Wednesday, January 12, 2005

China FX reserves up $200B in 2004

Hmm... exactly how much of this inflow is actually sterilized by debt issuance? How much is diversified into euros? China's Treasury holdings were recently reported at only $180B. That means they either did a lot of hidden buying via intermediaries, bought a lot of agency debt, or both.

WSJ: "China's foreign-exchange reserves jumped more than $200 billion in 2004 to reach $609.9 billion at year end, as speculators betting on a rise in the local currency's value added to the effect of a widening trade surplus.

Last year's huge increase was the biggest surge in China's reserves in any single year -- indeed, it was bigger than China's entire reserves until 2001. The gain of $206.7 billion, almost half of which was registered in the last three months of the year, almost certainly will add to pressure on Beijing to let its currency appreciate, even though much of the increase was the result of speculative inflows betting on just such an outcome.

The figures, disclosed to Dow Jones Newswires by a Chinese central bank official yesterday, would have been even higher had China not used $45 billion in reserves to recapitalize two huge banks last year. China's foreign reserves constitute the second-largest such stash in the world behind Japan's.

Adding steadily to Beijing's money pot are China's robust exports. Yesterday, China's Ministry of Commerce reported exports rose 35.4% to $593.36 billion in 2004. That, in turn, pushed the country's full-year trade surplus to $31.98 billion, up 26% from 2003, despite rising import costs. Foreign direct investment, a further source of reserves, reached $57.55 billion in the first 11 months of the year, surpassing the $53.5 billion recorded for all of 2003. The full-year investment figure hasn't been announced.

Much of the additional reserves, some $95 billion, came from so-called hot-money inflows, says Dong Tao, chief Asia economist for Credit Suisse First Boston. These swell the reserves because China, to maintain its currency peg to the U.S. dollar, buys foreign currency that enters the country in exchange for yuan."


Anonymous said...

Japanese Company to Pay Ex-Employee $8.1 Million for Invention

TOKYO - The inventor of a revolutionary lighting technology has reluctantly agreed to a record settlement from his former employer in a dispute that challenged the idea that the fruits of the labor of Japanese workers belong only to companies.

Shuji Nakamura, now a professor at the University of California, Santa Barbara, will receive 840 million yen ($8.1 million) from his former employer, the Nichia Corporation, for inventing blue-light-emitting diodes. Nichia secured lucrative patents for Mr. Nakamura's invention, which allowed the creation of more vibrant video billboards and traffic signal lights and helped lead to the development of blue lasers, which are used in the latest DVD players. His invention was also useful in creating white-light-emitting diodes, which may someday replace incandescent bulbs as a source of indoor lighting.

The case has been closely watched in Japan as a test of long-held notions that employees should sacrifice everything for their companies and the idea that there is something unseemly about individual workers, even the most productive ones, seeking a bigger cut of profits than their co-workers.


Anonymous said...

U.S. Trade Deficit Hit Highest Figure Ever in November

The trade deficit jumped sharply in November, rising to $60.3 billion, increasing by 7 percent over the month before.


Anonymous said...

China's Trade Surplus May Stir Currency Debate

HONG KONG - China reported on Tuesday that its trade surplus grew for the seventh consecutive month, to a record $11.1 billion in December. The surplus helped send China's foreign currency reserves soaring further, lifting the economy to another year of extremely strong growth, Chinese officials announced.

The robust performance, however, is a double-edged sword for China. It is likely to increase pressure for Beijing to allow China's currency, the yuan, to rise in value against the dollar as foreign investment and export earnings alike pour into the country at an accelerating pace. China's ballooning surplus also serves as a convenient backdrop for an increasingly polarized debate in the United States over whether trade with China is good or bad for the economy.


Anonymous said...

At a Crucial Oil Juncture, a Russian Calls on China

BEIJING - At a time when China and Russia are facing far-reaching choices about their oil trade, Russia's energy minister, Viktor B. Khristenko, made a quiet trip to Beijing over the weekend, people close to the industry said Tuesday.

The trip, which was not reported in the Chinese or Russian media, was confirmed by a Western businessman involved in China's oil business and a Russian source close to the embassy, both based in Beijing. Both requested anonymity, citing the sensitivity of their dealings.

The executive and official could not shed light on whom Mr. Khristenko met with or what was discussed, but the visit came at a crucial time in energy diplomacy between the two countries, which share a 2,640-mile border and a history of antagonism.

Mr. Khristenko's unusually low-key visit took place just days after he announced that Russia was willing to sell China a stake in a major Russian oil producer. The trip also comes after the recent announcement that Russia would route an oil pipeline to the Pacific Coast of Siberia instead of to the Chinese oil hub of Daqing - the route favored by China.

Anonymous said...

Robert Heilbroner, Writer and Economist, Dies at 85

A witty writer, he called himself a 'radical conservative,' an oxymoron suggesting that, like Don Quixote, he wanted to rush rapidly forward, break the mold - and end up right where he was. But in that he was only half joking. He did indeed want to conserve the basic separation of the national economy from the national government, as suggested by Adam Smith in the 18th century. But he believed, too, that when the economy was hit with severe recessions or high unemployment or yawning income gaps, for example, government had to intervene with public spending that stimulated economic activity and generated jobs and the construction of public works that contributed to higher living standards.

Although popular with students and the general reader, he was regarded by mainstream economists as a popularizer and historian whose insights made no great contribution to the study of the field. He, in turn, saw their reliance on mathematics and computer modeling as narrow in vision and as losing sight of the very purpose of economics - to help improve the well-being of people at work and of the society they work in.

'The worldly philosophers,' Dr. Heilbroner said in a 1999 interview, 'thought their task was to model all the complexities of an economic system - the political, the sociological, the psychological, the moral, the historical. And modern economists, au contraire, do not want so complex a vision. They favor two-dimensional models that in trying to be scientific leave out too much and leave modern economists without a true understanding of how the system works.'


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