Category Archives: China

Saudi production falls

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Saudi’s production falls as they work to regain control of price after the Great Masters Inventory Liquidation runs its course.

OPEC Oil Output Fell 1.5% in December, Survey Shows

by Diane Munro and Margot Habiby

Jan. 6 (Bloomberg) &#8212 Crude-oil production from the 13 OPEC members in December declined 475,000 barrels a day from November, the latest Bloomberg survey of producers, oil companies and industry analysts shows. Figures are in the thousands of barrels a day.

Opec Production
December 2008

Opec Country Dec Est. Nov. Output Monthly Change Nov. 1 Target Est. vs. Target Est. Cap. (@)
Algeria 1,330 1,360r -30 1,286 44 1,450
Angola 1,820 1,850 -30 1,801 19 2,000
Ecuador 500 500 0 493 7 500
Indonesia* 840 850 -10 — — 900
Iran 3,850 3,820 30 3,618 232 4,100
Iraq* 2,345 2,320 25 — — 2,500
Kuwait# 2,500 2,550 -50 2,399 101 2,650
Libya 1,690 1,710 -20 1,623 67 1,800
Nigeria 1,900 1,880 20 2,050 -150 2,500
Qatar 790 790 0 785 5 900
Saudi Arabia# 8,400 8,800r -400 8,477 -77 10,800
U.A.E 2,350 2,350 0 2,433 -83 2,800
Venezuela 2,320 2,330 -10 2,341 -21 2,500
Total OPEC-13 30,635 31,110r -475 — — 35,400
Total OPEC-11* 27,450 27,940r -490 27,308 142 32,000

*Quotas effective Nov. 1, 2008. OPEC agreed at its Dec. 17 meeting in Algeria to cut its quota target by 2.463 million barrels a day from the previous level, to 24.845 million barrels daily from Jan. 1. The quota target excludes Iraq, which has no formal quota, and Indonesia which left OPEC at end-2008.

>   
>   On Thu, Jan 8, 2009 at 9:56 AM, David wrote:
>   
>   I honestly don’t like or trust a lot of the “World
>   Oil Demand” stats that many people look at.
>   I think perhaps the EIA/DOE figures compiled
>   below are most realistic, if not a bit lagged.
>   Seems to show steady decline in US/OECD,
>   rising China and flat/rising ME and rest. Wish
>   they had an India bucket to be frank, have
>   requested a few times already.
>   

Thanks, still looks like the world is reasonably close to the edge, and any pickup in world economic activity could be problematic.

Saudi Production (Dec)


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China back pushing its exports and ignoring Paulson

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Recession Opens U.S.-China Rift Paulson Talks Bridged

By Kevin Hamlin and Mark Drajem

Dec. 29 (Bloomberg) — The global recession is re-exposing fissures in U.S.-China relations that Treasury Secretary Henry Paulson spent more than two years smoothing over.

Hoping Obama lets the world export their brains out to us and sustain domestic demand with fiscal policy.

Heightened tensions between China and the U.S. may worsen a contraction in world trade that already threatens to deepen and prolong the economic downturn. The friction comes as President- elect Barack Obama readies a two-year stimulus package worth as much as $850 billion

Hopefully more than that.

that will require the U.S. to borrow more than ever from China, the largest buyer of Treasury securities.

No sign of this ridiculous rhetoric changing yet.


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China News

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Highlights

China eases rules on forex advances

Domestics somehow caught short USD like the rest of the world?

More measures to spur consumption and foreign trade(Xinhua)

Help for both domestic consumption but exports as well- still pushing exports.

China to Raise Export Rebates, Use Yuan to Settle Some Trade

Pushing exports.

China Must Prevent Drastic Decline in Property Prices

China eases rules on forex advances

Exporters will be able to increase their advances on foreign-currency payments to 25 percent from the current 10 percent, the China Securities Journal reported on Wednesday.

The decision came in a circular issued by the State Administration of Foreign Exchange (SAFE) on Tuesday night.

Importers’ quota for deferred foreign-currency payments also rose to 25 percent from 10 percent.

Analysts said the move would help small and medium-sized enterprises raise funds and improve their cash flow.

A banker who asked to remain unidentified told Xinhua the financial crisis has caused difficulties for many enterprises and this move would give them more operating capital.

The State Council, or China’s cabinet, urged a higher quota of foreign exchange advances to support trade during a standing committee conference on Dec 3.

SAFE official Cai Qiusheng was quoted by Tuesday’s Shanghai Securities News as saying that foreign exchange reserves were below their peak at $1.9 trillion as of the end of September.

According to the paper, enterprises that have good credit and haven’t violated any foreign-exchange regulations can qualify for the new limits.

To prevent “hot money” inflows through trade, SAFE, the Ministry of Commerce and the General Administration of Customs issued a joint circular on July 14 to step up supervision of cross-border capital flows.

The foreign exchange agency told administrative departments at all levels to step up inspection to prevent large-scale cash outflows.

More measures to spur consumption and foreign trade(Xinhua)

Updated: 2008-12-24 20:02BEIJING — More measures will be taken to stimulate consumption and support foreign trade, according to Wednesday’s executive meeting of China’s State Council, or the cabinet.

A document released after the meeting, chaired by Premier Wen Jiabao, said to stimulate domestic consumption, efforts should be made to improve the rural circulation network, increase varieties of commodities available in rural markets, improve urban community service-facilities, promote upgrade of durable goods, support development of circulation companies, stimulate consumption in holidays and through exhibitions, and step up supervision over product quality and safety.

In the fiscal year of 2009, the central government would increase its financial support for development of the rural circulation network and the service industry.

To sustain a stable growth in the country’s foreign trade, the central government would raise export tax rebates of high-tech and high-value-added products, adjust the forbidden and limited commodity catalogue of processing trade, encourage a transfer of processing trade from the eastern to the central and western region.

The government would also urge banks to improve services for foreign traders, increase imports of products needed, direct foreign funds to high-tech, energy-saving and modern service industries, simplify customs procedures and keep a close eye on the quality and safety of both imported and exported products.

China to Raise Export Rebates, Use Yuan to Settle Some Trade

Dec. 24 (Bloomberg) –China will raise export rebates on some machinery and electronics and let some trade with Hong Kong, Macau and Southeast Asia be settled in yuan to help boost faltering overseas sales, the Cabinet said.

China will also expand the use of government money to develop foreign trade, the State Council announced today.

The pilot program for settling trade in yuan will take place in Guangdong province, eastern China’s Yangtze River Delta region, and Guangxi and Yunnan provinces, the statement said.

China Must Prevent Drastic Decline in Property Prices

Dec. 24 (Bloomberg) — China must prevent a drastic decline in property prices, the State Council said in a report to the nation’s parliament today, state-run China National Radio said on its Web site.

The government will increase construction of housing for low-income families and control excessive gains in land prices, the report said.


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Re: ECB ending Fed swap lines!

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(email exchange)

>   
>   On Fri, Dec 19, 2008 at 9:25 AM, Scott wrote:
>   
>   ECB says to discontinue US dollar swap OPS from end Jan.
>   
>   I guess they don’t want euro to strengthen!
>   

Exactly!

This is the new century version of ‘competitive devaluations.’

Paulson moved first by talking foreign CB’s out of buying USD reserves.

Bernanke thought he was helping with rate cuts.

China said ‘no mas’ a while back started ‘letting’ the yuan depreciate, probably via USD purchases.

Japan recently announced ‘no mas’ and that they were prepared to resume USD buying to abort yen appreciation.

If the ECB in fact cuts off its banks ‘cold turkey’ from the Fed’s $ the shock can be enormous.

Ramifications:

Upward pressure on USD LIBOR.

Downward pressure on the euro.

Upward pressure on eurozone credit default premiums.

Falling US equities.

Etc.

ECB to Discontinue Dollar Swap Tenders From the End of January

By Jana Randow

Dec. 19 (Bloomberg) — The European Central Bank said it will discontinue its euro-dollar foreign exchange swap tenders at the end of January due to “limited demand.”

Right! Only $300 billion outstanding.

The ECB will continue to loan banks in Europe as many dollars as they need for terms of 7, 28 and 84 days in exchange for eligible collateral, the Frankfurt-based central bank said in a statement today. Dollar swaps “could be started again in the future, if needed in view of prevailing market circumstances,” the ECB added.

Those circumstances being the strong euro?


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Paulson weak dollar policy ends- MOF to resume intervention

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Before the body is cold the MOF has announced they are no longer going to be intimidated by being called ‘currency manipulators’ and ‘outlaws’ by Paulson and are resuming the building of the USD reserves to support their export industries.

Bernanke’s beggar thy neighbor policy is being matched by real action- direct intervention- rather than interest rate rhetoric.

The move in the yuan suggest China has been doing much the same.

This will leave the eurozone all the more vulnerable as they are the only nation not using fiscal policy and ideologically cant buy USD, so the combination of a relatively high euro and weak domestic demand will keep them on the ropes while others recover.

Yen Declines as Nakagawa Says Japan May Take Currency Action

By Kim-Mai Cutler and Stanley White

Dec. 18 (Bloomberg) — The yen weakened from near a 13-year high against the dollar after Japanese Finance Minister Shoichi Nakagawa signaled the nation is ready to intervene in the foreign-exchange market for the first time in four years.

“We will take necessary steps if needed” to limit the currency’s advance and protect the overseas earnings of Japanese exporters, Nakagawa told reporters in Tokyo. The dollar fell to an 11-week low against the euro on speculation the Federal Reserve’s near-zero interest rate policy will reduce the appeal of U.S. assets.


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China’s fiscal policy and the end of the Paulson era

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This sounds like they get it and are on it.

It also seems the weak yuan policy is back, as Paulson’s influence fades.

Paulson’s ‘beggar they neighbor’ weak dollar policy caused the US slowdown to spread worldwide.

Govt to increase spending power of rural residents

By Fu Yu

The Chinese government has reaffirmed its commitment to stabilizing the real estate and stock markets, and to boost auto sales.

The National Bureau of Statistics director Ma Jiantang said in a published article that the government would eliminate “consumption bottlenecks” to promote consumer demand. In the article published in Qiushi, a Communist Party journal, Ma wrote that the government would try to increase the spending power of lower income groups and to raise the desire to consume among the well-to-do.

The government has also planned to raise agricultural produce prices to help increase rural income levels. In addition, it will raise subsidies on seeding and farm machinery, and to increase some social benefits to farmers and low-salary rural workers.

In his analysis, Ma said consumers in rural areas have a strong potential demand for a wide range of consumer products and services.

He believes the $586 billion economic stimulus package will have the effect of encouraging increased spending by higher-income consumers, which will help boost investment.


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Obamaboom fiscal fitness update

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Leaning in the right direction to restore demand.

A decisive move from the new Obama team is very possible given the latest rhetoric.

FACTBOX-Fiscal stimulus plans to tackle the crisis

Nov 23 (Reuters) – Countries around the world are setting out fiscal stimulus packages to help their economies withstand the impact of the global financial crisis.

Below are some details:

* AUSTRALIA:

— The government has announced a A$10.4 billion ($6.8 billion) package of cash handouts and family benefits and has pledged more if it is needed.

— It is providing A$1.5 billion to boost the housing and home building markets and doubling the grant for first-time home buyers. They will now get A$14,000 from an original A$7,000.

* CHINA:

— Provincial government plans will add an additional 10 trillion yuan ($1.464 trillion) to a 4 trillion yuan stimulus package announced by the central government earlier this month, state television said. The central scheme included rail and infrastructure schemes as well as extra social spending to offset the sharp drop in demand for the exports which fuel China’s economy.

— China is also changing value added tax (VAT) to allow companies to deduct the cost of capital equipment, saving them about 120 billion yuan a year.

* EUROPEAN UNION

– An economic stimulus plan to be presented on Nov. 26 will include a significant budgetary expansion, the head of the EU executive said on Friday, as it signalled longer deadlines for countries to slash budget gaps.

— German Economy Minister Michael Glos has said the plan envisaged, among other things, a 1 percentage point cut in value-added tax across the EU and that the total value of the stimulus was 130 billion euros ($163 billion).

* GERMANY:

— The government has announced a package which will generate about 50 billion euros ($64.22 billion) in investment and contracts.

– A new lending programme of up to 15 billion euros will be introduced for German state-owned development bank Kreditanstalt fuer Wiederaufbau (KfW) to strengthen its lending activities. KfW’s infrastructure programme for structurally weak local authorities will be raised by 3 billion euros.

— Urgent investment in transport will be accelerated via a new programme totalling 1 billion euros in both 2009 and 2010.

— Parliament has approved a rise in government net new borrowing in 2009 to 18.5 billion euros from 10.5 billion.

* NETHERLANDS

— The government has announced a “liquidity impulse” of about 6 billion euros ($7.5 billion), including allowing companies to write down investments earlier than usual.

— Companies will also receive temporary financial support from an unemployment fund to pay employees who will cut down on their working hours.

*RUSSIA

— Prime Minister Vladimir Putin on Nov. 20 unveiled a $20 billion economic stimulus package and help for people hurt in the economic slowdown. He offered assurances there would be no repeat of the economic turmoil when the Soviet Union collapsed in 1991 and, 10 years ago, when the state defaulted on its debt.

— The package will include a cut in profit tax, which accounts for 8.5 percent of budget revenues, to 20 percent from 24 now, and a new depreciation mechanism that will allow firms to reduce the profit tax further.

— The government has already sanctioned state-run banks to support industry with billions of dollars of soft funding.

* SOUTH KOREA:

— The government has unveiled a package worth at least 14 trillion won ($9.37 billion), including tax cuts

— Measures also include an extension of 1.3 trillion won to state-owned banks to help SMEs. The government is to expand credit guarantees to SMEs by 6 trillion won.

* SPAIN:

— In the last six months, Spain announced various measures to cushion the impact of the economic slowdown and soaring unemployment including a 38 billion euro ($49.28 billion) fiscal stimulus package.

— The package includes 6 billion euros in tax cuts and 4 billion euros of liquidity to credit strapped companies and households.

— It also includes a 400-euro income tax rebate for employees, pensioners and the self-employed.

* SWITZERLAND:

— The government announced an economic stimulus package worth 890 million Swiss francs ($753 million). It includes government spending of 340 million francs on flood defence, natural disasters and energy efficiency projects.

— Spending plans also include up to 1 billion francs on roads and railways and 550 million francs as tax breaks to 650 firms for job creation programmes.

* TAIWAN:

— Taiwan has announced T$122.6 billion worth of subsidies and tax cuts and T$58.3 billion of infrastructure spending. The steps unveiled are expected to generate T$1 trillion ($31.2 billion) in investment and consumption.

* UNITED KINGDOM:

— The government is expected to announce on Monday a package of tax cuts and extra public spending of upto 20 billion pounds ($29.70 billion), with the centrepiece a temporary cut in sales tax.

— The packagesis also expected to feature tax relief for small firms, efficiency savings and help for mortgage payers.

— British Prime Minister Gordon Brown said on Nov. 11 he was ready to borrow to provide the British economy a fiscal boost and he urged other countries to do the same.

* UNITED STATES:

— President-elect Barack Obama said he is crafting a two-year plan to revive the economy and save or create 2.5 million jobs. He called in October for a $175 billion stimulus measure but appears ready to for a much larger package. — Congressional Democrats have promised to make a broad economic stimulus a priority when they reconvene in January. The package is expected to include middle-class tax cuts and billions of dollars for public works projects, such as the construction of roads, bridges and mass transit. OTE]))

— President George W. Bush signed a $168 billion, two-year economic stimulus package into law in early 2008. Of that total, $152 billion was earmarked for 2008.

— The package includes tax rebates of up to $600 per individual earning $75,000 in adjusted gross income or less and $1,200 per couple plus $300 per child. Businesses would be able to deduct half the costs of purchases of new equipment. (Editing by David Cowell; +44 207 542 6486)


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Pac Rim vows ‘Extraordinary’ steps

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How about:

‘Conduct ongoing fiscal adjustments to support domestic demand at full employment levels?’

Not quite, but moving in that direction.

They would all rather export than sell their output internally.

Pacific Rim Leaders Vow Further ‘Extraordinary’ Steps on Crisis

By Shamim Adam and Bill Faries

Nov. 23- Leaders of Pacific Rim nations promised to work together on further “extraordinary” steps to combat the global economic crisis and pledged to refrain from erecting new barriers to trade and investment.

Leaders of the 21-nation Asia-Pacific Economic Cooperation group, which includes the U.S., China and Japan and accounts for half of world output, also called for improved corporate governance and backed efforts to thaw frozen credit markets.

“We have already taken urgent and extraordinary steps to stabilize our financial sectors and strengthen economic growth and promote investment and consumption,” the group said in a statement during its meeting in Lima, Peru. “We will continue to take such steps, and work closely, in a coordinated and comprehensive manner, to implement future actions.”


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ObamaBOOM around the corner?

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Obama says drafting bold economic stimulus

U.S. President-elect Barack Obama said Saturday that he was crafting an aggressive two-year stimulus plan to revive the troubled economy, warning that swift action was needed to prevent a deep slump and a spiral of falling prices.

Agreed!

“If we don’t act swiftly and boldly, most experts now believe that we could lose millions of jobs next year,” the Democratic president-elect said in a weekly radio address.

Agreed!

Obama, who succeeds President George W. Bush on Jan. 20, said the economy could get worse before it gets better. “We now risk falling into a deflationary spiral that could increase our massive debt even further,” he said.

Obama said the plan would aim to save or create 2.5 million jobs by January 2011 and would be “big enough to meet the challenges we face.” Any additional jobs would offset what is expected to be a dismal employment picture in the near future.

I vote for ‘create’ and await clarity of what he means ‘boldly’.


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Russian Central Bank spent $58 billion backing Ruble (Update1)

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Russian Central Bank Spent $58 Billion Backing Ruble (Update1)

By Alex Nicholson and Maria Levitov

Nov. 19 (Bloomberg) — Russia’s central bank spent $57.5 billion defending the ruble in September and October, Chairman Sergey Ignatiev said.

Why would they ‘defend’ the ruble? Maybe they ‘defend’ it selectively, via transactions with ‘insiders’ moving from rubles to dollars?

Russia held 45 percent of its reserves in U.S. dollars, 44 percent in euros, 10 percent in pounds and about 1 percent in yen on Nov. 1, Ignatiev, said in the lower house of parliament in Moscow today.

“Russia ensures the stability of its currency, given the fundamental indicators of our economy,” Finance Minister Alexei Kudrin told lawmakers today. The amount of reserves ensures “a firm foundation for macroeconomic stability, for stability of the national currency,” he added.

Looks like I’m wrong on suspecting insider conversion. Sorry!!!

Russia’s international reserves stood at $475.4 billion as of Nov. 7, the third-biggest after China’s and Japan’s. They have fallen $122.7 billion since Aug. 8 as the central bank shored up the ruble. The bank buys and sells currency to keep it within a trading band against a dollar-euro basket to limit the impact of exchange-rate fluctuations on the economy.

Right, that’s the reason…

Ignatiev also said that the central bank reduced its holdings of Fannie Mae and Freddie Mac bonds, which are held by Russian oil funds that are part of the reserves, to $20.9 billion on Nov. 1 from $65.6 billion on Jan. 1.

Explains some of the spread widening.

Fannie and Freddie were “taken under state control” in the U.S. in September, guaranteeing their reliability, Ignatiev said. The bank isn’t currently selling bonds of the two U.S. mortgage- finance companies, he said.

Right, not even if an insider wants to buy them with rubles.


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