‘Corruption on wheels’ in China

During the Olympic Games in Beijing, residents were impressed by the blue sky over the city. This was so because the air is very polluted in Beijing, but for the Olympic Games they did a lot effort against pollution. For example they sharply reduced the number of vehicles on the roads, about 70% of government-owned cars.

This was such a success that the Beijing Municipality decided to continue the car restrictions. But now it seems that Beijing's authorities don’t have any problems with the car restriction and operate as good as before.
This raised a big question: if they could function so well without so many cars, why did it spend so much tax money to buy and maintain so many vehicles in the first place?

Now, there is a big focus on the issue in China. If we compare the amount of money that China spends to education, 610.4 billion Yuan, and the amount of money for government-owned cars, 600 billion Yuan, I think it’s logical that the Chinese people ask questions...
A lot of the government-owned cars are not only used for what they serve, but a lot of officials also make private trips with their cars to famous holiday spots, pick their children up at school,...

Now the question is raising how many cars the Chinese government really needs. I think that’s quite logical because the people pay taxes that are used to buy cars for the Chinese government, who doesn’t need all those cars. Their tax money should better be invested in education or social security for example, instead of wasting it to unnecessary cars.
This also has an other positive aspect. China is finally doing something about their pollution. They are known as one of the most polluting countries in the world, so I think it’s a very positive fact that the people in Beijing now are asking questions if it’s really necessary to use so many cars. This only can lead to a more ‘green’ way of living and producing, which is really necessary.

source : http://www.atimes.com/atimes/China/JK25Ad01.html

India moves to cut prices on fuel

The Oil Minister of India has announced that the prices of fuel will reduce. The fuel retailers will be allowed to reduce their prices with five rupees or 10 US cent for a litre petrol and two cents for a litre diesel. With this drop, the government hopes to stimulate the economy in this global credit crisis.
For India, it's his first drop in 22 months of high prices. Price drop is also good for the government because now they could probably achieve their economic stimulus plan.Some economist say that the reducing prices also can be combined with a short-term cut of the interest rate but only for the weekend. With this move, the economist hope that people will put money on their bank or that they will buy more.

I think that the price dorp of India will give their economy a boost.The people of India will now have more money because they don't have to spend a lot of money anymore for fuel and with that money they buy more or put it on a deposit account. But I don't think that the cut of the short-term interest rate during the weekend will boost their economy, I think that it's a to short period for people to decide whether they will put their money on the bank or not.
So generally I think that India can boost their economy by dropping the price of fuel and the short-term interest rate, but they have to exist for a long time.

source: http://news.bbc.co.uk/2/hi/south_asia/7767617.stm

Will the Mumbai attacks hurt India's prospects?

After the attacks on Mumbai, the Indian financial sector is looking less and less attractive to foreigners. The situation was already very bad before the attacks, but now it’s worse. This year, investors already sold 13.4 billion dollars of equities. This is also a cause why the Sensex, the bench market, dropped with 60% since January.
Everyone thought also that the Indian economy was immune for the worldwide downturn, but India is just like all other Asian countries who felt the worldwide downturn. This is strange because India is less exposed to the global economy through export and felt the same effect as those countries who have more export.

There growth is also slowing down. At the moment there growth is about 7,5% and next year they hope to have minimum 5%, but it’s going to be hard to get this. The reason why it’s going to be hard to get that result, is the fact that the investments are decreasing. Local banks are less willing to give loans and companies have to loan more abroad.

Specialist say the growth of India in 2010 is going to be negative, but say that India still looks compelling over the long term. I agree with this because, I think now India is just like any other country, they just are trying to survive this economical recession. That is the reason why banks are less willing to give loans. The slowing down of the growth of India is not only caused by the attacks of Mumbai, but is also caused by slowing down of the world economy and the export.

Source: http://www.moneyweek.com/news-and-charts/economics/will-the-mumbai-attacks-hurt-indias-prospects-14214.aspx

Japan set to tackle lending costs

The bank of Japan held last Tuesday an emergency meeting to solve the problem of the rising borrowing cost for Japanese companies in this economical crisis. These costs are rising at their fastest pace in ten years.
The bank is under increasing pressure because they provide money to the financial markets aggressively as market rates increase due to the credit crunch.
It’s a fact that the Japanese economy is getting more worse every day. Japanese industrial output and the consumer spending has fallen deeply what encourages the fear that Japan is heading to a recession.
Despite the sad prognosis, economists say that a interest cut would be very good, but cutting further then would have an negative influence on the operations on the money markets.
It’s a good idea to reduce the lending costs because cheaper loans will encourage companies and consumers to borrow more money and they will spend it to consumer products which is exactly what’s necessary to get out of the negative spiral where they are in at the moment. Now it is upon the economist to solve this very difficult balance exercise to find the perfect interest rate that wouldn’t influence the financial market to bad but would encourage consumer spending.

Source: http://news.bbc.co.uk/2/hi/business/7758401.stm

Shares up as India market reopens

The stock exchange of India has reopened after it was closed on Thursday because off the attacks in Mumbai, the business capital of India. The benchmark Sensex has rising with 0.7% wich is not bad for what's happend in Mumbai.
The attacks have a little impact on the other Asian markets, most of them have rising, but have brought many companies in problems on short-time. Some companies have to cancell al their meetings and conferences which means that they couldn't be working like they would and maybe have had losses. But people say that the businness in Indai wille be normal again, they haven't got a choice, people have to have food, companies have to produce,...
Like many other countries, India has sufferd from the global credit crunch, plenty off foreign investors have already pulled their money from the Indiane markets. But their are also companies who said that, due to the attacks, they will be no changes in their long-term investments.
Indian economists said that India will always be popular for foreign investors because they can give them what others countries can offer. The predictions for the future are good. The growth rate for example will be 9% in 2009.

I think that India will be in problems if the attacks will last on will go further through the country. When I for example will be an investor and i have had money in India I would immediatly pull off the markets. Because off the attacks the companies can produce what they produce normal conditions. And also becausse off the global credit crunch, I think that India has no good papers for the future despite off the good growth rate of 2009.
Also I think that new foreign investors will put their money on markets that are more stable than the Indian market.

source: http://news.bbc.co.uk/2/hi/business/7753843.stm

China sets a green standard

American environmentalists are pleased with the efforts that China is doing to green its financial sector. The environmentalists even say that regulators in the United States could learn from the recent success that China achieved by stimulating investments that don’t despoil the world.

In a recent Chinese report we could see a very positive and remarkable highlight! The Chinese financial sector does now even have policies to limit the pollution and climate change. There is a regulation that says that Chinese banks may not lend money to companies that aren’t in compliance with the environmental laws. For example we could take the industrial and commercial bank of China. They reduced their loans to polluting industries by 24%!

There’s even a Ministry of Environmental Protection created. So far, there are already 38 firms consigned on a credit blacklist. This because of their environmental violations. In figures we could say that there is already a $293 million in loans is denied or recalled because of environmental violations.

I think that the Chinese government is on a very good way with the efforts that they are doing to green its financial sector! It’s very important that we all think about the environment because we have to think about the next generations. If we keep polluting like we are now doing, there will be a big problem. So I think that it’s very important to stimulate and reward companies who are trying to produce in a less polluting way.


source: http://www.atimes.com/atimes/China_Business/JK25Cb01.html

Japanese production falls sharply

The Japanese production and consumer spending have fallen sharply what indicates that the country is heading for a serious and prolonged recession.
The industrial production fell by 3.1% and the consumer spending by 3.8% in October compared with previous month. Both a lot faster than analysts predicted. That resulted in companies adjusting their production very quickly to reflect the lowered demand. Car makers are the ones that are hit the worst. But other sectors also start suffering, steelmakers for example.
Analysts are now forecasting a drop in industrial production of 8.6% for the fourth quarter. Early figures already showed that the Japanese exports fell by 7.7% and the Yen climbed stronger than ever against the Dollar. This is very bad because the Japanese production is very reliant on export to other industrial countries who all have been hit by the global crisis.

The recession is something the Japanese government will have to fight against by taking measurements that will help both the companies and the consumers. And it’s their duty to preserve the current level of prosperity by minimizing the negative effects. But on a general view I think the Japanese economy will have to endure this difficult period and they can only hope it will get better soon.


Source: http://news.bbc.co.uk/2/hi/business/7754159.stm

China fears unrest amid slowdown

The Chinese economy is slowing down and this has big consequences. Unemployment rises and this could lead to social unrest. So the impact of the global crisis on the Chinese economy is also very big. Unemployment caused by productions cuts are not the only consequence, many companies are going bankrupt.
The export is slowing down and the property market is in a state of crisis and that is also one of the reasons why China had a negative growth, but they have good forecast for the future and they try to keep the people calm, but this is not easy. Already there were protests by fired workers.
The government and the central bank had to take measurements to slow down a further diminution. One of these measurements is lowering interest rates from 6.66% to 5.58%. This cost a lot for the government but it’s necessary to stabilize the Chinese economy.
It’s not the fault of the Chinese government that the economy is not doing well but I think the government and the central bank need to do more than lowering interest rates. They should help companies who are not doing well. Lowering taxes is also a good idea, because they can attract new investors .

Source: http://news.bbc.co.uk/2/hi/business/7753020.stm

Pakistan asks IMF for rescue loan

Like the titel says, Pakistan has asked for help from the Intenational Monetary Fund. It's the last chance for Pakistan to help their economy. With this loan, Pakistan can stabilise their economy and it needs the money to avoid a recession in the country. Befoe asking a loan to the IMF, Pakistan has search for other sources to find a loan but they failed to find a deal.
Also Pakistan suffers with the consequences of the international economical crisis.
Because off the rise in international prices of food and oil, the Pakistani rupee has falling down so a lot of the capital of the government has no value anymore. Pakistan is also a country which imports a lot and because off the drop of the Pakistani rupee, they have the pay a lot for their products compairing with other countries.

The IMF helps the countries who are in troubles but they have strict conditions for repaying the loan and that can also create problems.

The IMF has said that they will help other countries who have problems like Pakistan.

I found it great of the IMF that they will help countries like Pakistan.
With the help of the IMF the countries can hopefully face the crisis and help their economy.
But I think that the countries will be in problems when the moment has there to repaying their loan. When the moment is there, there economy will be good but I think they will no have the money to repaying their loan. So I hope for Pakistan and al the other countries with problems that they will have a good economy in the future with or without the help of the IMF.

source: http://news.bbc.co.uk/2/hi/south_asia/7730943.stm

Time to catch breath

The IMF, International Monetary Fund, forecasts simultaneous recessions for Japan, Europe, and North America for the first time since 1945. This might explain why the Asian markets had a very volatile week.For example we can take the KOSPI, the South Korean benchmark. It was swinging 16.1% from its Wednesday high to its Friday low. But at the end of the week it was the region’s second biggest gainer, which was positive.Although up only the very poor 1.9% on the week following recent disastrous declines which is in response to the country's central bank who slashes interest rates for the third time in a month. The central bank is doing this to avoid a big recession.

As we take a look at the whole Asian market, we can see that there has been a very volatile week in every country. So it’s not only South Korea who has suffered from the volatility.

I think that it’s quite normal that there has been such a volatility lately on the Asian market. This is so because of the forcasting of the International Monetary Fund. If the IMF didn’t forcast recessions, there probably wouldn’t be so much volatilities on several, not only the Asian, markets.

source: http://www.atimes.com/atimes/Asian_Economy/JK08Dk01.html

Daewoo leases African plantation

The South-Korean company Daewoo has announced that they want to plant corn on the fertile land of Madagascar to decrease their dependence of US import.
The land that Daewoo leases for the next 99 years is about half the size of Belgium. They hope to produce more than 5 million tons of corn each year.

They will use local workers and farming techniques from South Africa. Other countries that have a lack of arable land such as Saudi Arabia and Kuwait have also been seeking for agriculture investments in Africa or Asia. The African governments are very pleased with this. Angola and Ethiopia both declared they are willing to offer farmland to those rich investors.

This idea has his positive and negative sides. One of the downsides I come up with is the fact that if they exploit the farmland on a very intensive way they land will become infertile and the Africans end up with another piece of desert that is not suited for any form of farming. But on a general view I think it’s a good thing that the Asian and Arabic investors create a lot of job opportunities for the poor African people. We can only hope that they pay the workers a decent wage and that those initiatives bring prosperity and welfare to the poorer regions of the world.

Source: http://news.bbc.co.uk/2/hi/business/7737643.stm

India turns up energy diplomacy

India wants to secure Energy resources and export markets to maintain its economical growth. This is the reason why the government is visiting Russia and Japan. These countries want to deepen ongoing Energy projects while seeking new leverages.

Indian and Russian companies can develop in each other’s country . The Indian government looks forward to the investment of new Russian refineries and petrochemical developments in their country. Indian companies want also to be involved in projects in Russia. To arrange this all, representatives of the two government came together to discuss this all. These transaction have no consequences for the local people, but the amount of the transaction is very big and that why the two government have to make good arranges, so that everybody is satisfied afterwards.

The Indian government wants also to import 2 million tonnes of liquefied natural gas (LNG) a year from the Sakhalin LNG project. LNG is the biggest gas importer in India, it belongs to the Gazprom group and they want to sell LNG to India. This would make the connections between the two countries bigger and would help India to keep its economical growth. It’s a big investment for the Indian government but they have to look in the future, it’s a good investment for the future.
But they have to use these natural resources very wisely and make sure that they don't wear out these source.

Source: http://www.atimes.com/atimes/South_Asia/JK22Df04.html

Korean Air suffers profits fall

Korean Air has booked another quarterly loss. The airline is hit by the bad position of the South Korean currency and the high fuel costs. Because of the weak won, which is the currency of South Korea, it's more difficult for the airline to buy fuel. The fuel is priced in dollars so they have to pay more when they change won into dollars.

The biggest problem for the airline is the bad position of the South Korean won. It is one of the worst currencies that have performed so badly, the currency dropped about 30% compairing with the dollar. Thanks to that, the price that the airline has to pay for their fuel is very very high.

It's one of the biggest cargo carriers in the world and the management fears that after the falling demand of tickets from people, the cargo demands also will go down.

What do I have to say about it, it's an international problem. Korea has the disadvantage that their currency isnt so good but it's not only in Korea that the economy is bad. I found that the governement has to something, if they can do something of course, about the bad economy and especially about their weak currency.
Maybe the IMF can help the countries with the worst economy or currency. I hope that the economical crisis will stop soon.

source: http://news.bbc.co.uk/2/hi/business/7730064.stm

North Korea stokes another crisis

The relationship between North and South Korea is not so well. But now North Korea is testing the will of South Korea’s president, Lee Myung-bak, while they are looking forward to a very good working relationship with the United States, now that Barack Obama has become the new president.

The North will take measures, geared to force South Korea’s conservative president towards softening his hardline stance on the North. That’s an optimistic scenario.

But there’s also a pessimistic scenario...
As the North is about to close their borders with the South and sets new conditions on inspections of their nuclear facilities, the militarist will control in North Korea at an extremely critical juncture. And also knowing that the leader in the North, Kim Jong-il, is too ill to rule the nation effectively.

North Korea is about to take action. They are about to close the border with South Korea from December 1. That measure will have big consequences... All the activity at the Kaesong industrial complex, where more then 80 South Korean companies employ 35,000 North Korean workers, will be suspended.

I believe that closing the border is not such a good measurement. I fear that if the border will be closed, there will become a rumour between the two countries. It’s understandable that North Korea will do everything to get a good working relationship with the United States, but they have to be realistic and see what other problems they may cause.



source: http://www.atimes.com/atimes/Korea/JK15Dg01.html

Why the next currency crisis won't be in Asia

Many countries are at the moment in a Financial crisis. The question is, is Asia the next victim of worldwide financial crisis. Countries like Hungary raised their interest , to avoid a bigger crisis. Higher interest rates are often the last resort before a currency crashes and a crisis start. These crisis are spreading over many countries and could also spread over Asia.
Already have certain countries like Indonesia, South Korea, the Philippines felt this. They had to devaluate their currency. These countries concluded that a crisis always start with a country that already has problems. That’s why they also took measurements like exchange reserves and better developed banking systems.
But Asia, just like all other regions, the currency can also fall. But Asia is prepared. They have the best underlying fundamentals of any region and that is why the Asian currencies will bounce back once the crisis is over.
I believe everything is possible in Asia. Some countries have already experienced a bit of the crisis, but they anticipate well. Their economies are still working fine and they are getting smarter by taken measurements. The problem of the Asian economy is that there isn’t a unity between the different countries of Asia. If Asia had this, they would have a strong economy, with many prospects for the future.

Source: http://www.moneyweek.com/investments/why-the-next-currency-crisis-wont-be-in-asia-13939.aspx

China startled by force of crisis

According to the Chinese premier Wen Jiabao the effects of the worldwide financial crisis on China is worse than they expected. It’s the first time the Chinese premier gives his own personal opinion about the crisis.
Compared to other countries, China’s grow rate is still high but their economical expansion is slowed down.
Not so long ago, China announced that they would slow down their economy to protect it against global recession.
In Southern China for example multiple factories had to close which caused unemployment for a lot of migrated workers.
China’s biggest fear is that the social problems caused by the cool down will lead to instability and unrest.
To offset the results of the measurements the Chinese Central Bank has declared they will cut in the interest rates to boost their economy and a 10 point stimulus plan has to persuade Chinese consumers to spend more.
In my opinion the Chinese government did well by closing the factories and thereby avoiding much worse to happen. Now the government has taken actions to stimulate the economy again those unemployed workers will soon get back to work again. If the government shouldn’t have intervened on time it could have ended in a social massacre.

http://news.bbc.co.uk/2/hi/asia-pacific/7727237.stm

Australia lowers rates to 5.25%

The Austrialian Central Bank has reduced his main interest rate from 6% to 5.25%. With this drop of the interest, the Central Bank of Australia hopes to give a boost to the economy and to avoid a recession.
The reduction to 5.25% was larger than expected but analysts say they had predicted a reduction.
It was the third cut in three months of the Reserve Bank. Thanks to this reduction, the key interest rate of Australia has become the lowest since March 2005. Some experts says that this reduction is a good stimulus for families and the industry to face the world credit crisis. It will give the economy the power to move on in these bad times. It is not only Australian Central Bank who made a reduction, most of the Centrals banks around the world did it.

I think the Australian Central Bank did a good job by reducing the interest rate. With this reduction they help the people and the industry. Which will lead to a better economy. And if a country has a good economy, everybody can enjoy of the advantages of a good economy. So to conclude I would say that the Australian Central Banks has done a good job by reducing the interest rate.

source: http://news.bbc.co.uk/2/hi/business/7707579.stm

India approves insurance overhaul

The Indian government has approved a new bill that allows foreign investors to take a bigger participation in domestic insurance companies then before. From 26 percent to 49 percent. Only the communist party opposed against this proposition and cancelled its support to the government. Multinational insurers would then be free to move into a market from which twenty percent of the population are uninsured. They are very eager to explore this rapidly growing, developing market where almost nine on ten workers doesn’t even have a pension scheme.
The Indian government also hopes that the easier ownership for foreigners will also attract the much needed capital that can feed the growing economy because insures would be able to pull 12 billion dollar from the Indian markets.
In my opinion this is a very wise decision of the Indian government to allow foreign investors because the Indian people also have the right to insure themselves. And now the market soon will be opened for globalization they will be able to have a bigger choice to select insurances and most likely also a better price to buy one. This is a good step towards a better society because the insurances will give the Indian people a safer and better life.

Source: http://news.bbc.co.uk/2/hi/business/7702207.stm

Japanese Inflation Has Begun It's Steady Path Downwards, Economists Say

The Japanese core inflation fell and will continue to do so in the near future, that is what several economist think. Now the bank of Japan has to consider different measurements against the declining inflation by adapting their monetary policy. Several economists fear that the bank of Japan will cut rates now the inflation is stagnating.

Economist, Davy Cohen, said that the steady inflation is an effect of the falling energy prices all over the world.
Matt Robinson, an economist with Moody’s economy.com, agreed with that point of view and he even thinks that this is the beginning of a downward trend in national inflation.
On the other hand, Robinson says that core-core inflation, prices shed of both energy and food prices, are not about to go downwards. "This suggests the spike in food and energy prices may have already become entrenched in broader price pressures," he said.
This might be a reason for the bank of Japan to limit their enthusiasm to cut rates.

Davy Cohen, an other economist, disagrees. He thinks that the falling inflation will be seen as an opportunity to cut rate, what would not be very good for the economy of the country.

I think that the bank of Japan will be enthusiast to cut rates now the core inflation is stagnating, which I think is logical. But unfortunately that wouldn't be a good measurement for the people but I'm afraid that the bank Of Japan will cut rates.

source: http://www.actionforex.com/latest-news/asian-economy/japanese-inflation-has-begun-it%27s-steady-path-downwards

Myanmar's farmers pay for China's oil thirst

China wants to expand its oil fields to Myanmar. The farmers of Myanmar are the victims of this new plan of China. The south Island ( Ramree) with 400 000 inhabitants has a lot of oil and gas under the ground.
The Chinese Oil company has already destroyed rice fields and plantations when they conducted seismic surveys and mined the island in search of oilfields. This caused hundreds of people their houses and they were forced to relocate. The oil company has never consulted the local people and the company has never took its corporate social responsibility.
They also polluted the local nature. To dump their waste, they dig shallow canals to carry the toxic drilling mud. away from the drilling site, but right into the Chaing Wa Creek. This creek passes several local farms.
China is using Myanmar in search of oil and gas. There are no advantages for Myanmar. The local people have to move, what isn’t fair for them. The profit of the oil is not going to the people of Myanmar, but right into the pockets of the Chinese owners. And they pollute a lot and don’t take their responsibility. The government of Myanmar made also profit on the sale of gas to Thailand, but like the Chinese Oil company, the government did with the money nothing for the local people.

Source : http://www.atimes.com/atimes/Southeast_Asia/JK04Ae01.html

Bank of Japan makes rare rate cut

The bank of Japan has reduced its main interest rate from 0.5% to 0.3%. The first reduction in seven years. And the main interest in Japan is already the lowest in the entire developed world. This measurement resulted in the Nikkei index to go up but closed the day with a loss of 5%. The bank of Japan defended this decision by saying that the economical crisis has “increased further in severity”.

Thursday announced Prime minister Taro Aso that they created a five trillion yen economic package to boost the slacking economy. The second stimulus in two months. It includes an expansion of tax cuts on the housing market to help the struggling housing market, guarantee the loan of employees of small companies (to restore faith in the economy, funding for care of children and the elderly, and support for the unemployed young people. This is necessary because these groups feel the impact the most in times of an economical recession.
The first package consisted out of 11.7 trillion yen proposed by the previous prime minister; Yasuo Fukuda. Once again a government has to interfere to prevent worse to happen. This is also caused by their weakened currency and the decreasing export to the US and Europe.

Source: http://news.bbc.co.uk/2/hi/business/7701319.stm

China faces getting rich less quickly

In China the business is not so good as it has been during the past two years. The reason of this development is the global slowdown. The demand of toys, that are all made in China, declined. Many toy companies in China went bankrupt.
But the global slowdown is not the only reason why the demand of toys from the West declined. Last year, there were new safety regulations added to costs and wages went up.
All this contributed to the decline of toys. Global slowdown is the biggest contributor. Western people have less money to spend, so they buy less toys. Toy companies are not the only victims, other industries are suffering.
All this leads also to a fall of the stock market and house prices. The rich people in China see their profit decline. Despite all this, many people in China are not afraid. Many of them live already in poverty and can’t lose much.
So the economical recession is not only a problem that effects the Western economy, but also the Asian economy. But China has still its advantages and can still keep its strong position on the market despite all the companies that went bankrupt. The country will never go broke, but the rich people will not get richer, our get fast rich. They will have to do more effort and make their companies stronger and solid. I still believe that the country can become the new market leader, the new USA.

Source : http://news.bbc.co.uk/2/hi/business/7683866.stm

China Pledges to Boost Economy

On Saturday the 25th of October the Chinese Premier Wen Jiabao admitted, on the
two-day Asia-Europe meeting in Beijing, that his country was feeling some effects of the worldwide financial crisis. 43 leaders of nations were there to make new rules to guide the global economy. They also agreed that the IMF (International Monetary Fund) should take a leading role in assisting countries that are seriously affected by the crisis, if they request it.

Premier Wen Jiabao said that the government must spend to avoid a big crisis in the own economy.
He thinks that the government has to do everything to avoid that the financial crisis has an impact on the real (Chinese) economy.

Unfortunately it has already a ‘little’ impact because the Chinese economy is slowing down because of the smaller demand from foreign countries. China doesn’t export as much as in the previous years. However, the Chinese economy has still the fastest growth rate among the world’s largest economies.

On the two-day meeting the 15 euro zone countries and the UK have agreed to put a
$2.3 trillion in guarantees to help banks. The Asian countries have decided to create a
$80 billion emergency fund to help those who are facing liquidity problems.

I think that it's logical that also China feels some (negative) effects from the financial crisis but it's very good of the government that they will do efforts to minimalise those effects. By giving a boost to the national economy, they're on a good way! But I don't think that China has so much worries because even in financial crisis they have the fastest growth rate among the world's largest economies.

source: http://online.wsj.com/article/SB122495542486569603.html

Indian airline sector 'to shrink'

It is not going well in the Indian airline sector. Air India boss Raghu Menon says it could happen that half of India's airline could disappear during these economical bad times. He said that Air India has to take care of their money in the future because two other big companies have signed an alliance with each other.

The Indian airlines have to take care with one bad thing after the other. The baddest thing for them was the continuous rise of the fuel during 5 months and for an airline that is a disaster.

The other problem is the falling demand because off the rising ticket prices and the bad situation of the economy. That is why cost cutting is very important.

It will be a challenge for Air India to be a profitable airline in the future, certainly because two other big airline have signed an alliance.

I think it is good from those other two airlines to sign an alliance because they can split the costs and their are a team know, when one airline of the two is in bad papers, the other can help him.

I hope ffor Air India that they can be profitable in the future and that they can compete with the alliance but personnaly I don't think theyy can do. The alliance has more power because they are with the companies and can slit the costs but Air India has to do it al by themself and that will be a difficult job I think.

source: http://news.bbc.co.uk/2/hi/business/7675957.stm

Taiwan takes on tech innovation

Taiwan is the biggest technological workshop of South East Asia. Already 90% of the laptops are produced in Taiwan. But it’s not only laptops, they produce more than that, like self phones and motherboards for many products.
Taiwan had always one problem, it lies in the shadow of one of the biggest economies of the world (China). That is also the reason that many Taiwanese companies move their production to China. Also because they can produce their goods at lower prices.

The big Taiwanese companies, like Asus and Acer, have agreed that there are 2 ways to approach the market : the first one is to go for the global manufacturing as a provider and the second one is to go for the branded business. But to really succeed in the hi-tech space, is to creating innovative products under your own banners.

Brands like Acer and Asus have taking a strong position on the world wide laptop market. These brands offer laptops with the same continence as Western made laptops, but these laptops are cheaper. The fact that they also put time in finding new innovations and not only copy from other companies, make them stronger and give them a better position on the market. Despite that Taiwan is in the shadow of China, this country has a good economy, certainly because they are the market leader on hi-tech market.

Source : http://news.bbc.co.uk/2/hi/programmes/click_online/7686147.stm

East Asia set to start $80bn fund

East Asians nations have decided to raise a fund of $80bn to protect their region from financial turmoil. This has been discussed by the ten members of the Association of Southeast Asian Nations (Asean)and is supported by South Korea, China and Japan. Those last three countries even contributed 80% of the capital.
The fund can be used by any participating country in times of emergency or to boost its liquidity. What’s in my opinion a very good idea to avoid recession and to preserve the confidence of people in the economy.

The political leaders are mostly concerned of the Western economies because they are very reliable of export to the west. There even is increasing evidence that leading countries are entering a recession. Chip maker Samsung for example announced a 44% fall in its third quarter profits.
Earlier Asian shares fell sharply with the Nikkei closing around 9.6% down.
With this fund at their disposal we can only hope that the inflicted damage would be as low as possible. Especially since the emerging economies don’t have the financial reserves Western countries have.

(Asean nations exists out of: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.)


http://news.bbc.co.uk/2/hi/business/7688406.stm

Korea searches for Dollars

Last Saturday, The Wall Street Journal published an article concerning the (South) Korean economy. The South Korean government and banks are asking the citizens to search for Dollars in their houses and to deposit them in banks. The banks can loan that money to small companies.
Korea wants to attract foreign money so they can use it for loans to businesses that deal with foreign customers, who have an other currency. Especially the small manufacturers need foreign money because the don’t bank overseas like big companies do.

Just like a lot of banks in other countries in the world, South Korea has problems to obtain foreign currencies and especially Dollars. The South Korean government understands that problem and wants to help their local economy. This month they provided $8.5 billion to banks so they can help the smaller businesses with their Dollar liquidity problems.

I think it’s a nice initiative from the South Korean government but it doesn’t solve the problems on the long term. The government isn’t able to give that amount of money to the banks every month. So I think they have to find a new solution because the liquidity crisis all over the world will damage the banks’ foreign-currency funding and their creditworthiness.

source: http://online.wsj.com/article/SB122428493988946393.html

The best Asian growth story you've never heard of

Indonesia has a population of 235 million and it has a vast amounts of natural resources such as coal. In the 80’s and 90’s, the economical growth was about 7%, every year. But in 1998, they had an Asian financial crisis and many companies went bankrupt. The last three years, the country is again doing well with an economical growth of 6%. The country has, just like all other countries, problems. The main problems are high corruption, unemployment and the fact that many people live in poverty. Geography is also a sorrow point of Indonesia. The country exist out of 5 island. Communication is not easy, that’s why it is the world fastest-growing mobile market. They skipped the landline stage and jumped straight to wireless. The mobile market is also very competitive. The firms are bidding for customers. The competition is hard, but still attractive.

Indonesia is a underdog in the Asian economy. Everybody is looking to China and India, expecting them to become the new world leaders on the economical market. But Asia has other players, like Indonesia, with a big amount of natural resources and fast growing economy. The biggest problem of Indonesia, is corruption. Corruption makes it not interesting for the Western financier to buy stocks in Indonesia companies. Only Western companies in Indonesia are interesting, like some telecommunication companies.

Source : http://www.moneyweek.com/investments/stock-markets/the-best-asian-growth-story-youve-never-heard-of-13720.aspx

Eastern Savior

Two trillion dollar. That’s the amount of foreign currency reserves of China. And by some, this makes China a potential savior for the Western Banking problems.



To bail out suffering financial firms, the Western governments need a lot of money. And China seems a good place to get it. But it will be very unlikely that will write a blank cheque since they are also busy trying to protect their economy from a domestic economical slow-down. And any offered help will be attached with demands. In a certain way it’s a good thing China gets more power/status but when Western governments become to dependant from foreign loans, they could force all kind of decisions just because they have the money.
In fact, the Chinese are already doing something similar for a couple of years. They bought pieces of the US national debt which allowed the US government to spend more than they actually had.

China can’t help on their own, also the other emerging economies such as India, Brazil,.. need to help. And even if the money is available, it’s not certain the political will is present. Chinese leaders already said they believe Western governments should solve their own problems. I think that the emerging economies should also try to stabilize the world economy with everything what’s in their power, because sooner or later, it will affect their economy to.

Source: http://news.bbc.co.uk/2/hi/asia-pacific/7671482.stm

Domino or dynamo?

China has become the most important country in the world economy because most of the big countries have big losses as result of the global credit crisis. But the economy of China doesn't grow as much as in the past. The main reason is the sinking prices on the housing market. But China banks can handle this because they don't give big mortgages like in America, buyers of a house in China have to invest 30 or 40% of their one.
Chinese banks can also handle the credit crisis better than the Western banks because the total loans that they give to people is just 65% of their total deposit and that's lower compairing to Western banks.
The people of China haven't as much debts as the Western people so they can handle the sinking prices wich the Western people can't do
These are the mains reasons why China isn't a victim of the global credit crisis and with the help of the government and the national bank, the Chinese economy will do it good in the future

I think that all the Western banks and governments can follow China's example because their economy is good despite the global credit crisis.
Also the Westren can better follow China's example. We found it normal that we go to the bank when we needed money and ask for a loan, even if it's for a small amount of money, or a mortgage but we don't think what would happen if the economy is going down or if the prices would go up. But the banks are also guilty because they give us that loan or mortgage.
So I think that Western people, banks and government have to take over a little bit more of the Chinese system.

source:http://www.economist.com/finance/displaystory.cfm?story_id=12381871

Asia, too, feels the pain.

No single day will pass without some bad news of a bank getting in trouble caused by American mortgage-backed securities. But what about the Asian economies? Did they get in trouble despite the facts that they have $3 trillion in foreign currency, well capitalized banks that are hardly interested in those corrupted American bank products?

Unfortunately yes. Real estate prices are going down from Seoul to New Delhi. Singapore’s economy just entered a recession and some indicators even announce a coming recession in Japan.
What could be the cause that those growing economies gets into trouble?

Well, a important reason is the fact that all those countries depend heavily on our western dollars and euro’s. And now we, the west, are in the middle of a recession. We do not longer import as much as we did before. India for example announced that they growth was limited with only a +1.3%. Some people will say that’s still a good result in this worldwide crisis. It is, but when you know their growth was +7.4% in July you see that also they suffer from it.
It’s sad that the employees of those small companies they job get threatened due to our bank problems.

Who could help them with financial injections, loans etc? Surely not the United states since they already have difficulties in saving their own economy. So more and more people look toward China. China always was and still is an enormously powerful hound that charged ahead every obstacle on its way. Maybe China can confirm its status as a economical super power, equal or maybe even better then the US.

Source: http://www.iht.com/articles/2008/10/10/business/asiaecon.php

Japan agrees funding and tax cuts

On Monday the 29th of September, the BBC published an article about the newest financial plans of the Japanese government.

The Japanese government agreed to provide 1.81 trillion yen or 17 billion US Dollar to stimulate the Japanese economy. The Japanese economy is on the brink of a recession. It’s also very interesting for the inhabitants because it will cope the high energy and food prices in the country.They also promised the Japanese people tax cuts before the end of the fiscal year in March 2009.


The Japanese prime minister, Taro Aso, thinks to achieve an economic recovery and he also tries to help the (poor) people in his country. It’s also good for the country itself and the local economies.

I think that it’s a good idea of the prime minister because he wants to avoid a national recession. He tries to help the Japanese economy and the inhabitants, that is a very positive fact. On the other hand, I think that 17 billion US Dollar is a lot of money! The question is if it’s really doable to spend that amount of money to save the economy!? If they really are able to find that amount of money it would give the local economy a real boost!





source: http://news.bbc.co.uk/2/hi/asia-pacific/7641164.stm

Power Plants

India has a new product , a product that will give their economy a extra boost and help them to create extra jobs. Jatropha is a plant that can be transformed into biodiesel. This plant is not only good for India, but also for the world economy. The demand for fuel is still growing and with this alternative maybe the demand will decline. The government also believes in this new project and is investing in this sector. The Jathropha is not they only plant that they can use for biodiesel, they have another one. There is also one negative side of these plants, the crops take too long to bear fruit and the sole of the field are unreliable. This may not discourage the Indian government to invest in this project because it is a good project. We need to find alternatives for oil and this is a very good alternative. They have certainly the knowledge to develop this project. The best technicians and IT people come from India. They have enough space to develop it, so that won’t be a problem. Financially is it also not a problem, India has a lot of capital. To conclude the Indian economy is the best working economy of the moment, but like most economies they have a few defaults like inflation. They’re becoming more stronger and their spreading their knowledge over the world.

Source : http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=6899464&story_id=12270974

Junot Roegiers

The big boys are back

About 10 years ago, Japan was a bad country on the field of finances, now they are working on their comeback on the financial world market. Some big companies are engaged in buying shares of big American banks. Nowadays it's easy for the big Japanese banks to buy shares of banks or even the whole bank because of the bad situation on the financial market in Europe and Amercia.
The Japanese banks are well known in their own country but for us they are still unknown.
In every take over you have a little bit problems even in this case because Japan and Amercia have two different cultures. But the thing that Japanese banks can do best is to deal with hard and difficult situations and now they have to prove it.

I found it a good strategy of the Japanese banks to buy as much shares and banks in America (maybe in Europe) as they can because now they have to pay less for everything and the banks in America are more or less out of the problems. I hope for the Japanese banks and also a little bit for the American banks, that they can help the Americans and don't become a bad player on the market again. Because then there will be a bigger disaster than now. But I hope that they do not take over my bank because I don't trust them, I can't explain why I don't trust them but it's a feeling.

source: http://www.economist.com/finance/displaystory.cfm?story_id=12306044

Japan posts a rare trade deficit

In August, the Japanese trade gap slipped into the red. Japan is on the edge of a recession.
The reasons for the failing economy are the falling export and domestic demand. Because of the rising prices of oil, coal and natural gas, the Japanese governement has to pay more for the products they have to import.
The other problem they have is that their export doesn't grow proportionate with the cost of the import, so they lose a lot of money. The reason for that is the falling demand of Japanese cars. And it isn't Japan only that have problems with their economy but also overseas.It was since 1980 that Japan has have so much economical problems.

I think the only solution for the problems that Japan and the overseas areas have is to reduce the price of the oil and the raw materials in general so that the imports costs will going down
The governements of the US and the European countries could raise the purchasing power of the people so that there (probably) will be more demand of Japanese cars and the export of Japan will raise. Only the governements can help Japan, they have to take measures to help Japan and the world in general.

I also think that the problems, that Japan has, also hit other countries. Especially now because the financial world become weaker and weaker and soms people have already lost their money so I personaly think that the economical crisis doesn't stay only in Japan but will spread out.




source:
http://news.bbc.co.uk/2/hi/business/7635265.stm

Why China's milk industry went sour

On the 17th of September, the Chinese government found a dangerous chemical (melamine) in the milk products. Factories of dairy products added this chemical to mislead quality tests and artificially increase the price of their milk. Resulting in thousands of ill babies and damaging the reputation of the Chinese economy. Sadly enough some people say this news was already discovered during the Olympics, but China didn’t want to broadcast bad publicity during this very important happening.

In my opinion, this has to do with the fact that the Chinese economy focuses on producing cheap mass products instead of creating new innovative quality goods. They try everything to cut down the costs so their goods are still cheap enough to be sold abroad. Also the greed of big companies that want to gain more profit is an important factor. The poor farmers aren’t assembled in unions nor do they have the influence to be heard by higher authorities.

For the future, I think this won’t happen anymore because I consider this as a failure/flaw of the control system that isn’t enough developed yet due to the fast growing economy. And to quote the Chinese premier Wen Jinbao: “As head of the government I feel deeply grieved. But the most important thing is to draw a lesson from it”. If you look back at our own economical history, the most important lessons are also learned after critical periods.

Source: http://news.bbc.co.uk/2/hi/asia-pacific/7635466.stm

Brecht Zegers

China gloats as financial tsunami on Wall Street continues

On the 18th of September, the English newspaper, The Daily Mail published an article concerning the financial crisis in Wall Street, in the United States.
The author of the article mentions that China is using the financial crisis in the United States to show the world that we can not longer be dependent from just one big economic nation, that tries to rule everything, like the United States.
The former central bank Deputy Governor, Wu Xiaoling, said US regulators weren’t able to manage all the financial risks and China needs to learn from those mistakes in the United States to avoid such a crisis, or even bigger, in their own country.

I think that what the author mentions is right. We should not be so dependent from the United States like we are now. We also have a financial crisis in the US dependant countries. It would be better if we had a financial system that's not based on the US only. Diversification would be better, since no investor would invest all his money in one company, why should the big banks do it then? Look what happened in Belgium, the big crisis concerning Fortis and Dexia. The cause of that crisis is partial to blame on the financial crisis in the United States. Now the Belgian government had to give money to the two concerning banks to save them from bankrupt. Otherwise there would be a lot of people that lose their money.
So I think that it’s very important to have an diversification on the financial market, just like China claims.


Source: http://www.dailymail.co.uk/money/article-1057523/China-gloats-financial-tsunami-Wall-Street-continues.html

Red capitalism

China is the best example of red capitalism , but the last 30 years China has evolved a lot. China is evolving into a free-market economy. They have big ambition to catch up the West and become the new market leader on the free-market economy and stealing the role from the USA. In our European economy you can see that China is becoming a powerfull player. Technology is their strongest asset. But there are still a lot of negative marks in the Chinese Economy like the proporty market. For the moment, the market is closed. The government has a tight policy on the market. The price of a house is very high and private houses are not affordable .If China wants to become the new market leader , they have to change this. The biggest problem of China is the fact that they have a good economy but only a small part of the inhabitants can profit from it. The most of them are poor and don't earn much. Health care is also negative mark. Their economy is only based on making profit, but not on the well being off the inhabitants. That can maybe lead in the futur to a decrease of the economy. To conclude, economy of China has evolved into one of the most prosperous countries. But they have to improve some marks to become the market leader and to create a steady economy

Junot Roegiers

Source : http://www.atimes.com/atimes/China_Business/JI27Cb01.html