China This Week: Hu, Sarkozy Prep for G20; Stronger Ties with Europe; Beijing Tells US to Stay Out of Dispute with Japan

Hu, Sarkozy Prepare for G20:  Chinese President Hu Jintao and his French counterpart Nicolas Sarkozy met in the French Riveria last Friday to discuss reforms to the international monetary system, trying to coordinate their stance before the Seoul G20 summit.

France, which takes over the chair of the G20 group of leading economies in mid-November, has placed reform at the top of its agenda during its one-year tenure.

Chinese President Calls for Stronger Ties with Europe: Hu said on Tuesday that China attaches great importance to its relations with Europe and wants to strengthen ties with the region.

Click to read more ...

China Economy Weekly: Beijing-ASEAN Trade; Rare Earths “Not Bargaining Instrument”; 12th Five-Year Plan

China and ASEAN Trade: Premier Wen Jiabao, speaking at the 13th China-ASEAN Summit in Hanoi, Vietnam has said China is determined to develop economic ties with the Association of Southeast Asian Nations (ASEAN).

Wen proposed that bilateral trade be increased to $500 billion by 2015, promising that China will make an effort to buy more from ASEAN countries. He also suggested setting up an Industrial Cooperation Mechanism within the China-ASEAN Free Trade Area framework to handle any problems and differences that arise.

Rare Earths “Not Bargaining Instrument”:  Beijing has said that it will not use rare earths as a diplomatic "bargaining tool", in response to challenges against its management of the vital metals.

Click to read more ...

China Economy Weekly: Currrency and Trade Arguments, Rare Earths and Japan, Banks in Taiwan

Currency Issues:  Chinese Premier Wen Jiabao has there was no basis for the drastic appreciation of the yuan, the Chinese currency. He added the issue was an economic one and must not be politicized.

Critics have claimed that China keeps the level of the yuan low to win competitive advantages in trade. However, Wen said, there was no connection.

The yuan appreciated 55.2% from January 1994 to July 2010. Meanwhile, major currencies of the world had depreciated, with the US dollar dropping 2.5%, the euro 3.8% and the Japanese yen 19.5%.

Click to read more ...

China Economy Weekly: Trade Battles with US, Power to Tibet, Investing In General Motors

Beijing Buys More US Debt:  China slightly increased its holdings of US Treasury debts in July, to $846.7 billion, after two months of net sales.

The news allayed concerns that Washington's largest creditor was moving away from investing in dollar assets.

Coincidentally, the debt data came out as two US Congressional hearings were being held on China's exchange rate policy. 

The hearings were attended by Treasury Secretary Timothy Geithner, who acknowledged that the two countries "have significant economic interests" in their relationship and highlighted the importance of the Chinese market on the US economic recovery. However, he expressed dissatisfaction with the pace of the yuan's appreciation.

China responding by warning that obsessing over yuan appreciation would not solve trade problems in the US and "might make things even worse"

Click to read more ...