LyrArc Article Gist
As OPEC members met again in June 2015 for the first time since the meeting in November 2014, there is a sense that OPEC no longer exerts the same influence on oil prices. There are 4000 oil companies in the U.S., says one U.S. State Department official, even if OPEC were to cut production the cuts could be matched by shale oil producers in the U.S. quickly increasing output. This is the new reality, say experts. OPEC expects to keep production at the same level of the current production ceiling of 30 million barrels a day in place for the 7th meeting in over 3 years. Algeria and Nigeria, both hurt badly by the drop in oil price, have called for cuts but failed to persuade the Saudis. With Russia unwilling to join a coordinated production cut, there is not much talk about doing this. The Saudis and Iraq have continued to pump more oil, with April 2015 production of 30.84 million barrels a day the highest monthly average since 2012. Other factors also remain in the minds of the Saudis and other producers such as the United Arab Emirates, Kuwait, Qatar- policies on climate change, use of less energy and more from friendlier sources for the same amount of economic output demonstrated by countries such as Germany, advances in technology, energy saving transitions in emerging markets such as China and India....

LyrArc Article Gist
Research from Australian National University shows steadily improving conditions for migrant workers in China. Migrant workers were able to spend more time in cities- an average of 8.9 years. The hukou sysem ensures migrants return to rural areas when they have to raise a family. About 252 million migrant workers work in factories and construction jobs in urban areas. Migrants with children leave them with grandparents back home. Improving the conditions of these workers is important to reduce the wage and income disparities in China and to reduce inequality. About a fifth of the migrant population now has pension and health benefits. Creating a balanced economy with domestic consumer spending making a larger share of GDP also requires improving wages and benefits of migrant workers. Incoming prime minister Li Keqiang says in a statement on a government website: China "must take migrant rural workers and gradually change them into urban residents. This requires that we push forward household registration reform." If done seriously this will create a new kind of China as these migrant workers are integrated into urban society after years of being shunned and ignored by China's educated middle class. Professor Meng's research at Australian National University of migrant workers shows the proportion of migrant workers with unemployment insurance increased from 11% in 2008 to 21% in 2012. The research shows similiar figures for health and pensions. Improving their living standards also make it attractive for more young people from rural areas to migrate to cities increasing urbanization....

LyrArc Article Gist
For years Peter Bernstein has watched the US markets, from the postwar recession of 1958 till today. He is now 89 years old. He sees 2 culprits one is oversecuritization and the second is years of overborrowing by financial institutions and consumers alike. He rules out a V shaped business cycle. he sees an L shaped business cycle or a a flat U. It would be a flat U because it will take a long time for the memory to recover from the excesses of recent years and the consequences. He remembers the early years after World War II, it took a very long time to get the depression out of business and banking decisions. And he says one of the things that helped people take risks was the feeling that the central bank had got things right and knew what it was doing but he says the Fed too now is going to feel what it should do now is less clear. So the feeling going forward will be to be very careful. He thinks this will take a long time to clear up, much longer than people think. Not 2009, he is sure they are wrong, there has to be a respite along the way is how he puts it. He says until credit is going up instead of down you can't have growth. And he thinks housing has to be a part of this. And then there is the uncertainty. What if, what if China goes into a recession? His point that " nothing can go in one direction forever." And China has been growing like this for twenty years since the 1990's. It just does'nt go on forever. and there has to be a respite. Again here him speak: first he goes to housing, he says somehow housing has to flatten out. Then he shifts to say "we have to underpin the consumer" and with that he shifts to saying this is why its different, and to saying this is why its like nothing we have had before. And then he turns to investment, saying its investment that made the V at the bottom of the cycle but he doesn't see the consumer in the USA coming up with a positive till he has worked out the excesses of overspending. Exports or consumer overseas? He thinks they maybe too infected by us to do it. Though Asian growth will help....

LyrArc Article Gist
Yan Xuetong, is professor of political science and dean of the Institute of Modern International Relations at Tsinghua University, Beijing. He is the author of Ancient Chinese Thought, Modern Chinese Power. In this essay translated from the Chinese, Xuetong says China's new leaders should borrow ideas from ancient Chinese philosophers and theorists like Guanzi, Confucius, Xunzi and Mencius who pointed to the importance of morally informed leadership as the key to success in the long term. Xuetong presents this as the best way for China to compete with the U.S. At the same time it gives Xuetong a basis for calling on the new Chinese leadership to create a less unequal society, with attention paid to social justice and balanced development free from corruption, similiar to the calls made in the U.S.

LyrArc Article Gist
India had 11 interest rate increases in 18 months, but this has not slowed the rise of inflation. The Wholesale Price Index is around 10%. Inflation expectations as measured by the Reserve Bank of India are around 12% in mid-2011.

LyrArc Article Gist
The yen strengthened to 88 yen to the dollar, the strongest in 13 years, and Hirohisa Fujii, the new Finance Minister said that the government would not step in to weaken the yen even if it went up further. Thomas Harr a foreign exchange strategist at Standard Chartered in Singapore says the elections were a big boost for the yen. It created a new environment in Japanese politics for the first time since World War II as the LDP party was swept out of power. The hope is that by moving away from dependence on exports and reviving the domestic economy Japan can turn the page to a new chapter in its economic growth, away from the stagnation of the last two decades. But its a tricky balancing act between exporters and the domestic consumer.

LyrArc Article Gist
Why polluting industries and colluding local government officials who are judged on the rate of economic growth achieved have come together and become entrenched to thepoint where its hard for the central government to implement pollution control measures. Deng's response to a sluggish socialist bureaucracy was to give power to local government officals to promote growth and to be judged on that basis. The environmental ministry and the environmental protection departments are very small and lack the resources to control these industries. And NGO's and the informed public and citizens are powerless to demand change as they are seen by the government as risking social stability by risking growth. After the East Asian crisis China anticipating a slowing down in competition with recovering Asian economies pushed harder for more economic growth. As a result production of steel set new records and the addition of power generating capacity each year surpassed the total power generation of countries like Britain and France.But this power generation does not use the modern technology available as it is costlier and takes longer to build. So a lot of short run decisions are being made in the interests of growth. An effort to introduce Green GDP backed by President Hu Jintao was dropped after it ran into a lot of resistance. Using this about 3 points of GDP were deducted from the 10% growth as environmental cost. This was based on modest environmental costs estimates and did not take into account the entire cost of pollution to health and the environment. China's own environmental experts think that Western estimates of environmental costs are if anything on the conservative side as they are based on models used in the west and conditions in China have little precedent in the scale and range of environmental degradation. Coal is burned to produce two thirds of the energy and uses older technology for power generation, it is a big polluter of the environment. And the modest energy efficiency goals set by the central government are not being met as a result China is already expected to be consuming as much energy in 2010 as it was expected by its own planners to be consuming in 2020. To informed outsiders it appears that the polutting process is systemic in its nature and only political change that allows people who are suffering the worst effects of this pollution to make their voice heard, can lead to reversing the trends that have been set in place from the Deng period of economic change that started in the 80's. ...

LyrArc Article Gist
"China's Superbank," by Henry Sanderson and Michael Forsythe looks at the rise of China Development Bank to provide insights into the two decade real estate boom in China, and the trillions of dollars in loans made by state owned banks to finance China's state owned industries and infrastructure development. The authors say these loans based on land owned by the state, improved with roads and other infrastructure and then sold to industry, have helped finance China's urbanization and industrial development. But it has also created problems including eviction of farmers from the land by local government authorites increasing inequality, led to misallocation of capital on bad projects, and an unsustainable model of development focussed on state owned companies. A major side effect of this is not covered in the book. This is the impact of crowding out of credit for private industry in China, with privately owned business having to pay higher rates in the underground loan market or lacking financing. A major focus of the report "China: 2030" by the World Bank and China's official think tank Development Research Center is on reversing this development to come up with a sustainable development model. The report was supported by World Bank chief Zoellick and China's new prime minister Li Keqiang. "The Great Rebalancing," by Pettis, a finance professor at Beijing University, looks at the other side of the financing of China's boom- the low interest rates on savings for China's consumer. This reduces household incomes and reduces purchasing power as the interest rates are lower than the rate of inflation. Lower value of China's currency also reduces the purchasing power for China's consumers. Estimates show the low interest rates cost China's workers and consumers somewhere in the range of 3 to 8% of GDP annually in bank deposit income. This money is funnelled through the banking system to make more loans for infrastructure and growth at the state owned companies, concentrating exraordinary level of financing in one direction. As a result the consumption share of GDP in China has actually fallen in the two decades of hyper development. This is about 34% compared to 50-55% for other Asian economies....

LyrArc Article Gist
Average wage gains for rural areas about 5% between 2001 and 2003, and a loss of 2.5% in wages for the poorest 10% of the people in China are shown in information from the World Bank. This will be of concern to Chinese government as it moves forward with current policy.

LyrArc Article Gist
The president of the U.S. Chamber of Commerce China Center says the White House has a supportive community when it comes to getting China to abide by fair rules relating to intellectual property. Mr. Bolton talking to the CEO Council was frank about the U.S. government's efforts to get China to to implement a broad set of reforms. He even called for a show of hands from executives who think its acceptable to live by the situation today which hurts the U.S. when it comes to intellectual property. No one showed their hand. U.S. executives once skeptical about the tariffs from president Trump on Chinese products are now shifting their views on the confrontational approach taken by president Trump on issues of U.S. technology transferred to companies in China that lead to the U.S. losing its technological advantage.

LyrArc Article Gist
Several factors make it likely that oil prices will remain low for an extended period of time into 2016 and beyond. As Ailworth points out nobody is blinking. The Saudis plan no change to their high production. U.S. oil producers in the Gulf of Mexico have already made investments for deep sea drilling wells following the end of the moratorium on drilling in the Gulf. Many of these wells are producing at very low marginal cost as most of the investments have already been made. It makes economic sense to produce even in a low price environment, according to Andarko. Shell continues to invest in the deep waters of the Gulf. Its production is up 10% to 250,000 barrels a day. American shale oil drillers have not cut back as much as expected, partly because many companies with large debts need the cash flow to pay interest on debt. And some of the 1200 wells that were drilled but left untapped may also be brought on stream to slow production declines. As a result the overall production of American crude, according to monthly federal information, has declined by about 3% to 9.3 million barrels from the peak reached in April 2015. This helps the U.S., Europe, China and India, at a time when their economies are experiencing different problems. It hurts Russia, Venezuela, Nigeria, and Iran. Russia is coping as its exporters convert dollars into rubles after the sharp depreciation in the ruble, and helps local industry including steel producers, as well as wheat exports. Venezuela's economy is the worst hit. And Iran now has to produce at high levels in 2016 to improve its economy following the lifting of sanctions....

LyrArc Article Gist
The situation in Guangdong province in 2012, with older factories unable to compete with the rising wages, stricter environmental enforcement, and lower export demand. Many Taiwanese manufacturers are closing factories. The growth in Dongguan, a manufacturing hub in Guangdong, is estimated at 3.5% for the first three quarters of 2012, half the overall rate for Guangdong province. A researcher in a Chinese think tank says China's manufacturers are in a kind of "sandwich trap" with competition from Vietnam and India in lower wage production and competition from Germany and the U.S. in higher wage technology intensive products. This is especially true in 2012-2013, now that U.S. and German manufacturers have reduced costs and increased competitiveness.

LyrArc Article Gist
Hon Hai chairman Terry Gou told corporate employees that Hon Hai plans to increase the number of robotic arms in its manufacturing plants from 10,000 to one million by 2013. He says the move will "improve working conditions and provide a better career path to employees." The improvement of working conditions is a major concern after a number of suicides. The plans to automate dangerous and monotonous tasks is intended to migrate workers to other work. Hon Hai has about 1 million employees in China. It is moving plants to the less costly interor of China where wages are lower- to Chengdu, Wuhan and Zhengzhou from the coastal areas.

LyrArc Article Gist
Amazon expands during the pandemic when retail on line delivery has helped people reduce trips to the grocery or retail stores. Amazon hired 427,000 people to expand its workforce to 1.2 million people by November 2020, 9 months into the pandemic. Almost doubling the employee workforce. These workers are mostly at warehouses, with some software engineers and hardware specialists. This includes hiring in India and Italy and is worldwide hiring. This does not include 100,000 temporary workers for the holidays, and 500,000 delivery drivers working for contractors.  Only hiring of 230,000 people by Walmart about 2 decades a ago in one year comes close. Walmart hired 180,000 people during the pandemic. Walmart has 2.2 million employees. With the expansion underway Amazon looks to become the largest private employer in the world in 2 years, say experts.  Amazon pay is $15 an hour after an increase of $2 recently. Its coronavirus safety practices have been upgraded after early criticism in April and May. Recent expansion in Italy and in India are also part of worldwide expansion after Walmart has pulled back from its worldwide expansion. This also shows how quickly major aspects of life are changing during the pandemic as some companies in online business are becoming more prominent than others. Target and Walmart have also increased in size. Best Buy has changed its focus with its conversion into a company that leads with personal service in online plus store hybrid retail and a focus on seniors and older people for healthcare service and product delivery. Companies are changing the way they run or getting a new life in remaking their business. This is also a time when other aspects of business such as social media are becoming evident. Subtle aspects such as reports of higher rates of mental depression through use of social media platforms. There is also the awareness that information technology companies in Silicon Valley generate most of their money in advertising and this advertising of $100 billion is only a small fraction of the $12 trillion U.S. economy. Should Silicon Valley based in California decide priorities on where capital allocation should go through the part it plays in moving startups based less on America's priorities than other considerations. Healthcare, education, cities, and infrastructure have not received funding they need and capital allocation by financial markets has failed the American people, as it has failed in Europe and other parts of the world for similar reasons. This has hit hard communities and people across the U.S. and Europe and also in Latin America, Africa and Asia, with the loss of manufacturing to China and other countries from the U.S. India and Europe. ...

LyrArc Article Gist
Singapore's Lee Kuan Yew and his views on relations between China and the U.S.

LyrArc Article Gist
The Trump administration's early proposal for NAFTA moves away from campaign pledges to completely renegotiate the treaty, instead taking the approach of working to improve the U.S. trade position in relation to Mexico and Canada. It includes seven objectives for tougher rules for labor and the environment favored by Democrats in Congress, and it also has support from Republicans with its effort to update NAFTA for changes in technology and in other areas since the accord was signed during the Clinton administration. The area in which U.S. and Mexican business are wary is one in which the Trump administration still seeks to keep the option of imposing protective tariffs, and a border-adjusted tax to level playing field for differences in taxes, as well as other measures to protect American jobs and interests. Because any renegotiated NAFTA also has to pass both houses of Congress this proposal took into account the different constituencies and interests for this issue. Robert Lighthizer, trade representative under president Reagan is likely to become the next U.S. Trade Representative and lead negotiator. We first profiled Lighthizer in a group in Lyrarc for pointing to the need for a level playing field in trade. As early as 2010 Lighthizer argued in op-ed articles that globalization and trade practices should ensure a level playing field for the U.S., and was covered in Lyrarc. ...

LyrArc Article Gist
This story in the WSJ shows how the Phase 1 deal between the U.S. and China was negotiated in November and December 2019. As a bargaining chip for negotiations on a Phase 2 deal the U.S. has preserved tariffs of 25% on $250 billion in imports from China, and the reduced tariff  of 7.5% on $120 billion of imports. In Phase 1 Mr. Trump convinced the Chinese leadership that he was serious about going ahead with further tariffs to cover all of China's exports to the U.S.by a December deadline. This was also Mr. Kushner's message to the Chinese ambassador. In talks China gave easy concessions on agricultural imports and offered to buy twice the amount of soyabeans and other food imports- which helps Mr. Trump with farmers in the U.S. At the same time difficult concessions on enforcement to change subsidies to Chinese state owned companies were put off. China formally says it is an issue of Chinese sovereignty. It is also seen as a part of the Chinese business model that is working and China is in no hurry to change this. It has offered to step back from asking foreign companies to transfer technology in exchange for market access. On technology issues and subsidies the tough negotiating issues on which the U.S. has insisted for changes, China has held back. Phase Two is not likely to happen at least not till after the election, as China wants to be able to develop its own technology rivaling the U.S. and Europe, without the kind of formal enforcement the U.S. is demanding. In the long run it plans a shift to an economy that is less dependent on the U.S. for imports which may be in the interest of both countries, as U.S. manufacturing has shriveled over two decades hurting American jobs as a result.   ...

LyrArc Article Gist
Anglo American responds to declining commodity prices and the slowdown in China with deep cuts of 53,000 jobs from its 151,000 workforce. Some of the jobs will be layoffs and other job cuts will be through sale of mines. In Australia mining employment is down 13% in the 2d quarter of 2015 over prior year. Anglo American plans to sell over a quarter of assets in the downsizing. BHP has spun off over ten mines into a separate company called South32. American Pittsburgh based company Consol Energy says it will no longer provide guaranteed health insurance to retired workers. Anglo American is one of the hardest hit companies. It had losses of $3 billion for the first half of 2015, and needs $1.5 billion in cost cutting to become profitable again.

LyrArc Article Gist
JP Morgan estimates that 150 million Chinese were in the stock market at the end of 2007. THese would be in the urban areas and in large cities where the brokerage houses are located. As a percentage of the new middle class this is is a significant part of the urban population. The drop in the Shanghai stock exchange of 46% from its high in October 2007 is going to significantly impact consumption in 2008 and 2009 as savings of the average person on the street have taken a big hit And 15-20 % of the earnings of pubicly listed companies on the Shanghai stock exchangenot involved in banking and finance came from stock trading gains according to experts. If you add the earnings of financial companies and banks then you have banks having large losses which happened in Japan from the drop in their stock assets holdings, and reluctant to lend to business leading to a tightening in credit and a contraction in the economy from another angle. Something similiar to what happened to banks in the USA but in that case originating from a housing bubble. The industrial companies that engaged in stock trading would also have a drop in assets and earnings and thus have less to invest. That this would lead to a small drop in growth rates is not plausible, growth rates dropping from 11 to 9% as some experts say. Because there are overextensions in other areas such as real estate and other negative factors such as rising inflation including rising food prices, rising oil prices, and rising labor costs, and a slowdown in the export sector as markets in the western countries especially in the US go through a protracted slowdown. All these factors take time to have an impact and one could see much lower growth rates taking the pressure off oil demand and oil prices. A similar situation may be seen in other countries like India where the Bombay stock exchange dropped 31% from its high late last year and 53% drop in Vietnam. Vietnam and India may benefit from a shift in production from China as companies try to look for alternatives to the higher cost environment in China but they would still see a significant drop in growth rates before resuming high growth rates. ...