1. LAT: US Fourth-quarter economic growth revised up to still-tepid 2.6%
The economy expanded at a slightly faster pace at the end of last year than previously estimated, but the rate remained tepid, the Commerce Department said Thursday. The nation's total economic output, or gross domestic product, increased at a 2.6% annual rate in the fourth quarter of 2013. That was up from an earlier estimate of 2.4%, with the improvement coming from higher consumer spending. Still, the upwardly revised growth rate — the government's final revision of the data — was much lower than the initial estimate of 3.2% and indicated that the recovery's momentum slowed as the year ended.
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2. Bloomberg: Chinese pigs eating soybeans cut U.S. supply to 1965 low
In the 60 years that
Ursa Farmers Cooperative has been loading Midwest soybeans onto boats along the Mississippi River, business has never been this good. Barge convoys are heading south along the world’s busiest inland waterway to New Orleans export depots at a record pace as demand surges from pig farmers in China, the largest pork-eating country. Soy stockpiles in the U.S., where farmers harvested the third-largest crop ever just six months ago, are the lowest relative to demand in at least five decades, fueling the second-biggest rally in prices to start the year since 2005. “Our soybean supplies will be empty by the end of April,” said Scott Meyer, grain department manager at the Ursa, Illinois-based terminal owner, which loads about 35 million bushels of crops annually. “Chinese demand for soybeans was a lot stronger than everyone expected this year.”
Bloomberg photo
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3. Reuters: China sacks ally of former security chief as graft probe widens
A former aide to China's retired domestic security chief Zhou Yongkang was sacked on Thursday after authorities opened a corruption probe, state media said, the latest move targeting associates of Zhou, who is also under investigation for graft. The official Xinhua news agency said that Ji Wenlin had been removed from his post as a vice governor of the southern island province of Hainan. The ruling Communist Party's anti-corruption watchdog announced in February that Ji was being investigated for suspected serious breaches of party discipline and the law, the usual euphemism for graft. The government has given no other details and it has not been possible to reach Ji for comment. Sources have told Reuters that Zhou has been put under virtual house arrest. President Xi Jinping has launched a sweeping crackdown on corruption since taking power, warning corruption is a threat to the ruling Communist Party's very survival.
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4. NYT - Editorial: When China bends the rules
Several years ago, China began restricting exports of rare earth minerals, which are used in cellphones, wind turbines and various industrial products, making them more expensive on the world market. American, Japanese and European companies and officials rightly complained that China, the dominant producer of many of these minerals, was manipulating the market to benefit Chinese businesses. On Wednesday, a World Trade Organization panel found that China’s export restrictions on two minerals — tungsten and molybdenum — violated international trade rules. The decision is important because it sends a clear message to officials in Beijing that they cannot engage in protectionism without consequences. China has about two months to appeal the decision. Under W.T.O.
rules, if China does not comply with the final decision, its trading partners can impose sanctions like quotas and duties on raw materials imported
by China. Chinese export controls, which included export taxes, quotas and limits on which businesses can export the materials, created a two-tier market for rare earth minerals. Domestic businesses and foreign-owned companies located in China could buy rare earth minerals with few restrictions and at cheaper prices than users of the materials located in other countries. The Chinese government had argued that the export restrictions were justified to conserve “exhaustible natural resources” and protect the environment. Rare earth mining is often a dirty business, especially in
China where officials have a poor record of cracking down on pollution. The W.T.O.
panel concluded that those arguments did not justify export restrictions because China cannot treat foreign and domestic businesses differently. Under commitments China made to join the W.T.O.
in 2001, it has the right to protect the environment and to enact policies designed to conserve natural resources. But that is not the issue in this case. China has benefited greatly from international trade. But if it wants to be part of the global trading system, it has to play by the rules.
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5. NYT: Most Chinese cities fail pollution standard, China says
Only three of the 74 Chinese cities monitored by the central government managed to meet official minimum standards for air quality last year, the Ministry of Environmental Protection announced this week, underscoring the country’s severe pollution problems. The dirtiest cities were in northern China, where coal-powered industries are concentrated, including electricity generation and steel manufacturing. The ministry said in its announcement, which was posted on its website on Tuesday, that in the broad northern region that includes the large cities of Beijing and Tianjin as well as the province of Hebei, which surrounds Beijing, the air quality standards were met on only 37 percent of days in 2013. Beijing, with 20 million people, did so on only 48 percent of days, the ministry said.
Associated Press photo
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6. Reuters: China to move some facilities out of polluted capital to ease congestion
China plans to move some administrative, research and healthcare facilities out of its capital to a nearby city to ease the burden on Beijing, which is often wreathed in heavy smog and choked with traffic jams, state media reported on Thursday. The environment has emerged as one of Beijing's key priorities amid growing public disquiet about urban smog, dwindling and polluted water supplies and the widespread industrial contamination of farmland. With a population of more than 21 million and more than 5 million cars on the road, Beijing's living conditions are being pushed to their limits. A study by a Chinese government think tank released in February said that severe pollution had made the city almost uninhabitable for human beings, state media reported. Baoding, a dusty industrial city 100 miles southwest of the capital, will host the administrative units, universities, research institutes and healthcare facilities that are to be relocated, official news agency Xinhua said.
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7. Reuters: Enforcement seen key to success of China's new environmental markets
China's plan for a market in air pollution permits promises to help clean up its air cheaply, but the move could prove just as useless as previous environmental policies unless the government stamps out lax enforcement and spotty data. Smog regularly blankets the country's major urban centers and kills half a million people each year. The news of plans to launch a market within three years demonstrates China's growing will to tackle environmental problems through market-based tactics, rather than its traditional command-and-control measures. China has already launched several regional pilot markets to fight rapidly rising greenhouse gas emissions, but even a well-designed pollution market would not work unless the government made sure companies followed the rules, experts said. "Enforcement will be important to create confidence and establish the credibility of pollution permits," said Olivia Boyd, an energy analyst at IHS World Markets Energy. This credibility is vital to ensure any emissions trading scheme is stable in the long term, she added China's plan for a market in air pollution permits promises to help clean up its air cheaply, but the move could prove just as useless as previous environmental policies unless the government stamps out lax enforcement and spotty data. Smog regularly blankets the country's major urban centers and kills half a million people each year. The news of plans to launch a market within three years demonstrates China's growing will to tackle environmental problems through market-based tactics, rather than its traditional command-and-control measures. China has already launched several regional pilot markets to fight rapidly rising greenhouse gas emissions, but even a well-designed pollution market would not work unless the government made sure companies followed the rules, experts said. "Enforcement will be important to create confidence and establish the credibility of pollution permits," said Olivia Boyd, an energy analyst at IHS World Markets Energy. This credibility is vital to ensure any emissions trading scheme is stable in the long term, she added.
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8. WSJ: China to boost cybersecurity
China's defense ministry said it would take measures to boost
cybersecurity after reports this week alleging the U.S.
spied on Chinese technology company Huawei Technologies Co.
and several Chinese leaders. Speaking at a monthly briefing, defense ministry spokesman
Geng Yansheng said the revelations "exposed the hypocrisy and despotism of the U.S.
side."
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9. Reuters: China to strengthen Internet security after U.S. spying report
China will beef up its internet security after recent reports that the U.S.
government spied on a major telecommunications firm, the
Defence Ministry said on Thursday. Reports that the U.S. National Security Agency infiltrated servers at the headquarters of Huawei Technologies Co. "
lay bare the United States's hypocrisy and despotic rule," ministry spokesman
Geng Yansheng told a briefing. "For a while now, some Americans have jabbered on and on, condemning Chinese hacking attacks," he said. "But the truth is that this is without any basis in fact, it's simply a thief crying 'Stop, thief!'" The ministry did not say what steps would be taken to strengthen Internet security. The White House has said that the U.S.
does not spy to gain commercial advantage. Cyber-espionage has cast a shadow over China-U
.S.
ties, with each side accusing the other of spying.
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10. WSJ - Joseph Sternberg: A watershed for Chinese patent theft
The first IP lawsuit by a foreign firm against a large state-owned enterprise tests Beijing's reform mettle.
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11. NYT: Search for lost jet is complicated by geopolitics and rivalries
The frantic hunt for Malaysia Airlines Flight 370 has been, in one way, a nearly miraculous display of international collaboration: 26 nations, many of them rivals, have opened up their territorial waters and airspace or have contributed closely held technology and surveillance data to a search that has riveted the world. That extraordinary cooperation has been instrumental in narrowing the search
to a remote part of the southern Indian Ocean this week. But the effort has also underscored the limits of trust among powers like China, Malaysia, the United States, India and Thailand, all of which bring their own, often competing, strategic interests to bear. The instruments of the search — advanced radar and satellite arrays, banks of intelligence analysts, surveillance planes and ships — are also the tools of
spycraft. And as they
have come together, the imperative among participating countries to cloak their technological capacities and weaknesses has proved irresistible, at times hindering the search, military analysts say.
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12. Xinhua: WTO rules certain U.S. trade remedies against China inconsistent with its rules
The World Trade Organization (WTO) ruled on Thursday that the United States had acted inconsistently with WTO rules with regard to its countervailing and anti-dumping measures on certain products from China. As for the dispute brought
by China to the world trade watchdog in 2012, the panel report, circulated this afternoon, found that U.S. Department of Commerce (DOC) failed to adjust the duty amounts so as to avoid double remedies in 25 anti-dumping and countervailing duty investigations against China initiated between 2006 and 2012, which was inconsistent with the WTO rules. Meanwhile, the panel ruled that the U.S.
was not acting inconsistently with the WTO rules by passing the amendment to the Tariff Act in March 2012 and retroactively authorizing its investigating authority to impose countervailing duties against the so-called "non-market economy countries" as of November 2006. China's request for consultations in September 2012 with U.S.
over the dispute came after the so-called GPX bill was passed to authorize the U.S.DOC to apply countervailing duties to "non-market economy" countries.
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13. CD: Approval process for foreign businesses shortened
Shanghai Pudong New Area's approval process for foreign businesses has shortened to two days, following the government's call to streamline the administrative process and vitalize market forces. Shanghai's Pudong New Area will halve the approval period
to two days for
establishment and change of projects backed by foreign capital, the Xinhua News Agency reported on Wednesday. This will make Pudong, one of the country's earliest reform testing-grounds, the fastest hub to provide market access to multinational companies. The policy will also beat the record of a minimum four days for a company to receive business licenses in the China (Shanghai) Pilot Free Trade Zone, an initiative to open up the economy and attract foreign investment.
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14. Xinhua: China launches campaign against rogue journalists
China on Thursday launched a nationwide campaign to crack down on fake news and ban journalists and newspapers from extorting money in return for stories. The campaign will seek to "prevent extortion by news reporting and contain the spread of fake news," according to a statement released by its organizers. No timetable was given
for the campaign, which organizers say will involve more hotlines and online platforms for the public to report malpractice by journalists and newspapers. The campaign, jointly launched by the Publicity Department of the Communist Party of China Central Committee and
another eight government ministries and offices, will make journalists' personal information more accessible in case people need to check their identity, according to the statement.
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15. Xinhua:China yuan weakens to 6.1465 against USD
The Chinese currency
renminbi, or yuan, weakened 25 basis points to 6.1465 against the U.S.
dollar on Thursday, according to the China Foreign Exchange Trading System. In China's foreign exchange spot market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day. The central parity rate of the yuan against the U.S.
dollar is based on a weighted average of prices offered by
market makers before the opening of the interbank market each business day.
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16. Caixin: AliPay's 'closed system' is biggest reason for regulatory action, expert says
Too much money is moving around out of PBOC's sight, economist says, and a problem would affect
large number of people.
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17. Caixin: Mark Schwartz: Reason to be optimistic on China's economy
Goldman Sachs executive says he is confident the Xi government has country on the right path, and charity efforts are a core value of his company.
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18. Bloomberg: Morgan Stanley sees more China defaults as cash squeeze tightens
More Chinese companies are heading toward default as higher funding costs and slowing growth weigh on existing debt commitments, according to Morgan Stanley. “The pressures are now on for the corporate default rate to be moving higher,” said Viktor Hjort, the Hong Kong-based head of Asia fixed-income research at the U.S.
lender. “Any economy that generates defaults usually needs three things, leveraged balance sheets, sluggish growth and tighter financial conditions. China ticks all three boxes.” Chinese issuers pay an average 6.22 percent
for dollar-denominated securities, after yields touched 6.39 percent on March 20, the highest since September, JPMorgan Chase & Co.
indexes show. Top-rated companies pay an average 6.05 percent for 10-year notes onshore, the most in a month and poised for the biggest monthly increase since November, according to
Chinabond indexes. Corporate borrowing spiraled during the global credit crisis, as the Chinese government encouraged banks to lend to support the economy. Financial institutions are now clamping down on non-performing loans and curbing new lending, pushing up the cost of servicing this debt as the nation’s economy slows. A preliminary gauge of manufacturing missed estimates this week, suggesting factory output weakened for a fifth straight month in March.
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19. WSJ: Yum aims to restore confidence in China with new menu
U.S. Restaurant Chain Launches Marketing Campaign Following Negative Publicity.
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20. Reuters: Hyundai to expand in China with a new factory
The South Korean carmaker Hyundai Motor said Wednesday that it was planning to build a fourth plant in China, which would be its first major overseas expansion in more than two years. Hyundai and its affiliate Kia Motors would use the facility in the southwestern city of Chongqing — to cost 1 trillion won, or $929.5 million — to protect their share of the world’s biggest car market, which accounted for more than a fifth of their global vehicle sales last year. “Considering China’s future demand growth outlook, we need to build a new plant to maintain our stable market share of 10 percent in China,” Hyundai said in a statement. The move signals the end of a period of consolidation for Hyundai, which has been focusing on improving quality, rather than expanding capacity, to avoid the sort of recalls that have dogged Toyota Motor. Competitors like Volkswagen, General Motors and Nissan Motor are aggressively increasing capacity in China, putting pressure on Hyundai and Kia.
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21. NYT - Economix: China’s shadow banking malaise
With the United States economy still struggling to regain full employment, the European economy becalmed in the aftermath of a serious sovereign debt crisis and many emerging markets looking increasingly vulnerable, global macroeconomic attention has become increasingly focused on China. Will China’s economy slow down, and would such a development carry serious financial fallout, even some sort of crisis? Some commentators have suggested that China could be facing a Lehman moment (or even a Greece or Spain moment) with some particularly Chinese characteristics. None of this sounds good, and some of it sounds downright scary. But much of the speculation also seems like a stretch, if not an exaggeration of the negative implications for both China and the global economy.
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