted by PD at 3:09 AMThis interview is a good watch (If not excellent). Tarun Khanna, professor at Harvard Business School, speaks on four points:
1. Identifying salient features
2. Complementary entrepreneurship
3. Familiarity and trust
4. Reshaping the contours of business
You may watch this video HERE. After clicking on this link click on the link "Launch Interactive" below the picture of Tarun Khanna at the bottom.
1. Identifying salient features
2. Complementary entrepreneurship
3. Familiarity and trust
4. Reshaping the contours of business
You may watch this video HERE. After clicking on this link click on the link "Launch Interactive" below the picture of Tarun Khanna at the bottom.
Saturday, March 21, 2009
The chart below shows the military spending of top 15 spenders. US spending is larger than the combined spending of next 14 countries. WOW!!! Recently Russia announced that it will spend more because despite its promise of not to include former USSR countries in NATO, US is doing so. China also announced a 14.9% increase in its military spending. DON'T KNOW WHERE IT WILL END?
I am starting this blog for not for the daily news but for the interesting articles and news that are related to business and other happenings in the world. I believe these articles are even worth collecting. The intent here is not to provide you a daily snapshot of the news but with the ones that are very interesting and not answered at most of the common places.
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