A Chinese landing craft with 1,000 marines headed for Syria

A Chinese landing craft with 1,000 marines for Syria – reports
DEBKAfile September 6, 2013, 12:31 PM (GMT+02:00)
Western naval sources reported Friday that a Chinese landing craft, the Jinggangshan, with a 1,000-strong marine battalion had reached the Red Sea en route for the Mediterranean off Syria.  According to DEBKAfile, Beijing has already deployed a number of warships opposite Syria in secret. If the latest report is confirmed, this will be the largest Chinese deployment in the Middle East in its naval history.

China to join Russia for largest naval drills with foreign partner

China will join Russia later this week for its largest-ever naval drills with a foreign partner, underlining deepening ties between the former cold war rivals along with Beijing's desire for closer links with regional militaries.

China has long been a key customer for Russian military hardware, but only in the last decade have their militaries begun taking part in joint exercises.

China's defence ministry said on Tuesday that its navy would send four destroyers, two guided missile frigates and a support ship for the exercises, which start on Friday in the Sea of Japan and run until 12 July.

The ships departed on Monday from the port of Qingdao, where China's Northern Fleet is based, and headed for the rallying point in Peter the Great Bay near Vladivostok.

"This marks our navy's single biggest deployment of military force in a China-foreign joint exercise," the ministry said. Read more >>

When the Whole World Has Drones

The precedents the U.S. has set for robotic warfare may have fearsome consequences as other countries catch up.

A slim aircraft glided through Israeli airspace, maintaining low altitude and taking a winding path to avoid detection. It flew over sensitive military installations and was beginning its approach to the Dimona nuclear reactor when it was blown from the sky by the Israel Defense Forces. The plane was pilotless, directed by agents elsewhere, and had been attempting to relay images back home. Whether they were successfully transmitted, Israelis won’t say, perhaps because they don’t know. But here’s what’s certain: It wasn’t American. It wasn’t Russian or Chinese. It was an Iranian drone, assembled in Lebanon and flown by Hezbollah.

The proliferation of drone technology has moved well beyond the control of the United States government and its closest allies. The aircraft are too easy to obtain, with barriers to entry on the production side crumbling too quickly to place limits on the spread of a technology that promises to transform warfare on a global scale. Already, more than 75 countries have remote piloted aircraft. More than 50 nations are building a total of nearly a thousand types. At its last display at a trade show in Beijing, China showed off 25 different unmanned aerial vehicles. Not toys or models, but real flying machines.

It’s a classic and common phase in the life cycle of a military innovation: An advanced country and its weapons developers create a tool, and then others learn how to make their own. But what makes this case rare, and dangerous, is the powerful combination of efficiency and lethality spreading in an environment lacking internationally accepted guidelines on legitimate use. This technology is snowballing through a global arena where the main precedent for its application is the one set by the United States; it’s a precedent Washington does not want anyone following. Read more >>

China’s Inflation Accelerates as Food Prices Soar

China’s inflation accelerated more than forecast to a seven-month high as the nation’s coldest winter in 28 years pushed up vegetable prices, a pickup that may limit room for easing to support an economic recovery.

The consumer price index rose 2.5 percent in December from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.3 percent median estimate in a Bloomberg News survey of 42 economists and a 2 percent gain in November. The decline in the producer-price index eased to 1.9 percent.

“With growth momentum firming up and inflation picking up, the likelihood of any further easing has disappeared and the next interest-rate move will probably be an increase,” which could come as early as the fourth quarter, Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong, said in a telephone interview.

Inflation may temporarily accelerate to more than 3 percent next month, Zhu said, reflecting the impact of cold weather on food prices and the weeklong Chinese Lunar New Year holiday, which fell in January last year. Read more >>

80% Of The World Is Now In Contraction

With the US closed today, the rest of the world is enjoying a moderate rise in risk for the same old irrational reason we have all grown to loathe in the New Normal: expectations of more easing, or "bad news if great news", this time from China, which over the weekend reported the first official sub-50 PMI print declining from the magical 50.1 to 49.2, as now even the official RAND() Chinese data has joined the HSBC PMI indicator in the contraction space for the first time since November. Sadly, following today's manufacturing PMI update, we find that the rest of the world is not doing any better, and in fact of the 22 countries we track, 80% are now in contraction territory. Read more >>

Chinese companies pull out of U.S. stock markets

Just a few years after Chinese companies lined up to sell shares on Wall Street, a growing number are reversing course and pulling out of their U.S. stock exchange listing.

This week, Focus Media Holding, announced its chairman and private equity firm investors want to buy back its U.S.-traded shares and take the Shanghai-based advertising company private. The deal would value Focus Media at $3.5 billion, according to financial information firm Dealogic.
Some Chinese companies say they are pulling out of U.S. markets because a low share price fails to reflect the strength of their business. Withdrawing also eliminates the cost of complying with American financial reporting rules.

The withdrawals follow accusations of improper accounting by some companies and a deadlock between Beijing and Washington over whether U.S. regulators can oversee their China-based auditors.
Washington wants auditors to hand over documentation on companies that are under investigation but Chinese authorities have barred the release of some information. If a settlement is not reached, the SEC could reject audits by China-based firms, forcing companies to find new auditors. Read more >>

China’s Growth Slows to Three-Year Low

China’s growth slowed for a sixth quarter to the weakest pace since the global financial crisis, putting pressure on Premier Wen Jiabao to boost stimulus to secure a second-half economic rebound. Gross domestic product expanded 7.6 percent last quarter from a year earlier, the National Bureau of Statistics said today in Beijing. The pace, a three-year low, compares with an 8.1 percent gain in the previous period and the 7.7 percent median forecast of economists. Industrial production increased at a slower pace in June while retail sales growth decelerated.

Today’s data painted a mixed picture from a pickup in fixed-asset investment that could signal the economy is stabilizing to the warning sign that electricity output failed to increase in June from a year earlier. Singapore reported an unexpected economic contraction as China’s slowdown undermines a global recovery already threatened by Europe’s debt crisis and limited U.S. job growth.

“The fact that the data shows persistent weakness --rather than a precipitous plunge -- means policy makers are likely to continue incremental monetary accommodation but not embrace a more aggressive fiscal stimulus policy response in the immediate term,” said Ramin Toloui, Singapore-based global co-head of emerging-markets portfolio management at Pacific Investment Management Co., which manages the world’s largest bond fund. Read more >>

Marc Faber: Global Recession Dead Ahead

 

Faber warns that economies of the world may be on the brink of a serious slowdown. Faber indicated that while investors remain focused on Greece and Europe – other issues, bigger issues are looming.

And they’re more threatening. “As an observer of markets – whenever everyone focuses on one thing – like Greece and Europe – maybe they miss issues that are far more important – such as a meaningful slowdown in India and China.” The latest reports from Beijing would support Faber's assertion. The HSBC Flash Purchasing Managers Index, slipped to 48.7 in May from 49.3 in April. That marks the seventh straight month that the index has been below 50, a level which indicates economic activity is contracting.

Faber also cited weakness in the high-end as another key catalyst that’s very negative. “There are more and more stocks that are breaking down – economic sensitive stocks and companies that cater to the high-end,” he said. "That suggests to me the economy is likely to weaken and the huge asset run is likely to come to an end with significant asset deflation.” Read more >>

Cost of rare-earth metals pushing up the cost of US gasoline

The skyrocketing cost of rare-earth metals from China is pushing up the cost of gasoline production in the U.S., the latest sign of the wide-reaching impact of Beijing's decision to restrict exports of the minerals.

Prices for some of the chemicals refiners use to process gasoline have risen dramatically after China, which controls about 95% of the world's rare-earth supply, said it would reduce export quotas for the metal by 35% for the first half of 2011. Beijing had already cut quotas by 72% for the second half of 2010. More...

Inflation major reason Chinese citizens losing faith in government

Image by Getty Images via @daylifeInflation in China is on track to rise. According to the National Bureau of Statistics (NBS), the consumer price index (CPI) rose 3.2% in the first 11 months of this year. In November alone, the CPI rose 5.1% year-on-year and 2% month-on-month. And the CPI increase was mainly propelled by price hikes for foodstuffs. In November, food prices rose 11.7% year-on-year. The Blue Paper says food price hikes seriously affect living standards, especially for low-income families.

A December 15 survey by the research arm of the People's Bank of China (PBoC), the country's central bank, also reached a similar conclusion.

A questionnaire given to 20,000 bank depositors in 50 cities found their satisfaction with consumer goods-prices in the last quarter of this year had dropped to the lowest level since the last quarter of 1999. About 74% of the respondents thought prices were "unbearably high". This is 16 percentage points higher than in the third quarter. Only 25% of the respondents said the current price level was "acceptable", and most respondents expected inflation to intensify.

While the Blue Paper and the PBoC survey fail to mention it explicitly, it is apparent that dissatisfaction with inflation is a major reason for people's waning confidence in their government. At the annual session of the National People's Congress (NPC) in early March, Premier Wen Jiabao set this year's target of keeping inflation under 3%. It seems certain this will be "mission impossible", as CPI was expected to go up even more for December. More...

The Big Mac index

A WEAK currency, despite its appeal to exporters and politicians, is no free lunch. But it can provide a cheap one. In China, for example, a McDonald’s Big Mac costs just 14.5 yuan on average in Beijing and Shenzhen, the equivalent of $2.18 at market exchange rates. In America, in contrast, the same burger averages $3.71.

That makes China’s yuan one of the most undervalued currencies in the Big Mac index, our gratifyingly simple guide to currency misalignments, updated this week (see chart). The index is based on the idea of purchasing-power parity, which says that a currency’s price should reflect the amount of goods and services it can buy. Since 14.5 yuan can buy as much burger as $3.71, a yuan should be worth $0.26 on the foreign-exchange market. In fact, it costs just $0.15, suggesting that it is undervalued by about 40%.

The tensions caused by such misalignments prompted Brazil’s finance minister, Guido Mantega, to complain last month that his country was a potential casualty of a “currency war”. Perhaps it was something he ate. In Brazil a Big Mac costs the equivalent of $5.26, implying that the real is now overvalued by 42%. The index also suggests that the euro is overvalued by about 29%. And the Swiss, who avoid most wars, are in the thick of this one. Their franc is the most expensive currency on our list. The Japanese are so far the only rich country to intervene directly in the markets to weaken their currency. But according to burgernomics, the yen is only 5% overvalued, not much of a casus belli. More...

Steelworkers beat manager to death -- global civil unrest intensifies

The Sidney Morning Herald reports 30,000 Chinese steelworkers protested plans to merge their mill with another company and beat the company's general manager to death. Employees of Tonghua Iron and Steel Group objected to plans for Jianlong Steel to take control of the company. Jianlong Steel, headquartered in Beijing, controlled the company temporarily last year, and employees blame Jianlong for financial problems. Tonghua employees attacked Jianlong's general manager, Chen Guojun, during the protest and beat him to death.

Last Saturday workers occupied a UK wind tubine factory for six consecutive days in protest at plans to shut it down. The prior week employees at New Fabris -- a bankrupt French car-parts supplier -- threatened to blow up their factory unless Renault and Peugeot pay them compensation. Nearly 400 employees occupied the plant demanding the automakers pay nearly R350 000 to each worker. The Telegraph reported the French workers were paid the same week.