The China Trade - Censored in China :-)

2008-09-13T22:59:00.001+08:00

2004-02-12T04:21:00.000+08:00

Moving to a new url

I'm moving my new weblog "China Herald" to a new host at www.chinaherald.net, that is - unlike the blogspot host - also available in China. Still finding out the right settings: I'm also trying to prove that a one-person enterprise by a journalist is possible today. I think it is, but it is not easy. Please have some patience.

2004-01-25T07:31:00.000+08:00

Consolidation: this blog is moving ahead

I'm running at this stage about four blog-like operations and that is a bit too much, I discovered, so I'm going to consolidate my China-blogs into one new one: chinaherald.blogspot.com

Do expect here also a strong economic angle, but there will be much more variation. Hope to see you there again. Postings here will basically stop from now.

2004-01-17T02:44:00.000+08:00

What can stop China's growth? - the WTO column

Now at Chinabiz

17/1/2004

Ann Arbor, MI - China's economic growth has been hitting headlines over the past few months at least a few times per week. Of course, it is that time of the year when the accounts on 2003 have to be closed and the budgets for 2004 are set, but the tone is remarkably optimistic to put it mildly, compared to even one year ago when SARS held China captive.

We saw exports grow like never before, a record in the official GDP growth of 8.5 percent over 2003 (now we even think that reality might be rosier than the official numbers) and investment bankers are making overtime like they only did during the internet bubble. Meanwhile non-performing loans reduced dramatically with a major recapitalization by the government, opening a way to swift IPOs. Conferences worldwide focus on China: everybody wants to have a piece of the action.

That seems a good moment to look around and for the remaining doomsday scenarios, that were so popular until not so long ago. I have been trying to act as the pessimist - or clown as some might say - but that seems a useful function as the next China craze is in full swing. Fortunately, some of my colleagues at ChinaBiz also have a gloomy take on the future. Up to not so long ago roles were reversed, me being a lonely optimist while the rest of the world thought China was collapsing.

China has gotten much blame from manufacturers and trade unions in the US for cheating them out of work. Much of those arguments only show that those groups are clueless about globalization itself and in general do not make sense.

But what should not be forgotten is that globalization is always a two-edged sword. China is doing very well, partly because export to the US has never been as high as now. China's economy is doing very well, partly because the US is still doing well. This does not have to continue automatically.

The main problem for President George Bush is that the economy is not doing as good as he needs for the upcoming presidential elections later this year. More than ever, President Bush needs an economic upswing, but developments are not really supporting his efforts at this stage.

Even my regular taxi driver here in Michigan agrees with me. Jay is not an ardent follower of the debates on the presidential elections to put it mildly. He lost, like three million other US citizens, his previous job because of the economic downturn caused by the current president and he wants only one thing: no Bush. But when the economy is doing well a few weeks ahead of the elections, most people will forget about years of hardship and three million lost jobs.

Doomsday scenarios suggest that at the present rate of deindustrialization and indebtness the US might become a developing country in 20 years time, with analysts noting that the only superpower has much less leeway to tumble compared to Japan. That might put China ahead of the US in many instances, but it will not all be rosy given its present dependence on the US market. A US with third world wages may also offer stiff competition to the Asian giant.

Fons Tuinstra

2003-12-31T05:13:00.000+08:00

US beef was Chinese

Why do journalists sometimes have to make up stories, since the truth is already so funny (that is: when the following story in the Shanghai Daily is true, of course).
A Japanese restaurant in Shanghai had joined at the end of the 1990s a promotion drive for US beef and had put up a large sign saying it sold US beef. The owner discovered that the differences between US filets and its Chinese counterparts were considerable: 200 Renminbi (24 USD) for a kilo and 30 Renminbi (3.5 USD) and decided silently to replace the US beef by Chinese filets.
Now the mad cow disease has struck US beef, the promotion has become a problem and the owner has decided to tell his customers the truth: he only serves honest Chinese meat.

2003-12-24T05:09:00.000+08:00

The 2004 China craze – the WTO column

(An New-Year advance on my Chinabiz-publication)

Ann Arbor – Is doing business a science? At many business schools I have visited during the past few months they claim it is, but the only major that comes close to doing business in my viewpoint is theology, this other major that defies basic logic and where the outcome is hard to prove in scientifically.

Doing business seems rather basic as long as you have not obtained your MBA. When you invest in a business that guarantees some return on investment, when you avoid companies that have a reputation of only losing money, you should be on the safe side and be able to make some money. But all those basic precautions are thrown overboard when you get into this higher level of awareness, when greed get into this play, when a shortcut seems to allow faster access into the paradise of capitalism.
Some of you might still remember this funny time when the expectations regarding internet were high up and eyeballs had replaced harder currencies. Those eyeballs would translate into solid revenue was the assumption. And in China, yes, in booming China the internet would be a winner for sure, since the number of eyeballs was anyway countless.
It was a tough wake-up call when those eyeballs did not equaled money.

China is red hot yet again at the end of 2003 and the worst still seems to be coming. Hungry investors, unable to find decent investment objects elsewhere, flock to this Promised Land in need for salvation. Basic logic does not apply anymore. Why are we building more and more production capacity for cars in a world that has already an overcapacity? China!
Why we have spent last week US$ 3.47 billion on a bankrupt insurance company China Life? China! And because Hong Kong high priest Li Ka-shing also spent some pocket money into this venture.
Why are we investing into an insurance company that mainly has a reputation for losing billions? China!
Why invest into an industry that is only attracts the Chinese because there are not other ways for them to invest their savings? Because it is China and we do not expect any other investment tools will ever emerge for the Chinese! It China!

The only difference with a religious sect is that a charismatic leader is missing in this latest run for paradise. No investment banker yet can elevate himself from the ground by focusing on his toes, although some business schools think of including this concentration into their curriculum too. Nobody who can heal people, although cheating all those investors out of their money seems a healthy side effect: they seem to have too much anyway. Jezus won our admiration by changing water into wine, a very successful business model, but changing money into air does not seem enough to qualify as a business leader.

Let’s all see it from the bright side. Communism has failed to bring down capitalism. What bigger evil can bring down capitalism apart from capitalism itself? Let’s invest our capital, hold hands and pray, since the Lord has done bigger things.

Fons

PS: Best wishes for 2004 
PPS: Some of you asked me after my previous column on the internet as a disruptive technology to give some Chinese examples too. Hold on: next week you will get a follow up, this seemed more urgent.

2003-12-16T03:33:00.000+08:00

IBM move high-tech jobs to China, India

IBM plans to shift thousands of high-tech jobs from the US to China and India, the largest of such actions ever planned, writes AP today.
IBM documents obtained by The Wall Street Journal said about 4,700 programming jobs could be shifted overseas to save costs, a growing high-tech industry trend known as "offshoring", says the article.

2003-12-15T09:05:00.000+08:00

Greenspan defends China again

Federal reserve chairman Alan Greenspan again told US business people, now in Texas, that there is no direct relationship between the value of the Renminbi and the number of jobs in the US, writes AFP.
Greenspan warned against using the issue during the runup to the upcoming presidential elections in November 2004. "A rise in the value of the renminbi would be unlikely to have much, if any, effect on aggregate employment in the United States," he said.

2003-12-14T03:31:00.000+08:00

Competing forces

One of the more interesting discussions here in the US in relations to China is that on competitiveness. Americans do think they are the most competitive country in the world, although China proves it wrong all to often.
Truth is quite different. I'm now sitting in the canteen of the Michigan Business School on a Saturday afternoon. The place is packed with students and there is no way to get here coffee or even basic snacks. In China private enterpreneurs would have taken over, but here there is no sign of competiting services: I estimate they have been regulated away.
The same happens with telecommunication. In China that is seen as a kind of public utility, similar to water and the sewage system. Here in the US mobile phones connections are not covering the country, very expensive and a nuisance in every way. On top of that, you cannot use US mobile phones elsewhere in the world, since they are not compatible with the GSM system.
Getting online, even at the most famous universities, is very tough for outsiders like me. This Michigan Business School is one of the exceptions where I can walk in, plug in and get onto the internet. Both Stanford and Harvard University forces me into illegality to get online.
Now: why would the US loose in competing with China?

Have to correct this partly: also the US has a few services that allows nationwide internet-access. Maybe not as bad as I thought :-)

2003-12-13T05:23:00.000+08:00

Caught in the act

US Tresury Secretary John Snow, who critized China for unfair trade leading to the growing trade deficit between the two countries, was caught buying Chinese toys for his grandchildren, adding to the trade deficit himself, writes Reuters.
The 13 toys have cost about USD 200, the article says. Snow commented that he only added rather little to the country's deficit that was at a record height, reports AP, although US exports also rose to its highest level in 2.5 years.

2003-12-13T04:28:00.000+08:00

Canada and China want to double trade

Obvious no upcoming election in Canada, where China's Wen Jiabao and his Canadian guests decided to try to double their trade by 2010, writes AFP.

2003-12-13T01:07:00.000+08:00

Web cast planned on retail in China

At Chinabiz we are planning for Thursday a web cast on the retail in China, with Paul French of Access Asia as the main guest. His newest report on Wal-mart is not yet available in our bookstore, but other reports are.
Now we are solliciting feedback from possible participants on the right timing at our forum. A time will be set by Monday at the end of the day.
We will use yahoo messenger as a communication tool and you can mail me for technical assistance.

For January we plan an additional web cast on succesful B2B internet companies in China with Kate Hartford.

2003-12-12T11:20:00.000+08:00

2003-12-12T11:04:00.000+08:00

Value Renminbi no trade issue - Greenspan

US Federal Reserve Chairman Alan Greenspan was one of the last leading financial gurus to tell the world he did no see a relation between the value of the Chinese currency and the debate on the trade deficit between the US and China, media - including the China Daily - reported widely.
"The story on trade and jobs, in my judgment, is a bit more complex, especially with respect to China, than this strain of conventional wisdom would lead one to believe," Greenspan said in remarks prepared for the World Affairs Council of Greater Dallas.
Like others Greenspan assumed that a freer floating Renminbi would no so much help the US manufacturers, but rather other countries in the world, like low-wage countries in Asia.
A Japanese thinktank actually advised China to float its currency not before 2010, reports Dow Jones.

2003-12-12T05:53:00.000+08:00

No job recovery in the US

Top officials in the United States fear that a recovery of the job market might be as far away as 2005, much after the presidential election of 2004 where the economy will be one of the major issues. The Wall Street Journal publishes today from minutes of the Federal Reserve.
While other economic indicators show a recovery of the economy, gains in jobs have been low, supposedly because of the increased productivity of American workers. "Members generally anticipated that an economic performance in line with their expectations would not entirely eliminate currently large margins of unemployed labor and other resources until perhaps the latter part of 2005 or even later," the paper quotes the minutes.
The US administration is pursuing two different strategies towards China, writes the New York Times by encouraging US firms to relocate to China, despite all the rethoric against a China that is destroying American jobs.
More in The Economist.

2003-12-09T22:14:00.000+08:00

China and US disagree politely

China and the US decided to have talks on the Renminbi, writes Bloomberg today. That is of course a very nice way of saying they were unable to reach an agreement about one of the hot issues on Wen Jiabao's trip to the US.
Baobao - as some of the academics here call the Chines prime minister - will speak tomorrow at Harvard, but by then I will be on my way to Michigan. Hope it does not mess up things at the airport too much.

2003-12-07T00:57:00.000+08:00

On the road

My apologies for not updating this blog more regularly. I have been traveling extensively and working on other projects. Although prime minister Wen Jiabao will be visiting the US coming week, the attention for this high profile trip seems to be rather subdue in the US media. Will monitor developments now the snow storms have hit Boston and halted my sight seeing plans. But not much seems to be moving here.
At least I got for the first time in my live the opportunity to shovel away large quantities of snow. And more to come!

2003-11-26T17:40:00.000+08:00

And China gets now really annoyed

Keeping this week literally the middle-ground between China and the US by staying in Europe, but things look grim at the trade-front. Chinabiz gives an overview of the battlefield.

2003-11-25T14:28:00.000+08:00

US expands trade war to TV-sets

The Bush administration will impose levies on TV-sets from China that are perceived to dodge the real prices to conquer the US market, writes the Financial Times. Well, those TV-sets are damned cheap in China too, I cannot imagine how they can be made for that price, but they still do.

2003-11-21T23:20:00.000+08:00

Textile and North Carolina

Interesting background article in the New York Times regarding the backyard of George Bush: the South. In this case: the struggling textile industry in North Carolina.

2003-11-21T01:53:00.000+08:00

Stop the internet – the WTO column

(This weekend at Chinabiz)

Ann Arbor, MI – US trade officials have been demanding China to float its currency, to deal with the infringement of intellectual property rights. The Bush administration is doing it best to trigger off a trade war over textile quota. Deputy trade secretary Josette Shiner is this week in Beijing to add US farm goods at the political agenda.
History does no do very well with the current US government, even when it is only a few years ago.
It was in the days when China was about to enter the World Trade Organization and US media announced that their agricultural products would wipe away Chinese agriculture when China would lower its trade barriers. The US was still hailing China’s accession into the WTO as a great opportunity to get even in trade. We already felt pity with the hapless Chinese farmers that would have to face such a harsh future.
Well, that did not happen, not so much because China was actively blocking US goods, but because logistics is still rather poorly developed in China. That makes it very hard for US apples and oranges to leave the coastal areas. Local products had it much easier, because they were often already there were they were needed.
When Shiner will be pressing for more access for agricultural products, he might was well bring some shovels along to join the building craze.

Of course: the lack of infrastructure brings literally an unequal playing field, but China is picking up very fast her, although not as fast as the US hoped for. Being in the US it does not need much to see how jobs leave the US. I just saw an article in the New York Times of American radiologists who are loosing their work to their Indian colleagues. While the average US radiologist earns a whappy 350,000 US dollar per year, his Indian colleague can do the same work for 25,000 US dollar.
On one of my recent flights I met an American business man who supplies larger retailers like Wal-mart with displays. He described how the American retailer is using the internet for to let its suppliers bid on their projects. “You see your competitors moving in, taking away your work, while you look at your screen,” he said. Like most Americans he used to like transparency, although he can now also see the negative side of it.
While the US are still lagging behind Canada, Japan and Korea in terms of connectivity, the country is catching up fast, offering broadband connections to source work out to cheaper places in the world. That is how the USA is loosing it jobs, very fast. We can add value in many other ways, tell me the futurologists at the University in Michigan.
Well, let’s see.
When railroads were being built, opposition groups resisted that novelty that would destroy traditional life. They were right, it did destroy traditional life, but nothing could be done to stop it, and efforts to stop the railways also failed.
I’m just waiting for a ‘kill the internet’ movement, the ultimate anti-globalization movement. It will come, and it will fail.

Fons Tuinstra

2003-11-20T01:19:00.000+08:00

China retaliates

China disqualified the US textile quota as a move against free trade, Reuters reports. It stopped several deals with the US due to logistical and visa probmens, but a major trade war seems to be in the making, although the New York Times qualifies the response as very moderate.

2003-11-19T05:57:00.000+08:00

US expands textile quota for China

The Bush-administration has taken a firm line against China by imposing new quota for three textile products, bra's, dressing gowns and robes, writes AP. "U.S. textile makers hailed the announcement as a major victory to protect their beleaguered industry while critics warned that the decision would hurt American consumers by raising prices," says the article.
US Importers of textile have dismissed the move, since it will not bring back any jobs, they say.
State-owned newswire Xinhua in China repeated almost verbatim the AP story, without adding any comments at this stage.

Who did react was the International Monetary Fund (IMF) that said the Renminbi was not really overvalued and had warned the US government against taking additional trade measures, like the textile quota.

2003-11-18T10:01:00.000+08:00

US economy picking up

The US economy is picking up, also in terms of jobs for MBA-students, told Linda Lim, professor at the Michigan Business School me this afternoon. Especially the job prospects for the American students look very bright again.
That is not yet the case for the international students, as American companies tend to hire mainly US students. "They think they might get problems in getting a visa for those students," said Lim. "That is nonsense, but it makes it hard for international students anyway.
The US-China relations are going to be an issue in the upcoming elections, she aknowledged. Lim in the past also spoke out again the US policy of putting pressure on China. Lim: "It simply does not make sense."

2003-11-17T02:21:00.000+08:00

Internet kills US jobs

What makes reading papers fun is the combination of articles you sometimes see. Today in the Money&Business section of the New York Times an in-depth article on the outsourcing of US jobs for radiologists in this case to India. US radiologists can earn up to 350,000 US dollar, while their Indian colleagues can do a similar job - thanks to the internet - for 25,000 US dollar.
On the same page an article about a start-up company that offers wireless broadband access to US citizens, as the traditional suppliers cannot meet demand. The paper compares the expansion of the broadband internet access to the expansion of the railroad in the 19th century and the highways in the 20th, both developments that defined the US in their days.
On my way from Shanghai to Tokyo I sat next to a supplier of Wal-mart who also had to deal with the effects of the internet. Wal-mart now organizes global bidding through the internet between suppliers. "You see the price drop on the screen, and nothing you can do about that." This is called 'transparancy', isn't it?
There seems only one way out: ban the internet. But that was tried with the railways in the past, but also did not work out.

2003-11-17T00:58:00.000+08:00

US trade official on farm goods and IPR

US deputy secretary Josette Shiner is the next in line to visit Beijing and pressure China in this case on infringements of intellectual properties and farm goods, reports Reuters.
"U.S. officials have identified intellectual property rights as an area where the United States could take action against China at the World Trade Organization," writes the newswire.
This happened after the US administration had to give up possible legal action against China refusal to float its currency.
Access of US agricultural goods might be another dead end issue on the US agenda. Before China entered WTO US farm goods were expected to flood the country and even wipe out Chinese agriculture. The opposite happened, mainly because of the poor logistics inside China, that made it hard for US goods to leave the coastal areas and move to the interior. That situation might not have changed in the past few years.

2003-11-12T02:37:00.000+08:00

China savior of the world economy

The International Herald Tribune joined the Financial Times is cheering up China's economic performance as the newly found safety belt for a sluggish world economy.
That was slightly different from US commerce secretary Don Evans I watched yesterday at the show of Lou Dobbs at CNN and warned China again to get an "equal playing field", whatever that might mean.
But the Bush administration resists proposals in Congress to impose a 27.5% tariff on Chinese goods, the China's official newswire Xinhua reports.

2003-11-04T23:16:00.000+08:00

A balanced European viewpoint

In the Financial Times of today.

2003-10-31T14:28:00.000+08:00

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.

2003-10-30T11:11:00.000+08:00

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.

2003-10-29T10:39:00.001+08:00

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.

2003-10-28T11:18:00.000+08:00

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.

2003-10-25T11:57:00.000+08:00

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.

2003-10-23T15:39:00.000+08:00

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.

2003-10-21T17:18:00.000+08:00

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."

2003-10-21T11:19:00.000+08:00

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).

2003-10-20T12:06:00.000+08:00

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.

2003-10-19T22:49:00.000+08:00

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.

2003-10-19T14:46:00.000+08:00

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.

2003-10-17T18:02:00.000+08:00

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.

2003-10-17T17:24:00.000+08:00

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.

2003-10-16T16:45:00.000+08:00

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".

2003-10-15T11:47:00.000+08:00

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.

2003-10-13T17:20:00.000+08:00

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.

2003-10-13T10:30:00.000+08:00

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.

2003-10-13T09:49:00.000+08:00

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.

2003-10-07T18:51:00.000+08:00

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.

2003-10-06T11:01:00.000+08:00

"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."

2003-10-04T12:40:00.000+08:00

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.

2003-10-03T11:34:00.000+08:00

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."

2003-10-03T10:45:00.000+08:00

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

2003-09-30T15:35:00.000+08:00

Holiday

China observes a national holiday from 1 till 7 October, but things have started already.

2003-09-28T16:59:00.000+08:00

We Had Friends All Over The World
Sunday column at www.c-biz.org

Lausanne (28/9/2003)

By Bill Fischer

In the lobby of the Beijing Hotel, there was always a wonderful portrait of Chairman Mao surrounded by a diverse set of smiling people. Entitled: "We have friends all over the world," it is a legacy of the days when China was the political inspiration for the developing world. Today, there are few places around the world where China is not considered a direct economic threat.

The Managing Director of a well-known European firm says he will spend "the remainder of [his] career closing factories in Europe, and opening new ones in China." The North American customers of a well-respected European engineering firm now require them to manufacture 30% of their output in China, and to benchmark the remainder against Chinese prices. Mexico is reported losing jobs to China, and in the U.S. entire industries are at risk of vanishing, leaving only the unemployable behind. The stark reality of China's becoming "the factory of the world" is that factories elsewhere are closing.

This is a big issue! Unemployment is a tragedy wherever it occurs. In the past few weeks, nearly every manager I have met with has had China on their minds - and it's not good. There are no easy answers here, but as this debate grows, it is key to remember several key points:

Revaluation will not be the solution: Despite political pressure for yuan revaluation, this will not happen, or matter, in the short-run. China will not put its own growth at risk; it is as afraid of unemployment as we are. Furthermore, the magnitude of China's manufacturing cost advantages in many industries are well-beyond what any realistic revaluation could correct.

Floating the yuan is even more unlikely as long as China fears significant capital flight once currency constraints are relaxed. Correcting this is about institutional infrastructure.

Chinese factories are now key players in the global supply chains of "our" multinationals: Their success becomes "our" success. "Our" corporations are the beneficiaries of China's cost-advantages, and so are Western consumers! It is not so much that China is taking our jobs away, as it is that "we" are making different sourcing choices in the value-chains that serve us.

Moving-up the value-chain is no longer assured protection: China is becoming a major source of intellectual property - in science, R&D, design, & entertainment. The reality of 1.3 billion people is that China can and will compete on the basis of low-wage labor and high-impact brains, at the same time.

Much of what we have long-wished for in China has occurred: a market economy is growing and Chinese people are better-off than they have ever been. China is presently the best bet for an Asian growth-engine, and a force for political stability. As China integrates into the global economy, some job relocation is to be expected.

Gradually, the Chinese will certainly import more as growth continues. In the meanwhile, look for a lot of political bluster on all sides, but little effective immediate resolution of the dilemma.

Bill Fischer is professor at the business school IMD in Lausanne, Switzerland

2003-09-26T10:51:00.000+08:00

Contradictions – the WTO column
(tomorrow at www.c-biz.org

27 September 2003

Shanghai – What I love about China is that it is often governed by labeling. By just giving it a name, or a different name, suddenly things become better – or worse of course depending on how you look at a situation. In the past the number of unemployed was defined away, for example by calling them “waiting for work”. Those murky categories have gone away and today Shanghai has 290,000 registered unemployed, Mayor Han Zheng told this week. He still called it a ‘contradiction’ he was working on, although I found the number rather low for a city as Shanghai, given the changes it is facing.
Probably many unemployed do no register, solving at least the statistical problem.
Similarly in the 1990s private companies were first defined away as ‘collective enterprises’ and massively emerged at the end of that century and, hurray, suddenly the private enterprises occupied a top-position in the statistics, for a large part by re-labeling.

I was not really amazed when the renowned economist Wu Jinglian this week again ignored all political conventions. Some years ago he told an audience their money would be safer in a casino than in the Chinese stock markets, since in the casino’s you have rules, raising the ire of the domestic financial community. Yesterday he said China’s economy grew the first half of this year more than 10 percent, in stead of the official 8.2 percent.
The official figure is artificially kept low to hide that the economy is seriously overheating. Wu warned against those dangers.
Making predictions on what is going to happen in this country is tough even though both US lawmakers and money traders kept on pretending this week they can influence or at least predict upcoming changes in China’s way of dealing with its currency. The money traders forced the Japanese yen to give in but – slightly amazed – they see they cannot move the Chinese policy. It is not the Chinese way of changing policies.
The only way China can give in at this stage is by re-labeling its currency and that seems too much for this situation. I cannot image the scenario where China would basically launch a new currency, but it would be an ideal solution that would make everybody happy, especially the printers of money of course.

Some changes might be easier obtainable. Shanghai mayor Han Zheng was portrayed by some of my colleagues as an old-style communist when he used the qualification “contradictions” for the problems he faced. He should call them “challenges”, just like all the managers learn at business school. It does not change the problem, but it sound much better, doesn’t it?

Fons Tuinstra

2003-09-25T10:37:00.000+08:00

NAM prepares for legal steps

The National Association of Manufacturers goes ahead with the preparation of legal action against China, AP reports. “Officials of the National Association of Manufacturers told reporters they planned to support a novel trade case on the issue under Section 301 of U.S. trade law. If successful, such an effort would trigger penalty tariffs on billions of dollars in Chinese imports coming into the country.
The manufacturers are seeking a WTO-ruling in favor of the US, because China is manipulating its currency, a practice banned by the WTO. But it will be a novelty for the WTO, and is most likely not going to be an easy way, especially now China will said it will not give in.
“Chinese factories are now key players in the global supply chains of “our” multinationals,” argues professor Bill Fischer of the IMD business school in Lausanne. “Their success becomes “our” success. “Our” corporations are the beneficiaries of China’s cost-advantages, and so are Western consumers! It is not so much that China is taking our jobs away, as it is that “we” are making different sourcing choices in the value-chains that serve us.”
Bill Fischer will address the issue in the upcoming Sunday Column at www.c-biz.org

2003-09-24T11:02:00.000+08:00

The economic pressure sours, but

In the past few days I have spend much time with financial specialists here in Shanghai and of course the currency issue came up. Financial pressure on the renminbi has gone up so much that a revaluation would be appropriate for those financial reasons. The market keeps on speculating that China’s currency will go up very soon, increasing the pressure even more.
But because the issue has been so much politicized that giving in to that pressure has now become impossible. While all experts agree that the value of the currency go up, they also acknowledge it is not going to happen for political reasons. The American pressure might have bitten in its own tail.

2003-09-21T17:43:00.000+08:00

No support for US at G7

Efforts of the US to get the support of the ministers of finance of the seven most industrialized countries during the G7 meeting in Dubai this weekend for putting pressure on China to liberate its currency have failed.
We reaffirm that exchange rates should reflect economic fundamentals� We emphasize that more flexibility in exchange rates is desirable for major countries or economic areas,'' a statement said according to the newswire Bloomberg.
Li Ruogo, assistant governor of the People�s Bank of China � China�s central bank � repeated China would gradually liberalize its currency, but at its own terms at its own speed. He said he simply did not see the logic of doing it now.

2003-09-20T11:46:00.000+08:00

China Talks Tough

For the first time China has directly told the US to back off on the currency issue, writes Reuters, based on a report in the China Daily I must have missed. Good we still have the newswires around.

2003-09-19T11:33:00.000+08:00

The currency issue – the WTO column
tomorrow at www.c-biz.org

20 September 2003

Shanghai – China seems to be a convenient subject during the campaigns for American presidential elections and at least two days afterwards. Especially in the upcoming campaign, since there are so many real issues politicians want to avoid – Iraq, taxation - China has become an issue very early in the struggle.
Unfortunately this time a real non-issue has the honor of becoming the epicenter of public attention in the US: the question whether China treats the world unfairly by pegging its renminbi to the US dollar. Even a Wall Street Journal commentator – not really a medium for China fellow travelers – sighted yesterday that since it is politics, arguments do not make a difference anymore. China has already sent US Treasury Secretary John Snow home, polite but empty-handed. Snow will have another go at this weekend’s G7 meeting, but that will not make much of a difference.
It is comparable to the Japan discussion the US in the 1980s when US manufacturers campaigned against Japanese cars. Now half of the Americans drive a Japanese car.

The US manufacturers, followed by lawmakers and the US administration accuse China of stealing American jobs in an unfair way. Other countries like Mexico and Italy loose many more jobs to China, but they have been less vocal on this issue. On the contrary, it is remarkable how many experts, countries and institutions agree with China that says it first has to make its banking system healthy before it can give the renminbi in the hands of the free market.
Almost everybody agrees with China. The European Bank. The IMF. Nobel-prize winner Stiglitz. The Japanese Prime Minister. Mister Forbes. Almost nobody with a basic knowledge of economics thinks it is a good idea for China to float it currency, as it might even hurt the world economy.
It is obvious that only a good alternative subject is going to take the heat off China. What advice can we give the American politicians? I think first they should turn away from the economy. It is very hard to blame anybody else for the fact you are unable to compete on a global market. Better forget about the economy as an issue unless you would really have a very smart idea to save it.

Just pick a little country with loads of nasty anti-American habits, and bomb the hell out of them – verbally please, not like in Iraq. If you promise not to send your marines, I can give you some really good arguments why you should take on Holland, my home country. We despise the US policy toward Iraq. We let homosexual marry! You need more arguments? We condone soft drugs and legalized prostitution (although we liked it more when it was still illegal). We attract loads of American tourists who do not spend their money doing things that are banned at home. We facilitate abortion. We support safe sex.

Economy is anyway such a boring subject is you have no really smart solutions. How can you keep up momentum for the next 14 months, especially if you still need a lot of favors from China? Go for the small countries and juicy subjects: that is much more convenient.

Fons Tuinstra

2003-09-18T09:26:00.000+08:00

European banker supports China policy

It is getting boring by now, but also Ernst Welteke, a prominent member of the European Bank Council, has rejected US pleas to a floating renminbi. ‘‘It makes no sense to pressure the Chinese government because China must first develop its banking system,’’ Welteke said Tuesday. ‘‘One has to be careful to avoid abrupt changes,’’ according to Bloomberg.

2003-09-18T08:31:00.000+08:00

US manufacturers will file complaint against China

The president of the National Association of Manufacturers, Jerry Jasinowski, has announced on Wednesday his organization will file a complaint with the American administration to put pressure on China to release the peg of the renminbi to the US dollar, Reuters reports.
"The fact that they are taking the step is simply another signal, I think, to the Chinese about the seriousness with which people are taking the issue," he told reporters. "It will become, even as they are developing a case, one of the facts that the Chinese and we are going to have to look at," writes the news agency.
For me, I fail to understand how action under US law can change China's - or any country's - policies. For starters, I'm not very impressed.

2003-09-17T16:48:00.000+08:00

Free renminbi can destabilize world economy - Stiglitz

Nobel-prize winner and economist Joseph Stiglitz has warned that a free-floating Chinese currency might do more harm than good, Dow Jones reports from Shanghai. He does advice China to link their renminbi to a basket of currencies, not only the US dollar.
While more experts speak out in favor of the Chinese policy, the US adminstration is looking for new juicy subject that might go well with the electorate.

2003-09-17T09:30:00.000+08:00

The economists of Bush

Rumors from both side of the political spectrum said US president Bush did not have any economic advisors, but according to Reuters he broke up with one, so those rumors must have been untrue.
"Glenn Hubbard, who served as chairman of the White House Council of Economic Advisers until March, and other economists argued it made little economic sense and that a sudden revaluation of the yuan currency could trigger a banking crisis in China, according to the sources," writes Reuters.

2003-09-16T12:28:00.000+08:00

US turns to 'unfair' practises

The US administration moves away from the currency issue while focusing more on the 'unfair' practises, AP writes.
Commerce Secretary Donald Evans now can have a go with a "Unfair trade practises Team" in his Commerce Department, he announced on Monday in the Economic Club in Detroit.
China is again in the center of the interest and Evans will spend a week in November in Beijing.
"Manufacturers complained about rampant piracy of intellectual property, forced transfer of technology from firms launching joint ventures in China, trade barriers and capital markets that are largely insulated from free-market pressures," Evans said, according to AP.

Hmm, very little news here.

2003-09-16T12:20:00.000+08:00

"Don't do it" - S&P

The rating agent Standard and Poor has joined the army of experts, countries and institution advising China not to float their currency as it would jeopardize its banking system, write multiple media, for example the Financial Times.
US Treasury Secretary John Snow, pushed by American manufacturers, tried unsuccessfully to push China into a revaluation of the renminbi.
S&P considers that lifting of exchange controls at the moment could be risky as Chinese banks are ill-equipped to handle volatility in the exchange rate," said Ping Chew, the rating agency's China analyst, according to the FT.

2003-09-15T13:13:00.000+08:00

Anti-dumping cases against China grow

Export from China is severely hurt by a growing number of dumping cases, an official of the Chinese Ministry of Commerce says today in the China Daily. By the end of 2002 over 500 cases were filed against China, costing the country billions in lost export revenue.
At the end of 2001 only 55 had been filed, also a record number at the time.
China itself has filed 25 cases.
In the past China would merely ignore those claims but has developed a counter-strategy as the damage has increased. Chinese firm won recently a dumping claim by European manufacturers of lighthers.
Complaints about dumping - rightfully or wrongfully - have been used as a strategy to reduce Chinese imports.

2003-09-15T09:30:00.000+08:00

Chinese media on the Currency issue

Chinese media keep on reporting on the US pressure on China to revaluate its currency to 'save' American jobs in manufacturing. While international support is fading away, the issue might come up dat the G7 meeting coming weekend. Chinese media follow the issue closely.
The China Daily today quotes Robert Mundell, 1999 winner of the Nobel prize for economics, who encourages China to stick to its policies. The Columbia professor spoke this weekend in Beijing.
The Shanghai Daily reports about the European defection from the US camp.

2003-09-14T09:30:00.000+08:00

US support for Rmb-issue at G7 slipping

European financial bigshots like ECB-head Wim Duisenberg and German deputy minister of finance Caio Koch-Weser have broadend the currency problem to a pan-Asian issue. Duisenberg stressed that the issue of a fixed currency rate regime involves almost all economic growth centers in Asia, reason why he had in earlier statements not singled out China, like US-officials have been doing.
At the meeting of European ministers of finance and European central bankers on Saturday also other countries warned against isolating China on this issue.

2003-09-13T09:28:00.000+08:00

Trade deficit and logic

A rising trade deficit in July puts pressure on the Bush administration to act against the Chinese currency, US media including the Wall Street Journal reported on Friday.
The question whether is all makes sense seems to be more an academic discussion, as Yale Global Online questions whether the calls for revalution of the renminbi makes sense.
The article does not bring new insights, but gives a solid overview of the arguments against a revalution of the Chinese currency.
Professor Linda Lim of MBS, the Michigan Business School, warns that "political and financial instability in China resulting from a yuan revaluation at this time would surely undermine the main remaining engine of growth for the world economy - which is China."
She is joined today also by the managing director of the International Monetary Fund (IMF), Horst Koehler, writes the Financial Times.
In a recent meeting with the Chinese authorities, Mr Köhler said according to the FT: "I strongly advised them not to rush in opening the capital account without knowing that they have full control, or recognition of where they stand, related to their financial sector and the regulatory and supervisory framework."

2003-09-11T20:05:00.000+08:00

Dubai G7 perhaps on Renminbi - Japan

The meeting of ministers of finance at the end of this month might also focus on the issue of the Chinese currency, a Japanse official suggested in the media.

China itself does as if it shows flexibility by suggesting a freer currency might be possible in the future, NPC-chairman Wu Bangguo also said in Japan, in a published article. "
"We hope to nurture structural mechanisms for the yuan based on market principles," Wu told Thursday's business daily Nihon Keizai Shimbun, according to AFP. But then, China has been saying this for already ten years, so that is not much of a promise.

2003-09-10T14:08:00.000+08:00

China's production and export up

New figures on China's industrial performance show a relentless growth of industrial output and export, writes Bloomberg.
Factory production in August rose 17.1 percent year-on-year to USD 42 bilion, compared to 16.5 percent in Juy the National Bureau of Statistics announced at its website.
Export in August rose a paltry 27 percent to USD 37.4 billion, after it grew 31 percent in July, according to the Ministry of Commerce.

2003-09-10T14:02:00.000+08:00

Senators ask for anti-Chinese tariffs

Democratic and Republican senators push for a special tariff on China imports unless China agreed to float its currency, AP reports. The senators contempate a 27.5 duty and want to undo China's special trading status (that is rather a normal trading status, since it is granted to almost all other countries.
"The Chinese are using currency manipulation as a lethal loophole for America's manufacturing jobs," Senator Richard Durbin (Dem-Ill) said. "It is tantamount to imposing a tariff on American products because of their manipulation of their currency."
That argument has been countered by both China and a wide variety of experts.
Other media report that the senators want to give China 180 days to comply with their demands for a floating currency.

2003-09-09T15:05:00.000+08:00

Bush-advisor refutes currency argument

On of the strongest condemnations of blaming the way China is dealing with its currency as the cause for job losses in the USA comes from a former Bush advisor, today in the Wall Street Journal.
"This argument is both unpersuasive (it does not survive careful scrutiny) and unfortunate (it detracts from steps policy makers could take to address concerns of U.S. workers), writes Columbia professor of finance and economic Hubbard. Hubbard was until March the chairman of the Council of Economic Advisers of US-president Bush. "The decline in manufacturing employment resembles that in agriculture in the last century, in which robust productivity growth characterized American performance, and millions of workers exited agriculture for other segments of the economy."
And: "While scapegoating China for job loss in American manufacturing is unpersuasive, the deeper worry is that such quixotic policy will divert attention from policies that would actually help U.S. workers."

2003-09-08T15:14:00.000+08:00

World divided on currency issue

While experts still wonder whether the way China manages its currency is really the cause for the US manufacturers to shed jobs, the rest of the world is taking sides. Europe decided to go along with the US, writes the Financial Times. EU finance ministers are expected to join the American request to let the renminbi float; a request that will be most likely be ignored.
But Mexico, on of the countries most severely hurted by Chinese competition - about 200,000 jobs media write - joins the Chinese side, writes Bloomberg, its finance minister said during the APEC meeting in Thailand.
Chinese companies are still speculating the renminbi will still move, despite all denials from Beijing, and they focus on US Treasury bonds, writes newswire Dow Jones today.
"How China's holding of U.S. Treasurys comes into the picture emerged Sunday in data published by the Bank for International Settlements. The Basel, Switzerland, organization monitors international capital movements and said that earlier this year it saw the second-biggest expansion of dollar borrowing in Asia since 1997, and most of the activity was traced to Chinese banks."

2003-09-07T17:07:00.000+08:00

China hits again out at 'trade-war rethoric'

Chinese authorities seem to worry about the upsurge in what it considers to be unfair accusations that China is manipulating its currency. Changing the way China deals with the renminbi is not going to help the Americans to regain jobs, says yet another editorial in the China Daily
The editorial is a direct reaction on the interview US-president George Bush gave yesterday (see our previous entry).
"We expect our trading partners to treat our people fairly - our producers and workers and farmers and manufacturers,'' Bush said.
Angering Washington might result in trade sanctions, but China's bigger priority is fending off expectations that the yuan might be revalued - rumors that could impact China's economy even more than action by the United States, the China Daily writes.

2003-09-06T13:13:00.000+08:00

Bush backs off in revaluation-issue

US president George Bush has admitted in a TV-interview with CNBC China will not give in to American pressure to change its currency policy very soon, Reuters reports.
"The best thing to do with these countries, however, is not to ... scream and shout and thump the table here at home. It's to send a clear message to them so that they know our position so they can digest what we've told them and that we can work together as friends to resolve any problems we have," Bush said according to the newswire.

Now, does this mean China will not be an issue in the upcoming American elections? I might as well close down this blog then. :-)

Here a transcript of the whole interview.

2003-09-06T12:34:00.000+08:00

Worker productivity

The Wall Street Journal of today gives an interesting twist on the new unemploymency figures in August. The loss of 93,000 jobs came as a surprise, as analysts had been expecting 12,000 more jobs based on the recovering of the economy. The WSJ adds the two up and concludes that this is the effect of an increased workers productivity that increased 6.8 percent in the second quarter.
"That rise has let companies hold off on new hires until profits improve and the recovery has truly taken hold. It's also produced the strange spectacle of a "jobless recovery" -- one in which analysts and investors alike can't ever be quite sure what the next report will bring," the paper writes.

2003-09-05T16:42:00.000+08:00

Chinese internet censor stops US news

The news about US president George Bush going around in his mid-west to rally financial support for his upcoming election campaign did get the attention of the Chinese internet censors. During these rallies Bush also spoke out against China and the way it is managing its currency, to gain support from the hard-hit region.
That means that AP-reports in local papers, like The Beacon Journal from Ohio, censored in China, a very special honor! The same goes for dispatches in the Porterville Recorder and the Santa Maria Times. Somebody at the censorship department must be very bored.

2003-09-05T16:15:00.000+08:00

World Bank supports China's slow Rmb reform

After APEC, also the World Bank today sided with the cautious Chinese approach to change its currency management, writes AFP.

"We agree with an incremental approach to most things," Deepak Bhattasali, lead economist for the World Bank in China, told AFP. "An incremental approach in most development processes is better."

World Bank Senior Economist Dominique van der Mensbrugghe blamed the US itself at a briefing in Beijing. "The trade deficit in the United States is a macroeconomic phenomenon and it's not a phenomenon that is related to the trade deficit it has with China," he said. "The focus should be on the financial imbalances in the United States and not on this trade deficit," he said.

2003-09-05T11:35:00.000+08:00

US economy more standstill than progress

The US economy is far from recovering and we only see a standstill, reports MSNBC.
“It’s clear that businesses have stopped cutting, but there is as yet no evidence that they have started to hire,” said Mark Zandi, chief economist at Economy.com, a forecasting firm at their website.
Even economist who see a mild recovery of the economy say it does not translate into more jobs. "Usually you would have had lots of job growth by this time,” said Ed McKelvey, senior economist at Goldman Sachs.

2003-09-05T11:26:00.000+08:00

Bush will 'deal' with China

Tough talking about China has now reached a presidential level, report Reuters.
At a CNBC interview President Bush said he would "deliver a strong message from the administration that we expect our trading partners to treat our people fairly -- our producers and workers and farmers and manufacturers -- and we don't think we're being treated fairly when a currency is controlled by the government."
The presidents of China and the US will meet each other in October in Thailand and then the currency issue might be on the agenda again.

APEC (Asia Pacific Economic Cooperation) saw 21 heavily divided ministers of finance on the currency issue, writes the Shanghai Daily

Paul Krugman attacks the Bush administration in a yet again very strong column.

2003-09-03T16:56:00.000+08:00

More manufacturers head to China

Reports the NWI-Times on their site.

"According to Bill Cermak, a Pro Mold executive and founder of Save American Manufacturing, a small-manufacturers lobbying group, more than 100 plastic molders in the Chicago area have gone out of business," the paper writes. "To avoid being next on line, Pro Mold & Die is buying about 20 percent of its components from China."

2003-09-03T16:10:00.000+08:00

Is Google cheating? - OT

I bet they do. I have picked blogger.com to host this blog, because I estimated that it would get listed very soon, since Google owns Blogger.com. And guess: it took them less than three days to find and note this blog. It still is a nuisance it is being blocked in China, but it is worth it. To compare: my other service www.c-biz.org is around for much more than three days, and not listed.

2003-09-03T14:59:00.000+08:00

US groups turn to WTO - FT

The Coalition for a Sound Dollar will ask action from the US Trade representative under the WTO-regulations, the Financial Times reports today.

The coalition represents 85 manufacturing associations in the US, and they want to take action when US Treasury Secretary Snow comes home from Beijing empty-handed. "If he doesn't come home with much, it will reinforce the perception that more leverage is needed," said Frank Vargo, international vice-president of the National Association of Manufacturers according to the FT.

The piece in the FT also suggest that China will remain on the agenda for the weeks to come and president Bush is expected to bring up the issue during upcoming visits in the country.

While I'm not familiar with this specific procedure, WTO-procedures in general are perceived to be rather tedious, unpractical and not very efficient. Any procedure might easy take up to two years when things go smooth, so that would not be a quick fix needed during an upcoming election.

2003-09-03T13:20:00.000+08:00

"Let's discuss"

US Treasury Secretary John Snow has met yesterday and today many patient Chinese officials, but no sign the renminbi is going to move very soon, as he had urged China on the request of US manufacturers. China is willing to discuss how in the future a care floating of the currency could be possible. Since that discussion is already going on for ten years, it is really no sign things are going to change very fast.

Snow is addressing the wrong problem, said PBOC-governor Zhou Xiaochuan. "It's not a problem with the yuan... Under the current economic and trade structure, even if China balanced its trade policy or monetary policy, the U.S. would still likely have a rather large trade deficit with China.''

Snow himself tried to look at his failure to get any concessions from an optimistic angle, noted the Washington Post. "We've had a series of very good meetings, very important meetings and to me very encouraging meetings. . . . I was encouraged to hear the reaffirmation of China's long-standing goal to move toward currency flexibility." But Snow declined to discuss when such a move would actually be implemented, saying "I don't think it's helpful for us to talk about a timetable."

2003-09-03T13:06:00.000+08:00

Ask the American consumer, talk to Walmart

"I don't quite understand what Bush/Snow/AFL/CIO - whatever alphabet soup you'd like to name - are on about," reacts Gerd Heinz from Shanghai. "Sure, China loves to export - needs to, as well. But without the very keen interest of the American importers - and those in all the other countries as well - the Chinese would not only sit on their goods but also on their hands, not knowing what to do and how to improve their products, lives and opportunities."

So: "Why doesn't the American government talk to Walmart et al.? And to the consumers who are happy to buy ever more imports from China? No Chinese company would turn down a proposal of higher prices for their goods! Why, some might even improve the sweat-shop conditions and stop children working or at least pay those slaves a bit better."

2003-09-03T10:34:00.000+08:00

And the real losers are: Mexico, Italy...

While the US manufacturers are up in arms because their work disappears to China, other countries might have real problems, write both the New York Times today on Mexico and the NRC Handelsblad (in Dutch) yesterday on Italy.
The other Asian countries of course also belong in this row.
Both good stories, of countries that in different periods after the Second Worldwar took away low-paid jobs from the United States, but are now in the same position the USA were in the second half of last century.

2003-09-02T22:49:00.000+08:00

Rescue American jobs!

I stumbled over the site "Rescue American Jobs" almost by accident; but then: what is an accident on the internet?
This is the American anti-global movement! Since this is going to take more than five minutes to explore, I will requote for starters some of the quotes they use at their home page. Expect more in the days to come.

"The question is whether America can remain a great power or a dominant power if it becomes a primarily service economy. I doubt that. A country must have an industrial base to play a significant role in the world. I am concerned." - Henry Kissenger July-2003.
Not only a great quote: it hits the core issue: what kind of economy does the USA need?

"When my colleagues get a letter from a constituent who has been displaced by foreign workers, they should write back to them & say, 'It is the policy of this government to displace you, to move you into a lower economic income category, because we believe in cheap labor & we believe the politics of open borders helps our party." - Congressman Tom Tancredo.
Not really a pansy, it he, Tom Tancredo. Will have to check him out too.

Here you find some of their China-quotes. Looks really like the first key policy statement with more concrete proposals than the columnists could come up with.
An interesting site, but I noticed they have one problem: very few visitors. They have a well-done Forum I visited the site during working hours in the US, but there was the only visitor: me. Their records show that they never had more than five visitors at the same moment getting together to discuss things. That does not sound like a heated discussion, does it?

The situation is getting worse. I had a look at their registered members: about 75, but only two are regular posters. Top-writer is DawnMcTeo of Mesa, Arizona, who had posted 48 messages or almost 40 percent of the total at the forum today. Hmm, have to revise my verdict: not much movement here. Maybe I should give them a hand?

2003-09-02T15:19:00.000+08:00

China Readies for Snow with Tough Talk

Writes Reuters and offers more of the same.

2003-09-02T12:20:00.000+08:00

"Trade war"

Hey, ho! The tone of the report of the new Beijing correspondent of The Guardian is rather surprising when he writes about Snow's visit.
"In what could prove the opening salvo in a full-blown trade dispute between the world's richest and most populous nations, Mr Snow has promised to raise the sensitive issue of the Chinese currency's peg to the dollar, writes Jonathan Watts from Beijing. It is certainly a rather different style compared to his rather subdue colleague John Gittings, who retired this summer.
Watts is the new kid in the block, so he has to prove to his editors how important China is. A bit war is always good for the journalistic turnover, but it seems rather overdone at this stage of the developments.

2003-09-02T10:43:00.000+08:00

Bush supports manufacturers

Back in the US President George Bush came on Labor Day out in support of the embattled manufacturers.
"One way to make sure the manufacturing sector does well is to send the message overseas ... We expect there to be a fair playing field when it comes to trade. See, we in America believe we can compete with anybody just so long as the rules are fair, and we intend to keep the rules fair," he said according to Reuters.
During his presidency began in January 2001 3 million jobs have been lost, 2.5 million of them in the manufacturing industry, Reuters added.
Democratic opponents attacked Bush. "What is President Bush's response to this unprecedented job loss? More tax cuts for the most privileged people in our society," Sherrod Brown (dem- Ohio) said.

2003-09-02T09:20:00.000+08:00

Do not meddle with our Renminbi

In a rather strong-worded commentary the official China Daily sets the stage for the visit of US treasury secretary John Snow later today. It notes that the peg of the Chinese renminbi to the US dollar has become an item in the upcoming presidential elections.
An interesting argument the paper uses when it compares the competitive power of manufacturers in the US and in China. It refers to a report of the World Labor Organization (and I have to look that up) that shows that China's labor costs in manufactering are 2.2 percent of those in the United States.
"Even if the renminbi appreciates by 100 per cent against the US dollar, the Chinese goods' competitiveness relative to their American equivalent is still there. But products from other places in the world, whose labour costs used to be a bit higher than China's, may replace Chinese exports to the United States," the China Daily writes.

China is most likely going to do a set of other concessions, writes the New York Times, but will remain strong regarding the peg.

2003-09-01T21:39:00.000+08:00

Senator Elizabeth Dole

Why do I get mainly funny websites about viagra when I google senator Dole(rep- North Carolina)? Too much a newbie in American politics, I guess.
Ms Dole seems a solid woman, who even refrains from developing more than a basic official site. And on Google the fun about Liz just goes on. Guess she also lost the struggle for a link at this site.

At least she has some internet friends, but still not enough to qualify as a China-player.

2003-09-01T21:12:00.000+08:00

Senator Charles Schumer

Also senator Chuck Schumer (dem - New York) came out in defense of the US-based manufacturers, although he does not mention the C-word on his official site at all. (At least: I could not find it and his search engine failed when I tried to look up the C-word), so I have not added his site here.
"If you ask the experts, they'll tell you that China has been intentionally undervaluing its currency so that everything they sell to other countries is the cheapest thing going. That plays a big role in causing our businesses to suffer and our workers to lose jobs. The Treasury Department ought to examine the situation before it gets even more out of hand" the senator said in July.
Apart from pressure on China to revalue the renminbi, Chuck did not ask for any other measure or issued new ideas on what the manufacturers in New York could do to improve their competitiveness otherwise.

Correction: his site does mention China. Google worked better than his search engine. This guy is very busy is pushing out press releases, no wonder the search engine got overworked.

2003-09-01T20:29:00.000+08:00

Congressman Don Manzullo

Now were are getting into business. Congressman Don Manzullo (rep - Illinois) "proudly serving the People of Northern Illinois" has introduced firm legislative measure to protect jobs in the US, his site says.
"We are hemorrhaging manufacturing jobs in this country, and not enough of our political leaders understand the ramifications of losing our industrial base," Manzullo said at a meeting with some of his colleagues in July of this year. He is a free-trader, the site says, and he proposes measures against China, Japan, Taiwan and Korea, whom he all blames for keeping their currencies artificially low.
Hmm, that is an argument concerning China, maybe even an invalid argument, but I fail to see what the problem with the other countries is. So he wants tax incentives for American firms to survive the competition. Free trade, huh? At least they are good with children.

2003-09-01T20:10:00.000+08:00

AFL-CIO

I have added the trade union movement, the AFL-CIO as an obvious player in this game in the link-column, but it was damned hard to find the C-word on their website. Their president did not mention China in his speech for Labor Day. After much slicking it wrote:

"China is now the top contributor to our trade deficit. We buy more than $5 worth of goods from China for every $1 we sell, and we ran an $83 billion deficit with China last year. Since Congress granted China Permanent Normal Trade Relations (PNTR) status and China joined the WTO, the U.S. deficit with China has grown more than 20 percent, by more than $14 billion."

That is basically it. Boring statistics. I'm a bit surprised.

2003-09-01T19:44:00.000+08:00

National Association of Manufacturers

Let's look at the message of the NAM for Labor Day, the largest association of producers in the US.

"Unfair international trade practices, particularly by China, plus an overvalued dollar, make it impossible for manufacturers to raise prices to meet escalating domestic costs associated with health care, pensions, regulations, asbestos litigation and rising energy costs, especially for natural gas. Over the last decade, the prices of manufactured products declined by 4 percent while other business prices rose 18 percent, said its president Jerry Jasinowski a few days ago. "China’s commitments to open its internal market and abide by international trade rules must be enforced. China must also allow its currency to be set by the marketplace and end its practice of keeping its exchange rate hugely undervalued. It is time for the Administration to get tough with the Chinese."

Hmm, would the US-based manufacturers be saved by China opening up its internal market faster? That might in theory be a valid argument for the financial sector or telecommunication, but what about other industries? Import duties are diminishing, as far as I can see according to the agreements.
Jasinowski also mentions that costs in the US have to go down - he picks litigation as an example - but that seems a less important message.

2003-09-01T17:54:00.000+08:00

Snow in Asia

US treasure secretary John Snow is for sure celebrating his Labor Day in a special way: by visiting Asia.
He is on a mission impossible, the Financial Times writes. China has not moved the peg between de US Dollar and the Chinese Renminbi over the past ten years and will not do this substantially now. Changing the rates is not going to have an impact on the real problem: the problems the US has in competing with China.
"Some US politicians and industrialists, meanwhile, are wilfully ignoring economic realities," writes the FT. "Low-cost Chinese manufacturing is not a new threat to US business and in many industries China has simply taken over from other Asian producers as the prime assembler and exporter to the US."
Reuters writes that Snow is going to move very carefully regarding China, it said after his press conference in Tokyo. "Publicly, though, Snow avoided comment on either the yen or the yuan. The United States lacks leverage to persuade China to alter its currency policy, especially when it needs China's support at the United Nations and in efforts to deal with North Korea."

Tomorrow Snow will arrive in Beijing.

2003-09-01T13:34:00.000+08:00

More than teddy bears only

Daniel T. Griswold of the Center for Trade Policy Studies at the Cato Institute argues in a column in the Washington Times against an earlier essay by Paul Craig Roberts who said that because of the internet and connectivity the China (and India) threat is no longer limited to manufacturing, but would increasingly also put jobs in the service sector at stage.
While Griswold cones with decent macro-economic arguments against Roberts, I agree with Roberts on the wide ranger of industries where China is going to compete.
Last month I organized for the Shanghai Foreign Correspondents' Club a meeting with representatives of Xinhua Financial Newswire who are going to hit the traditional newswires like Reuters and Bloomberg where it hurts most: the wallet.
The question is what to do. For the media-discussion I will pursue this discussion at another blog, but for sure China will expand to the service industry too.

Paul Craig Roberts obvious disagrees with Griswold, he wrote a few days ago. Again some strong arguments:
"Without doubt, some U.S. job losses are due to the recession. But the decline in manufacturing's share of U.S. GDP from 19.2 percent in 1988 to 14.1 percent in 2001, a decline of 27 percent, is inaccurately described by Griswold as "the passing pain of a recession."

I fail to detect what his solutions are, though: I have seen them up to now only in the quoted piece of Bernie Sanders.

2003-09-01T13:07:00.000+08:00

The Bernie quote

Bernie Sanders (rep - Vermont) has set the stage best after his visit to China in January 2003, when he wrote:

"But one thing we should not do. We should not let the CEOs of corporate America continue to lower the standard of living of millions of American workers by shifting our manufacturing capabilities to China. We should not perpetuate “the race to the bottom.” While it is no secret that most of the giant multi-national corporations in our country no longer see themselves as having allegiance to the United States, and will provide support to any country that allows them to make large profits, the Congress must do better. We must have the courage to stand-up to the hundreds of millions in corporate campaign contributions that flood the Capitol, and uphold our constitutional responsibilities to protect the American people. "

He targets more the CEO of American companies that leave his country, while he is rather careful in his approach of China. "There are enormous opportunities in front of us that should be utilized to develop a closer and more positive relationship with China," he adds.