Thursday, September 17, 2009
Sep 17 (Reuters) - Japan's new government is crawling out of the worst post-War recession ever, but its ability to spend is growing more limited.
The dragon and anaconda: China, Brazil and power balance in Americas
By Loro Horta
Published on September 16, 2009
The Sino-Brazilian strategic partnership signed nearly two decades ago has, in recent years, begun to produce some impressive results. In 2007 trade between the two giants reached US$29 billion and grew to an impressive $43 billion by the end of 2008. This expanding economic relationship is being complemented with a corresponding growth in their political and diplomatic partnership.
Brazil is indeed a very important source of technology for a China that has been restricted by arms sanctions by the West following Tiananmen. Brazilian weapons have reached as far as Southeast Asia, when Malaysia acquired 18 Astros multiple rocket launchers (MRLS), causing concern in Singapore in the early years of the current decade.
Brazil is not just a major military technology provider, but also a supplier of civilian products. This was clearly demonstrated in August 2007 when it signed a $1.3 billion contract to sell commercial jetliners to Lufthansa and Japan Airlines.
An example of the closeness of Sino-Brazilian military ties came in May this year when Brazilian defence minister Nelson Jobim announced that Chinese fighter pilots would be trained on the Brazilian aircraft carrier Sao Paulo. Jobim's announcement came shortly after a senior Chinese military official publicly stated Beijing's intention to acquire an aircraft carrier in the near future. Bearing in mind that very few countries in the world possess an aircraft carrier and that they are all close US allies, the Brazilian gesture no doubt attests to the importance of Brazil as a source of military technology and know-how.
The energy sector is fast emerging as one of the most important areas of cooperation between the two nations. Brazilian national oil company Petrobras and China have signed several agreements for the construction of various sections of a massive $6 billion pipeline to transport Brazil's growing energy exports to China. In May this year the Chinese government signed a loan of $10 billion to Petrobras to assist it in developing the newly discovered Tupi oil fields.
In exchange, Brazil is to supply Chinese state-owned Sinopec with 200,000 barrels of oil a day for the next 10 years - nearly 7 per cent of China's oil needs. Petrobras is also reported to be transferring deep-water drilling technology to Chinese state-owned companies - an area where China has been rather unsuccessful. Most of its oil activities in China and throughout the world are on shore or in relatively shallow waters.
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"The negotiations are still in an initial phase, with a work group having been created with representatives of Brazil and China, who also met during the G-20 summit, in London," explained a source.
The next step should be the visit of a Central Bank of Brazil delegation to China, "despite there being no forecast as to when it may come true," said the source.
The work group should analyze the "results to be reached through an agreement that China recently established with Argentina" - the first country in South America to benefit from trade exchanges in the same currency with the Asian giant and with whom Brazil has also been developing the same program since September 2008.
The Central Banks of China and Brazil are also going to develop a "study of the potential bilateral trade volume to analyze the possibility of an agreement."
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Written by Newsroom
Wednesday, 16 September 2009
[Source] - brazzilmag.com
Tuesday, September 15, 2009
"Protectionism is getting worse and worse. I'm terribly worried about because protectionism lead to the Great Depression... I'm worried about a lot of things. A 50% rise in 6-9 months is something to worry about. You usually have corrections after that.
Sept. 15 (Bloomberg) -- Investors are putting more money into the yuan
on bets China will allow appreciation in the exchange rate to make it
more accepted as an international currency, according to WisdomTree
A weak dollar, linked to concern about record amounts of debt in the
U.S., will drive more funds into China and emerging markets given
prospects growth rates will exceed those in developed countries, Bruce
Lavine, president of investment firm WisdomTree, said in an interview.
Lavine said in each of the last three months there was an inflow of
$25 million into his $142 million Chinese Yuan Exchange-Traded Fund,
which was started in May 2008 and invests mostly in yuan
non-deliverable forwards. ETFs are listed on an exchange where they
are bought and sold daily like stocks.
"Five years from now you will see a thoroughly different landscape in
terms of internationalization of the yuan," said New York-based
Lavine, whose funds oversee $5.1 billion in assets. "When the dam
finally breaks, it happens faster than you think."
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Monday, September 14, 2009
Costa Rica -- which gave up six decades of ties with Taiwan in favor of China two years ago -- is the third Latin American country to negotiate a free trade deal with China, after Chile and Peru.
In the round of talks that ended Thursday agreements were reached for more than 90 percent of each country's exports, the trade ministry said.
Costa Rican exports include coffee, bananas, fruit juices, cigars, pork, beef and chicken, said Costa Rican chief negotiator Fernando Ocampo...
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The central government could "delay or cut" further allocations of money to those provincial governments that do not use their existing stimulus funds appropriately or do not raise enough of their own funds to complete the projects, the ministry said in a statement on its website (www.mof.gov.cn).
The move aimed to "ensure that projects backed by the central government get started in time and that budgeting for them is accelerated, in order to achieve our strategic goal of expanding domestic demand and promoting economic growth," it said.
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Sunday, September 13, 2009
"China Unicom (NYSE: CHU) gains after the mainland's No.2 wireless player reaches a deal with Spain's Telefonica (NYSE: TEF)."
[Source] - Reuters
China's Premier Wen Jiabao signaled he will maintain unprecedented
government spending to drive a recovery from the slowest expansion in
almost a decade.
"China's economic rebound is unstable, unbalanced and not yet solid,"
Wen said yesterday in a speech at the World Economic Forum in Dalian,
a city in northeastern China. "We cannot and will not change the
direction of our policies when the conditions aren't appropriate."
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2) Standard Bank Borrows $1 Billion From Chinese Banks
Standard Bank Group Ltd., Africa's largest lender, said the $1 billion
loan facility it signed with four Chinese banks will be mainly used
for clients developing projects on the continent.
"The money will be used mainly to support our Africa business, for
clients wanting to do business in Africa and this would include
Chinese clients," said Chief Executive Officer Jacko Maree, after
signing the five-year facility in Macau. It will be used mainly to
fund projects, he added.
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3) Mongolia Fund to Manage $30 Billion Mining Jackpot
The Mongolian government will set up a sovereign wealth fund using
mining royalties and tax revenue, and distribute part of the income to
citizens to alleviate poverty, said Finance Minister Sangajav
The fund, to be run by professional managers from 2013, will disburse
part of its annual income to every Mongolian in cash or non-cash
securities to let them own stakes in the country's mining wealth,
Bayartsogt said. Initial capital will be drawn from Ivanhoe Mines
Ltd.'s $4 billion Oyu Tolgoi copper- gold mine project, estimated to
generate $30 billion in tax revenue over 50 years, he said.
"We're drafting the idea to implement the proposal, and we're
studying examples like the Alaskan Permanent Fund," Bayartsogt said in
a Sept. 9 interview in the capital Ulaanbaatar, declining to specify
the size of the proposed fund.
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Venezuela and Colombia -- Politics versus trade
Sep 10th 2009 | SAN ANTONIO DEL TÁCHIRA
From The Economist print edition
Hugo Chávez stamps out regional economic integration
BUSINESS is slack at José Nelson Uribe’s tiny grocery store in San Antonio del Táchira, just a stone’s throw from Venezuela’s border with Colombia. “I’m not selling even a quarter of what I sold before,” says Mr Uribe. His woes are a result of the political conflict between his namesake, Colombia’s president, Álvaro Uribe, and Venezuela’s Hugo Chávez. “Before” means before July 28th, when Mr Chávez declared a “freeze” on diplomatic ties and said he would seek alternatives to Colombian goods. This was officially a response to an agreement formalising American use of seven Colombian bases for anti-drug operations, but it also coincided with questions as to how anti-tank rocket-launchers sold by Sweden to the Venezuelan army ended up in a camp belonging to the FARC guerrillas in Colombia. It is not the first time that Mr Chávez has threatened trade sanctions, but this time he seems serious.
The impact on the border region was swift. For each country, the other is the second-biggest trading partner (after the United States in both cases). Bilateral trade totalled $7.2 billion last year, of which $6 billion consisted of Colombian exports, mainly of food, live animals, clothing and cars. Four-fifths of that trade passed along the twisting mountain road that links San Antonio with the state capital, San Cristóbal. “That represents 50,000 direct jobs and 250,000 indirect [ones],” says José Rozo, a local business leader. Many of these are in transport firms and customs agencies. “Before, the local lorry drivers were doing around 500 trips a day,” Mr Rozo says. “Now it’s down to about 80.” Industry in Táchira has been hit too, since many companies depended on imports from Colombia.
The border is not closed. But few of the 30,000 Colombians who used to cross each day to shop do so now, because Venezuela’s National Guard confiscates their goods when they recross the border, says Mr Uribe, the shopkeeper. Venezuela’s government has stopped issuing import permits, nor is it providing dollars at the official exchange rate for imports from Colombia (a dollar costs almost three times more on the parallel market)...
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