China to Top GHG Emissions in 07

♠ Posted by Emmanuel in , at 4/30/2007 12:53:00 AM
This news from the Independent is not very welcome for you environmentalists out there:

In a seismic shift for the world, China will overtake the United States as the biggest emitter of greenhouse gases this year, far earlier than thought - and present the problem of tackling climate change in even more difficult terms.

The Chinese economy, which is now growing at the unprecedented rate of 11 per cent annually, is sending carbon emissions from China's mushrooming coal-fired power stations beyond those of the whole of the US, the International Energy Agency (IEA) said yesterday.

Less than three years ago the Paris-based IEA forecast that China would overtake the US as the world's biggest polluter - but not before 2025. More recently it said that China would be first by 2010.

The World is Flat Taxed

♠ Posted by Emmanuel at 4/30/2007 12:10:00 AM
Here's an interesting article from American.com on flat taxes (please, no remarks on the potential oxymoron):

Fifteen years ago, advocates of the flat tax had lots of supporting theory, but very little firm data. Milton Friedman had championed the flat tax, and Alvin Rabushka and Robert Hall of the Hoover Institution authored an elegant book detailing how a flat tax would work, but the political establishment largely ignored these efforts. Hong Kong had a flat tax, but critics said it was somehow a special case. Two other British territories, Jersey and Guernsey, also had flat tax systems, but the outside world was (and largely still is) unaware of those systems.

The world has changed. Today, spurred by tax competition, there are now 16 jurisdictions that have some form of flat tax, and two more nations are about to join the club. With the exception of Iceland and Mauritius, all of the new flat tax nations are former Soviet Republics or former Soviet Bloc nations. This is a sign of tax competition in the region, and shows that people who suffered under communism are less susceptible to class-warfare rhetoric about “taxing the rich.”

Dropping $ = Dropping US Power?

♠ Posted by Emmanuel in at 4/28/2007 07:08:00 PM
Here is an interesting piece from Reuters tackling the issue of whether a dropping dollar is a sign of America's diminished financial standing in the international political economy. I have some problems with it such as mentioning that pricing oil in euros would cause the US more hardships, but it is a thought provoking read nonetheless:
The United States may have no military equals, but the challenges to its financial power have become impossible to ignore.

A stark reminder came on Friday when the weakening dollar slumped to a record low against its main rival, the euro, after the U.S. economy recorded its fourth consecutive quarter of below-trend growth. The euro hit a record high of $1.3680.

The strength of the dollar is more than just a matter of bragging rights. Experts say the consequences of its long-term decline could have deep significance - for average Americans and for the country's position as an unrivaled global power.

Robert Mugabe, Friend of China

♠ Posted by Emmanuel in ,, at 4/23/2007 01:59:00 AM
China has tried to meet its voracious appetite for natural resources by hooking up with regimes considered toxic in the west. Iran, Sudan, Myanmar...the list grows longer. Here's the latest in a long line of friends with dubious histories, Zimbabwe's Robert Mugabe, #7 on Parade's 2007 list of the World's Worst Dictators. To no one's surprise, state media has made no mention at all of his rather colorful history or the current state of Zimbabwe after twenty-seven years of (mis)rule:
Top Chinese Political advisor Jia Qinglin said here Saturday that China will work with Zimbabwe to deepen bilateral reciprocal cooperation in economy, trade and other fields.

Jia, chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), China's top political advisory body, made the remarks at a meeting with Zimbabwean President Robert Gabriel Mugabe...

After the meeting, Jia and Mugabe attended a signing ceremony for four bilateral cooperation documents including an economic and technical cooperation agreement between the two governments.

They also attended the handover ceremony of Chinese agricultural machinery and equipment.

Parade supplies a few key the details that Xinhua glosses over regarding Mr. Mugabe:

Robert Mugabe once was hailed as a symbol of the new Africa, but under his rule the health and well-being of his people have dropped dramatically, which is as much an abuse of human rights as arbitrary arrest and torture. According to the World Health Organization, Zimbabwe has the world’s shortest life expectancy—37 years for men and 34 for women. It also has the greatest percentage of orphans (about 25%, says UNICEF) and the worst annual inflation rate (1,281% as of last month). He last allowed an election in 2002 but “won” only after having his leading opponent arrested for treason.

Foreign Banks Take RMB Deposits

♠ Posted by Emmanuel in , at 4/23/2007 01:25:00 AM

After waiting for some time to offer yuan accounts in the presumably lucrative China market, overseas firms will get their chance today. Although it has been reluctant to open up its banking sector to foreign competition, China needed to meet WTO stipulations on financial services at the end of 2006. Note though that these foreign banks will mainly target affluent clients. As I pointed out before, this may have something to do with onerous restrictions designed to safeguard the interests of local banks, most of which are state-owned:

To become eligible for the operations being launched Monday, each foreign bank has undertaken a vast restructuring that was mandated by local regulators, including the establishment of a legally incorporated holding company in China. The lengthy process had left uncertain when the long promised access would actually be permitted.

According to details the banks published in legal notices over the weekend, they have received approvals necessary to open in selected cities. The banks each intend to target relatively well-to-do Chinese citizens. Bank of East Asia is casting the widest net of the four, offering potential customers fee-free banking if they maintain deposits above 5,000 yuan, about $650. It will charge them 10 yuan a month if the balance falls short.

Considerably higher thresholds will apply at Citigroup, HSBC and Standard Chartered, likely ensuring only China's richest shift accounts to the global leaders. These banks intend to levy monthly management fees of 50 yuan to 150 yuan on deposit balances under 80,000 yuan and 100,000 yuan, depending on the bank.

China Daily further notes:

The four banks [Citigroup, HSBC, Standard Chartered, & Hong Kong-based Bank of East Asia], however, have fewer branches than their established domestic rivals. As such, they plan to highlight their wealth management services and target high-end customers by requiring high minimums.

Standard Chartered said it would roll out various renminbi products for customers under two retail brands - Priority Banking and Excel Banking.

HSBC will concentrate on its Premier Wealth Management service for its retail banking business and charge 300 yuan a month to handle accounts with less than 500,000 yuan.

Last week, Citigroup became the first foreign bank in China to offer a yuan-denominated investment linked insurance product.

The Philippine Remittance Economy

♠ Posted by Emmanuel in , at 4/22/2007 08:46:00 PM
There's a lengthy feature in today's New York Times Magazine detailing the reliance of the Philippine economy on the remittances sent home by overseas workers. Again, this third aspect of globalization through migration--the movement of persons instead of capital and trade--gets less attention though it probably shouldn't:
About 200 million migrants from different countries are scattered across the globe, supporting a population back home that is as big if not bigger. Were these half-billion or so people to constitute a state — migration nation — it would rank as the world’s third-largest. While some migrants go abroad with Ph.D.’s, most travel as Emmet did, with modest skills but fearsome motivation. The risks migrants face are widely known, including the risk of death, but the amounts they secure for their families have just recently come into view. Migrants worldwide sent home an estimated $300 billion last year — nearly three times the world’s foreign-aid budgets combined. These sums — “remittances” — bring Morocco more money than tourism does. They bring Sri Lanka more money than tea does...

Earlier waves of globalization, the movement of money and goods, were shaped by mediating institutions and protocols. The International Monetary Fund regulates finance. The World Trade Organization regularizes trade. The movement of people — the most intimate form of globalization — is the one with the fewest rules. There is no “World Migration Organization” to monitor the migrants’ fate. A Kurd gaining asylum in Sweden can have his children taught school in their mother tongue, while a Filipino bringing a Bible into Riyadh risks being expelled.
Given the rather bleak economic prospects in many parts of the Philippines, a significant part of its population has gone abroad to find better fortunes or is contemplating doing so:
With about one Filipino worker in seven abroad at any given time, migration is to the Philippines what cars once were to Detroit: its civil religion. A million Overseas Filipino Workers — O.F.W.’s — left last year, enough to fill six 747s a day. Nearly half the country’s 10-to-12-year-olds say they have thought about whether to go. Television novellas plumb the migrants’ loneliness. Politicians court their votes. Real estate salesmen bury them in condominium brochures. Drive by the Central Bank during the holiday season, and you will find a high-rise graph of the year’s remittances strung up in Christmas lights...

Nearly 10 percent of the country’s 89 million people live abroad. About 3.6 million are O.F.W.’s — contract workers. Another 3.2 million have migrated permanently, largely to the United States — and 1.3 million more are thought to be overseas illegally. (American visas, which are probably the hardest to get, are also the most coveted, both for the prosperity they promise and because the Philippines, a former colony, retains an unrequited fascination with the U.S.) There are a million O.F.W.’s in Saudi Arabia alone, followed by Japan, Hong Kong, the United Arab Emirates and Taiwan. Yet with workers in at least 170 countries, the O.F.W.’s are literally everywhere, including the high seas. About a quarter of the world’s seafarers come from the Philippines. The Greek word for maid is Filipineza. The “modern heroes” send home $15 billion a year, a seventh of the country’s gross domestic product. Addressing a Manila audience, Rick Warren, the evangelist, called Filipino guest workers the Josephs of their day — toiling in the homes of modern Pharaohs to liberate their people.
I highly recommend reading the whole piece if you are interested in migration matters. In particular, how the Philippines deals with this largess is a key question:
The downside is the risk of dependency, among individuals waiting for a check or for rulers (like Marcos) who use the money to avoid economic reforms. The cash could have a stultifying effect, like the “curse” of too much oil. No country has escaped poverty with remittances alone. “Remittances can’t solve structural problems,” said Kathleen Newland of the Migration Policy Institute, a Washington research group. “Remittances can’t compensate for corrupt governments, nepotism, incompetence or communal conflict. People have finally figured out that remittances are important, but they haven’t figured out what to do about it.”

China's "Mega Import Deals" w/ US

♠ Posted by Emmanuel in , at 4/18/2007 05:02:00 PM
China is supposedly set to appease trade tensions with America by buying $12B worth of US goods according to China Daily when the Strategic Economic Dialogue comes to the United States:

China is likely to ink mega import deals, possibly amounting to $12 billion, with the United States during the second Sino-US strategic economic dialogue next month, in a move to narrow the trade gap.

The talks, which will be co-chaired by Vice-Premier Wu Yi and US Treasury Secretary Henry Paulson, are the highest-profile dialogue mechanism over economic issues between the two.

The proposed procurement delegation is likely to be led by Vice-Minister of Commerce Ma Xiuhong, covering a wide range of US agricultural and industrial products, from soybean and cotton manufacturing machinery to electronic products.

The delegation will visit Atlanta, Chicago, San Francisco and Washington.

Climate Change IS a Security Issue

♠ Posted by Emmanuel in at 4/17/2007 08:58:00 PM
The UK and China have gone at it in the UN Security Council over climate change. First up is British Foreign Minister Margaret Beckett:

But Foreign Secretary Margaret Beckett, who chaired the meeting, argued that the potential for climate change to cause wars had to move from the fringes of the debate to the Security Council, the most powerful U.N. body.

"Our responsibility in this council is to maintain international peace and security, including the prevention of conflict," said Beckett, whose country holds the current council presidency. "An unstable climate will exacerbate some of the core drivers of conflict -- such as migratory pressures and competition for resources."

She noted that Ugandan President Yoweri Museveni, whose economy depends on hydropower from a reservoir depleted by drought, had called climate change "an act of aggression by the rich against the poor."

"He is one of the first leaders to see this problem in security terms. He will not be the last," she said in the day-long debate with 52 countries participating.

China and many other developing countries demurred:
But China's deputy ambassador, Liu Zhenmin, was blunt in rejecting the session: "The developing countries believe that Security Council has neither the professional competence in handling climate change -- nor is it the right decision-making place for extensive participation leading up to widely acceptable proposals."

"In our view discussions at this meeting constitute nothing but an exception with neither outcome documents or follow-up actions," Liu said.

No resolution is expected and Russia, China, Qatar, Indonesia and South Africa, among others, also warned that the council, whose mandate is only peace and security, was not the place to take concrete action.

So did Pakistan on behalf of 130 developing nations, although many, such as Peru and Panama and small island states, agreed with Britain. Their main argument against the debate is that the council was encroaching on more democratic bodies, such as the 192-member U.N. General Assembly.

NRA Response To VT Shootings

♠ Posted by Emmanuel in , at 4/17/2007 07:35:00 PM
The National Rifle Association (NRA) did not make extensive comments on the Virginia Tech shootings as it concluded its annual conference in St. Louis. There appears to be nothing about the incident on the NRA website. Instead of bringing up the issue of gun control, a former NRA president simply repeated the famous line of "guns don't kill, people do":
In a prepared statement, the group sent its "deepest condolences to the families ... and everyone else affected by this horrible tragedy.'' It said it would not comment further.

Former NRA President Bob Corbin declined to say what the slaying might mean for NRA's public image.

The former Arizona attorney general says "they ought to look at the person, not the gun."

Here are some questions looking forward (the "pinup" image of NRA President Sandy Froman is from Trey Ellis of the Huffington Post, by the way) -

1. Will stricter gun control laws be passed as a result with a Democratic majority in both houses of Congress? (I doubt it; the NRA is a very strong lobby and the Dems have other priorities ahead of this issue.)
2. Will international students be discouraged from studying in the US? (Maybe--their enrollment has been going down ever since they tightened regulations on international students in the wake of 9/11 and this incident could further the image of US educational institutions as hotbeds for disturbed individuals. Instead of "going postal," we may now have "going to college" in slang terms.)
3. Will there be a backlash against Koreans in particular and Asians in general? (Unfortunately, this is likely--the same thing happened the last time around with Arabs in the wake of 9/11. Korean officials are already gearing up for this possibility.)

China Sets 42M Fakeries Afire

♠ Posted by Emmanuel in , at 4/15/2007 05:05:00 PM

China appears to be making a show of its efforts to combat piracy according to Xinhua News Agency, though I think doing so before the US went to the WTO would have done it more good:

China launched a new nationwide crackdown on pornography and pirated tapes and DVDs on Saturday, setting fire to 42 million offending items, Xinhua news agency said.

It was the latest in a series of purges which have yet to show much effect in a country where fake designer goods and pirated Hollywood blockbusters can be bought for next to nothing on most street corners.

"Through the act of destruction, we wish to show to the world the firm determination of the Chinese government in protecting intellectual property," Xinhua quoted Long Xinmin, chief of the State Press and Publication Administration, as saying.

Of the items destroyed, smuggled and pirated audio/video, software, electronic publications made up 30 million, and pirated and illegally published books and magazines totaled 11 million.

Mr. Loverman Paul Wolfowitz

♠ Posted by Emmanuel in , at 4/13/2007 10:54:00 PM
Woman if a loving yuh looking for yuh buck upon the right man (Mr. Wolfie Man)
Loving yuh looking for yuh buck upon the right one
Dem call me Mr. Loverman dem call me Mr. Lover
(World Banka gonna make you feel alright)


I am late to this, quite frankly, ridiculous story of Wolfowitz fighting for his survival as World Bank president as I limited my Internet access while away these past two days. Oddly enough, I did mention Wolfowitz's profile on Tuesday in the New Yorker that is now being cited widely for insights into Wolfowitz's special and differential treatment (sorry) of his girlfriend Shaha Riza in her reassignment from the World Bank to the US State Department together with a hefty pay raise. It is not everyday that Nouriel Roubini gets away from his soapbox on Stateside subprime carnage to comment on World Bank shenanigans, but he sets the matter in order by saying "As the World Bank rightly prods countries all over the world to pursue good governance and clamp down on corruption and nepotism, the example given by Wolfowitz in this episode has damaged the credibility and the moral authority of the World Bank in pursuing these goals." As Dr. Roubini points out, the neoconservative-friendly, multilateral institution-bashing Wall Street Journal op-ed says Wolfowitz is the target of a smear campaign who should stay while the Financial Times says he sets a poor example and must go. Sebastian Mallaby at the Washington Post is dismayed at how Wolfowitz's cronyism has sidelined development efforts. In turn, none other than Nancy Birdsall has said it's time for Wolfowitz to bid adieu.

Recent developments include Wolfowitz getting booed by World Bank staffers despite him apologizing over the issue. The 24-member World Bank executive board is mulling the matter of whether to dispose of Wolfowitz as the IMF-World Bank meetings take place in Washington, DC. Given that he has very limited respect from World Bank staffers--if he ever had any--there is little point in Wolfowitz continuing. Meanwhile, Shaha Riza is portraying herself as a "victim" of the transfer. (Gee, if getting a cushy State Department job and a big pay raise care of your boyfriend is such torture, then maybe you should not have taken the deal in the first place.) As the others have suggested, things are tough enough at the World Bank without having to deal with these soap opera-style machinations. Mark my word: there will be no end to this story in the US as Wolfowitz is recognized as one of the key architects of the Iraq invasion. Until he is gone from his post, the World Bank will just get more and more sidelined by this sideshow. I just wonder who they'd hire next if they decide to sack him? Wolfensohn, Wolfowitz...how about CNN's Wolf Blitzer? Now, there's a thought for you. I think he'd do a better job than his predecessors, actually.

In any event, here is vintage Shabba Ranks in his 1992 worldwide megahit "Mr. Loverman." Shabba has unbalanced hair; Wolfowitz has unbalanced scruples. I'll take the former:

China's SAFE is DEADLY

♠ Posted by Emmanuel in at 4/13/2007 09:17:00 PM
I still get a kick out of the unaptly named State Administration of Foreign Exchange (SAFE) that has the unenviable task of "safekeeping" China's foreign exchange reserves. The biggest problem as pointed out by many are the risks posed to the country of a virtually guaranteed dollar devaluation. What has been galling--to me at least--is that the SAFE English site has lamely tried to cover up China's now $1.2T pile by not updating its figures since, oh, September 2006 at the convenient level of $987B. Message to the Chinese government: just because you don't publish FX reserve figures anymore on the English SAFE site and publish them elsewhere in RMB is not a clever ruse. Henceforth, I now consider SAFE rather DEADLY--Disingenuous Effort At Disguising Lots of Yuckiness. When the day of reckoning comes and the dollar falls yet more from its current depths, China and other dollar buyers will have no one to blame but themselves for their lack of foresight.

Off to PSA 2007 @ Bath

♠ Posted by Emmanuel in at 4/11/2007 02:51:00 AM
Dear readers, I will be attending the 57th Political Science Association Annual Conference at the University of Bath from later today till Friday. Bath is a beautiful and historic city, which is primarily why I decided to present at this conference :-) I hope to keep you posted on interesting papers that deal with issues of political economy. Provided that I can obtain Internet access, I will be posting throughout this event with my trusty del.icio.us and digg bookmarking tools in tow. If you are going, I hope to see you there!

Tom Tancredo for President 2008

♠ Posted by Emmanuel in , at 4/11/2007 01:55:00 AM

The isolationist's choice in the 2008 US presidential sweepstakes is none other than Republican Congressman Tom Tancredo from Colorado, who has built his career on a strong anti-immigration stance. He is seeking his party's nomination; given the strong isolationist sentiment Stateside, don't be surprised if he makes at least some headway a la Jean-Marie Le Pen in France during 2002. Despite discontent from the Latin community that Bush's new immigration plan is too harsh on would-be immigrants, Tancredo still believes it is too lenient. As his campaign site states, he is "For a Secure America" (read: illegal immigrants need not apply here.) Tancredo sees his one-note platform as a political strength rather than a weakness:
But is it possible for a man who has built a career on one issue, i.e. immigration, to branch out and appeal to the American electorate? Well, Tancredo has an answer for that question. "Immigration is not just about a single issue," Tancredo stated while on the campaign trail in New Hampshire. "Immigration is about healthcare, national security, education... it is essentially about the... our culture." To this Colorado Congressman, it is the "super-sized issue."
Tancredo represents a well-established xenophobic streak among Republicans. Pat Buchanan memorably ran for the Republican president nomination in 1992, and again in 1996. As income inequality widens in the US, a natural tendency is to pin the blame on politically weak immigrants for "stealing our jobs" and "ruining our culture." Do see this blog entry on his site for video clips on how he will build the impenetrable wall on America's southern border to keep immigrants out and how immigrants ruin US housing. (The latter clip comes before he lights up his cigar, by the way.) Who knows, you might be curious enough to read his book, "In Mortal Danger: The Battle for America's Border and Security."

Reactions to US China IP Complaints

♠ Posted by Emmanuel in , at 4/10/2007 07:36:00 PM
Here are the respective blurbs from the USTR on China's lack of protection and enforcement of copyrights and trademarks as well as its market access restrictions on IP-intensive goods from the US. (The official filings should appear on the WTO site soon.) Industry groups such as the Recording Industry Association of America (RIAA) and Motion Picture Association of America (MPAA) voiced their strong approval of this action. On the other hand, China expressed its--you guessed it--"strong dissatisfaction" over the US complaints. A top Chinese IP official expressed dismay in this manner, though again USTR Susan Schwab was critical of what she believed was a limited approach as noted previously:
China's top intellectual property rights (IPR) official lashed out on Tuesday at the United States' WTO complaint over alleged "copyright piracy" in China.

"It's not a sensible move for the US government to file such complaint," said Tian Lipu, commissioner of the Intellectual Property Office, at a national meeting of IPR officials in Nanchang, capital of east China's Jiangxi Province.

"By doing so, the United States had ignored the Chinese government's immense efforts and great achievements in strengthening IPR protection and tightening enforcement of its copyright laws," Tian said.

Tian cited a new judicial interpretation issued by the Supreme People's Court last week that lowered the threshold for prosecuting manufacturers and vendors of counterfeit intellectual property products.

The new rules state that anyone who manufactures 500 or more counterfeit copies (discs) of computer software, music, movies, TV shows and other audio-video products can be prosecuted and faces a prison term of up to three years.
The Ministry of Commerce (MOFCOM) was understandably displeased, saying the action was "not wise":
"China expressed great regret and strong dissatisfaction at the decision of the United States to file WTO cases against China over intellectual property rights and access to the Chinese publication market," a spokesman for the Commerce Ministry said in Beijing Tuesday.

Wang Xinpei, the spokesman, said the US move runs against the consensus reached by leaders of the two countries on developing bilateral trade relations and appropriately handling trade problems.

"Such a move would seriously damage the cooperative relations established in the fields, and would have negative impact on bilateral trade," Wang said.
Meanwhile, the NY Times urged in an editorial that cooler heads prevail:
If the answer is a methodical working through of some of the difficult issues raised by a large and growing trade relationship, this could still prove to be a productive effort. But if these complaints add up to the hesitant first steps toward an all-out trade war with China, everyone will lose, including American workers, whom the White House and lawmakers say they are trying to protect...

What must be avoided are the kinds of misunderstandings — intensified by growing anti-China sentiment in this country — that lead to tit-for-tat tariff reprisals until things spin out of control. A trade war would do more harm to American business than to China’s subsidies. What would happen to Boeing if the steel used in its jets became more expensive? The last thing a country with a record trade deficit can afford is to hurt its exporters.

The administration’s decision to get tough on China appears to be intended in part to soothe Congress’s antitrade passions long enough to win approval of a new free-trade deal with South Korea that would be good for U.S. consumers and exporters. But the White House would do better if it educated Americans about free trade’s benefits, which include cheaper clothes, televisions and cars, which hold down inflation. According to the Progressive Policy Institute, a Democratic research group, foreign manufacturers invest more in America than American manufacturers invest abroad.

It doesn’t feel that way to workers, who know that their wages have stagnated and hear every day that overseas competition is to blame and that little has been done to help displaced workers. But China didn’t break the piggy bank. President Bush and Congress did, with ill-conceived tax cuts for the wealthy and the war in Iraq.
What the Times op-ed does not mention is that the Bush administration may be taking these measures not only to get the Korea FTA deal done, but also to obtain renewal of Bush's fast-track authority which expires at midyear to send trade bills to Congress without modification for an up/down vote. The irony is that to get approval of trade-friendly fast-track authority, Bush needs to please Congress with all sorts of actions that counter the free-trade spirit. These are interesting times. So far, I have been surprised that China has not taken stronger-armed actions against the US, like hinting that it will unload Treasuries if the US does not let up. Unfortunately for free-trade advocates, this action is far from the end of US actions against China. The biggie--China's perceived undervaluation of the yuan--has not been touched upon yet, though expect action on that front in the coming months. I should shortly make a comprehensive post detailing current and pending US actions against China on the trade front. As they say, watch this space.

2007 Reith Lectures: Jeffrey Sachs

♠ Posted by Emmanuel in , at 4/10/2007 01:17:00 AM
Economist Jeffrey Sachs of Millennium Development Goals and "The End of Poverty" fame will be delivering this year's BBC Reith Lectures. These lectures will be broadcast on BBC Radio Four at the times indicated (GMT)--they are all on Wednesdays:

11 April at 9am (rpt Saturday 14 April at 10.15pm): "Bursting at the Seams"
The 21st century will be marked by severe natural resource limits, the rise of new economic powers and the threats of failed states. These are tectonic changes with the potential to unleash global-scale upheavals. Global cooperation of an unprecedented depth and scale will be needed but we are not yet prepared for such cooperation.

18 April at 8pm (rpt Saturday 21 April at 10.15pm): "Survival in the Anthropocene"
The biggest challenges that we face - climate change, alleviation of hunger, water stress, energy - are translated in the shadow of ignorance into "us versus them" problems, with only the weakest links to underlying scientific principles and technological options.

25 April at 8pm (rpt Saturday 28 April at 10.15pm): "The Great Convergence"
Power and America have seemed synonymous for the last fifty years. No longer. Power in the 21st Century is shifting to the East: to India and above all to China. Facing up to the end of centuries of North Atlantic dominance - first Europe then the U.S. - will pose huge challenges.

02 May at 8pm (rpt Saturday 05 May at 10.15pm): "Poverty in the Midst of Plenty"
This lecture considers the challenges of extreme poverty and the extreme worry of the rest of the world which fears for its own prosperity. It spells out the limits of the free market to solve these problems and proposes a plan of action which presents choices to those listening.

09 May at 8pm (rpt Saturdays 12 May at 10.15pm): "A New Politics for a New Age"
The key political novelty of our age is mass political awareness and mobilization. Mass mobilization has brought the Age of Empire to an end, and accounts for the failures in Iraq. No society any longer tolerates being ruled by another. Social mobilization can be a dramatic force for positive change.

For my dear non-UK readers, you can stream the BBC Four broadcasts from the Beeb site. The time difference is -5 hours for Eastern standard time (EST). Also, podcast (MP3) files of the lectures will be posted online after each broadcast, though they will be removed after 7 days according to the Beeb. While I lean towards the Easterly more than the Sachs camp in the Easterly-Sachs debate, the sheer intellectual weight that Sachs carries in policymaking circles makes him a must-hear. I look forward to hearing his thoughts on the environment, power shift, development, and political action.

Wolfowitz Profile in the New Yorker

♠ Posted by Emmanuel in at 4/10/2007 01:02:00 AM
There is a lengthy profile of World Bank President Paul Wolfowitz in the New Yorker magazine that I highly recommend to all of you interested in IPE, international relations, economics, development, or all four. Paul Wolfowitz is a highly controversial figure (especially as a key architect of the Iraq war) and the World Bank already was a highly controversial organization without him; the combination of both has made for some spectacular infighting. The inside angle on the reassignment of Wolfowitz's girlfriend from the World Bank; the skirmish with England's DfID over his anti-corruption measures; accusations of cronyism in installing allies while self-styling himself as an anti-corruption crusader; and the continuation of a "neoconservative" agenda are but a few of the topics covered. Here are a few teasers for you, but do read the whole piece if you have the time:

Many people at the World Bank remain suspicious of Wolfowitz. He has suspended loans to developing countries that he regards as corrupt—among them Chad, Kenya, and Bangladesh—while expanding the bank’s activities in places where the United States and its allies have intervened militarily, including Lebanon and Iraq. “Karl Rove would be proud: the man whom the world associates with the war in Iraq has recast himself as the crusader for good governance and development,” Manish Bapna, the executive director of the Bank Information Center, a not-for-profit organization in Washington that monitors the bank’s activities, said. “But inside the bank there is still a perception on the part of some staffers that his real agenda remains hidden, and that it reflects priorities from the Bush Administration...”

However, current and former World Bank officials, as well as a number of bank shareholders, have questioned Wolfowitz’s actions. Why were projects being suspended in India and not in Indonesia, which by many measures is more corrupt? Why Uzbekistan and not Tajikistan? Why Congo-Brazzaville and not the Democratic Republic of the Congo? “No one in the development community really understands what criteria we should use to withhold lending from poor countries,” Nancy Birdsall, the head of the Center for Global Development, a Washington think tank, said...

The decision to establish a World Bank office in Baghdad seemed to confirm the fears of Wolfowitz’s critics about his intentions. “Paul couldn’t do nation-building in the Pentagon, because Rumsfeld and the military didn’t want anything to do with it,” Dennis de Tray told me. “He saw the World Bank as another way to make it happen. It lends money; it’s got people on the ground in the region; it knows the terrain. I really think that was one of the attractions of the job to him.”

US Files WTO China IP Complaints

♠ Posted by Emmanuel in , at 4/09/2007 06:44:00 PM
If you've been visiting here, I've given advanced warning--not once, but twice--that the US Trade Representative (USTR) would file intellectual property (IP) complaints against China soon. This issue has been a matter of dispute for the longest time between these two countries. Although the US has held back when on the brink countless times before, it appears that it has now become fed up with perceived Chinese inaction. (Or at least domestic political undercurrents have become too strong to hold back any longer.) Some have estimated Chinese counterfeit goods to account for between 15 to 20% of products made in China. Well, the deed is almost done. Today the USTR announced that it will lodge two complaints tomorrow at the WTO Dispute Settlement Body (DSB)--the first deals with China's lax enforcement of IP laws, while the second deals with market access restrictions on American IP products and services. (It looks like Bloomberg jumped the gun on the story; the cases will be filed tomorrow as per their update.)
The U.S. filed said it will file two complaints against China at the World Trade Organization aimed at stopping what it said is piracy of copyrighted movies, music, software and books.

U.S. Trade Representative Susan Schwab announced today that cases were filed will be filed tomorrow at the Geneva-based trade arbiter. One case argues that China sets too high a value on pirated movie or music disks before prosecuting violators. The second objects to Chinese restrictions on the sale of foreign books and movies.


The complaint about widespread sale of pirated disks dates back at least a decade with China. In 1996, the U.S. was set to levy billions of dollars of sanctions against China before the Chinese agreed at the last minute to new measures to curb the export of pirated recordings and computer software.

Over the past three years, U.S. officials have complained often and loudly about what they say is the scale of theft of trademarked and copyrighted goods. The administration was set to file the complaints twice before, only to delay at the last minute as the Chinese government and some U.S. companies urged patience...

China last week announced a crackdown on hawkers of counterfeit goods and halved the criminal thresholds for prosecuting pirates. Possession of 500 pirated DVDs, rather than 1,000, would lead to criminal prosecution, the Supreme People's Court said, according to the Chinese Embassy in Washington.

"That was a step in the right direction, but doesn't go far enough," Schwab said.

"The thresholds create a safe harbor for pirates,'' she said. A vendor need only make sure he has only 499 illegal videos or CDs on hand, and "the most Chinese authorities could do would be to seize the goods and impose an administrative fine,'' she said. "The proprietor could resume business in a short period of time without fear of prosecution.''

The U.S. wants the thresholds eliminated, and seeks new rules on the disposal of pirated items seized by Chinese customs authorities.

As the World Trade Law blog notes, these are the fourth and fifth cases brought before the WTO DSB by the US against China. I will add more details as they come in. The USTR site has not yet updated its material on this matter, nor has China made its usual comments on being "strongly dissatisfied," etc. The filing should also appear on the WTO site soon. In the meantime, look at the USTR's recent report on China, particularly the sections on intellectual property rights protection (pp. 105-12) and audio-visual services (pp. 128-29).

"Z" Visa and Its Discontents

♠ Posted by Emmanuel in at 4/09/2007 01:48:00 AM
US President George Bush has long been considered a relatively immigrant-friendly politician. When then-Governor of California Pete Wilson (R) passed the now-infamous Proposition 187 denying public services such as education from illegal immigrants, then-Governor of Texas George Bush (R) distanced himself from such efforts. According to Bush, "I said when it first came out I was against the spirit of 187 for my state. I felt like every child ought to be educated regardless of the status of their parents." Fast-forward a couple of years to the present time with Bush nearing the end of his second term. He is concerned with leaving a legacy of some sort, which has been made very difficult by the Iraq war. Given his failure to make a move on other substantive issues in his second term, immigration reform is the last one standing. Also, calculations of the Republican party's future post-Bush come into the picture:
The intense effort — conceived by the president's chief political strategist, Karl Rove — is intended to ensure that Bush will achieve at least one crucial policy victory in the last two years of his presidency.

Success on immigration reform could also accomplish another Rove goal, shoring up the GOP's weakened support among Latinos, who are even more important to the party as independent voters become increasingly disenchanted.

Time is short, though. Immigration is one of the few areas where the Democratic Congress sees eye to eye with the lame-duck president, but strains between the two are likely to worsen as the 2008 election nears.
Unfortunately for Bush, the proposal he is crafting does not seem to be popular at all with the Latin community. Especially contentious is the "Z" visa:
Immigrant rights advocates say many of the [LA] area’s illegal immigrants feel betrayed by President Bush, who they had long considered an ally. While illegal immigrants and advocates have long focused their ire at conservative Republicans and Congress, many had seen Bush as an advocate of immigration reform because he had repeatedly said he favors giving many illegal immigrants a path to citizenship.

The White House’s draft plan, leaked last week, calls for a new “Z” visa that would allow illegal immigrant workers to apply for three-year work permits. They would be renewable indefinitely, but would cost $3,500 each time.

Then to become legal permanent residents, illegal immigrants would have to return to their home country, apply at a U.S. embassy or consulate to re-enter legally and pay a $10,000 fine...

The proposal has been sharply criticized by Hispanic advocacy groups, Democrats, the Roman Catholic Church and unions that have many immigrants in their ranks. They argue the cost of work permits and the green card application — which could total more than $20,000 — are prohibitive for low-wage earners...

The plan is far more conservative than the one passed by the Senate last year with bipartisan backing and support from President Bush. That plan would have allowed many of the country’s estimated 12 million illegal immigrants to stay in the United States, work and apply to become legal residents after learning English, pay small fines and back taxes and clear a background check.

Many Senate conservatives opposed that plan, and it failed to gain traction in the then Republican-controlled House, which at the end of 2005 passed the punitive immigration reform bill that angered immigrant communities and led to massive protests.
The steep fees and fines involved in Bush's new measure are clear financial deterrents to those wishing to obtain legal work status. In a way, though, it fits with the growing xenophobic and isolationist sentiment Stateside. Watch this space. (Here's a bit of trivia for you: the employment permit for foreigners wishing to work in China is called--you guessed it--the Z visa.)

UPDATE: You can follow Bush's speech on comprehensive immigration reform before the Yuma, Arizona border patrol on C-SPAN. He is speaking live as of 1730 GMT.

20 Years Ago: ABC Airs Amerika

♠ Posted by Emmanuel in at 4/09/2007 01:26:00 AM
I am not sure if most of you are old enough to remember the ABC miniseries Amerika starring Kris Kristofferson which depicted the United States in the aftermath of a Soviet takeover accomplished through the Trojan Horse of UN peacekeeping forces (!?--no John Bolton was not the executive producer). Though many of you are probably guffawing at the very thought right about now, a Soviet invasion seemed like a more plausible scenario back in 1987. While it would only be a few years until the collapse of the Soviet Union, very few among us figured that was about to happen at the time. The USSR with its numerous conventional and nuclear weapons as well as its plentiful soldiers still had a capacity to intimidate. However, it turned out that the economic force necessary to back such a military buildup simply wasn't there--at least not anymore. Chalk one up for Paul "Rise and Fall of Great Powers" Kennedy's thesis of economic accompanying military overstretch. Apparently, this miniseries is not remembered too fondly; while almost every B-movie ever made is available on DVD, Amerika is currently out of circulation. Chalk this title up for 80s completists like your truly. Ultimately, the miniseries raised a temporary stir but failed to change American attitudes about the Soviet Union:
At the time, Amerika was the most controversial television event ever broadcast by ABC. The network received more mail and phone calls about Amerika before it was on the air than the total pre- and post-broadcast viewer reaction of any other program in the history of ABC, including the end of the world story, The Day After.

The critics of Amerika came from all sides of the political spectrum. The liberals feared the program would antagonize the Kremlin, jeopardize arms control and d├ętente. The right thought the miniseries inadequately portrayed the brutality of the U.S.S.R. The United Nations thought the movie would erode its image...

While almost half the country watched The Day After (46.0 rating), Amerika was seen in 19% of all TV households. Despite lots of publicity, controversy and viewers, research conducted by Professor William Adams at George Washington University showed that attitudes about the things most critics thought would be influenced by Amerika, did not change. What American's thought about the Soviet Union, The United Nations, or U.S. Soviet relations did not change in before and after surveys.

Moral Complexion of China's Growth

♠ Posted by Emmanuel in ,, at 4/08/2007 03:16:00 AM
Pardon me for my tardiness in reading the Economist's recent survey on China's international relations; there is a lot of good stuff from there. Let me list some of these before moving on to the seasonally-inspired title of my post...

(1) Here is a transcript of a session on the book Power Shift: China and Asia's New Dynamics, edited by David Shambaugh of the Brooking Institution. Here, various academic authors tackle how China is using diplomacy to ensure that its political weight matches its growing economic clout in the Asia-Pacific region. For those of you in academia, the book is available from ebrary. Much as I dislike reading books onscreen, the contributor's list makes this book a must-read. (2) Next, the World Bank published Dancing with Giants: China, India and the Global Economy earlier this year and it is available online. In covering Chinese and Indian development, this edited volume also tackles the energy, emissions, and inequality challenges these two countries face. (3) Lastly, here is a podcast interview with the survey's author Dominic Ziegler, Tokyo bureau chief for the Economist. It is well worth listening to if you've got the scratch.

Now, on to my main subject matter. You may have read or heard about Benjamin Friedman's recent book on The Moral Consequences of Economic Growth, where he mentions that economic stagnation negatively affects a nation's moral health. Conversely, growth enables social and political advancement. While it may be true that economic growth is a necessary condition for such advancement, it is not a sufficient one. Case in point: China. If I were up to it, I could put up an entire blog devoted solely to its perceived social and political transgressions--at least through an admittedly western perspective. However, in the spirit of the season, I will spare everyone and simply repeat what the Dalai Lama has said about China's rise from the last article in the Economist survey:

As the Dalai Lama puts it: “Mr Hu's constant emphasis on a ‘harmonious society' suggests that something is missing.” China is wracked by social inequality, environmental damage and government corruption. Beijing's preparations for the Olympics are a heart-rending metaphor for this. The games have provided a pretext for an orgy of official corruption and cultural vandalism which in a few brief years has all but destroyed a unique historical city. A few scraps have been left for touristic consumption. Beijing's inhabitants have been shunted into tower blocks on the city's edges. In their place rise vast bombastic structures, architects' and politicians' self-indulgences with no civic context.

A constant theme heard from thoughtful Chinese is that China's rise lacks a moral underpinning, and that a moral vacuum lies at the heart of Chinese life. The Dalai Lama puts the blame on the Communist Party's “radical atheism” and predicts that “sooner or later, a spiritual or moral culture will have to come to fill an internal emptiness; externally, there will have to be rule of law, democracy, freedom of the press.”

Regardless of religion--be it Buddhism, Christianity or what else have you--the message does not differ much when the subject matter comes to accumulating wealth for its own sake. As Mark 8:36 states, "For what shall it profit a man if he gains the whole world and loses his soul in the process?" It's a question China will have to contend with more and more as its export machine eats up this world's resources while leaving a trail of environmental destruction and increased inequality at home. Sun Bin believes Premier Wen Jiabao is earnestly grappling with this question. There's no doubt about it; China's fate is closely tied to that of the rest of the world. May China heed the timeless wisdom of the world's great religions. I hope this post has given you something appropriate to ponder on this day. Happy Easter.

China Bans More Processing Trade

♠ Posted by Emmanuel in , at 4/08/2007 02:47:00 AM
China is banning yet more items involved in the processing trade, in which manufacturers in the country add value and then re-export. This move is related to China's efforts in moving up the value-added ladder while simultaneously addressing its widely noted problems with resource-intensity and pollution from heavy industry. While China has had a list of prohibited exports from the processing trade since 2004, it seems that it is only seeing results as of late. I previously mentioned China's efforts to move away from giving export-tax rebates to products from such industries, especially as America's case against China (DS 358) pertaining to export subsidies is about to reach the adjudication stage in the WTO. These are tentative signs that China is backing down:

China will ban processing trade in more categories of chemical and resource products in the latest move to restrict the export of resource-intensive products and to balance trade.

The 2007 Prohibited List for Processing Trade, which will take effect on April 26, bans processing trade firms from dealing in 990 products.

There are 186 new categories listed, including heavy diesel oil, apatite and lanthanon ore. They are mostly non-renewable resources, energy-consuming and high-polluting products.

Most of the newly added products fall within the categories for which export tax rebates were scrapped or lowered, according to an official with the Ministry of Commerce who did not wish to be named...

The government's moves to control processing trade have had a preliminary impact this year, according to Customs. The processing sector's imports and exports accounted for 45.4 percent of the country's total trade in the first two months this year, down 2.8 percentage points from a year ago.

But the processing trade surplus still amounted to $34.57 billion in this period, while the total trade surplus was $39.64 billion.

Apart from controlling processing trade, the Chinese government is also reportedly preparing to cut or scrap export tax rebates on extra categories such as high-purity refined zinc, garments and more iron and steel products.

Bush as Development Friend & Foe

♠ Posted by Emmanuel in , at 4/07/2007 08:28:00 PM
Two recent articles in the NY Times that deal with development cast the US president in a different light. Let us start with the first article. Here, Bush's efforts to make the delivery of food aid in Africa more efficient by purchasing locally have run into opposition from powerful US interests:
For a third year, the Bush administration, which has pushed to make foreign aid more efficient, is trying to change the law to allow the United States to use up to a quarter of the budget of its main food aid program to buy food in developing countries during emergencies. The proposal has run into stiff opposition from a potent alliance of agribusiness, shipping and charitable groups with deep financial stakes in the current food aid system.

Oxfam, the international aid group, and other proponents of the Bush proposal say it would enable the United States to feed more people more quickly, while helping to fight poverty by buying the crops of peasants in poor countries.

The United States Agency for International Development [see this USAID link as well] estimated that if Congress adopted the Bush proposal, the United States could annually feed at least a million more people for six months and save 50,000 more lives.

But Congress quickly killed the plan in each of the past two years, cautioning that untying food aid from domestic interest groups would weaken the commitment that has made the United States by far the largest food aid donor in a world where 850 million go hungry.

Representative Tom Lantos, Democrat of California and chairman of the House Foreign Relations Committee, warned last year at a food aid conference in Washington that decoupling food aid from American maritime and agribusiness interests was “beyond insane...”

Over the past three years, the same four companies and their subsidiaries — Archer Daniels Midland, Cargill, Bunge and the Cal Western Packaging Corporation — have sold the American government more than half the $2.2. billion in food for Food for Peace, the largest food aid program, and two smaller programs, according to the Department of Agriculture. Shipping companies were paid $1.3 billion over the same period to move the food aid overseas, the department’s figures show...

Agribusiness and shipping groups vigorously oppose the Bush administration proposal to buy food in developing countries with cash, which they argue is more likely to be stolen. They say that American food is safer and of higher quality and that the government can speed delivery by storing it in warehouses around the world.
The second article paints developed countries as being better able to survive the effects of climate change at the expense of developing countries as per the landmark 2007 report by the Intergovernmental Panel on Climate Change (IPCC). The chart on the right taken from p. 3 of the report's summary is quite instructive, especially for climate change skeptics. Though the article does not mention this directly, it hints at Bush ignoring the Kyoto Treaty despite America being the world's largest carbon dioxide emitter. Together with other developed countries, the US has an advantage in coping with climate change:

The world’s richest countries, which have contributed by far the most to the atmospheric changes linked to global warming, are already spending billions of dollars to limit their own risks from its worst consequences, like drought and rising seas.

But despite longstanding treaty commitments to help poor countries deal with warming, these industrial powers are spending just tens of millions of dollars on ways to limit climate and coastal hazards in the world’s most vulnerable regions — most of them close to the equator and overwhelmingly poor…

Two-thirds of the atmospheric buildup of carbon dioxide, a heat-trapping greenhouse gas that can persist in the air for centuries, has come in nearly equal proportions from the United States and Western European countries. Those and other wealthy nations are investing in windmill-powered plants that turn seawater to drinking water, in flood barriers and floatable homes, and in grains and soybeans genetically altered to flourish even in a drought.

In contrast, Africa accounts for less than 3 percent of the global emissions of carbon dioxide from fuel burning since 1900, yet its 840 million people face some of the biggest risks from drought and disrupted water supplies, according to new scientific assessments. As the oceans swell with water from melting ice sheets, it is the crowded river deltas in southern Asia and Egypt, along with small island nations, that are most at risk.

“Like the sinking of the Titanic, catastrophes are not democratic,” said Henry I. Miller, a fellow with the Hoover Institution at Stanford University. “A much higher fraction of passengers from the cheaper decks were lost. We’ll see the same phenomenon with global warming…”

Scientists say it has become increasingly clear that worldwide precipitation is shifting away from the equator and toward the poles. That will nourish crops in warming regions like Canada and Siberia while parching countries — like Malawi in sub-Saharan Africa — which are already prone to drought.

US to Drag China to WTO Over IP

♠ Posted by Emmanuel in , at 4/07/2007 01:51:00 AM
Oh boy, it appears there's no rest for the wicked as US versus China trade disputes surface even during this Easter holiday. Though action on it has been held back twice, intellectual property qualms that the US has with China may be acted upon by next week according to Bloomberg:
China's illegal copying of movies, music and software cost companies $2.2 billion in 2006 sales, according to an estimate by lobby groups representing Microsoft Corp., Walt Disney Co., and Vivendi SA. The WTO complaints are the first by the U.S. against China for breaching intellectual property rights, in a country where copying has extended to bags, golf clubs and even shampoo.

"The U.S. believes that now it's time to put more pressure'' on China, five years after the country became a WTO member, said Standard Chartered Plc's economist Stephen Green in Shanghai. "The U.S. believes that China has clearly infringed rules that it agreed to play by,'' prompting the action, he said...

"China has continued to demonstrate little success in actually enforcing its laws and regulations in the face of the challenges created by widespread counterfeiting, piracy and other forms of infringement,'' the U.S. trade office said in a report this week. "One major factor is China's chronic underutilization of deterrent criminal remedies.''

The US claims that China isn't doing enough to protect intellectual property rights as counterfeiting and piracy there remain rampant (see the USTR's recent report on China for more), while China counter-claims that despite its efforts, the task of policing intellectual property violations is taxing given China's sheer size. Granted, China has taken some efforts to strengthen IP laws, though these do not appear strong enough to appease America. One of the arguments being made is that China should bolster its IP enforcement efforts for it will need to protect domestic IP as China develops a knowledge economy of its own:
China's honeymoon period with the WTO on intellectual property and other issues may now be ending, and a real possibility exists that sanctions or retaliatory measures are on the horizon. But there may be strong non-coercive reasons for China's efforts to shore up its intellectual property regime as well. If China truly wants to become an innovation-oriented society -- there are sometimes suggestions along these lines -- it will have to do better in protecting its own creators of intellectual property.
Folks, there are so many ongoing or pending US trade sanctions against China that I've almost lost count. To remedy this situation, I will make a comprehensive summary of these sanctions sometime in the near future. Maybe I should rename this site the "China Trade Sanction Blog"! You know it's true--everything I do, I do it for you [cue up Bryan Adams' power ballad.]

A Picture Tells a Thousand Words

♠ Posted by Emmanuel in at 4/07/2007 01:35:00 AM
The Wall Street Journal has an interesting article on rising home inventories in the US. They have an interactive feature where you can make your own chart to indicate inventories in major metropolitan areas. Being me, I checked everything. Lo and behold, it seems that inventories were higher in a majority of areas in September of 2006, though these figures do not appear to be seasonally adjusted. Click for a larger image:

The number of homes listed for sale in 18 major U.S. metropolitan areas at the end of March increased 6.5% from a month earlier, according to data compiled by ZipRealty Inc., a national real-estate brokerage firm in Emeryville, Calif. The data cover listings of single-family homes, condominiums and town houses on local multiple-listing services.

Over the past 22 years, home inventories nationwide have increased an average of 1.7% in March from February, according to Credit Suisse Group. Supplies typically rise modestly in March as sellers pursue the many families with children who seek new homes in the spring, so they can move during summer vacations.

A New Trade Policy for America

♠ Posted by Emmanuel in , at 4/06/2007 09:57:00 PM
For the record, here is a summary of the US House Ways and Means Committee's "A New Trade Policy for America." While the emphasis on "meeting basic international labor standards" and "enforc[ing] common Multilateral Environmental Agreements" appears to be uncontroversial at first glance, these labor and environmental standards may be used in less benign ways as cover for protectionism, red in tooth and claw. Once you go down that slippery slope, there is no telling how far you will go. After all, the United States--the world's largest emitter of carbon dioxide--decided to nonchalantly dismiss the Kyoto Protocol, the mother of all multilateral environmental agreements. Thus, it would be sheer hypocrisy for it to go after other countries on environmental grounds. In any event, take note of this policy for it is the Democrat's take on what President Bush ought to do should he wish to get his fast-track authority extended when it expires at midyear.

Also, take note of parts calling for a "US Trade Enforcer" to prepare WTO cases (gee, I guess the USTR should start looking for employment elsewhere) and a "US Trade Prosecutor" to file them. That China is a currency manipulator I do agree with; however, lumping Japan with China is a little unfair as it has not actively intervened since March of 2004. It has been carry trade speculation, not Japanese intervention, that has kept the yen weak.

To avoid future confusion, let me give my take on this matter for China and the US. Yes, China still uses mercantilist strategies that are not wholly in accordance with WTO stipulations. We can debate whether the WTO unfairly circumscribes the ability of nations to use export-oriented development strategies all day, but there is little doubt that China has been extraordinarily successful already in promoting exports as evidenced by its large and growing trade and current account surpluses. Accordingly, China should wind down these mercantilist policies as the objective of export success has been largely achieved. It should now concentrate on promoting more even growth in the country by developing domestic demand and industries geared for filling it--especially services. The government can go a long way towards building the social infrastructure for a consumer-driven society by bolstering its provision of health care, education, and pensions. Really, there is little point in flooding the world market with more stuff while inequality and environmental destruction rise at home. Take care of your own folks first.

As for the US, my fear is that while many of the measures being brought against China on the grounds of it failing to meet WTO stipulations are justifiable since China did sign up to the WTO, Congress may use the cover of "labor" and "environmental" standards as code words for outright protectionism in the future. It would be better to call a protectionist spade a spade, but that is not likely to happen. True, the Democrats manning the Ways Means Committee like Chairman Charles Rangel (D-NY) and Trade Subcommittee Chairman Sander Levin (D-MI) got their posts because of rising anti-free trade sentiment Stateside. However, leveling the playing field is a whole 'nother ballgame from tilting the playing field in favor of certain interests. I hope they are wise enough to know the difference.

Hilary Benn on G8 Aid Commitments

♠ Posted by Emmanuel in at 4/06/2007 02:47:00 AM
The Right Honourable Hilary Benn, Secretary of State for the UK's Department for International Development (DfID), has asked other G8 nations to live up to the aid commitments they set during the 2005 Gleneagles Summit. (This summit was somewhat overshadowed by the simultaneous occurrence of the London subway bombings.) Benn claims that Britain has lived up to its pledge to increase spending on aid to help meet the Millennium Development Goals, and the others should too:

Britain has honoured its promise to increase global aid spending and other countries should follow suit, International Secretary Hilary Benn has urged. His call came amid warnings that the world's richer nations are not paying up on commitments made at the Gleneagles G8 summit nearly two years ago.

Mr Benn said: "The figures are disappointing, although we need to recognise that the total in 2005 was the largest ever and 2006 figures are still about £20 billion up on 2004. But countries have got to keep the promises they made and Britain has certainly done so and we will continue to encourage others to honour their promises."

But he also told BBC Radio 4's Today programme: "It's not just the level of aid that is given. It's not just a question that if we could write a big enough cheque then poverty would be overcome. Fundamentally it's about governance. Corruption is a problem in different places…"

The eight leaders of the world's leading industrialised nations, including Prime Minister Tony Blair and US President George Bush, pledged an annual increase in global aid to £25.3 billion [$50 billion] by 2010. They also promised to wipe out debts for some of the poorest countries in the world, and to provide universal access to HIV medicines in Africa within five years.

Charities have warned that unless drastic action is taken by the G8 - made up of the US, UK, Italy, Japan, Canada, France, Russia, and Germany - several of the key pledges from 2005 will fail to be met.

A Whole Lotta China Trade Papers

♠ Posted by Emmanuel in , at 4/06/2007 12:49:00 AM
The IMF is holding an open conference on the Global Implications of China's Trade, Investment and Growth later today in Washington, DC. Though I have qualms about holding a conference on Good Friday (naughty, naughty), the papers to be presented appear interesting based on preliminary viewing. In particular, I have skimmed the Swenson paper which suggests that the presence of multinational firms in specific industries that invest in China may lead to "spillover effects" that boost the export prospects of Chinese firms within those industries. Based on a preliminary reading, the Amiti & Freund and Cui & Syed papers come to somewhat dissimilar findings regarding the composition of China's exports. While the former notes that China's export growth from 1992 through 2005 occurred in categories it was already exporting in 1992, the latter notes that Chinese exports are increasing in technological sophistication. From the Cui & Syed paper are two helpful charts below depicting the shift in Chinese exports to machinery, transport equipment, and manufactured goods and away from consumer goods:



All papers appear well worth reading for the keen Sinologist. Dollar & Wei harp on the theme that Chinese investment in state-owned enterprises is still inefficient; better allocation would mean a 5% decrease in investment intensity without a concomitant decrease in economic growth. Happy reading!

An Anatomy of China's Export Growth
Mary Amiti (Federal Reserve Bank of New York) and Caroline Freund (IMF)

The Relative Sophistication of Chinese Exports
Peter Schott (Yale University)

Multinationals and the Creation of Chinese Trade Linkages
Deborah Swenson (University of California, Davis)

China's Export Growth and the China Safeguard: Threats to the World Trading System
Chad Bown (Brandeis University) and Meredith Crowley (Federal Reserve Bank of Chicago)

China's Role as Engine and Conduit of Growth
Shaghil Ahmed. et. al. (Board of Governors of the Federal Reserve System)

Das (Wasted) Kapital: Firm Ownership and Investment Efficiency in China
David Dollar (World Bank) and Shang-Jin Wei (IMF)

Measuring the Vertical Specialization in Chinese Trade
Judith Dean, K.C. Fung and Zhi Wang (U.S. International Trade Commission)

Is China Changing its Stripes? The Shifting Structure of China's External Trade and Its Implications
Li Cui and Murtaza Husain Syed (IMF)

About Those Forecasts...

♠ Posted by Emmanuel in at 4/05/2007 04:40:00 AM

Above are the results of a poll of economic forecasts from The Titans of Wall Street in the most recent issue of the Economist. As someone who has been bearish on America's economic prospects in 2007 for reasons described by famous bears like Nouriel Roubini and Bill Fleckenstein (who correctly predicted this year's subprime mortgage carnage), I doubt whether the US will manage even the least optimistic predicted GDP growth of 2.0% this year. As Fleckenstein points out, nearly universally bad data nowadays may foreshadow poor results. Worse yet, as America goes, so may the rest of the world--US underperformance will likely pull the rest down as consumer demand slows Stateside. I may be wrong; heck, I may even want to be proven wrong. In any event, take note of the differences in their forecasts now and at the start of the year (see below). Wall Street has even bumped up its average expectation for the US a touch despite the onset of housing Chernobyl; we'll see...

FBI Visits Second Life Virtual Casinos

♠ Posted by Emmanuel in ,, at 4/05/2007 02:02:00 AM
In a previous post, I discussed the United States' efforts to combat interstate gambling in relation to offshore Internet gaming operators and their operations Stateside. Now, you may be aware of the popular online virtual world Second Life. It duplicates practically all aspects of life online, especially the world of commerce from buying real-estate, going to shopping centers, and betting in virtual casinos. It is the latter that the creators of Second Life, Linden Labs, became concerned about as it thought potential violations of Internet gaming laws might become an issue for the company in the future. So, Linden Labs asked the FBI to take a virtual (virtue-al? Sorry for the pun :-) look at gambling in Second Life though it has yet to offer an opinion on the legality of gambling there. Apparently, virtual gambling in Second Life can be addictive as this fellow who blew $1,000 non-virtual dollars attests to (the exchange rate is about 270 Linden dollars to one US dollar). People and firms are starting to take their virtual presences seriously; someone has made a cool million investing in Virtual Life cyber-property, while Fortune 500 companies are keen on setting up shop. As these virtual worlds thrive, it will be interesting to see if their jurisdiction comes to mirror offline laws more closely:
That's the risk; we have a set of unknowns and we don't know how they're going to play out," said Brent Britton, an attorney specializing in emergent technology at the law firm Squire, Sanders & Dempsey in Tampa, Florida.

Britton said Linden Lab could potentially face criminal charges under the 1970 Illegal Gambling Business Act or the Unlawful Internet Gambling Enforcement Act [UIGEA]. The latter law, passed last year, takes aim at credit card companies and other electronic funds transfers that enable Internet gambling.

"What they did was go after the processors, and made it a crime to process payments that relate to online gambling sites. Linden could potentially be held as the same sort of processor," said Sean Kane, a lawyer at New York's Drakeford & Kane who has studied the legal issues of virtual worlds.

"If you're buying money on the Lindex (a virtual currency exchange) and utilizing it for gambling purposes, Linden could have a much higher level of responsibility," he added. "If they would be found in violation, that's difficult to say, but I can see a much stronger case being made."