June 30, 2009

Hong Kong-China Trade Settlement in Yuan by July

Yesterday Chinese central banker Zhou Xiaochuan signed a Memorandum of Understanding with the Hong Kong Monetary Authority to allow trade settlement in renminbi - Yuan - by July between Hong Kong businesses and the Pearl River delta cities Shenzhen, Dongguan, Zhuhai, and Guangzhou and Shanghai, a move widely interpreted as a first step to internationalize China's currency....

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Beijing Ready to Back Down on Iron Ore Contracts?

Reuters reports that the Chinese financial mag Caijing quotes anonymous sources at a closed session of the China Iron and Steel Association saying that as the June 30 deadline will soon pass the desired price cuts for iron ore will have to be reexamined. The report notes that Beijing still expects better than the 1/3 off Japan got....

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Score one for the United Steelworkers - the quasi-independent US federal International Trade Commission has approved imposing punitive duties on imported Chinese tires on a graduated scale starting at 55% above normal duties (currently 4%). President Obama must approve the decision. The final report is due July 9 to the US Trade Rep (Ron Kirk) and President Obama.

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June 29, 2009

Beijing Ups Gas, Diesel Price at Pump

The NDRC, Beijing's powerful economic regulator, will allow an 8-10% increases for gas and diesel retail prices helping China's big fuel distributors such as PetroChina but putting a squeeze on domestic drivers. The commission is testing how Chinese respond to paying (somewhat) close to world prices for automobile petrol.....

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June 26, 2009

China to Get More Turkmenistan Gas

Russia and China appear set to split Turkmenistan's gas riches at least in terms of current production levels in a new deal briefly mentioned on Turkmenistan TV. Beijing will extend $4 billion (US dollars) in loans and Turkemenistan will up its deliveries of natural gas to China - via an as yet unfinished pipeline - to 40 billion cubic meters per year.

Turkmenistan has the 4th largest proved reserves of natural gas in the world (according to BP statistics) and European and American interests are actively trying to get new production diverted to Europe via an alternative pipeline to lessen Russia's grip on the EU and former Soviet Republics.....

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Chinese Michael Jackson Fans Besiege Websites

Fans of mega pop star Michael Jackson flooded his official Chinese website and other Chinese websites such as Sina.com with comments and remembrances. Rest In Peace, Michael Jackson....

June 25, 2009

Beijing Auto Opel Bid Back On with GM?

According to Bloomberg, GM is signing non-binding agreements with Beijing Automotive and a Belgian bidder for its European Opel division. The German government backed Magna International is hitting stumbling blocks with GM over technology transfer. Beijing Auto is sweetening its offer and will require no government loans or guarantees....

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June 24, 2009

China Gets Kurdistan Oil in Sinopec Addax Takeover

Sinopec will take over Canadian oil exploration and production firm Addax Petroleum in a deal valued over $8 billion (Canadian dollars). With the acquisition Sinopec will get concessions at the Taq Taq field of Kurdistan in Iraq and unwittingly (or not?) enter the dramatic world of Iraq oil politics....

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Reunification Watch: Washington, Beijing Meet on Taiwan Arms

In separate meetings in Washington and Beijing, US and Chinese officials discussed future arms sales to Taiwan with the Obama administration saying it is "very supportive of a lessening of tensions across the strait." At issue is the near decade old arms package including F-16s and diesel submarines.

Is this a sign that the Obama administration is open to allowing for peaceful resolution between Beijing and Taipei - the intent of the Shanghai Communique - rather than an escalating arms race courtesy the Reagan era Taiwan Relations Act which is just a cover for Congressional pork to military industrial conglomerates such as Lockheed-Martin, manufacturer of the F-16 jet fighter?....

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June 23, 2009

Gwadar Port Update

Last week Pakistan PM Gilani said the port at Gwadar is operational and that the federal government was committed to linking the port to Pakistan's road and rail networks. However Balochistan Chief Minister Raisani continues to demand control of the port at the provincial level and that the Pakistan federal government cancel the operating agreement with Port of Singapore Authority....

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TRADE WAR: WTO Complaint Filed on China Exports Controls

The Obama administration and the EU are joining forces to (try to) prop up their ailing steel industries. WTO complaints filed today claim Beijing has imposed restraints on exports of key raw materials for steel making also used in aluminum and chemical processing. Key issue, China's control of global coke production and Beijing's ability to reduce supply for non-Chinese companies. This will be an interesting case to watch.....

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June 22, 2009

China Secures Kuwait Oil with Giant Refinery Deal

A big Sino-Kuwait refinery project, estimated at $9 billion (US dollars) with capacity to process 300,000 barrels of Kuwaiti crude per day is close to breaking ground. Environmental concerns moved the location from the Guangzhou urban agglomeration to a coastal site most likely Zhanjiang, Guangdong, which already has oil terminal facilties. Kuwait aims to export 500,000 barrels per day to China by 2015 much of it for the use of the refinery. Involved in the deal are Kuwait Petroleum Corp., Sinopec, and others....

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June 19, 2009

All A Twitter Over Iran

Beijing cautions Washington over intervention in Iran in an editorial in the China Daily saying attempts to push "the so-called color revolution" will prove very dangerous. The "twitter" or "green" or whatever "revolution" has opinion pages around the world buzzing with absurd comparisons between the turmoil in Tehran and Tiananmen 1989. But how many really understand the byzantine complexity of Iran's political system? An interesting editorial by a former Indian diplomat sheds some light on pieces of the Persian puzzle (link).

One thing is paramount: Iran is by this writer's estimate the 12th largest economy in the world and is number 2 in oil and gas reserves. Further, the population is very young and growing. There are around 70 million Iranian citizens representing a vast potential market for every type of consumer goods. Iran like China in the 70s will return to the world stage and what is really at play is who will benefit and share in Iran's future growth....

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June 18, 2009

China BioEnergy Center Opens

The first bioenergy research center in China has opened at Nanning, capital of Guangxi Zhuang autonomous region that borders Vietnam. The center will focus on native crops such as cassava and sorghum. Currently a cassava for alcohol project makes 200,000 tonnes a year in the Guangxi city of Beihai.....

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"Buy America" Meets "Buy China"

The hoopla in American opinion pages, er, media on Beijing's "Buy China" direction for government procurement smacks of hypocrisy to this writer. President Obama allowed the American Recovery and Reinvestment Act of 2009 to maintain its "buy America" provisions and has publicly stated that he believes the $1 trillion spent every year on defense should adhere to "buy America". Further, the Obama administration is caving to US manufacturers in anti-dumping cases involving non-government procurement by US importers.

Fact is, the USA federal government under W and now Obama has failed year after year to pressure Beijing on its commitment to join the WTO Government Procurement Agreement. Could it be because Uncle Sam is reluctant to give up his protectionist prerogative too?

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June 17, 2009

New High in Russia-China Bilateral Relations

Hu Jintao and Dmitry Medvedev traveled to Moscow after the Shanghai Cooperation Organization to solidify numerous deals and plans for much closer relations between the two Eurasian giants. Hu also met with PM Vladimir Putin. In an historical reversal, Beijing will lend Moscow billions to buy Chinese machinery to close a technology gap in Russia.

A half century ago the shoe was on the other foot and in the midst of a little understood dispute Moscow withdrew such assistance to Chairman Mao reducing Mao's influence until he was (briefly) voted out of power, an external cause to the Great Proletarian Cultural Revolution. Relations with Russia (in its Soviet Union incarnation) deteriorated to the point of a border war in 1969 that helped force the reproachment with the USA under President Nixon. How times change....

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June 16, 2009

Setback for China WTO Government Procurement Commitment

According to the London Financial Times today, Beijing expressed an explicit "Buy China" policy in government procurement. If true, this is a serious setback in China's long overdue accession to the WTO Government Procurement Agreeement (GPA). China is required under its WTO protocol to adhere to the GPA but there is no set time period. After being an observor to the GPA from 2002-2006, Beijing filed to join the agreement at the very end of 2007. Since that time little progress has been made.

Beijing may be responding to the explicit "Buy America" provisions in the US federal government's stimulus packages and defense spending. As a candidate, President Obama indicated he supported "Buy America" in defense procurement.

Are these more signs of looming trade war....?

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China Shed $4.4 Billion of US Treasuries in 1 Month - OR Not?

UPDATE: Brad Setser of the CFR analyzes Beijing's actions in US Treasuries and sees not a reduction in overall holdings but a slowing of purchases is evident.

Beijing sold near $4 and half billion (US) dollars worth of Treasury securities between March and April and the overall value of China's holdings fell for the first time in nearly a year to $763.5 billion.

Meanwhile, the Shanghai Cooperation Organization summit in Yekaterinburg, Russia, could be the most important meeting this year as China, Russia, and central and south Asia nations discuss moving their foreign exchange reserves into the IMF.....

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June 15, 2009

China - Pakistan Strengthen Ties

The Shanghai Cooperation Organization is meeting at Yekaterinburg, Russia, and observor nations Pakistan, India, and Mongolia are in attendance. Iran - the first observer nation invited to the group - is absent due to a contested presidential election.

At the meeting China and Pakistan agreed to enhance the China-Pakistan Cooperative Partnership. Pakistan pledged top level support for the estimated 10,000 Chinese currently working at over 100 development projects in the country. No specific mention of Gwadar port that this author can find at this time....

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New on The Street: NEP

Today is the first trading day for North East China Petroleum under ticker symbol NEP. The private company operates 4 oilfields in north China and has an agreement with PetroChina to sell its crude in China. This is an interesting opportunity to directly invest in the booming Chinese energy sector....

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June 12, 2009

China Environmental Protection Ministry Halts New Dams

The Chinese Ministry for Environmental Protection has halted approvals for any new dams on the Jinsha River which forms the border between Sichuan and Tibet and the Nu River in Yunnan, as yet unexploited.

Malcolm Moore, reporting from Shanghai for the British Telegraph, says the halt affects 8 hydropower dams developed by the Huaneng and Huadian power companies - two of China's biggest listed producers.

But details are not clear. The slant is that the ruling is a victory for China's growing green movement. The huge Xiangjiaba hydroelectric dam along the lower reaches of the Jinsha, however, is not affected. Just this week Siemens and China State Grid said construction of the ultra high voltage transmission line from Xiangjiaba to Shanghai will be sped up....

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Chery to Open 4th Plant, Build Heavy Trucks

The Chinese auto sector boom continues. Leading privately-held auto maker Chery announced it raised nearly half a billion (US) dollars from domestic investors and will build a fourth production factory to build heavy trucks....

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June 11, 2009

China Has More Oil Than Mexico, More Gas Than Kazakhstan, Number 3 in Coal, Number 1 in Hydro

British Petroleum is out with its oft-quoted annual Statistical Review of World Energy with unsettling news - the world's proven oil reserves are down. China ranks in the top 20 in all energy categories. Following is breakdown of Top 20 Nations by Reserves of Oil, Gas, and Coal, and by Consumption/Generation of Hydro and Nuclear Power, and overall Energy Consumption:


1. Saudi Arabia
2. Iran
3. Iraq
4. Kuwait
5. Venezuela
6. UAE
7. Russia
8. Libya
9. Kazakhstan
10. Nigeria
11. USA
12. Canada
13. Qatar
14. China
15. Angola
16. Brazil
17. Algeria
18. Mexico
19. Norway
20. Azerbaijan


1. Russia
2. Iran
3. Qatar
4. Turkmenistan
5. Saudi Arabia
6. USA
7. UAE
8. Nigeria
9. Venezuela
10. Algeria
11. Indonesia
12. Iraq
13. Norway
14. Australia
15. China
16. Malaysia
17. Egypt
18. Kazakhstan
19. Kuwait
20. Canada


1. USA
2. Russia
3. China
4. Australia
5. India
6. Ukraine
7. Kazakhstan
8. South Africa
9. Poland
10. Brazil
11. Colombia
12. Germany
13. Canada
14. Czech Republic
15. Indonesia
16. Greece
17. Hungary
18. Pakistan
19. Bulgaria
20. Turkey


1. China
2. Canada
3. Brazil
4. USA
5. Russia
6. Netherlands
7. India
8. Venezuela
9. Japan
10. Sweden
11. France
12. Colombia
13. Italy
14. Mexico
15. Argentina
16. Switzerland
17. Austria
18. Turkey
19. Pakistan
20. Chile


1. USA
2. France
3. Japan
4. Russia
5. South Korea
6. Germany
7. Canada
8. Turkmenistan
9. China
10. Sweden
11. Spain
12. UK
13. Belgium+Luxembourg
14. Taiwan
15. Switzerland
16. Czech Republic
17. Finland
18. Slovakia
19. Bulgaria
20. India


1. USA
2. China
3. Russia
4. Japan
5. India
6. Canada
7. Germany
8. France
9. South Korea
10. Brazil
11. UK
12. Iran
13. Italy
14. Saudi Arabia
15. Mexico
16. Spain
17. South Africa
18. Ukraine
19. Indonesia
20. Australia

*I believe this list may be the most sensible ranking of the world's most important economies.

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IBM Opens New Innovation Center in Beijing

IBM, one of many American multinationals banking on Chinese economic growth to fuel future earnings, opened a Global Railway Innovation Center in Beijing to collaborate on high speed rail and other rail technologies. Railway building is a major component of Beijing's stimulus plans and 70 railways are planned for 2009 with over 5,000 km of track. Alsthom of France and the German firm Siemens - both leaders in rail technology - are active in China and parties to several joint ventures....

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June 10, 2009

US Congressman Says China Buying More Gold

US House of Representatives member Mark Kirk, Republican from Illinois, talked to FoxNews about his recent trip to China and said China plans to buy $80 billion (US dollars) of gold. In addition to this bit of news, Congressman Kirk claims mandarins in Beijing told him that they were losing confidence in the dollar....

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Water is new Hot Spot for China Investment

A Shanghai spokesman for French water conglomerate Suez says Chongqing is "strategic" to their growth in China. Beijing has allocated $35 billion (US dollars) of its big stimulus effort to water projects. Other companies currently active in China are rival French water firm Veolia, Falcon Waterfree of USA and JDL Environmental. (Source)....


US-China Trade Deficit Increases

Plus ca change, plus c'est la meme chose... Trade figures for April released today in Washington show an increase in the US-China trade deficit to $16.8 billion - almost as much as America's trade deficit with the EU, Mexico, OPEC, Japan, and Canada combined.

While most import categories continued to decline in the great rebalance of global trade (aka the "Great Recession" or aftermath of the "Panic of '08") consumer goods increased around $400 million.....

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June 09, 2009

Battle for Gwadar Port Heats Up

Declaring Gwadar the provincial "Winter Capital", Balochistan Chief Minister Nawab Muhammad Aslam Khan Raisani, well known for his views on Baloch autonomy, wants to toss out the multi-year agreement with Singapore Port Authority to manage the deep water port largely developed by China and control it himself.....

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Shanghai Pride

The Rainbow League, a Shanghai gay sports organization and American expat Tiffany LeMay are holding the first ever Shanghai Gay Pride under the radar (as gay and lesbian stuff is in China) with exhibitions and film screenings all week. The unofficial pride will culminate with a big party this Saturday June 13. The author remembers when several Shanghai drag queens tried to throw a gay pride event about 10 or so years ago only to be quickly shut down so to speak by local police. How the times are a changin' in Shanghai....


June 08, 2009

TIT-FOR-TAT: China Anti-Dumping Complaint Against USA, Russia

China's Commerce Ministry will investigate US subsidies on steel and Russian support for steelmakers focusing on grain oriented flat-rolled electrical steel products used in the production of power transformers and for other high-tech uses. The announcement follows two recent anti-dumping cases aginst China active in the United States.....

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Trina Solar to Open California Distribution Center

Chinese solar PV maker Trina Solar (listed on the NY Stock Exchange under symbol TSL) is set to open this month a warehouse at the Port of Oakland, California. Indications are the Trina operations will result in net job creation for local workers at the facility....

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June 05, 2009

ChongQing Booms and Shops

Amid all the reports today of a deadly landslide in a mining area of southwestern China's mega city ChongQing is news that the municipality will go on a $8 billion foreign shopping spree searching the world for land and resources for its booming economy and approximately 30 million citizens. This week ChongQing also broke ground on the first ever Free Trade Zone inside China. Previously FTZ were located only along China's export-oriented eastern coast. The Cuntan Bonded Area will focus on processing industries and opening up the cities of the interior and western regions. Danish shipping giant Maersk will jointly develop the inland bonded port under a 2007 agreement....

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Fiat-Guangzhou Auto to Build Linea in China

Italian carmaker Fiat and Guangzhou Automobile will invest nearly three quarters of a billion (US) dollars in a plant to manufacture 160,000 Fiat Lineas a year. Final approvals including the actual location in the Pearl River Delta region are forthcoming and include significant environmental protection....

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June 04, 2009

Chinese Electric Cars Coming To California

Coda Automotive, a startup out of Santa Monica, California, will introduce an all-electric sedan this year with possible imports beginning second Half of 2010. The car itself is by Harbin, Heilongjiang, based Hafei Automobile - part of the giant AVIC conglomerate - and the lithium battery is by Tianjin Lishen Battery, a domestically listed company. The car body and interior appears to be a much improved version of Hafei's Saibao III or V sedan. Coda Automotive will first offer the car in California only but envisions 20,000 or more in production with nationwide sales....

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June 03, 2009

TAM @ 20

In the years since June 1989 China has changed enormously.

Since that time the USA and the world have witnessed several genocides (Rwanda and Bosnia for example).

Yet Americans are peculiarly fixated on what happened in Tiananmen Square that summer in 1989.

It is time to stop dwelling on this one particular event in modern Chinese history. We must look at our own past, see our own experiences, and not pass judgement blindly.

In the words of the memorial to the Kent State massacre, we should "Inquire, Learn, Reflect"....MORE:

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TRADE WAR: Hearings on Chinese Tires

The latest product demanding protection from Chinese imports is the tire or more accurately the many millions of Chinese made tires sold in the USA. Once again the challenge is brought by the United Steelworkers union representing some 15,000 tire manufacturing jobs. Businesses that import and sell tires from outside America counter with the reality that US manufacturing capacity is nowhere near capable of supplying the giant requirements for tires nationwide.

The hearings before the quasi-federal International Trade Administration allow Democratic Party delegations from Congress including newly minted Dem Arlen Specter of Pennsylvania a chance to talk tough on China for their constituents. A ruling is expected at the end of the month....

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June 02, 2009

Global Rebalance: Italy, Malaysia Exports to China Up

An interesting effect of the current great rebalance of global trade, while overall trade figures are down for nearly every country, there are examples of improving economic conditions based on exports to China. For example, April exports to China were up over 8% in Italy. Likewise, Malaysia exports to China are increasing. In trade at least, the multipolar world may already be here....

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Hummer Sold to Sichuan Tengzhong

As reported here back in February, a Chinese company wanted GM's Hummer division and today it is announced that Sichuan Tengzhong Heavy Industrial Machinery will buy Hummer. GM says its Louisiana plant will continue to make Hummers to 2010.
The Hummer became an iconic American brand after its wide use in the first (US) Gulf War or Operation Desert Storm in 1990-91. Now it will turn Chinese....

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US Trade Rep Kirk on China: Market Access Key

Speaking to the US-China Business Council today, Ambassador Ron Kirk, US Trade Representative, said " The health and growth of our bilateral relationship with China will depend, in part, on this job-creating access to China's markets for U.S. goods, services and investment." Kirk emphasized that the Obama administration will rely on diplomacy and enforcement of China's WTO trade committments. In conjunction with the meeting, the US-China Business Council released a nifty webpage (click for link) to see the major impact on US export growth to China by state and Congressional district....

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June 01, 2009

In Beijing Geithner Offers "Mutual Respect"

Speaking at Peking University today US Treasury Secretary Geither said " the United States will fully support having China play a role in the principal cooperative arrangements that help shape the international system" in a "spirit of mutual respect." Geither had praise for Beijing's quick actions during the Panic of '08 but otherwise gave no specifics and no insight into how US demands for Renminbi currency reform will be addressed. Also today Treasury announced the appointment of two new point persons for China: David Loevinger as "Executive Secretary and Senior Coordinator for China Affairs" in Washington and the appropriately named David Dollar as "Economic and Financial Emissary to China" in Beijing....

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Dongfeng Nissan in Minicar Venture

Dongfeng Nissan Passenger Vehicle Company, a Sino-Japanese joint venture, will begin mass production of the Nissan March minicar by 1 Quarter 2010. Dongfeng and Nissan plan to work together to expand Nissan sales in China aiming for 380,000 vehicles this year.

Meanwhile, as GM crumbles into bankruptcy today, the head of GM China Kevin Wale says the GM-Shanghai Automotive subsidiaries are fine and they have confidence in their future plans....

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