China Becomes #1 Energy Consumer

China just became the largest energy consumer, another sign China is well on their way to surpassing the United States. The Wall Street Journal:

China is now the world's biggest energy consumer, knocking the U.S. off a perch it held for more than a century, according to new data from the International Energy Agency.

The Paris-based agency, whose forecasts are generally regarded as bellwether indicators for the energy industry, said China devoured 2,252 million tons of oil equivalent last year, or about 4% more than the U.S., which burned through 2,170 million tons of oil equivalent. The oil-equivalent metric represents all forms of energy consumed, including crude oil, nuclear, coal, natural gas and renewable sources such as hydropower.

One might think that's great the U.S. is using less energy than China, but it's not. Industrial enterprise and manufacturing are the biggest consumers of energy and this reflects, once again, on how China has captured U.S. manufacturing ...and jobs.

China's Exports Explodes - 140% yearly increase in trade gap

Recall how the Obama administration refuses to label China a currency manipulator. Now recall the U.S. needs 10,600,000 jobs just to return to a 5% unemployment rate. Now recall the U.S. has lost 2.4 million jobs due to China from 2001-2008.

Now the news, China's trade gap increased 140% from one year ago.

The trade gap rose 140 percent, to $20.02 billion, compared with a year earlier, the customs bureau said on its Web site on Saturday. That compares with the $15.6 billion median estimate of 24 economists surveyed by Bloomberg News. Exports surged 43.9 percent compared with a year earlier and import growth moderated for the third month, rising by 34.1 percent.

Notice how exports soared while imports, uh, not so much.

The value of outbound shipments rose to a record $137.4 billion last month, the customs bureau said. The previous high was $136.68 billion in July 2008, before the global financial crisis deepened. The 43.9 percent expansion compared with the median 38 percent forecast in a Bloomberg News survey of 24 economists.

Treasury Refuses to Label China a Currency Manipulator, Despite Overwhelming Evidence

The Treasury Department once again, refuses to call it as it is and label China a currency manipulator.

Senator Chuck Schumer:

This report is as disappointing as it is unsurprising. It's clear it will take an act of Congress to do the obvious and call China out for its currency manipulation.

The Alliance for American Manufacturing:

"Claiming China doesn't manipulate its currency makes about as much sense as saying LeBron James doesn't play basketball.

"It's clear that China's announcement before the G-20 last month was nothing more than a charade, but the Administration seems to have fallen for this rather unbelievable promise.

"Congress must pass strong legislation to address China's currency manipulation so that America's workers and businesses can compete on a level playing field.

"We will never double exports unless we stop China's cheating.

"This is a step backward."

Don't think it's just Democrats blasting the administration for refusing to confront China, Republicans are as well.

Chuck Grassley:

WTO Rules Against Airbus for Illegal Subsidies, while China subsidizes Paper Industry

The WTO has ruled against Airbus for illegal government subsidies.

The World Trade Organization ruled Wednesday that European governments gave planemaker Airbus illegal subsidies in its battle with U.S. competitor Boeing Co., in a first key ruling on a long-running dispute between the European Union and Washington.

Problem is the ruling is over 1000 pages and interpretation, as in will anything happen as a result, is confusing. So now the U.S. and the EU are arguing over what the ruling means.

Take, for example, one key argument in the dispute: did the U.S. prove that Airbus funding was harming Boeing? The U.S. says yes, as the panel recognized the ''serious prejudice'' suffered by the Chicago-based company.

But the EU is happy that American claims of ''material injury'' were rejected.

There were differing views on whether that means European subsidies were responsible for lost American jobs or market share.

Another question is what this means if the U.S. wishes to subsidize and protect key industries and innovation for future economic growth.

Notice this ruling comes years too late to stop Airbus from taking away orders and business from Boeing.

Meanwhile EPI has a new report, which shows China subsidized it's paper industry by $33 billion dollars from 2002-2009 to overtake the global market.

China "Pledges" to "Reform" their Currency

China is making front page news with a pledge to reform their currency.

Right. The specifics are clearly lacking and worse, China rejects a one time re-evaluation.

The decision to “increase the renminbi’s exchange-rate flexibility” was made after the economy improved, the central bank said in a statement on its website, without indicating a time-frame for the change. It ruled out a one-off revaluation, saying there is no basis for “large-scale appreciation,” and kept the yuan’s 0.5 percent daily trading band unchanged.

“The recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability,” the People’s Bank of China said in the statement. “It is desirable to proceed further with reform of the renminbi exchange-rate regime and increase the renminbi exchange-rate flexibility.”

The Renminbi is considered undervalued from 23% to 40%. This appears to be a non-announcement announcement from China before the G-20 meeting in order to get the pressure off for China's currency manipulation.

Just yesterday China claimed their currency manipulation was not up for discussion at the G-20 meeting.

The actual announcement is here. China claims their currency peg helped with the financial crisis. Uh huh. From the press release:

BoA Tells Investors to Bail Out of China Due To No More Slave Labor

Bank Of America, you know that corporation based in the United States, land of the free, home of the brave, is telling investors to sell because wages in China might have to rise.

Investors should sell shares of Chinese cement and metal companies as increases in labor costs will curb capital spending in those industries, according to BofA Merrill Lynch Global Research.

Seven Chinese provinces raised minimum wages in the first quarter after halting them last year amid the global recession, according to the Labor Ministry. Higher salaries may deter foreign investment in China, which has been a low-cost manufacturing base.

Astounding huh? The Yuan is still undervalued ranging up to 40%, yet the minute Chinese workers get anywhere with wages, investors should pull out.

Chinese Honda workers managed to get a 30% wage increase and 30 states increased the minimum wage by 15%. This amounts to $23.5 a month. That's a cocktail to investors. Suck it up!

I guess BoA just wants workers to continue committing suicide so as to not disturb ROI:

Latest on China and their Currency Manipulation

There is a Strategic and Economic Dialogue between the United States and China in Beijing starting Monday. So far we have seen the United States wimp out on truly confronting China on currency manipulation. Both Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner are attending.


U.S. and Chinese officials have stressed that the meeting in Beijing will not be dominated by the yuan.

There are some rumblings by Clinton on the economy:

"In the coming days, officials at the highest levels of our two governments will be discussing issues of economic balance and competition," Clinton said in a speech given in a vast hangar at Shanghai airport, referring to the Beijing meeting.

"Transparency in rule making and standard setting, non-discrimination, fair access to sales to private sector and government purchasers alike, the strong enforcement of intellectual property rights are all vitally important in the 21st century global economy," Clinton told the audience of U.S. and Chinese business executives.

"American companies want to compete in China," she said, standing in front of a Boeing 737. "They want to sell goods made by American workers to Chinese consumers with rising income and increasing demand."

Meanwhile CBS MarketWatch reports:

IMF - "Essential" China Allow Currency to Appreciate

Currencies of a number of emerging Asian economies remain undervalued, substantially in the case of the renminbi,” the IMF said in the report. Renminbi is a name for China’s currency, a denomination of which is the yuan. It’s essential for China to address excess demand pressures by reining in credit growth and allowing exchange-rate appreciation - IMF

The above is quoted by Bloomberg in the IMF press conference on their World Economic Outlook report.

Additionally the IMF said debt laden countries should let their currencies depreciate: