US ranks First as favorable for Foreign Direct Investment

According to an article published on the WSJ:

For the first time since 2001, the U.S. knocked China out of first place in an annual survey of executives rating favorable places for foreign direct investment.

The U.S. narrowly outscored China in the survey by consulting firm A.T. Kearney of executives from 302 companies world-wide. China slipped to second place and Brazil came in third, followed by Canada. India dropped to No. 5, from No. 2 last year.

he Kearney survey was taken last October and November. Executives were questioned about the likelihood of investing in various countries over the next three years. Kearney uses the responses to create an index ranking 25 countries on a scale of 0 to 3 in terms of attraction. The U.S. scored 2.09 in the latest survey and China, 2.02. About two-thirds of the companies surveyed had annual sales of more than $1 billion and the sales for all were above $500 million.

From Reuters: Gold, Close to three Year low on Wednesday

 Gold hit a near-three year
low on Wednesday, falling for a seventh session out of eight, as
strong U.S. economic data boosted stocks and supported the
Federal Reserve's plan to scale back its bond purchases in the
next few months.
    Bullion prices have been sliding since Fed Chairman Ben
Bernanke hinted,to reduce its $85 billion monthly bond purchases 

in the near future,supported by a recovering economy.

    Spot gold fell 1.4 percent to $1,258.54 an ounce by
0202 GMT. Gold for immediate delivery fell to $1,254.74 earlier
- its lowest since September 2010, while Comex gold also
fell to a near 3-year low of $1,254.6.
   

China can Handle Tap of Easy Money

"A recent rise in China's inter-bank lending rates triggered concerns that the country may face a credit crunch, and such worries have aggravated after the rates surged to record highs following remarks by U.S. Fed Chairman Ben Bernanke on the possible exit of quantitative easing (QE).
With ample measures at hand to defuse scare over what appeared to be strained liquidity in recent weeks, the People's Bank of China chose not to ease the credit line. The response is believed to be aimed at re-directing funds away from speculative trading to the real economy.
The ongoing global financial crisis has profoundly changed the external environment of the Chinese economy. If a lesson should be learnt from the current financial crisis, it is to attach a leash to money supply. Allowing excessive liquidity in the financial sector instead of in real economy will result in financial disasters sooner or later.

As observed by many economists, China saw significant growth in bank loans in the first five months this year. However, the real economy did not seem to have benefited from this credit boom.

Such a background better explains why China's central bank did not extend a helping hand to commercial lenders, which allegedly concentrated large sums of resources on speculative investment.

In addition to showing the government's determination to contain financial risks, the central bank's refusal to inject cash also signals that Chinese policy-makers are ready to face short-term pains such as market turbulence and economic slowdown while working to craft a more sustainable growth structure.

China is expected to consolidate its financial risk management ability and to make full use of financial tools to promote a shift of  its economic model".

Source:  Xinhua

Japan will reduce nuclear power .

"Japan has embarked on a new experiment in its energy system, encompassing changes to the mix of fuels used domestically and the corporate organisation of energy production.

Oil continues to make up the largest share of Japan's primary energy supply because of the lack of substitutes for gasoline and diesel available at competitive prices. In electricity, on the other hand, for six decades energy planning has operated under the assumption that nuclear power, in conjunction with efforts to reduce the energy intensity of economic activity, provides the safest, most secure and most cost-effective way of powering the economy.

The most coherent statement of this policy prior to the 11 March disaster is the June 2010 Strategic Energy Plan (SEP) produced within the Ministry of Economy, Trade and Industry. It established a series of targets focused on expanding the role of nuclear power in electricity generation by building 14 new nuclear units by 2030, increasing the use of renewable energy, and subsidising the deployment of low-carbon technologies through the commercial, residential and transport sectors.

It was estimated that this would lead to a substantial reduction in aggregate energy demand, as well as a shift away from the consumption of coal, oil and natural gas to a lesser degree, in favour of nuclear power and renewable energy.

First, despite differences in rhetoric, there is a surprising degree of continuity in the approaches taken by the Liberal Democratic Party (LDP) and the former government (the Democratic Party of Japan, or DPJ) towards the energy mix. DPJ officials adopted strong language against the nuclear industry and initially proposed aggressive targets for banishing nuclear power from Japan's electricity generation. Final legislation showed they were willing to accept a longer-term role for nuclear power.

Second, the LDP has decided to move ahead with a deeper restructuring of Japan's system of regional electricity monopolies. 

Third, the establishment of a Nuclear Regulation Agency (NRA), which is charged with ensuring the safety of the nuclear industry, is fundamentally changing energy policy making. Japan has historically not placed great emphasis on independent regulatory agencies. 

The precise mix of fuels and demand-side changes that will account for the reduction of nuclear power remains unclear.But what is certain is that new investment patterns and regulatory complexity are already ensuring that nuclear power is set to play a reduced role in Japan's energy supply picture moving forward".

Source: NewsonJapan

China's Central bank said, it has boosted liquidity to some Financial Institutions.Cash Crunch will Ease.

 "China's central bank on Tuesday stressed that the country is not short of liquidity and the current cash crunch in the interbank market will gradually ease.

In a second statement released within two days, the People's Bank of China said it has boosted liquidity support to some cautious financial institutions after the country's short-term interbank rates rocketed to unusually high levels during the past two weeks.

The Shanghai Interbank Offered Rate (SHIBOR) overnight rate, a basic gauge of interbank borrowing costs, surged to an all-time high of 13.44 percent last Thursday.

The central bank attributed the phenomena to a confluence of factors, including fast credit growth, the concentrated collection of business income taxes, surging cash demand during the Dragon Boat Festival holiday, changes in the foreign exchange market and banks' setting aside money to meet reserve requirements

With seasonal factors and market panic waning, the current cash crunch will gradually ease, the central bank forecast.

It said it will continue to carry out a prudent monetary policy while actively using a combination of innovative tools, such as open market operations, short-term liquidity operations and standing lending facilities, to adjust liquidity to stave off abnormal fluctuations in the market.

The latest comment came as a swift follow-up to Monday's statement, in which the central bank asked the country's overstretched lenders to manage liquidity risks, signalling no intention to help ease the current squeeze.

China's key stock index sank 5.3 percent on Monday and recorded the biggest daily loss in nearly four years over liquidity concerns''.

Source: Xinhua