1. AP: Obama's Asia policy set back by Democrat
President Barack Obama's Asia policy took a hit this week, and it came from a member of his own party. The top Democratic senator, Harry Reid, announced that he opposes legislation that's key for a trans-Pacific trade pact that is arguably the most important part of Obama's effort to strengthen American engagement in Asia. Since Obama rolled out the policy, most attention has been on the military aspect, largely because it was described as a
rebalance in U.S.
priorities after a decade of costly war in Afghanistan and Iraq. But officials have increasingly stressed that Obama's foreign policy "pivot" to Asia is about more than cementing America's stature as the pre-eminent power in the Asia-Pacific as China grows in strength. It's about capitalizing on the region's rapid economic growth. That's the importance of the Trans-Pacific Partnership, or TPP, an ambitious free trade agreement being negotiated by 12 nations, including Japan, that account for some 40 percent of global gross domestic product. "The pivot is the TPP right now," Victor Cha, director of Asian studies at Georgetown University's School of Foreign Service, told a conference at a Washington think tank this week
on U.S.
policy and the outlook for Asia in 2014.
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2. FT: US trade deals remain on track, says Froman
America’s top trade official has sought to reassure European and Asian negotiating partners that the White House can overcome rising dissent in Congress as it tries to keep
momentum behind two of the world’s most ambitious regional trade agreements. Michael Froman, US trade representative, told the Financial Times that the administration was convinced it could secure congressional backing for the deals even after Harry Reid, the Democratic senate majority leader, last week said he would oppose fast-track legislation for any agreements. His opposition was widely seen as a major blow to President Barack Obama’s plans to strike accords with the EU and 11 Pacific Rim countries. Mr Reid can wield control over the progress of legislation in Congress’s upper chamber. European and other officials have said that unless the Obama administration secures support for legislation known as “Trade Promotion Authority” they would be wary of making
the the concessions that are likely to be needed for either deal. The legislation would prevent Congress from amending any pact and ensure that it would have to consider any accords in a timely fashion.
FT Back to Top
3. NYT: McCain calls China a ‘rising threat’ in Baucus confirmation hearing
President Obama’s choice to be ambassador to China sat through a tough-sounding lecture in Washington on Tuesday from a Senate colleague who accused Beijing of regularly abusing human rights and planning to reassert its historic regional dominance. He then said that he largely agreed. He said that the United States needed to be “fair but firm” with China, while “engaging in a constructive conversation.” But even as the United States grapples with how to expand its presence in Asia while dealing with an increasingly assertive and self-confident China, Mr. Baucus had to absorb an intense and critical soliloquy from Senator John McCain, Republican of Arizona. Mr. McCain suggested that it would be dangerously naïve to believe — as Mr. Baucus had asserted earlier in the hearing — that when Chinese leaders in late November declared a disputed air defense identification zone in the East China Sea, they were motivated by national pride and competitive internal politics. “It’s not that the Chinese are proud, as we are, it’s not that the Chinese want to keep their job,” Mr. McCain said. He went on: “This is a matter of a rising threat or challenge to peace and security in Asia because of the profound belief in the Chinese leadership that China must, and will, regain the dominant role that they had for a couple of thousand years in Asia.” He then added: “The overarching goal here is for us as a country, I think, to engage China with eyes wide open to try to find common ground,” such as through improved military-to-military cooperation. But he acknowledged that the overarching relationship was complicated.
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4. WP: In China’s war on bad air, government decision to release data gives fresh hope
China’s Communist state is hardly known for its transparency. So when environmental groups appealed to the government last year to disclose official data on air pollution, they were not expecting much. “Way beyond our expectations, the government actually said yes,” said Ma Jun, head of the Institute of Public and Environmental Affairs in Beijing. “I am quite amazed.” Since Jan. 1, the central government has required 15,000 factories — including influential state-run enterprises — to publicly report details on their air emissions and water discharges in real time, an unprecedented degree of disclosure that is shedding light on the who, what, when and where of China’s devastating environmental problems. The reporting requirement is part of a striking turnaround by China’s government, which is also publishing data on the sootiest cities and trying to limit the use of coal. The country’s appalling air is blamed for more than a million premature deaths a year, for producing acid rain that damages the nation’s agriculture, for driving away tourists and even for encouraging the brightest students to study abroad. Perhaps just as important, Beijing’s bad air has been making its Communist leaders lose face.
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5. Bloomberg: China manufacturing gauge falls to six-month low
A Chinese manufacturing gauge fell to a six-month low in January as output and orders slowed, adding to signs that government efforts to rein in excessive credit will cool growth in the world’s second-largest economy. The Purchasing Managers’ Index (SHCOMP) was at 50.5, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Feb. 1 in Beijing. That matched the median estimate of analysts surveyed by Bloomberg News and compared with December’s 51 reading. Numbers above 50 signal expansion.
Bloomberg Back to Top
6. Reuters: Growth eases in China’s service sector
Growth in China’s service sector slowed to a five-year low in January, an official survey showed Monday, another sign of stuttering momentum that could deepen investors’ concerns about emerging markets around the world. The National Bureau of Statistics of China said the official
nonmanufacturing purchasing managers’ index fell to 53.4 in January from 54.6 in December. The reading on Monday was the lowest since December 2008, although it was still above the 50-point level that separates growth from contraction. The survey is the third in two weeks to show slowing growth in China, and is likely to affirm expectations that the country’s economic growth will soften in 2014. The tapering of the United States Federal Reserve’s stimulus has hurt emerging markets, and investors have sold stock and currency investments and moved them to developed markets. Signs of slowing or weak activity in China and other major emerging markets are further hastening this shift.
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7. Reuters: China drags on otherwise buoyant Asia factory sector
Asian manufacturing outside China showed signs of solid expansion in January as order books swelled, but factories in the region's giant struggled for growth, heightening concerns about an economic slowdown. China's service-sector growth also slowed down - to a five-year low - in another sign of the stuttering economic momentum that has been a factor behind the emerging markets sell-off of the past two weeks. Purchasing managers
indexes (PMIs) on Monday showed Indian manufacturing running at its strongest pace since March 2013 and in South Korea the sector was expanding at its fastest in eight months. Last week, a Japan PMI rose to its highest level in nearly eight years as new orders expanded at their fastest pace on record - a sign of strong domestic demand before prices rise with an increase in a domestic sales tax in April.
Reuters Back to Top
8. FT: Chinese factories gee up for Year of the Horse
As China prepared to usher in the Year of the Horse, Crystal Group, a garment manufacturer that produces clothes for retailers such as Abercrombie & Fitch and Mothercare, added a new task to its holiday “to do” list. Dennis Wong, executive director at Crystal, says it bought 9,000 return train tickets for migrant workers in Dongguan who wanted to return home for the Lunar New Year – the biggest holiday in the Chinese calendar – and also helped them buy snacks for the often long trip from Guangdong Province to their towns and villages. While workers receive a free trip, more importantly, they no longer have to queue – or go online as is increasingly common – to buy tickets. Crystal also gains as workers are less likely to leave Guangdong earlier to secure a train or bus seat for the biggest annual migration on earth. “The whole
programme is to attract them to stay as long as they can,” says Mr Wong, explaining that the company also boosts the amount it pays in efficiency bonuses
by up to 8 per cent from November until the new year period.
FT Back to Top
9. Bloomberg: Global earnings poised for 2014 rise as U.S. offset China
Global corporate earnings growth is poised to accelerate this year as higher spending by U.S.
consumers and Europe’s gradual rebound from a two-year recession help offset a slower economic expansion in China. 3M Corp. (MMM), which sells consumer,
health-care, industrial and safety products around the world, said sales growth may double in the U.S.
and demand is improving in Western Europe. Company earnings in Japan may rise about 9 percent in the next fiscal year as the weaker yen aids exporters such as Toyota Motor Corp. (7203), according to estimates compiled by Bloomberg. Even French carmaker Renault SA (RNO) is projected to reverse a three-year slide in earnings this year as European car sales rebound. “What we’ve got going on for the first time in this recovery is truly global synchronized growth,” said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which manages about $340 billion in assets. “It’s still slow by long-ago historic standards, but it will feel pretty good in this recovery.”
Bloomberg Back to Top
10. Reuters: China says no cover-ups using state secrecy as excuse
China has unveiled new rules telling officials not to cover up what should be publicly available information using the excuse it is a
state secret, in what state media said was a move towards greater government transparency. China has notoriously vague state secret laws, covering everything from the number of people executed every year to industry databases and even pollution figures, and information can be retroactively labeled a state secret. The issue received international attention in 2009 when an Australian citizen and three Chinese colleagues working for mining giant Rio Tinto were detained for stealing state secrets during the course of tense iron ore negotiations. But the government has come under pressure from its own people to be more open, especially on sensitive issues like the environment, which have no obvious implications for national security.
Reuters Back to Top
11. Xinhua: Factory activity at 6-month low in January
China's purchasing managers’ index for the manufacturing sector dropped to a six-month low of 50.5 percent in January, according to official data released at the weekend. Last month continued December’s decline and indicated the lowest factory activity since August while marking the 16th straight month above the boom-bust line, said a statement jointly released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing. In January, the sub-index for production stood at 53.0 percent, down 0.9 percentage points from December but still 0.2 percent higher than last year’s average. The sub-index for new orders lost 1.1 percentage points to 50.9 percent, said the statement.
Xinhua Back to Top
12. Xinhua: Xi's Sochi visit to deepen Sino-Russian ties
Russia, for the second time, will be Chinese President Xi Jinping's first foreign destination of a year. In March 2013, Xi took a state visit to Russia a few days after he took office as Chinese President. Xi's announced
Russian stay from Feb. 6 to 8 and scheduled attendance to the opening ceremony of the Sochi Winter Olympic Games will be his first foreign trip in 2014. It will also be the first attendance by a Chinese president at a major overseas sports event, signaling China's strong support for the Olympics and Russia's efforts to host the games. Vladimir Putin, then Russian Prime Minister, attended the opening ceremony of the Beijing Olympics
in August 2008.
Xinhua Back to Top
13. Xinhua: Chinese property developers face downward cycle: Deloitte
Nearly 60 percent of listed Chinese mainland real estate
companies registered a decline in net profit margin in 2012, reflecting the beginning of a downward profitability cycle, according to a research report from Deloitte. The accountancy firm compared the financial data of 174 property companies listed in Shanghai, Shenzhen and Hong Kong in 2012 against 168 companies in the previous year. The report, published last week, said the sampled property companies achieved an average total revenue of 7.91 billion HK dollars (1.02 billion U.S.
dollars)
in the reported period in 2012, against 6.35 billion HK dollars in 2011. Net profit margin dropped 2.65 percent from 2010, albeit a slight increase of 0.5 percent from 2011. A reduction pattern has emerged for returns on equity, which weakened to 9.98 percent in 2012, against 10.72 percent in 2011 and 11.5 percent in 2010, according to the report.
Xinhua Back to Top
14. Caijing: Tencent pushes WeChat in US
WeChat US users who connect their
WeChat account with their Google accounts will get a $25 restaurant.com gift card if they invite five Google contacts to join the service by Jan 31.
Caijing Back to Top
15. FT: Lenovo braced for Cfius scrutiny over Motorola handset deal
As the largest Chinese technology deal in the US, Lenovo’s $2.9bn purchase of Motorola’s handset business last week will be closely
scrutinised by a US government committee that reviews transactions for national security concerns. As part of the purchase from Google, Lenovo will assume 2,000 patents and receive a
licence to other Google
smartphone intellectual property, which will be combed through by the Committee on Foreign Investment in the United States (Cfius). However, most of the valuable and sensitive
patents are being kept by Google, while Motorola’s business that has government contracts is part of another company, people familiar with the matter said. The deal also involves hardware, not software, and Chinese-made handsets, like those manufactured by Huawei, are already sold in the US. As a result, Lenovo’s acquisition may not face major
challenges though it may have to meet certain conditions requested by Cfius to get approval, people familiar with the matter said. Also, Motorola’s small presence in the US with less than a 5 per cent market share could help Lenovo, though its goal is to increase sales. Concern over whether facilities or offices are close to locations that could raise security
worries is not expected to be a big issue.
FT Back to Top
16. WSJ: A tale of two Chinese auditor risk factors
Last week’s ruling against the Chinese units of the “Big Four” audit firms has already made its first appearance in initial public offering risk factors. In its U.S. IPO filing on Thursday, Chinese e-commerce retailer JD.com Inc.
went into detail about the ruling from Securities Exchange Commission administrative law judge Cameron Elliot, that could ban the “Big Four” accounting firms from auditing U.S.
companies in China for six months. While the ruling is being contested, companies now have to disclose that they could end up losing their auditor and potentially violating U.S.
listing standards. At least eight companies have highlighted the administrative proceedings at the SEC in initial public offering documents since the SEC first brought the case in December 2012. Those firms, including Chinese online retailer Light In The Box Holding Co.
and Chinese car-sales website owner Autohome Inc.
have often made reference to “adverse” effects
from a potential ruling, but in light of the decision, JD.com has gotten much more specific.
WSJ Back to Top
17. NYT: Imax faces a threat in China
We’ve got the future under control,” contends OmniCorp, the giant technology corporation in “RoboCop,” a blockbuster
remake set for release by Sony Pictures and MGM next month. But can Imax Corporation, the movie studios’ business ally, say the same about its dealings in China?
Imax, whose huge screens will play a 2-D version of “RoboCop” starting on Feb. 12 in the United States, has a wary eye on the Chinese market, where the same film will open 16 days later, in 3-D,
on a competing set of large screens. That will happen with the support of a powerful government-owned company, the China Film Group, which both controls the import of films
to China and oversees the competing large-screen system. The issue is especially sensitive for Imax: Not only could competitors in China cut into its potential market share there, but Imax has charged in several courts that the Chinese system relies on technology that was blatantly stolen from its offices in Canada.
NYT Back to Top
18. LAT: Chinese developer buys major lot in downtown L.A.
The block links the financial district with L.A. Live and Staples Center. Its purchase is the second major downtown land deal struck with Chinese money in barely a month.
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19. FT - Edward Luce: Obama’s trade agenda hangs on a thin Reid
The Democrat from Nevada never met a trade deal he liked.
FT Back to Top
20. WSJ - Joe Kaeser Oped: Why a U.S.-European trade deal is a win-win
Changing business trends mean we're locating plants closer to markets.
WSJ Back to Top
