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A 35% rise against the dollar of the Brazilian real and a rise of 80% of the Brazilian Bovespa index in 2009, following quickly after the global financial crisis, shows the big swings in emerging markets stock and currency values. Brazil is a big exporter of agricultural and mining commodities. Brazilian government is concerned about short term investors who are piling into investments there, but could pull out quickly in another crisis. The government imposed a 2% tax on foreign investments- designed to reduce currency volatility and discourage short term speculative investors. A slowdown in demand for commodities from China or other countries could quickly reverse this rise. And a rise of this proportion in so short a time, coming on the heels of a financial crisis, shows the nature of swings in the global economy that are of increasig concern today. In October 2008 Brazil's currency lost a third of its value compared to August 2008, and the Bovespa index fell by 50%. The central bank had to use its currency reserves to prevent a severe drop in the value of the real. Short term investors were pulling money out of the stock market resulting in dollar outflows, and many Brazilian companies that had bet against the dollar in currency derivative contracts suffered huge losses. The situation was similiar in Mexico. It shows the fragility of economies depending on commodities exports, and the lack of mechanisms to track these derivatives and to restrain speculative short term investors. ...

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Vietnam has seen rapid growth in the last 20 years as it joined the shifted away from the state planned economy similar to China in the late 1980's, joined the worlds trading system, freed up the economy and attracted foreign investment. But something doesn't seem right. Looking at the Vietnam growth curve, growth in Vietnam's GDP vs growth of world GDP the curve seems to be following a similiar pattern, there is a sharp downturn in the early 1990's with a V shaped bounce back and a sharp downturn in early 2000 followed by another V shaped bounce back in growth to this date. As America begins its first of several years of credit contraction and investment contraction followed by similiar patterns in some European economies like the UK, Ireland, Spain and a slowdown in the rest of Europe, the question hangs over growth in Asia, from South Korea and Taiwan where recent elections reflected these concerns in electing politicians who promised new ways of kickstaring their economic growth, to China, India and Vietnam where the concerns are about how to meet the growing expectations of the large numbers of people, probably the majority of the people in these countries who have been left out of the economic development experienced in urban areas and by the new middle class. Corruption, the stock market collapse or severe setback, and a slowdown in their main export markets, and are problems shared by all 3 countries China, India and Vietnam. India and Vietnam share the problems of a poor infrastructure. In this new environment Asian countries will have to come up with innovative solutions to maintain growth and quality of growth, as some of the chaotic growth of the last 20 years may have come at some cost like that of the environment in the case of China and better solutions can be found than growth that sacrifices goals in health care and other necessary goals of balanced development....

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How capital is flowing all over the middle east from oil rich countries to other countries in the middle east. See related article on GE infrastructure orders in the middle east WSJ July 25,2007, one of GE's fastest growing markets after China and India. What opportunities are available to other companies in other industries in the middle east? Private equity firms, including one run by a Pakistani and Carlyle Group, state companies in oil rich companies funding cross border investments, special econmic zones of Israel in Egypt and Jordan, dismantling of protectionis barriers, having executive of Unilever as Egyptian trade minister to overhaul public sector and regulations, increased foreign investment which brings with new knowhow and ideas (about $40 billion a year including Turkey).

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Russian economy is faltering under the strain of the global financial crisis. The stock market is plunging, with the RTS Index down 19% on October 6, 2008, and the market down 60% since the high in May, 2008. Construction spending is winding down. Th economy growth rate was 8.1% in 2007 but its slipping. If oil prices hit $50 and they were already at $78 on October 10, 2008, then says Anders Aslund at the Peterson Institute for International Economics in Washington, there will be a sharp decline in the growth rate. Moscow analysts say the growth rate could drop to 4%. For Americans Russia may seem remote excpt for investors. But in a global economy there are connections to emerging markets and Russia is one big emerging market, next to China, India and Brazil. When General Motors shares dropped 31% and Ford's 22% on one day on October 9, 2008, the news that spooked the markets was ofcourse a credit watch and questions about liquidity from Standard and Poors rating agency, but alsoimportant was that the one bright spot for GM and Ford in Europe and in Russia in particular was disappearing as GM sales declined in Europe and in Russia. In the prior 12 months GM had seen sales jump by 40% in Russia giving it 10% of a car market that passed Germany recently as the largest car market in Europe. Couple of important things about Russia. Russians today are big spenders, savings are small and Russians do not trust their banks so bank deposits are very low. Household deposits are equivalent of 17% of GDP, compared with 45% in the USA. Only 4% of Russians trust commercial banks according to a poll by National Financial Research Agency in Moscow. So Russia depends on the outside world for much odf the cash flowing through its financial system. Foreigners purchased two thirds of the $170 billion in bonds isued by Russian companies and foreign banks put up half of the accumulated $900 billion in bank loans including almost all longterm debt estimates Moscow investment bank Troika Dialog. With global credit markets in a lockdown mode Russia is simply running short of cash. The government has $560 billion in foreign exchange reserves from years of high oil prices plus $160 billion in two sovereign wealth funds with most of this money in fixed income securities abroad as a rainy day cushion should oil prices tumble. On October 7 the governmet announced $36 billion in emergency loans to Russian banks following earlier pledges in September of $150 billion in loans and relief for Russian companies in danger of defaulting on international debts. One danger here is that about 55% of outstanding corporate loan are of maturity less than 1 year. One of Russia's largest developers Mirax Group is putting 50 projects on hold as bank financing for developers has almost ceased. On the other hand Russia's financial sector is relatively small and the credit crisis cannot hurt Russia as much as it will USA ad Europe. Bank loans account for 10% of corporate finance and the bond market is only a decade old, so about half of all capital investment by companies comes from retained earnings. And Russia has huge needs for investments in infrastructure after years of underinvestment, a stable political structure, an educated workforce, and an economy that is just getting started. As Secretary Paulson answered questions after the G7 meeting October 10, this was another point on the minds of the secretary and questoners, the hope that emerging markets like Russia, India, and China would continue to grow though slower than before, even as the US and Europe slipped into a long recession, and provide a little cushion to the global economy....

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Over $65 billion invested in 2014 by German companies to acquire American companies with a global presence, including TRW and Dresser Rand.

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Central Huijin, part of China's sovereign wealth fund, China Investment Corporation, bought shares of China's four major banks in October 2011 to prevent steep price declines. China's bank stocks have lost about a third of their value in 2011. The four major banks- China Construction Bank, Agricultural Bank of China, Bank of China, and the Industrial and Commercial Bank of China- control two-thirds of the banking industry in China. In China's interlocking system of relationships between the state, the banks and the state controlled industrial companies, Central Huijin owns 35.4% of Industrial and Commercial Bank, 67.6% of Bank of China, and similiar stakes in the other 2 banks. It was created in 2003 to bail out China's banks after bad loan losses, and was transferred to China Investment Corporation in 2007. As part of the 2007 move bonds were issued by CIC to compensate the central bank. This means the banks pay dividends to CIC so that it can make payments on the bonds. Today the 4 major banks pay half of their earnings in dividends to CIC. CIC chief Lou Jiwei, says Central Huijin needs 300 million renminbi a day, or $47 million to pay interest on the bonds to the central bank. The 4 major banks are also under pressure from China's regulators to increase their capital reserves, because of large bad loans to local governments after the global financial crisis of 2008....

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Prof. Jeffrey Wasserstrom of UC Irvine reviews Henry Paulson's "Dealing With China." Paulson was head of Goldman Sachs investment bank and Secretary of the Treasury 2006-2009, the period of the global financial crisis. He made 70 visits to China since his days at Goldman Sachs and calls Chinese leaders Jiang Zemin and Jinping "old friends." He established the Strategic Economic Dialogue in the Bush administration for dialogue on economic issues with China, and setup the Paulson Institute at the University of Chicago to focus on China-U.S. relations. One of Paulson's points is that China's financial system faces a day of reckoning, with large losses and many restructurings. Wasserstrom's review looks at Paulson's view of dealing with China and points to a sense that it needs updating because by the time the book is published a lot has changed with the new Jinping administration. The new administration in China is more assertive in foreign affairs, and less tolerant of both the corruption that became part of the Chinese capitalist development inside a state run one party system, and of the voices for more openness. It also has placed tight controls on the Internet. Jinping sees a constructive role for the Communist party in the future as China makes economic reforms away from state run enterprises, and is working to strengthen the party through discipline and anti-corruption initiative. The reckoning Paulson mentions, Krugman and other experts have described in other language- not as a reckoning but that China was no exception and would face the same problems that the U.S. and the eurozone faced since 2008 from financial excesses. In this sense Paulson's views and interactions with the Chinese leadership may represent another era, a period of exuberance when some of these financial excesses were being built up. Today's economic team of Jinping and Li Keqiang is more focussed on making sure the transition through a economic crisis is managed carefully, keeping in mind the risks for China considering its history, and the situation where China is still a "middle income country" with aspirations for further development to improve incomes and living standards. Their view is that tight control is needed as China makes this transition to a less state enterprise dependent, and more consumer economy, so that there is no loss of the gains made so far. A different set of skills and deft management of the economy is needed, making Paulson's views from another era less relevant. External influences such as managing the complex China-Japan relationship as both countries become more assertive are creating another dynamic in Asia, which Chinese leaders may see as requiring careful management, making Paulson's experience less relevant for a new period with new challenges. For the U.S. the economic cooperation with China now occurs with an added political dimension. Of concern for the tight control, seen as not forward looking and not bringing more constructive voices into the system, and the new complexities of carefully managing the changing U.S.-China-Japan relationship in Asia. ...

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U.S. consumer brands from iPhones to Nike sneakers are popular in China. They are also products Made in China by Chinese workers. This makes a subtle threat in Chinese media of boycotting American products less likely and not in China's interest. In earlier disputes with South Korea and Japan China resorted to tactics that included boycotting products from these countries. American products are considered as prestigious and of higher quality in China in the popular perceptions. About one third of the 800 companies that are members of the U.S. Chamber of Commerce in China have more than 1000 employees.  The U.S. has also provided much of the foreign investment that led to China's rapid growth. With it came critical technology. According to the Rhodium Group the investment by the U.S. in China between 1990 and 2017 is about $250 billion. Some projects between IBM, Walmart and Tsinghua University are high priority projects in food safety. Subtle threats in Chinese media could turn into boycott of some American products from Procter and Gamble or Nike. But as this report shows the relative affluence of employees in the Shanghai region who work at American companies depends on avoiding such a situation. ...

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How the formation of Special Economic Zones like the one at Shenzen in China is now moving forward in India with the help of the central and state governments. The SEZ's like the one near Chennai are attracting a lot of foreign investment to India and take care of the roads, power, water, access to ports, and make it easier for investment capital to come to India. Companies from Germany, S. Korea, Taiwan and Japan, Finland and the USA are investing in these SEZ's. India needs manufacturing investment to create large numbers of jobs for a large and younger demographic.

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This report in the Economist points to the improved situation for Mexico after the scare from Trump's plans to build the wall and deport large numbers of immigrants. The peso dropped by 15% between mid November 2016 and January 2017, but has since recovered, and non-oil exports were up 5.5% in February 2017 over prior year with the manufacturing growth in the U.S.  Growth forecasts are now up from about 1% GDP growth previously to 2% for 2017, close to the 2.3% in 2016. Much of the change in mood in Mexico is a result of the failure of the early travel bans being blocked in the courts, the failure to get health care legislation through Congress, and the effort by the trade advisers and economic advisers around Trump to move Trump's positions more to the centre and closer to traditional Republican party positions. Wilbur Ross, the Commerce Secretary, says " a sensible agreement" can be reached with Mexico. Peter Navarro, trade adviser, talks about making "a mutually beneficial regional powerhouse." Robert Lighthizer, a veteran from the Reagan days, is likely to be made the new U.S. Trade representative. Still as the Economist points out the "20% border adjustment tax" continues to be supported by Paul Ryan in Congress to pay for tax cuts. But certainly the mood has lifted in Mexico in the first 100 days. This is true for economic policy in relation to China and Germany, and the close circle of Ross, National Economic Council head Gary Cohn, and Secretary of State Tillerson is moving Trump to the centre in policy statements to get things done. Mexico is faced with internal challenges of reestablishing the rule of law, improving infrastructure, reducing red tape and corruption, addressing problems in the education system, to promote economic growth. These challenges may prove to be as large as the external challenges were once thought to be. ...

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This editorial in the New York Times points out that the new president of the ANC party -that runs South Africa and has a monopoly of power in the post Apartheid years, under Mandela, Mbeki and Zuma- faces a uphill task as the ANC remains deeply divided after supporting Mr. Zuma in office till the very end. Apart from the stagnant economy, there are challenges the ANC faces in the lethargy of the post Apartheid years, and the culture of corruption, and patronage management that led to mismanagement of state enterprises.

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There appears to be a conscious deliberate decision by the Chinese government and policymakers to shift the economy from low-end technologically unsophisticated and polluting industry, that pays low wages with little worker protections, towards technologically sophisticated, environment respecting, and higher wage industry. This does not mean textiles are out, but textile companies that are larger better managed, able to introduce newer technologies and produce higher quality product- that command higher prices in the world market and therefore also able to sustain decent wages and worker protection- are in. Phasing out the smaller shops and the poorly run or deliberately polluting and labor exploiting companies run from Hong Kong or elsewhere. The general shift is to be a leader in products which are value added either by technology or human capital, such as better trained more knowledgeable workers. This is similiar to the shift Japan made after the sixties, as it moved from a rural to a urbanized society and textile companies like Kanebo became technologically sophisticated, while small shops withered out, and Japan gradually shifted into automobiles, electronics and chip making. The noticeable difference is that Japan with a prewar industrial base and a smaller market protected its home market for Japanese companies, whereas China lacking this prewar industrial base let foreign investment and companies overseas bring in equipment and use low cost Chinese labor to supply western markets. And it turned a blind eye to labor protections, at least till it had built up its own industrial base and knowhow with policy requiring Chinese partners in industry and technology transfer. Economic winds are also doing the job. Inflation, Chinese goods prices increased by 4.6% in May according to the U.S. Commerce Department. This is a result of the Chinese government requiring worker protections and decent wages and stricter pollution enforcement resulting in increased energy costs. For years the U.S. and other countries depended on China for low cost goods and the demand for low cost goods depressed margins which resulted in legitmate costs such as pollution control technology, worker protection and decent wages, being ignored. China is now left with heavy environmental cleanup costs, and a bad image internationally as a heavy polluter. The huge external trade surpluses China has built up exceeding a trillion dollars have pushed up the value of the yuan making Chinese goods costlier in world markets, and apparel and shoe makers in developed countries seeing Vietnam as a better lowcost alternative. The story of this phase of Chinese industrial development can be seen in a town like Honghe, a 90 minute drive from Shanghai, which has half of its 100,000 residents working in 100 factories and 8000 shops that knit, dye, package and ship some 200 million sweaters a year, bringing in according to local government estimates $650 million a year. Now many of these shops are idle and mirant workers are returning home. To see the subtler signs of the Chinese policymakers hand note that even visa policies have been tightened to make it harder for foreign buyers to visit Chineses factories and trade shows. Also the Chinese government has raised the minimum age for workers in these factories from 16 to age 18 and so on. And the impact is being felt in places like Honghe near Shanghai, Shengzhou another city near Shanghai which makes one third of the world's neckties, and in Dongguan in Guangdong where its toy, shoes shops close. The change also shows how quickly things can change in the world economy. Only 3 years earlier in 2005, Jiaxing Yishangmei Fashion Company, a family owned company was booming and had just landed Walmart Stores as a customer. Now Walmart no longer sources from this company. Analysts say that the Chinese sweater industry was probably overbuilt, with about 6 cities in China claiming to produce more than 100 million sweaters annually. A wave of consolidation could boost efficiency, and bring pressures to innovate rater than compete only on price. And many Chinese economists, and policymakers think China has relied too much on cost-cutting and simple production models to increase exports. A researcher at the Chinese Academy of Social Sciences thinks such a high dependence on foreign trade is not good for China. For the US and Japan this researcher says that trade is equivalent to 20% of gross national product and by contrast for China trade is equivalent to an extreme of 75% of GNP. ...

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China's breakneck growth was enabled by housing construction, and coal in a way that created problems of climate change. Now China's largest housing developers Evergrande and Country Garden together have a staggering $500 billion in debt and in serious financial trouble in or near default. How will China's government respond? It let Evergrande who had defaulted on debt payments build 300,000 apartments last year, just to protect home buyers. Now it's founder Mr. Xu is taken in for questioning and "illegal crimes." Making sure that the apartments on which people made deposits are built would cost another $72 billion, says Nomura. Yet suppliers, painters, builders and brokers are owed another $390 billion, in one estimate. And foreign creditors are getting together for complicated restructurings. Evergrande had entered wealth management promising 8 or 9% returns and has stopped making payments. All this is affecting public confidence in the future and China's growth story. For decades China depended on housing construction for high growth rates. Now the process is unwinding with both in financial difficulties. This NYT report says that after Evergrande's default, Country Garden failed to make a payment on $200 billion in debt last week and has 400,000 apartments that it sold but has not finished building. ...