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Posts Tagged ‘Steinbock’

US-China Trade at Global Crossroads

Posted by hkarner - 13. November 2017


By Dan Steinbock, RGE Economonitor, 11/11/2017

Despite “America First” policies, President Trump’s economic agenda needs expanding trade with China.

President Donald Trump began his grueling 12-day Asia tour amid US Special Counsel’s first indictments, which cast a shadow over the White House’s future.

Nevertheless, Trump and President Xi Jinping were able to sign deals worth US$253 billion, which makes the visit to China historic in terms of the value of business agreements struck.

If anything, the visit demonstrates that, despite an insular foreign policy, Trump’s economic objectives cannot be executed without expanding trade with China.

Rapid trade expansion

In 2016, US-China trade amounted to $579 billion, while Trump’s singular focus is on the $368 billion trade deficit. Yet, merchandise trade is only one aspect of the broad bilateral economic relationship. Today, China is US’s second-largest merchandise trading partner, third-largest export market, and biggest source of imports.

The increase of imports from China in the US and the bilateral trade imbalance is largely the result of the shift of production facilities from other, mainly Asian countries to China. Since 1990, the share of US imports from China has soared sevenfold to 26 percent. Today, China is the center for global supply chains, which has greatly lowered US multinationals’ costs and thus prices for US consumers. Den Rest des Beitrags lesen »

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The Rise of Anti-Establishment Italy

Posted by hkarner - 10. Dezember 2016

By on December 8, 2016  RGE EconoMonitorSteinbock

After the UK Brexit and the Trump triumph in the US, the rise of anti-establishment Italy is hardly a surprise. It is the effect of half a decade of failed austerity doctrines in Europe and decades of failed political consolidation in Italy – ever since the notorious Tangentopoli scandals.

While Italy’s constitutional referendum heralds a political earthquake that will eventually affect both France and Germany, the immediate result is more uncertainty in economy, political polarization and market volatility.

End of an era in Italy – and Europe

Only hours after Italians had casted their ballot in the referendum on constitutional reforms, Prime Minister Matteo Renzi announced his resignation after heavy defeat.

Renzi’s ‘Yes’ camp included most of his Democratic Party (DP) and centrist allies, and the tacit support of moderate voters, including some from Silvio Berlusconi’s Forward Italy (FI). In turn, the opposition lineup featured Beppe Grillo’s Five Star Movement (M5S), the regional Northern League (NL) led by Matteo Salvini in alliance with the far-right Brothers of italy’s (Fdl) and Berlusconi’s Forward Italy (FI), a significant minority of PD allies, a number of small leftist groups,

According to projections, almost 60% of voters rejected constitutional changes. “My government ends here,” said Renzi from Palazzo Chigi. Moments later, he acknowledged that his pledge to resign if defeated at the polls had been a mistake. Den Rest des Beitrags lesen »

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Greater Role to Africa and Developing World in the China-Led G20

Posted by hkarner - 6. September 2016

By on August 30, 2016  RGE EconoMonitorSteinbock

Greater Role to Africa and Developing World in the China-Led G20

As China assumes leadership in the grouping, Beijing wants greater role to Africa and developing world in the G20.

When China’s Foreign Minister Wang Yi spoke in the Hangzhou Summit in May, he made it clear that Beijing intends to cooperate with other G20 countries to deliver ten outcomes. One of these focuses on Africa.

As the G20 host, China’s goal is to “initiate cooperation to support industrialization of Africa and least developed countries (LDCs).” Wang added, “This year, China will encourage G20 members to help Africa and LDCs speed up industrialization, reduce poverty and pursue sustainable development by means of capacity building, investment increase and infrastructure improvement.”

After seven decades of promises by major advanced economies, it is hardly a surprise if Africans feel somewhat wary about such pledges. However, this time may prove different.

Africa’s role in the G20 Den Rest des Beitrags lesen »

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What If Clinton Wins

Posted by hkarner - 19. August 2016

By on August 19, 2016  RGE EconoMonitorSteinbock

The polls reflect the new status quo. Despite her high unfavorability ratings, Clinton now has the support of every second registered voter, whereas Trump, with his high unfavorability ratings, can rely only on every third. As a result, Clinton’s likely voters nationwide amount to 45-50 percent, as against Trump’s 35-40 percent.

Campaign financing tells the same story. By early August, Clinton had raised $365 million in big money financing, almost a third of it outside money. In contrast, Trump had barely $100 million, only a tenth of it outside money. Four of every five dollars in the Clinton campaign has come from large corporations and Wall Street, big lobbyists and big unions, not ordinary Americans.

How did we get here?

Questionable choices Den Rest des Beitrags lesen »

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Italy at the Brink: From Renzi’s Referendum to Italexit?

Posted by hkarner - 18. August 2016

By on August 10, 2016  RGE EconoMonitorSteinbock

Europe’s Summer of Discontent                               

In the aftermath of the Brexit tensions, Italy is defying Brussels to bail out troubled banks and preparing for constitutional referendum in October. If Prime Minister Matteo Renzi fails to achieve adequate support, economic destabilization will shift from the UK to Italy – which could pave way to the rise of anti-establishment left or right.

“Thank you Great Britain, next it is our turn,” tweeted Matteo Salvini, the leader of the right-wing Northern League (NL), a major Italian center-right opposition party. Meanwhile, ex-Prime Minister Silvio Berlusconi has anointed Stefano Parisi, a former Internet executive and government economic advisor, as his political heir, giving him a mandate to reconsolidate Italy’s fragmented center-right, starting with Berlusconi’s own Forza Italy (Go Italy!) party.

Along with radical right, Euroskepticism has been on the rise in Italy as elsewhere in Europe. Until recently, Italy saw itself as part of an integrated Europe, but that was before the immigration crisis and continued economic stagnation – both of which are attributed to Prime Minister Renzi by Italy’s radical right and left.

“Whether you like it or not, the British people have chosen,” said Alessandro Di Battista, after the UK’s Brexit referendum. He is one of the leaders of opposition center-left 5-Star Movement (M5S), Italy’s second-most popular party. The Brexit will have a direct impact on more than 300,000 Italians who are official residents in the UK, and another 300,000 or more who work illegally in underpaid jobs. Any Brexit effect will also have repercussions on the Italian business, economy and markets, especially as the Milan bourse has become part of the London Stock Exchange. Den Rest des Beitrags lesen »

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The French Endgame about Labor Reforms: Europe’s Summer of Discontent

Posted by hkarner - 16. Juni 2016

By on June 14, 2016  , RGE EconoMonitor

French government wants structural reforms, but unions and most people don’t. As political friction is escalating, Paris is preparing for the Euro 2016 football tournament, which is attracting terror efforts by radical right, ultra-left and the jihadists. At the same time, the country has been pummeled by ‘once-in-a-century’ flooding.

As long as the European sovereign debt crisis caused depressions in small economies, such as Greece, bailouts were still possible. As the crisis spread to larger Euro economies, such as Italy and Spain, stability is no longer viable without structural reforms. Now the turmoil is spreading into Europe’s core economies, starting with France.

While everyday life suggests no chaos, France, behind its carefully cultivated façade, is boiling over.

Protests begin

At the end of May 2016, half-a-dozen French cities turned into battlefields. From Paris and Le Havre to Saint-Nazaire and Marseille, workers protested the government’s plan to change France’s labor law The new legislation would allow individual companies greater flexibility to make decisions about hiring, firing, pay and working hours, according to economic conditions as they are perceived by the employers.

In contrast, the unions see these measures as an effort to undermine collective-bargaining procedures that they once established with blood and tears. What makes the battle bitter is the simple fact that the Socialist government is willing to fight its own constituencies to bring the French labor model closer to those of the UK and Germany, which are led by conservative governments. Den Rest des Beitrags lesen »

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Europe’s Hard Choices: Change or Decline

Posted by hkarner - 22. März 2016

By on March 18, 2016  , RGE EconoMonitor

Europe’s Hard Choices: Change or Decline

Today, Europe is struggling with a series of old and new challenges. Hard choices can no longer be deferred.

For half a decade, Europe has struggled with excessive debt (which remains excessively high), fiscal adjustment (which has failed to revive the continent), systemic banking vulnerabilities (which have not been nullified), and competitiveness challenges (which are worsening due to R&D cuts across the core economies).

The prime reason for the semblance of stability in Europe stems from the European Central Bank’s (ECB) record-low interest rates and rounds of quantitative easing (QE). Yet, the ECB’s policy tools are being exhausted.

What’s worse, growth is decelerating across all EU major economies, including the current “growth engines” — Germany and Spain.

Weight of stagnation Den Rest des Beitrags lesen »

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The EU Division Over China’s Market Economy Status

Posted by hkarner - 18. März 2016

The dispute over China’s “market economy status” (MES) divides Europe by countries and industries.

It stems from China’s 2001 agreement to join the World Trade Organisation (WTO), which Beijing believes required countries to grant MES to China within 15 years – by December this year.

Reportedly, EU lawyers reached similar conclusions over year ago. While the opinion did not necessarily suggest what the European Commission itself would decide, it did provide legal guidance to trade commissioner Cecilia Malmstroem and commission president Jean-Claude Juncker.

Today, China is the EU’s second-largest trading partner and one of the biggest markets for the 28-member bloc. Brussels’ MES decision will pace EU-China relations for years to come.

Opponents claim that the WTO accession deal does not imply China will be granted MES automatically by the end of the year. They argue that the state still plays a substantial role in the Chinese economy.

Against China’s MES Den Rest des Beitrags lesen »

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US, China and Ultra-Low Oil Prices

Posted by hkarner - 4. März 2016

By on March 1, 2016  RGE EconoMonitor Steinbock

The US-led petrodollar era is being surpassed by a multipolar oil age in the Middle East. The transition is permeated by fundamental change and financial speculation that is penalizing the roles of the US and China in the region.   

As producers have scrambled to gain market share from competitors, prices remain more than 70% down from summer 2014. Recently, oil ministers from Saudi Arabia, Russia, Venezuela and Qatar announced an agreement to freeze their oil output levels if other major producers will follow suit. In the near-term, that is not likely.

The current status quo heralds more economic, market and military volatility in the world’s most explosive region.

Eclipse of US-Saudi partnership          

After the 1945 Yalta Conference, which effectively divided Europe, the ailing President Franklin D. Roosevelt rushed to USS Quincy where he met Saudi Arabia’s King Ibn Saud. Bypassing the Brits who had been courting the Saudis for oil, FDR and Saud agreed to a secret deal, which required Washington to provide Saudi Arabia military security in exchange for secure access to supplies of oil. Den Rest des Beitrags lesen »

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How International Is International Monetary Fund?

Posted by hkarner - 6. Februar 2016

By on February 5, 2016  RGE EconoMonitor

IMF Lagarde

Recently, the International Monetary Fund announced “historic reforms” in its governance. In reality, changes have barely begun. The IMF does not look like the world it purports to represent. 

During the global crisis of 2008/9, advanced economies could no longer contain the devastation. As a result, the old G7 club of Western powers was surpassed by the G20, which includes both advanced and emerging economies.

In turn, Washington and Brussels pledged to accelerate governance reforms in international organizations, such as the International Monetary Fund (IMF). Last week, these reforms entered a new era, according to the organization.

“I commend our members for ratifying these truly historic reforms,” Christine Lagarde said. The French managing director of the IMF stated that the reforms would ensure that the institution is better able to meet its members’ needs in a rapidly changing global environment.

But how does the IMF reflect the international community?

Asia’s fractional power Den Rest des Beitrags lesen »

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