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China top bank sees explosive growth in gold demand and voracious appetite for silver
SHANGHAI (Reuters) –
Demand in China for physical gold and gold-related investments is growing at an “explosive” pace and its appetite for the yellow metal is poised to remain robust amid inflation concerns, said an Industrial and Commercial Bank of China (ICBC) executive.
ICBC, the world’s largest bank by market value, sold about 7 tonnes of physical gold in January this year, nearly half the 15 tonnes of bullion sold in the whole of 2010, said Zhou Ming, deputy head of the bank’s precious metals department on Wednesday.
“We are seeing explosive demand for gold. As Chinese get wealthy, they look to diversify their investments and gold stands out as a good hedge against inflation,” Zhou told Reuters.
“There is also frantic demand for non-physical gold investments. We issued 1 billion yuan worth of Read more…
Solar Flare Causes Problems for China’s Radio Communications
A solar flare—the strongest one in four years—messed with China’s communications in the southern portion of the country over the past several days, according to media reports.
The recent, massive solar flare that was emitted by the sun on Tuesday caused a Read more…
Inflation in China rises as food prices soar
In January, the price of fresh fruit soared by 34.8 percent over a year earlier, while eggs rose 20.2 percent, the National Bureau of Statistics reported.
Adding to a squeeze on food supplies, China’s wheat-growing northeast is in the grip of a severe drought that threatens its crop. Beijing has launched a $1 billion emergency campaign of cloud-seeding to induce rains and expanded irrigation.
Also in January, inflation that so far has been confined mostly to food began to spread to Read more…
Japan confirms China surpassed its economy in 2010
By TOMOKO A. HOSAKA
TOKYO — Japan confirmed Monday that China’s economy surpassed its own as the world’s second largest in 2010 and said a late-year downturn was Japan’s first quarterly contraction in more than a year.
Japan’s real GDP expanded 3.9 percent in the calendar year in the first annual growth in three years, but it wasn’t enough to hold off a surging China. Japan’s nominal GDP last year came to $5.4742 trillion, less than China’s total of $5.8786 trillion, the Cabinet Office said.
Gross domestic product shrunk at an annualized rate of 1.1 percent in the October-December quarter, a sharp reversal from a revised 3.3 percent expansion in the third quarter, the government said.
A slowdown in exports and weaker consumer demand at home led to the unsurprising downturn, which is expected to be temporary. The result was better than Kyodo news agency’s average market forecast of an annualized 2.2 percent decline.
China was acknowledged last year as having grown to the world’s second-largest economy, but the Japanese data confirming it were not available until Monday. The switch underscores the nations’ stark contrasts: China is growing rapidly and driving the global economy, while Japan is struggling with persistent deflation, an aging population and ballooning public debt.
Prime Minister Naoto Kan has pledged to revive the economy and make major reforms in the country’s tax and social welfare systems. His approval ratings are eroding quickly, however, as voters question his government’s ability to lead the country through its pressing problems.
The fourth-quarter figure translates to a 0.3 percent fall from the previous three-month period, according to the Cabinet Office’s preliminary data. Consumer spending, which accounts for some 60 percent of GDP, fell 0.7 percent. Auto sales slumped during the quarter after government subsidies for “green” vehicles expired in September.
Exports fell 0.7 percent from the previous quarter amid a strong yen and waning global demand. A rise in the Japanese currency reduces the value of exporters’ profits overseas and makes Japanese goods pricier in foreign markets.
The road ahead looks brighter, with economists saying GDP will expand this quarter in tandem with global growth. The head of Japan’s central bank, Masaaki Shirakawa, said last week that that recent signs indicate Japan is emerging from the “pause” and performing at par with other advanced economies.
Ryutaro Kono, chief economist at BNP Paribas ( BNPQY.PK – news – people ) in Tokyo, says exports and production have escaped their “soft patches.”
“The economy seems to be recovering again from December, so the negative growth in (the fourth quarter) need not become the basis for pessimism about Japan’s cyclical outlook,” he said in a report this month.
Panama Canal rail alternative built by China considered by Colombia
A 136 mile rail alternative to the Panama Canal built by China is being considered by Colombia in a move that would boost trade between Asia and South America.
The ‘dry canal’ would link Colombia’s Atlantic and Pacific coasts by rail, according to Juan Manuel Santos, the president of Colombia.
“It’s a real proposal… and it is quite advanced,” he told The Financial Times. “I don’t want to create exaggerated expectations, but it makes a lot of sense.”
The project is one of several Chinese proposals designed to help boost transport links between the two continents.
It is also hoped the rail link would help encourage the US to ratify a four-year-old free-trade agreement. Agreements with Colombia and Panama, which would Read more…
Chinese Develop Gait-Biometrics Surveillance
Another way to be under surveillance.
A confidential United States embassy dispatch released by Wikileaks provides details about a new technology developed by the Chinese Academy of Science to identify people by their gait.
The technology is designed to be deployed beneath existent flooring. From there it measures pedestrian pace and walking pressure to create a unique biometrics profile which can be used to identify and track the movements of individuals without their knowledge…
According to the dispatch, when questioned about the technology’s potential applications, scientists “stated the device was being used by ‘secret’ customers and was not available on the commercial market.” Officials went on to note the technology was involved with “Program 863.”
Program 863, or the State High Tech Development Plan, is a civil-military program created in 1986, according to Lev Navrozov – a former dissident Soviet writer – for the purpose of developing a “post-nuclear superweapon” possibly incorporating nanotechnology.
China gains chokehold over U.S. defense
WorldNetDaily
An alarming new report says the United States is choosing to rely on China for the rare earth metals that are critical for the production of America’s strategic defense weapons, giving the communist nation a chokehold on the ability of the U.S. to defend itself, according to Joseph Farah’s G2 Bulletin.
While the U.S. has the world’s second-largest reserves of the substances, instead of facilitating production, it has left China to take over the market – it controls some 97 percent of the global sales of these elements, according to the report.
The American Security Project, in fact, says the U.S. is “completely reliant on China” for rare earth metals for the production of the nation’s most critical weapons systems.
“Rare earth metals are essential for the United States’ military and economic well-being,” the report said. “Yet, the U.S. has been particularly lax when it comes to securing the supply of these metals.
“The U.S. has gone from the world’s top producer and supplier of rare earths to Read more…
China spends $1 billion to tackle drought
Beijing (CNN) — China’s government will invest $1 billion to combat a three month drought crippling the country’s north.
The worst drought in six decades threatens to ruin China’s winter harvest, the world’s largest producer of wheat.
To combat it, China’s government plans to spend around 6.7 billion yuan ($1.02 billion) to divert water to affected areas and irrigation facilities according to the state news agency, Xinhua.
Some 2.57 million people and 2.79 million livestock are suffering from drinking water shortages, Xinhua said.
The main affected provinces include Shandong, Jiangsu, Henan, Hebei and Shanxi, which together account for about 60% of the wheat planted this winter.
The United Nation’s Food and Agriculture Organization (FAO) issued an alert Tuesday, warning of severe wheat shortages, saying “the ongoing drought is potentially a serious problem.”
According to the FAO the drought is now affecting an area of around 5.16 million hectares, representing two-thirds of China’s wheat production.
Meanwhile the country’s capital Beijing got it first snowfall in more than three months overnight on Wednesday. But the precipitation is unlikely to end the area’s drought, reported Xinhua.
The precipitation followed cloud seeding by the municipal artificial weather intervention office, the agency said.
What does China want from Zimbabwe?
Zimbabwe has claimed that China is ready to pour $10 billion (£6.2 billion) into its ailing economy. If the figure is true, what might Beijing want in return?
By Malcolm Moore, Shanghai 8:13AM GMT 10 Feb 2011
When Yang Jiechi arrives in Harare on Thursday, for the first visit by a Chinese Foreign minister in a decade, he is almost certain to be bearing gifts.
After almost three years in which China has publicly shied away from Zimbabwe, there are signs that Beijing has its eyes, once again, on the country’s rich mineral reserves.
Since the deadly elections in 2008, which forced Robert Mugabe, Zimbabwe’s president, to form a “unity” government with his opponent Morgan Tsvangirai, relations have cooled while Chinese officials hedged their bets over the country’s leadership and squirmed in the fierce glare of international condemnation.
“China gets embarrassed when embarrassing details become public,” said Philip Barclay, a former British diplomat in Harare and the author of Zimbabwe, Years of Hope and Despair.
“And the Chinese weapons shipment which arrived in 2008, just at the time when violence broke out around the Zimbabwean elections, was very embarrassing. They really did not like that,” he added.
On Thursday, however, Mr Yang is likely to start negotiations over a significant injection of Chinese investment.
According to Tapiwa Mashakada, the Zimbabwean Economic planning minister, Mr Yang may be carrying with him as much as $10 billion of investment from Beijing.
“We have met with officials from China Development Bank and they have said they are willing to invest up to $10 billion,” he said, at a business conference in Harare earlier this month.
“The Chinese are looking into mining development, that is exploration and exploitation, agriculture, infrastructure development and information communication technology,” added Mr Mashakada, a member of Mr Tsvangirai’s Movement for Democratic Change party.
Previous rumors suggested, however, that the money on the table is actually a $3 billion loan from China’s Export-Import (Exim) Bank. Both sums dwarf previous Chinese investments in Zimbabwe, and Mr Mashakada’s claim represents more than twice the value of Zimbabwe’s entire economy last year, and more than all other Chinese direct investments in Africa in 2009 put together.
“It is a pie-in-the-sky figure,” said Mr Barclay. “It is much larger than previous Chinese investments and when they do invest money, the Chinese expect concrete benefits, usually closely linked to concessions,” he added.
More likely are targeted deals, perhaps for Zimbabwe’s platinum and zinc mines. Zimbabwe has the second-largest reserves of platinum in the world after South Africa.
Details of the Exim bank deal reported in Zimbabwe’s respected “Independent” newspaper cite documents proposing a “master-loan facility” aimed at resuscitating Zimbabwe’s struggling economy after years of hyperinflation and disastrous government policies.
In return, China reportedly wants control over platinum deposits currently owned by the Zimbabwean government in the Selous and Northfields concession covering 68 square miles and valued at between $30 billion to $40 billion.
More controversially, China may also have its eyes on the Marange diamond fields in Chiadzwa. In late 2008 the Zimbabwean military is alleged to have seized control of the fields, shooting illegal miners from helicopter gunships.
Currently, a small proportion of the diamonds from this vast mine are certified by the Kimberley Process to avoid being tagged as “blood” diamonds, but a much greater quantity is thought to be bought up by dubious traders with profits flowing to Mr Mugabe’s Zanu-PF.
China already mines one alluvial diamond concession at Chiadzwa in partnership with the government under the banner of Anjin Investments. There have also been rumors that China may be involved in further illegal mining activities, but they have never been confirmed.
In addition, some Chinese investment could flow into agriculture. China imports a significant quantity of tobacco from Zimbabwe, and may have one eye on a future source of food for its growing middle class.
Around 5,000 Chinese workers live in Zimbabwe, and the two countries have a relationship stretching back to the founding of Robert Mugabe’s Zanu-PF, whose Marxist revolution was partly funded by Beijing. Over the years, China has found it easy to do business with a country that was run along similar lines, with Zanu-PF’s politburo making unilateral decisions.
It is not clear if dealing with the unity government and Mr Tsvangirai’s MDC party will be to Beijing’s taste, but for Zimbabwe there seems little option.
“The MDC will send China warm and fuzzy messages too,” said Mr Barclay. “Although the investment from China is not a particularly good fit, the Chinese are the only investors out there. There was a small delegation from Germany in 2010, but they backed off.”
Chinese weapons fall into hands of insurgents
Insurgents in Afghanistan and Iraq have obtained Chinese-made weapons
Chinese-made weapons have fallen into the hands of insurgents fighting Coalition forces in Iraq and Afghanistan because of China’s failure to enforce export controls on arms to Iran, the leaked cables show.
By Gordon Rayner
US diplomats also feared that Chinese companies were selling materials to Iran that could be used to build nuclear missiles and other weapons of mass destruction.
Chinese-made guns, as well as rocket-propelled grenades and surface-to-air missiles containing Chinese-made components, have all been used against Coalition forces or civilian targets in Iraq, the US claims, while other weapons have been obtained by militants in Afghanistan.
The US was so concerned about Chinese arms and components being sold to Iran that in September 2008 the State Department launched a major diplomatic offensive to put pressure on Beijing.
It decided to share intelligence with eight “key allies” including Spain and Italy to “persuade China to enforce its export control laws more effectively” and to “aggressively implement” UN Security Council resolutions on the sale of arms and weapons materials.
Ambassadors were told to encourage the foreign governments to point out to the Chinese that arms sales to Iran “could ultimately damage China’s reputation and its bilateral relationship with” each of the countries.
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