Careful what wish for

It's just been a few mere months since the eyes of the world were beckoning China to help bail out the world economy. Now China is flexing its political muscle and calling for a new currency to replace the dollar as the global standard.

There's been lots of finger pointing over the current global crisis. Some say the Chinese are to blame by investing heavily in US Treasuries and flooding the market with easy cash - thus lulling the Fed into holding interest rates too low for too long. The Chinese say the Fed was indeed at fault, and those policies were not only misguided, but put the entire global economy at risk.

The Chinese feel that a different reserve currency, overseen by the International Monetary Fund, would help emerging and developing nations better manage their own economies.






http://english.aljazeera.net/business/2009/03/20093253587630765.html

China's growth numbers

Last week China officially stopped clinging to their 8% targeted yearly growth number. This week, the World Bank downgraded their assessment from 7.5% to 6.5%. The lower number is more in line with independent economists/Chinese watchers.

Even at 6.5%, growth is growth and China is faring much better than the two economies larger than it (US and Japan). The 2009 projections for he world economy is only a 0.9% expansion.




http://english.aljazeera.net//news/asia-pacific/2009/03/20093184551167145.html

China's anti-monopoly law and Coke

China enacted their first anti-monopoly law in August 2008. The idea was to promote a competitive, fair market.

Enter Coke. It is proposing to take over China's Huiyuan Juice Group. Coke wants to gain ground with the more affluent Chinese.

The deal is awaiting approval. If it goes through, the purchase, valued at 2.4 billion dollars, would be the largest bid by a foreign firm to takeover a Chinese company.

If Coke's bid is rejected on national-interest grounds, it could make tit for tat difficulties for Chinese firms trying to buy abroad.

Legally, there doesn't appear to be a reason to impede the transaction.

"It doesn't raise national security issues, it's just juice," said Susan Finder, a Hong Kong anti-trust lawyer for the US firm Heller Ehrman. "Is Huiyuan a national treasure of a brand?"

However, how long the approval process will take remains unclear."
Source: http://www.chinatoday.com/law/china.law.case.01.htm

China's own market

How quickly can China grow its own market? Long reliant on others to turn its economic wheels, China is spending internally in hopes of creating its own domestic market. According to the Wall Street Journal (2/10/09), domestic consumption was 39% of China's gross domestic product last year, compared to 69% of GDP in the U.S.

The government is particularly focusing on rural areas and providing incentives ranging from 13% electronic goods subsidies to one time cash gifts ranging from $13-$26 per household (a large sum of money for residents earning $700 per year).

The Chinese households are renown for their high savings and low debt. Until the government addresses their social services and health care inadequacies, the Chinese will continue to save and not spend.