China etc

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Foreign and Military Affairs

China, Russia quit dollar

By Su Qiang and Li Xiaokun (China Daily)
Updated: 2010-11-24 08:02
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China, Russia quit dollar

Premier Wen Jiabao shakes hands with his Russian counterpart Vladimir Putin on a visit to St. Petersburg on Tuesday.ALEXEY DRUZHININ / AFP

St. Petersburg, Russia – China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

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Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

“About trade settlement, we have decided to use our own currencies,” Putin said at a joint news conference with Wen in St. Petersburg.

The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.

The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.

“That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries,” he said.

Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.

The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.

Putin said one of the pacts between the two countries is about the purchase of two nuclear reactors from Russia by China’s Tianwan nuclear power plant, the most advanced nuclear power complex in China.

Putin has called for boosting sales of natural resources – Russia’s main export – to China, but price has proven to be a sticking point.

Russian Deputy Prime Minister Igor Sechin, who holds sway over Russia’s energy sector, said following a meeting with Chinese representatives that Moscow and Beijing are unlikely to agree on the price of Russian gas supplies to China before the middle of next year.

Russia is looking for China to pay prices similar to those Russian gas giant Gazprom charges its European customers, but Beijing wants a discount. The two sides were about $100 per 1,000 cubic meters apart, according to Chinese officials last week.

Wen’s trip follows Russian President Dmitry Medvedev’s three-day visit to China in September, during which he and President Hu Jintao launched a cross-border pipeline linking the world’s biggest energy producer with the largest energy consumer.

Wen said at the press conference that the partnership between Beijing and Moscow has “reached an unprecedented level” and pledged the two countries will “never become each other’s enemy”.

Over the past year, “our strategic cooperative partnership endured strenuous tests and reached an unprecedented level,” Wen said, adding the two nations are now more confident and determined to defend their mutual interests.

“China will firmly follow the path of peaceful development and support the renaissance of Russia as a great power,” he said.

“The modernization of China will not affect other countries’ interests, while a solid and strong Sino-Russian relationship is in line with the fundamental interests of both countries.”

Wen said Beijing is willing to boost cooperation with Moscow in Northeast Asia, Central Asia and the Asia-Pacific region, as well as in major international organizations and on mechanisms in pursuit of a “fair and reasonable new order” in international politics and the economy.

Sun Zhuangzhi, a senior researcher in Central Asian studies at the Chinese Academy of Social Sciences, said the new mode of trade settlement between China and Russia follows a global trend after the financial crisis exposed the faults of a dollar-dominated world financial system.

Pang Zhongying, who specializes in international politics at Renmin University of China, said the proposal is not challenging the dollar, but aimed at avoiding the risks the dollar represents.

Wen arrived in the northern Russian city on Monday evening for a regular meeting between Chinese and Russian heads of government.

He left St. Petersburg for Moscow late on Tuesday and is set to meet with Russian President Dmitry Medvedev on Wednesday.

Agencies and Zhou Wa contributed to this story.

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Analysis: China’s $300 billion fund a wake-up call to U.S.

ReutersBy Nick Edwards | Reuters – 22 hrs ago

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  • A yuan banknote is displayed next to a U.S. dollar banknote (back) for the photographer at a money changer inside the Taoyuan International Airport March 18, 2010.  REUTERS/Nicky LohA yuan banknote is displayed next to a U.S. dollar banknote (back) for the photographer …

BEIJING (Reuters) – China’s plan for a new $300 billion sovereign wealth fund is as much a warning to Washington as it is a body blow to Brussels.

It’s the clearest sign yet of Beijing’s waning faith in bonds issued by Europe and the United States. Europe’s festering debt debacle, record low yields on U.S. Treasuries and a depreciating dollar all add weight to the view in China that the time is ripe to change investment tack.

“China has decided that real assets are better than broken debt fix promises and low interest rates,” says Paul Markowski, president of MES Advisers and a long-time external adviser to China’s monetary policymakers on global financial markets.

Beijing has watched for two years as Europe’s crisis has choked growth and demand in China’s biggest export market and stoked default risks on the near $800 billion of euro zone government bonds it is estimated to own.

It has been a painful lesson.

After all, China had actively bought euro assets to guard its $3.2 trillion reserve pile against over-exposure to U.S. dollars, which have lost about a third of their value in the last 10 years as U.S. Treasury yields have sunk to record lows.

Reuters reported last week that the People’s Bank of China plans to create the new vehicle with two funds, one for Europe and one for the United States, making China in aggregate the world’s biggest sovereign wealth fund investor. The plan originated before Europe’s debt crisis, sources said.

That gels with comments from investment sources with links to China’s monetary authorities and foreign reserve managers who detect a clear desire in Beijing to acquire real assets in return for supplying fresh funds to bridge U.S. deficits and recapitalize European financial institutions and governments.

HAPPIER RETURNS

The $300 billion figure is consistent with the sum that Markowski and others calculate China has in excess reserves — the amount beyond what Beijing would need to tackle a balance of payments crisis or a domestic funding emergency.

“They want underlying assets. Equities, corporate bonds, real estate — anything that governments want to flog,” said one source involved in foreign exchange trading for official institutions such as central banks.

The source singled out bidding for the Portuguese government’s stake in utility firm Energias de Portugal, which would net roughly 2.5 billion euros for Lisbon, as typical of the path indebted countries will have to follow in future to persuade reserve managers to part with additional cash [ID:nL6E7NC0UN].

Granted, Chinese investors won’t be warmly received everywhere — a sovereign wealth fund showing up in Paris or Madrid with an offer to buy up public infrastructure would probably come away disappointed.

“It’s easier said than done,” said one Hong Kong based investment banker who has advised Chinese clients on overseas acquisitions. “One idea is that China could buy up agricultural land. They’ve also eyed ports in the past. They just don’t want to do anything that’s politically unpopular.”

There are domestic pressures, too. China Investment Corp (CIC), the country’s existing sovereign wealth fund, was sharply criticized within China for money-losing investments in U.S. investment bank Morgan Stanley and private equity firm Blackstone Group in 2007.

But with a European debt crisis and the U.S. triple-A rating no longer a given, China’s state investors have good reasons to push into new kinds of assets.

“There is a great deal of discomfort (among reserve managers) over what the concept of a risk-free asset is,” said Gary Smith, the London-based global head of official institutions at BNP Paribas Investment Partners.

Doubts about the safety of government bonds in developed markets where fiscal balance sheets are battered and inflation risks are high in the face of exceptional monetary stimulus have seen Smith’s clients allocate new cash to inflation-linked bonds this year and even move into higher risk emerging markets.

“Of course your risk goes up if you invest in emerging markets, but if your risk has already gone up in what you previously considered risk-free assets, then the relative disadvantage of emerging markets has gone down.”

That analysis speaks volumes to reserve managers and wealth funds, opening up a raft of new investment opportunities that developed economies had not previously had to compete against.

Data shows China’s shift into real-world assets is under way.

China’s outward foreign direct investment (FDI) hit $68 billion in 2010 after more than doubling in 2008 to $52 billion from $23 billion in 2007, according to Karl Sauvant, executive director of the Vale Columbia Center on Sustainable International Investment at Columbia University and an expert on global FDI.

Sauvant’s institute estimates China will strike $1-2 trillion in FDI deals over the coming decade, adding to its existing portfolio of over $300 billion.

ONCE IN A LIFETIME

Whether China’s change of focus is all borne of European debt and dollar debasement or a desire to move China’s economy up the value chain, a new mood in Beijing is evident to many.

“Many foreign firms have advanced technology and they are having business difficulties and at the brink of bankruptcy. This is the opportunity that occurs only once in a thousand years,” Zheng Xinli, an influential government adviser, was quoted as saying last week by Hong Kong’s Wen Wei Po newspaper.

It’s at least the best time in 15-20 years to buy European listed equity, even adjusting for the tattered price-tags on European financial stock, says JP Morgan analyst Mislav Matejka.

Euro zone shares are trading at a 46 percent price-to-book value discount to the United States, making it the cheapest region in the world for a global equity investor, says Matejka.

Independent China policy expert Andy Xie agrees.

“European stocks are cheap,” said Xie. “Many European companies earn profits all over the world. It makes sense for Asian central banks to shift their reserves from overpriced government bonds like US Treasuries into such stocks. It would pump money into the euro zone through a channel that benefits Asian countries over time.”

(Additional reporting by Michael Flaherty; Editing by Don Durfee, Brian Rhoads and Dean Yates)

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China:  “Pakistan is our Israel”

The world’s most populous country is showing more international assertiveness, which bothers the US.

Thalif Deen Last Modified: 28 Oct 2010 14:56 GMT

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China’s foreign relations are increasingly influenced by state run energy companies, study says [GALLO/GETTY]

When a US delegate once confronted a Chinese diplomat about Beijing’s uncompromising support for Pakistan, the Chinese reportedly responded with a heavily-loaded sarcastic remark: “Pakistan is our Israel”.

But judging by China’s unrelenting support for some of its allies, including North Korea, Burma, Zimbabwe and Sudan, its protective arm around these countries is no different from the US and Western political embrace of Israel – right or wrong.

While China is battling the West over exchange rates, import tariffs and its territorial claims in the South China Sea, Beijing is also lobbying furiously to stall a Western- inspired proposal for a Commission of Inquiry on possible war crimes by the military junta in Burma (Myanmar).

“Such a commission should not be seen as a way to punish the government, but to prevent impunity and help prevent further abuse,” says the UN Special Rapporteur on Myanmar, Tomas Ojea Quintana.

But China, which in January 2007 exercised its veto, along with Russia, to prevent Security Council sanctions against Burma, has not shown any willingness to back the proposal – even for a watered-down commission.

“Clearly,” says one Asian diplomat, “China is trying to reassert its political clout at the United Nations as a counterweight to its defensive stand on currency and trade issues.”

The New York Times newspaper said on Tuesday that the US administration is facing a “confrontational relationship” with an assertive China and is trying to respond to “a surge of Chinese triumphalism” by strengthening Washington’s relationship with Japan and South Korea.

US President Barack Obama is planning to visit four Asian countries next month – Japan, Indonesia, India and South Korea – while bypassing China.

Meanwhile, UN Secretary-General Ban Ki-moon, who needs China’s support in the Security Council if he decides to run for a second term next year, is currently on his fourth trip to China, having visited the country in May and July 2008, and in July 2009.

In recent months, China has prevented a Security Council resolution against North Korea over the sinking of a South Korean ship and also tried to suppress a UN report alleging the use of Chinese-made bullets in attacks on UN peacekeepers in Darfur, Sudan.

“China sees value in promoting its image as the Security Council member defending the rights of the developing world, and China sees value in relying on the UN to counter US power,” said Linda Jakobson, director of the programme on China and Global Security at the Stockholm International Peace Research Institute (SIPRI).

Jakobson, an in-house China expert at SIPRI, points out that Beijing also sees value in participating in UN peacekeeping operations “both because this enhances the image of China as a responsible power but also because it gives Chinese military experience”.

Still, China relented to US and Western pressure in supporting four Security Council resolutions imposing sanctions against Iran, one of Beijing’s staunchest political, economic and military allies.

The fourth round of sanctions, all of them aimed primarily at Iran’s nuclear programme, was imposed in June this year.

Justifying his country’s support for the resolution, Chinese Ambassador Li Baodong was quoted as saying that Beijing wanted to make sure that sanctions would not affect the Iranian people or its normal overseas trade.

Jakobson said that China agreed to these sanctions after much deliberation and on the condition that the energy sector was excluded.

“This can be seen as a compromise solution on China’s part,” she said. “The exclusion of the energy sector was crucial.”

Jakobson also pointed out that China wants to protect the massive investments by Chinese energy companies already in Iran or under negotiation with Tehran, and China wants to ensure that its long-term strategic plans for energy security are not threatened.

In a detailed policy paper released last month, and titled “New Foreign Policy Actors in China”, SIPRI said the increasing sway of large state-owned energy companies have an increasing influence on foreign policy deliberations in China.

Jakobson, who co-authored the report with Dean Knox, said this is one example of that sway though it is noteworthy that there are other foreign policy actors who presumably were not inclined to advocate China’s support of the resolution.

On the other hand, she said, there were presumably actors who advocated China’s support for the resolution because China supports non-proliferation and does not want to see Iran go nuclear.

“If China had not supported the resolution, it would reflect badly on China’s image and undermine its efforts to portray itself as a responsible global power,” Jakobson said.

She said China attaches great importance to the United Nations and would like to see the role of the UN strengthened – though Beijing is wary of many proposals that want to expand Security Council membership and/or give power to members other than the present five permanent members, the United States, Britain, France, Russia and China.

The SIPRI report argues that actors outside the traditional power structure are increasingly shaping China’s foreign policy.

Influential new actors on the margins include Chinese state- owned enterprises, especially energy companies, which, due to their widespread international outreach, affect China’s bilateral relationships and diplomacy at large.

The others include local governments, especially in border and coastal provinces, which seek more lucrative trade and foreign investment opportunities.

At the same time, there is growing importance of researchers, who serve as advisors to officials and media, and netizens, who constitute a new pressure group that China’s leaders at times feel compelled to take into account, not least during international crises.

The findings also point to a fracturing of authority in foreign policy formulation.

Diversification outside China’s official decision making apparatus – along with changes within it – means that foreigners can no longer expect to only deal with one government agency or Party organ but must take into account multiple actors that have both a stake and say in the decision-making processes.

A version of this article first appeared on the Inter Press Service News Agency.

http://english.aljazeera.net/indepth/features/2010/10/20101028135728235512.html

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The USA National Federal Debt financed by foreign buyers of bonds (junk in reality), securities, etc, along with gross consumerism,  colossal waste, bankster predatory lending, derivatives (weapon of mass economic destruction) etc, and on and on with so many blatant injustices and ills, and then there is the HUGE trade imbalances with China on top and USA on bottom, etc, etc, all  … leading to …

and

…. and other known consequences … for the USA, EU, and the global economy

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other interesting news items ,,,

<> China: Too Many Men

With more than a billion people, China has too many men. According to the latest census, an average of 120 boys are born for every 100 girls, the greatest imbalance in the world. As correspondent Lesley Stahl reports, the root of the problem is a traditional preference for sons. In China, as in other Asian countries, it is sons, not daughters, who usually take care of their parents in old age. To deal with its population explosion, China imposed its strict and harshly enforced one-child policy in the 1980s, and that’s when things started going out of whack,…”

http://www.cbsnews.com/stories/2006/04/13/60minutes/main1496589.shtml

<> China’s gender imbalance ‘likely to get worse’
Problem of too many men is exacerbating as rural women ‘marry out’ into cities, says researcher

http://www.guardian.co.uk/world/2009/may/19/china-gender-ratio-women-men

<> Chinese Bias for Baby Boys Creates a Gap of 32 Million

http://www.nytimes.com/2009/04/11/world/asia/11china.html

<> The Official Website of the Beijing 2008 Olympic Games August 8-24, 2008

http://en.beijing2008.cn/

<> Fire in the Sky: picture below [2008 Beijing Summer Olympics ]

olympics_opening_10

It is estimated that the Opening Ceremonies, directed by filmmaker Zhang Yimou, will be seen by 4 billion television viewers around the world.

http://www.time.com/time/photogallery/0,29307,1830773_1747659,00.html

olympics_opening_09Giant Craft
Performers wave props symbolizing the oars of a ship of Chinese explorer Zheng He, a 14th century admiral whose ships sailed all the way to Africa from China.

opening-harmony-typeThe “Moving Type” ceremony

opening-Img214516904The “Moving Type” ceremony

opening-type-oly12The “Moving Type” ceremony

open -fu-img214517050-thumbMartial artists perform Kung Fu during the Opening Ceremony for the 2008 Beijing Summer Olympics at the National Stadium on August 8, 2008 in Beijing.

Below: Hong Cong, China

hong kong aerial view

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