Chinese Premier Wen Jiabao

SHARM EL-SHEIK, Egypt (Channel News Asia): Chinese premier Wen Jiabao said on Sunday he was encouraged by signs of an economic recovery in the United States, but hoped it would keep its budget deficit to an “appropriate size” to stabilize the US dollar exchange rate.

“We follow very closely China’s holdings of US assets, because that is a very important part of our national wealth,” Wen told a media conference at the Egyptian resort town of Sharm el-Sheikh, where he is attending a China-Africa cooperation summit.

“We have seen signs of recovery in the US economy, which makes us see the light of hope,” he said.

“I hope the US will effectively discharge its responsibilities … most importantly we hope the United States will keep an appropriate size to its deficit so that there will be basic stability in the exchange rate,” he added. read more at Channel News Asia…

An economic dawn in Singapore? (photo: Randal Rayborn)

By Kenny Chee – AsiaOne Business – The Singapore economy is not expected to see another dip in the immediate future, and it is likely to continue stabilizing, said Prime Minister Lee Hsien Loong yesterday.

But a dramatic recovery is not being seen, as Singapore’s growth depends on the situation in developed countries, he said.
Speaking at a media conference ahead of the Asia-Pacific Economic Cooperation (Apec) Leaders’ Week beginning this Sunday, he noted that recovery in developed countries was due to stimulus packages administered by their governments.

Though the global economy is picking up, these should not be withdrawn suddenly, he said.

“As governments withdraw these stimuli, you (need) to have self-sustaining growth to create prosperity so that you are actually spending what you are creating,” he cautioned.
He also said that Americans need to save more and Asians need to spend more. read more at AsiaOne Business…

US Federal Reserve Bank Chairman Ben Bernanke

The Standard of Hong Kong reports that US Federal Reserve chairman Ben Bernanke warned Asian policies promoting exports could lead to a re-emergence of imbalances in trade and capital flows, which some believe helped fuel the US housing bubble.

Trade surpluses achieved through policies that artificially enhance domestic saving and export industries distort the allocation of resources, he said.

“To achieve more balanced and durable economic growth and to reduce the risks of financial instability, we must avoid ever-increasing and unsustainable imbalances in trade and capital flows,” he said in comments prepared for delivery to a San Francisco Fed conference on Asia.

Bernanke said imbalances have narrowed following the crisis, but warned that as the global economy recovers and trade volumes rebound, global imbalances may reassert themselves.

The Fed chairman said that that Asian economies had rebounded strongly from the crisis, with annualized growth rates in the double digits expected in China, Hong Kong, Korea, Malaysia, Singapore, and Taiwan. read more…

Eerie Similarities to 2008-2009?

Investors in October, 2009 have eerie echoes of the 1930 stock market rally nagging at the back of their minds. Yet they must still be tempted by the massive move up in equities since the March, 2009 lows.  The traditional American urge to invest – not to gamble, but to take solid, speculative risks in expectation of reasonable reward – persists in spite of the often unjustified punishments dished out by Wall Street and government in equal measure.  The decaying job market notwithstanding, there is still investment capital in the West searching for a home.  Searching for the prospect of honest, reasonable returns in a market seemingly determined to punish investors and reward gimmicks.  

The events of 2008 have given that capital every reason to stay on the sidelines. Yet the alternative of investing or starting a business overseas is daunting to the novice investor, small businessman, or salaried employee. They intuitively understand the need to get out from the red tape that the mature Western economies drown them in, but the leap to more favorable business climates on foreign shores is still very large.

AsiaLynx.com was launched to give Americans and other English-speaking readers a chance to view the business climate in Asia in greater depth that is often afforded by the mainstream media.  We will look for and bring you the slightly offbeat stories – the indicators of the real health of the global economy and the trends in trade, commerce, and employment.  Stories such as “Young Americans Going To China For Jobs” and “China’s super-rich only second to US” are treated as novelty tidbits by the American business media, but we think they point to a very real trend – the world’s center of economic gravity is shifting irrevocably toward Asia.  No doubt, young people in Europe in the early part of this century were scoffed at by their elders when they departed for the United States seeking new opportunities – the scoffing of American elders at their small but growing number of Asia-bound children will doubtless be even greater today.

Yet the United States is at a critical crossroads – its welfare state and military machine having expanded over the last four decades to unsustainable levels. Hard choices will have to be made: on pensions, job creation, tax policy, foreign intervention and scientific advancement. So far, the leaders of both major American political parties have signaled that they will maintain and expand the welfare state (“welfare”, it is clear, includes the fiscal health of the investment and money center banks), no matter what sacrifices have to be made in other areas.

Asia’s great opportunity has thus arrived.

Keep checking back with AsiaLynx.com as we attempt to chart the progress of the Great Shift Eastward. Whatever develops, it is going to be an interesting ride.

Randal Rayborn

American Mikala Reasbeck smiles at a recruiting office in Beijing, China. (AP Photo/Ng Han Guan)

(Bonnie Cao, 9/20/09 – Huffington Post) BEIJING — When the best job Mikala Reasbeck could find after college in Boston was counting pills part-time in a drugstore for $7 an hour, she took the drastic step of jumping on a plane to Beijing in February to look for work.

A week after she started looking, the 23-year-old from Wheeling, West Virginia, had a full-time job teaching English.

“I applied for jobs all over the U.S. There just weren’t any,” said Reasbeck, who speaks no Chinese but had volunteered at the 2008 Beijing Olympics. In China, she said, “the jobs are so easy to find. And there are so many.”

Young foreigners like Reasbeck are coming to China to look for work in its unfamiliar but less bleak economy, driven by the worst job markets in decades in the United States, Europe and some Asian countries. read more…

For the European Union, shipments fell 15 per cent in September from a year ago and declined 4.7 per cent to the US, while shipments to China tumbled 15 per cent year-on-year

The Business Times is reporting that Singapore’s key exports fell for the 17th consecutive month in September as demand from crucial markets including the US and European Union continued to decline, data released on Friday showed.

Non-oil domestic exports fell 7.2 per cent in September from a year earlier to $12.81 billion (US$9.24 billion), trade promotion body International Enterprise Singapore (IE Singapore) said in a statement.

The decline was sharper than the average 6.0 per cent fall forecasted by analysts in a Dow Jones Newswires poll.

Total trade in September shrank 19.0 per cent to $68.28 billion from the same period a year ago.

IE Singapore said the decline in non-oil exports during September was due to weaker shipments of electronic and petrochemical products. read more…

“]

SINA News reports that enthusiasm spread to Chinese exporters yesterday as they appeared more upbeat about sales and orders handled during this autumn’s Canton Fair, hoping to get a leg-up on this year’s overseas exports.

The 21-day Canton Fair, also known as the China Import and Export Fair, is the world’s largest fair by floor area and starts one day after China reported surprisingly good trade figures.

Exports from China fell in September by 15.2 percent compared to the same period last year. Forecasters expected a 21 percent fall. The report suggested global demand is improving.

Compared with the fair held in April, where economies of the United States and Europe were deep in a quagmire, this Canton Fair is much busier, with slews of foreign purchasers flocking into the exhibition halls on opening day and exhibitors brimming with smiles and busily receiving them. read more…

Paul Achleitner, head of finance, Allianz

Bloomberg reports that Allianz SE, Europe’s biggest insurer and the manager of a portfolio of about $600 billion, expects stocks to fall because economic recovery is lagging behind the seven-month jump in the Standard & Poor’s 500 Index.

“The market rally right now is — my personal view is — way ahead of real-life developments,” Paul Achleitner, head of finance at Munich-based Allianz, said yesterday in an interview at Bloomberg headquarters in New York. “The expectation level is so high, you’re going to have the risk that there’s going to be a discrepancy in expectation” and economic data, Achleitner said.

The stock market rally has led many commentators to declare the recession over, claiming that a “V-shaped” recovery is underway. Sober comments from critical observers like Achleitner are less popular on the business channels.

HSBC CEO Michael Geoghegan

The Telegraph is reporting that Michael Geoghegan, the chief executive of HSBC, has said he fears the global economy faces a “second downturn”. Aside from a rise in equity prices, however, there is no significant evidence that the “first downturn” ever came to an end. Equity prices have not been reflecting the reality of the economic situation, especially in the US, where a rising tide of unemployment is threatening to choke off any chance at a real recovery. Still, it is significant that leading executives are starting to admit that the economic outlook is not so positive as government/media cheerleaders would have everyone believe.

Arab states try to break the dollar

The Independent reports that the Arab states are working with China, Russia, and France to end pricing of oil in dollars, moving instead to basket of currencies to include the Chinese yuan and the Japanese yen. The change is not slated to occur until 2018, but it is a clear shot across the bow of United States and British government interests.