China Life profit is up 115% or some such number, but less stock gains, profit is down 15%
I am sure this is a stable situation :0)
In the meannasty time.the evils at Stratfor are licking chops, again ...
Global Market Brief: China, U.S. -- The Changing Trade Dynamic
April 19, 2007 1914 GMT
The United States and China have been engaged in a dance over trade for some time now. One of Washington's periodic moves has consisted of advocating a symbolic anti-China gesture aimed at appeasing anti-China factions in the United States.
Until now, these threats have wound up costing China relatively little. And a trade war over intellectually property rights or glossy paper used by magazines is not about to wreck the U.S.-Chinese relationship. Even so, the dynamic behind the trans-Pacific dance has begun shifting.
The latest trade flare-up between the United States and China is related to the next Strategic Economic Dialogue summit in Washington, where U.S. Treasury Secretary Henry Paulson and Chinese Vice Premier Wu Yi will meet for talks May 23-24. It also is related to the upcoming expiration of U.S. President George W. Bush's trade authority, the renewal of which Congress is currently considering. Both deadlines have ramped up pressure on the White House (and hence on U.S. Trade Representative Susan Schwab) to act more aggressively against China's so-called economic misdemeanors.
Both sides have strong motivations to keep the U.S.-Chinese relationship stable. China depends on the U.S. export market (its largest) to generate jobs for its workers, while U.S. creditors and businesses with investments in China depend on continued Chinese economic growth and social stability. Beyond trade, numerous other ways in which the two nations are interdependent are at play, such as Beijing's ability to influence North Korean leader Kim Jong Il in the current round of six-party talks.
Ever since the Democrats assumed control of the U.S. Congress in November 2006, Beijing has anticipated an end in the win-win consensus-style dialogue that Washington has adopted on economic disagreements post-Sept. 11. Beijing sees that the U.S. administration's ability to fend off congressional pressure for more aggressive action against China is in decline. The U.S. Commerce Department's decision to reverse a decade-long policy March 30, whereby China received nonmarket-economy status on certain issues, reveals this trend.
What China fears most, however, is the day Congress or U.S. interest groups successfully coerce the Office of the U.S. Trade Representative into enacting legislation that could substantially undermine continued Chinese economic growth. A tariff on China's biggest employing sectors, like machinery manufacturing, would be one example. As such, Beijing already is revving up the pace and intensity of its response to pre-empt potential U.S. trade action.
Intellectual property rights (IPR) have always grabbed U.S. media attention, with China typically cast as the villain. U.S. charges that China has allowed IPR violations are motivated more by politics than by economics, as evidenced by the relative lack of attention the United States pays to other equally situated, if not worse, offenders.
But IPR have always been superficial to the core U.S.-Chinese economic relationship. Therefore, words and actions taken by either the Chinese government or the U.S. administration on the subject typically have been aimed more at appeasing U.S. interest groups rather than at quashing the problem.
Beijing has recently intensified its public relations campaign designed to show the United States how much it is doing to address the intellectual property issue. Four days after the United States lodged two IPR-related complaints against China with the World Trade Organization (WTO) on April 10, Gansu province ordered workers to burn 1.06 million pirated audiotapes and videotapes. On April 16, the National Working Group for IPR Protection published the country's "Top 10 IPR Protection Events of 2006." Local media have been falling all over themselves to list China's countless IPR protection accomplishments. This is not the first time China has made such gestures, but the intensity and pace of this latest drive is noticeably higher.
Whether anyone believes China is really clearing up its intellectual property problems is beside the point: Beijing's effort to show foreigners that it is taking action is what really matters. By doing so, China is trying to manipulate the two competing factions in the United States. These are comprised of a faction wishing to engage China, such as U.S. retail businesses and consumers dependent on cheap Chinese imports; and a faction wishing to constrain China, consisting of U.S. producers competing with cheap Chinese imports. By launching a high-profile media campaign to promote its IPR protection activities, China is giving the engage-China faction ammunition with which to counter China-related intellectual property criticisms from its rival faction.
Beijing also is attempting to influence U.S. opinion through other means. On the same day the "Top 10 IPR Protection Events of 2006" was published, the South China Morning Post reported that China abruptly ended ongoing environmental and energy negotiations with the United States aimed at eliminating Chinese tariffs on imports of U.S. environmental products and services. The talks were set up as part of the Strategic Economic Dialogue in May 2007. By shutting them down, China is giving the engage-China group (e.g., U.S. environmental equipment producers) an additional tool with which to lobby Congress against launching further WTO complaints.
The Chinese government action still is only a game of appearances rather than real trade retaliation. If Beijing truly wanted to retaliate, it would have chosen a more costly step against the United States, such as imposing countertariffs.
Ultimately, only talk on economically and geopolitically costlier issues, such as revaluation of the yuan, matters. Paulson and U.S. Federal Reserve System Chairman Ben Bernanke have asked China to speed up its currency appreciation, but to date China has ignored the U.S. request -- because it can. The Bush administration realizes China is in a delicate situation, and so cannot risk a huge, immediate yuan revaluation given such a step's potential to destabilize China's economic growth. Paulson has thus danced around the issue, avoiding delivering China an ultimatum. Though the IPR cases probably will soon be submerged in lengthy legal proceedings at the WTO, the steps to the U.S.-Chinese trade dance have started changing.
CHINA: Shanghai usurped Hong Kong's position as the world's second-busiest port in the first quarter of 2007, and Shenzhen is likely to bump Hong Kong down to fourth place before the year is up, the South China Morning Post reported April 19. Hong Kong's competitive advantage in the terminal business has faded since most of its manufacturing base moved across to the Pearl River Delta serviced by Shenzhen. Hong Kong's businesses and the public believe its government has failed to preserve the territory's former competitive strengths, citing a lack of decisive timely action and effective public consultation. For now, the Hong Kong government is focused on winning special concessions from the booming mainland market via agreements such as the Closer Economic Partnership Arrangement, which significantly has boosted business for both Hong Kong's stock market and tourist and retail sectors. Whether such special concessions continue will depend on how regional rivalries evolve between the former colony and Chinese cities such as Shanghai -- and their ability to influence Beijing's decisions. |
