Icbccss&p500usd Discussion Threads

[avoint] 17/8/2003 11:26

Just checked my Chinese funds and have seen a very marked increase in the last two weeks.Maybe time to add to the little beauty.Regardless of what happens in the US China has the power to grow from present day levels into a formidable economic power.

[mick p] 10/8/2003 15:12

We have talked of a change in the economic order, this article may well be the first time our attention has been drawn to the way ahead.

Maybe the yuan will become a (the?) reserve currency of choice for the whole of the far east?

[avoint] 31/7/2003 23:31

Makes you laugh

BEIJING -(Dow Jones)- Several international information technology companies have joined a Chinese military procurement organization, which could spark a debate about their sales to the People's Liberation Army.

China's military has long been eager to use the increasingly sophisticated products made by domestic companies to modernize its communications and information systems, which it sees as a key part of modern warfare.

Now the PLA appears to be formalizing a relationship with the commercial sector, including some foreign companies, with the launch of the "Army-Supporting Alliance on Science and Technology" in Beijing Wednesday. Li Jinai, the director of the PLA's General Armaments Department, attended the ceremony.

The new group said in a statement that it will "organize exchanges between the military and IT companies, and render assistance to the military in spreading knowledge of IT, purchasing IT products, and supplying IT services."

Leading Chinese companies joined up, including computer makers Legend Group Ltd. (H.LGP) and Founder Holdings Ltd. (H.FND), and system integrator Digital China Holdings Ltd. (H.DCH). Legend, Founder and 10 other companies also donated IT equipment to the army.

However, international companies also appear eager to gain military business. According to a list provided by China Computerworld magazine, a sponsor of the new organization, the alliance includes the China branches of security-software makers Network Associates Inc. (NET) and Symantec Corp. (SYMC).

Local offices of the business software providers Sybase Inc. (SY) and BEA Systems Inc. (BEAS), and video-conferencing company Polycom Inc. (PLCM) were also among the organization's 50 or so member companies.

BEA Systems said no one was available to comment Thursday, and the China offices of the other companies couldn't be immediately reached.

[617 squadron] 31/7/2003 23:24

Is this US Propoganda or is the threat real?


Pentagon says China refitting missiles to hit Okinawa

By Bill Gertz
THE WASHINGTON TIMES

China is modifying short-range mobile missiles to target U.S. forces in Okinawa and is sharply increasing the number of missiles aimed at Taiwan, according to the Pentagon's latest annual report on Chinese military power.

More:

[avoint] 31/7/2003 23:16

It's reasons like this why people should invest in China

31 Jul 2003 12:07 BS China's Shanghai Auto 1st Half Net CNY960.4 Million Vs CNY406.3M

[bhg] 31/7/2003 19:47

"The Fed is in a dangerous game with China"

[geologic] 30/7/2003 14:09

China's Yuan Fixed-Rate Policy Stirs More Outrage: David DeRosa
July 25 (Bloomberg) -- Isn't it funny how so many people are worked up about China's refusal to revalue the yuan?

You didn't hear a word from these currency cowboys when the dollar was rising against world currencies. Now that the dollar has dropped, you would think the sky was falling.

The latest salvo comes from U.S. Representative Dan Manzullo of Illinois and U.S. Senator Olympia Snowe of Maine, both Republicans.

They are seeking a federal study by the General Accounting Office of how China's pegging of the yuan to the dollar is affecting the U.S. economy.

And last week, four other senators asked Treasury Secretary John Snow to investigate if China is responsible for 34 months of consecutive manufacturing job losses in the U.S.

Snowe, in a letter to the GAO, complained: ``In an era of free trade, we should not have to confront the issue of countries distorting their currencies to gain unfair trade advantages.''

That's what fixed exchange rates are all about. Has she just realized that?

Advantage China

Snowe then makes the dubious claim that ``these practices are especially hurtful to small manufacturers.'' But what about big businesses, Senator? Why the asymmetry?

Chalk that up to Snowe being the chairwoman of the Senate's committee on small business and entrepreneurship. There had to be a political angle.

What Snowe is protesting is that the since the yuan is pegged to the U.S. currency, it has tracked the dollar's 11 percent decline against the euro in the past year, which gave China an export advantage. The U.S. trade deficit with China grew to $9.9 billion in May from $9.5 a month earlier.

Here you have to wonder what the brouhaha is all about. China's yuan hasn't changed 1 cent against the dollar. Nothing has changed between the U.S. and China in the bilateral sense. But the yuan has dropped, along with the dollar, against all other currencies.

What the 1990s proved is that fixed exchange rates are undesirable and unstable. It doesn't end there.

China is running a large current-account surplus. This means that China receives more for its exports than it pays for its imports.

China's central bank follows a policy of sterilizing this surplus, meaning it buys up the net dollars from trade. This is why the bank had a dollar-denominated nest egg of $346.5 billion at the end of June.

Accumulating Dollars

For some reason, China's foreign reserves, of which these dollars are a large part, are a red flag to U.S. elected officials. They look at this as a smoking gun, proof that China is pulling a fast one with the yuan.

Few people have taken this analysis to its logical conclusion. What's going on is that China's yuan policy, combined with its trade surplus, forces the regime to accumulate dollars.

And where do those dollars go? Answer: The U.S. government bond market. They don't keep the dollars in cash -- they buy U.S. bills, notes and bonds.

So no wonder U.S. Treasury yields are so low -- a fact that is helping U.S. industry, small and large.

Put it this way: If you think China is manipulating the currency market with the yuan's peg, then you also have to acknowledge it is therefore manipulating the U.S. government bond market -- and it is doing the later to the benefit of the U.S.

Now if the yuan were to become a floating currency, or at least revalued, the demand from China for U.S. government debt would either cease or be substantially reduced. And that would partially undo, and maybe reverse, the work that the U.S. Federal Reserve has done to make credit cheap.

Is that what Senator Snowe wants? Be careful what you ask for because you just might get it.

[geologic] 28/7/2003 16:17

great, bhg.

ASCANI:
I completely disagree

Posted By: Dan Ascani
Date: Friday, 27 June 2003, at 2:25 p.m.

In Response To: A no brainer? (bandel)

Bandel,

This is FAR from a no-brainer. In fact, nearly everyone expects the yuan to soar. Why? Why does releasing the peg from the dollar mean it will soar? When currency pegs were threatened during the Asian crises of 1997-1998, countries that popped off the beg saw their currencies collapse, not soar.

The pressure is strongly DOWN on Asian currencies because of intense competition and the exporting of deflation, and because central bank operations of these countries strongly favors holding dollar reserves, not converting them to domestic currency.

China would not want to see its currency soar any more than Japan does. China is more likely to DEVALUE before its currency soars, or alternatively, after its currency initially moves higher due to relative strength.

If the yuan rose, then, I think it would be a head fake. The Chinese government would then devalue. In any case, it's far from a no-brainer. And the bullish consensus on the yuan seems to be hovering around 90%! (I'm just throwing a number out there to make a point. I really have no data to support that number, but I hope the point is well taken.

[geologic] 28/7/2003 16:15

CHINA LOVES BUSH for his Economic Plan:

from Daily Reckoning

The Bush administration has made economic recovery a top priority. To that end, it has given the American nation a tax cut, expected to provide an economic stimulus equivalent to 1.6% of GDP.

Too bad so much of the stimulating is done overseas, particularly in China.

For if an American consumer has an extra dollar in his pocket, about 2 and a half cents of it will end up in Chinese hands. That may not seem like a lot of money, but it is more than the return from money market funds, more than the inflation rate, more than twice the Fed funds rate...and more than $200 billion dollars a year.

And the Chinese know how to get even more money; they just have to build more factories, hire more people and produce more and better goods - all the things that the tax cut was supposed to stimulate in America.

Likewise, lower interest rates were supposed to stimulate a recovery in America. What they have actually stimulated is mortgage refinancing...which permitted Americans to spend more...which allowed them to buy more goods from China...which put more money in Chinese hands, stimulating their businessmen to compete even more with US enterprises...!

[bhg] 23/7/2003 19:13

Beyond my ken but FWIW here is a link to Dan Ascani's take on the yaun a few weeks ago.

[a.fewbob] 23/7/2003 18:49

Energyi,

Do you have any suggestions on how to profit from Chinas future currency floatation?

[hong kong phuey] 22/7/2003 17:20

Chinese , hmmmm, are they not suppose to be hostile towards the black.

[energyi] 19/7/2003 13:23

I lived in Hongkong from 1980-1984.
Saw the famous "currency crisis" first hand.
Watch my bank co-workers panic as the currency collapsed by 30%
in a few days

[cashflo] 19/7/2003 13:14

Cheers energy, I'm going to have to do some serious research here, have a friend from bejing which is an added bonus, Have you spent much time over there yourself?

[energyi] 19/7/2003 12:44

Start in Honkong.
Everything is cheap there now.

Also visit Shanghai, maybe Beijing

[cashflo] 19/7/2003 12:39

Energy - excellent thread, one of your best and most informative ever, I have considered spending some time in either china or india during this winter as an extended holiday probably for about 3 months, any advice or guidance from anyone that has done anything similar would be much appreciated. cheers

[energyi] 19/7/2003 10:59

RMB RALLY?
Experts: RMB revaluation 'unnecessary'

China should not bow to pressure from home and abroad to revalue its currency in a move to prop up a sustainable economic growth and prevent speculative hot money from international markets batting the market, warned a group of senior experts and officials.

- - -
Shares lower as investors make cautious moves before interim reports

SHANGHAI: Shares closed a tad weaker last week even though UBS AG' purchase of A shares had sent indices soaring to new highs.

Brokers said the impending peak season for interim corporate results kept many investors sidelined.

The benchmark Shanghai composite index, grouping hard-currency B shares for foreign investors and yuan-denominated A shares, nudged down 0.2 per cent, to 1,528.854. Listed firms must report first-half earnings by August 31.

Some investors unloaded stocks in poorly performing companies.

"We foresee a range-bound market during the results season," said Song Jian, an analyst at Everbright Securities. "Since China allowed foreign investors to buy A shares, domestic investors have been paying more attention to fundamentals when picking up stocks."

Swiss bank UBS AG last Wednesday executed its first trades under the watershed qualified foreign institutional investors (QFII) scheme, which allows foreigners into the main, US$500-billion stock and debt markets.

Shares closed last Thursday at their highest levels in nearly three weeks. They were spurred by gains in the first four local firms, which UBS ordered under the QFII scheme.

Shanghai's yuan-denominated A-share index edged down 0.2 per cent, to 1,601.230 points.

China Business Weekly news

[energyi] 19/7/2003 10:50

BIG NUMBERS!
When you combine the fact comparative per capita disposable income, at least in urban areas, is much higher in reality than the exchange rates tell us, with the fact the Chinese savings rate is many times higher compared with US residents, and the Chinese population is four-and-a-half times larger than that of the United States, you can easily calculate why there is a veritable flood of savings hitting the Chinese banking system.

National Bureau of Statistics figures indicate bank deposits in China last year rose from 7.4 trillion yuan (US$891 billion) to 8.7 trillion yuan (US$1.05 trillion).

That is a 1.3-trillion-yuan (US$156-billion) increase in one year. Even using an exchange rate translation, that is a US$158-billion increase in savings.

In absolute terms, that represents more than 50 per cent of the savings that US residents tucked away last year.

If such a super abundance of capital exists, why do Chinese encourage foreign capital to enter China? What are their incentives?
...MORE:

[energyi] 19/7/2003 10:39

G.,
Keep us posted

- - -
China-ROK economic cooperation grows rapidly
( 2003-07-17 17:00) (Xinhua)

Four years ago, TriGem Computer Co. Ltd, established at an investment of 25.8 million US dollars from the Republic of Korea (ROK), was just a small company in Shenyang of northeast China's Liaoning Province.

Now, it has become a large exporter with annual sales of over 500 million US dollars.

"TriGem has been a successful business in China thanks to the support of the Chinese government," said Seung-Kap Lee, vice- president of the company.

Like TriGem, more ROK companies have entered the China market choosing areas around the Bohai Sea. In Weihai city of Shangdong Province, more than 800 ROK companies hired 30 percent of the city 's labor population, paying about one third of the province's total tax take.

Northeast China, as Chinese Minister of Commerce Lu Fuyuan expected, will attract more foreign investors ahead of the upcoming Asia-Europe Meeting (ASEM) Economic Ministers' Meeting next week.

His remarks coincide with the views of ROK president Roh Moo- hyun, who said the ROK and China had great potential for economic cooperation.

China's customs statistics show that China-ROK bilateral trade volume increased by almost 800 percent over the past ten years. In the first half of this year, growth of China-ROK bilateral trade surpassed 40 percent.

As China drew more attention from global investors, well-known ROK companies like LG and Samsung also saw business opportunities brought by the 2008 Beijing Olympic Games and the 2010 World Expo in Shanghai.

Last year, ROK's investment to China was 2.72 billion US dollars, an increase of 26.4 percent over the previous year. As a result, China for the first time became the largest investment target of the ROK.

[gedy] 19/7/2003 08:03

energyi - I'm just starting to get very interested in what is happening in China, but I don't know enough yet to know what causes a sharp drop in an index, in fact I don't even know what that Index exactly is.

You may have read in my other posts that I used to have conversations with a retired banker and we agreed that the Chinese are intelligent and hard working. I am amazed that that work 100 to 200 hours a week, are there hours shorter or their weeks longer:-) I met Chinese students when I did my M.Sc. in 1976, so they have been so they have been sending their brightest students to study engineering in the "west" for over a quarter of a century. I will ask another contact I have in the accounting world what he knows about China, he regularly visits Russia, I will find out if he goes to China on a regular basis, I know he has been there at least once in the last 5 years.

One other thing is I have held an Amateur Radio transmitting licence for over 30 years. Twenty years ago I had a very good station and could contact other radio amateurs in any other part of the world, from Aukland to Vancouver, from Cape town, Tomsk, Ulan Bator, Tokyo. I never had any contacts with China, I must get back to being more active on the air as I think there are some Chinese radio amateurs now, as i am a bit "out of touch" I just don't know and I ought to.

[energyi] 19/7/2003 07:08

ANYONE know what caused that sharp drop in SSEC-China Index on Friday?

[energyi] 19/7/2003 07:03

CHINA WINNING: from the Riverside Interview

DANIEL YERGIN: Why is the RMB the strongest currency? Because of the reserves they hold?

MARC FABER: It is the soundest economy in the world at the present time. Last year, the Americans print money. Industrial production here is flat to down. No investment activity. But in China, industrial production is up 19%.

DANIEL YERGIN: Do you see China just marching along 8% growth a year? No bumps in the road?

MARC FABER: In America, between 1800 and 1915, there was tremendous growth in the country. They had industrialization. They had 15 financial crises and the Civil War and yet you had progress. For sure in China, you will have crisis. That is within the next five years, you will have political and economic crises, but the trend is towards a very strong China economically and politically.

DANIEL YERGIN: What do you think the political crisis will look like?

MARC FABER: I think it will come via the financial system. And when the whole thing collapses, then people will say or point their fingers at some government officials.

JIM ROGERS: You mean the banking system?

MARC FABER: The banking system, and the state and the price system. And then, the entrepreneurial class, which is now rising-the ones that have no connections with the government-they will take over at that stage. Then you will have a better kind of government, in terms of more rules and regulations rather than just administration by the wills and whims of some leading politicians at the present time.

JIM ROGERS: If I can make an analogy. If you were born in New York in 1903, in 1907 there was a huge financial panic. You would have been brilliant to buy that financial panic. Marc is right. In 2007, there is going to be a financial panic in China. I for one, am going to be buying it. I happen to own the RMB. But, you ask why is it so sound? They have a balance of trade surplus, a huge balance of trade surplus. We in the US have a huge deficit. They have the second largest foreign currency reserves in the world. We are the largest debtor nation the world has ever seen. I cannot get enthusiastic about putting money into the US. I would love to. I live here. I love the US, but I've got to be realistic. I can go broke out of patriotism, but I'd just as soon not.

16:42 MARC FABER: I would like to add one more point. In China, every year they have 500,000 engineers coming out of technical schools and universities. The same number comes out of schools in India. These people have very low salaries. They frequently don't come from established families. They are prepared to work 100 to 200 hundred hours a week to make it up because the competition is so stiff. These are people that don't go skiing over the weekend or boating in the summertime. They work every day of the week. And I have to say that I was never very optimistic about Internet stocks, but I think the Internet allows every citizen anywhere in the world to acquire the knowledge of people like yourself in the lost village of the country. There is a tremendous knowledge transfer. I think that people who say, "We in America and Western Europe, we have the knowledge and the know-how, and so forth." Well, actually these people, the Indians and the Chinese will acquire that very quickly and in five years time, you will see the big thing will be research labs in China and India. To carry out research in these countries is maybe 10% of what it costs here in the US and in Western Europe.

JIM ROGERS: Marc is dead right about China. You can go across China on the best highways in the world and you will find people who work from dawn till dusk in China. Everybody. They save and invest. They save 30 or 40% of their income. India is dead wrong on all of that. They have the worst highway system in the world. Drive it! Drive it! They have the worst telephone system. They may have a few people, but they all leave.

>>>MORE:

[rambutan2] 18/7/2003 13:27

Thousands of people a week are flocking to Beijing's newest tourist
attraction – a decommissioned SARS hospital.
More than 1,000 people in one day alone visited the Xiaotangshan Hospital,
where most of the Chinese capital's SARS victims were treated and where
many died.
The makeshift hospital, set up in eight days to accommodate nearly 700
patients at the peak of the outbreak in May, sent its last patients home
in June.
According to the Beijing Morning Post, it's been included on a package
tour of urban Beijing costing $5 a head.
Tourists are shown the wards, told stories of how doctors and nurses
battled the deadly virus and can buy photographs of medics in capes and
masks treating infected patients.
Apart from being a tourist attraction, the hospital is being kept on
standby in case there is a fresh outbreak of the virus.