Is the world wrapped up in too much debt? Kyle Bass thinks so and has some chart porn to boot.Comments »
The EU notwithstanding, this will be the biggest issue in 2012. I cannot see how commodities don’t go into a total meltdown if the Chinese armor cracks.
SHANGHAI (AP) — China’s leaders are reversing their two-year effort to cool the economy, seeking to counter slowdowns in manufacturing and property that are dragging growth lower and threatening to spur unrest.
In the latest sign the world’s No. 2 economy is weakening faster than thought, business surveys released Thursday showed manufacturing contracted in November for the first time in nearly three years.
That news came a day after Beijing moved to invigorate business activity by easing credit curbs, ending a long campaign to take some fizz out of rapidy expanding economy. China’s leaders had resisted easing lending curbs out of fear that opening the spigots might revive an outright investment boom and re-ignite inflation.
High living costs are risky for China’s communist leaders because they erode the economic gains that underpin the ruling party’s claim to power. But slowing growth is another peril: already news of labor unrest at factories in the south suggests that workers are being squeezed as exporters juggle tight credit and slowing demand.
The decision by the People’s Bank of China to reduce the amount of money that China’s commercial lenders must hold in reserve by 0.5 percent of their deposits “is a clear signal that Beijing now sees the balance of risks as lying with growth rather than inflation,” said Stephen Green, an economist with Standard Chartered in Shanghai.
The European debt crisis and feeble U.S. recovery have weakened demand in China’s biggest export market, while at home efforts to curb inflation by cooling the property market are hurting a wide range of industries heavily dependent on housing and other construction.
The worsening conditions are no surprise to Chen Xiaoyan, a saleswoman at the Cangnan Qianku Qingfeng Pet Supplies Craft Factory in Wenzhou, a manufacturing base that has been hit especially hard by tight credit policies, leaving many factories short of operating cash.
“It was hard enough to do business last year. This year is the hardest,” said Chen. “Our profit was 30 percent lower last year and it will be down another 10 percent this year,” she said. Materials costs have come down in recent months, but labor costs have not, said Chen.
Worries over erring on the side of too fast growth are being overshadowed by greater alarm over a deeper slump as conditions worsen overseas.
“They’re stuck,” Patrick Chovanec, an associate professor at Tsinghua University’s School of Economics and Management in Beijing said of China’s policymakers.
That explains a comment by Vice Premier Wang Qishan to U.S. trade negotiators last week that “an unbalanced recovery is better than a balanced recession,” he said.
The Chinese economy is one of the few still growing at a respectable pace, and Beijing’s leaders intend to keep it that way.
China’s economic growth eased to a still-robust 9.1 percent in the quarter ending in September from 9.5 the previous quarter. But indicators showing export industries and some other areas of the economy were cooling more sharply raised fears of job losses and possible unrest.
In the manufacturing sector, the activity gauge of the China Federation of Logistics and Purchasing fell an greater-than-expected 1.4 percentage points to 49 in November, well below the 50-level that signifies expansion. That was the first contraction in manufacturing activity since early 2009.
Another manufacturing survey by HSBC showed an even steeper decline, with its PMI dropping to 47.7 in November from 51.0 in October.
The property market also appears to have reached a turning point, at least in the biggest cities. New home sales fell 17 percent by transaction volume in China’s top 20 cities in July-September compared with a year earlier.
Sharp discounts by some property developers have angered home buyers who bought when the market was at its peak, with some staging protests or storming real estate company offices.
“They promised us the price of our apartment would never go down, that it would only increase,” complained Zhu Hongxia, a property owner in Shanghai who was standing with others outside the office of China Vanke, the country’s biggest developer.
“You can’t decrease the price suddenly by such a big amount,” Zhu said.
While many homeowners have been angered by the drop, the government is seeking to prevent prices from surging further out of reach of most families. Leaders say property curbs will stay in place despite signs the effort to deflate the bubble is reverberating throughout an economy that already was slowing.
The construction slowdown has prompted builders to cut jobs — losses that have fallen heavily on unskilled migrant laborers.
Beijing Xuanyu Construction Co. in Shunyi on the outskirts of Beijing, a subcontractor on apartment projects, has cut its workforce of construction site laborers from 100 a year ago to about 70, according to Liu Jun, a manager.
The core staff of about 200 engineers, project managers and administrators so far is unaffected, Liu said. He said bricklayers are paid about 200 yuan ($32) a day and lower-skilled workers at least 140 yuan ($23).
“The volume of business has declined,” Liu said. “Our workforce costs are too high.”
China is striving to shift its economy toward greater dependence on consumer demand, rather than construction investment and exports. But they remain key drivers in this developing economy, and the job-scarce U.S. recovery and Europe’s recent upheavals do not bode well: export growth has fallen steadily since hitting a peak of nearly 36 percent in March.
China’s monthly trade surplus with the 27-nation European Union fell 10.3 percent from a year earlier to $13 billion in October as countries that use the euro common currency struggle to contain a sovereign debt crisis.
Vienna’s excellent infrastructure, safe streets and good public health service make it the nicest place to live in the world, consulting group Mercer said in a global survey which put Baghdad firmly in last place.
German and Swiss cities also performed especially well in the quality of living rankings, with Zurich, Munich, Dusseldorf, Frankfurt, Geneva and Bern in the top 10.
The Austrian capital, with its ornate buildings, public parks and extensive bicycle network recently reduced the cost of its annual public transport ticket to 1 euro a day.
Serious crime is rare and the city of around 1.7 million inhabitants regularly tops global quality of life surveys.
But Mercer warned that top-ranking European cities could not take their position for granted in the survey, which assessed more than 200 cities.
“They are not immune to any decrease of living standards should this (economic) turmoil persist,” Mercer’s senior researcher Slagin Parakatil said on the company’s website.
Mercer, which also ranked cities according to personal safety, gave Athens a poor score because of clashes between demonstrators and police and political instability.
“In 2011 Athens is ranked in Europe among the lowest in the personal safety ranking,” Parakatil said.
Oslo also fell to 24th place in the separate safety survey because of Anders Breivik’s mass killings in July. It would usually be in the top 15, Mercer said.
Baghdad’s political turmoil, poor security enforcement and attacks on local people and foreigners made it the worst place to live in 2011, both in terms of life quality and safety, Mercer said.
Political and economic unrest in Africa and the Middle East also pushed down scores in those regions.
“Many countries such as Libya, Egypt, Tunisia and Yemen have seen their quality of living levels drop considerably,” Parakatil said.
“Political and economic reconstruction in these countries, combined with funding to serve basic human needs, will undoubtedly boost the region.”
He said that while the outlook is uncertain for most of the world because of economic and political turmoil, cities in Asia-Pacific look set to benefit thanks to political stability and solid growth.
Auckland, Sydney, Wellington, Melbourne and Perth made it into the top 20 for quality of life in 2011 while Singapore was the highest-ranking Asian city in 25th place.
Top 10 in Mercer Quality of Living survey
1 Vienna Austria
2 Zurich Switzerland
3 Auckland New Zealand
4 Munich Germany
5 Dusseldorf Germany
5 Vancouver Canada
7 Frankfurt Germany
8 Geneva Switzerland
9 Bern Switzerland
9 Copenhagen Denmark
Full city rankings: bit.ly/syDUPF
(Reporting by Sylvia Westall)Comments »
“1) “Fragmentation of the euro zone,” in which the 17 member nations would go their own way, which he said would be “incredibly disruptive not just for Europe but also for the global economy.”
2) “Full fiscal union,” in which the nations adopt uniform financial reforms that would be more political in nature.
3) A “middle ground” in which a “smaller but stronger euro zone” emerges where as many as three countries default on their debt and exit the EU.”Comments »
Date: Sun. Nov. 27 2011 10:08 PM ET
Canada will announce next month that it will formally withdraw from the Kyoto Protocol, CTV News has learned.
The Harper government has tentatively planned an announcement for a few days before Christmas, CTV’s Roger Smith reported Sunday evening.
The developments come as Environment Minister Peter Kent prepares for a climate conference in Durban, South Africa that opens on Monday, with delegates from 190 countries seeking a new international agreement for cutting emissions.
Issues on the agenda include extending the Kyoto emission targets, a move being championed by Christiana Figueres, head of the UN climate secretariat.
Kent said in the House of Commons on Nov. 22 he won’t sign a document at the Durban conference that extends the Kyoto targets.
“Canada goes to Durban with a number of countries sharing the same objective, and that is to put Kyoto behind us,” Kent said.
NDP environment critic Megan Leslie called the government’s decision to pull out of the Kyoto accord “disappointing.”
“It’s a really cynical and it’s a really cowardly move,” Leslie told CTV News.
Green Party Leader Elizabeth May called the move “a very damaging act of sabotage.”
“It will reverberate around the world,” May told CTV. “Canada will be a pariah globally if it goes through with this.”
The accord is set to expire next year.
Kent told The Canadian Press that the Kyoto Protocol is out of date because it excludes major emitters among developing nations, including China, India and Brazil.
He also said that previous governments had failed to devise a strategy to hit the accord’s targets.
Those targets are now out of reach, and the Conservative government has set other, more modest targets while vowing to press the big polluters among developing nations to sign a deal with their own emissions-reduction targets.
Kent told CP in an interview ahead of the Durban conference that Canada will play hardball with developing countries to get an agreement during the climate talks.
Kent said developing countries should not be allowed to use the emissions records of wealthy nations as an excuse not to agree to lofty emissions-reduction targets.
He also said that all nations must be prepared to demonstrate their progress on whatever emissions targets are contained in any new deal.
Delegates at the conference will also be hammering out the details of a plan to administer the Green Climate Fund, money that is to help poor countries deal with climate change.
The fund is expected to grow over the next eight years to eventually distribute about $100 billion a year. However, it is still unclear where all of that money will come from and how it will be distributed.
Read the rest here.Comments »