Icbccss&p500usd Discussion Threads

[hectorp] 31/5/2004 19:03

For goodness sake there wont be enough food to feed both western countries and aspiring rich feeders in China and India as is starting to happen.
Rice will become expensive etc. I live on far eastern produce and I monitor the price of rise and pulses, theya re going up fast! We'll all be starving in the wast in 15 years . I'll relocate to Bali before then, that and the Gulf Stream switching off.. br.. we'll alll be liveing in the 17th C. again.
Better buy gold to hoard and buy food for gold in 20 years.

[rambutan2] 31/5/2004 18:01

a fact linking in with post 471 (which surprised me, although it shouldnt have): china has 25% of worlds pop but only 10% of its arable land. food tech companies, partic us ones, are rubbing their hands at the thought of all those chinese growing wealthier and eating more...

[snowflake34] 31/5/2004 17:48

China averts EU trade dispute
By Daniel Dombey in Brussels
Published: May 30 2004 18:21 | Last Updated: May 30 2004 18:21


China has averted a potentially damaging trade dispute by reaching a short-term deal with the European Union over coal exports.

The European Commission had threatened to take Beijing to the World Trade Organisation over China's export restrictions on coking coal and had initially set a deadline of May 14.

Coke is an important raw material for steelmakers, who complain that the restrictions by China, the world's biggest coal producer, have helped drive up prices from $79 a tonne two years ago to $350 in the first quarter of 2004.

As much of $200 of that price is made up by an export licence fee for Chinese coke producers.

The battle was also an important test of relations within the WTO, of which Beijing became a member three years ago.

China is already facing a WTO complaint filed by the US in March over an allegedly discriminatory tax on semiconductors.

The deal reached between China and the EU on Friday provides that this year China will provide EU industry with no less than the 4.5m tonnes of coke it supplied in 2003 and that export licences will be delivered "without cost or delay".

"We are obviously very pleased," said Pascal Lamy, EU trade commissioner. "[This] shows the growing maturity and strength of the EU-China trade relationship."

However, the agreement does not resolve the problem for the years after 2004 - an issue the two sides said they would work on in coming weeks.

The EU had called on China to abolish the trade restrictions altogether. Beijing has rejected such calls, since the purpose of the quotas is to maintain supply to domestic producers at a time when China's economy is booming.

Last year China allowed less than 10 per cent of its annual coke production to be shipped abroad.

But ties with the EU are growing in importance. With total trade of €135bn ($158bn, £94bn) last year, China is now the EU's second largest non-European trading partner after the US, and the EU is China's second largest export market.

The EU's trade deficit of €55bn with Beijing in 2003 was its largest with any partner.

China is currently pushing the EU to lift its arms embargo and to grant China "market economy status", which would make it harder for Brussels to punish Chinese companies for dumping activities.

Brussels has also complained about alleged obstacles encountered by European carmakers and construction companies in the Chinese market.

[snowflake34] 28/5/2004 12:16

Gareth Chetwynd in Rio de Janeiro
Friday May 28, 2004
The Guardian

Brazil was closer to achieving its goal of feeding millions of Chinese with soya that may be grown on cleared Amazonian rainforest yesterday, after five days of talks on trade and diplomacy between the two nations.
Luiz Inacio Lula da Silva, the president of Brazil, led a delegation of eight cabinet ministers, six state governors and 450 business leaders to China in a push to foster closer ties in Asia's fastest growing economy.

The range and dimension of the commercial deals demonstrated a degree of economic synergy rarely seen between two developing countries.

Brazil's vast land and mineral resources, and a perennially weak currency, mean that it is emerging as a key supplier of the raw materials China needs to feed its growing urban population and to keep its factories exporting goods.

The enormous expansion in soya cultivation for export is the most visible sign so far of Brazil's success in locking into Chinese markets.

China's plan to move 300 million rural people into the cities by 2020 poses food supply problems, and Brazil intends to fill the gap.

The Brazilian agriculture minister, Roberto Rodrigues, said: "We have 62m hectares (153m acres) of land planted now, but we have another 90m hectares that will be occupied by agriculture. We could supply the food that [the Chinese] do not manage to produce themselves."

These intentions may give rise to fears for the future of the Amazon rainforest, where soya cultivation and ranching has expanded swiftly over the past decade. Brazil's farming lobbies, however, dismiss the critics of the plans. They are "ill-informed" and merely "serving the interests of countries competing with Brazil in the export markets", according to Marcus Vinicius Pratini de Moraes, a former agriculture minister.

The week's 15 commercial agreements also included $5bn (£2.7bn) worth of deals for Brazil's CVRD group, the world's largest iron ore exporter, and an accord that will see Brazilian and Chinese oil companies working together in South Asia, Iran and South America.

In return, Chinese companies are positioning themselves to provide capital to help Brazil achieve massive expansion in its crumbling road, rail and port infrastructures.

Cooperation already exists in the field of aerospace; China launches Brazilian satellites and Brazil builds passenger jets in northeast China.

They also outlined plans to negotiate the sale of Brazilian uranium and processing technology for Chinese nuclear power generation.

With such weighty economics in play, President Da Silva was able to use the visit to further his own diplomatic agenda of forging developing nation trade blocs to counter the dominance of Europe and the US in world trade and diplomatic forums.

He urged China to consider joining the embryonic G3 alliance consisting of Brazil, India and South Africa. "We dream that in the near future it will be a G5 with Russia and China," Mr Da Silva said. "We want to build a political force capable of convincing rich nations ... that they can ease their protectionist policies and give access to the so-called developing world."

Mr Da Silva also went to China armed with a battery of diplomatic initiatives to woo his hosts.

Despite his own record as a trade union leader who led resistance to military dictatorship, he has backed China on its stance on human rights and Tibet. "Many are hoping this alliance is a failure. But there are more people around the world who are on our side than against us," Mr Da Silva said.

[snowflake34] 27/5/2004 08:41

China asks for tenders in nuclear expansion
By James Kynge in Beijing and Andrew Taylor in London
Published: May 26 2004 21:55 | Last Updated: May 26 2004 21:55


China is to invite international tenders before the end of this year for four new nuclear power reactors as part of a huge nuclear expansion programme designed to reduce dependence on imported fuel and plug growing gaps in electricity generating capacity.

China is the world's biggest potential market for nuclear power at a time when few other countries outside Asia are considering building new reactors. The government has proposed increasing its nuclear capacity from about 8 gigawatts to about 40GW by 2020.

To meet this target would require construction of about two reactors a year, each costing about $1.5bn according to the London-based World Nuclear Association. The scale of development would be similar in size to the large nuclear power construction programme conducted by France in the 1980s.

The next round of development will involve four reactors of 1GW each - two to be installed in a new plant in Yangjiang, Guangdong province, and two in the new Sanmen plant in Zhejiang province - officials said. Construction of both plants is due to start in 2006.

Framatome, the French nuclear engineering group, is expected to be one of the favourites to develop the Guandong site as it has already provided four reactors on an adjacent site. Candu, the Canadian nuclear developer, has similarly provided two reactors at the Sanmen site.

Other potential developers include Westinghouse, the US nuclear engineering group owned by British Nuclear Fuels; and GE of the US, in partnership with Japanese engineering groups. National governments have been campaigning on behalf of their companies for several months, executives said.

"We are holding the tenders in order to get competitive prices. This tender is being conducted according to the principle of 'our market for your technology'," said an executive at China National Nuclear Corporation, a state-owned entity.

"They bring in the technology and then it will help us to develop our own," he added.

China already produces electricity from nine nuclear reactors with another two Russian-built reactors under construction in Jiangsu province, north of Shanghai.

A recent government blueprint foresees China increasing its nuclear power capacity sixfold by 2020. The resultant investment bonanza, which is expected to total more than $30bn, follows an erosion of concerns over the safety, cost and waste disposal associated with nuclear power.

China has been concerned over its growing dependence on imported oil and the air pollution caused by its coal-fired power stations. Nuclear power represents a way of diversifying the mix of China's energy sources and reducing Beijing's reliance on foreign supplies.

In addition to the four reactors to be put out for foreign tender this year, CNNC is to start building four generators using mainly domestic technology next year at two existing nuclear power stations: one at Qinshan in the east coast province of Zhejiang and the other at Ling'ao in the southern province of Guangdong.

One beneficiary of China's appetite may be Brazil, which will help in the construction of 11 nuclear power plants and may do a deal to sell uranium to China, according to a spokeswoman accompanying the delegation of Luiz Inácio Lula da Silva, Brazil's president, in China on Wednesday

Nuclebras Equipamentos Pesados, a Brazilian state-owned company, would take part in the projects. "In the future, the agreement could also include the transfer of Brazil's uranium- enriching technology to China but a commercial deal to sell uranium is what the Chinese want to work on right away," the company said.

[snowflake34] 26/5/2004 13:40

From Morgan Stanley:

Asia Pacific: The Calm Before the Storm

Andy Xie (Hong Kong)


The period of the Fed raising interest rates usually precedes emerging-market crises. In the current cycle, the Fed has kept interest rates lower and longer than in any previous cycle. The capital flow into emerging markets is comparable to the highs in the previous cycles. It would take a miracle for the global economy to land without any crises, in my view.

I believe the market continues to underestimate the impact of the Fed rate hikes to come. When the Fed is raising interest rates, the Fed funds rate usually peaks at or above the level of the 10Y treasury yield. The market typically continues to look for excuses that this time would be different and, therefore, isn't prepared for the shock.

The Fed and the Emerging Market Crises

The Fed interest-rate cycles correlate with emerging-market crises. Is it correlation or causality? I believe in the later. When the Fed cuts interest rates, ceteris paribus, it decreases the cost of capital and, hence, causes more capital to flow into emerging markets. The inflow boosts economic performance in the emerging economies, which increases optimism and triggers more capital inflow.

Because the financial system in emerging economies doesn't price risks well (e.g., little long-term financing), the positive economic impact of capital inflow is exaggerated and, hence, the optimism of foreign investors that drives the capital inflow is also exaggerated. This is a bubble phenomenon. When the Fed reverses its policy, the bubble bursts.

Latin America was the focus of this dynamic in 1980s. The Fed cycles caused economic upheavals in the region and eventually discredited the region so much that its relationship with the Fed cycle diminished almost to nothing. The NAFTA regenerated market enthusiasm for Mexico. But it was destroyed soon afterward by another financial crisis when the Fed increased interest rate in 1994. Because Latin America is cut off from global capital and is not at the forefront of manufacturing competitiveness, its economic development is increasingly driven by agriculture and natural resources.

The focus of global capital shifted to Southeast Asia in 1990s. When the Fed kept the interest rate low in early 1990s to deal with the S&L crisis, it triggered a massive boom in Southeast Asia. When the Fed normalized the Fed funds rate in 1994, the boom was kept going by running up bad debts and overbuilding properties. The resulting current-account deficit eventually triggered a confidence crisis among foreign investors. The withdrawal of foreign capital in 1997 and 1998 led to the Asian Financial Crisis.

Global capital targeted China, India and Japan in this cycle (see “Hunker Down,” May 17, 2004). Their combined forex reserves have increased to $1.43 trillion now from $540 billion in August 2002 when the S&P 500 peaked. The biggest difference this time is that the local businesses have not taken on currency risks. Instead, international portfolio investors and individual currency speculators are still holding the currency risk. Of course, there could be currency risk held by local businesses that the market couldn't see. The market was surprised before.

In Latin America, the governments took the risks by borrowing dollars from American banks or selling dollar-denominated bonds to American bond funds. In Southeast Asia, local businesses and banks borrowed dollars from European and Japanese banks, because they believed that the local currencies would appreciate against the dollar.

If the currency risk is indeed held by international investors, the systemic risk should be much lower in this cycle than before. But, a significant withdrawal of foreign capital from emerging markets is inevitable, in my view. That would trigger credit tightening among the economies that have benefited most from the capital inflow in the past two years.

Is There Vaccination Against the Fed?

Every time that the Fed rate hikes cause an emerging market crisis, policymakers in emerging economies search for ways to decouple from the Fed in their monetary policies but always fail. In my view, emerging economies could not have really independent monetary policies. The effectiveness of monetary policy is in controlling domestic demand. When the world is divided between a rich and a poor economy, the income generation of the poor economy always depends on trading with the wealthy one. Thus, during a growth period, the poor economy always depends on the monetary policy of the rich one.

What emerging economies can and should do is to minimize the bubble when the Fed is stimulating the US economy. The distortion that matters most is risk pricing. Short-term bank loans dominate emerging-market financing. Often, politicians or controlling bank shareholders allocate capital for their personal interests. Thus, such a system would quickly translate capital inflow into demand (e.g., consumption in Latin America and investment in East Asia). The resulting prosperity validates the optimism of foreign investors and triggers more capital inflow. It typically turns into a big bubble characterized by rapid debt growth and a deteriorating current-account balance.

When the Fed reverses its interest-rate policy, emerging markets do not have a credible instrument like the US Treasury to tie down foreign capital and must go through rapid adjustment to pay the excesses built up during the period of low US interest rates.

To minimize the bubble, emerging economies must develop a credit culture that increases the risk premium for investment when the Fed keeps the interest rate low. A bond market is a necessary condition. A flexible exchange rate is helpful only when there is a robust credit culture. Otherwise, a flexible exchange rate would exacerbate the problem by giving currency speculators a chance but would not improve risk pricing.

Developing a credit culture requires the rule of law. It would take generations for many emerging economies to be governed by the rule of law. The vaccination against the Fed is probably too expensive for emerging economies. Global financial markets will likely go through boom-burst cycles along with the Fed policy changes for a long time to come.

The Fed Myopia Costs the US Too

The Fed focuses on the US economy in setting its policy. This is shortsighted, in my view. This myopia costs the US and the global economy. Because the Fed doesn't pay sufficient attention to the global consequences of its monetary policy, its policy amplifies global economic cycles that also increase the volatility of the US economy, impairing the Fed goal to smooth the US economic cycle.

The problems in the global economy today originated from the Fed policy in early 1990s to pump enough liquidity during the S&L crisis. The Fed cut interest rate by 500 bps in 24 months between 1990 and 1993 to stabilize the US financial system. It was in theory the right thing to do for the US economy. However, its byproducts still resonate in the global economy today. It caused the Southeast Asian capex bubble and the 1997–98 financial crises.

The story didn't end there. The capital that came out of the emerging markets in 1997 and 1998 went into the US, triggering the NASDAQ bubble and widening the US current-account deficit. The US current-account deficit increased from $117 billion in 1997 before the Asian crises to $411 billion in 2000 — the year that NASDAQ peaked.

The Fed then cut interest rate aggressively to cushion the blow from the tech burst. It prevented the current-account adjustment that should have come and also removed the incentives from other economies to improve their domestic demand. This story is still playing out. We are about to enter a new chapter with the Fed raising the interest rate again.

In a global economy with multiple linkages, the Fed policy has long-term consequences that would bounce back to hit the US economy years later. The Fed is still trapped in its myopic view and determines its policy by watching the US cyclical data only. Unless the Fed changes its stance and takes a general equilibrium approach to its policy, it would continue to create instability in the world. This paradigm, I am afraid, will end up with a catastrophic global crisis.

[energyi] 22/5/2004 07:50

WHY OIL is Rising



Demand for crude oil from China (chart by FirstEnergy Capital Corporation) continues to accelerate with their economy. China was an exporter of crude oil as recently as 1991, but now it is a net importer and the level of imports continues to grow. China now represents about 6.7% of global demand.

Recent statements from Chinese authorities claim they want to moderate economic growth, but any measures that are implemented will take some time to have an effect. Growth of energy intensive industries and automobile ownership in that country are expected to continue to grow briskly. International demands for crude oil have put upward pressures on prices.

During the first years of the 21st century power companies have undertaken an unprecedented expansion of electric generating capacity. One expert noted that this building activity is "a truly historic mobilization of construction and managerial resources to bring about this tremendous physical plant expansion."

Worldwide capacity additions completed or scheduled from 2000 to 2006 are estimated to be 906 gigawatts, of which 30% will be built in the United States and around 18% will be built in China.

...MORE:

[snowflake34] 21/5/2004 16:52

Small iten re soybeans, from cnbc:

The global soybean market is a mess, thanks to the financial troubles at Chinese soybean processors and the small U.S. crop due to last year’s drought.

Chinese banks have refused to issue letters of credit to Chinese soybean crushers, leaving cargoes of soybeans stuck in port. Apparently, one result of the recent government pressure on Chinese banks to think before they lend is that the banks have noticed that the country’s soybean crushers lose almost $40 for every ton of beans they crush at current prices.

Adding to the woes of Chinese crushers, they bought much of their supply at peak prices and now are looking to delay or cancel delivery. This plus the small U.S. harvest has made soybean prices on the Chicago Board of Trade extremely volatile lately. Prices for July delivery of soybeans fell to their 50 cents-a-bushel limit at the Board of Trade on May 14.

[grupo guitarlumber] 21/5/2004 04:40

BEIJING (AFX-ASIA) - China is expected to record gross domestic product
growth of more than 9 pct year-on-year in the first half of 2004, the Chinese
Academy of International Trade and Economic Cooperation under the Ministry of
Commerce said in its quarterly report.
The report published on the ministry's website this morning also sees
economic growth in the second half of the year will slower than in the first
half.
But "full-year economic growth will maintain a relatively fast pace", the
report added.
In the second quarter, China's economy is expected to maintain the same pace
as the first quarter of the year when GDP grew by a rapid 9.8 pct on the back of
surging fixed-asset investment, credit growth and export demand.
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[the knowing] 11/5/2004 10:55

China inflation outlook 'not optimistic', Q2 loan growth high - central bank

BEIJING (AFX-ASIA) - China's central bank warned that the economy is likely
to continuing powering ahead in the second quarter, with the inflation outlook
"not optimistic" and bank lending and fixed asset investment all set to show
strong growth.
However, a slowdown will become evident in the second half of the year as
government policies to cool the economy feed through into the system, the
People's Bank of China said in its quarterly monetary policy report.
Strong increases in second quarter data have been expected, and do not show
that monetary policy has been ineffective, the bank said.
The impact of the policies "will have a more evident effect in the second
half of the year," the bank said, adding "there will be no a hard landing for
China's economy".
The bank reiterated that it will adopt prudent monetary policies in future
for a "moderate tightening" if needed, but will not slam on the brakes.
In the short term, however, economic data and bank lending figures are not
expected to show much of a slowdown.
The outlook for inflation, which stood at 3.0 pct in March is "not
optimistic", and the consumer prices index is likely to remain at a relatively
high level in the second quarter, the PBoC said.
GDP, which rose by a sizzling 9.7 pct in the first quarter, will also remain
at a "relatively high level" in the second quarter, partly because of the low
comparative base last year when the SARS epidemic cut second quarter growth to
6.7 pct.
Fixed asset investment, which soared 43 pct in the first quarter "clearly
showed an overheating phenomenon", the bank said.
China will see a "relatively high" loan growth in the second quarter of this
year, partly due to the low comparative figure in the same period last year,
with a slowdown seen starting only in the third quarter as the raft of policies
and administrative orders issued by the government to curb lending bear fruit.
But the PBoC said it will meet the lower loan growth target for the whole
year.
In January, the bank said it was aiming to cut new lending this year by 6.1
pct to 2.6 trln yuan, down from 2.77 trln in 2003 in an attempt to slow the
rapid credit growth which is fuelling soaring fixed asset investment, which rose
43 pct in the first quarter.
But at the same time, the central bank said it will give banks more
flexibility to set their own lending rates as part of its gradual move to a
market-oriented interest-rate system.
However, it made no mention of any possibility of a rise in benchmark
lending rates, a move which is being widely expected by investors and analysts.
The PBoC also reiterated its existing stance on the currency, pledging to
keep the yuan basically stable at a reasonable and balanced level, while also
seeking to move gradually towards a more flexible exchange-rate system.

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[johnwwwilkinson] 10/5/2004 12:37

China orders prices cap

--------------------------------------------------------------------------------
SHANGHAI - In a return to the days of command planning, China has ordered provincial governments to cap price increases in a bid to rein in inflationary pressures and slow down the sizzling economy.
Local officials will have to freeze price rises on a range of goods for three months if consumer prices in their regions increase more than 1% on a monthly basis or 4% annually for three consecutive months, the State Development and Reform Commission (SDRC) said on its website.

In areas where the consumer price index does not breach the SDRC's ceiling, authorities have been told to control the timing of any price increases and make sure there are no sudden and sharp fluctuations.

Those who violate the mandate will be punished, the SDRC said.

China's booming economy, which grew 9.7% in the first quarter of the year, and soaring fixed-asset investment, which rose
43% in the same period, are fuelling inflationary pressures in various sectors such as the steel and construction industries.

Cooling measures aimed at overheated sectors have so far failed to temper the world's sixth largest economy, which surged 9.1 percent last year.

China has maintained an average annual economic growth rate of 9.4% over the past 25 years as it moves away from the dictates of Marxist central planning to a capitalist market economy.

In the frankest admission to date by China's leaders, Premier Wen Jiabao acknowledged this month that the economy was at risk of overheating but insisted his government was taking action to ensure a soft landing.

China's consumer price index rose 2.8% in the first quarter but was up 3% in March alone on the back of strong growth in food and raw material prices. Food prices jumped 7.9% year-on-year in March while grain prices soared 30%.

AFP

[maywillow] 05/5/2004 16:46

A beer brawl in China
Chris Buckley NYT
Wednesday, May 5, 2004





Stage is set for takeover battle
BEIJING The world's two biggest beer brewers are squaring off for what could be an unprecedented battle for control of a Chinese company..
In a sign that bare-knuckled global capitalism has arrived on the mainland, SABMiller, the world's second-largest brewer, on Wednesday announced a $391 million bid to buy all the shares of Harbin Brewery Group - including those shares bought just a few days ago by Anheuser-Busch, the world's No. 1 beer maker..
SABMiller, the London-listed company created by the merger of South African Breweries and Miller Brewing, bought 29.6 percent of Harbin Group last June. Its new bid was apparently hastened by the announcement on Sunday that Anheuser-Busch, which makes Budweiser, would buy 29 percent stake in the Chinese brewer..
If Anheuser-Busch chooses to make an offer for the company, it would be the first known hostile bid for a Chinese company by a foreign firm. It would also give Chinese shareholders, rather than the government, a chance to decide the fate of a publicly traded company..
"We expect a bidding war," Charles Cheung, an analyst at Citigroup, wrote in a report quoted by Bloomberg News. "We think Anheuser-Busch has the backing of the Harbin government and the company's management.".
Harbin is a Hong Kong-listed company that controls about 5 percent of China's vast but fragmented beer market. Industry analysts said the companies' interest was fueled by renewed interest in China's beer market, where attractive acquisition targets are in short supply after a round of deals..
"International players are eyeing China's beer market," said Sylvia Mu Yin of Euromonitor in Singapore. “It's developing with stable growth while the beer market in Japan, Europe and the U.S. is saturating or saturated.".
The New York Times

[the knowing] 03/5/2004 10:16

Hong Kong industry sees improved business prospects in Q2 - govt survey

HONG KONG (AFX-ASIA) - The government said a survey conducted by it shows
that business transactions and production volumes in Hong Kong are expected to
grow in the second quarter compared the first three months of this year.
The quarterly business survey conducted by the Census and Statistics
Department shows that a majority of respondents -- the senior management of some
490 prominent establishments -- expect business prospects to improve in the
current quarter, the government said.
Respondents in the manufacturing sector believe that production volumes will
rise in the second quarter, although employment and selling prices are seen
broadly unchanged.
The construction sector is expected to see increased activity, though
employment in the sector is seen falling as tender prices are likely to soften.
Sales volume of the wholesale and retail sector is likely to climb in the
quarter, with respondents also positive about employment. They also expect
selling prices to be stable.
The import and export trade is also expected to see a similar trend.
In the restaurant and hotel sector, respondents expect a rise in both
business volume and employment. They however anticipate food prices and hotel
rates to remain unchanged.
Prices in the transport and related services, banking and insurance sector,
real estate and telecommunication sectors will be little changed compared to the
first three months this year, the survey showed.
However, these sectors are expected to show a growth in the April-June
period, the government said.

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[mcbeanburger] 29/4/2004 15:50

These Morgan Stanley type do like to talk...

Andy Xie (Hong Kong)

China's leadership appears to have imposed a moratorium on bank lending. It is a sign that the central leadership is reasserting control over the runaway investment bubble. Eight months of mild monetary measures and jawboning had not been effective; many local governments colluded with property developers and commodity businesses to accelerate investment in the first quarter, which has forced the central government to react with drastic measures.

What is occurring now is a battle to maintain stability. The investment bubble has become too big for normal economic measures to achieve a soft landing. Only careful implementation of administrative measures may allow China to engineer a soft landing. Even then, the odds for a soft landing are not high, in my view.

Premier Wen Jiabao compared cooling investment to controlling the SARS epidemic last year. It was the right analogy. The runaway investment bubble threatens to leave behind collapsing property prices, vast amounts of excess capacity and another wave of bad debts. Because the government owns all the banks, Chinese people would pay for the losses.

More..

[mcbeanburger] 29/4/2004 14:41

To:ild who wrote (12801)
From: ild Thursday, Apr 29, 2004 10:11 AM
Respond to of 12843

Date: Thu Apr 29 2004 09:28
trotsky (China's boom and China's bust...) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
note that a bust does not usually develop in a sitution where everybody is worrying that it might. it doesn't happen that way - more likely, the bust will come when everybody has STOPPED worrying about it. it will be a surprise. yes, China's central planners have decided to step on the credit brakes. but i would submit that they won't dare to choke off credit to the extent that would be necessary to stop the expansion in a meaningful manner. they still remember their LAST bust, and it wasn't pleasant. this time around, it would get even more unpleasant - and the danger of social upheaval is what the communist party of China fears most.
my bet: similar to what happened when easy Al first tapped the brakes in mid '99, the boom , instead of faltering, will go into overdrive. only AFTER everyone is convinced that nothing can stop it will the credit tightening bite, with the usual lag inherent in monetary policy steps.
note btw. that China is far less monolithic and centrally controlled than is generally assumed in the West. this is a VAST country, hosting several ethnicities ( the sub-set Uighurs in Xinxiang for instance numbers nearly 90 million people ) , and lots of local party bosses who have their own agenda. Beijing is simply a far away place for many of them, whose edicts only have marginal importance. the momentum of this typical credit induced boom won't break that easily - after all, last year alone, the broad money supply increased by over 21%. so far this year, there has been no slowdown whatsoever, on the contrary.
however, one must be aware that it won't continue forever. it's clearly a dangerous malinvestment bubble, and one day it WILL go bust ( thereby revealing the malinvestmens for what they are ) . so one needs to keep an eye on it.
note also: the cassandra factor. the doomsayers began predicting the downfall of China's boom by the middle of last year. by experience, they are usually about 1 1/2 to 2 years early.
Date: Thu Apr 29 2004 09:10
trotsky (gold 'seasonals') ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
supposedly, this is a season of 'weak physical demand'. however, somebody forgot to tell the Indians. currently, the major Indian gold trading centers sell almost the equivalent of one BoE auction every single day, i.e. roughly 18 tons of gold. so we have a situation where speculators have deserted gold, just as physical demand in the major gold buying area of the world is coming on unexpectedly strong ( and no doubt is getting even stronger now, since Indian gold demand is at least to some extent price elastic ) .

Date: Thu Apr 29 2004 08:08
trotsky (pm stocks) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
will capitulation occur today? always possible, note that in Rydex, money still hasn't flown out of pm stocks, in spite of a big NAV drawdown.

[the knowing] 29/4/2004 10:21

China 2004 exports to grow 15 pct, imports seen up 20 pct - MoC

BEIJING (AFX-ASIA) - China's exports in 2004 are expected to rise 15 pct
year-on-year to 505 bln usd, with imports seen up 20 pct at 495 bln usd, the
Ministry of Commerce (MoC) said in a report.
The ministry said in the report that China's overall foreign trade in 2004
could rise 17 pct to reach 1.0 trln usd, and the country is expected to see a 10
bln usd full-year trade surplus.
China's exports in 2003 rose 34.6 pct to a record 438.37 bln usd, while
imports rose 39.9 pct to 412.84 bln usd, with total trade rising 37.1 pct to
851.21 bln usd. Its trade surplus for 2003 fell 16.1 pct to 25.54 bln usd.
For the first quarter, imports rose 42.3 pct to 124.14 bln usd, while
exports jumped 34.1 pct to 115.71 bln, leaving a trade deficit of 8.43 bln usd.
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[keene] 29/4/2004 07:46

energi see rei