China

Supply of U.S. Dollars Overseas is Shrinking Says China's Central Bank

It helps to read global newspapers because according to Shanghai Daily:

It is getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing supply of dollars overseas, a Chinese central bank official said yesterday.

Oops! Fewer U.S. dollars to buy up U.S. debt?

A Free Trade Challenge May Be Yielding Jobs

(Via Campaign for America's Future) Remember back in September when the Obama Administration imposed tariffs on Chinese tires. Well, its decision to challenge the old "free trade" religion may have resulted in AMERICAN JOBS:

Findlay's Cooper Tire will add 100 new jobs

“Last year at this time we were worried about losing Cooper,” said Sehnert.

Now the company has announced a $10 million dollar investment in the plant, mostly in automation.

With the company's expansion comes the real good news for Findlay residents, 9.1% of whom are unemployed.

The plant will need to fill 100 new jobs.

China Harming Global Economy - EU Chamber of Commerce Report

The EU Chamber of Commerce has released a report, Overcapacity in China: Causes, Impacts and Recommendations.

Overcapacity is a blight on China’s industrial landscape, affecting dozens of industries and wreaking far-reaching damage on the global economy

The reports says China's stimulus package has made this overcapacity much worse.

One of the problems is China dumps it's excess goods onto the market, selling them for much less than the cost to produce.

This hurts other national economies in terms of wiping out their domestic industries through unfair competition.

I think the report is a little polite, ignoring China's intentional and strategic market dumping and other strategies to capture yet another manufacturing sector for itself long term.

Gold, the dollar and China

So what it's true? A Chinese official trashed our currency, so the dollar is down and gold reaches another high.

"The continuous depreciation in the dollar, and the U.S. government's indication that, in order to resume growth and maintain public confidence, it basically won't raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation," Liu Mingkang, chairman of the China Banking Regulatory Commission, said Sunday in Beijing at the International Finance Forum, according to news reports.

Meanwhile Gold is at another high:

This is a different type of gold rally, with support coming from both sides of the market -- investment [and] fundamental," said Darin Newsom, a senior analyst at Telvent DTN.

CIC Buys 15% in AES

Who? What? CIC stands for the Chinese Investment Corporation. CIC is a sovereign wealth fund for the Chinese Government that is buying up natural resources all over the world. Yesterday it was announced that CIC is buying a 15% interest in AES, an American based power generation company:

A CIC unit will buy 125.5 million in new shares for $12.60 each, or $1.58 billion, Arlington, Virginia-based AES said today in a statement. CIC will own about 15 percent of the power company. AES also signed a letter of intent to sell a 35 percent interest in its wind-power operations to CIC for $571 million.

The emphasis on that last sentence was mine. Of course AES executives are spinning this as a great thing for the company:

It's China's world. We just live in it

Fortune Magazine put out an interesting article earlier this week. I wanted to quote a piece of it so you can get the idea.

Oil in Nigeria (and the Congo and Brazil and Kazakhstan and ...). Natural gas in Iran. Iron ore in Australia. China's hunt for natural resources around the globe, which began in earnest earlier this decade, has intensified as never before.
In September alone, China's sovereign wealth fund, the China Investment Corp. (CIC), shelled out nearly $1 billion to buy an 11% stake in JSC KazMunaiGas Exploration Production, a Kazakhstan oil and gas company. Just a week earlier CIC paid $850 million to acquire 14.9% of Noble Group, the Hong Kong commodity-trading powerhouse. Earlier this summer the China Development Bank lent Petrobras, the Brazilian national oil company, $10 billion to help fund exploration in deep waters off Brazil.

Financial Balance of Terror

Sometimes you wonder if Larry Summers is reading the blogs. The catch phrase Financial Balance of Terror has been coined by none other than 1990's Financial Terror Architect, Obama economic adviser Larry Summers!

President Barack Obama and fellow Group of 20 leaders are trying to end what Obama adviser Lawrence Summers has called the “financial balance of terror.”

World leaders, meeting in Pittsburgh last week, adopted a framework for more durable economic growth as they sought to prevent a replay of the worst crisis since the Great Depression. They also acknowledged the growing clout of China and other emerging economies by giving them a bigger voice in decision- making.

The Headlines on Trade with China are Ridiculous

Because the United States showed just a little sign of life and challenged China's dumping of tires in yet another unfair trade practice, the main stream media screams absurdities.

Take this headline Treasuries Gain as U.S.-China Trade Tensions Threaten Recovery and this one Yen Rises Versus Euro on Signs Trade Protectionism Increasing .

What really happened? China was dumping tires to U.S. markets in order to destroy and capture yet another good by producing under cost, flooding the market to drive down prices temporarily and plain put U.S. tire makers out of business.

China has $800 billion on U.S. Treasuries

The Chinese government sponsored newspaper, China Daily, reports China holds $800 billion in U.S. Treasury bonds.

Leading economists have urged the United States to use concrete measures instead of empty words to ward off possible losses in China's holdings of US treasury bonds, which have already surpassed $800 billion.

The call comes amid widespread concern that US countermeasures to battle the financial crisis are creating another credit bubble and failing to regulate financial markets.

"So far the US government and the Federal Reserve have failed to provide China with any details of how its countermeasures against the financial crisis will not lead to serious capital losses to China's holding of its treasury bonds and foreign reserves," Yu Yongding, a renowned think tank economist with Chinese Academy of Social Sciences, told China Daily.

Here Comes China with Dr. Doom Right Behind

While Dr. Doom (Roubini) warns of a double dip recession, an interesting New York Times article also appears, Asia’s Recovery Highlights China’s Ascendance.

In past global slowdowns, the United States invariably led the way out, followed by Europe and the rest of the world. But for the first time, the catalyst is coming from China and the rest of Asia, where resurgent economies are helping the still-shaky West recover from the deepest recession since World War II.

While Roubini warns on oil price increases breaking any potential recovery, we note China's robust growth is causing oil prices to rise.

Anyone recall China's Quest for Oil quoting deal after loan after acquisition?

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