1. Reuters: Market slips as China’s exports take a spill
The stock market drifted lower on Monday, weighed down by soft data out of China and Boeing’s latest production setback. Merger and acquisition announcements, however, as well as news about companies including Facebook and Alexion Pharmaceuticals, helped keep the losses from being bigger. China’s exports unexpectedly tumbled 18.1 percent in February, against expectations for a 6.8 percent rise, swinging the trade balance into deficit and adding to fears of a slowdown in the world’s second-largest economy. “There’s
reasons to be a little cautious on the market. There’s a little bit of profit-taking,” said Paul Zemsky, head of asset allocation at ING Investment Management.
Reuters Back to Top
2. WSJ: U.S. stocks drop on weak China data
Chinese Exports Fell 18% in February, Prompting Economic Worries. U.S.
stocks edged lower Monday after sluggish economic data from Asia and lingering concerns about the conflict in Ukraine put investors on the defensive. The Dow Jones Industrial Average dropped 34.04 points, or 0.2%, to 16418.68. Traders said the session was dominated by short-term-oriented market participants tweaking positions, rather than big bets by long-term investors. The S&P 500 lost 0.87
point, or less than 0.1%, to 1877.17. The Nasdaq Composite Index fell 1.77 points, or less than 0.1%, to 4334.45. Weekend data showed an unexpected drop in Chinese exports in February, as well as a downward revision in the Japanese government's estimate of economic growth in the final three months of 2013.
WSJ Back to Top
3. FT: China worries dent mood on Wall Street
Fresh concerns over China and lingering uncertainty about Ukraine provided a “risk-off” backdrop for financial markets at the start of the week, although
moves were generally modest as participants waited for further clues about the health of the global economy. In New York, the S&P 500 equity index eased 0.1 per cent from Friday’s record close, while the pan-European FTSE Eurofirst 300 shed 0.4 per cent and the Nikkei 225 in Tokyo fell 1
per cent.
FT Back to Top
4. Reuters: China concerns hit commodities, little collateral damage as yet
Asian markets were set for another tense session on Tuesday as worries about China's economy continue to reverberate, taking a particularly hard toll on commodity prices. February's shock fall in exports from the Asian behemoth has cast a shadow over the global outlook, even as analysts blamed much of the drop on the Lunar New Year holidays. Oil and industrial commodities bore the brunt of the sell-off. Copper futures shed almost 2 percent on Monday, while spot prices for iron ore tumbled over 8 percent. Brent crude lost 92 cents to $108.08, while U.S.
oil extended its decline to $100.94 a barrel. Investors will be nervously watching Chinese money markets and the yuan for any evidence the People's Bank of China (PBOC) is engineering an easing in monetary conditions after it forced the currency sharply lower on Monday
.Tensions between Russia and Ukraine added to investor unease. In Crimea, unidentified armed men fired in the air as they moved into a Ukrainian naval post. Russia said the United States had spurned an invitation to hold new talks on resolving the crisis.
Pedestrians walk past an electronic board showing various stock prices, which are reflected in a polished stone surface, outside a brokerage in Tokyo January 24, 2014. Reuters
Reuters Back to Top
5. WSJ: China weakens yuan by largest degree since 2012
China's central bank weakened the daily reference rate for its currency by the largest percentage in more than a year and a half, continuing a push to drive the yuan lower. As sluggish economic news sent jitters through the market, the People's Bank of China set the daily reference rate Monday at 6.1312 to the dollar, compared with 6.1201 to the dollar on Friday. The 0.18% change represented the largest one-day move in the rate since July 2012. The central bank determines the
rate each day, and then allows the currency to trade as much as 1% higher or lower. Since 2005, it has gradually moved the rate up, allowing the yuan to strengthen 33%, but in the last month has pushed it lower, seeking to discourage speculators who have channeled money into the economy in hopes of benefiting from the currency's rise. The U.S.
dollar-Chinese yuan pair was fixed "much higher than what the market environment would have otherwise suggested," said Sacha Tihanyi, a senior currency strategist at Scotiabank in Hong Kong. This suggests, he said, that the yuan is heading back to weaker
levels it hit against the greenback a few weeks ago.
These 100-yuan notes are worth less Monday, after the People's Bank of China made a big change in the daily reference rate. Reuters
WSJ Back to Top
6. FT - Editorial: China’s dangerous need for speed
Since taking power last year, the new leadership in Beijing has insisted that it will place less emphasis on how fast China expands, and put a greater focus on the quality of its economic growth. Xi Jinping, president, and Li Keqiang,
premier, have both stressed that China must reduce its addiction to cheap credit, lower its reliance on business investment and pay more attention to the quality of life of its citizens, for example by taking concrete steps to reduce pollution levels. Yet when these declarations faced their first meaningful test last week, China’s leaders blinked. Last week at the National People’s Congress, the same assembly that 12 months ago elevated Messrs Li and Xi to their current roles, the government announced it would aim for a growth rate of 7.5 per cent this year. This is the same target as in 2013, when the economy expanded by 7.7 per cent. Injecting more liquidity into the system would provide breathing space for the large state-owned enterprises and local governments, which are struggling to repay the loans accumulated following the 2009 monetary stimulus. It would also keep social unrest at bay, as businesses would be able to create jobs for the millions of migrants who every year leave the countryside for the cities. Yet a new stimulus would spur the rate of credit growth, which continued to accelerate in January. It would also add to the debt stock, which over the past five years has nearly doubled, climbing from 130 to 210 per cent of national income. For these reasons, Beijing should hold off on fresh stimulus, even if it means letting its growth target slip. What it should do instead is
insist on measures that give the signal that investors will face the consequences of
loans going sour. The decision to let solar-panel
maker Shanghai Chaori Solar default – the first such instance in recent Chinese history – will help introduce much-needed discipline in a market that has too often enjoyed the luxury of
bailouts. China faces a difficult balancing act between pushing too hard on the brake – which could cause a wave of defaults – and continuing to fuel its credit addiction. But chasing overambitious targets is not the answer. China will eventually have to rebalance its economy towards a more sustainable model. The sooner it starts to turn, the less dangerous the process will be.
FT Back to Top
7. NYT: China’s hard line: ‘No room for compromise’
The Chinese foreign minister took a strong stand Saturday on China’s growing territorial disputes with neighboring nations, saying that “there is no room for compromise” with Japan and that China would “never accept unreasonable demands from smaller countries,” an apparent reference to Southeast Asian nations. The foreign minister, Wang Yi, a former ambassador to Japan, made his comments at a news conference on the fourth day of the National People’s Congress, an annual meeting of China’s rubber-stamp legislature. Mr. Wang took questions from foreign and Chinese news organizations on the same morning he learned that a Malaysia Airlines flight bound for Beijing had disappeared, and he spoke on a range of subjects that included Ukraine, the Korean Peninsula and relations between China and the United States. Mr. Wang stressed several times that China was committed to regional peace.
Wang Yi, the Chinese foreign minister, at a news conference Saturday during the National People’s Congress in Beijing. Credit Reuters
NYT Back to Top
8. NYT - Editorial: China’s disturbing defense budget
China is causing new anxieties in Asia with a defense budget for 2014 that totals $132 billion, up 12.2 percent over the previous year. These numbers should not be used as an excuse to ratchet up America’s military spending. But they do raise legitimate concerns about China’s motives that Beijing should seek to dispel, especially at a time when regional tensions are rising. Although China’s overall economic growth rate has declined, the new defense budget reflects the biggest increase in three years and continues a several-decades-long trend of double-digit increases. Many experts assume that the real total is higher. Even so, the budget is far below that of the United States, which was $526.8 billion for fiscal year 2014 and finances the world’s largest, most expensive and advanced military program. It is reasonable to expect that as the world’s second-largest economy, China, over time, would invest more on defense to protect its security and economic interests. China says the world has nothing to fear, but it could mitigate concerns by explaining why it needs such hefty increases and where the money will be spent, as the United States does. More consultation between the Chinese and American militaries would also be useful. So would a serious effort to resolve the territorial disputes, or at least agree on a code of conduct for managing them. Meanwhile, Congress should resist the impulse to pump up military spending. The better response is to support President Obama’s policy of expanding America’s economic, political and military engagement in Asia while remaining
cleareyed about China’s capabilities.
NYT Back to Top
9. WSJ: Obama, China's Xi discussed Ukraine
Phone
call on Sunday their first conversation since Russia's
cccupation of Crimea.
WSJ Back to Top
10. Reuters: Chinese raw materials also found on U.S. B-1 bomber, F-16 jets
After discovering China-made components in the F-35 fighter jet, a Pentagon investigation has uncovered Chinese materials in other major U.S.
weaponry, including Boeing Co's B-1B bomber and certain Lockheed Martin Corp F-16 fighters, the U.S.
Defense Department said. Titanium mined in China may also have been used to build part of a new Standard Missile-3 IIA being developed jointly by Raytheon Co and Japan, said a senior U.S.
defence official, who said the incidents raised fresh concerns about lax controls
by U.S. contractors. U.S.
law bans weapons makers from using raw materials from China and a number of other countries, amid concerns that reliance on foreign suppliers could leave the U.S.
military vulnerable in some future conflict.
Reuters Back to Top
11. FT - Robert Zoellick Oped: International treaties can once again help China advance
Reciprocal investment deals can strengthen the Chinese and global economy. Twenty years
ago Zhu Rongji, China’s former premier, shrewdly used negotiations over his country’s accession to the World Trade
Organisation to open its domestic markets to greater competition and import international standards into its legal system. This produced more than a decade of strong growth, and gave China a greater stake in global trade. Now China has another opportunity to advance internal reforms through international negotiations. The country is in discussions over bilateral investment treaties with the US and the EU. These would allow Chinese companies to invest and operate overseas more easily, in return for reciprocal access to Chinese markets. Such agreements can strengthen China’s economic governance and contribute to the creation of a
rules-based international economy. Inevitably, talks over bilateral investment rules will take time. So did the negotiations that culminated in China’s acceptance of the WTO rules. The US and the EU should co-operate to set high standards for their respective treaties. The process can be used to engage business groups, communities and local officials who see the advantages of investment, workers and farmers who benefit from open markets, and supporters of China’s reforms. The Obama administration needs to make this case to Congress. A strong investment treaty is a necessary building block for other high-priority trade accords, such as the Trans-Pacific Partnership. Good strategy requires action as well as ideas. Bilateral treaties, technical though they might be, can be potent tools. They can assist China’s market reforms, deepen constructive economic ties with the west, and strengthen the international rule of law. They also offer a positive agenda to buffer inevitable differences.
FT Back to Top
12. Xinhua: China intensifies crackdown on corruption
Work reports of two judicial bodies, delivered to the National People's Congress (NPC), China's top legislature, on Monday, demonstrated that the anti-corruption campaign is picking up momentum. According to the Supreme People's Procuratorate (SPP), prosecutors last year investigated 2,871 public servants at county levels and above, including 253 at city levels and eight at provincial and ministerial levels, in 2,581 cases of graft, bribery, and embezzlement of public funds involving more than one million yuan (about 163,300 U.S.
dollars). The work report of the Supreme People's Court (SPC) shows that Chinese courts in 2013 convicted and punished 31,000 criminals in 29,000 cases of embezzlement, bribery and breach of duty, including several serious cases such as Bo Xilai and Liu Zhijun. Bo was a former member of the Political Bureau of the Communist Party of China (CPC) Central Committee. Liu was
former minister of railways.
Xinhua Back to Top
13. Xinhua: China's reform inspires fresh vigor in economy
The new Chinese government achieved a steady yet impressive start last year, and some remarkable new economic achievements were made as the country pushed its comprehensive reform into high gear. First, China has maintained its economic growth target for 2014 at about 7.5 percent, the third consecutive year the government has targeted that figure. China's economy grew by a robust 7.7 percent in 2013, one of the strongest performances globally. Amid slower growth and weak market demand globally, China contributed nearly 30 percent of global growth by striking a balance between its economic growth speed and growth quality. "China is a hero in the recent economic recession. If China hadn't been there, that recession could be much worse
for Europe and for the United States," said Eric Maskin, the Nobel
Economic Prize Laureate and professor at Harvard University.
Xinhua Back to Top
14. SD: Nod for trading platform in FTZ
The Shanghai Stock Exchange has secured approvals from regulators to set up an international trading center
in the free trade zone, the chairman of the
bourse said on Saturday. The move could pave the way for more foreign investors to tap the world's fourth-largest stock market by capitalization and also for foreign companies to issue shares in the world's second-largest economy.
Gui Minjie, chairman of the exchange, said significant progress has been made in recent
years allowing Chinese firms to list on overseas markets. However, no foreign firms are allowed to issue shares on Chinese
bourses. Speaking to reporters
at the sidelines of a National People’s Congress session in Beijing,
Gui said the exchange was preparing a team to study ways to develop the trading platform.
SD Back to Top
15. SD: Auto sales to rise by double digits in 2014
China’s auto market continued to grow strongly last month and is on track toward another double-digit growth for 2014, the China Association of Automobile Manufacturers said yesterday. Sales of passenger cars and commercial vehicles rose 17.8 percent from a year earlier in February to 1.6 million units. But the sales fell 25.9 percent month on month as dealerships were shut during the weeklong Spring Festival holiday last month. The combined sales of the first two months of this year rose 10.7 percent year on year to 3.75 million units. The government’s anti-pollution and frugality campaigns may cause sales to grow moderately at 10 percent this year compared with the 14 percent jump last year, according to the association.
SD Back to Top
16. SD: Unilever buys into Chinese water firm
Unilever made its biggest acquisition in China when it bought 55 percent of Qinyuan Group, a Chinese water purification company, that will boost the Anglo-Dutch consumer goods giant’s business in this sector globally. "We are delighted to make this strategic investment (in Qinyuan),’’ said Paul Polman, global head of Unilever, in a statement yesterday. “This deal will more than double the size of our water purification business and will bring together complementary technology...
all under the Unilever umbrella,” Polman said. He said the deal is the company’s biggest acquisition in China for more than 10 years. The companies, however, did not disclose the acquisition price.
SD Back to Top
17. NYT - DealBook: New movie studio is formed, with China and self-distribution in mind
Several years ago, the Hollywood producer Robert Simonds Jr.
began thinking about how a movie studio for today’s age — with the ascendance of China and a dizzying array of distribution channels — should look. Now Mr. Simonds and his backers, including TPG Growth and the Chinese investment firm Hony Capital, think they have the answer. The group plans to announce on Monday the formation of a studio with ambitions to fill in a space abandoned by bigger rivals. Its focus: $40 million movies featuring big-name stars, the kind of comedies and dramas that have lost some currency in Hollywood, displaced by giant summer spectacles. The group’s goal is to invest more than $1 billion in new projects over the next five years. Propelling the creation of the as-yet-unnamed studio are some of the biggest trends reshaping the film industry. Among them is the desire to tap into China, where a growing appetite for new movies has drawn courters from across Hollywood, including the likes of Mr. Simonds and Jeffrey Robinov, the former head of Warner Bros.
who is setting up his own shop.
NYT Back to Top
18. Reuters: Ackman to renew attack on Herbalife with aim on China business
William Ackman's hedge fund Pershing Square Capital Management LP said it would unveil on Tuesday details about Herbalife Ltd's (HLF.N) violations in China as the activist investor sharpened his attack against the nutritional products company. Ackman has called on regulators to investigate Herbalife's distribution model which he calls a "pyramid scheme," where a company makes most of its money by recruiting distributors rather than selling products to real customers. Herbalife has vehemently denied operating a pyramid scheme.
Ackman's "accusations are provably false," Chief Financial Officer John DeSimone said in a New York Times article on Monday. Pershing Square responded to the article by saying Herbalife failed to address a number of questions, including those about its sales practices and distributor remuneration.
Reuters Back to Top
19. NYT - Sinosphere: Life’s guarantees: Death, taxes and 7.5% Chinese G.D.P. growth
Few things in life are guaranteed, but a researcher at China’s powerful economic planning agency says one thing is assured: 7.5 percent growth this year. That promise was made by Song Li, who focuses on macroeconomics and finance at an institute under China’s National Development and Reform Commission, and cited in Monday’s People’s Daily, the flagship newspaper of the ruling Communist Party. By Mr. Song’s reasoning,
economic measures announced late last year
will deliver a “reform dividend.” That, combined with an improving global economy, means “the expected target of about 7.5 percent growth this year is guaranteed,’’ he said. Prime Minister Li Keqiang announced last week at the opening of the annual session of China’s National People’s Congress that the country’s goal for growth was “around’’ 7.5 percent this year, the same as last year but lower than past targets of 8 percent annual growth. But he did not guarantee that number, saying it would take “arduous efforts” to meet it, and blaming China’s past growth-at-any-cost model of “inefficient and blind development” for the country’s heavy air pollution.
Construction workers bicycled along a street in central Shanghai. Economic growth slowed last year to its lowest rate in more than a decade. Reuters
NYT Back to Top
20. Economist: Chinese politics - The brains of the party
Few people have heard of the journal Internal Reference of Ideology and Theory. It is published in such secrecy by the Central Party School in Beijing that only several dozen people read it. They just happen to be the most powerful people in China. Nicknamed the “express train”, it is one of a few vehicles trusted to carry ideas directly to the desks of President Xi Jinping and his colleagues on the Politburo. As the task of governing China has become more complex, so too has the question of how ideas percolate and filter to the top. Long gone are the days of Mao, when one man
disastrously set policy with utter disregard (and sometimes deadly scorn) for the input of his advisors or the welfare of the public. Mr Xi (pictured, in foreground at right) has called for the party to expand its brain capacity to handle such issues, urging the development of “think-tanks with Chinese characteristics”. In recent
years hundreds of new institutes and research
centres have been established, most of them government-affiliated in some way. Scholars and writers participate in a more open, though not totally free, public marketplace of ideas. Public opinion has more influence than ever on the shaping of policies on such social
flash-points as high housing prices, wealth inequality and pollution.
Economist Back to Top
21. Guardian: China to train leaders to manage online public opinion
Xinhua reports on government training
programme designed to control flow of online information on sites such as Sina Weibo.
Guardian Back to Top
