Tag Archives: China

Chinese Stocks Fall Short on Third Quarter, Oil prices Drop Below $50 a Barrel

According to a Reuters poll of 50 economists, China’s growth in the July-September shows that it has slowed to 6.8 percent; down from 7 percent in the second quarter. If this report is correct, this would reveal China’s weakest growth pace since 2009 when it fell to 6.2. percent in the first quarter.  

According to some news sources this is better than predicted given the unsurety of the market in the last few months. But China’s growth data is always watched and considered to be one of the main global barometer on the economy.  

Crude oil prices are also fell again at 3 percent on Monday and below $50 a barrel.    According to news sources, the signs that a nuclear deal will begin this year that will waive sanctions on Iranian oil are contributing to the already rollercoaster oil market.      

Bloomberg reports that Iranian oil minister Bijan Namdar Zanganeh announced that OPEC should manage the market by reducing the level of production and wants prices back to between $70 and $80 a barrel.    

West Texas Intermediate crude oil is lower by 1.1% at $46.73 a barrel.

China Third Quarter Growth Weakest Since 2009

Policymakers are feeling the pressure to make new support measures as China’s economic growth in the third quarter fell to 6.8%, the weakest it’s been since 2009.

Chinese leaders are scrambling to reassure global markets that Beijing has the capability to manage the world’s second-largest economy even after suffering from the devaluation of the yuan and a stock market plunge that took place over the summer.

According to Reuters poll of 50 economists, China’s growth in the third quarter last year also saw a drop to 6.8%. The lowest expansion seen was in 2009, when China saw it fall to 6.2%

Some investors fear that growth levels could already be weaker than the official data suggests, creating skepticism about the reliability of Chinese official data.

“We expect the government to maintain loose monetary policy and step up fiscal spending in response to the economic slowdown,” economists at China International Capital Corp (CICC), a domestic investment bank, said in a note.

“We believe that loosening measures may help cushion the slowing momentum in economic growth but it’s difficult to reverse the long-term downward trend.”

Beijing is still in line with its full target for the year as the first two quarters saw economic growth of 7.0%, despite property downturn, industrial overcapacity, and weak exports and imports. Currently, the government claims that the reports have not been inflated to meet official forecasts.

Goldman Sachs: The Third Wave of 2008’s Financial Crisis is Coming

In 2008, the U.S. real estate and investment banking collapsed, resulting in a financial disaster that is returning in a third wave.

Goldman Sachs analysts led by Peter Oppenheimer stated that the new crisis is characterized by a triple-whammy of rock bottom commodities prices, China’s stalling growth and other emerging markets economies, and low global inflation. The triple-whammy is a result of the banking collapse and European sovereign debt crisis, what experts call a debt supercycle that has taken place over the last few decades.

During the first two debt-fuelled crises, central banks all began to lower interest rates, encouraging investors to lend in emerging markets like China for a decent return. However, now that interest rates may be on the rise, lenders are pulling out of commodities.

During the first wave in 2008, the same situation happened along with the crash of the U.S. housing market. The low interest rates were put into place to grow credit and increase leverage, particularly in China. Combine this with China trying to escape the middle-income trap and the plunge of global commodity prices, and a new crisis is not very far away. At best, the situation would be a painful readjustment period for China.

The global economy will soon slow down thanks to developed economies raising interest rates. The raised rates will also apply to safer assets such as government bonds, which gives investors less incentive to take risks overseas in emerging markets. Without the investments, emerging market companies can’t fund big projects, which in turn, slows down the global economy.

What makes the situation even worse, is that recovery from the crisis is continuously stalled due to the different stages of the economy interacting with each other. In 2010 and 2011, the EU sovereign debt crisis derailed the U.S. economic recovery.

What will it take for the world to recover from the financial crisis? All excess lending in emerging markets have to be worked through, and investors will have to take losses.

U.S. May Send Warships Near Disputed South China Sea Islands

A U.S. defense official said on Thursday that the U.S. is considering sending warships close to China’s artificial islands in the South China Sea. This would be a signal that the U.S. does not recognize the islands as Chinese territory, despite China’s claims.

The Financial Times newspaper reported that U.S. ships would sail within 12-nautical-mile zones of the disputed territory.

U.S. officials are waiting for the approval of the Obama Administration but said action would take place “within days.”

In May, Chinese officials issued eight warnings to a U.S. surveillance aircraft that had been flying near the Chinese artificial islands.

Chinese officials are aware of the United States’ potential actions and stated that they will continue to communicate with the United States regarding the South China Sea issue.

“I believe the U.S. side is extremely clear about China’s relevant principled stance,” said Chinese Foreign Ministry spokeswoman Hua Chunying. “We hope the U.S. side can objectively and fairly view the current situation in the South China Sea, and with China, genuinely play a constructive role in safeguarding peace and stability in the South China Sea.”

During the recent visit to the United States by Chinese President Xi Jinping, President Obama discussed the matter with the Chinese President, stating that he had “significant concerns.” Xi responded by telling President Obama they China intended to militarize the islands. U.S. officials report that China has already begun to create military facilities on the island and are waiting to see how much military hardware will be installed.

China’s Foreign Exchange Reserves Fall by over $43 Billion in September

China’s foreign exchange reserves lost $43.3 billion in September as the central bank intervened to stabilize the yuan and calm sentiment after a surprise devaluation of its currency rocked global markets.

China houses the world’s largest reserves and dropped to $3.514 trillion last month after a record slide of $93.9 billion in August. Questions have been raised about how sustainable China’s efforts to support the yuan are after the devaluation of the yuan and the fall of the reserves.

Analysts expect the reserves to keep falling.

“The decline in China’s foreign reserves, while less than market expected, still shows that China’s central bank continued the market intervention in the past month,” said Singapore-based Zhou Hao, senior economist in Asia at Commerzbank.

“As PBoC [People’s Bank of China] also intervened into the forward market in the past month, the foreign reserves will likely plunge again when these forward contracts mature,” he said.

The devaluation of the yuan has leaders worrying about a global currency war as well as it raised doubts on Beijing’s ability to manage a transitioning economy. China is shifting its economy to being led by domestic demand rather than an investment and exports led model.

According to Bloomberg, the value of yuan rose 0.22% Wednesday to 6.5340 a dollar, the strongest level since mid-August.

Typhoon Dujuan Hits Mainland after Pummeling Taiwan

Over half a million homes are without power in Taiwan while officials survey the damage caused by Typhoon Dujuan.  Two deaths were reported as well as hundreds of injuries. Dujuan made landfall in China Tuesday morning with an average sustained wind at 74 mph.

Two to three feet of rain have been reported from Taiwan in a number of mountain locations with wind gusts as high as 154 mph.  

The torrential rainfall from what is left of the Typhoon still torment the already battered Taiwan, threatening more flooding and dangerous mudslides.

Typhoon Dujuan is forecasted to rapidly weaken and dissipate as it moves over the terrain of southeastern China.

China to Donate Millions of Dollars and Thousands of Troops to U.N.

On Monday, Chinese President Xi Jinping announced to the United Nations General Assembly that his country would provide more money and troops to aid U.N. peacekeeping efforts.

He said that 8,000 troops would be assigned as a U.N. permanent peacekeeping force. Additionally, China would give $100 million to the African Union, so an immediate response unit could be created and capable of responding to emergencies. Finally, Xi stated that China would donate $1 billion – over the next 10 years – to the United Nations as a “peace and development fund.”

China was among other world leaders from more than 50 countries who pledged equipment and training for U.N. peacekeeping missions as well as roughly 40,000 police and troops.

President Xi Jinping also announced that China would also donate a helicopter squad for African peacekeeping operations.

Bruce Jones, vice president for foreign policy at the Brookings Institution and an expert on peacekeeping, state that China’s contributions would be significant, especially the 8,000 police officers.

“Police is one of the most glaring gaps in the United Nations peacekeeping operations,” he said. “This is an important step in creating a dedicated reserve capacity.”

Xi’s pledges for peacekeeping operations comes amid growing concerns over China’s military might and territorial disputes in the Asia-Pacific region. Earlier in his address to the General Assembly, Xi tried to ease the concerns over his country’s growing influence as a threat.

“We are committed to peaceful development. No matter how the international landscape may evolve and how strong China may become, China will never pursue hegemony, expansion, or sphere of influence,” he said.

Typhoon Dujuan Slams into Taiwan

With wind gusts over 150 miles per hour Typhoon Dujuan has slammed into Taiwan.  Dujuan has been categorized as a Super-typhoon and has left 24 injured as the incredible winds and massive rain battered the Island on Monday evening.

Most of the 24 people hurt suffered minor injuries, the island’s Emergency Operation Center said, many of them hit by flying debris.

More than 7,000 people have been evacuated in anticipation of the storm. About 200 people staying in emergency shelters.   

So far, more than 330,000 home are without electricity and tens of thousands of troops are on standby.  

Rainfall amounts have already reached 30 inches in some areas spawning fears of mudslides in the mountains.  

China has issued its top alert as the storm approaches the mainland.  

U.N Summit, World Leaders Meet to Discuss Global Problems

Today five of the most powerful men in the world will be speaking at this historic meeting at the U.N. United States President Obama, Russia’s President Putin, U.N. Secretary-General Ban Ki Moon, Chinese President Xi Jinping, and Iranian President Hassan Rouhani

U.N. Secretary- General Ban Ki Moon called for a political solution to the war in Syria that has left more than 200,000 dead and unleashed a torrent of refugees. “The global humanitarian system is not broken; it is broke,” he said. He also urged world leaders to work together in order to banish the “blatant brutality” of extremist groups, such as the Islamic State.

U.S. President Barack Obama said they would work with any country to solve the crisis and war in Syria but that we must also not allow Syrian President Bashar Assad to stay in office. When speaking about the conflict in Ukraine, he said the world cannot stand by while Russia violates Ukraine’s integrity and sovereignty.

The need to protect and nurture the environment was first thing on Chinese President, Xi Jinping’s agenda in his speech today. “We should care for nature and not place ourselves above it. We should reconcile industrial development with nature.” He added that China would never pursue “hegemony, expansion or sphere of influence” in the world. And he pledged $1 billion over the next decade to support U.N. efforts to further global peace and development.

Russian President Putin stressed the importance of combating the ISIS threat in Syria stating that it must be done in cooperation with the Syrian government. “We think it is an enormous mistake to refuse to work with the Syrian government and its armed forces,” Putin said. “No one but the Syrian forces and Kurdish militia are seriously fighting against the Islamic state.” The alternative is to arm terrorists who threaten Europe, Russia and other countries, he said.

The Iranian President Hassan Rouhani praised the Iranian/U.S. agreement on nuclear weapons as an example of global cooperation. On the terroristic threats in the middle east, he stated firmly the terrorist “wave of destruction has gone beyond the Middle East and the Arab world and reached the shores of the United States and Europe,” he added. “Without the U.S. invasions of Iraq and Afghanistan, and U.S. support for the Zionist regime, the terrorists would not have justification for their actions.”

President Obama and Putin are scheduled for an intense meeting this afternoon at the White House to discuss their differences on Syria and the Ukraine.

Tensions High as President Obama and Chinese President Xi Jinping Meet

Chinese President Xi Jinping landed in Washington D.C. Friday where President Obama welcomed him and his wife to the White House. Despite the pleasantries, tensions were high between the world leaders over allegations of Chinese cyber spying, territorial disputes between China and its neighbors, and Beijing’s economic policies.

Chinese and U.S. officials do hope the world leaders can cast aside their differences to talk about one area of cooperate, the global fight against climate change. However, the cooperation was overshadowed by major disagreements.

President Obama reassured the Chinese President that the U.S. would continue to discuss its differences with China.

“We believe that nations are more successful and the world makes more progress when our companies compete on a level playing field, when disputes are resolved peacefully and when the universal human rights of all people are upheld,” President Obama said in his welcoming speech.

Xi gave a similar statement during his speech, stating that the two countries would have to use respect and compromise to improve relations.

Despite the speeches, experts report that the relations between the two countries are at its most adversarial in decades. This is due to allegations of cyber attacks between the two nations, the territorial disputes in the South China Sea, China’s economic situation, and China’s violations of human rights.