Archive for the ‘cash’ Category

At G-20, China Did Not Commit Bailout Funds Despite Huge Reserves

November 16, 2008

China got what it wanted in Washington’s financial summit — a promise of a bigger role for developing countries in global finance — but gave no sign Sunday whether it will respond by using any of its $1.9 trillion in reserves in a bailout fund.

By JOE McDONALD, AP Business Writer

China has been pushing for developing countries generally — and itself specifically — to have more influence at the International Monetary Fund and other global bodies. Analysts say that might be Beijing’s price to give in to foreign appeals to dip into its reserves and contribute money toward an IMF emergency loan fund for struggling countries.

The Washington summit was an “important and positive” step toward “the reform of the international financial structure,” foreign ministry spokesman Qin Gang said in a statement. It made no mention of possible bailout contributions, and a man who answered the phone at the ministry press office said he had no information.

Leaders from 21 nations, including China, and four international organizations attended the emergency two-day summit intended to address the financial crisis sweeping the globe.

Summit participants vowed Saturday at the conclusion of the two-day conference to cooperate more closely, keep a sharper eye out for potential problems and give bigger roles to fast-rising nations. But the leaders avoided many of the harder details leaving them to be worked out before their next summit, after President George W. Bush is gone and President-elect Barack Obama is in the White House.

China says it will cooperate with the IMF but Chinese officials say its most important role will be to preserve global growth by keeping its own economy healthy. Beijing announced a 4 trillion yuan ($586 billion) stimulus package last week, at a time of slowing economic growth and fears that falling exports could lead to layoffs and factory closures.

“China’s economic power is growing, so China could contribute and help ease the financial crisis,” said Wu Jinglian, a prominent economist and Cabinet adviser. “But the first priority is to keep our own economy growing. That will benefit every country in the world.”

A woman cooks while her husband playing computer games inside ...
A woman cooks while her husband playing computer games inside the prefabricated temporary housing in Yingxiu, Sichuan Province in China Nov. 8, 2008. Six months after the worst quake to hit China in three decades, the future remains uncertain for many survivors. Jobs are hard to come by, and government aid payments are about to end. Many people are still in temporary housing. China’s leaders have called reconstruction a priority. Last week, the government announced plans to pump $146 billion into the effort over the next three years. Some 120 billion yuan ($17.5 billion) will be spent on ensuring schools, hospitals and other public facilities are built to higher standards.(AP Photo/Andy Wong)

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http://news.yahoo.com/s/ap/20081116/ap_on_re_as/as_asia_meltdown_summit_1

Investors cheer China’s stimulus package

November 10, 2008

Investors welcomed China‘s multibillion dollar stimulus package but analysts said Monday that Beijing must ensure companies get access to more credit to sustain its effectiveness.

A man walks past buildings on the city skyline in Shanghai, ... 
A man walks past buildings on the city skyline in Shanghai, China, Tuesday Oct. 21, 2008. In the foreground is the Shanghai World Financial Center, and at left the Jinmao Tower. China’s economy expanded by just 9 percent in the third quarter, its most sluggish pace in five years.(AP Photo/Greg Baker)

Stock markets in Japan, Hong Kong and mainland China soared following Sunday’s announcement of the 4 trillion yuan, or $586 billion, package as China joined moves by governments around the world to cushion the blow of the global slowdown.

By JOE McDONALD, AP Business Writer

The package calls for higher government spending on roads, airports and other infrastructure and bigger subsidies to the poor and farmers. It promises more lending for rural projects, smaller companies and consumers but gives no details.

The plan represents another drastic step away from lending curbs and other anti-inflation measures that Beijing imposed over the past three years but has been rolling back since mid-2008 as government alarm about slowing economic growth mounts.

“It is clear that aggressive fiscal stimulus is necessary to jump start the economy at a time of sharply deteriorating outlook and sentiment,” said UBS Securities economist Tao Wang in a report to clients.

Still, “given the importance of bank financing in China … increasing bank lending would be critical to sustain corporate investment needs,” he said.

The plan follows an unexpectedly sharp slowdown in economic growth that has raised the prospect of job losses and unrest. China’s economic growth fell to 9 percent in the third quarter, its lowest level in five years, and analysts expect export growth to fall as low as zero in coming months as global demand weakens.

British Prime Minister Gordon Brown welcomed China’s move and said he looked forward to discussion of coordinating policy at a Washington meeting this week of leaders from the Group of 20 major economies. Chinese President Hu Jintao is due to attend.

Also Monday, the government said China’s wholesale inflation eased in October, which gives authorities more leeway to stimulate the economy without the threat that they might ignite new price rises. Producer prices rose 6.6 percent in October from the year-earlier period, down from August’s 12-year high of 10.1 percent.

Alarmed at falling growth, the government switched its official goal in mid-2008 from a single focus on fighting inflation to a dual target of ensuring fast economic expansion while also containing price rises. It has cut interest rates three times in recent weeks and lifted limits on how much each Chinese bank can lend.

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http://news.yahoo.com/s/ap/20081110/ap_on_bi_
ge/as_china_stimulus_package_13

GM reports $2.5B 3Q loss, says it’s running out of money, suspends Chrysler takeover talks

November 7, 2008

General Motors Corp. said Friday it lost $2.5 billion in the third quarter and warned that it could run out of cash in 2009 if the U.S. economic slump continues and it doesn’t get government aid.
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By TOM KRISHER and JEFF KAROUB, AP Business Writers
From The Associated Press

GM also said it has suspended talks to acquire Chrysler. While it didn’t specifically name the automaker, GM said it was setting aside considerations for a “strategic acquisition.”

“While the acquisition could potentially have provided significant benefits, the company has concluded that it is more important at the present time to focus on its immediate liquidity challenges and, accordingly, considerations of such a transaction as a near-term priority have been set aside,” the company’s said in a statement.

The automaker said its cash burn for the quarter accelerated to $6.9 billion, and government aid will be “essential” because of the slow economy and credit crisis.

The GM logo hangs over an unsold 2009 Acadia sports-utility ... 

Above: The GM logo hangs over an unsold 2009 Acadia sports-utility vehicle on the lot at a GMC Truck dealership in the south Denver suburb of Littleton, Colo., on Sunday, Oct. 12, 2008. General Motors Corp. on Friday, Nov. 7, 2008 said it lost $2.5 billion in the third quarter and warned that it could run out of cash in 2009. GM also said it has suspended talks to acquire Chrysler, and said its cash burn for the quarter accelerated to $6.9 billion due to a severe U.S. auto sales slump.(AP Photo/David Zalubowski)

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http://news.yahoo.com/s/ap/20081107/ap_on_bi_ge/earns_gm;_ylt=
AsQnG1GHOpiokSxdWMm4QZys0NUE

Pakistan’s Zardari is Cozy With China; But His Fate Is Tied To The White House and Whoever Lives there….

October 17, 2008

Pakistan’s President Asif Ali Zardari completed his first state trip to Beijing on Oct. 17, signing a raft of new agreements with a nation he had hailed in Islamabad four days earlier as “the future of the world.” China and Pakistan tied up at least 11 deals on trade and economic cooperation, infrastructure projects, agriculture, mining rights and telecommunications; they now aim to double bilateral trade, which currently stands at around $7 billion, by 2011.

Chinese President Hu Jintao (R) and his Pakistani counterpart ... 
Chinese President Hu Jintao (R) and his Pakistani counterpart Asif Ali Zardari stand near their respective country’s flags during a signing ceremony at the Great Hall of the People in Beijing October 15, 2008. Zardari arrived on Tuesday for his first visit to China as president, and has said he wants his four-day trip “to remind the leadership of the world how close our relationship is”. Pakistan is set to usher in a series of agreements with China during the trip, highlighting Islamabad’s hopes that Beijing will help it through economic and diplomatic troubles.REUTERS/David Gray (CHINA)

By Ishaan Tharoor
Time Magazine
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The two countries have a long-standing, all-weather relationship, forged over decades of mutual animosity toward neighboring India, with whom they separately have fought wars. But Zardari’s visit comes at a pivotal moment. His fledgling democracy is not only threatened by terrorism, but is also teetering toward bankruptcy. Spiraling inflation, now at 25%, has eaten into Pakistan’s foreign exchange reserves at a rate of $1 billion a month and the country risks defaulting on debt repayment loans. These fiscal headaches have been compounded by a flare-up in tensions with its most vital ally, the U.S., which recently launched raids against terrorist targets in Pakistan’s remote tribal areas without notifying Islamabad — actions that have triggered a firestorm of protest and clouded relations with Washington.

Enter China. With nearly $2 trillion amassed in foreign currency holdings, China’s government had the largesse this week to grant Zardari an immediate soft loan of upwards of $1 billion, according to a report in the Financial Times. “As a long friend of Pakistan, China understands it is facing some financial difficulties,” said Chinese Foreign Ministry spokesman Qin Gang at a briefing with journalists on Oct. 16. Other new measures include the increase of access Pakistani goods will have in China’s markets as well as agreements to launch special economic zones within Pakistan with tax incentives for Chinese companies.

Beyond this, Zardari’s strengthening of ties with Beijing sends a clear signal to the U.S. On Oct. 8, Washington concluded a landmark nuclear energy deal with India — a pact that upset both Beijing and Islamabad, in part because it enabled India to skirt international regulations regarding the purchase of nuclear fuel, something the U.S. has ruled out offering Pakistan. Su Hao, professor of Asia-Pacific studies at China Foreign Affairs University in Beijing, says China’s foreign policy establishment is “highly concerned about the U.S.-India contract, because it was a unilateral decision by the U.S.”

A burgeoning Sino-Pakistani alliance may check what many in Islamabad and Beijing fear to be a solidifying Indo-U.S. consensus in the region. Though no official statement from either government was made, Pakistan’s ambassador to Beijing, Masood Khan, told The Nation, a Pakistani daily, that obtaining nuclear reactors and fuel for civilian nuclear technology would be the “main item” in talks with Beijing this week. Apart from being Pakistan’s main conventional arms supplier, China has played an integral part in building Pakistan’s nuclear weapons industry. In turn, Islamabad allowed the Chinese to build a deep-sea facility in Gwadar, a $250 million project that, once completed, will give Beijing an immensely strategic listening post on the Persian Gulf.

Still, a geopolitical Cold War is not at hand. The fate of Pakistan’s government remains tightly bound to the White House….

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http://www.time.com/time/world/article/0,8599,1851332,00.
html?xid=rss-topstories

U.S., China, Jockey To Provide Pakistan What it Asks For

October 17, 2008

The American military is beginning a training effort inside Pakistan this week that holds promise as the US helps Pakistan fight tribal militants blamed for much of the increase in violence there as well as in neighboring Afghanistan.

By Gordon Lubold

But a separate initiative to provide jet fighters to the Pakistani Air Force that Bush administration officials believe will be instrumental in the fight has been held up over concerns that Pakistan will use the planes against India, not against extremist elements in its border with Afghanistan.

The US deployed a small unit of about 30 special forces personnel into Pakistan this week to bolster the ability of Pakistan’s Frontier Corps to fight its own insurgency.

The team, which also includes some British special forces, is significant, not for its size, but for the expectation that it can give Pakistan the tools to fight militants on its own. That is key to American defense officials who are desperate to reverse violence in the region but say any counterinsurgency there must have a Pakistani face.

That is why a long-proposed sale of new and refurbished F-16 jet fighters to Pakistan has become so critical to the Bush administration, which believes the old fleet of fighters the Pakistani Air Force is using now aren’t effective.

The older planes aren’t able to fly night missions, and they aren’t equipped to drop the kind of precision munitions that could be instrumental in the ground fight against militants.

“Right now, they’re basically dropping dumb bombs in the daylight, a fact that does not escape the enemy,” says one defense official.

But Congress isn’t so sure the Pakistani government can be trusted to use the planes against the tribal militants thought to be responsible for violence in Pakistan as well as in neighboring Afghanistan.

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http://news.yahoo.com/s/csm/20081017/ts_csm/apakequip_1
F-16 June 2008.jpg
Above: F-16
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China, Pakistan and Nuclear Power

CBS — China has privately agreed to follow a “step-by-step” approach to fulfilling Pakistan’s aspiration for an expanded nuclear energy program, rather than sign an ambitious civil nuclear program of the kind recently struck between the U.S. and India, senior Pakistani and Western officials said on Thursday.

Private discussions are believed to have been held on expanded nuclear cooperation between Pakistan’s president Asif Ali Zardari and Chinese leaders during Zardari’s four-day visit to China, which began Tuesday.
.China and Pakistan

A senior Pakistani government official, familiar with discussions between Zardari and Chinese officials, claimed Thursday that China had agreed to “consider further nuclear power reactors to fulfill our needs. The relationship (on the nuclear issue) remains intact”. Speaking to CBS News on condition of anonymity, the official added, “there is now a complete understanding on our future cooperation”.

China has installed a 325-Megawatts nuclear power reactor at Chashma, in Pakistan’s central Punjab province. Beijing is also currently working to install a second power reactor of the same capacity there. In ten years, Pakistan plans to produce up to 8,000 Megawatts of electricity using nuclear energy.

In addition to the two Chashma reactors, Pakistan has one Canadian-supplied nuclear energy reactor with a capacity of 137-Megawatts. Western diplomats say Pakistan is seeking to bridge the large gap between its installed capacity and future ambitions with Chinese help.

Western diplomats say China is interested in maintaining a stable relationship with Pakistan….

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http://www.cbsnews.com/stories/2008/10/16/world/main4527309.shtml
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Pakistan’s President Gets What He Wants from China: CASH

By Anthony Faiola and Karen DeYoung

Washington Post Staff Writers
Thursday, October 16, 2008; Page A01

Pakistan has reached a critical new phase in its long-deteriorating financial situation, as investor flight and bleeding of national reserves force the country to scramble for international funds to shore up its economy. With the global financial crisis draining coffers in the United States and Europe, the key U.S. ally in the war on terrorism is seeking help from an old friend newly flush with cash: China.
President Asif Ali Zardari arrived in Beijing on Tuesday for a four-day state visit as concern has surged over a possible debt default by Pakistan that could cripple its economy and spark more civil unrest. While the amount of money Pakistan needs in the short term is relatively small — $4 billion to $6 billion — analysts say the climate of crisis and public anger over domestic bailouts in the United States and Western Europe have made even a modest infusion from its Western allies politically difficult.

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http://www.washingtonpost.com/wp-dyn/content/article
/2008/10/15/AR2008101503852.html

 

 

Al Qaeda Won’t Feel Effects of Global Economic Trouble

October 16, 2008

CAIRO, Egypt (AP)  —  Al Qaeda, which gets its money from the drug trade in Afghanistan and sympathizers in the oil-rich Gulf states, is likely to escape the effects of the global financial crisis.

One reason is that Al Qaeda and other Islamic terrorists have been forced to avoid using banks, relying instead on less-efficient ways to move their cash around the world, analysts said.

Those methods include hand-carrying money and using informal transfer networks called hawalas.

US military spokesman Rear Admiral Patrick Driscoll speaks during ...
US military spokesman Rear Admiral Patrick Driscoll speaks during a news conference at the Green Zone area in Baghdad, Iraq. The US military said on Wednesday that a foreign insurgent killed in the main northern Iraqi city of Mosul this month has been identified as Abu Qaswarah, Al-Qaeda’s number two in Iraq.(AFP/POOL/Ali Abbas)

While escaping official scrutiny, those networks also are slower and less efficient — and thus could hamper efforts to finance attacks.

“It would be inconceivable that large amounts of [terror-linked] money would transit through the formal financial system, because of all the controls,” said Ibrahim Warde, an expert on terrorist financing at The Fletcher School at Tufts University.

The question of where Al Qaeda and its sympathizers get their money has long been crucial to efforts to prevent terrorist attacks. A 2004 U.S. investigation found that banks in the United Arab Emirates had unwittingly handled most of the $400,000 spent on the Sept. 11 attacks.

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http://www.foxnews.com/story/0,2933,439382,00.html

U.S. Investing $250 Billion in Banks: Financial ‘Bailout’ Continues to Intill Hope

October 14, 2008

By Mark Landler
The New York Times

WASHINGTON — The Treasury Department, in its boldest move yet, is expected to announce a plan on Tuesday to invest up to $250 billion in banks, according to officials. The United States is also expected to guarantee new debt issued by banks for three years — a measure meant to encourage the banks to resume lending to one another and to customers, officials said.

A euro coin and one US dollar bill. The dollar has dipped against ... 

And the Federal Deposit Insurance Corporation will offer an unlimited guarantee on bank deposits in accounts that do not bear interest — typically those of businesses — bringing the United States in line with several European countries, which have adopted such blanket guarantees.

The Dow Jones industrial average gained 936 points, or 11 percent, the largest single-day gain in the American stock market since the 1930s. The surge stretched around the globe: in Paris and Frankfurt, stocks had their biggest one-day gains ever, responding to news of similar multibillion-dollar rescue packages by the French and German governments.

Treasury Secretary Henry M. Paulson Jr. outlined the plan to nine of the nation’s leading bankers at an afternoon meeting, officials said. He essentially told the participants that they would have to accept government investment for the good of the American financial system.

Of the $250 billion, which will come from the $700 billion bailout approved by Congress, half is to be injected into nine big banks, including Citigroup, Bank of America, Wells Fargo, Goldman Sachs and JPMorgan Chase, officials said. The other half is to go to smaller banks and thrifts. The investments will be structured so that the government can benefit from a rebound in the banks’ fortunes.

President Bush plans to announce….

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http://www.nytimes.com/2008/10/14/business
/economy/14treasury.html?_r=1&hp&oref=slogin

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Asian Markets Soar On Signs of Renewed Hope

By JEREMIAH MARQUEZ, AP Business Writer 18 minutes ago

HONG KONG – Asian markets soared for a second day Tuesday, led by a record 14 percent jump in Tokyo, after Wall Street rallied from its worst week ever on optimism that government rescue efforts will heal the crippled global financial system.

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http://news.yahoo.com/s/ap/20081014/ap_on_bi_ge/world_
markets;_ylt=AhU9ssfZ2fvgiOjAnyoc0oSs0NUE

A businessman walks past an electonic board showing the Hang ...
A businessman walks past an electonic board showing the Hang Seng Index. Global stock markets staged spectacular gains Monday as governments pumped hundreds of billions of dollars into banks crippled by the credit crunch, coaxing newly confident investors to buy shares.(AFP/Mike Clarke)

A South Korean woman passes a foreign exchange facility in Seoul. ... 
A South Korean woman passes a foreign exchange facility in Seoul.(AFP/File/Jung Yeon-Je)

China sits out global crisis, focusing on own growth

October 11, 2008

By Tim Johnson, McClatchy Newspapers

BEIJING — China sits on a huge pile of money, and its policymakers crave global assets. So why doesn’t China spend a little and save the world from global financial meltdown?

Economists give a number of reasons why China prefers to sit on the sidelines of the global turmoil, focusing instead on protecting its economy and maintaining growth powered by consumers at home.

“In this type of global crisis, the best China can do is take care of itself,” said Qing Wang, chief economist on China for Morgan Stanley . “Its role in the global economy is still quite small.”

An employee counts Renminbi banknotes at Bank of China branch ...

An export powerhouse, China has amassed foreign reserves of $1.81 trillion , an unprecedented stockpile, and is awash in the savings of its thrifty citizens. That war chest has drawn cries from other corners of the globe for China to help bail out the global financial system — a cry that’s been resisted in China .

Economists said it is easy to overlook that China’s foreign reserves are already largely locked up — including some $1 trillion in U.S. government bonds.

“The money is already spent. . . . It’s not sitting there in cash,” Wang said.

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http://news.yahoo.com/s/mcclatchy/20081010/wl_mcclatchy/3069051_1

Bargains await cash-rich China

October 9, 2008

By Chris O’Brien
The Washington Times

BEIJING | When the world’s economies bottom out, the most populous nation will be better poised than others to turn the financial implosion to its advantage, leading Chinese economists say.

China‘s financial institutions have been relatively unscathed by the meltdown. Laden with $1.8 trillion in foreign exchange reserves, they possess the spending power to splurge on bargain-price shares in the world´s crumbling banking and real estate giants.

China's founding leader Mao Zedong appears on Chinese currency, ...
China’s founding leader Mao Zedong appears on Chinese currency, the Yuan. (AFP/File/Frederic J. Brown)

A mood of caution appears to prevail, however, after two high-profile investments faltered last year.

The China Investment Corp. (CIC), a sovereign wealth fund set up a year ago with $200 billion in foreign exchange to invest, bought a $3 billion stake in Blackstone Group and $5 billion in Morgan Stanley, both of which are mired in the U.S. crisis.

The Chinese government’s reluctance to wield its financial clout overseas would represent a missed opportunity to invest in some “grossly undervalued” companies, said Yao Shujie, an economics professor and head of the School of Contemporary Chinese Studies at Nottingham University in Britain.

“Investors are repressed by fear and a lack of confidence at the moment, and it is understandable individual investors don´t want to jeopardize their life savings. But China, as a country, has the ability to bear a large amount of risk. Now is the time to take risks,” he said.

Mr. Yao is not advocating a wholesale purchase of Wall Street´s financial stocks. China lacks the experience and expertise to manage the likes of Goldman Sachs or Morgan Stanley, the remaining major investment banks.

Instead, he said, China should follow a strategy of “a billion dollars here, a billion dollars there,” spreading risks over a diversified portfolio, and should consider board-level representation so Chinese bankers can learn new management techniques.

A week ago, Japanese banking giant Mitsubishi UFJ Financial completed a $9 billion deal to buy a 21 percent share in Morgan Stanley.

“If the Chinese government follows this kind of policy, then by the time this crisis is over, which in my view will be in one to two years, it could have made a huge profit from it,” Mr. Yao said.

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http://www.washingtontimes.com/news/2008/oct
/09/bargains-await-cash-rich-china/