China International Political Economy

Chinese equipment maker, Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd, has announced it will buy the Hummer brand from now bankrupt GM according to the Philadelphia Inquirer.

The China investment is valued at $500 million. [Read more →]

Brazil’s Petrobras signed a $10 billion Chine investment agreement in return for oil according to Reuters.

The Chine investment with Brazil will lend Petrobras $10 billion to help extract oil from Brazil’s most recent discovery of reserves on the southern coast.

In return, China’s state oil firm Sinopec will receive 200k barrels of oil a day for the next 10 years.

General Motors Corp (GM) has announced it will start to export its China made cars to the US as soon as 2014 according to AP.

The China trade news estimates that GM will add as many as 50k in sales through China exports to the US.

Although the strategy is smart and leverages China’s comparative advantage of lower cost labor as compared to unionized Detroit, the US government may have a different view of the situation considering the current US China trade deficit and the US government’s ownership in the flailing auto giant.

The US China trade deficit hit $27.6 billion in March according to AP.

The 5.5 percent increase in the US China trade deficit from a month earlier is a result of lower US exports from large manufacturing companies such Caterpillar and Boeing. [Read more →]

Consumer price in the Chinese economy fell 1.5 percent in April according to AP.

The drop in the Chinese consumer price index makes it the third since February as the China economy fends off deflationary pressures.

Nonetheless, the Chinese government is confident that the Chinese economy will see recovery despite the over reaching impact of the global recession considering domestic spending may pick up due to lower prices. [Read more →]

The Deutsche Bank has announced to that expects the Chinese economy in GDP terms to surpass the US by 2020 according to MarketWatch.

The key driver of China’s economic growth in terms of GDP output according to Jun Ma, Deutsche Bank’s Chief Economist for Greater China, will be China’s rapid expansion in emerging market economies as the country leverages its $2 trillion in foreign exchange reserves.

Nonetheless, Ma continued that he still expects as many 18 months for China economy to enter into a new cycle of growth in light of the current global recession. [Read more →]

The Chinese government has suggested the idea of a new international reserve currency as concerns over US dollar weakness continue according to Bloomberg.

The news comes just a day after the China government stated it would continue its US debt buying policy.

The concern over future US dollar weakness by the Chinese government is valid as the US government continues to print money as a means to stimulate the US economy in the wake of the global economic crisis. [Read more →]

The Chinese government announced it will continue to buy U.S. Treasury bonds from the United State the largest China trade partner according to Reuters.

The vice governor of the People’s Bank of China, Hu Xiaolian, stated clearly that the further investment in US treasuries is an integral part of the Chinese government’s foreign exchange reserve management strategy.

While the news is positive, there is a growing concern that the Chinese government is losing interest in US treasuries as the global economic crisis continues to discredit American capitalism. [Read more →]

Coca- Cola Co.’s proposed China investment in the Huiyuan Juice Group sparked controversy as some say the ruling by the Chinese government is protectionist according to the Dow Jones Newswire.

The China government Ministry of Commerce defended its decision to block Coca- Cola $2.4 billion investment in China’s largest juice company saying that the decision was based purely on antimonopoly law and should in now way be interpreted as protectionist in nature.

China’s antimonopoly law is less than a year old and could deter future China investment by foreign firms should similar rulings continue. [Read more →]

The Chinese government has proposed that it China trade partners should cover a portion emissions cost according to Reuters.

The plan would penalize China importers that import products made on factories that emit large amounts of carbon dioxide in effort to reduce greenhouse gases.

Key China trade partners affected include the United States, Canada and Mexico as these three countries are the biggest importers of China goods. [Read more →]

Chinese exports declined 25.7 percent in February to mark a worst than expected drop in China trade according to the LA Times.

The poor China trade news has economists, investors and the Chinese government worried that the China economy may in fact be worst off than previously thought.

Despite the negative China trade number some consider the news as a positive way to continue to spur domestic demand. However, as job loses mount in factories due to a lack of demand for Chinese goods the likelihood of the Chinese poor and middle class spending rather than saving is doubtful. [Read more →]

The Chinese economy saw as decline in consumer prices marking its firth decline since 2002 according to Bloomberg.

China’s consumer price index which measures the price of food, clothing and fuel fell 1.6 percent from a year earlier in February.

The poor economic news is a blow to recent PMI news that indicated the China economy may in fact be recovering. [Read more →]

The China economy saw its Purchasing Managers Index (PMI) move to 49 in February according to Reuters.

The improved Chinese economic news marks an increase in China PMI for the third month in a row and up from its low of 38.8 in November.

While the positive PMI indication is a hopeful sign that the China economy is recovering, economist warn that is may still be too early to tell if such as recovery is sustainable. [Read more →]

Germany signed a $10 billion China trade agreement in a move to fight the damage of the current global economic crisis according to AP.

The China trade agreement involves trade deals with as many as 36 German companies in the automotive, medical, textile and electronic sectors.

The move by both nations is welcome news as protectionist rhetoric continues to creep into the dialog of governments as they struggle appease citizens in the wake of the global economic crisis. [Read more →]

Russia and Brazil both signed separate China trade pacts for future supplies of energy according to AP and Marketwatch.

The China trade pact with Russia involves a $25 billion loan to Russia in order to design, construct and operate a cross-border crude pipeline in conjunction with OAO Transneft.

The China trade pact with Brazil involves a similar loan to Brazil for $10 billion to develop deep-water oil reserves recently found of the coast of Brazil and to allow for Petrobras to future supply of crude oil to China Petroleum & Chemical Corp. and the China National Petroleum Corp. for refining. [Read more →]

China trade data shows that Chinese exports fell to a 13 year low with a decline of 17.5 percent in January according to Bloomberg.

The slump in Chinese exports continues to point to the challenges in US and Europe over the current global economic crisis which may spill over into protectionism as the China trade surplus reaches $39 billion.

With exports down significantly the Chinese economy is expect to slow to 6.1 percent this quarter which is the lowest since 1999. [Read more →]

Auto sales in the Chinese economy surpassed auto sales in the US for the first time according to AP.

735,000 new cars were sold into the China economy in January but only 656,976 vehicles were sold in the US the same month according to the China Association of Automobile Manufacturers.

Healthy cars sales is welcome news for the Chinese government as it offers some hope that domestic spending may drive the growth of the China economy as the US demand for Chinese exports continues to wane. [Read more →]

Inflation in the Chinese economy slowed to 1% as producer prices slowed to its weakest pace since 2006 according to Bloomberg.

Poor China economic news continues to challenge the Chinese government as it tries to spur domestic spending in the wake of the current global economic crisis.

As a result of concerns over the health of the China economy, McDonald’s Corp. has cuts it prices in order keep meals affordable for the Chinese middle class which is another clear sign of deflationary pressure. [Read more →]

The world’s largest semiconductor company, Intel, has altered its China investment strategy as it plans to close its Shanghai plant according to AP.

While change in Intel’s China investment strategy points towards the a reaction to global economic crisis, the plant closer is tied to a strategy to optimize its resources as the plant will move to central China, Chengdu, and leave its China headquarters in Shanghai.

The China government continues to actively encourage foreign China investment to move towards the central part of the country and away from the coast as a means to create jobs where they are most needed. [Read more →]

Yum Brands Inc., operator of the KFC, Taco Bell and Pizza Hut chains, has stated it will continue to invest in China despite the global economic crisis according to Forbes.

Yum considers its Chinese investment as part of a long term grow strategy and expects continued growth in 2009 with hopes that it investment in China and greater Asia with offset stagnate growth in the US.

KFC is now one o the most popular restaurant chains in China. [Read more →]

Manufacturing coming out of the Chinese economy slowed in January for a fourth consecutive month according to MarketWatch.

The Chinese economic news comes as the China Purchasing Managers’ Index continues to register below 50 coming in at 45.3 in January.

Nonetheless, the PMI number is up from its all-time low in November of 38.8 and 41.2 in December which suggests that the Chinese economy is seeing signs of stabilization. [Read more →]

The Chinese government and the China Central Banks let the yuan fall a day after the US accused the China government of currency manipulation according to Bloomberg.

The message by the Chinese government was hear loud and clear and acts as Obama’s first foray into his administration’s relationship with the China government.

The key driver of new spat between the Chinese government and the US is the simple word ‘Manipulation’ which is widely held in financial circles as politically incorrect. [Read more →]

Timothy Geithner, the new US Treasury Secretary, has criticized the Chinese government of currency manipulation according to Reuters.

The US accuses the China government and the China Central Bank of artificial creating a weaker yuan in order to gain a Chinese trade advantage in order to drive China exports.

While the Bush administration held a similar opinion, the new Obama administration is more critical of the Chinese government. The aggressive stance is likely design to appease US manufacturing sector as job losses continue. [Read more →]

The Chinese economy slowed to 6.8 percent growth in December after a previous gain of 9 percent for the last three months according to Bloomberg.

Key drivers to the slowing China economy and GDP are the decline in Chinese exports as the affects of the global economic slowdown continue to take hold.

The Chinese government is committed to maintaining its goal of 8 percent so the China economy will likely see reduced interest rates, a decline in the value of the Yuan and the creation of more jobs through government infrastructure projects. [Read more →]

China Foreign Direct Investment (FDI) dropped 5.7 percent in December to $5.9 billion according to Bloomberg.

The Chinese investment news marks a three month consecutive decline in foreign direct investment in China.

Academics at the Chinese Academy of International Trade and Economic Cooperation blame the decline of China investment on the extreme caution of multi-national firms to expand in China in the wake of the global economic slowdown. [Read more →]

The China economy has surpassed the German economy as the third largest in the world according to Bloomberg.

The Chinese economic news comes as China’s gross domestic product (GDP) has grow by 13 percent from last year for a total of $3.38 trillion as compared to Germany’s $3.32 trillion.

The amazing growth of the Chinese economy is largely attributed to the Chinese government’s adoption of free market policies and reform. The growth of the China economy has also allowed it to take a large stake in the world’s number one economy, the US, as China now holds as much as $652 billion in US Treasuries or US government debt. [Read more →]

A decline in Chinese trade activity has negatively impacted China’s foreign exchange reserves as China’s foreign exchange reserve rose only 27% according to MarketWatch.

China’s foreign exchange reserves increased a total of $462 billion from 2006 to 2007 but only $418 billion from 2007 to 2008.

Analyst also blame a decline in hot-money flows in addition to a slowdown in China trade for the decrease in reserves. [Read more →]

Chinese exports fell at its fastest pace in over ten years according to AP.

The poor China trade news comes as Chinese exports in December fell 2.8 percent from a year earlier and as the China’s foreign reserves continue to decline.

The larger concern of the Chinese government over the poor Chinese trade numbers is the impact on jobs due to the global economic slowdown and the prospect of social unrest if factory closers job loses and continue to mount. [Read more →]

The Chinese economy continues to show signs of slowing as the China Association of Automobile Manufacturers expects China car sales grow only 5 percent this year according to Bloomberg.

The Chinese economic news comes as sales of cars and light trucks have fallen consecutively over the last four months and continues to hurt both domestic and foreign car makers.

In in effort to spur sales, the China State Council is considering eliminating taxes altogether on cars and trucks with smaller engines as a means to drive growth in the Chinese economy. [Read more →]

The Chinese government via the Ministry of Industry and Information Technology has issued 3G licenses to the big three Chinese telecom firms according to Bloomberg.

The announcement is expected spur huge amounts of Chinese investment up to $41 billion to ramp up the development of high-speed mobile-phone services via third-generation networks by the firms China Mobile, China Unicom and China Telecom. [Read more →]