A report Wednesday morning from Reuters, which spots an article in a Chinese-language newspaper: China will let the yuan rise about 5 percent against the dollar in 2011 to combat inflation, an official newspaper said on Wednesday, while a former central bank adviser said the country needs to free up the currency. …
Copper prices in London soared to record highs on Tuesday as data from China showed the country’s imports had picked up for the first time in three months — just as fears over supply disruptions in the world’s biggest producer, Chile, increased. As Bloomberg noted, copper for delivery in three months on the London Metal Exchange climbed 1.4 per cent to $9,327 a metric tonne.
The US has raised the pressure on China to improve market access for foreign companies with the release of a highly critical report examining Beijing’s policies on the eve of bilateral trade talks in Washington, the FT reports. A package of Chinese policies aimed at encouraging local innovation are “expected to make it difficult for foreign companies to compete on a level playing field in China”, said the International Trade Commission, a US government agency, in a report released on Monday night just ahead of the annual meeting of the Joint Commission on Commerce and Trade. The ITC report is the first of two which, on the request from the US Senate, will attempt to measure the impact of intellectual property rights infringement in China and Chinese innovation policies on the US economy. If the second one, due next May, diagnoses sizeable damage to US companies and jobs, it could become the basis for US trade action against Beijing. The ITC also said US receipts of royalties and licence fees from exports to China suggested widespread infringement of intellectual property rights and market access problems. Meanwhile Reuters adds that a US energy department report is due to warn that the country faces potential disruption to its supply of rare earth metals unless it diversifies its sources. China currently controls 97 per cent of world trade in rare earth metals. In other US-China news, McDonald’s China chief executive said yesterday that the fastfood chain intends to double its number of restaurants in China to 2,000 by 2013, the news agency adds. The New York Times carries more discussion of the report.
China recorded another large trade surplus in November of $22.9bn as both exports and imports grew strongly, putting more pressure on the Chinese authorities to raise interest rates and let its currency appreciate, reports the FT. Exports grew 34.9 % in November over the same month the year before, much faster than forecast, and potentially a sign that demand from developed economies is picking up. In October, exports rose 22.9%. Imports to China were also well ahead of forecasts, increasing by 37.7% over the year before, compared to an increase of 25.3% in October. The trade surplus was down from the $27.15bn registered in October, but ahead of forecasts and still one of the biggest ever recorded.
The World Trade Organisation has handed China a victory in a dispute with the EU, reinforcing China’s strategy of increasing its engagement with global bodies such as the WTO. As the FT reports, the ruling, issued late on Friday, applies to the EU’s antidumping duties on Chinese steel fasteners such as screws and bolts, and finds that EU duties on these products contravene WTO regulation. China’s ministry of commerce welcomed the ruling. A spokesman for Karel De Gucht, European trade commissioner, called the ruling “mixed” and noted that both sides could appeal.
The World Trade Organisation handed China a victory in a dispute with the European Union, a ruling that reinforces China’s strategy of increasing its engagement with global bodies such as the WTO. As the FT reports, the ruling, released late on Friday, applies to the EU’s antidumping duties on Chinese steel fasteners such as screws and bolts, and finds that EU duties on these products contravene WTO regulation. China’s ministry of commerce welcomed the ruling. “China urges the EU to respect the WTO ruling and quickly end the practices.” John Clancy, speaking for Karel De Gucht, the European trade commissioner, called the ruling “mixed”. He acknowledged one EU practice was found inconsistent with trade law, but noted that both sides could appeal.
Gold imports into China have soared this year, turning the country, already the largest bullion miner, into a top overseas buyer, the FT reports. The surge, which comes as Chinese investors seek protection against rising inflation and currency appreciation, puts Beijing on track to overtake India as the world’s largest consumer of gold. Beijing revealed China’s gold imports — more than 209 tonnes in the first 10 months of the year, a fivefold increase from an estimated 45 tonnes last year — on Thursday for the first time. Such data were previously confidential. The WSJ adds that the figures are a reminder of China’s “huge but nascent purchasing power”.
Gold imports into China have soared this year, turning the country, already the largest bullion miner, into a major overseas buyer for the first time in recent memory, the FT reports. The surge, which comes as Chinese investors look for insurance against rising inflation and currency appreciation, puts Beijing on track to overtake India as the world’s largest consumer of gold and a significant force in global gold prices. Gold imports into China have soared this year, turning the country, already the largest bullion miner, into a major overseas buyer for the first time in recent memory. The surge, which comes as Chinese investors look for insurance against rising inflation and currency appreciation, puts Beijing on track to overtake India as the world’s largest consumer of gold and a significant force in global gold prices.
If you were wondering why distillate spreads improved over the last month in Europe, apparently there has been a unique demand situation heading over from Asia — prominently China — as well as Latin America. KBC Energy Economics weekly oil comment on Monday notes, for example, how shortages of diesel in China have been bleeding through into the overall global supply picture:
One of the reasons why Beijing has tended to stockpile US Treasuries is connected to the need to absorb surpluses generated via the US trade deficit with China. China’s dollar peg largely depends on the process.
China on Friday posted a third straight trade surplus of more than $20bn, highlighting US complaints that the nation’s currency is undervalued, reports Bloomberg. China’s $20.03bn excess in August compared to the year-earlier figure of $15.7bn, although well below the $26.9bn median estimate in a Bloomberg survey of 34 economists. Exports climbed 34.4% while imports grew 35.2%. Ahead of next week’s congressional hearing into China’s currency policy, the report may fuel lawmakers’ calls for protection against Chinese imports.
. . . What happens when the batteries run out? FT Alphaville looks again at the shortage in rare earth metals. China’s cut back on export quotas once again, bringing the matter closer to American shores — and prompting industry calls for government intervention.
A surge in imports from China pushed the US trade gap sharply higher in May, adding to a stream of weak data for the Obama administration already under pressure over the economy and stagnant jobs market, the FT reports. The trade deficit grew by 4.8 per cent to $42.3bn, according to commerce department figures, the highest since November 2008 and at odds with the consensus of economists, who forecast the gap would shrink in May.
If most of the media agrees that China’s decision to enhance the yuan’s flexibility was a step in the right direction, many currency analysts are voicing some of their own reservations — not least in terms of the future of the PRC’s FX reserves, writes FT Alphaville.
The reason (ahem) is Chinese export data, which was leaked on Wednesday and confirmed on Thursday. Apparently this is reassuring because its shows China has not been affected by the sovereign debt crisis in the eurozone.
China on Wednesday said it would impose a second round of tariffs on imports of US chicken products that may run as high as 31.4 per cent, the FT reports. China’s commerce ministry said the new tariffs were a response to what it said were unfair subsidies given to poultry farmers in the US. The duties come on top of tariffs of up to 105 per cent that China placed on US poultry two months ago because of alleged dumping.
China uses a large array of dubious measures to prevent foreign companies competing fairly in its market, the US Trade Office’s report to Congress said on Wednesday. The annual report on trade barriers to American exports acknowledged that Beijing had reduced official trade tariffs and quotas. But the Chinese authorities still used domestic tools such as restricting trading rights, skewing government procurement towards Chinese companies and hoarding raw materials for internal use, the FT reports.
China uses a large array of dubious measures to prevent foreign companies competing fairly in its market, a US government report said on Wednesday. The annual report on trade barriers to American exports acknowledged that Beijing had reduced official trade tariffs and quotas. But the Chinese authorities still used domestic tools such as restricting trading rights and hoarding raw materials for internal use.
Restrictions on the import of skills are forcing Chinese companies to suspend the building of badly needed power plants in India to rid the country of its crippling energy deficit, the FT said. A Delhi-based Chinese official said as many as 10 Chinese companies had had to suspend work on power projects because of a shortage of skills and difficulties in importing their own technicians from China. India’s skills shortage is viewed as a big brake on the country’s ambitions.
China urged US multinationals to lobby the Obama administration against taking protectionist measures over the renminbi, just as attitudes towards Beijing appear to be hardening in the US Congress. Yao Jian, a spokesman at the Chinese commerce ministry, said some companies had already been lobbying against restrictions on imports to the US. Elsewhere, FT Alphaville pointed to a Goldman Sachs note on the Chinese currency‘s steady appreciation, while FT columnist John Authers also tackles the issue.
Recent developments in both China and the US have boosted speculation that the People’s Republic is preparing to let its currency appreciate. And judging by the tone emanating from western politicians and pundits, if a revaluation is not forthcoming, you can expect a whole lot more anti-China rhetoric. On Thursday in Washington, a bipartisan group of 15 US senators lashed out at China’s currency practices — including massive dollar buying to hold down the renminbi — describing them as effective subsidies and urging the Obama administration to consider taking action against Chinese imports.
Remember how China was importing every commodity under the sun last year – quite inexplicably, considering exports were lagging throughout most of the period? Sean Corrigan at Diapason Commodities has a theory to explain the phenomenon. As he noted in an email to FT Alphaville:
The latest Chinese economic data and the policy announcements emanating from Beijing make it very clear: inflation is back in China, as the FT notes, and almost every economic commentator worth their notes is venturing an opinion as to what the mandarins should do about it. After nearly a year of declining prices, November data, published last Friday, has deepened the dilemma for Beijing’s policymakers as they try to consolidate a strong economic recovery.
Wen Jiabao, premier of China, lashed out on Monday at demands for Beijing to allow its currency to appreciate, and suggested that foreign pressure for a strong currency could be aimed at slowing China’s economic development. Speaking at the conclusion of an EU-China summit in Nanjing, Wen gave no hint that currency policy would change, saying again that China would maintain the currency’s stability at a “reasonable and balanced level” – Beijing’s standard words to describe its management of the renminbi.
We’ll get right to the point: garlic has outperformed gold and stocks in China, becoming the country’s best performing asset this year, according to a Reuters report. And no, the trigger has not been a sudden fear of vampire squids in China, but the idea the bulb could be used to ward off H1N1 flu, according to Morgan Stanley economists cited by the news wire.
Qin Xiao, chairman of China Merchants Group and of the Asia Business Council, is worried. He is worried about China — and specifically whether the Chinese authorities will be able to extricate themselves from their loose and stimulus-heavy monetary and fiscal policies of recent months. Here are some excerpts from his Thursday FT op-ed: