Archive for the ‘GDP’ Category

China’s Worst Nightmare: Unemployment

October 31, 2008

The global economic meltdown has dealt and enexpected blow to China: high unemployment amidst this population of 1.3 billion people.

By Simon Elegant
Time Magazine

When China’s President Hu Jintao made his first official visit to Washington in April of 2006, he encountered a string of diplomatic snafus that culminated in enduring several minutes of screaming from a protester admitted into the media stand. Still, U.S. officials say he and President George W. Bush developed a genuine personal rapport. At one point, Bush asked his counterpart which of the numerous challenges China faced was the most serious — which one kept Hu awake at night worrying.
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“Unemployment,” Hu reportedly answered without hesitating.
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These days, Hu must be suffering from serious insomnia. When that meeting in Washington took place, China’s economy was still expanding at a double-digit rate, creating enough jobs every year that many of the 20 million new job seekers who entered the market found some sort of gainful employment. Now GDP growth has dipped to around 9% and is expected to decline further as the worldwide financial crisis transmogrifies into a global recession. Already, scores of Chinese factories producing consumer goods like toys and plastics goods have shuttered in the southern industrial powerhouse of Guangdong, and thousands of unemployed workers have made their displeasure known with rowdy demonstrations last month.

It’s a situation that is only going to get much worse in the next few months, as the number of unemployed balloons. According to estimates by the Dongguan City Association of Enterprises with Foreign Investment, 9,000 of the 45,000 factories in the cities of Guangzhou, Dongguan, and Shenzhen — the heart of China’s industrial south — are expected to close before the Chinese New Year in late January. That could mean up to 2.7 million workers facing unemployment, the association said. And they called that number “conservative.”

Finding jobs for millions of unemployed is “the biggest challenge [China’s] leadership faces” says David Dollar, head of the World Bank’s China office in Beijing. The current crisis has greatly accelerated a process that was already underway as China’s economy has been shedding low-level factory jobs to transition to manufacturing higher value-added products and jobs in the service industry. “In a way, the crisis could work out well for China. It has the potential to help in rebalancing the economy away from production” to the creation of more jobs in the service sector, says Dollar. If GDP growth slows further to 8%, the government still can hit its job creation targets, but the speed with which the adjustment happens will be critical, he says. “We’re going to learn just how well the capital and labor markets work in China. The concern is if the adjustment is very quick, it could be difficult.”

Read the rest:
http://www.time.com/time/world/article/
0,8599,1855400,00.html?xid=rss-world

China’s economy showing cracks amid global crisis

October 19, 2008

China‘s strong economy appeared to put the nation on the global high ground when the financial tsunami first struck last month, but as the storm continues to rage, that position is looking less sure.

After five years of annual double digit economic growth, and with more than 1.9 trillion dollars in foreign reserves as well as a closed financial system that protected it from toxic US assets, China seemed insulated from the crisis.

Containers are seen at a terminal overlooking Victoria Harbour ... 
Containers are seen at a terminal overlooking Victoria Harbour in Hong Kong in September. China’s strong economy appeared to put the nation on the global high ground when the financial tsunami first struck last month, but as the storm continues to rage, that position is looking less sure.(AFP/File/Mike Clarke)

by D’Arcy Doran, AFP

But with thousands of workers already being laid off as exports shrink, the property market slowing and the stock market low on confidence, the world’s fourth biggest economy is clearly starting to hurt amid the global downturn .

“People are starting to see the pain, that is in business and also in the labour market. It’s not as easy to get a job as it was a few months ago,” Beijing-based World Bank economist Louis Kuijs told AFP.

“The bigger the economic crisis — the recession in the US and in Europe — the more it will be felt in China,” he said.

China’s leaders, for their part, have said the country’s best strategy is to keep the economy growing.

“If a large country of 1.3 billion people can keep up stable and relatively fast economic growth, that’s a big contribution to the world,” Premier Wen Jiabao said.

On Monday, China will release its third quarter gross domestic product figure.

China’s GDP growth is expected to shrink to 9.1 percent in the third quarter from 10.1 percent in the second, according to a forecast by Goldman Sachs.

If accurate, it would mark the first time China’s quarterly GDP growth has fallen below 10 percent since the end of 2005.

But a fall in the third quarter figure would mostly reflect government policies to moderate growth, Goldman Sachs said, not the US crisis.

Morgan Stanley predicts full-year GDP growth will shrink to 9.8 percent and to 8.2 percent in 2009 — still above Beijing’s official 8.0 target.

However, if property markets melt down across the country, the economy could see a hard landing with GDP growing less than seven percent, Morgan Stanley said. Its economists estimate there is about a one in four chance of that.

Read the rest:
http://news.yahoo.com/s/afp/20081019/bs_afp/financial
bankingchinaeconomy_081019062139

Playing Frisbee on a Precipice: Seriousness of American Politicans in Doubt During Economic Crisis

October 10, 2008

By Peggy Noonan
The Wall Street Journal

There are 3½ weeks to go. Life, and political campaigns, can turn on a dime. But I think it just turned on a lot of dimes.

There was an October surprise, and it has all but certainly decided the race. On the left, a smug triumphalism is setting in. On the right, anger rises: the finger pointing is about to begin. In parts and pockets of the middle, we have Americans who aren’t thinking about politics because they’re busy trying to imagine what a modern depression would look like and wondering, for the first time ever, if it is possible that they may wind up living in their cars.

Read the rest:
http://online.wsj.com/article/SB122359863551021415.html

Economists Expect Crisis to Deepen

October 10, 2008

By Phil Izzo
The Wall Street Journal

The U.S. economy has sunk into a recession and government action is critical to stem the damage, according to economists in the latest Wall Street Journal forecasting survey.

“We’re in the middle of a very dark tunnel,” said Brian Fabbri of BNP Paribas, referring to the worsening credit crunch. “Each day we see another crack in the system.”

Those cracks are quickly adding up. On average, the 52 economists surveyed now expect U.S. gross domestic product to contract in the third and fourth quarters of this year, as well as the first quarter of 2009.

This is the first time that survey forecasts for those periods have turned negative. If those predictions bear out, it would mark the first time U.S. GDP — the total value of goods and services produced — has contracted for three consecutive quarters in more than a half century. Economists put the odds of recession in the next 12 months at 89%, up from 60% in last month’s survey.

It is a challenging scenario for the next president, as the election moves into the homestretch. Either Sen. John McCain or Sen. Barack Obama likely will face an economy in the midst of recession on Inauguration Day, even if the credit crisis begins to ease. The new administration will have to get up to speed quickly, taking over the largest government intervention since the Great Depression.

Read the rest:
http://online.wsj.com/article/SB122349368554816267.html

Bernanke warns of possible recession

April 2, 2008
By JEANNINE AVERSA, AP Economics Writer 

WASHINGTON – Federal Reserve Chairman Ben Bernanke warned Wednesday the economy may shrink over the first half of this year and that “a recession is possible.” Yet, he didn’t offer any assurances of further interest rate cuts.

US Federal Reserve Bank Board Chairman Ben Bernanke responds ...
US Federal Reserve Bank Board Chairman Ben Bernanke responds to questions during a joint congressional hearing on the country’s economic outlook on Capitol Hill in Washington, April 2, 2008.REUTERS/Jonathan Ernst (UNITED STATES)

Bernanke’s testimony to the Joint Economic Committee was a much more pessimistic assessment of the economy’s immediate prospects amid a trio of crises — housing, credit and financial.

“It now appears likely that gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke told lawmakers. GDP measures the value of all goods and services produced within the United States and is the best barometer of the United States’ economic health. Under one rule, six straight months of declining GDP, would constitute a recession.

Still, Bernanke said that he expects more economic growth in the second half of this year and into 2009, helped by the government’s $168 billion stimulus package of tax rebates for people and tax breaks for businesses as well as the Fed’s aggressive reductions to a key interest rate. Nevertheless, the chairman acknowledged uncertainty about the Fed’s next steps, notwithstanding the mounting economic woes.

 Read the rest:
http://news.yahoo.com/s/ap/20080402/ap_on_bi_ge/
bernanke_congress;_ylt=Al0d0o
x8ZL_k__msZcFHZYas0NUE

Defense spending beacons

April 1, 2008

By John R. Guardiano
The Washington Times
April 1, 2008

Is America spending too much or too little on defense? That”s a fair and crucial question, especially at a time of war, when U.S. soldiers, sailors, airmen and Marines are dying overseas. But because advocates on both sides of the issue are asking the wrong questions, recent media analysis of the issue has been ill-informed and misplaced.
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Critics of increased defense spending argue correctly that, in absolute dollar terms, the United States spends more on defense than at any time in its history. In addition, they note, the U.S. spends more on defense than the next 10 countries combined. Therefore, they argue, defense spending is more than adequate.
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Proponents of increased defense spending counter that a dollar today is worth a lot less than in it was in previous eras. Moreover, they add, as a share of the gross domestic product (GDP), defense spending is at a historic low during a time of war.
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The United States spends less than 4 percent of its GDP on defense. By contrast, Defense spending averaged some 14 percent of GDP in the Korean War, nearly 10 percent during the Vietnam War, and more than 33 percent during World War II.
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Clearly, both sides in this debate have legitimate contextual points; however, both sides miss the mark.
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Defense spending relative to that of other nations is an unhelpful comparison because the United States isn’t like other nations. America is the world’s sole remaining superpower, with far-reaching obligations to protect U.S. national security interests worldwide.
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Moreover, American considers its soldiers, sailors, airmen and Marines to be its greatest military asset. Thus, we are unwilling to sacrifice their lives when technology can prevent the loss of life. That’s one important reason America has invested literally hundreds of billions of dollars in advanced weapons systems: We know dollars spent today can save lives tomorrow.

Read the rest:
http://www.washingtontimes.com/apps/pbcs.dll/article?AID=/20080401/COMMENTARY/129960178

Putin: Persistent, Popular, Pugnacious…Paranoid

February 20, 2008

By David J. Smith
Tbilisi 24 Saati
February 18, 2008

Russian President Vladimir Putin’s two farewell performances—farewell as president, anyway—revealed no new substance.

Instead, his February 8 Development Strategy to 2020 speech and his February 14 mega-press conference showcased a persistent, popular and pugnacious Kremlin strongman who increasingly defines Russia in terms of foreign bogymen.

Take heed.

Vladimir Vladimirovich Putin
Владимир Владимирович Путин
Vladimir Putin

Putin’s twelve-year strategy—to use his word—must have brought a smile to the face of anyone nostalgic for Soviet times. It was stuff worthy of a Communist Party Congress: denunciation of earlier times, glowing progress report, indignant criticism of unnamed officials, frank talk of what is yet to be done and a pinch of paranoia.

Putin’s Russia is looking more-and-more Soviet—or maybe some of us are only now noticing how Russian the Soviet Union was.

These days, of course, Putin mixes capitalist and socialist themes. Investment, stock market capitalization and GDP are all skyrocketing.

And Russia has made major advances in machine building, transportation, housing, education and health care. One expected happy peasant girls to dance across the stage, their baskets brimming with food for the people!

However, Putin’s February 8 speech was more notable for what it did not say. Russia’s soon-to-be prime minister failed to mention Dmitry Medvedev, the man he chose for Russians to elect as president on March 2.

Dmitry Anatolyevich Medvedev
Дмитрий Анатольевич Медведев

Medvedev, it seems, has little to do with Putin’s strategy to persist in the Kremlin.

In his 4½-hour Saint Valentine Day press conference, though, Putin managed a few words about Medvedev. Prime Minister Putin will place President Medvedev’s picture on his wall. “We will establish our personal relations,” said Putin, “I assure you there will be no problems here.”

There will be no problems because Putin reread the Russian Constitution to achieve an understanding that had eluded him during eight years as president. “The highest executive authority in the country is the government, which is led by the prime minister.”

Putin’s Duumvirate with Medvedev may change some of the Kremlin’s personal dynamics and style, but he said, “If I see that in this post I can continue realizing these goals, I will work as long as possible.”

Though Putin’s switcheroo may appear odd to some westerners, his persistence in the Kremlin is fine with most Russians.

With the presidential election less than two weeks away, Medvedev shuns campaigning and debates, counting on Putin’s popularity to elect him president. Expect him promptly to appoint Putin prime minister.

With this kind of popularity, it was appropriate for Putin to give his Castroesque press conference on February 14. An adoring Russian journalist even passed him a Valentine Day present—a wire service photo captured Putin leaving the stage clutching the pink and red heart.

In this loving environment, concern for the integrity of elections and the scrutiny of foreign observers is misplaced. Indeed, there will be no observers from the Organization for Security and Cooperation in Europe (OSCE), the foremost election observation group.Asked about the OSCE spurning the March 2 presidential election, a pugnacious Putin replied, if the election monitors want to teach something, “Let them teach their wives to make shchi.” (Shchi is a Russian cabbage soup.)

And there was plenty more in that vein.

Asked about reports of corruption, he replied that these were rumors that journalists “picked from a nose and smeared onto their papers.”

One might dismiss these remarks as crude muscle flexing for domestic consumption, but Putin’s pugnacity sparks greater concern when considered with his apparently growing paranoia in the international arena.

“I cannot but say a few words…about our foreign policy strategy,” said Putin toward the end of his strategy speech. No foreign policy strategy followed—nothing about trade, neighbors, world peace, climate change or any of the usual foreign policy topics.

Instead, Putin recapitulated his familiar grievances against the west: American missile defenses in Central Europe, “a new spiral in the arms race,” purportedly violated treaties and NATO enlargement.

Then he added, “A fierce battle for resources is unfolding, and the whiff of gas or oil is behind many conflicts.”

In his press conference, Putin connected western criticism of Russian elections with disagreement on Kosovo: “Who is going to listen to Russia’s position on Kosovo if Russia itself is supposedly an undemocratic country?”

On most of these matters the Russian position is just plain wrong.

On Kosovo, Moscow has a point, but stupid western diplomacy is just that, not an anti-Russian plot. Criticism of Russia’s democracy deficit is well founded and unconnected to Kosovo.

But cogent arguments only detract from the image Putin is creating. “We are effectively being forced into a situation where we have to take measures in response, where we have no choice but to make the necessary decisions.”

One cannot escape the fear that Putin is not cataloging Russian foreign policy challenges—or even grievances—but defining Russia by his paranoia.

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David J. Smith is Director, Georgian Security Analysis Center, Tbilisi, and Senior Fellow, Potomac Institute for Policy Studies, Washington.

Peace and Freedom wishes to thank Ambassador Smith andMr. James T. Hackett who made use of this article on the internet possible.

SecDef Gates, Admiral Mullen Testify Before SASC

February 6, 2008

By John E. Carey
Peace and Freedom 
Wednesday, February 6, 2008

Secretary of Defense Robert Gates and Chairman of the Joint Chiefs of Staff Admiral Mike Mullen testified before the Sente Armed Services Committee today.  Senator Carl Levin (D-MI) is chairman of the committee and Sen. John Warner (R-VA) is the ranking member of the minority.

Several issues of interest were discussed.

Asked about the size of the defense budget both Secretary Gates and Admiral Mullen said that the budget needed to be 4% of Gross Domestic Product (GDP).  Admiral Mullen said that 4% of GDP should be an annual “floor” or lowest national investment in defense.

Defense Secretary Robert Gates stands by his chair at the witness ...
Defense Secretary Robert Gates stands by his chair at the witness table on Capitol Hill in Washington, Wednesday, Feb. 6, 2008, prior to testifying before the Senate Armed Services Committee hearing on the fiscal 2009 Defense Department budget.
(AP Photos/Susan Walsh) 

Secretary Gates said that there has been a recent shift in understanding by the government of Pakistan and that President Musharraf and his closest advisors now realize that the free reign apparently given to the Taliban and al-Qaeda in the tribal areas of Pakistan has now resulted in an “existential threat to the current government of Pakistan.”  Consequently, President Musharraf and his advisors are now waging a much more effective war against terror in the tribal areas.

US intelligence chief Mike McConnell told a Senate hearing yesterday, Tuesday, February 5, that the al Qaeda network in Iraq, Pakistan and Afghanistan has suffered setbacks, but still poses a persistent and growing danger from its safe haven in Pakistan’s tribal areas. He stressed that al Qaeda remains the pre-eminent threat against the United States” more than six years after 9/11.

Secretary Gates and Admiral Mullen supported and reiterated that view.

Joint Chiefs Chairman Adm. Michael Mullen testifies on Capitol ...
Joint Chiefs Chairman Adm. Michael Mullen testifies on Capitol Hill in Washington, today, Wednesday, Feb. 6, 2008, before the Senate Armed Services Committee hearing on the fiscal 2009 Defense Department budget.
(AP Photos/Susan Walsh)

On the issue of the North Atlantic Treaty Organization (NATO), Senators expressed concern that all NATO nations had not fielded troops in Afghanistan.  Secretary Gates said that he feared the evolution of a two tiered NATO with one tier “fighting and dying” and a second tier not participating.  Secretary Gates said that he will continue to persuade NATO member nations toward a more active role in the war against terror.

Secretary Gates said he had become a “nag” to the Defense Ministers of NATO by pestering them about their contributions to the mission in Afghanistan.

In January some NATO defense ministers went public with their resentment for Mr. Gates.

“This is not the Robert Gates we have come to know,” Van Middlekoop told the Dutch broadcasting agency NOS last month, following criticism from Mr. Gates. “It’s also not the manner in which you treat each other when you have to cooperate with each other in the south of Afghanistan.”

Today Secretary Gates went out of his way to compliment the Dutch, Canadians, British, Australians and others for their work in Afghanistan.  But he said there were still several NATO member nations not taking the mission seriously enough. 

Secretary Gates said he would continue to press this issue this week end at a Defense Ministers’ meeting. 

Last month, Pentagon spokesman Geo Morrell said, “The secretary is not backing off his fundamental criticism that NATO needs to do a better job in training for counterinsurgency. But he is not — nor has he ever — criticized any particular nation for their service in Afghanistan.”

Secretary Gates also spoke eloquently about the AEGIS Ballistic Missile Defense system now deployed at sea, the Littoral Combat Ship (LCS) and THAAD.

On combat troops in the war zone, Admiral Mullen said, “The well is deep, but it is not infinite.  We must get Army deployments down to 12 months as soon as possible. People are tired.”

Secretary of Defense Robert Gates makes a statement about the ...
Secretary Gates at a recent Pentagon briefing.

From the  Associated Press:
http://news.yahoo.com/s/ap/20080206/ap_on_go_
ca_st_pe/us_iraq_21

From Reuters:
http://news.yahoo.com/s/nm/20080206/us_nm/
usa_budget_wars_dc_1

Thailand-India links moving to next level

August 11, 2007

By Umesh Pandey
Bangkok Post
August 11, 2007

As India and Thailand celebrate their 60th anniversary of diplomatic relations both countries are looking to broaden their partnership by pursuing a comprehensive bilateral free trade agreement and helping push forward the India-Asean FTA.

“We now have plans to take this engagement to an even higher level. An India-Asean and an India-Thailand FTA are under discussion, and the negotiations on both agreements are in very advanced stages,” said Latha Reddy, the Indian ambassador to Thailand.

Thailand and India, she said, were getting ever closer to each other, thanks to the economic development of India, which has helped attract investors from across the world.

Read it all:
http://www.bangkokpost.com/Business/
11Aug2007_focus04.php