The Great Debate UK
from Davos Notebook:
Will Goldman’s new BRICwork stand up?
Jim O'Neill, the Goldman Sachs economist who coined the term BRICs back in 2001, is adding four new countries to the elite club of emerging market economies. But does his new edifice have the same solid foundations?
In future, the BRIC economies of Brazil, Russia, China and India will be merged with those of Mexico, Indonesia, Turkey and South Korea under the banner “growth markets,” O'Neill told the Financial Times.
Hmmm. Doesn't quite grab you like BRICs, does it? The Guardian helpfully offers an amended branding banner of "Bric 'n Mitsk" (geddit?). But which ever way you cut it, it's hard to see a flood of investment conferences and funds floating off under the new moniker.
Ten years ago, Goldman had this field to itself. Now more and more acronyms are being bandied around by banks seeking to pique investors' appetite for higher returns.
from Breakingviews:
Low expectations should make China do more on yuan
By Wei Gu
The following article is part of Reuters Breakingviews' e-book, Predictions for 2011. The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
HONG KONG -- The Chinese currency rose just 3.6 percent in 2010. As political pressure ebbs and euro zone trouble spreads, traders now expect an even smaller gain for 2011. Beijing has said it wants to make the yuan more flexible. If it really means that, low expectations create a window of opportunity.
from Breakingviews:
China may stub its toe on rare earths quotas
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
HONG KONG -- China may stub its toe on its rare earths quotas. By restricting exports of the metallic elements, it is hoping to give domestic industries a boost. But Chinese companies will lose if the move leads to trade restrictions or boycotts of overseas acquisitions. If Beijing is serious about addressing environmental concerns, it should cut rare earths production, not exports.
from Global News Journal:
Perilous predictions for 2011
It’s the season to be merry - and to make forecasts about next year. Across the finance industry fine minds spend December crafting outlooks and extrapolations about how the world will fare, in the hope of a decent return over the next 12 months and avoiding the bear traps that will swallow an investment. The banks, strategic advisories and political risk consultants trumpet their analytical prowess, of course, but are also meeting a natural human need to peer into the future. We all want guidance to take the sting out of living in an uncertain world.
Nowhere is prediction more fraught with peril than in politics and world affairs. The success rate is in inverse proportion to the costs that unexpected acts in the real world can impose on the investor. So despite the difficulty of providing a reliable guide to the future there are huge incentives to try to chart the way ahead. Here's Control Risks, a risk consultancy firm, on its view of 2011, while competitor Eurasia reveals in early January, as does the World Economic Forum. Nomura has a list of 10 political challenges to prosperity that range from the prospect of gridlock in US domestic politics to brinksmanship on the Korean peninsula.
from Breakingviews:
Trade should leave China and India both winners
Decades of mistrust haven't stopped China and India's trade from tripling in the past five years. Now China wants to restart free trade talks when Premier Wen Jiabao visits New Delhi later this week. India has long resisted such an agreement. Yet more open trade should leave both sides winners.
Since the two countries warred over a border dispute in 1962, China and India have had a fractious relationship. But on some issues they agree. India helped China stop an agreement over climate change in Copenhagen that both felt was too soft on rich countries. Chinese and Indian state-owned firms have bid together for oil and gas assets.
from Reuters Investigates:
China’s rebalancing act puts consumer to the fore
Wal-Mart, the world's largest retailer, now has 189 stories in China, according to its website. Soon it will have many more. The U.S. chain has announced plans to open a series of "compact hypermarkets", using a bare-bones model developed in Latin America, the Financial Times said.
Wal-Mart stores are a bit different than the one's you might find in, say, Little Rock Arkansas. They sell live toads and turtles for one thing, The Economist reported. But they also sell the appliances, gadgets, and housewares that Wal-Mart stores merchandise everywhere.
from Breakingviews:
Seaweed boom shows China’s inflation challenge
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
HONG KONG -- It sounds like the ultimate proof of China's runaway economy: a seaweed bubble. After garlic and green bean manias, food inflation is now asserting itself in a 20 percent rise in seaweed prices in the last year.
from MacroScope:
Building BRICs in Africa
Some eye-catching numbers from Standard Bank out today on the influence of BRICs countries -- Brazil, Russia, India and China -- on Africa.
First off, the bank says the global recession and its recovery have been nourishing these so-called South-South ties. But it is all now ready to take off. The bank estimates:
from Breakingviews:
China could fight inflation by letting money out
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
HONG KONG -- China is in an inflationary bind. Policymakers need to bring interest rates up, yet are worried about triggering debt defaults and attracting speculative money. Two bank reserve requirement hikes in two weeks, and new measures to stabilise consumer prices, will only have marginal effects on rising prices. A better way would be to let money flow offshore.
from Chrystia Freeland:
What’s good for the world is bad for the U.S. and China
This fall, much of the United States seemed to have settled on a narrative for the country’s struggle to adapt, after a debilitating financial crisis, to a post-industrial and post-unipolar global economy: China and its undervalued currency are largely to blame.
Proof that this was a nationally compelling storyline came during the acrimonious midterm election campaign. U.S. politics have rarely been more polarized, but complaining about China was something both parties could agree on.
