February 3, 2009
Protectionist Policies in the Third World -- India Bans Chinese Toy Imports for Six Months
India's Directorate of Foreign Trade announced last week a temporary ban of six months on Chinese toy imports.
The Toys Manufacturers Association of India said it was pleasantly surprised by the decision of the Commerce Ministry to prohibit shipments of cheap toys from China.
Love that: "pleasantly surprised." Of course, it's all because of safety and quality concerns (heavily spiced with patriotic protectionist sentiment of the industry).
"You see Chinese toys everywhere. The good, upper-end toys are made in India, but the cheap toys in the street and small shops were being dominated by them. They are bringing in toys without safety norms," he said.
This may amount only to another inning in the game of international trade hardball these two nations have played over the past 15 years. Or it may be a harbinger of protectionist policies -- WTO be damned -- that may spread throughout the Third World. We now hear popular echoes -- ones heard and ignored for years -- redoubled in the U.S.
More than half of all Chinese toy exporters are reported to have closed their doors in 2008. Chinese toy exporters who've recently shipped product to China now find their inventory aboard ship unable to offload in Indian ports and probably unsaleable.
“虽然印度不是我们出口的主要国家,但影响肯定存在,特别是对企业士气的消极影响。”中国玩具协会副会长郭卓才表示...“
[Editor's Translation: "Although India is not one of our primary export nations, the effect will definitely be felt, especially a negative effect upon the morale of our enterprises," said Guo Zhuo-cai, the Vice-Chair of the China Toy Association...]
The smaller Chinese factories with overflow and lower quality goods are more likely to suffer from the Indian ban. But protectionist sentiment may have taken root in the Third World. Watch it grow throughout those nations -- indeed, we may see a Chinese response in kind, not simply the bureaucratic nonsense of a WTO dispute China has threatened to lodge.
Posted by Richard at 1:49 PM | Comments (0)January 30, 2009
On Again, Off Again (Repeat) -- The "Bad Bank"
The Bad Bank (see yesterday's post) has hit a snag and may not progress past the light bulb stage. Executive regulators don't seem to know how it would work in practice.
Federal Deposit Insurance Corp Chairman Sheila Bair is apparently pushing for the top post of Baddest Banker:
FDIC Chairman Sheila Bair is pushing to run the operation, which would buy the toxic assets clogging banks’ balance sheets, one of the people said. Bair is arguing that her agency has expertise and could help finance the effort by issuing bonds guaranteed by the FDIC, a second person said.
Surely this sounds like Iraq all over again: a massive invasion frantically cobbled together with little planning as to the "after party."
Posted by Richard at 8:55 PM | Comments (0)January 28, 2009
US to Implement Chinese-Style Toxic Asset Buy
American lawmakers appear to have shelved the frightful idea of "nationalizing" failing banks. However, they've now settled down to discuss -- from media commentary, frantically -- a plan that mimics the experience of modern Chinese banking regulators: the creation of a "bad bank" to remove toxic assets from the system.
You may remember that the Chinese banking system was (and remains) functionally bankrupt. [This article from 2005 is worthwhile reading.] Through deft financial sleight-of-hand, a satisfactory percentage of non-performing loans (NPLs) were removed to a state-controlled holding companies (AMCs), thus allowing, among other benefits, quasi-state-owned financial institutions to list on foreign stock exchanges, sporting "acceptable" NPL ratios. But NPLs continue to rise, despite Chinese statistics (read "notorious.") to the contrary. (Whom to believe?)
PWC Hong Kong's China NPL Investor Survey 2006 -- evidently the last issued, for good reason (remember that Ernst & Young retracted its NPL report of 2006 under pressure from Chinese regulators) -- states:
The size of the China NPL market is extensive. Based on the statistics provided by the China Banking Regulatory Commission ("CBRC") as at the end of the 3rd quarter of 2006, the total number of NPLs in China's commercial banks was approximately RMB1.3 trillion (US$160 billion). However, this amount does not include the NPLs that are presently held by the AMCs -- the only NPLs from China's banking system that to our knowledge are available for sale to investors.
It is difficult to estimate the amount of unresolved NPLs within the AMCs as they generally only report the amount disposed from their initial 1999 transfer loans of RMB1,400 billion (US$170 billion), and not amounts disposed from the various subsequent transfers made in 2004/05 which, based on press reports, we estimate total approximately RMB1,225 billion (US$153 billion). Recent press reports indicate that as of the second quarter of 2006, the AMCs have resolved approximately RMB1,169 billion (US$145 billion and paren of the 1999 transfer loans. That leaves a balance of RMB231 billion (US$30 billion) of the 1999 transfer loans that still need to be resolved and an unknown number of the RMB1,225 billion (US$153 billion) subsequent transfer loans requiring disposal. Whatever way you look at it, the AMCs still have a large number of NPLs on their books that they need to resolve.
It shouldn't surprise that foreign investors are no longer in the market for NPLs:
The China NPL market for foreign investors is very quiet and we expect it to remain so for some time. While there is supply and demand, only a handful of transactions have been completed this year and foreign NPL investors are leaving the market in droves. In addition, we have not noticed any new entrants to the market.
Now, with the U.S. very likely to purchase its own children's toxic assets, perhaps it will turn to China for expertise? With similar "success?"
And who will buy these assets, if they can be called that, from the proposed "bad bank?" And for what prices: who will determine them and by what method? Mark to market? What market? what astronomical sum would it, in fact, cost? No one, it seems, really knows...
Posted by Richard at 4:47 PM | Comments (0)January 27, 2009
Indian Migrant Workers in Dubai Drive to Airport, Leave Keys in Ignition and Fly Away
Not only are Korean expats leaving China, as we posted earlier this month, but migrant Indian workers are no longer willing to call Dubai home:
It's the great escape by Indians who've hit the dead-end in Dubai. Local police have found at least 3,000 automobiles -- sedans, SUVs, regulars -- abandoned outside Dubai International Airport in the last four months. Police say most of the vehicles had keys in the ignition, a clear sign they were left behind by owners in a hurry to take flight.
[Many thanks to Miss Johnson From London for the onpass.]
Posted by Richard at 2:04 PM | Comments (0)January 26, 2009
Watch Out! The Email Scam Some Attorneys Fall For
Due diligence on potential clients purporting to hail from foreign lands means more than simply calling the bank and asking if their "Official Bank Check" is good. This article follows the latest court filing, Buckley, White, Castaneda & Howell v. Citibank, in which an eager attorney is now on the hook for $182,500. Petition / Answer
[See our posts on the attorney email scam in our Legal category.]
Posted by Richard at 1:45 PM | Comments (0)January 23, 2009
Here We Go Again! New U.S. Treasury Secretary and Manipulation of the RMB
Paulson's Legacy: Geithner:
Timothy F. Geithner, who moved closer to confirmation as Treasury secretary on Thursday, told senators that President Obama believed China was “manipulating” its currency,
Again? Since 2006, we've discussed Treasury's desire to move the RMB, but, by now, it's become a dreadful bore. [Search this page or click the Foreign Exchange category of this blog.]
Perhaps Washington believes that China has been weakened and leverage may be exerted where popular opinion supports the administration. Watch out for the push-back!
UPDATE (8 hours later):
Sure enough, the Chinese have fired back.
A Chinese ministry Saturday strongly denied Obama administration claims that China "manipulates" its currency, as the first contact between the new administration and China takes a markedly sour tone.Posted by Richard at 5:10 PM | Comments (0)
January 20, 2009
Transparency in the U.S. -- Who Can Now Say the Chinese Government is Opaque?
Federal Reserve Board Vice-Chairman Donald Kohn before Congress on the importance of keeping secret the names of the recipients of the American banking bail-out.
Gasp. I don't think I can muster up even a single comment on this one.
Posted by Richard at 2:32 PM | Comments (1)January 19, 2009
The Trade Surplus: Will China, Like Garbo, Continue to Plead: "I Vant to Be Alone?"
An enjoyable article by Alan Wheatley: China and the "Garbo Defense." Indeed, what economic policy toward China will the Obama administration adopt? Any at all?
"In bad times everybody talks more about financial cooperation, but the reality is that in bad times everyone wants to take care of himself first," said Shi Yinhong, an international security professor at Renmin University in Beijing.
"There is a great deal of interdependence, but built into that interdependence there are many potential conflicts," he said.Posted by Richard at 2:08 PM | Comments (0)
January 7, 2009
A Treat -- The Markopolos Madoff Letter to the SEC
Sorry, China Hands, but this is too fascinating -- must share it with all those following the Madoff Meltdown.
Harry Markopolos's 2005 letter to the SEC. Lengthy, detailed, intelligent, outrageous.
1 in 5 South Koreans Living in China Have Left
One in five of an estimated 700,000 South Koreans living in China at the start of 2007 have left [China], according to the [South Korean] consulate in Beijing.
A brief article on its causes, worth reading.
Posted by Richard at 3:15 PM | Comments (0)January 6, 2009
Electric Power Generation No Longer a Growth Industry in China?
Growth in electric power generation "has collapsed under the weight of the global economic implosion — at least for now," claims Andrew Revkin, author of the New York Times Dot Earth blog,. Environmental activists appear to consider this progress in the climate control wars -- the necessity for which I question. Global warning is a theorem whose proof I find circumstantial and unpersuasive. [But then, I'm generally skeptical and don't usually rush to judgment. Let's give it another generation or two...]
Certainly, the graph the weblog displays, based upon China's notoriously unreliable National Bureau of Statistics, claims a decrease in growth. Here, here and here (from 2002), just for starters. To what extent have these energy stats been studied, picked apart, cross-tested?
In 2001, Tom Rawski, economist at the University of Pittsburgh, in "What's Happening to China's GDP Statistics," argued persuasively that the unreliability of Chinese energy statistics has caused serious flaws in official GDP calculations. Has something happened between 2001 and 2008 in China that have made these statistics more trustworthy? [That was a rhetorical question.]
Yes, yes, I know. It seems believable: a widespread decrease in manufacturing will most likely cause a drop in energy generation. But where are the hard numbers? Why are Stanford academics parroting official Chinese numbers? Where is the analysis?
For a brief summation on Electricity Regulation in China, read this short paper, authored by Lehman, Lee and Xu, which Aldo de Nobili and Ed Lehman were kind enough to send me. Download file
Posted by Richard at 2:34 PM | Comments (0)December 26, 2008
"It's China's Fault," say American Economists
As further evidence of the negative feeling towards China, read this piece.
Citing three economists (Bernanke, Rogoff and Laurence Myer), as well as a handful of non-economist political figures, its authors claim that "some" American economists now view Chinese capital inflows into the U.S. as a necessary element of the credit collapse.
[Some. Indeed, three can mean "some." But the implication throughout the copy is that such sentiment is widespread among economists. What is going on in this article, anyway? Where is the editor?]
For the past five years, China has been one of the most prolific bidders [of Treasuries]. It holds $652 billion in Treasury debt, up from $459 billion a year ago. Add in its Fannie Mae bonds and other holdings, and analysts figure China owns $1 of every $10 of America’s public debt.
Evidently, these capital inflows are a root cause of America's current woes. Not only does there exist popular aniimus against Chinese goods, but among rational thinkers (economists) and decision-makers (senators) as well. At least, this is the claim.
Typical of the modern New York Times style, one which I find difficult to stomach, its authors ramble from reportage to opinion.
In the past decade, China arguably enabled an American boom. Low-cost Chinese goods helped keep a lid on inflation, while the flood of Chinese investment helped the government finance mortgages and a public debt of close to $11 trillion.
But Americans did not use the lower-cost money afforded by Chinese investment to build a 21st-century equivalent of the railroads. Instead, the government engaged in a costly war in Iraq, and consumers used loose credit to buy sport utility vehicles and larger homes. Banks and investors, eagerly seeking higher interest rates in this easy-money environment, created risky new securities like collateralized debt obligations.
“Nobody wanted to get off this drug,” said Senator Lindsey Graham, the South Carolina Republican who pushed legislation to punish China by imposing stiff tariffs. “Their drug was an endless line of customers for made-in-China products. Our drug was the Chinese products and cash.”
Mr. Graham said he understood the addiction: he was speaking by phone from a Wal-Mart store in Anderson, S.C., where he was Christmas shopping in aisles lined with items from China.
Very cute, that last paragraph. Another oft-employed stylistic device that brings the Op-Ed into the Front Section. This is rhetoric, employed to persuade. So what is the point?
My reading of the opinion burrowed deeply within this article is this: China's investment decisions are really of little consequence. Instead, American economists, political leaders and regulators -- the supposed anchors of our system -- have taken to foolishly blaming the hard-working people of China whose exports allowed us to live well, but cheaply. It is our own government administrations who are to blame.
While some [note my strategic and misleading use of "some"] of the claims in this article may be supported in fact, the trick of hiding political criticism in the World Section is a sham, a disservice to the reading public. Together with the cynical appeal to reader emotion and peppered with snide observations, one must question whether to rely upon the factual information the article purports to convey.
Posted by Richard at 1:14 PM | Comments (2)December 24, 2008
Happy Holidays from Asiabizblog!
Asiabizblog wishes all of our readers the merriest of holidays and best wishes for the New Year.
Hope springs eternal and Spring is just around the corner. In that spirit, I thought I'd share with you a poem a friend in Beijing sent me this morning. [Thank you, dear Audrey!]
一張紙Posted by Richard at 1:17 PM | Comments (0)
出生一張紙，開始一輩子；
畢業一張紙，奮鬥一輩子；
婚姻一張紙，折磨一輩子；
做官一張紙，鬥爭一輩子；
金錢一張紙，辛苦一輩子；
榮譽一張紙，虛名一輩子；
看病一張紙，痛苦一輩子；
悼詞一張紙，了結一輩子；
淡化這些紙，明白一輩子；
忘了這些紙，快樂一輩子!
My (hastily considered) translation:
A Sheet of Paper
At birth, a sheet of paper, a lifetime begins;
At graduation, a sheet of paper, a lifetime of strife;
Upon marriage, a sheet of paper, torment for life;
Become a bureaucrat, a sheet of paper, a lifetime of political struggle;
Money, a sheet of paper, a lifetime of hardship;
Win an award, a sheet of paper, a vanity for life;
A doctor's diagnosis, a sheet of paper, a sorrow for life;
An obituary, a sheet of paper, the sum of one's life
When these papers recede in importance, we truly understand
These papers forgotten, a lifetime of happiness!
December 20, 2008
Rising Tide of Feeling Against China and Chinese Imports
The animus towards China -- specifically imported products -- has never, in my lifetime, been as acute nor as widespread than it is today.
This article and the popular comments below it show the depth of contrary feeling. Chinese products are blamed for being injurious to human health, cheaply made, made with slave labor, anti-American, etc., requiring strict import regulation or even the outright ban of Chinese imports.
Few American internetizens appear to have much to say that's postive about China. One can't foresee anything but greater kickback from Americans. Importers will need to diversity their sources, if they haven't already.
Posted by Richard at 2:55 PM | Comments (1)December 19, 2008
VIDEO EVENT: Dr. Eileen Wibbeke on Global Business Leadership
I'm pleased to present Dr. Eileen Wibbeke, author of the textbook, Global Business Leadership, who recently gave a talk to Google executives on international business leadership at Googleplex.
December 18, 2008
U.S. Commerce Dept. Waves Goodbye to the Export License VEU Program
The Validated End User (VEU) program, about which we wrote in June, will soon become but a bad memory, according the Washington Times.
The program allowed the companies to obtain dual-use technologies without the formal security checks required for an export license. Congressional investigators recently raised concerns that the program lacked safeguards, and that the Beijing government is refusing to allow U.S. officials to conduct full inspections at Chinese facilities to see whether companies are diverting U.S. high technology to the military.
And good riddance! Who, except those with high hopes and little experience with China, would believe that the Chinese government would agree to "full inspections at Chinese facilities?" [I think I'll produce a TV program entitled, "Whose Sovereignty is it Anyway?"]
The other shoe may drop soon. Let us not forget that the FDA recently opened an office in Shanghai, about which we wrote last month, specifically with the expectation that inspections will be conducted on Chinese facilities.
[Thanks to Carol Kalinoski, Esq. for the tip-off.)
Posted by Richard at 5:16 PM | Comments (0)December 15, 2008
Direct Ocean Cargo Shipments Between Taiwan and Mainland China Now Permitted
As of today, direct ocean cargo shipments between Taiwan and China are permitted,. 經濟日報 (Taiwan's daily business newspaper):
海運直航協議正式生效，兩岸昨（12）日同時公布「海運直航許可管理辦法」、「台灣海峽兩岸海上直航實施事項」。交通部航政司表示，辦法明（14）日生效並發出許可，15日展開直航。台灣公司、船舶證照為兩年期，但大陸為總量管制，船舶證為一年效期。
17 carriers have applied for permits -- 12 of them mainland Chinese, five of them Taiwanese. 18 routes applied for originate in China; eight in Taiwan.
Direct flights, the impact of which I briefly discussed in June and which now occur daily, have come under criticism for ticket pricing.
December 11, 2008
Steep Drop in China's Foreign Trade
I do believe last summer that Asiabizblog predicted a steep drop in trade coming shortly. Well, here it is.
Beijing announced yesterday that its November exports dropped 2.2 percent after a 19.2 percent surge in October. Imports took an even steeper drop, falling 17.9 percent. Analysts now say growth there is slowing to its lowest level since 1990, curbing Chinese demand.
Surprising that few Americans are calling for protectionist policies to curb imports -- especially given the incoming Democratic administration, which wishes to be perceived as the party of the American worker (whatever that may now mean).
"Global trade is reversing course because it is a function of industrial production, and we're seeing the biggest coordinated slump in industrial production since the early 1930s," said Philip Suttle, director of Global Macro Analysis at the Institute of International Finance. "In the old days, you'd get weakness in one part of the world, and it would take three to six months to impact another part. But now, everybody is so interconnected through trade that the impact is happening instantaneously."
The executive bailout has been implemented; the worker's bailout to follow? Will we see an increased call for protection, from foreign imports as American unemployment surges? Looks like this may get bloody, soon..
December 9, 2008
Audio Event: Chinese Advertising with Kevin Swanepool
Kevin Swanepool, CEO of The One Club, discusses creativity in Chinese business and his organization's China Creative Workshops to encourage young advertisers in Greater China.
Stumble It!
