Friday, October 31, 2003

US: no legal action possible against China

US tresury secretary John Snow has conceded that China is not manipulating its currency and legal action is therefore impossible, the New York Times and the Washington Postwrite.
'But in practically the next breath, Mr. Snow acknowledged that China did not meet the technical requirements established under Omnibus Trade and Competitiveness Act of 1988, "the same finding for nearly 10 years of past reports,"' the NYT writes.

Official Chinese newswire Xinhua was very fast to follow up.

Thursday, October 30, 2003

China goes shopping in US

In an effort to mitigate US pressure on the trade deficit between two countries, China has announced an official shopping spree in the US, say official media based on a Xinhua dispatch.
"China will expand imports from the United States and it hopes the US side will ease restrictions on exports to China, said Chinese Premier Wen Jiabao when he met with US Commerce Secretary Donald Evans Tuesday, writes Xinhua.
A shopping list has not yet been published, but Boeing seems to be one of the targets.
US secretary of commerce Don Evans kept on asking for the peg between the US dollar and the renminbi to be removed, but that might be again in vain.

Wednesday, October 29, 2003

EU has no problem with China trade, Lamy says

The Financial Times today: 'In comments that appeared aimed at distancing the EU from growing US criticisms of China's trade practices, Mr Lamy said in London he was not concerned by the EU's trade deficit of about $50bn a year with China as long as European exports to the Chinese market continued to grow strongly. "We don't feel it's a big systemic problem," he said. "Our numbers are quite different from the US numbers.""
While the US keeps up the pressure, writes AP.

Tuesday, October 28, 2003

New wave of US ignorance

In what calls the Financial Times an acceleration of US "rhetoric against China trade policy" US Commerce secretary Don Evans has called for a reduction of state control over the Chinese economy.
It displays a profound ignorance concerning the conditions in China. One of the main problems is the lack of state control, the inability of Beijing to get things done. Only when the state is control, China's economy can open, otherwise it will sink away in the swamp of internal bureaucracy and warfare.

Saturday, October 25, 2003

The flight of white collar jobs

An estimated 3.3 million white collar and IT jobs are expected to leave the US, say media report, quoting law makers in the US.

Thursday, October 23, 2003

China makes commercials for McDonalds worldwide

Yet another signal that China will be hitting the services in a hard way. McDonalds asked Leo Burnett China to do the commercial of their new slogan in a host of languages, writes the Far Eastern Economic Review today. (not for free available).
The paper writes: "In McDonald's history, all of our creative direction was led by America. But we now said: "Let the best ideas win'," says Larry Light, the global chief marketing officer of McDonald's. And in a competition for pitches from ad firms from around the world, China came top with half a dozen ideas. The competitors even voted the China team the most imaginative of McDonald's global network.

Tuesday, October 21, 2003

No Asian support for US

None of the other Asian nations have joined the US in its efforts to remove the peg between the US dollar and the renminbi, writes the Wall Street Journal.
"That's because China's economy has become so closely integrated with those of countries such as Japan, South Korea and Taiwan that if China's economy was hurt by a premature float of its currency, as many economists and Chinese authorities say it would be, the rest of Asia would suffer the fallout."
The third school

Morris Goldstein, senior fellow at the Washington-based Institute of International Economic, told at a meeting at the ongoing APEC-conference in Bangkok China�s renminbi was undervalued between 15 and 20 percent, while American lobby groups said it would be double that amount. He presented himself as a 'third school' in the argument.
They often confuse China's large bilateral trade surplus with the United States running at more than 100 billion dollars with its much smaller overall current account surplus of 35 billion dollars, he said according to ChannelnewsAsia.
"It is the overall current and capital account positions that matter for judging the extent of the exchange rate misalignment not bilateral trade balances or components of the current and capital accounts," he said.
Goldstein previously worked for the International Monetary Fund (IMF).

Monday, October 20, 2003

Floating rmb target - central banker

Just like central bankers all over the world Zhou Xiaochuan, the governor of the People's Bank of China - China's central bank - is not really a chatterbox. But yesterday he explained the policies on the Chinese currency. Letting it go is the target, he told the official newsagency Xinhua.
Do not cheer too fast: it is already policy since 1993 when the renminbi was pegged to the US dollar. It will be easier to exchange the renminbi in the future, without being specific about both the mesures and the time line.

Sunday, October 19, 2003

China, US will enter dialogue

The US has refrained from taking action against China and will enter first a dialogue on their trade relations, the presidents of both countries have announced in Bangkok, Reuters reports.
"We stated our readiness to resolve whatever questions that might emerge in our economic exchanges and trade through dialogue," Hu said without referring to the U.S. demand that China revalue its currency, the newswire writes.
"Refusing to budge on the currency issue, Chinese President Hu Jintao told business executives that Beijing's economic policies were good for global trade," we read in the Wall Street Journal.
No news at the front

Very short before of the meeting in Bangkok between the presidents of China and the US, Hu Jintao and George Bush, there is remarkable little news. Bush will personally ask Hu to let the renminbi float, on the request of his manufacturers back home.
And Hu will say no.

Friday, October 17, 2003

It's the services, you stupid!

While the US manufacturers keep on complaining about unfair competition from China, the real battle for jobs is taking place in the service sector, today again the HSBC shows. An article in the Wall Street Journal says that the banking conglomerate will shed 4,000 jobs in the UK over the next three years, because work is going to India, China and Malaysia. No low-end jobs, but data processing and call centers, mainly backoffice work.
I have visited in the past one of the HSBC data processing centers here in Shanghai. While the work in itself is very repetitive and even boring after say, ten minutes, you do need rather good English skills to grasp the meaning of the forms and letters you have to deduct the data from.
Calling centers seems more a thing for India, although I have heard stories that also neighboring Hangzhou has some of them.
Investment into China

For our number crunchers an interesting piece of work by the university of Warwick on China's direct investments, courtesy of Edward Hugh of China Economy Watch.
Because it is a deeplink and the piece is not signed, I could not right away identify the author. The (lenghty) piece argues that many investments into China coming from Latin America are actually coming from the Virgin Islands (China's second largest investor) and are just like many other investments - like those from Hong Kong - really intra-China money transfers.

Thursday, October 16, 2003

Biggest exporter from the US

Today former accountant Rupert Hoogewerf released the fifth edition of his China Rich list, together with the British publisher of Euromoney, after he broke up with the American magazine Forbes.
Rupert always has a flood of interesting facts about his top-100 available and today was no different. Who do you think is the largest exporter from the US? A Chinese company owned by the Zhang Yin Cheung Yan) (46) from Guangdong province, the second of only two women on the list. She runs American Chung Nam Inc. in California. The company is not yet very active with providing information online.
Her wealth is estimated at USD 300 million.

Chinese media are less favorable about the company. A monthly economic magazine says the company is the largest in terms of the number of containers it sends away. The company is also accused of exporting much chemical waste into China "bringing an ecological disaster to Guangdong".

Wednesday, October 15, 2003

Bush heads the currency fanfare

US president Bush has called upon both China and Japan to stop giving themselves an unfair trade advantage by medling with the value of their currencies, AP reports.
Bush said so at the eve of a nine-day trip to Asia in an interview with Asian journalists. US manfacturers want China to increase the value of the renminbi by at least 40 percent, press reports say.
"My main focus here in America is there to be significant job creation," Bush added according to AP.
"Part of making sure that the job creation, momentum of the job creation, is viable is to make sure - is to talk to our trading partners about fair trade."
Six senators have been urging the USA to act against China, Reuters says. Russia seems to support the call for floating the renminbi, according to the Pravda.
But China's neighbors have less problems with the current Chinese currency policy, also AP reports.

Monday, October 13, 2003

Taipei Times support China-argument

The government in Beijing is getting an interesting ally in its resistance against US pressure to let its currency float: the Taipei Times.
This daily paper in Taiwan often takes an anti-China stance in the conflict on nationality, but in this issue it gives much room to experts who support China. A few days ago I saw Siglitz passing by and today Tony Yang, head of the Shanghai branch of HSBC can give his supportive views.
Since the HSBC is one of the larger banking corporations that is banking on China, that viewpoint is not surprising, but the medium is.
Domestic competition

Who thinks that China is a killer by on the global market, and blames unfair practices, should have a look at today's story by Leslie Chang in the Wall Street Journal (that unfortunately needs a subscription). It documents very detailed how also inside China competition is very fierce and how only the very powerful survive.
It shows what the rest of the world might have to fear when China really goes global economically.

Busch expected to raise currency issue

After weeks of relative silence US president Busch is expected to bring the currency issue back on the political agenda as he will meet China’s president Hu Jintao during an APEC-meeting (Asia Pacific Economic Cooperation) on 20-21 October in Bangkok, newswires report.
Earlier efforts have had no effect and many experts have questioned whether it would be financially sound to float the renminbi because of the poor condition the Chinese bank system is in now. A revaluation of the Chinese currency also did not seem to have much effect on the position of the US manufacturers, the lobby that has been asking for the revaluation, but more on the economic relations between China and other third world countries.
The International Monetary Fund (IMF) has called for more flexibility in the renminbi in stead of floating it, AFP reports.
"Such flexibility would facilitate China's ability to control the monetary growth, namely give more independence to monetary policy... cushion the impact of external shocks from the major structural changes underway in the economy," the IMF's deputy managing director, Shigemitsu Sugisaki, said Sunday at the World Economic Forum's East Asia summit in Singapore. But the IMF deputy chief said the Washington-based body was not advocating an immediate move to a freely floating exchange rate, rather a "phased approach", said AFP.

Tuesday, October 07, 2003

Wen seeks support of ASEAN

Premier Wen Jiabao is seeking support for China's currency policies among Southeastern nations during the ASEAN meeting in Bali, reports the Financial Times. It was the first time China addressed this issue on this political level.
Mr Wen said that nearly 55 per cent of China's total exports are products that have been processed from imported materials much of which comes from elsewhere in Asia. This means "a considerable part of China's export returns is shared by other countries", especially in the region, reports the FT.

Monday, October 06, 2003

"It is not fair"

President George Bush told business executives last week in a meeting in Chicago on the Chinese monetary policy.
"Forget about that. Monetary policy may or may not be prudent, cautious, or responsible. Since when does it have to be fair?" Bloomberg commentator David DeRosa hits back today.
DeRosa seems genuinely upset about the American accusations: "defies common sense" and "Like it or not, China has a perfect excuse to tell those leaders who are complaining about the yuan to go jump in a lake."

Saturday, October 04, 2003

US corporations start to move

Business Week comes this week with a rather comprehensive overview of the arguments in favor of free trade, especially in favor of the large American companies using cheap Chinese labor and consumers, using cheap Chinese imports.
"A lot is at stake in getting the U.S. relationship with China right. Following its accession into the WTO in 2001, the country is on course to open its economy and markets to foreign competition. It's up to Washington to encourage China to continue down that path. Bashing Bejing over mutually beneficial bilateral trade is not the way to go," Business Week writes.
Nothing really new for who has been following the discussion, but I did wonder when the US corporations and their chambers of commerce would start to shed some light on their side of the story.

Friday, October 03, 2003

Ignore US pressure - FT Comment

While China is having a much needed holiday - a perfect way to increase costs! - the outside would continues to discuss the influence of the way China deals with its currency on trade.
US lawmakers have put the issue on their political agenda and Treasury Undersecretary John B. Taylor echooed their concerns in a piece of AP that was widely used in the regional media.
"China represents one of the largest economies in the world and a flexible exchange rate regime would be a good policy for China," Taylor told lawmakers , according to AP.
But in a comment nobody less than the London-based Financial Times Francis Scotland of the BCA research Group called upon China not to give in to American pressure. "The good news is that Beijing is continuing to ignore US pressure for a revaluation of the Chinese currency", the Scotland writes in the comment. "China's dogged adherence to its peg is a powerful tonic for global and US growth."
And: "The main risk in the global outlook is the apparent failure of the US administration to understand the bigger picture. The US is the world's champion of free markets and capitalism. A retreat into protectionist-type policies of the sort being discussed in Washington would do irreparable damage to the global economic outlook."
Shifting markets – the WTO-column
tomorrow at www.c-biz.org

October 4, 2003

Shanghai – This week I have purchased an American product made in the US. I thought I should mention this as even the Americans nowadays buy rather Chinese teddy bears and Japanese cars, because they are more competitive than American products. There is still hope!
What I bought is anti-spam software (Ihatespam – really good stuff). The number of spam messages I had to delete every morning passed the 100 threshold, so I decided that simply deleting them was not good enough. Maybe I’m more exposed to spam than the average internet user, because much of my work takes place online, but I’m sure that the nuisance of spam will force you too one day to act.

There are other trends in my purchasing habits that I find personally more worrying. This summer I have cancelled the last subscriptions on printed foreign media. I now get everything I need for free through the internet. Actually, I get much more than I need.
I pay 130 renminbi a month to Shanghai Telecom and no dime goes to any media company anymore.
Again, I might ahead of the crowd, because of my specific situation as a journalist in China. For foreign publications we traditionally had to pay a stiff surcharge in exchange for which we would get the publications two or three days after the rest of the world got them. Finding alternatives, mostly over the internet, has been more important here in China than elsewhere in the world. But again I’m quite sure that I’m not that far ahead of you all.
The worrying part of this is that Shanghai Telecom does not pay my bills. When we do not pay media companies for their information anymore, who is in the end going to pay my bills? That is a bit of an existential question for a light column like this, but still worth to consider. It is not only American manufacturers who have to face changing markets it is no different for journalists. I have been walking around with a shield saying “We are Doomed” at a meeting of the Shanghai Foreign Correspondents Club, but is do not think the message came across. We rather write about other trades going down the drain than about ourselves.

It reminded me of my early lessons in history. Then we were taught the big theories about how cultures emerged and went down, emerged and went down. What was interesting was that the theories varied very much, only the end was similar. Every culture went down too. So when these great thinkers were asked how their theory would apply to their own, existing culture, they were all sure that their own culture was the only exception: their culture would not go down.

It is a very human thing: we only like bad news when it is about others, not about ourselves.

Fons Tuinstra

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