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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (4963)	5/25/2005 7:53:56 PM
From: RealMuLan	Read Replies (2) \| Respond to of 6370

[One step closer for a trade war bet. EU and China. All China needs to do is to stop buying those airbus, or just buy a couple less.]--"EU cuts off China talks and moves to WTO" By Paul Meller International Herald Tribune THURSDAY, MAY 26, 2005 BRUSSELS With one eye firmly on the French referendum on the European constitution this weekend, the European trade commissioner, Peter Mandelson, decided Wednesday to cut short talks with Chinese trade officials and begin action at the World Trade Organization that could lead to quotas being reimposed on some of the Chinese textiles that have been flooding into Europe. "We are going ahead with formal consultations," said the commission's trade spokeswoman, Claude Véron-Réville. She added: "We made it clear to the Chinese that time is pressing." The move to the WTO will almost certainly lead to protectionist measures being re-introduced on two categories of textile products at issue - T-shirts and linen cloth - in the first half of June. It also may hamper the European Union's attempts to keep the dispute from widening to other categories of textiles, and from poisoning the broader trade relationship with China - its biggest trading partner after the United States. Chinese textile imports have surged worldwide since quotas were abolished on Jan. 1. That has put pressure on European producers - many of them French - and has spilled over into the debate in France about the EU's constitution. Campaigners for a no vote on Sunday have used the sharp rise in Chinese textile imports as a symbol of the perils of globalization - a process they claim is driven by the free-market, Anglo-Saxon approach they see as championed by the EU. Mandelson's decision to end efforts to resolve the issue informally is seen as an attempt to woo French voters by demonstrating decisive action in the matter. He had been following a more patient, flexible approach in talks with Chinese trade officials over the past two months. "It's a desperate act, but what alternative did he have?" asked Romano Subiotto, a trade lawyer in the Brussels office of law firm Cleary Gottlieb Steen & Hamilton. With resentment toward the EU's trade liberalizing instincts running so deep, "perhaps the politicians should have thought twice before embracing globalization so enthusiastically," he added. The Chinese vice minister and chief trade negotiator, Gao Hucheng, held a day and a half of face-to-face talks with Mandelson, but left Brussels on Wednesday empty-handed. As the talks progressed, Mandelson received the backing of his fellow commissioners to push ahead with urgent measures at the WTO to tackle the sharp rise in the two specific categories. Véron-Réville, the EU trade spokeswoman, said that would now be done "in the next few days, and certainly before 31 May." Talks will be intensified to try to prevent seven other categories of textile products under investigation by the EU from becoming the subject of additional WTO proceedings. Although Mandelson stressed last week that he was not coordinating his response to this year's surge in Chinese textile imports with the United States, the move to the WTO mirrors the action taken by Washington this month, although on a smaller scale. The quotas the Bush administration announced would cover trousers, shirts, blouses, underwear and combed cotton yarn. The U.S. State Department said last week that its quotas would take effect after it opens official consultations at the WTO with China, expected by the end of May. China last week tried to address U.S. and EU concerns by offering to introduce tariffs - some up to 400 percent - on 74 categories of goods, including T-shirts and linen. But the move failed to satisfy European trade officials. "The initial feeling was that China's offer may not go far enough," said a person close to the European trade negotiators, who spoke on condition of anonymity. In the first quarter of this year the volume of T-shirt imports from China into the EU has shot up by 187 percent, compared with the first quarter of last year, the commission said. Imports of Chinese flax yarn - used to make linen - have risen 56 percent during the same period. Under WTO rules, China's trading partners may impose quotas on Chinese textiles 15 days after starting the formal dispute if China fails to take action during that time. "It's highly unlikely the two sides will find a way of averting new quotas during this period," Subiotto said. "They had a long time to discuss it informally already with no success." When China joined the WTO in 2001, a clause was added to its accession agreement, allowing other WTO members to safeguard their own textile industries with trade restrictions like quotas if they experience a sustained surge in Chinese imports that causes irrevocable harm to local producers. The safeguard measures being considered by the EU consist of new quota limits on Chinese imports fixed at 7.5 percent above the quantity of T-shirts and linen imported from China last year - the same level as the U.S. quotas. The quotas would remain in place until the end of this year. Under China's accession agreement, all such safeguard measures against Chinese textiles must be scrapped by the end of 2008. A 40-year-long quota regime was lifted Jan. 1 to allow the country to trade freely with other WTO members. Textiles were always seen as a problem area because China produces so many textile products so cheaply. The lifting of the quotas was seen as the last obstacle to the country becoming a fully fledged global trading partner. China has hardened its position amid the hostile rhetoric both in the United States and Europe. After indicating that it would impose tariffs to control the surge in exports, the government warned that any product category that faced new trade restrictions from abroad would not be included. "Chinese products that are subject to export restrictions in the future will be removed from the export tariff list," the Ministry of Commerce spokesman, Chong Quan, said in a statement posted on the ministry's Web site. iht.com

To: RealMuLan who wrote (4963)	5/26/2005 1:24:10 PM
From: regli	Read Replies (1) \| Respond to of 6370

First of all, I don't think that there can be a reserve currency without gold backing. Even the Japanese back their currency with a certain amount of gold. In many cases, due to gold leasing, it is very difficult to say how much each country still posesses. I think that 10% with an ideal of 25% of M1 should be the figure, especially for a country with reserve currency ambitions. However, at this point I think the key should be to say that this is China's intention and that it will gradually acquire a reasonable reserve. If at the same time it were to announce the peg to gold, it would display strength instead of giving the appearance of having given in to pressure. Note that its peg could be freely chosen. The fascinating part then would be to watch if the U.S. or the EU would want to debase their currencies against gold over time, an entirely different proposition than asking another country to revalue its currency.