Economy/Resources - 152. page

Xinhua carried a commentary that a professor from Fudan University wrote titled, “Trade Protectionism Will Not Solve the Problems the U.S. Faces.” The article said that, since Trump took office, he has publicly promoted “Buy American and Hire American.” He withdrew the U.S. from TPP and requested a renegotiation of NAFTA. These indicate that trade protectionism is on the rise and has become the latest unstable factor affecting the progress of the global economy. The article cited the following three reasons that trade protectionism will not solve the problems the U.S. faces. First, trade protectionism will harm the interests of the U.S. multinational corporations because they will lose the profits from trade while the foreign countries will lose on trade volume. Second, it will hurt the competitiveness of the U.S. economy because even though, on a short term basis, it will help the industries that are less competitive, it will also cause those industries to lose the motive to expand and advance in technological renovation. Therefore, they will become less competitive in the global market. Third, it will damage the future of the U. S. economy because the possible global trade war will seriously affect those U.S. companies that rely on exports. As the U.S. focuses on its own interests and becomes isolated and selfish, it will weaken the confidence of investors from the U.S. and around the world. Therefore it will not help U.S. economic growth in the long term. The article concluded that, if U.S. does not face its own domestic economy, political, and social structure issues but rather blames unfairness and an imbalance in international trade deals, it will not help to solve its own problems. Rather, it will hurt others as well as itself.

Source: Xinhua, February 26, 2017
http://news.xinhuanet.com/world/2017-02/26/c_129496228.htm

Foreign investment is pulling out of the Chinese market and it is impacting the Chinese labor market. Foreign capital investment was US$121 billion in 2016, down 62.94 percent from 2011. Continue reading →

On February 17, China Times published an article discussing China’s investments to stimulate the economy. According to the statistics that each province has released, the total investment to stimulate the economy in 2017 amounts to more than 40 trillion yuan (US$5.82 trillion). Twenty-three provinces so far have announced their 2017 fixed asset investment targets. Taking into account the provinces that have yet not published their data, the total investment in fixed assets this year will be at least 45 trillion yuan (US$6.54 trillion).

In addition to the large provincial budget targeted for infrastructure investment, the National Development and Reform Commission (NDRC) also announced the latest progress on major investment projects. On February 15, NDRC spokesman Zhao Chenxin said at a press conference that in January, NDRC approved 18 fixed asset investment projects with a total investment of 153.9 billion yuan (US$22.38 billion). These projects are concentrated mainly in water conservancy, transportation, and energy fields.

Beijing Fushengde Economic Consulting Firm Chief, Economist Feng Delin, told the China Times reporter, “These investments are mainly to cope with the economic slowdown.”

Source: China Times, February 17, 2017
http://www.chinatimes.cc/article/64563.html

According to a report that Radio France Internationale published, Greenpeace East Asia and Custeel (a website that the China Iron and Steel Association, which 16 large-sized steel manufacturers and enterprises in China fund) conducted an investigation of China’s steel production. The findings showed that, despite the serious steel surplus that China faces, its 2016 steel production capacity actually increased by 36.5 million tons. The investigation report disclosed that even though China claimed that, in 2016, it shut down steel factories having 85 million tons of steel capacity, the number should only have been 23 million tons because the rest of the factories that were shut down had been idle, with no production capability. Meanwhile, according to the report, new projects launched in 2016 added 12 million tons of production capacity with most of it located in Hubei Province.

The report stated that China Steel production accounts for 50 percent of the production volume in the world. Competitors criticized (China’s steel industry) for using the destructive competition approach and selling below cost. As a result, in 2016, they faced anti-dumping treatment from the EU and the U.S. The Chinese authorities promised that, by 2020, China would reduce steel production by 100-150 million tons. In 2016, China’s steel production was around 1.1 trillion tons, which means it is sitting on 300 million tons of excess steel.

Source: Radio France Internationale, February 13, 2017                                                                                    cn.rfi.fr/%E4%B8%AD%E5%9B%BD/20170213-%E6%89%BF%E8%AF%BA%E6%9C%AA%E8%A7%81%E6%95%88-%E5%8E%BB%E5%B9%B4%E4%B8%AD%E5%9B%BD%E9%92%A2%E9%93%81%E4%BA%A7%E8%83%BD%E5%AE%9E%E9%99%85%E5%87%80%E5%A2%9E3650%E4%B8%87%E5%90%A8

For the first time since February 2011, China’s foreign exchange reserve level dropped below US$3 trillion.
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Reuters Chinese recently reported that the Institute of International Finance (IIF) released its recent report on China’s capital outflow. According to numbers that the IIF provided, China’s 2016 outflow reached a record high of US$725 billion, which was a US$50 billion increase over 2015. The same number in 2014 was only US$160 billion. In the past two years, both Chinese businesses and individuals accelerated their process of sending money overseas, partially due to the expectation of the Chinese currency’s depreciation. High capital outflow caused a US$320 billion decrease in China’s foreign exchange reserve. In 2016, the Chinese currency RMB saw a record depreciation of 6.5 percent against the U.S. dollar. The IIF also suggested that China may see a higher capital outflow in 2017 if U.S. companies move their money back to the States, which they may do if the Trump administration delivers on its promise of tax relief on the flow-back dollars. The IIF estimated a US$206 billion capital outflow from developing economies, with most of this amount coming from China.

Source: Reuters Chinese, February 2, 2017
http://cn.reuters.com/article/china-capital-outflow-2016-iif-idCNKBS15I01H