Exploring and keeping readers up to date with the growing economic and political ties between China and South America. Including all the good stuff: Commodities, Energy, International Finance, South-South Cooperation, Microfinance and more
The BBC grew some "huevos" today and ran a report on the ongoing use of near slave labor on Bolivian plantations. Pretty appalling to think this is going on in the Americas.
A friend of mine, whose father made his way to the United States selling cabbages on the streets of post-war Korea proposed a question to me the other day. "What is the big deal in particular about Bolivia? After all, you have seen Slumdog Millionaire, there's really poor people everywhere and I'm sure India has a lot more and a much dire levels of poverty than Bolivia does."
Perhaps his perspective has some truth to it. It does not however, change the fact there is a democratic country in the Americas which has pockets of slavery. I say pockets because I am sure this is a one of the extreme examples the media has chosen to focus on, hurting the Bolivian farmers out there who are good people, who do treat their workers fairly and are just trying to earn a living.
"A senior UN official recently described as "unacceptable" the alleged forced labour of indigenous people by landowners in Bolivia. The BBC's Andres Schipani reports on the contentious issue of "slavery" from the eastern province of Santa Cruz."
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"All my life I've been here and at the end of it I have nothing and have nowhere else to go," she says.
Her hamlet of 13 Guarani families - all workers on the plantations near the town of Camiri in Alto Parapeti region in the eastern province of Santa Cruz - built a school but ranchers destroyed it, she says.
"They didn't want us to learn, they want things to be like they always have been," Teresa's granddaughter, Deisy, says.
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The other side, a.k.a, the owners of the large plantations has this to say for themselves. "The idea that there is slavery here is absurd … Offering loans and selling food is not a debt trap but a favour because there are few banks and shops in the region," says Eliane Capobianco of the rancher's association Fegasacruz, in the eastern city of Santa Cruz, the opposition heartland. Click here for the complete BBC report
Jim Rogers sits down with Bloomberg host Haslinda Amin in his home base of Singapore. Haslinda gets a full twenty minutes to test his patience while she asks what his opinions are on investing in a variety of investment categories. Commodities. Currencies. North American Natural Gas. Yen Carry Trade. Agriculture. Equities. ETF's.
As usual, Jim Rogers is sticking to what he knows best-raw materials. If you're a new reader, or have not heard of Jim Rogers definitely run a search on the right of his name to bring up past posts and videos including him.
Japan never ceases to amaze me. When I first traveled to the island I was an angry, impatient New Yorker. I decided to stop over in Japan to visit a old friend of mine on route to Beijing for a semester abroad.
I had no idea what I was getting into. I spoke a bit of Chinese, but no Japanese, and had prepared little else besides a youth hostel in Tokyo for my first week in the country.
I got off the subway at Asukasa, drenched in sweat from some of the worst August humidity I have ever felt in my life—and trust me I have felt bad humidity... The beginning of the Amazon in the province of San Martin, Peru or the swamps of Louisiana do not compare.
After twenty minutes of wandering I was drenched from head to toe in sweat. I walked into a laundry mat and before I could talk three workers quickly helped me inside. They handed me a glass of water, a cold washcloth and offered me a seat.
The workers got on their store computer, found map quest directions and then proceeded to carry my bags for twenty minutes up some intense hills, across ridiculous intersections and all the way to the door of my hostel. They then refused a tip. I did not even know what to say, except, “how do you say thank you in Japanese?”
"Ari-ga-to"
Today, Bloomberg ran a interesting story on the return Yen carry trade, which is when traders in Japan take out cheap loans at Japan's 0.1% interest rate and invest it in higher yielding foreign bonds where the interest rate is higher.
The article talks about the return of “housewives.” Housewives you say? As it turns out, housewives usually manage investing their family savings. Japanese families currently have a incredible $14.9 trillion in savings!
Ron Harui of Bloomberg writes:
“They’re seeking higher returns after the central bank cut its benchmark interest rate to 0.1 percent. Investors who sell the yen against the euro would earn 3.4 percent by year-end, compared with 0.25 percent in one-year yen-denominated deposit accounts, data compiled by Bloomberg show."
Question: If Japan has all this capital sitting on the side lines, would it not be wise to figure out a way to invest a higher portion of it in Japan?
Japan's central bank is essentially stuck in a catch 22. On one side the low interest rate stimulates growth by encouraging lending. However, if the money being lent is invested internationally in foreign bonds that yield a higher rate of return than a Japanese savings account, the true goal maintaining low interest rates is not being achieved.
The way things stand at the moment, Japanese savers are technically helping fund Australia's huge budget deficit through the purchase Australia's higher yielding bonds.
I'm sure the matter is more complicated than my gross simplification. I welcome comments from someone more familiar with Japan's financial sector.
One year ago, Sichuan Province was struck by a devastating 8.0 magnitude earthquake. Thousands of visitors flocked to Sichuan province to pay their respects to the victims of the May 12th earthquake which killed over 80,000 people.
In Beichuan, a valley town totally wiped out by the 8.0 magnitude quake, family and friends gathered to light incense and ritual paper money to comfort the dead.
“I feel that this earthquake is not over yet, every time I see something related to the earthquake I feel like crying." ~ 20 year old XiaoYao who lost her brother and sister
“I feel so sad and heart broken and it hurts in my heart. I did not want to come back to this town. It brings back so many bad memories.” ~ 46 year old Xiao Caigui who lost over 30 relatives
The worst devastation was in Wenchuan where nearly 24,000 died or went missing and Beichuan county where 20,000 of its 160,000 residents perished in the quake.
Last year China hosted the Olympic games. It was also forced to deal paralyzing snow storms, worse than usual flooding during monsoon season (their equivalent of hurricanes) and oh yes... the most devastating earthquake in terms of power and damage since the quake which caused the Tsunami in few years back.
Optimism about the ending of the U.S. recession and its impact on future demand for natural gas coupled with positive comments from large domestic gas suppliers about the trend in gas supplies has ignited a rally in natural gas futures prices during the past week. Natural gas prices jumped from a low of $3.25 per thousand cubic feet (Mcf) on April 27th to a recent high of $4.31 per Mcf last Friday. A near 33% rise in gas prices in such a short time-period reflects a severely oversold market. The dramatic price run-up may have more to do with commodity short-sellers than people buying into the view of a sustainable and healthy recovery for the market.
There were several very positive statements made by the CEOs of major natural gas producers about the changing supply/demand dynamics of the business on their company earnings conference calls with analysts. Mark Papa, CEO of EOG Resources, Inc. (EOGNYSE), said he expects the impact from the decline in gas-oriented drilling will result in natural gas production falling by 4.5 billion cubic feet per day (Bcf/d) by the end of the year.He believes the resulting North American natural gas production declines could be reversed by early in 2010 if $7 per Mcf gas prices return or the gas-directed rig count falls below 650. This view compares with that of the Petroleum Industry Research Association (PIRA) that believes gas production will be 3 Bcf/d lower at year end.
Equally bullish was Aubrey McClendon, CEO of Chesapeake Energy (CHK-NYSE), who sees gas storage being full by October and that gas production would be 10% lower at year-end compared to 2008. That implies natural gas production should fall by 4 Bcf/d. Should these estimates prove accurate, the supply drops would go most of, if not all, the way to wiping out the perceived supply/demand imbalance in the domestic gas market of about 5 Bcf/d due to the falloff in industrial and commercial consumption related to the economic recession and credit crisis. Click here for complete article from Rigzone
[China - Venezuela] -- CNPC, Venezuela Plan to Build Two Oil Refineries in China China National Petroleum Corp. and Venezuela plan to build two oil refineries in China, Jiang Jiemin, the president of the Chinese company, told reporters in Beijing today.
[China - Trinadad & Tobago] -- Alutrint: Chinese labor needed due to lack of local expertise China's EXIM bank placed as a condition on its consent to provide a US$400mn loan to the Trinidad & Tobago government to build the Alutrint aluminum smelter - in the La Brea region of Trinidad island - that the project hire Chinese contractor CMEC to provide labor and technology for the plant, Alutrint manager of communications and community relations Josieann Richards told BNamericas.
[China - Russia] -- Chinese Envoy to Russia: Oil Pipeline Serves Strategic Goals of Both Sides The construction of the China-Russia oil pipeline conforms with the strategic goals of China and Russia to diversify the former's energy imports and latter's energy exports, Chinese Ambassador to Russia Liu Guchang has said.
[South Korea - Peru] -- Peru hopes to complete 70% of FTA talks with Korea this week Peru hopes to complete 70 percent of free trade negotiations with South Korea this week because of the similarities found between the two negotiating teams, allowing them to progress quickly, Peruvian chief negotiator Nathan Nadramija said Monday.
During the first round of FTA Negotiations in Seoul on March 16, both countries successfully concluded four chapters relating to electronic commerce, border services, as well as two other chapters related to institutional issues.
Luis Carlos Kinn, manager of Jindal subsidiary Gas to Liquids Internacional S.A., confirmed the successful completion of the first production test at the well drilled in the El Palmar field, some 50 kilometers (31 miles) from Santa Cruz, the capital of the likenamed eastern province.
[Chile - Bolivia] -- Chile Open to Tunnel Proposal Giving Bolivia Access to Sea The Chilean government is willing to study the proposal by a group of architects that would provide landlocked Bolivia with access to the sea through a tunnel to an artificial island in the Pacific Ocean.
[Venezuela - Angola] -- Venezuelan Government Bank BANDES To Open Branch in Angola Jesus Alberto Garcia, Venezuelan ambassador to Angola, stated in an interview with Radio Nacional de Angola that Banco de Desarrollo Económico y Social de Venezuela (BANDES), the state development bank of Venezuela, will open a branch in Angola. He added, “This is one of the main things President Chavez wants to do with Africa.” Branches of BANDES outside of Latin America and the Caribbean include Syria and the Republic of Mali.
[Latin America - Spain] -- Spain Wants Closer Ties with Latin America Spain’s King Juan Carlos and Prime Minister Jose Luis Rodriguez Zapatero said Monday that the upcoming bicentennials of Latin American independence should be used to promote Spanish and European Union ties to the region.
James Reynolds is the BBC's Beijing correspondent. The following excerpts and video have been been compiled from his most recent article, published at his BBC blog.
"I've just been down to Sichuan to see what things are like a year after the earthquake which killed more than 85,000 people...."
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The Sichuan earthquake has now taken a prominent place in this national story. The government's response was portrayed as quick and compassionate. The Premier, Wen Jiabao, was cast as the noble hero - the leader who cried with the bereaved and who promised that fallen towns would one day rise again.
This is the official legend of the earthquake. It's what ordinary Chinese people are told - and it's probably what most of them genuinely believe as well.
On a hilltop overlooking the ruins of the town of Beichuan, hundreds of Chinese tourists now queue up to buy pieces of this legend. Vendors sell picture books and DVDs of the disaster, incense and candles to be placed on memorials.
But these tourists know almost nothing of the parents' story. Since early June 2008, the Communist Party has banned the Chinese media from covering the parents' campaign.
Over the last year, local officials have harassed, sometimes even attacked the parents in an effort to keep them quiet.
Click here to access Reynolds full article @ his BBC blog.
[South-South Cooperation] -- China, Middle East -- Reuters Analysis -- by Alan Wheatley, China Economics Editor
Alan Wheatley is an intelligent journalist with years of experience reporting news in both Taiwan and mainland China whom I respect a great deal. Alan's article does a superb job of combining hard data with different points of views from experts on all sides to present a unbiased report.
This is the general principle Reuters journalists follow. By providing the reader with the necessary perspectives and hard data to back them up, the reader is expected to make their own decision on the significance of the article.
As there always are, I am sure some bad apples exist. After a internship with Reuters Beijing Bureau back in 2006, I can personally testify that the Beijing staff makes a concerted effort to uphold the journalist's creed and report both sides of the story.
En route to the Silk Road
With no fanfare, a $5 billion (3.3 billion pounds) refinery in which Saudi Aramco has a 25 percent stake quietly began processing oil a couple of weeks ago in eastern China.
The start-up of the Fujian plant, half-owned by top state-owned refiner Sinopec (0386.HK), testifies to the thickening trade and investment ties between China and the Arab world.
China's exports to the 22 members of the Arab League jumped to $62.3 billion last year from just $7.2 billion in 2001, the year China joined the World Trade Organisation. The share in total Chinese exports rose to 4.4 percent from 2.7 percent.
Imports from the Arab world over the same period grew to $70.3 billion from $7.5 billion, doubling the share in total imports to 6.2 percent, according to official Chinese data.
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Nowhere is this more in evidence than in Yiwu, a town in eastern China whose vast wholesale markets draw traders from across the globe in search of cheap consumer goods.
"We don't see too many Europeans any more. These days, most of our customers are from the Middle East," Zhu Shanshan, a sales representative at Dove Candle, which sells scented candles and handicrafts, said on a recent visit to Yiwu.
Oil followed equity markets lower today, reversing gains made last week after the U.S. economy lost fewer jobs than expected. Crude inventories rose to the highest since 1990 in the week ended May 1 as fuel consumption tumbled, an Energy Department report showed last week.
[Reuters Video] - China's central bank says the $580 billion stimulus measures are having a better-than-expected impact on the economy, with more action likely.
[Brazil - Argentina] -- Brazil, Argentina Working on $1.5 Billion Credit Line Brazil and Argentina are nearing agreement on a “precautionary” measure to create a $1.5 billion credit line to help boost liquidity amid the global financial slowdown, ministers from the two countries said.
As many as seven countries, including Argentina and Uruguay, may establish reciprocal credit lines to help boost liquidity in South America, Brazilian Finance Minister Guido Mantega told reporters in Buenos Aires. Argentine Economy Minister Carlos Fernandez said the credit line with Brazil would be for the equivalent of $1.5 billion in local currencies.
[Peru - South Korea] -- Peru, S Korea to hold 2nd round of FTA talks The Second Round of Negotiations for a Free Trade Agreement (FTA) between Peru and the Republic of Korea will be held in the Peruvian capital Lima on May 11-14, the Ministry of Foreign Trade and Tourism (Mincetur) reported Sunday.
On Monday, the negotiating teams will discuss issues such as dispute settlement, trade remedies, temporary entry, investment, sanitary and phytosanitary measures, cooperation, rules of origin and public purchases.
On Tuesday, they will discuss trade in goods, intellectual property, telecommunications and financial services.
On Wednesday, the meeting will focus on institutional and labor matters, financial services and competition policy.
On Thursday, issues to be discussed include customs and trade facilitation, services and investments, as well as environment.
[China - Zambia] -- Zambia picks China group to run Luanshya copper mine Zambia on Friday selected Chinese company NFC Africa as the new investor to run the closed Luanshya Copper Mines (LCM), which is due to restart production at the end of May.
"It is now with great pleasure that I announce the sale of the 85% shares to China Nonferrous Metals Mining, commonly known as NFCA," Zambia's President Rupiah Banda told former Luanshya Copper Mines workers at a public meeting.
*** Venezuela is a difficult subject to report on. Unless you dig, finding reporters/ journalists with integrity who strive to present a story that is unbiased, it is extremely difficult to get accurate perspectives on the country.
Therefore, when reading articles from major media I tend to focus on the hard data from reliable sources and perspectives which come in the form of direct quotations of "experts," whom represent different points of view. I then disseminate the entire article and form my own opinion.
Hey that's how I do it, you might have your own system. Regardless, in situations such as this where I am publishing a Newswire post on Venezuela where the posts come mainly from:
1.Bloomberg, a U.S financial news giant that loves capatalism and therefore tends to look down on such things as nationalization of private industry.
2. The Latin America Herald, a publication which does a concise job of reporting on all the major headlines that are worthy (in its opinion) for its fan base of wealthy Miami/Ft. Lautherdale dwelling Latinos.
Ok, here we go. Lets start off with a more feel good story about martial arts in Caracas.
Venezuelans aim to kick crime out Ask most residents of Caracas what the city's biggest problem is, and the vast majority will say "crime". Official figures show a huge increase in violent crime in the Venezuelan capital over the past decade, reaching a total of 130 murders per 100,000 population last year compared to 63 per 100,000 in 1998.
Little wonder then that demand for self-defence classes is at an all-time high. Some martial arts teachers report a five-fold increase in their attendance levels over the past few years.
"My classes have become noticeably larger in the past months," says Karin Yamur, who teaches taekwondo in different parts of the city.
Venezuela Seizes 60 Oilfield Service Company Assets Venezuelan President Hugo Chavez seized assets from 60 oilfield services companies including Oklahoma-based Williams Cos., using a law the national assembly passed yesterday.
“Petroleos de Venezuela doesn’t have the management and strategic capacity to operate these companies properly,” said Jorge Pinon, a fellow at the Center for Hemispheric Policy at the University of Miami, referring to the state-owned oil company. “You’ll see a substantial drop in oil production.”
Chavez Seizes Farms, Says Land Is People’s Property Venezuelan President Hugo Chavez said land should be considered the property of the people and ordered the government takeover of a group of farms that he said were being underused.
Arsenal Seized from French Expat in Venezuela An “arsenal of war” including high-powered rifles, grenades, explosives and a flame-thrower, was seized Friday from the home of a French citizen residing in the Venezuelan capital, authorities said.
Venezuelan Broadcaster Facing Sanctions for Quake Coverage Conatel, the agency that regulates telecommunications and broadcasting in Venezuela, notified Globovisión television of a suit being filed against it for reporting on this week’s moderate earthquake in the Andean nation before any announcement by officials or state-run media.
A definitive agreement for the launching of the Bank of the South was reached in Buenoes Aires on Friday afternoon. Everything seems set to go with one minor change to note, The Bank of the South will begin operations with $7 billion in working capital, not the $10 billion reported previously.
South-South Cooperation is a term historically associated with the exchange of resources, technology and knowledge between developing countries. This latest initiative by the countries of Argentina, Brazil, Bolivia, Ecuador, Paraguay, Uruguay and Venezuela is especially exciting for the region as it:
a) Involves seven South American countries b) Includes countries with very different political and economic ideologies c) Includes the regional powerhouse of Brazil d) Is not dominated by one power, but rather uses a fair system to calculate member country donations e) Sends a message to member countries that what is good for the region is good me
What is mysterious, and surely politically motivated, is the fact the most staunch US allies in the region; Colombia, Peru and Chile, have not been included...
Here's the scoop from what went down over in Buenos Aires on Friday, courtesy of MercoPress.
“We’ve closed all pending issues and therefore this is the last ministerial meeting on the subject, said Argentine Finance minister Carlos Fernández who nevertheless added that the final stitch is “the technical review of statutes” of the new bank and the “parliamentary approval by the seven founding countries”.
[Arg Finance Minister, Carlos Fenandez]
The Bank of the South, started at the end of 2007 (and the brainchild of Venezuela’s Hugo Chavez), will have an initial capital of 7 billion US dollars (originally it was planned 10 billion), of which Argentina, Brazil and Venezuela will supply 2 billion US dollars each; Ecuador and Uruguay 400 million US dollars each and Bolivia 200 million.
“The terms of the agreement are acceptable, so the statutes should be easily approved without much discussion”, said Brazil’s Finance minister Guido Mantega. “This is the missing step for financial integration”, he added.
“Given the current international context the bank should be operational as soon as possible” added Argentina’s Fernandez. “It’s not easy to create a financial institution of this kind in the midst of an international crisis”.
According to the statutes each country member will have “one vote” in the board but for approval of loans 70 million US dollars plus, support from votes representing two thirds of capital subscription will be needed, explained Fernandez.
At the same meeting Argentina and Brazil also agreed to a 1.5 billion US dollars swap to reinforce their international reserves. The operation is similar to that recently agreed between Argentina and China and the one signed by the Federal Reserve and fifteen other countries, including Brazil.
The swap is “preventive” and enables each country access to a credit in Brazilian Reales or Argentine Pesos equivalent to 1.5 billion US dollars and valid for three years.
Brazilian minister Mantega said that when Brazil signed the agreement with the FED he advanced that the scheme would be expanded to the region, with Argentina and Uruguay as first interested parties.
“It’s a precaution mechanism to reinforce international reserves. Let’s hope this becomes available as soon as possible and operational for the two central banks”, said Fernandez.
[China-Kuwait] -- Sinopec, Kuwait to Build $9 Billion Plant in China China Petroleum & Chemical Corp., Kuwait Petroleum Corp. and an overseas oil producer plan to build a $9 billion refining and petrochemical plant in southern China’s Guangdong province, according to the head of China’s energy authority.
[China-Brazil] -- Vale ships record iron ore to China in Q1 Brazil's Vale, the world's largest iron ore producer, shipped 34.63 million tons of iron ore to China in the first quarter of 2009, which marks a quarterly record, the company announced on May 6.
[China] -- China launches campaign to counter disasters China needs stronger steps to promote public preparedness and early warning systems for natural disasters, experts said ahead of the one-year anniversary of the Wenchuan earthquake.
[South Korea] -- Korean lenders hit by 75% drop in profit South Korean banks are grappling with deteriorating asset quality amid the economic downturn, which according to the country’s financial regulator led to a 75 per cent drop in combined profits in the first quarter.
[South Korea] -- SKorea to set up US$802m resources development fund SEOUL: South Korea Sunday unveiled plans to establish an 802 million dollar fund for investment in overseas mineral mines, oil fields and gas wells.
[India] -- State Bank of India Profit Exceeds Analyst Estimates State Bank of India reported fourth- quarter profit rose 46 percent to a record, exceeding analysts’ estimates, as lower lending rates lured borrowers and gains from trading grew more than fivefold.
Net income rose to 27.4 billion rupees ($556 million), from 18.8 billion rupees a year earlier, the nation’s largest bank said in a statement to the Bombay Stock Exchange today. That beat the 21.7 billion rupee median estimate of five analysts surveyed by Bloomberg.
Grants of as much as A$21,000 ($16,142) to first-time buyers and the lowest interest rates in 49 years have emboldened more than 40,000 young Australians to take out home loans since October, stoking demand for properties that cost less than A$500,000.
As part of Budget 2009 a total of $20 million over three years will be allocated to the seismic data acquisition program run by Crown Minerals, which is responsible for the administration and promotion of New Zealand's oil and gas.
