Reuters blog archive

from Breakingviews:

Debt deal may encourage Asia’s dollar craving


By Andy Mukherjee

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Washington’s last-minute deal on raising the U.S. government’s debt ceiling made grim viewing for Asian central banks. It’s the second time in two years they have faced anguish over the safety of their enormous U.S. government bond holdings. But even with an agreement to raise the ceiling until Feb. 7, and default averted, the harrowing experience is unlikely to turn America’s largest creditor group into a bunch of angry sellers. They may in fact do the opposite, and buy more.

There is precedent for such behaviour. China and Japan, the two biggest holders of U.S. government debt, now own 16 percent more Treasuries than they did during the previous round of sparring over the debt limit during the summer of 2011. A 95 percent jump in the same period in the Treasury ownership of the Caribbean banking centres, where Asian central banks often buy to mask their purchases, suggests financial fragility has only tightened the embrace of the dollar. Asia’s biggest eleven economies officially held over $3 trillion of U.S. government securities at the end of July, according to Treasury data.

Asia has a strong motivation for self-insurance. The region’s markets still rely on U.S. debt as collateral for trades, and a crisis - say, a missed interest payment - that pushed down the value of government bonds would only increase the volumes needed to back everyday transactions. Although the region’s central banks have stitched up an array of currency swaps, they remain small, and would be next to useless if all participants became desperate for dollars at once.

from The Edgy Optimist:

The benefits of a ‘de-Americanized world’

This current bout of Washington inanity is approaching its denouement, but however it ends, it has accelerated a trend that has been gathering steam for at least the last five years: the move away from a Washington-centric world and towards a new, undefined, but decidedly less American global system.

The latest broadside was the widely disseminated editorial in China’s state-run news agency Xinhua, which called for a “de-Americanized world” that no longer depends on the dollar and is thus no longer at the whim of “intensifying domestic political turmoil in the United States.” That follows on the heels of a Vladimir Putin’s op-ed in the New York Times in which he called out the American tendency to see itself as an exceptional, indispensable nation. “It is extremely dangerous,” Putin concluded, “to encourage people to see themselves as exceptional, whatever the motivation.”

from Breakingviews:

Thai mogul emerges on top in supermarket swap


By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Thailand’s richest man has emerged on top in a Chinese supermarket swap. Dhanin Chearavanont, whose conglomerate picked up a stake in insurer Ping An and acquired cash-and-carry group Siam Makro earlier this year, is offloading the bulk of his loss-making retail operations in China in return for shares in local rival Wumart Stores. Both sides benefit from the deal worth HK2.9 billion ($373 million) but Dhanin is ahead by an aisle.

from Breakingviews:

Guest column: Why China’s bad banks are a bad idea


By Joe Zhang

The author is a Reuters Breakingviews guest columnist. The opinions expressed are his own.

At the end of the 1990s, China’s banks faced a rising tide of bad debts, and Beijing came to the rescue. Financial insiders still see that move as necessary, wise and courageous. On the contrary, bailing out the banks was a bad idea. It would be a mistake to repeat the trick.

from Breakingviews:

Britain can gain from China’s empire builders


By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Britain once had nothing to offer China but silver and opium. Now it has holidays, banks and building sites. George Osborne, the UK Chancellor of the Exchequer, and London’s mayor Boris Johnson are using visits to Beijing to say just how welcoming the UK is likely to be. It’s a triumph of openness, and provided the UK chooses its partners carefully and the Chinese are tactful, both sides will benefit.

from Breakingviews:

Cooper-Apollo spat forces investors to pick lanes


By Una Galani and Peter Thal Larsen

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Investors in Cooper Tire & Rubber are being forced to pick lanes. Legal wrangles have put Apollo Tyres’ agreed $2.5 billion offer for its U.S. rival in doubt, and tensions at its China joint venture have undermined Cooper’s value. But a negotiated price reduction still looks possible. Cooper shares may be pricing in too much bad news.

from The Great Debate:

Looking to diplomacy with Iran


President Barack Obama has decided to test whether Iranian President Hassan Rouhani’s “charm offensive” is a legitimate effort to reach an agreement on a more constricted and transparent Iranian nuclear program. With this decision, he embarks on the most transformative and important diplomatic initiative of his presidency.

The closest historical analogy is President Richard M. Nixon’s opening to China in 1971. Nixon had recognized a major adversary’s new willingness to change course and he seized the opportunity to further vital U.S. national security interests.

from Environment Forum:

Disasterology 7: Earthquake-scarred Sichuan village reimagined as tourist hub, memorial


For survivors of Superstorm Sandy in the U.S. Northeast, the Sendai tsunami in Japan and the massive earthquake in Chengdu, China, the scars of disaster are still palpable. I’m part of a group of journalists brought together by the East-West Center in Hawaii to see how the people and environments hit by these catastrophes are faring, one year,  two years and five years later. We began our tour on Sept. 29. Here are the other posts in the series:

from Global Investing:

The hit from China’s growth slowdown

China's slowing economy is raising concern about the potential spillovers beyond its shores, in particular the impact on other emerging markets. Because developing countries have over the past decade significantly boosted exports to China to offset slow growth in the West and Japan, these countries are unquestionably vulnerable to a Chinese slowdown. But how big will the hit be?

Goldman Sachs analysts have crunched the numbers to show which markets and regions could be hardest hit. On the face of it non-Japan Asia should be most worried -- exports to China account for almost 3 percent of GDP while in Latin America it is 2 percent and in emerging Europe, Middle East and Africa (CEEMEA) it is just 1.1 percent, their data shows.

from Photographers' Blog:

Little gladiators: China’s cricket fighting


Beijing, China

By Kim Kyung-hoon

On a late summer day in Beijing while roaming through the narrow alleyways of an old pet market I heard the chirping of insects. It was such a refreshing sound on a stiflingly hot day. At one point, the chirping grew louder and louder, and my curiosity led me into one alley. There, I found countless little insects in bird cages and small jars on sale and waiting for their new owners.

According to a cricket expert, keeping crickets as singing pets is an old Chinese tradition which dates back more than 3,200 years. Unlike in some countries, where people treat crickets with disdain and repel them with bug spray, in China the chirping of crickets traditionally has been regarded as beautiful music. Even more interesting than the singing crickets in small cages was the men observing hundreds of small jars with very serious faces.