Wei's Feed
Jan 7, 2011
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U.S. banks get one foot in the door in China

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

HONG KONG — Days before President Hu Jintao’s U.S. visit, Beijing has given Washington a present. Morgan Stanley and JPMorgan have been given the go-ahead to form local joint ventures, giving them access to China’s $100 billion a year securities underwriting market. But the approvals come at a time when foreign JVs are losing out to local players. Meanwhile, more lucrative broking services are still off limits.

Dec 30, 2010
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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.

Dec 14, 2010
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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.

Dec 10, 2010
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What’s the true measure of China’s growth?

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

HONG KONG — China’s growth is real, but even the nation’s leaders aren’t sure how to measure it. The man expected to be China’s next premier thinks GDP data is unreliable, and he prefers electricity usage as a measure of economic expansion, recent disclosures from Wikileaks say. But as China transitions to a more services- and consumption-based economy, energy data will be a less useful indicator and leaders need to start looking elsewhere.

Dec 3, 2010
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China’s policy combo not enough to curb inflation

Beijing wants to tighten monetary policy to be more “prudent”. Yet it also pledges more public spending. These contradictory goals may compromise the ruling party’s ability to contain inflation, while raised interest rates will put more upward pressure on the yuan.

China probably needs more tightening to rein in consumer inflation which is running at a 25-month high of 4.4 percent. The new monetary policy is really only slightly less loose.

Nov 26, 2010
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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.

Nov 22, 2010
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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.

Nov 9, 2010
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Beijing can afford to change rules for Diageo

Scotland has scotch and China has white liquor. Baijiu, a clear drink with 50 percent alcohol, is China’s national pride. The sector has been largely off limits to foreign investors, but Diageo wants to pop it open with a $1.1 billion bid for producer Shui Jing Fang. China can show openness by letting the UK distiller in, and pick up some useful skills along the way.

What Diageo covets is access to a large and uniquely Chinese market. Top-end baijiu retails for as much $200 a bottle, and sales of white spirits are growing at over 10 percent a year, according to Euromonitor. Shui Jing Fang, in which Diageo currently owns 40 percent, has a 30 percent operating margin. That’s on par with Diageo’s and higher than Pernod Ricard’s.

Oct 25, 2010
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Asian exchange tie-up makes sense but at bad price

Magnus is the Latin for big. And Magnus Bocker, the new CEO of the Singapore Exchange (SGX), is certainly thinking big. Whether his $8.3 billion bid for Sydney-based ASX is good for his own shareholders is another matter. The move has some strategic logic. But the hard synergies are small and the 37 percent premium seems too generous.

A Singapore and Australia tie-up makes some sense for both parties. Asia lacks a big non-Chinese trading platform. Both countries face outside pressure. Singapore has been losing China-related listing businesses to Hong Kong. Australia struggles to benefit from the Asia boom as it is culturally and physically remote. Together they offer investors access to 2,700 companies from 20-plus countries, and the world’s second-largest grouping of resources stocks.

Oct 21, 2010
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Beijing’s keep-’em-guessing approach has flaws

Two days before Thursday’s strong inflation figures, the People’s Bank of China surprised with a rate hike. Global markets sold off, but quickly recovered. The effect of conducting monetary policy through short sharp shocks is waning. It looks time for a well-explained, concerted plan to fight rising prices.

Chinese policymakers favor a keep-’em-guessing approach. The first rate hike in three years came out of the blue, and the central bank remains mute on its reasons. Only annual inflation of 3.6 percent, above the official target, gives a retrospective clue. Similarly, the People’s Bank has not explained why it ditched its bewildering practice of moving rates by 27 basis points at a time.