Foreign Capital Flees the U.S.
MARCH 17, 2009
Wall Street Journal
Outflow Hits Record $148.9 Billion as China Reloads
Foreigners withdrew funds from U.S. assets in record amounts in January, but China continued to add to its stockpile of U.S. government debt.
Already the largest foreign creditor to the U.S. government, China raised its Treasury holdings another $12.2 billion in January, taking its total holdings to $739.6 billion, according to the latest data from the Treasury Department released Monday. China held $492 billion in Treasurys in January 2008.
Foreigners sold a net $60.9 billion in long-dated U.S. securities in January, after buying $24.3 billion in December. Including changes in banks' dollar holdings, short-term securities and nonmarket transactions, net foreign ...
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World Bank Lowers Its Forecast for Growth in China
New York Times
By BETTINA WASSENER
Published: March 19, 2009
Exports, like motorbikes from a factory in southeast China, have driven the nation’s growth. Some economists say new domestic demand will help China weather the global downturn
HONG KONG — The World Bank lowered its forecast for economic growth in China on Wednesday to 6.5 percent in 2009, reflecting the influence of the global slowdown.
The figure, down from the bank’s earlier forecast of 7.5 percent growth, is well below the 8 percent projected by the Chinese government for its market, the fastest-growing major economy. It is more in line with what many independent economists expect for China, which has the world’s third-largest economy after the United States and Japan.
China’s banks have been largely unscathed by the international financial turmoil, and the authorities still have plenty of leeway to enact additional stimulus measures on top of steps already announced by Beijing.
Recent economic data has shown, however, that exports — a significant factor behind China’s stellar growth — have fallen sharply.
The Chinese prime minister, Wen Jiabao, called on Wednesday for rapid adoption of policies meant to stimulate growth, saying “big difficulties” continued to confront the nation, Reuters reported.
Some industrial sectors and geographical areas were improving, Mr. Wen said at a regular meeting of the cabinet, according to the central government’s Web site. But, he added, the government should waste no time in starting stimulus measures.
In its quarterly review of China, the World Bank stressed that the country’s economy was holding up relatively well in the face of the most severe global downturn in decades.
“China is a relative bright spot in an otherwise gloomy global economy,” the World Bank’s country director for China, David Dollar, said in a statement Wednesday, adding that the bank still expected China to continue to outgrow most other countries.
The World Bank also echoed what many other China watchers were saying: that greater domestic consumption and a reduced reliance on exports were crucial to China’s long-term growth prospects.
Only 5 of 12 economists polled by Reuters say they think the government’s 8 percent goal is achievable; the average expectation is for growth of 7.8 percent.
The Reuters poll, published Wednesday, also found that economists expect India, Indonesia and the Philippines to be the only other emerging Asian economies to grow this year. Worst hit in the region will be Singapore and Taiwan, which are both expected to shrink 4.9 percent, according to the poll.
Despite Wednesday’s revision, the World Bank’s comments on China also reflect a broad consensus that the country is better placed than many others to get through the downturn relatively well — even if a tangible recovery remains some way off.
This has also been reflected in China’s stock market — one of the world’s best performers so far this year.
While most indexes around the world have fallen more than 10 percent so far this year and the Dow Jones industrial average is down 15.7 percent, the Shanghai stock exchange is up 22 percent since Jan. 1, and added a further 0.3 percent on Wednesday.
Jonathan Garner, chief equity strategist for Asian and emerging markets at Morgan Stanley, speaking to reporters in Hong Kong on Tuesday, said he believed much of emerging Asia — outside Japan, which is in a recession — was better positioned than other regions of the world, and that stock markets here might have bottomed out last October.
By contrast, the market in the United States “could still see new lows before it troughs,” he said.
Source:
http://www.nytimes.com/2009/03/19/bu...hina.html?_r=1
China’s Stimulus Spending to Help Growth Reach Target
By Irene Shen
March 22 (Bloomberg) -- China’s stimulus spending may add as much as 1.9 percentage points to economic expansion and help the government achieve its growth target this year, according to the State Council’s research group.
“China has the ability to become the first in the world to step out of the crisis and keep stable growth for the mid and long term,” Zhang Yutai, director of the Development Research Center of the State Council, said in a live broadcast from the China Development Forum in Beijing today.
Vice Premier Li Keqiang reaffirmed China’s goal of 8 percent growth at today’s forum, saying some industries “have seen signs of recovery.”
China is targeting expansion in 2009 even as economies from the U.S. to Japan contract. The nation’s economy is showing “early signs” of stabilizing as government-backed investment counters a slump in exports, the World Bank said March 18.
Vice Premier Li Keqiang reaffirmed China’s goal of 8 percent growth at today’s forum, saying some industries “have seen signs of recovery.”
China is targeting expansion in 2009 even as economies from the U.S. to Japan contract. The nation’s economy is showing “early signs” of stabilizing as government-backed investment counters a slump in exports, the World Bank said March 18.
Investment in China rose 26.5 percent in the first two months of 2009 and bank loans quadrupled in February, indications the government’s 4 trillion yuan ($585 billion) stimulus plan is starting to feed into the economy.
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