2012-10-18

Articles for the day

In China, a Power Struggle of a Different Order
As the Communist Party in China prepares for a once-in-a-decade leadership transition next month, it is also planning to take a giant step — to break up the monopolies enjoyed by its gargantuan state-owned enterprises.

Are Neo-Nazis Aiding Greek Cops With "DIY Law Enforcement"?
The BBC's Paul Mason reports on recent demonstrations surrounding the performance of a controversial play as tensions escalated and the Golden Dawn party "de-arresting" demonstrators - pulling them from police detention, as the police do nothing.
Greece is a perfect encapsulation of the peak social mood blowback, when the bubbles burst and public mood does a 180. More here: Alarm at Greek police 'collusion' with far-right Golden Dawn

Questions over China's Int'l Investment Position
This has "led to a currency mismatch and significant risk exposure to the forex reserve's depreciation," said Zhang Monan, research fellow at the State Information Center, a policy think tank under the nation's top economic planner, the National Development and Reform Commission.

By contrast, he said, Germany does not face similar pressure even though it is also a trade surplus country. This is because it does not need to keep a large forex reserve since the euro is a reserve currency.

Encouraging companies and individuals to hold more forex and invest the money themselves can also help end the cycle Stiglitz described, Zhang said, as is the case with Japan, which holds only 17.6 percent of forex assets in its national reserve.

Since the second half of last year, China's forex reserves have shown a month-on-month decline several times. Some experts believe that this is partly because domestic companies and individuals have started keeping more U.S. dollars in their accounts. There have been signs of stronger capital flows out of China, which many economists and regulators believe is the result of heavier Chinese investments overseas.

Chinese nationals and companies have been the main force driving recent capital outflows, a SAFE official said. In fact, "our analysis has found that the amount of withdrawal of foreign investors' investment principals has fallen compared to one year before."

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