India and China compete for business in Africa

India and China scramble for business in Africa

With demand for resources to fuel both their growing economies rising, the contest between the two giants is playing out in different parts of the world.

The campus of Nairobi University is one such place.

In a corner here, workers from the China Wu Yi company are working to build a futuristic 21-storey tower, complete with lecture halls, for up to 3,000 students and a helipad.

"Once it is finished in two years, this building will be the tallest structure around," says Prof Sa Dequan, head of the university's Chinese language and cultural teaching centre.

China Wu Yi was helped by the Chinese government to gain access to Kenya, but now it is handling 18 projects here.

Not long ago, it completed a section of the eight-lane, 50km Thika Superhighway, described as Kenya's pride.

India's $65bn (£44bn) of trade with Africa is dwarfed by China's $200bn.

Chinese companies are active across the continent with big infrastructure projects, including ports, railways and sports stadiums.

By contrast, Indian initiatives are led by individual companies looking to expand in sectors such as telecoms, agriculture, the automotive industry and education.

Nairobi-based analyst Anil Bhandari says the African pie is too big for anyone to fret about.

"Most African countries are growing at 7% to 9%. Players like India, China, Brazil, European countries have a role to play."

Source:  BBC

China: Prices of coal down 10%

Prices of thermal coal in China, used to fire up power plants, have declined 10 percent so far this year amid an economic slowdown and gradual transition.

The latest benchmark Bohai-rim steam-coal price index showed that the average spot price at six major coal shipping ports in northern China in the week ending July 30 fell further to 570 yuan (93 U.S. dollars) per tonne, down 10 percent from the beginning of the year.

"Coal prices have fallen to five-year lows," Bu Changsen, chairman of Shandong Energy Group Co., Ltd., said. "The whole coal industry is experiencing the worst downturn in more than a decade and therefore most coal firms nationwide are mired in hard times."

Power consumption is a barometer of the state of the economy. Therefore slumps in thermal coal prices could mirror the downward pressure on the Chinese economy, economists said.

Meanwhile, the weak coal market comes as the country is striving to cut some high polluting and energy guzzling capacity to transform the economy into a more sustainable one, said Li Tiegang, deputy president of the school of economics with Shandong University.

Official data also showed that compared with heavy industries, the new and high-tech sectors have better growth momentum and offer hope for the Chinese economy.

China's Central Bank injected liquidity into the banking system on Tuesday

China's central bank continued to inject liquidity into the banking system on Tuesday, with 12 billion yuan (1.96 billion U.S. dollars) of 7-day reverse repurchase agreement (repo) operations.

The yield of the reverse repo, a process of central bank purchasing securities from commercial banks with an agreement to resell them at a future date, stood at 4.0 percent, according to a People's Bank of China statement.

"The reverse repo rate fell 40 basis points from last week's offering," said Jiang Chao, an analyst with Haitong Securities."It indicated that the central bank aims to guide the market borrowing costs to a lower level," 

But experts said the central bank's move does not mean a change in the prudent monetary policy.

Source: Xinhua

China's top economic planner said most Regions can meet target growth

 China's top economic planner said on Tuesday that most regions can achieve their growth target this year if macro-policies remain basically stable, in the latest words of reassurance about the slowdown of the world's second-largest economy.

The commission called for deeper reforms and further opening-up in the more affluent eastern regions, including accelerating construction of new experimental zones and pilot reforms in major areas to offer experience to the broader economy.

It also pledged more support to the central, western and northeastern regions.

Central government investment will lean toward major infrastructure and social projects in central and west China to make sure they are not affected by the slowing economy, the NDRC said, adding it is also mulling a policy document to revitalize old industrial bases in the northeast.

Source: Xinhua

Hollande reste optimiste sur la croissance française

François Hollande s'est de nouveau montré optimiste mardi 6 août sur une reprise de la croissance lors d'un déplacement en Vendée sur le thème de l'emploi, jugeant que "c'est fragile, mais il y a quelque chose qui se passe".

"Nous devons tout faire pour accompagner ce mouvement", a déclaré le chef de l'Etat lors d'une visite d'un Pôle emploi à La Roche-sur-Yon. "Je suis confiant sur l'inversion de la courbe du chômage. Nous allons y arriver", a-t-il répété.

 Un optimisme affiché alors que dans son rapport annuel sur l'economie francaise , publié lundi, le FMI estimait que Paris avait déjà accompli "aux deux tiers les efforts entrepris en 2011 pour stabiliser les déficits", et pouvait dorénavant lever un peu le pied sur la rigueur.

"Il ne faudrait pas l'interpréter comme un relâchement de ce que nous avons àfaire sur le plan des économies, mais plutôt comme un encouragement", a-t-on commenté dans l'entourage du président de la République.

"L'échec étant patent, tout va être dans la communication et la méthode Coué, a déclaré M. Roger Karoutchi, sénateur des Hauts-de-Seine et vice-président de l'UMP. Le président en déplacement tous les jours clame dans les médias : 'Emploi, emploi, emploi !' Bon, à défaut de créer un emploi, cela peut faire croire que l'on s'en occupe."

Le porte-parole du PCF, M. Olivier Dartignolles, a lui dénoncé "l'optimisme présidentiel" qui "ne remplacera pas l'urgence d'en finir avec l'austérité, avec une politique gouvernementale qui tourne dramatiquement le dos à l'espoir d'un changement, à une amélioration concrète des conditions de vie".

Source: Le Monde

Japan unveils new big warship

Japan's biggest warship was unveiled on Tuesday, raising grave concerns about the country's military buildup as observers said the vessel is actually an aircraft carrier, banned by Japan's pacifist constitution.

Tokyo's move coincided with Manila's latest efforts to upgrade its military, as the Philippine navy received a second former US coast guard ship. Manila received the first ship in 2011.

Analysts see the upgraded warships in Japan and the Philippines as efforts to gain an upper hand in maritime disputes with China, as well as a catalyst igniting an arms race that would escalate regional tensions.

China's Ministry of National Defense expressed concern on Tuesday about Japan's "continuous military buildup" and urged it to adhere to peaceful self-defense.

"Japan should reflect on its history, adhere to self-defense and the promise of following the path of peaceful development," the ministry's bureau for media affairs told China Daily. The ministry also called for Japan's neighbors and the international community to be "highly alert".

The Japanese-built carrier has a displacement of around 20,000 tons. It can accommodate 14 helicopters and will play a major role in disaster and rescue missions, as well as defend sea passages and Japanese territory, according to Japan's defense ministry.

But it is much larger than many countries' aircraft carriers in terms of displacement and deck length, and it can be easily and swiftly refitted to support F35-B fighters, which have strong combat capabilities, said Zhang Junshe, a senior researcher at the People's Liberation Army Naval Military Studies Research Institute.

"It is an aircraft carrier, and Japan just called it ‘a helicopter destroyer' to downplay its aggressive nature," Zhang said. Japan, defeated in World War II, is creating regional tensions by breaking the postwar order, he added.

Source: ChinaDaily

China to relax family planning policy

The National Health and Family Planning Commission moved on Tuesday to allay concerns in media reports last week that China will relax its family planning policy by 2015 to allow more couples to have two children.

The commission said no timetable has yet been determined and instead said the new plan will be carried out "at the proper time".

The commission, however, did confirm media reports that an update is on its way. In the new plan, couples will be allowed to have a second child if at least one parent has no siblings.

There are several exceptions to the one child rule,the current policy permits couples to have two children if both parents are the only children in their families.

In most rural areas, for example, families can apply to have a second child if their first-born is a daughter.

An update to the policy makes economic sense, because allowing more couples to have a second child could stem potential labor shortages in the future.

Lu Jiehua, a professor of social demographics at Peking University who has done research for the commission, said that the "proper time" is probably coming this year.

"Regions with a relatively higher proportion of (families with only one child) and a higher urbanization level are most likely to introduce the relaxation first," he said.

Government Bonds Quotes

Government Bonds

                                                                                          Price         Yield
                                                                                        Change           %

U.S. 5 Year			-0/32	1.393
U.S. 10 Year			-1/32	2.647
U.S. 30 Year			-1/32	3.729
Germany 2 Year			0/32	0.178
Germany 10 Year			-5/32	1.708
Italy 2 Year			2/32	1.911
Italy 10 Year			6/32	4.263
Japan 2 Year			0/32	0.117
Japan 10 Year			-3/32	0.788
Spain 2 Year			3/32	1.827
Spain 10 Year			7/32	4.564
U.K. 2 Year			0/32	0.370
U.K. 10 Year			-1/32	2.481

  Source:  WSJ

Fed Officials talking about tapering bond buying soon

Dallas Fed  President Richard Fischer, talked yesterday about starting to cut central bank bond buying as early as September.
Chicago Fed President Charles Evans said today that the central bank could start tapering its $85 billion-a-month bond-buying program at its September policy meeting, 
Mr. Lockhart told Market News International the Fed could start cutting back its bond-buying program at any of three remaining Federal Open Market Committee meetings this year.
The Chicago Fed's Mr. Evans' view that the Fed could decide to begin reducing its bond-buying program in September is significant because he is part of the activist wing of the Fed that has supported unconventional policies like bond buying, which aim to drive down borrowing costs in the hopes of spurring investment, spending and hiring.
Mr. Fisher and Mr. Lockhart aren't voting members of the Fed's decision-making committee, while Chicago's Mr. Evans is.

Source:  WSJ

FMI Executive Board of U.S. Economy Part II

The executive board welcomed the improvements in the U.S. economy,which bodes well for
a gradual acceleration of growth. While the balance of risks tilt the outlook to the downside.
They concurred  "that the fiscal deficit reduction in 2013 is excessively rapid, and that the automatic spending cuts  not only reduce growth in the short term but could also lower medium-term potential growth. They stressed the importance of adopting a comprehensive and back-loaded medium-term plan entailing lower growth in entitlement spending and higher revenues".
 A slower plan of U.S. deficit reduction in the short run,would help global growth,place the fiscal
situation on a sustainable path,and would help to reduce global imbalances . They also expressed concern over the possible political gridlock for the next fiscal budget, and expected improvement.

They agreed that "accommodative monetary policy continues to provide essential support to the recovery, but cautioned that its financial stability implications should be carefully assessed. They considered that a long period of exceptionally low interest rates could potentially entail unintended consequences for domestic financial stability and has complicated the macro-policy environment in some emerging markets. In this context, macro-prudential oversight and supervision of the financial system remain essential".

There are significant challenges involved in reducing easy money policy. Including market overreactions in interest rates and currencies.
"They stressed that effective communication on the exit strategy and a careful calibration of its timing will be critical for reducing these risks".

"Directors welcomed the recent improvements in the housing and labor markets. They agreed that the rebound of the housing market has benefited from monetary policy actions and government-backed programs that facilitated refinancing and modification of loans under stress. They saw room for policies that continue to support the housing market while gradually reducing the dominant role of the government-sponsored enterprises".

"Emerging vulnerabilities and risks from persistently low rates in the financial sector need to be carefully monitored. Directors welcomed the strengthening of the regulatory architecture relative to the pre-crisis period, including through the adoption of Basel III capital rules. They emphasized that completing the implementation of the financial reform agenda remains essential to increase the resilience of the U.S. financial system".

Source:IMF Executive Board Concludes 2013, Article IV Consultation
                 with the United States

Positive Economic Indicators in the EU Zone

Germany said industrial orders at its factories surged by a surprisingly strong 3.8 percent in June, their largest monthly rise since October as contracts for big-ticket items jumped and euro zone demand rebounded.Manufacturing, which makes up around one fifth of Europe's biggest economy, struggled earlier this year but Tuesday's data, combined with a survey last week showing the sector expanded at its fastest rate in 1-1/2 years in July, offers some hope that it is regaining traction.

Britain's manufacturers reported their biggest annual rise in overall industrial production for over two years, adding to growth already seen in service sector activity, the housing market and in retail sales.The data showed a 1.1% month-on-month increase in industrial output,beating predictions of 0.6%

Italy's economy shrank by less than expected in the second quarter, adding to recent signs its slowdown is bottoming out.Gross domestic product marked its eighth straight quarter of contraction, dropping 0.2 percent on the quarter and 2.0 percent an annual basis, national statistics bureau ISTAT said on Tuesday.The quarterly slump was the smallest since early in a recession that began in the middle of 2011, and half as large as the 0.4 percent drop forecast by analysts in a Reuters survey.

That continued a run of encouraging data, and some analysts are predicting a return to very modest growth in the fourth or possibly the third quarter, tracking a gradual upturn forecast for other parts of the euro zone.