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Wednesday 17 December 2008
China Needs More Domestic Reforms
Beijing risks inflicting even more damage to the world economy by reflexively slowing market reforms in response to the financial crisis. China’s leaders should quicken, not slow, the pace of reform to help the country weather the storm.
Beijing risks inflicting even more damage to the world economy by reflexively slowing market reforms in response to the financial crisis. China’s leaders should quicken, not slow, the pace of reform to help the country weather the storm.
To stimulate the economy, Beijing has resorted to nonmarket measures that have worked in the past, like big infrastructure projects, to increase public spending.
Further, the yuan’s recent slide has prompted speculation that policy makers are deliberately encouraging a depreciation of the currency in the hope of supporting exports.
But those policies will not pull China out of this turmoil. The multiplier effect of government infrastructure investment is much weaker now than during the Asian financial crisis of 1997, because China’s roads and bridges are much improved. And with demand slumping almost everywhere abroad, a small yuan devaluation will not save exports, especially when other Asian currencies are seeing much bigger falls.
China has to switch from its export-oriented growth model to a new one driven by domestic demand.
To that end, Beijing should introduce further reforms, including improvements in the social security net, health care, education, land tenure and taxation, as well as proper energy and resource pricing mechanisms, said Jiming Ha, chief economist of China International Capital.
Political reforms are needed to facilitate the economic transition, according to Zhiwu Chen, a Yale professor. The state still controls three-quarters of the economy, and Chen suggests that Beijing should pool state-owned assets into funds and give its people shares to make them feel richer, enticing them to buy goods.
It is particularly important to enrich China’s villagers, because there are 800 million of them, Chen said. Beijing needs to loosen controls on village land and allow farmers more freedom to transfer their land rights to gain more wealth.
“China needs to act as aggressively as possible to boost consumption to replace exports,” said Paul Cavey, an economist with Macquarie Bank. “Structural reforms will help China to grow out of this crisis.”
China should draw the right lessons from the credit crunch. If it had moved more decisively on the currency front when the international community was clamouring for reforms, its economy might not have been at as much risk now. But some in Beijing seem to be gloating, on the other hand, that China may have avoided a bullet by not fully integrating within the global marketplace.
Fan Gang, an adviser to the central bank, said recently that if China had bowed to overseas pressure three years ago and sharply revalued the yuan, the result today would have been a steep drop in the currency and possible balance of payments crisis.
Professor Michael Pettis of Peking University, however, asserts that China might have been in much better shape today had it revalued the yuan by 10 percent to 15 percent in 2005, instead of the one small 2 percent revaluation it carried out. He argues that China would not have racked up such huge trade surpluses and its growth would have been more balanced.
By focusing on selling the yuan to buy dollars to suppress its currency, China has become hostage to its own monetary policy and created massive liquidity at home that contributed to high inflation earlier this year.
Following the revaluation and unpegging of the yuan from the U.S. dollar in 2005, the currency hit a peak against the dollar in September. As China’s export sector has reeled, Beijing has since allowed its currency to weaken a bit.
But it would be unwise to use currency depreciation to increase China’s ability to export overcapacity, because that would almost certainly lead to more trade friction - not a good long-term solution. Instead, Beijing should view the current crisis as a chance to regain its monetary freedom.
No one really knows how the yuan would move if the central bank let it trade freely. Just half a year ago, dealers were saying that the yuan would almost certainly rise in the absence of government interference, but now that the Chinese economy is slowing abruptly and exports have fallen in November for the first time in seven years, traders are less certain.
Still, the Chinese economy remains one of the healthiest in the world, so the yuan would be unlikely to depreciate much. That is why Yu Yongding, a former adviser to the central bank, says it’s time for the government to let go and test the real value of the yuan.
A 52-YEAR-OLD Singaporean, who accepted free air tickets from her “benefactors” to seek medical treatment overseas, was duped into becoming a drug courier, reported China Press.
She was arrested at an international airport in Sweden for possessing 5kg of heroin in her luggage.
The drug is said to be of high quality and worth RM3.3mil in the market.
The victim, who was reportedly suffering from haemorrhoids, had first befriended her Nigerian benefactors in Kuala Lumpur several months ago.
The Nigerians then agreed to sponsor her air tickets to South America and Europe where she could seek advice from medical experts to treat her ailment.
It was reported that the victim, who worked as a security guard, did not realise that the Nigerians were actually members of an international drug syndicate.
Endless nights Id play solitaire Imagining that you were here One night flights Such heartless affairs They froze the hopes of love in me You suddenly appeared Melted all my fears Filled me with the love I need
You make me smile again Like a child of three And I believe it will turn out right baby Oh you make me smile again Hold me in your arms Oh love, my love
Heart to heart Our souls intertwine Make love and float away with me Twins of flame A love so divine I want to spend my life around you Now, now I have the strength Now I have the hopes You give me all I need
To make me smile again Like a child of three And I believe it will work out right Oh you make me smile again Hold me in your arms Oh love, my love
You make me smile again Like a child of three Oh I believe well live a dream for two Oh you make me smile again Hold me in your arms Oh love, my love
Japanese carmaker Mazda Motor has spent 17.8bn yen ($184m; £123m) to buy back almost 7% of its shares from troubled US carmaker Ford Motor.
The Japanese company made the announcement the day after Ford decided to cut its stake in Mazda from 33.4% to just over 13%.
Ford has been hit by falling global sales and is seeking to raise cash along with its Detroit competitors.
Shares in Mazda fell 2.1% on Wednesday on the news.
According to media reports on Tuesday, the rest of Ford's stake in Mazda might be bought by trading houses Sumitomo and Itochu, Japanese insurance companies and car parts maker Denso.
Earlier this week General Motors sold its 3% stake in Japanese carmaker Suzuki for $230m (£156m).
Declining value
The possible sale of a 20% stake in Mazda was first reported more than a month ago.
At that moment, the stake was valued at $850m. However, based on Mazda's share price on Tuesday, the value of the holding has fallen to $543m, a quarter of what the stake was worth a year ago.
Ford first bought a stake in Mazda in 1979. It took control of the Japanese carmaker in 1996, saving it from potential bankruptcy.
The "Big Three" US car firms Chrysler, Ford and GM are seeking a total $25bn in emergency US government loans.
4 comments:
China Needs More Domestic Reforms
By Wei Gu, Reuters
17 December 2008
Beijing risks inflicting even more damage to the world economy by reflexively slowing market reforms in response to the financial crisis. China’s leaders should quicken, not slow, the pace of reform to help the country weather the storm.
To stimulate the economy, Beijing has resorted to nonmarket measures that have worked in the past, like big infrastructure projects, to increase public spending.
Further, the yuan’s recent slide has prompted speculation that policy makers are deliberately encouraging a depreciation of the currency in the hope of supporting exports.
But those policies will not pull China out of this turmoil. The multiplier effect of government infrastructure investment is much weaker now than during the Asian financial crisis of 1997, because China’s roads and bridges are much improved. And with demand slumping almost everywhere abroad, a small yuan devaluation will not save exports, especially when other Asian currencies are seeing much bigger falls.
China has to switch from its export-oriented growth model to a new one driven by domestic demand.
To that end, Beijing should introduce further reforms, including improvements in the social security net, health care, education, land tenure and taxation, as well as proper energy and resource pricing mechanisms, said Jiming Ha, chief economist of China International Capital.
Political reforms are needed to facilitate the economic transition, according to Zhiwu Chen, a Yale professor. The state still controls three-quarters of the economy, and Chen suggests that Beijing should pool state-owned assets into funds and give its people shares to make them feel richer, enticing them to buy goods.
It is particularly important to enrich China’s villagers, because there are 800 million of them, Chen said. Beijing needs to loosen controls on village land and allow farmers more freedom to transfer their land rights to gain more wealth.
“China needs to act as aggressively as possible to boost consumption to replace exports,” said Paul Cavey, an economist with Macquarie Bank. “Structural reforms will help China to grow out of this crisis.”
China should draw the right lessons from the credit crunch. If it had moved more decisively on the currency front when the international community was clamouring for reforms, its economy might not have been at as much risk now. But some in Beijing seem to be gloating, on the other hand, that China may have avoided a bullet by not fully integrating within the global marketplace.
Fan Gang, an adviser to the central bank, said recently that if China had bowed to overseas pressure three years ago and sharply revalued the yuan, the result today would have been a steep drop in the currency and possible balance of payments crisis.
Professor Michael Pettis of Peking University, however, asserts that China might have been in much better shape today had it revalued the yuan by 10 percent to 15 percent in 2005, instead of the one small 2 percent revaluation it carried out. He argues that China would not have racked up such huge trade surpluses and its growth would have been more balanced.
By focusing on selling the yuan to buy dollars to suppress its currency, China has become hostage to its own monetary policy and created massive liquidity at home that contributed to high inflation earlier this year.
Following the revaluation and unpegging of the yuan from the U.S. dollar in 2005, the currency hit a peak against the dollar in September. As China’s export sector has reeled, Beijing has since allowed its currency to weaken a bit.
But it would be unwise to use currency depreciation to increase China’s ability to export overcapacity, because that would almost certainly lead to more trade friction - not a good long-term solution. Instead, Beijing should view the current crisis as a chance to regain its monetary freedom.
No one really knows how the yuan would move if the central bank let it trade freely. Just half a year ago, dealers were saying that the yuan would almost certainly rise in the absence of government interference, but now that the Chinese economy is slowing abruptly and exports have fallen in November for the first time in seven years, traders are less certain.
Still, the Chinese economy remains one of the healthiest in the world, so the yuan would be unlikely to depreciate much. That is why Yu Yongding, a former adviser to the central bank, says it’s time for the government to let go and test the real value of the yuan.
S’porean tricked into carrying heroin
December 17, 2008
A 52-YEAR-OLD Singaporean, who accepted free air tickets from her “benefactors” to seek medical treatment overseas, was duped into becoming a drug courier, reported China Press.
She was arrested at an international airport in Sweden for possessing 5kg of heroin in her luggage.
The drug is said to be of high quality and worth RM3.3mil in the market.
The victim, who was reportedly suffering from haemorrhoids, had first befriended her Nigerian benefactors in Kuala Lumpur several months ago.
The Nigerians then agreed to sponsor her air tickets to South America and Europe where she could seek advice from medical experts to treat her ailment.
It was reported that the victim, who worked as a security guard, did not realise that the Nigerians were actually members of an international drug syndicate.
Smile Again - Manhattan Transfer
Endless nights
Id play solitaire
Imagining that you were here
One night flights
Such heartless affairs
They froze the hopes of love in me
You suddenly appeared
Melted all my fears
Filled me with the love I need
You make me smile again
Like a child of three
And I believe it will turn out right baby
Oh you make me smile again
Hold me in your arms
Oh love, my love
Heart to heart
Our souls intertwine
Make love and float away with me
Twins of flame
A love so divine
I want to spend my life around you
Now, now I have the strength
Now I have the hopes
You give me all I need
To make me smile again
Like a child of three
And I believe it will work out right
Oh you make me smile again
Hold me in your arms
Oh love, my love
You make me smile again
Like a child of three
Oh I believe well live a dream for two
Oh you make me smile again
Hold me in your arms
Oh love, my love
Mazda buys own shares from Ford
19 November 2008
Japanese carmaker Mazda Motor has spent 17.8bn yen ($184m; £123m) to buy back almost 7% of its shares from troubled US carmaker Ford Motor.
The Japanese company made the announcement the day after Ford decided to cut its stake in Mazda from 33.4% to just over 13%.
Ford has been hit by falling global sales and is seeking to raise cash along with its Detroit competitors.
Shares in Mazda fell 2.1% on Wednesday on the news.
According to media reports on Tuesday, the rest of Ford's stake in Mazda might be bought by trading houses Sumitomo and Itochu, Japanese insurance companies and car parts maker Denso.
Earlier this week General Motors sold its 3% stake in Japanese carmaker Suzuki for $230m (£156m).
Declining value
The possible sale of a 20% stake in Mazda was first reported more than a month ago.
At that moment, the stake was valued at $850m. However, based on Mazda's share price on Tuesday, the value of the holding has fallen to $543m, a quarter of what the stake was worth a year ago.
Ford first bought a stake in Mazda in 1979. It took control of the Japanese carmaker in 1996, saving it from potential bankruptcy.
The "Big Three" US car firms Chrysler, Ford and GM are seeking a total $25bn in emergency US government loans.
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