Tag: commerce

Italy is now a partner in China’s new Silk Road

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Reuters

❝ Italy has become the first developed economy to sign up to China’s global investment programme which has raised concerns among Italy’s Western allies.

A total of 29 deals amounting to €2.5bn ($2.8bn) were signed during Chinese President Xi Jinping’s visit to Rome…

❝ The new Silk Road has another name – the Belt and Road Initiative (BRI) – and it involves a wave of Chinese funding for major infrastructure projects around the world, in a bid to speed Chinese goods to markets further afield. Critics see it as also representing a bold bid for geo-political and strategic influence…

❝ The levels of debt owed by African and South Asian nations to China have raised concerns in the West and among citizens – but roads and railways have been built that would not exist otherwise..

Here I sit in the richest, most powerful country in world history. Our roads suck. Bridges suck. Water systems throughout the land are polluted. And more. Our government doesn’t make infrastructure a priority. Our politicians are glad to blather about their support for rebuilding and repairing national infrastructure decades old – as long as they aren’t actually pushed into doing a damned thing.

New Silk Road, old Silk Road. If someone is putting their political and economic clout behind better, easier commerce…try to keep the whining down to a minimum, folks. You’re on the wrong side of history. I know what construction contracts look like going back to the original build-out of the US Interstate System. It was justified to keep our military happy. Which was Cold War bullshit. The victory was owned by US trucking companies.

Trump talks walls – China builds bridges

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Presidents and First Ladies of China and Ecuador, this week

❝ An expected U.S. economic retreat from Latin America under Donald Trump is causing the region’s leaders to look halfway around the world, to China, for help weathering the possible financial headwinds.

They’ll have the perfect opportunity to make their appeal this week when Chinese President Xi Jinping attends a Pacific Rim summit as part of a visit to Ecuador, Peru and Chile…

❝ Over the past decade China has displaced the U.S. as the main trading partner in country after country in Latin America as demand for the region’s soybeans, oil and iron ore fueled the fastest growth in decades. But more recently, as China’s demand for raw materials has been slowing, the region’s economies have taken a hit, dampening the once-torrid love affair with the world’s second-biggest economy.

❝ Margaret Myers, a China expert at the Washington-based Inter-American Dialogue, said that most South American countries have awoken to the pitfalls of dependence on commodity exports and would prefer closer ties to the U.S., which buys the sort of manufacturing goods that generate more jobs.

“But the question is whether the U.S. will reciprocate,” she says. “Nobody in the region is expecting much from Trump in terms of really productive policy. That leaves room for China to play a much more important role.”…

❝ To be sure, a U.S.-China trade war would have ripple effects across Chinese industry that would also depress demand for Latin America’s raw materials.

But for now Chinese businessmen attending the APEC summit see nothing but potential.

As far as I can see – in the view from Lot 4 – China’s foreign policy is more likely to result in mutual growth. Certainly, a predictable difference between investing nations whose “long-term” view means the next election, if not the next quarter – on one hand – and investing nations and parties concerned with a five to ten-year window of change. Usually, progressive in being focused on stable growth.

“President” Trump would threaten world economy as much as jihadi terror

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❝ The prospect of Donald Trump winning the race to the White House has joined China’s slowing economy, the Greek debt crisis and Britain’s EU referendum as a major threat to the global economy, according to a respected risk analysis firm…

The EIU placed the possibility of Trump being sworn in as US president next January sixth on their latest list of global threats, as serious as a resurgence of jihadi terrorism, and only marginally less risky than the collapse of the eurozone…

❝ “In the event of a Trump victory, his hostile attitude to free trade, and alienation of Mexico and China in particular, could escalate rapidly into a trade war…”…It added: “His militaristic tendencies towards the Middle East – and ban on all Muslim travel to the US – would be a potent recruitment tool for jihadi groups, increasing their threat both within the region and beyond…”

❝ According to the EIU, there was “a moderate probability” of Trump winning November’s presidential election, and serious conflict in Washington if he succeeded.

“Although we do not expect Mr Trump to defeat his most likely Democratic contender, Hillary Clinton, there are risks to this forecast, especially in the event of a terrorist attack on US soil or a sudden economic downturn,” it said.

But, then, are there any Trump supporters who care a rat’s ass about global commerce, international treaty obligations, friendship and cooperation between nations and nationalities?

Asia’s Multilateralism

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That’s Bob Shiller’s book on Irrational Exuberance on the shelf

The International Monetary Fund and the World Bank are poised to hold their annual meetings, but the big news in global economic governance will not be made in Washington DC in the coming days. Indeed, that news was made last month, when the United Kingdom, Germany, France, and Italy joined more than 30 other countries as founding members of the Asian Infrastructure Investment Bank (AIIB). The $50 billion AIIB, launched by China, will help meet Asia’s enormous infrastructure needs, which are well beyond the capacity of today’s institutional arrangements to finance.

One would have thought that the AIIB’s launch, and the decision of so many governments to support it, would be a cause for universal celebration. And for the IMF, the World Bank, and many others, it was. But, puzzlingly, wealthy European countries’ decision to join provoked the ire of American officials. Indeed, one unnamed American source accused the UK of “constant accommodation” of China. Covertly, the United States put pressure on countries around the world to stay away.

In fact, America’s opposition to the AIIB is inconsistent with its stated economic priorities in Asia. Sadly, it seems to be another case of America’s insecurity about its global influence trumping its idealistic rhetoric – this time possibly undermining an important opportunity to strengthen Asia’s developing economies.

China itself is a testament to the extent to which infrastructure investment can contribute to development. Last month, I visited formerly remote areas of the country that are now prosperous as a result of the connectivity – and thus the freer flow of people, goods, and ideas – that such investments have delivered.

The AIIB would bring similar benefits to other parts of Asia, which deepens the irony of US opposition. President Barack Obama’s administration is championing the virtues of trade; but, in developing countries, lack of infrastructure is a far more serious barrier to trade than tariffs.

A generally wholistic understanding of the workings of the global economy is just one of the reasons Joe Stiglitz was honored with the Nobel Prize in economics. It ain’t a bad start.

RTFA and understand why modern economists think our government’s hypocrisy ain’t new – just backwards for a couple new reasons.

Ground broken for California’s 130-miles high-speed rail project

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Gov. Jerry Brown and state political leaders on Tuesday celebrated their perseverance over lawsuits and skeptical lawmakers and voters as they ceremonially started work in the Central Valley on the initial 29 miles of the nation’s first high-speed rail system.

Speaking to about 700 supporters of high-speed rail in a vacant lot in Fresno, the governor was cheered when he called critics — about 30 of whom protested outside the fenced-off festivities — “pusillanimous … that means weak of spirit,” and said the state owed it to the future to think big and invest in projects like high-speed rail.

Brown noted that the State Water Project, BART and the Golden Gate Bridge all faced opposition in their time. “We need to be critiqued,” he said, “but we still need to build…”

While high-speed rail backers made speeches and signed a symbolic section of rail in lieu of cutting a ribbon or wielding golden shovels, a new Congress whose Republican majority has vowed not to contribute more federal funding to California’s high-speed rail project took office in Washington. They include House Majority Leader Kevin McCarthy, R-Bakersfield, whose district would be bisected by the fast rail line…

Surely no one expects a 21st Century Republican to favor transportation, logistics and commerce considered modern in most nations.

Along with the financial challenge comes the need to complete the project without significant delays or massive cost overruns, and the question of whether state legislators have the political will to keep the project going when it runs into trouble.

The current construction is expected to be completed by 2018…The authority expects to award a contract this month for the next phase, which would take the tracks south to Bakersfield. Once that stretch is completed, with work overlapping the initial leg, the plan is to work on a connection to Palmdale, not from Bakersfield but from Burbank. Not only is that a critical stretch in connecting high-speed rail into the Los Angeles area, but officials believe it could operate as a profitable line even before the connection to the valley is completed.

By 2017 or 2018, the agency expects to have a 130-mile stretch through the valley that can be used as a test track for high-speed trains. And by 2022, it expects to be able to run trains from Merced to the Burbank Airport. Connections to San Francisco’s Transbay Transit Center and Los Angeles’ Union Station would be finished by 2029.

Critics…waved signs with such messages as blah, blah, blah, blah, blah!

In the same time period China is scheduled to build several hundred miles of standard rail – only travel at 110mph – for Thailand connecting Bangkok and major cities to Laos and southern China. Myanmar’s main industrial areas will be linked to the deep-sea port of Dawei. 2000 miles of rail will be built in a trilateral project for India, Myanmar and Thailand – linking those nations to Laos, Cambodia and VietNam. The ASEAN north-south corridor will be extended down to Malaysia and Singapore.

Besides ASEAN nations, there are six more partner countries – China, India, Japan, South Korea, Australia and New Zealand, combining half of the world’s population.

Good thing ain’t many of them as backwards as American conservatives.

Two huge, phony free trade agreements about to be negotiated – on behalf of corporate special interests

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Though nothing has come of the World Trade Organization’s Doha Development Round of global trade negotiations since they were launched almost a dozen years ago, another round of talks is in the works. But this time the negotiations will not be held on a global, multilateral basis; rather, two huge regional agreements – one transpacific, and the other transatlantic – are to be negotiated…

The Doha Round was torpedoed by the United States’ refusal to eliminate agricultural subsidies – a sine qua non for any true development round, given that 70% of those in the developing world depend on agriculture directly or indirectly. The US position was truly breathtaking, given that the WTO had already judged that America’s cotton subsidies – paid to fewer than 25,000 rich farmers – were illegal. America’s response was to bribe Brazil, which had brought the complaint, not to pursue the matter further, leaving in the lurch millions of poor cotton farmers in Sub-Saharan Africa and India, who suffer from depressed prices because of America’s largesse to its wealthy farmers…

Given this recent history, it now seems clear that the negotiations to create a free-trade area between the US and Europe, and another between the US and much of the Pacific (except for China), are not about establishing a true free-trade system. Instead, the goal is a managed trade regime – managed, that is, to serve the special interests that have long dominated trade policy in the West…

…There must be a commitment to transparency. But those engaging in these trade negotiations should be forewarned: the US is committed to a lack of transparency. The USTR’s office has been reluctant to reveal its negotiating position even to members of the US Congress…

If negotiators created a genuine free-trade regime that put the public interest first, with the views of ordinary citizens given at least as much weight as those of corporate lobbyists, I might be optimistic that what would emerge would strengthen the economy and improve social well-being. The reality, however, is that we have a managed trade regime that puts corporate interests first, and a process of negotiations that is undemocratic and non-transparent.

The likelihood that what emerges from the coming talks will serve ordinary Americans’ interests is low; the outlook for ordinary citizens in other countries is even bleaker.

I doubt there is much inclination to invite of any of our recent Nobel Prize winners in economics to participate in governance of the United States. They have an unsettling habit of telling the truth about who owns our politicians, Liberal and Conservative. Joe Stiglitz in particular.

As much as politicians inside the Beltway blather about transparency they wholly ignore the concept in practice. When gadflies like Stiglitz puncture the information bubble provided by tame media a certain amount of dissent leaks to those Americans willing to engage in independent thought.

I’m not certain how large that number is or what effect they have on politicians or ordinary voters alike. I don’t hear a whole boatload of discussion in either the analog or digital world. That doesn’t mean we stop trying.

Why the US needs Huawei more than Huawei needs the US

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Runaway, runaway!

There are only so many companies left that can build a decent mobile network. Banning Huawei from the U.S. seriously skews the competitive balance in an already off-kilter industry.

Huawei has taken quite a political beating lately. Not only are U.S. lawmakers calling for sanctions against the Asian infrastructure maker due to its ties to the Chinese government, but Sprint and Softbank just brokered a deal with the federal government that could ban Huawei’s gear from their current and future U.S. networks.

Recently a frustrated Huawei EVP and co-CEO Eric Xu took a rather flip position on the matter, saying his company was no longer interested in the U.S. market and had essentially stopped paying attention to the controversy surrounding it here. Xu was obviously posturing. No global equipment maker would just simply ignore the world’s largest telecommunications market.

But there is a bit of truth to his words. Huawei has done quite well for itself without landing a single major U.S. infrastructure deal. Domestic operators may have resisted Huawei’s allure, but carriers in Canada, Europe, Asia, Latin America and Africa certainly haven’t. By some measurements, Huawei has already surpassed Ericsson as the largest telecom vendor in the world.

…If Huawei gets banned, then one of the key industry forces keeping equipment prices low suddenly disappears. That’s not a situation U.S. mobile industry wants to see.

There has been a lot of consolidation in the telecom equipment market in the last several years. In many ways, Huawei was directly responsible for that consolidation, driving smaller players out of the market or into mergers through its aggressive pricing. A decade ago there were about a dozen companies that could sell you a cellular base station. Today there are really only three or four dominant mobile players, and Huawei is one of them.

…The dwindling competitive landscape is particularly evident in the U.S. where historical reliance on CDMA technologies has led two companies to dominate: Ericsson and Alcatel-Lucent. No U.S. operator relies solely on a single network maker, so AT&T, Verizon Wireless and Sprint all use both vendors as primary suppliers.

But Alcatel-Lucent is suffering, and it might not be long before Alcatel-Lucent finds itself broken up and sold for parts. If that happens, there will be a big vacuum, and there aren’t that many companies capable of filling it. There’s Nokia Siemens Networks and Huawei, and that’s pretty much it. Smaller network players like Samsung have been asserting themselves of late, but they’re still small fish in an ever-shrinking pond…

All of the major U.S. operators have already named their LTE suppliers, so there won’t be much opportunity to disrupt the market for years to come. And when that time does come it will take a lot to pry those carriers away from their current suppliers. But the presence of Huawei would at least gives those operators leverage.

Look at this way: AT&T loves Ericsson and Alcatel-Lucent. It probably will never leave them. But if I’m AT&T, I want Huawei around to keep those two vendors honest. And if Alcatel-Lucent suddenly goes belly up, I’d rather have more than one choice to replace them than NSN.

From the coverage I’ve seen on biz TV shows, from what I’ve read here from Fritchard and Kevin Tofel, all I see is the same corrupt congressional politicians who babble about competitiveness in American capitalism – then turn their back on that standard to protect the corporate thugs who pick up the tab for their political careers.

Contemptible hypocrites.

Bush’s Iraq War is officially over — guess who got the oil?

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sinochem

Since the American-led invasion of 2003, Iraq has become one of the world’s top oil producers, and China is now its biggest customer.

China already buys nearly half the oil that Iraq produces, nearly 1.5 million barrels a day, and is angling for an even bigger share, bidding for a stake now owned by Exxon Mobil in one of Iraq’s largest oil fields…

Before the invasion, Iraq’s oil industry was sputtering, largely walled off from world markets by international sanctions against the government of Saddam Hussein, so his overthrow always carried the promise of renewed access to the country’s immense reserves. Chinese state-owned companies seized the opportunity, pouring more than $2 billion a year and hundreds of workers into Iraq, and just as important, showing a willingness to play by the new Iraqi government’s rules and to accept lower profits to win contracts.

“We lost out,” said Michael Makovsky, a former Defense Department official in the Bush administration who worked on Iraq oil policy. “The Chinese had nothing to do with the war, but from an economic standpoint they are benefiting from it, and our Fifth Fleet and air forces are helping to assure their supply…”

Notably, what the Chinese are not doing is complaining. Unlike the executives of Western oil giants like Exxon Mobil, the Chinese happily accept the strict terms of Iraq’s oil contracts, which yield only minimal profits. China is more interested in energy to fuel its economy than profits to enrich its oil giants…

The Iraqi government needs the investment, and oil remains at the heart of its political and economic future. Currently OPEC’s second largest oil producer after Saudi Arabia, the Iraqi government depends on oil revenues to finance its military and social programs. Iraq estimates that its oil fields, pipelines and refineries need $30 billion in annual investments to reach production targets that will make it one of the world’s premier energy powers for decades to come…

But the kind of investment that is necessary has required contracting the services of foreign oil companies that are not always enthusiastic about Iraq’s nationalistic, tightfisted terms or the unstable security situation that can put employees in danger. Some like Statoil of Norway have left or curtailed their operations.

But the Chinese, frequently as partners with other European companies like BP and Turkish Petroleum, have filled the vacuum. And they have been happy to focus on oil without interfering in other local issues. “The Chinese are very simple people,” said an Iraqi Oil Ministry official who spoke on the condition of anonymity because he did not have permission to speak to the news media. “They are practical people. They don’t have anything to do with politics or religion. They just work and eat and sleep.”

Just as the Chinese arriving in Iran speak Farsi with an Iranian accent, the managers of China’s enterprises in Iraq speak Arabic with an Iraqi accent. Getting along with commercial partners isn’t as difficult as Congress tries to make it. If you watch the world news on a Chinese channel like CCTV9 you’re as likely to hear American-accented English as a British [or actually Hong Kong] accent. It all depends on the focus.

The Chinese decided long ago their commercial policies didn’t have to depend on politics. Good, bad or indifferent as your own analysis may be – China’s business partners appreciate the difference. That’s been pretty much maintained as policy by private/shareholder-owned enterprise as state-owned. Even though state-owned business is now the minority of Chinese commerce.

But, I have to think Dick Cheney didn’t plan it this way. 🙂

Global light patterns show economic shift to the East

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Click to enlarge

The amount of light produced by a society is closely correlated with its economic status–rich developed countries tend to be brighter at night than poor developing ones. So an interesting question is how the distribution of light across our planet is changing over time.

Today we get an answer thanks to the work of Nicola Pestalozzi, Peter Cauwels and Didier Sornette at the Swiss Federal Institute of Technology in Zurich. These guys have used data released by the US Defense Meteorological Satellite Program which has monitored night light levels around the planet continuously since the mid-1960s…

Pestalozzi, Cauwels and Sornette look in particular at the dynamics of night lights. They calculate the planet’s mean centre of light and measure how it has moved in the last couple of decades. “Over the past 17 years, [the center of light] has been gradually shifting eastwards over a distance of roughly 1000 km, at a pace of about 60 km per year,” they say.

They’ve also used night lights as a way to monitor all kinds of other changes such as the expansion of developing countries like Brazil and India, the drop in light levels in countries suffering from demographic decline and a reduction in urban population like Russia and the Ukraine, and the success of light pollution abatement programs in countries such as Canada and the United Kingdom.

Perhaps their most fascinating insight is in the rapid increase of economic regions such as the Nile Delta and the area around Shanghai. Pestalozzi, Cauwels and Sornette say that the data clearly shows how light produced by these areas in the developed world has remained remarkably stable, with the New York metropolitan region easily topping the rankings by sheer size.

However, the amount of light produced by these areas in the developing world has increased dramatically with Shenzen in China and the Nile Delta in north Africa showing the biggest increases.

No surprise to anyone involved with global commerce. I started working for Asian companies around 1974 and the size of the companies increased steadily as the firms I worked for moved from Japan to Taiwan and eventually, Shanghai.

Egypt’s Mohamed Morsi prepares for first trip to U.S. as president

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Egypt is keen to strengthen its “strategic relations” with the US, and work is currently underway to prepare for the first official visit by President Mohamed Morsi to Washington, the Egyptian ambassador to the US, Mohamed Tawfik, told Ahram Online.

In an interview given to Ahram Online by phone from his office in the US capital, Tawfik, who took up his ambassadorial post in September, said that the recent re-election of US President Barack Obama could ” help keep a good pace for the upgrading of relations between the two countries” given that the current US administration, despite expected changes, is well aware of the details of Cairo-Washington ties and of the demands that Egypt has made to the US.

“Ultimately Egypt and the US do have strategic ties and ultimately it is in the interest of the US as a world power and Egypt as the central Arab state to pursue cooperation on issues of common interest; but certainly continuity is useful at this point in time,” said Tawfik.

Cairo, according to its ambassador in Washington, is going to pursue the immediate processing of an economic aid package that the US promised in the first quarter of 2011.

“The transfer of an aid package of $450 million is a priority that we are currently working on; this is the first instalment of a wider aid package that the US has promised,” Tawfik said. He added that action is already being taken and that the US administration is working with the US Congress to finalise the matter soon…

However, as Tawfik stresses, there is more than simply aid at stake.

“Upgrading trade relations, especially through granting Egyptian products better access to American markets, and encouraging direct US investment in Egypt, are also matters that we would like to pursue actively with the US,” he added.

Economy, Tawfik insisted, is a top priority in Egyptian-American relations, given that it is clearly a priority for the Egyptian state at this point in time. But this economic interest, he added, does not undermine the political cooperation between Cairo and Washington, especially in relation to regional issues – the Arab-Israeli issue being a permanent priority.

Xenophobes, the whole range of nutballs that spawned birthers in the Republican Party will suffer exploding bowels over a visit from Egypt’s new president. Democratic elections have little or nothing to do with their ideology. Middle Eastern nations that have their first democratic election in decades are still expected to rejoice over Israeli’s apartheid politics, stand hat-in-hand waiting patiently for whatever largesse Congress deems appropriate.

The new era of global relationships, in fact, isn’t run as an exclusive American-controlled club. There are dozens of other free and independent nations waiting for the United States to participate in commerce as equals – or get out of the way.