Changing China

from Global Investing:

Time to kick Russia out of the BRICs?

It may end up sounding like a famous ball-point pen maker, but an argument is being made that Goldman Sach's famous marketing device, the BRICs, should really be the BICs. Does Russia really deserve to be a BRIC, asks Anders Åslund, senior fellow at the Peterson Institute for International Economics, in an article for Foreign Policy.

Åslund, who is also co-author with Andrew Kuchins of "The Russian Balance Sheet", reckons the Russia of Putin and Medvedev is just not worthy of inclusion alongside Brazil, India and China  in the list of blue-chip economic powerhouses. He writes:

The country's economic performance has plummeted to such a dismal level that one must ask whether it is entitled to have any say at all on the global economy, compared with the other, more functional members of its cohort.

I have just returned from Moscow, which is always dreary around this season. But this year, the mood among the capital's eloquent liberal economists has hit a new low. For the last seven years, Russia has undertaken no significant economic reforms. Instead, the state has been living off oil and gas, like a lucky but undeserving rentier."

Economically, Åslund has the numbers on his side. The International Monetary Fund estimates that the Russian economic will contract by 6.7 percent this year, while China will grow 8.5 percent and India 5.4 percent. There is less of a case for Brazil, with a contraction of 0.7 percent projected, but it is still doing far better than Russia.

But the BRICs concept is not just about economics. As mentioned, it is a marketing device to urge investors to focus on the big emerging players. From an investment standpoint, it could be argued that Russia is leading the BRICs. Its stock market is up 128 percent this year versus around 80 percent for the other three.

At very least, however, Russia's economic underperformance and stock market outperformance does suggest it is the outlier of the group.

Why we like garlic

It beats gold, stocks and even property with prices up as much as 40 -fold.

Is it because of swine flu or rising production costs or market speculators ?

Beijingers give their reasons for the humble garlic bulb’s rise to success.

Video credit: Christina Hu

Photo credit: David Gray  

No new stimulus? Buy!

Global markets surged on Wednesday, led by the Shanghai stock market’s 6.1 percent gain, on hopes that Chinese Premier Wen Jiabao would announce a new stimulus on top of the 4 trillion yuan ($585 billion) two-year spending plan unveiled in November.

Investors were optimistic that with a bit help from the central government, the economy could turn the corner and start to regain lost ground, heading off a rise in unemployment that officials fear could threaten social stability.

But in his 2-hour report to the annual meeting of parliament, Wen made no mention of the much hoped-for injection.

No matter. Speculators and investors poured back into China’s share market on Thursday, grasping new reasons to be upbeat, and pushing up the index another 1.04 percent.

Wen’s speech was positive enough to support hopes that an economic recovery was starting. He set an ambitious target of 5 trillion yuan in new lending this year, and insisted this year’s 8 percent economic growth target would be met.

Will that be enough to keep investors’ momentum going? Here’s a link to Reuters coverage of the speech and its impact:

Photo captions: Premier Wen Jiabao delivers speech during the opening ceremony of the National People’s Congress at the Great Hall of the People, REUTERS/Jason Lee