The Chinese economy is so intertwined with the rest of the world that a peaceful path of development is both necessary and inevitable

"China has been making efforts in the past months to sort out territorial issues left from history with its Southeast Asian neighbors, including Vietnam.

So it sounded unnecessarily harsh when visiting U.S. Secretary of State John Kerry criticized China for its maritime policies in the South China Sea  in Hanoi on Monday.

In Manila, the next stop of his Asia tour, Kerry is expected to fast-track a deal on increasing U.S. military presence in thePhilippines , an act viewed by many as a show of support for the Southeast Asian country in its territorial dispute with China.

Again, many in China worry that the United States might send the wrong signals that would encourage some regional countries to take reckless policies in their maritime rows with China.

In the past couple of years, the South China Sea has become a new frontier in Washington's strategic pivot to Asia.

Picturing China as a common threat, American hawks have talked some Southeast Asian countries into believing a zero-sum game scenario over relations with China.

However, as is frequently observed in history, engagement with China has turned out to be a win-win game. China's growth for the past three decades has offered vast benefits to its neighbors. Trade bloomed, and investment soared, as the consequences of China's policy of reform and opening up first reached those closest to the door.

The Chinese economy is so intertwined with the rest of the world that a peaceful path of development is both necessary and inevitable. As China grows richer, everyone benefits. A prosperous East Asia is in the interest of all countries that have a stake in the region, including the United States.

Economic vitality makes confrontation a less appealing, and hardly affordable, means to solve problems. In October, China proposed joint development with Vietnam and Brunei as a strategic and practical prelude to the final settlement of territorial disputes. The initiative, which promises solid gains from the rich oil and gas beneath the water, could foster mutual understanding and trust crucial for an eventual solution.

As part of a larger plan to cement relations with East Asian neighbors, China has also proposed to provide more public goods, including setting up an infrastructure investment bank and boosting maritime security cooperation, in order to promote regional peace and development.

Such creative and tangible cooperation projects are backed up by significant real investment commitments. It should relieve the nerves of Washington as China's constructive and cooperative engagement in East Asia is very much in line with U.S. strategic goals in the Asia-Pacific.

To ensure a peaceful, cooperative regional environment, the United States needs to embrace a positive-sum game mind-set.

Meanwhile, it would be imprudent for Washington to continuously boost military presence in the region, which could tip the balance of power and prompt some regional players to opt for confrontation instead of engaging in productive talks.

After all, the United States, as the sole superpower in the world, should find ways to dissipate distrust and foster cooperation over the South China Sea, where everyone may come out as a winner.

Source: Xinhua

Japanese dangerous past militarism and present military buildup,signals it has shifted its previous restrictive defence policy

Some 80 years ago, Tokyo, the capital of the Japanese empire, was the dangerous place where many of its reckless militarist policies were born and where some of the worst nightmares of its neighbors began.

During the 1930s and 1940s, Japan, which had long seized the Korean Peninsula, invaded China and the Southeast Asian countries, opening one of the darkest and bloodiest chapters in modern Asian history.

The wounds have since never fully healed.

Unfortunately, these wounds are once again touched as the Japanese cabinet approved a national security strategy and revised defense plans on Tuesday amid increasing regional concerns about its right-leaning politics and surging nationalism.

The defense policy package, the latest move of Prime Minister Shinzo Abe's cabinet to seek military buildup amid festering historical and territorial disputes with neighboring China and South Korea, signals that Japan has shifted its previous restrictive defense policy to a more proactive one.

Japan's actions, including Abe's failed attempt to form an imagined anti-China alliance with some Southeast Asian countries, are unquestionably directed against Beijing.

In recent years, Tokyo tried hard to play up the so-called China-threat theory, and dressed itself up as a victim of Beijing's policies when Tokyo itself has actually engaged in brinkmanship by adopting provocative policies, including "purchasing" some of the Diaoyu Islands.

Meanwhile, right-wing Japanese politicians have stirred up regional tensions by repeatedly watering down Japan's history of aggression and visiting the notorious Yasukuni Shrine that honors the country's war criminals.

Japan's denial of history and military expansion have alarmed regional countries, especially China and South Korea.

From a historical view, Japan, as a relatively small island country with scarce natural resources, is really unwise to engage in big-power geopolitics and aggressions against its neighbors.

The Japanese government, which devastated its neighbors in the Second World War, finally brought devastation to its own cities and citizens.

This is a lesson that should be repeatedly revisited by the Japanese government and the Japanese people both for the benefits of the country itself and the world.

With China and South Korea achieving great success in national development in the post-war period, a dangerous Tokyo that seeks for better warships and missiles is more likely to harm itself than its neighbors.

China tried to develop a strategic partnership of mutual benefits with Japan, but the chances of sound China-Japan relations are slipping fast amid endless Japanese provocations.

If Japan really hopes to return itself to the ranks of a "normal country," it should face up to its aggression in history and cooperate with its Asian neighbors instead of angering them with rounds and rounds of unwise words and policies.

Source: Xinhua

Japan attempting to boost army by raising Chinese threat

Japan's latest defense plans have sparked concerns both at home and abroad. Ukeru Magosaki, a former Japanese diplomat, says Japan is using China as an excuse to upgrade its military power.

"We must take note of this. These plans suggest that because there are threats from China, so Japan has no choice but to boost military might. But actually, it’s the other way around. It is because Japan wants to upgrade its military forces, that’s why Japan comes up with the threat from China. As I see it, the so called ’active pacifism’ is trying to achieve so called ’peace’ through use of force. This is against the traditional foreign security policies of Japan, as well as the peace in accordance with UN charter. The strategy aims to coordinate with US global strategy and allow self-defense forces to battle overseas." Ukeru Magosaki said.

Source:  Xinhua

The Complicated Relationship Between Emerging Economies And Foreign Miners

According to Ernst & Young’s assessment of the global mining industry in 2013, resource nationalism is the most worrisome risk threatening miners.

If you’ve been reading the papers over the last year, this may not come as much of a surprise.

But when you consider that resource nationalism has rapidly climbed from the bottom of the list of 10 factors included in Ernst & Young’s yearly report to the very top, it clearly illustrates a worrying trend. 

“There is no doubt projects around the world have been deferred and delayed, and in some cases investment withdrawn altogether, because of the degraded risk/reward equation”, writes Ernst & Young’s Global Mining and Metals Leader Mike Elliott. 

“The uncertainty and destruction of value caused by sudden changes in policy by the governments of resource-rich nations cannot be understated”, 

In many ways, mining companies are victims of their own success. 

The strong commodity prices and high reported profits seen in years past have spurred politicians and local stakeholders in some resource rich nations to demand a larger piece of the pie. 

The tragedy though is that bureaucracy moves slowly and the policy response to the mining boom has begun to take effect after the good times have passed and the industry has fallen into recession. 

And it’s not just the emerging economies that present risks to investors. While a number of South American and African states have been in the headlines for resource nationalism of late, Ernst & Young identify Australia’s proposal of a “super profits” tax in 2010 as the catalyst for the recent round of nationalistic tax reforms. 

The proposal later evolved into the Minerals Resource Rent Tax which came into effect on the 1st July 2012 placing an additional 30 per cent tax load on profits generated by iron ore and coal companies making over A$67 million.

That development in Australia prompted Chile and Peru to enact similar taxes targeting profits rather than simply production. 

Following, India has created a taskforce to work on the creation of new levies on minerals. The initiative followed demands raised by several provinces in India for a new mineral resource rent tax with a minimum of 50 per cent on “super profits” earned by miners.

A number of host governments are also now seeking to have minerals beneficiated in-country prior to export. That’s a fair enough aspiration, but the cost of constructing new refineries or smelters and, often, the lack of affordable power, skilled labour, competitive tax regimes, and the loss of flexibility in their global supply chains are all areas for concern. 

So far, South Africa, Zimbabwe, Indonesia, Brazil and Vietnam have announced beneficiation strategies. 

Still, Ernst & Young points out that the majority of growth in the global mineral supply has come from emerging economies. 

The rise of mineral exploration and supply from emerging economies has coincided with a slowdown in developed nations. This dichotomy is seen most sharply in the copper, aluminum, and steel sectors.

In these sectors growth has certainly been driven by emerging economies. 

Meanwhile, according to Metals Economics Group, between the year 2000 and 2010 mineral exploration spending in the developing world increased from 40 to 60 per cent of the global total. 

With so much of the exploration funding being spent in emerging markets, international mining companies and the governments of emerging economies must find a workable compromise in order to keep the industry on track. 

But there are examples of countries where the local government is eager to facilitate the expansion of mining. 

A notable example of this is Nicaragua where foreign direct investment has grown at an average compounded rate of 23 per cent since 2003, from US$186 million to over US$1 billion in 2012.

While mining does not account for all of the investment growth in Nicaragua, gold mining within the country has been one of the biggest growth industries and the government has set up a targeted agency to promote the sector abroad. 

To that end, the government is keen to point out that Nicaragua has a favourable tax regime, with a corporate tax rate of 30 per cent, and mining investment credits in place. 

What’s more, companies enjoy the freedom to expatriate all capital and profits, enjoy full international ownership, and maintain full protection of intellectual property rights, patents, and brands.

In fact, Nicaragua now has the second lowest labor market risk in Central America and, according to the Doing Business 2013 report put out by the World Bank, is the top jurisdiction there in enforcing contracts, resolving insolvency, and protecting investors.

One company making the most of Nicaragua’s favourable policies is Condor Gold. The company’s La India project already hosts an NI 43-101 compliant resource of 2.4 million ounces of gold grading 4.6 grams per tonne.

And the company has recently announced the completion of a 23,598 metre drilling program which is designed to provide an upgrade to the resource figure with an emphasis on defining open pit resources. 

 SOURCE; MINESITE

Sharing the Benefits Of Gold Mining And How Mining Contributes To Development

"There can be no doubt that mining, executed responsibly, is a significant force for sustainable growth. Beyond the multiplier effects on employment, livelihoods and the national economy, it should not be underestimated that whole communities are directly and often exclusively dependent on the sustainability and growth of the mining sector.

But to succeed in growing the mining economy, long-term relationships of trust and mutual respect must be established between its key stakeholders.

A mining operation should provide socio-economic benefits to all stakeholders – including employees and local communities (in the form of jobs, local procurement and community projects), national and regional governments (in the form of royalties, taxes and investment) and investors of capital (in the form of dividends, interest and risk adjusted returns on their investment). If one group withdraws their support for the operation, this will negatively impact all stakeholders.

For much of the last decade, the debate about mining’s contribution to development has been stunted by the dead hand of the ‘resource curse’ theory, which held that many poorer countries would be better off leaving their minerals in the ground.

This is partially because many developing countries with a natural resource endowment are faced with a legacy of poverty and inequality to which the mining industry has, without doubt, contributed.

To address these challenges, it is essential to maximise the socio-economic benefits from the extraction of natural resources, but to do so without shrinking the mining economy. There are numerous examples around the world where mines have been a catalyst for wider socio- development.

Gold mining typically accounts for a high proportion of foreign direct investment for developing countries and for a substantial chunk of foreign exchange earnings. A recent report [The direct economic impact of gold, PWC, October 2013] found that gold mining contributed some $78 billion in gross economic value added and 530,000 direct jobs in the 15 leading gold producer countries. Moreover, mining tends to generate large numbers of indirect jobs and to have significant multiplier effects in part because many mining jobs pay well and are highly skilled''.

By Nick Holland CEO Gold Fields

Russia to lend Ukraine US$ 15 billion and cut prices of natural gas

Russia agreed to lend Ukraine $15 billion and cut prices for natural gas, striking a deal to bail out its crisis-stricken neighbor to stave off possible economic collapse amid large-scale protests in Kiev over the rejection of a trade deal with the European Union.

The high-stakes deal comes as thousands of Ukrainians have been protesting President Viktor Yanukovych's government for weeks, which has put additional pressure on Ukraine's bonds and currency.

Source: WSJ

Machu Picchu Inca Ruins, Cuzco Perú.

The overall effect of lower oil prices on most commodities indices,operating costs and boost on consumer spending.

"Over most of the last twenty three years the price of oil in the US, usually referenced to the WTI benchmark has traded at the same price as oil in Europe normally published as Brent.  Since early 2011 the gap between the two has gradually widened to such an extent that now American oil is about US$13 a barrel cheaper. The reason of course is the widespread use of fracking in the New World that has opened up lots of new fields and supply. It promises to make the US energy independent in the future. This price disparity does create all sorts of issues in the oil, and especially in the refining industry, but it has two important implications for the mining sector. 

Firstly, given the weight of oil in most commodity indices, it has the effect of depressing these benchmarks and encourages investors to reduce their allocation to all commodities. This was a major factor in the underperformance of mining stocks earlier in the year even though metal prices did not decline that much.  

The second effect of lower oil prices is to reduce operating cost across large chunks of the economy, particularly in mining and also for consumers.  While the reduction in fuel costs won’t transform the mining industry, at least not on the scale seen so far, it will help to ameliorate the impact of declining revenues.  More importantly it will help to boost consumer spending across the world and that can only boost economic growth and hence demand for metals. 

So far few economists seem to have factored in lower oil prices into their growth forecasts. It is of course conceivable that it won’t actually happen.  But if it does though the impact could be quite significant and act to compensate for the removal of the US$85 billion injection from the US Federal Reserve every month.  

Lower oil prices won’t be so warmly welcomed in places like the Middle East, Russia or Venezuela, which is probably no bad thing.  It will also continue to have a depressing impact on commodity indices. While that may encourage some capital allocation away from commodities to equities mining stocks, being pro-growth, may not be so badly affected''. 

Source: Minesite

New York factory index picks up slightly in December

An index of manufacturing conditions in the New York area recovered slightly in December after a surprise negative reading in the prior month. But the improvement was below expectations and suggested that factory activity was treading water in the region.
The Empire State’s general business conditions index rose to 1.0 in December from negative 2.2 in November.

The recovery was less than expected.Economists polled by MarketWatchexpected a positive 5.0 reading.

The so-called internals were generally disappointing: the new-orders component remained a negative 3.5 from negative 5.5 and labor market indicators remained weak.

One bright spot was the shipment component, which improved to 7.7 in December from negative 0.5 in the prior month.

The Empire State index is the first of several regional manufacturing gauges to be released. They can frequently be volatile from month to month but taken together they present one of the timeliest reads on a critically cyclical sector.

The Federal Reserve’s Beige Book has reported that manufacturing activity across the country has expanded at a “modest to moderate pace.”

Source: Marketwatch

Peru: Perenco inicia producción petrolera en el lote 67

LIMA, 4 dic (Reuters) - La petrolera francesa Perenco inició el miércoles las operaciones de un lote de hidrocarburos en Perú cuya producción aumentará progresivamente hasta los 60.000 barriles diarios de petróleo en seis años, informó el Gobierno.

Perenco puso en funcionamiento el lote 67, en la región amazónica de Loreto cerca a la frontera con Ecuador, tras invertir unos 712 millones de dólares. El bloque tiene reservas probadas de crudo pesado de unos 100 millones de barriles.

La inversión total del proyecto para producción y transporte de crudo del Lote 67 superará los 1.800 millones de dólares, dijo el Gobierno, pero no informó de los plazos de ejecución.

"La producción de crudo pesado en el lote 67 se inicia con 1.000 barriles diarios de petróleo (bpd), para el 2014 producirá 6.000 bpd, (...) en el 2017 será a 35.000 bpd y posteriormente alcanzará su pico de producción de 60.000 bpd", dijo Perupetro, encargada de las licitaciones del sector.

Para desarrollar el lote de crudo pesado, Perenco requiere mezclar el recurso con un diluyente para convertirlo en un hidrocarburo liviano que pueda ser transportado en el oleoducto.

En un esfuerzo por impulsar la alicaída producción petrolera del país, actualmente de unos 63.000 bpd, el Gobierno peruano busca agilizar los permisos burocráticos que han frenado varios proyectos en el país rico en recursos naturales.

Perupetro suspendió el miércoles la subasta de nueve lotes petroleros en su cuenca marina para evaluar modificaciones a las bases de la licitación a pedido de las firmas interesadas en la exploración de esos bloques de hidrocarburos.

Fuente: Reuters

The behaviour of mining equities and the underlying commodities

"The behaviour of mining equities and the underlying commodities travelled in different directions last week.  Mining shares again drifted down, driven more by worldwide negative sentiment to equities, while the LME Index gained 2% to close at 3,129. A large component of the gain in the index was derived from the 4% increase in the zinc price to $1,958 a tonne and the 1.5% increase in the price of copper to $7,218 a tonne. Indeed, at one point towards the end of the week the copper market went into a $13 backwardation as demand for metal for prompt delivery exceeded that for three months. 

Underlying the price move was a further fall in LME inventories. They declined 3.7% to stand at 393,000 tonnes and Bloomberg reported that total copper inventories including those on the New York and Shanghai exchanges stand at just 551,745 tonnes. This tightness was not predicted and Stephen Briggs of BNP Paribas commented that the forecast surplus in copper this year has now disappeared.

A tighter market this year means that the 2014 will start in better shape and Barclays has revised its projected surplus for 2014 down by 34% to just 127,000 tonnes of copper.  One reason for this is the admission by Anglo American that its copper production will slide from 755,000 tonnes this year to 690,000 tonnes in 2014.   

The industry is doing its best to respond to these good conditions as evidenced by the announcement that Codelco will invest $4 to $5 billion a year over the next five years in new capacity.  

The negative sentiment towards the miners as distinct from the metals can be explained to some extent by the perception that while price are steady they are not rising. Rising prices suggest the companies are growing revenue and profits while flat prices indicate flat profits. While true to a degree it does overlook the importance of cash flow and the compound growth that arises from that.

There are also powerful mitigating influences, not the least of which is currency. In the short term the weakness in the Australian dollar depresses the share prices of the big miners with overseas stock market listings. Set against that though is the consequent reduction in operating costs.  The 1.8% decline in the Aussie dollar last week to 89 cents will help a lot. If Glenn Stevens, the Governor of the Royal Bank of Australia, gets his wish that it declines even further to 85 cents the positive impact on the bottom line of the local mining stocks will be significant.

Capital markets still remain hugely distorted by the continuing repercussions of the financial crisis of five years ago when interest rates were reduced to virtually zero. Some asset classes, like junk European debt, were thrown a lifeline.  Others, like mining, have just soldiered on throwing out prodigious amounts of cash to those savvy enough to hold those equities. The volume of that cash flow has never really been recognised, but it will be eventually. Especially if conditions next year turn out to be less gloomy than some are still expecting.  It looks as if analysts will be revising their data right to the very end of the year.

Source:  minisite

China's urbanization could learn from foreign experience

Urbanization is the road China must take in its modernization drive, offering an important way to address rural problems, a statement released after a Chinese central urbanization work conference said.

As the highest-level meeting the Chinese leadership has convened on urbanization, the two-day conference, which ended Friday, has attracted worldwide attention and received valuable suggestions.

Singapore's Lianhe Zaobao reported the meeting signaled next year would mark the start of China's new urbanization process and relevant reforms would be implemented successively.

The conference statement said efforts would be made to build a diverse and sustainable funding mechanism for the drive, and private investment in and operation of urban public infrastructure would be encouraged.

"It is great news for private enterprises like Pacific Group," Yan Jiehe, founder of China Pacific Construction Group told Xinhua. "This means non-public investment has the opportunity in the future to be fully involved in China's urbanization, and share risk with the public sector to lift the quality and efficiency of the process."

In the United States, more and more private capital has been introduced into urban construction in recent years in the face of reduced revenue and public financing at all levels of American government.

"The core of public and private joint investment is sharing both risks and benefits, and the key to success is carrying out detailed study in both public and private sectors," David Zelenok, chief innovation officer of the city of Centennial in the U.S. state of Colorado, told Xinhua.

Overseas analysts also saw the meeting's emphasis on reforming the local government revenue system as an important factor in steadily driving forward the urbanization process.

Stephen K. Sham, mayor of the city of Alhambra in Los Angeles County, said federal government tax rebates for local authorities, a major source of U.S. cities' revenue, was strictly limited to funding infrastructure, ensuring funds could not be misused, and this could be adopted by China.

Edward Tieh-Yeu Huang, a former Community Redevelopment Agency expert with the City of Los Angeles, lauded the meeting's proposal to macro-manage urbanization, especially its emphasis on consistent city planning, listening to public opinion, and respecting experts' advice.

He said U.S. local governments usually held public hearings to canvass opinion and proposals were often modified repeatedly before being adopted.

Luis Alberto Moreno, president of the Inter-American Development Bank (IDB), warned that China, with its current fast pace of urbanization, should try to avoid what Latin American countries had experienced, such as pollution, traffic congestion, huge divisions of wealth, lack of medical and educational resources and other "city diseases."

Source:  CCTV

Shanghai releases reform plan for state-owned enterprises

Eyes focus on reforms targeting the country’s vast number of state-owned enterprises which is also coincidently among the top priorities of the country’s most recent economic plan.

According to the guidelines, local governments will centralize more than 80 percent of its state-owned assets in strategic emerging industries as well as advanced manufacturing and service industries.

It also plans to diversify investment sources and speed up the listing of companies. State firms will have to pay at least 30 percent of their earnings to the state by 2020. The money will be used for industrial restructuring, infrastructure construction and social security. Enterprises will be divided into three groups under different categories.

In the past, the State-owned Assets Supervision and Administration Commission were in charge of the management of assets, human resources and businesses. But in the future, this management role will be gradually taken over by those who actually run the business.

Source: CCTV

Real average hourly earnings rose 0.2% from October to November seasonally adjusted

REAL EARNINGS * NOVEMBER 2013


All employees

Real average hourly earnings for all employees rose 0.2 percent from October to November, seasonally 
adjusted, the U.S. Bureau of Labor Statistics reported today. This increase stems from a 0.2 percent 
increase in average hourly earnings combined with an unchanged Consumer Price Index for All Urban 
Consumers (CPI-U).

Real average weekly earnings rose 0.4 percent over the month due to the increase in real average hourly 
earnings combined with a 0.3 percent increase in the average workweek.  

Real average hourly earnings rose 0.9 percent, seasonally adjusted, from November 2012 to November 
2013. The increase in real average hourly earnings, combined with a 0.3 percent increase in the average 
workweek, resulted in a 1.1 percent increase in real average weekly earnings over this period.


Production and nonsupervisory employees

Real average hourly earnings for production and nonsupervisory employees rose 0.2 percent from 
October to November, seasonally adjusted. This increase stems from a 0.1 percent increase in average 
hourly earnings combined with an unchanged Consumer Price Index for Urban Wage Earners and 
Clerical Workers (CPI-W).

Real average weekly earnings rose 0.5 percent over the month due to the increase in real average hourly 
earnings combined with a 0.3 percent increase in the average workweek. 

Real average hourly earnings rose 1.1 percent, seasonally adjusted, from November 2012 to November 
2013. The increase in real average hourly earnings, combined with an unchanged average workweek, 
resulted in a 1.1 percent increase in real average weekly earnings over this period.

______________
Real Earnings for December 2013 is scheduled to be released on Thursday, January 16, 2014 at
8:30 a.m. (EST).

===============================================

Source: U.S. Bureau of Labor Statistics

U.S. Productivity and Costs Q3 revised

  PRODUCTIVITY AND COSTS
                     Third Quarter 2013, Revised


Nonfarm business sector labor productivity increased at a 3.0 percent annual 
rate during the third quarter of 2013, the U.S. Bureau of Labor Statistics 
reported today. The increase in productivity reflects increases of 4.7 
percent in output and 1.7 percent in hours worked. (All quarterly percent 
changes in this release are seasonally adjusted annual rates.) From the third 
quarter of 2012 to the third quarter of 2013, productivity increased 0.3 
percent as output and hours worked rose 2.1 percent and 1.8 percent, 
respectively. (See table A.) 

Labor productivity, or output per hour, is calculated by dividing an index of 
real output by an index of hours worked of all persons, including employees, 
proprietors, and unpaid family workers.  Measures released today were based 
on more recent source data than were available for the preliminary report.

Unit labor costs in nonfarm businesses decreased 1.4 percent in the third 
quarter of 2013, while hourly compensation increased 1.6 percent. Unit labor 
costs rose 2.1 percent over the last four quarters. 

BLS defines unit labor costs as the ratio of hourly compensation to labor 
productivity; increases in hourly compensation tend to increase unit labor 
costs and increases in output per hour tend to reduce them.

Manufacturing sector productivity declined 0.1 percent in the third quarter 
of 2013, as output and hours worked increased 1.1 percent and 1.2 percent, 
respectively. Productivity increased 1.1 percent in the durable goods sector 
and decreased 1.0 percent in the nondurable goods sector. Over the last four 
quarters, manufacturing productivity increased 2.2 percent, as output 
increased 2.3 percent and hours edged up 0.1 percent. Unit labor costs in 
manufacturing grew 1.3 percent in the third quarter of 2013 and declined 0.2 
percent from the same quarter a year ago. (See tables A and 3.) Nonfinancial 
corporate sector productivity decreased 0.7 percent in the third quarter of 
2013.  

The concepts, sources, and methods used for the manufacturing and 
nonfinancial corporate output series differ from those used in the business 
and nonfarm business output series; these output measures are not directly 
comparable. See Technical Notes for a more detailed explanation. 

Revised measures

The measures released today are based on more recent source data than were 
available for the preliminary report. Tables B and C present previous and 
revised productivity and related measures for the major sectors: nonfarm 
business, business, and manufacturing, as well as nonfinancial corporations.

In the third quarter of 2013, nonfarm business productivity increased 3.0 
percent, rather than 1.9 percent as reported November 14; this is the 
largest increase in the quarterly series since a 4.7 percent gain in the 
fourth quarter of 2009. The upward revision to productivity reflected a 1.0 
percentage point upward revision to output. Unit labor costs were revised 
down, and decreased 1.4 percent, as the upward revision to productivity was 
greater than an upward revision to hourly compensation. In the manufacturing 
sector, productivity declined 0.1 percent rather than increasing 0.4 percent 
as previously reported, reflecting a downward revision to output and an 
upward revision to hours worked. Unit labor costs increased 1.3 percent, the 
same as the preliminary estimate.

In the second quarter of 2013, nonfarm business productivity, output, and 
hours were unrevised. Unit labor costs increased 2.0 percent, rather than 
the previous estimate of 0.5 percent, the result of an upward revision to 
hourly compensation. In the manufacturing sector, output and productivity 
growth were both revised up by 0.1 percentage point. Unit labor costs 
increased 0.5 percent, a smaller increase than previously reported, due 
primarily to a downward revision to hourly compensation.  

Second-quarter 2013 measures of productivity and costs were revised for the 
nonfinancial corporate sector. Productivity increased 3.3 percent rather 
than 2.4 percent as reported November 14. 
______________

Source: Bureau of Labor Statistics

US CPI on seasonally adjusted basis unchanged in November

Consumer Price Index - November 2013

 The Consumer Price Index for All Urban Consumers (CPI-U) was
 unchanged in November on a seasonally adjusted basis, the U.S. Bureau
 of Labor Statistics reported today. Over the last 12 months, the all
 items index increased 1.2 percent before seasonal adjustment.
 
 The energy index declined in November, offsetting increases in other
 indexes to result in the seasonally adjusted all items index being
 unchanged. The indexes for gasoline and for natural gas fell
 significantly, more than offsetting increases in the electricity and
 fuel oil indexes. The food index rose slightly in November, with the
 food at home index unchanged.
 
 The index for all items less food and energy rose 0.2 percent in
 November. Increases in the indexes for shelter and airline fares
 accounted for most of the increase, with the indexes for recreation
 and for used cars and trucks also rising. The indexes for apparel,
 for household furnishings and operations, and for new vehicles all
 declined in November.
 
 The all items index increased 1.2 percent over the last 12 months, a
 larger increase than the 1.0 percent rise for the 12 months ending
 October. The 12-month increase in the index for all items less food
 and energy remained at 1.7 percent for the third month in a row. The
 food index increased 1.2 percent over the last 12 months, while the
 energy index declined 2.4 percent

  Source:U.S. Bureau of Labor Statistics

EU membership or Russian bloc: Ukraine torn between two economic paths

The European Union has suspended a proposed trade agreement with Ukraine. An EU official wrote on Twitter, quote: "Work on hold." The timing of this message is worth noting. It comes on the eve of a meeting between Ukrainian President Viktor Yanukovych and Russian President Vladimir Putin who is trying to persuade the Ukraine to join a Russia-led economic bloc instead of the EU. 

It's a high stakes poker game and no one here in the Ukrainian capital can figure out if President Viktor Yanukovych is bluffing.

While his flip-flop on European Union membership has provoked mass demonstrations, it could be a ploy to extract as much as 20 billion euros, or 27 billion U.S. dollars in aid from the EU. That's what Kiev says it'll need to offset the costs of implement a trade agreement with the EU.

In tilting toward Moscow, the Yanukovych government also hopes to get discounted prices on Russian gas exports.

Whether it's salesmanship, or something else, Yanukovych needs a winning hand to reduce Ukraine's 140 billion dollars in foreign debt, which is around 42 percent of the country's annual economic output.

"Our debt is a great sum, its 40% of our total debt, so we can't live without borrowing," economist Yuri Korolchouck says.

This month, Yanukovych didn't just tilt east to Moscow. He tilted almost as far east as he could go, heading to Beijing where he secured eight billion in Chinese investment.

But Kiev has been biding its time as President Yanukovych considers joining an eastern customs union headed by Russia, with benefits of its own.

Moscow has also offered cheap credit to help Ukraine’s battered economy.

This hasn't pacified the pro-European protesters that came out in their thousands over the weekend.

"It wasn't signing the agreement or not, the Ukrainians want to live in a European type of country, where they have the same values. They want liberty, freedom and dignity," protester Markian Andriyenko says.

And Yanukovych may have to act fast. The demonstrations, now into their fourth week, are putting more pressure on the economy, leading to the closure of some banks.

"As you well see now the politics is very unstable. All banks are afraid and starting to freeze their accounts so not to lose their market share," Kiev resident Andre says.

Making matters worse, the Ukrainian currency, the Hryvnia, has shrunk to its lowest value in four years.

Tens of thousands continue to gather here in Independence Square, despite the latest news out of Brussels. This does not shut the door for the Ukraine, but could be seen as an attempt by the EU to get some sort of reaction some sort of commitment by Yanukovich before he heads to Moscow on Tuesday to meet with his Russian counterpart Vladimir Putin.

 Source:  CCTV

Thailand tourism earnings fall by 124 mln in the first half of Dec.

Tourism in Thailand is being hit by the on-going political turmoil. One forecaster predicts the country will go into recession as a result. Many holidaymakers who have travelled to the Thai capital say they had second-thoughts.

More than a million protest-wary tourists have so far stayed away from Thailand. Here at Bangkok's Dusit Zoo, those who have come - say they had misgivings.

"One day we are thinking we don't come to Thailand, when we are in Germany. Could be dangerous," two tourists say.

"We thought maybe we wouldn"t go to Bangkok at all, but we were still coming to Thailand)" a tourist says.

This French couple say their family asked them to stay away.

"Our family yes but for us no, we don’t scare about it," a tourist says.

In fact, the demonstrations have been more disruptive than dangerous, but five people have been killed and more than 200 injured. Tourism and its associated industries accounts for 15 per cent of Thailand's GDP, and so far has been a bright spot in an economy plagued this year by slow growth, high debt and low confidence. Tourism earnings fell by 124 million US dollars in the first half of December as around 400,000 international and 600,000 domestic travellers put their plans on hold.

This country's often called "Teflon Thailand" because of its resilience to economic misfortune, whether natural or man-made. But with these protests coming ahead of the main tourist season, the consequences this time the consequences may be a little harder to un-stick."

"I really felt we were going to see a pick up in GDP this quarter, obviously the first two quarters we were in a technical recession, we started to see a small recovery coming in Q3 and my forecast for 2013 was for GDP growth of 2.5 per cent, I think we're going to be lucky to see 1 per cent now and going into the first quarter of 2014. I think we're going back into a technical recession again, probably a four per cent negative on GDP for that quarter," Stephen Hinch, Vice President of MBMG Investment Consultants, says.

Though Thailand has a knack of somehow staying afloat.

Source: CCTV

European shares dip, dollar steady as Fed meeting nears

European shares and bonds got off to a weak start and the dollar hovered cautiously on Tuesday as the Federal Reserve prepared for a two-day meeting where it may start to wind down its stimulus program.

A majority of economists polled by Reuters still expect the Fed to wait until March before it starts to scale back its $85-billion-a-month bond-buying program. But recent data have steadily shortened the odds on a move in January, or even this week.

"Although we have heavier odds pinned on the tapering being announced in January, we think the economic case has already been made for pulling the trigger," analysts at Societe Generale wrote in a note.

"The only reason to delay would be to give the FOMC the opportunity to strongly signal its intent to taper in January. In either case - actual taper or signal of impending taper - we expect the 10-year U.S. Treasury yield to test 2.9 percent."

Treasuries were steady at 2.8683 percent in early European trading. They had inched up on Monday after solid U.S. manufacturing figures, but European government bonds started on the back foot.

European share markets also got off to a weak start. Declines of 0.5, 0.4 and 1 percent on London's FTSE, Paris's CAC 40  and Frankfurt's Dax  took back much of the gains they had made on Monday and bucked earlier rises in Asia. .T

The to-and-fro of when the Fed will begin to halt the flow of cheap dollars has dominated trading worldwide for months. Investors may find out on Wednesday, when the bank concludes its meeting with a live news conference.

As traders set up their final positions for the Fed, the so-called 'fear gauge,' the VIX volatility index .VIX, was testing a two-month high, although in the currency market there was little movement from the dollar. .DXY

Many analysts have been expecting the dollar to rise as the prospect of tapering strengthens. It has made some ground against the yen, but the euro's recent strength has all but cancelled out the gains.

One reason has been tighter euro money markets as banks have repaid cheap ECB loans faster than expected. That has cut the central bank's balance sheet by 8 percent this year, although Frankfurt has shown no real alarm at the move.

The euro was barely changed at $1.3761 at 1030 GMT (5:30 a.m. EST), giving up gains it made after Germany's ZEW business sentiment came in well above expectations, reaching its highest level since April 2006.

It also stayed within reach of a five-year peak against the yen, advancing about 0.1 percent to 141.82 yen, and rose against the Swedish crown after the Riksbank cut the repo rate, as expected.

   Source: Reuters

Euro zone November inflation picks up, third quarter labor costs rise slowest in three years

 Euro zone inflation picked up in November because of a rise in electricity and accommodation prices, data showed on Tuesday, but wage growth continued to decelerate in the third quarter to the slowest pace in three years.

Consumer prices in 17 countries sharing the euro fell 0.1 percent on the month, increasing the annual inflation rate to 0.9 percent from 0.7 percent in October, a drop which forced the ECB to cut rates to a new record low in November.

The inflation rate dropped below 1 percent for the first time since February 2010 in October.

The monthly drop was led by a 0.8 percent decrease in prices of energy and a 0.1 percent fall in prices of tobacco and services. Food prices were flat in November, data from EU's statistics office Eurostat showed on Tuesday.

Labor costs in the euro zone rose at their slowest pace in three years in the three months to September, Eurostat separately said, in a sign the cost competitiveness of euro zone euro zone countries was improving.

Nominal hourly labor costs in the bloc grew 1.0 percent in the third quarter, following a 1.1 percent increase in the second quarter.

Source:  Reuters

China urges Japan to respect regional security concerns

 China on Tuesday urged Japan to respect regional countries' "fair and reasonable" security concerns after the latter approved a defense policy package to expand its military might.

"Japan's policies in the military and security sphere are linked with its national development direction and will impact regional security," Foreign Ministry spokeswoman Hua Chunying told a regular press briefing.

Considering Japan's negative activities on historical issues, Asian countries, including China, and the international community have to be highly watchful and alert about Japan's actions, Hua said when asked to comment on Japan's defense policy package.

The Japanese cabinet approved the policy package on Tuesday. It consists of a national security strategy, defense program guidelines and a five-year defense buildup plan.

In the security strategy, Japan pledged to seek more "proactive" roles for its military force abroad and to set new guidelines on arms exports, signaling a major shift from its previous restrictive policy.

"We urge Japan to face and sincerely review its history, follow the momentum of peaceful development and win-win cooperation, respect regional countries' fair and reasonable security concerns," Hua said.

She appealed to Japan to adopt peaceful development and contribute positively to regional peace and stability.

Source: Xinhua

Main Thai opposition party divided over running in election

Thailand's main opposition Democrat Party reappointed former premier Abhisit Vejjajiva as its leader on Tuesday but members could not agree on whether to run in an early election or stick with street protesters who want to reform the political system.

The protesters, backed by the Thai elite and Bangkok's middle class, want to force through political reforms before the snap election called by Prime Minister Yingluck Shinawatra. Their aim is to eradicate the influence of Thaksin Shinawatra, Yingluck's brother and the power behind her government.

Democrats resigned from parliament this month to join the street protests led by Suthep Thaugsuban, a deputy prime minister under Abhisit until 2011.

Some agree with his call for reforms to be implemented before another election can be held. But others believe their party, Thailand's oldest, should respect the democratic process and take part in the election, called for February 2.

"There will be no conclusion today as to whether the Democrat Party will run," Abhisit told reporters as the two-day meeting was drawing to an end. "We are tired enough from meeting today on other matters."

The Democrats must decide by December 27 if they want to register for the vote.

"Abhisit's dilemma is he could be in big trouble with the protesters if he does go ahead with elections as most protesters are from his constituency," said political analyst Kan Yuenyong at the Siam Intelligence Unit think-tank.

"Abhisit is in a tough position because his inclination would be to boycott no matter what, as his party is bound to lose the election. Others in his party want to restructure the Democrats and feel duty-bound to run on February 2," Kan said.

"There is a power struggle going on and Abhisit, who has been the party's poster boy for so long, is trying to exert control over a fractured Democrat Party."

Source: Reuters

Kerry arrives in Manila to strengthen U.S. ties with old ally

U.S. Secretary of State John Kerry on Tuesday played down tensions with China over territorial disputes in the East China Sea, saying U.S. efforts to strengthen maritime security in South East Asia were part of a normal process to help allies defend themselves better.

Kerry said disputes between countries should be resolved peacefully through arbitration and the United States would speak out when China took unilateral actions that raised the potential for conflict.

A day after announcing $32.5 million to stiffen maritime security in South East Asia, the bulk of it to Vietnam, Kerry said the United States would provide $40 million to the Philippines over three years to build its capacity to police the South China Sea.

"We don't view the situation as one of rising tensions and we don't want rising tensions," Kerry told a news conference with his Philippine counterpart Albert del Rosario.

"What we are involved in are normal processes by which we work with other countries in order to raise their maritime protection capacity."

Kerry said the United States had not taken a position on any particular claims by countries but did not agree with the way China had asserted itself in a dispute with Japan in the East China Sea.

"We are not approaching this with any particular view towards China except to say when China makes a unilateral move, we will state our position and make clear what we agree and disagree with," Kerry told a news conference.

He said the United States would stand by its allies in the region who are trying to resolve disputes with others through legal means.

Source: Reuters

Merkel elected to third term in parliament vote

Angela Merkel was elected to a third term as chancellor in a vote in the German lower house of parliament on Tuesday, paving the way for her new "grand coalition" government to be sworn in and formally take power later in the day.

Merkel's conservatives scored their best result in over two decades in a German election on September 22 but were forced into lengthy coalition talks with the rival Social Democrats (SPD), whose members only approved the deal last weekend.

The vote in the Bundestag was a formality as the ruling parties hold an overwhelming majority of the seats. A total of 462 Members of Parliament backed Merkel for chancellor, with 150 voting against and 9 abstaining.

Source: Reuters

Brazil opposition settling on presidential candidate as rival bows out

Brazil's main opposition party moved closer to selecting a presidential nominee on Monday, after its candidate in the last election backed Senator Aecio Neves, former governor of Minas Gerais, the country's second-most populous state.

Jose Serra, a two-time presidential runner-up who took 44 percent of votes in the 2010 race against President Dilma Rousseff, said on his official Facebook page that the center-right PSDB should not lose time in nominating Neves.

Serra's go-ahead clears the stage for 2014, when Neves is expected to take on Rousseff. Her popularity suffered with public protests this year, but has rebounded thanks to low unemployment and well-regarded social programs.

The 53-year-old Neves is hugely popular in his home state but has been slow to gain traction in early national polling. He garnered 19 percent support compared to Rousseff's 47-percent backing in an opinion poll published by Folha de S.Paulo newspaper last month.

Serra has been reluctant about a full-throated endorsement of Neves, underlining internal divisions dragging on the PSDB. The party has failed to capitalize on the discontentment that brought over a million Brazilians into the streets in June to protest poor public services.

"Since most party leaders think it best to formalize as soon as possible the name of Aecio Neves to run for president, they should do so without delay," Serra said on Facebook. "I thank all those that have expressed their desire for me to run again, either personally or in polling."

Source: Reuters