L. Ronald Scheman, “Free trade isn’t so free”

Free trade isn’t so free, Washington Times

L. Ronald Scheman

12/30/2009

Two recent reports from China point to one of the major challenges facing the Obama administration in formulating trade policy.

First the Chinese National Bureau of Statistics revised Chinese growth projections for 2010 to 9.6 percent. Then Chinese Premier Wen Jiabao strongly rejected pressures to allow its currency to be guided by market forces, purporting that demands to allow the renminbi to appreciate “were an effort to contain the country’s development.”

While China’s determination to promote development is its internal matter, policies that spill over its borders are the concern of all. Policies that foster almost 10 percent growth in the midst of world economies that are gasping for air expose a fundamental systemic problem that must be addressed.

The commitment to free trade that has dominated U.S. policy since World War II has produced enormous benefits to a growing global population. It has helped to increase production, lower prices and bring millions of people out of poverty. However a substantial question remains as to whether trade is really free if the currencies that set prices are not.

The complex issues of free international trade have one simple truth at their core. The value of products traded across borders is determined by the currency in which the trade takes place. Purported “free” trade without freely traded currencies is a charade.

Currency values affect the end price of products the same way as tariffs over which much wrangling takes place at the World Trade Organization. A product manufactured in China for 680 renminbi would be imported into the United States for $100 at the current exchange rate of 6.8 renminbi to $1. If the exchange rate were 5/$1, the product would sell for $136.

Ironically, the Chinese today are joining the chorus blaming the excesses of the U.S. consumer and a liberal U.S. financial market for the current financial crisis. This perception blatantly overlooks a crucial factor.

The U.S. consumer was responding to the value equation in the internal U.S. market. Chinese control of the renminbi kept their goods cheap in comparison to U.S. goods. Currency distortions also made investment in Chinese manufacturing profitable and investment in U.S. manufacturing costly.

Economists the world over emphasize that rebalancing aggregate global demand to raise consumption in the surplus economies is basic to the long-term sustainability of the international economy. In this context pricing, resulting from currency exchange rates, is a major influence on consumer behavior.

Two other implications, however, have equally serious consequences. First, as the dollar declines against other currencies but remains tied to the Renminbi, the Renminbi is effectively accompanying the dollar in devaluingagainst those currencies.

This makes Chinese goods even cheaper in other countries, especially other developing countries. Second, China’s ballooning trade surplus produces commodity buying in the West that spurs the same commodity bubbles that ignited the recent financial imbalances.

In the developing countries this imbalance has been devastating.

Chinese exports to these countries have risen dramatically since the dollar began to weaken. China’s policy may help create jobs in China but it is a “beggar thy neighbor” policy in regard to the poorer countries, decimating local industry. The well-known fury of anti-globalization activists is attributable far more to job loss from undervalued Chinese goods than to any policies of other developed countries.

While we have little power to induce the Chinese to revalue their currency there are other alternatives to redress the current estimates of an approximate 25 percent undervaluation of the renminbi. Commensurate tariffs on Chinese goods is the logical instrument. Such overriding tariffs should be accepted as fair global policy when faced with controlled currencies that have fallen dramatically out of alignment.

We should also be attentive to more profound implications of Chinese policy. Chinese strategic literature emphasizes that other instruments, not military ones, will be determinative for China’s role in the world.

The reality of today’s exchange rate policies is that China is gradually draining the industrial strength of the West just as surely as if they were bombing its factories. As they well know, currency manipulation is a stealth instrument of economic competition.

Economists are almost unanimous in their assessment that a balanced global economy requires a shift in consumption to the currency surplus countries. The easiest and least painful way to do this is for all major actors in global trade to play by the same rules in regard to currencies. If the Chinese are unwilling or unable to do this on their own, it is time to consider policies that do it for them.

L. Ronald Scheman, author of “Greater America” (New York University Press, 2003) is former United States executive director of the Inter-American Development Bank.

http://www.washingtontimes.com/news/2009/dec/30/free-trade-isnt-so-free/

Charles Blum, “Destabilizing Stability”

Destabilizing Stability

12/28/2009

Charles Blum

Imagine a circus act in which the high-wire artist tried to maintain balance by keeping his body stiff and his knees locked. The rigidity of the effort would be laughable, at least until he lost his balance and fell.

Yet, in all seriousness, the Chinese leadership repeats that its rigid currency policy, which has frozen the yuan (also called the renminbi or RMB) against the dollar for 18 months, is a contribution to stability in the international economy. Listen to Premier Wen Jiabao in a rare sit-down interview with the media on Sunday: “Keeping the yuan’s value basically steady is our contribution to the international community at a time when the world’s major currencies have been devalued.”

De-valued? Against the RMB, virtually every other major currency has risen in value even as they fluctuate against one another in response to market changes. The exception about which Wen is complaining, of course, is the dollar. China has effectively pegged the RMB at 6.8 to the dollar since July 2008. As a result, China’s contribution to a dynamic global exchange rate equilibrium is nil.

The truth is that:

• China, like any IMF member, is obligated to change the value of its pegged currency as needed to reverse imbalances in trade flows and payments. That’s the meaning of IMF Article 4. Exchange rate stability is no virtue; it’s a violation of a country’s international obligations when imbalances need to be corrected.
• The “protectionism” that Wen also complained about in the interview is a direct result of China’s aggressive overreliance on export-led growth. The premier seems to argue that China cannot afford to give up the weak renminbi (the yuan by another name) because its trading partners are exercising their legal rights to commercial self-defense. But what accounts for China’s flood of low-priced exports that prompts trading partners’ antidumping and countervailing duty cases? The massive export subsidy delivered by means of an undervalued RMB. Exchange rate stability is a source of, and not a solution to, trade tensions.
• Wen allowed as how China is concerned that inflation might someday become a problem there. He’s already right. The excessive inflow of dollars and other hard currencies has to be “sterilized” by the Chinese government’s exchanging them for local currency, thereby flooding the market with renminbi. The excessive growth in money supply – China’s money growth is about double its real economic growth – creates constant inflationary pressure. Looked at another way, China is forcing its own people to pay extra renminbi, the only money most of them are allowed to possess, in order to buy anything from abroad. That includes energy and components as well as food and other consumer goods. Here again, stability adds to and does not diminish the problem.

Chinese officials can assert that up is down, black is white, and foul is fair. That won’t change reality. In fact, China’s currency policy is a burden to its own consumers, an affront to its trading partners, and a threat to the international economy. It ought to stop – now – before we all fall off the high wire.

Geoff Dyer, “Wen dismisses currency pressure”

Wen dismisses currency pressure, Financial Times

By Geoff Dyer in Beijing

Published: December 27 2009 12:52 | Last updated: December 27 2009 19:14

Wen Jiabao, China’s premier, has said Beijing would not give in to foreign demands for its currency to strengthen, taking an increasingly defiant tone amid mounting international pressure.

In an interview published by the Xinhua news agency on Sunday, Mr Wen said some of the demands for China to let its currency appreciate were an effort to contain the country’s development.

“We will not yield to any pressure of any form forcing us to appreciate. As I have told my foreign friends, on one hand, you are asking for the renminbi to appreciate, and on the other hand, you are taking all kinds of protectionist measures,” he said.

By keeping the Chinese renminbi stable against the US dollar, China was contributing to the recovery in the global economy, he said. “The purpose [of these calls for appreciation] is to hold back China’s development,” he added.

China dropped its formal dollar peg in 2005 and has since allowed the renminbi to trade within a narrow band. But since the middle of last year it has operated a de facto peg. This has meant that the renminbi has depreciated about 9 per cent against the currencies of its main trading partners since early this year, even though the Chinese economy has rebounded quicker than any other major economy.

However, Chinese officials argue that its exchange rate against its trading partners is roughly in line with its level at the start of the global financial crisis in September last year, when the US dollar initially strengthened.

In recent weeks the demands for China to appreciate its currency to help rebalance the global economy have come not only the US and the European Union but also developing nations such as Brazil and Russia.

A few economists had predicted that Beijing might begin to shift policy early in the new year on the grounds that it needed to head off incipient inflationary pressures and because any change in policy nearer the June G20 summit might appear to the domestic audience as giving in to foreign pressure.

Mr Wen indicated that the government might accelerate measures to prevent the economy from overheating. The government was worried that property prices in some parts of China had risen too quickly, he said, and that bank lending this year had been too excessive. However, he added that the authorities were already taking measures to moderate the level.

“It would be good if our bank lending was more balanced, better structured and not on such a large scale,” he said. There were no immediate signs of inflation, he said, but the government had to be watchful because “inflation may emerge”.

According to Xinhua, Mr Wen also said China would continue to fight for “its due rights for further development” in future climate change talks. China has received stinging criticism from some participants of the Copenhagen talks who accused Beijing of blocking a broader deal. Even Barack Obama, the US president, chided China for “skipping negotiations”, a likely reference to one meeting involving Mr Obama to which Mr Wen sent a deputy foreign minister in his place.

China has tried to fight back. Measures included a long article on Xinhua which said Mr Wen had not been informed of the “mysterious” meeting with Mr Obama.

http://www.ft.com/cms/s/0/3069c326-f2e5-11de-a888-00144feab49a.html

Jamil Anderlini, “China considers extra $200bn for CIC sovereign wealth fund”

China considers extra $200bn for CIC sovereign wealth fund, Financial Times

By Jamil Anderlini in Beijing

Published: December 21 2009 02:00 | Last updated: December 21 2009 02:00

Marc Benitah, “China’s Fixed Exchange Rate for the Yuan: Could the United States Challenge It in the WTO as a Subsidy?”

China’s Fixed Exchange Rate for the Yuan: Could the United States Challenge It in the WTO as a Subsidy?

By Marc Benitah

October 2003

On September 24, 2003, members of the Congressional-Executive Commission on China urged a U.S. trade official to consider challenging China’s fixed currency exchange rate at the World Trade Organization (WTO). Rep. James A. Leach (R-Iowa), chairman of the Commission, put forward the idea that China’s currency could be “a subsidies issue under the WTO, so it’s not exactly a non-WTO issue.” ^[1]

U.S. manufacturers have strongly criticized China for maintaining an artificial exchange rate with the dollar. Groups such as the National Association of Manufacturers argue that China’s currency, the Yuan, is undervalued by 40 percent because the Chinese government has fixed its value in dollars. The lower Yuan makes Chinese exports to the United States less expensive, and conversely makes U.S. exports to China more expensive. Before his trip to Asia, President Bush underlined that “we expect the markets to reflect the true value of [a] currency” and “countries need to be mindful that we expect fair trade.” ^[2]

The question is whether a WTO panel would regard the Chinese fixed exchange rate system as a “subsidy.”  According to WTO texts, a practice is an “actionable” subsidy (a subsidy that can be challenged) if it satisfies three criteria.  First, it must be “specific.” Second, it must entail a governmental “financial contribution,” and third, it must confer a “benefit” on its recipient. In order successfully to challenge the Chinese fixed exchange rate system as a subsidy, the United States would have to demonstrate that these criteria are simultaneously satisfied.

A program is deemed specific if it is granted selectively, in law or in fact, to an enterprise or group of enterprises. In other words, if it is available for all the sectors of the economy, it is not specific and therefore not an actionable subsidy. A first glance, it may appear that the Chinese fixed exchange rate is not targeted selectively toward a special sector of the Chinese economy, but on the contrary, is available for all sectors of the Chinese economy. Therefore it would not be specific and thus not actionable.

This first impression is misleading if we take into account the fact that the Chinese fixed exchange rate system would most likely be challenged as a prohibited de facto export subsidy, under Article 3 of the WTO Subsidies and Countervailing Measures Agreement (“SCM Agreement”).  Article 3 prohibits subsidies contingent, in law or in fact, on export performance.  According to the WTO commentary to Article 3, this de facto standard is met when the facts demonstrate that the granting of a subsidy, without having been made legally contingent upon export performance, is in fact tied to actual or anticipated exportation or export earnings.  Article 2.3 of the SCM Agreement would then take effect.  It stipulates that “Any subsidy falling under the provisions of Article 3 shall be deemed to be specific.”

The specificity criterion thus does not seem to be an insurmountable legal obstacle to challenging the Chinese fixed exchange rate as a de facto export subsidy. In other words, if the United States demonstrates that the Chinese fixed exchange rate system is a de facto export subsidy, then automatically the specificity criterion would be satisfied.

With regard to the “benefit” criterion, it is surprising not to find it defined in Article 1 of the SCM Agreement, which defines a subsidy in general terms.  Article 1 indicates only that the fact that a “benefit is . . . conferred” is a necessary condition for identifying a subsidy. However, a case law definition of this criterion has emerged, determining that a benefit exists when a governmental financial contribution:

makes the recipient “better off” than it would otherwise have been, absent that contribution. In our view, the marketplace provides an appropriate basis for comparison in determining whether a “benefit” has been “conferred”, because the trade-distorting potential of a “financial contribution” can be identified by determining whether the recipient has received a “financial contribution” on terms more favourable than those available to the recipient in the market. ^[3]

This definition is sufficient in simple cases where the “free” marketplace to which it implicitly refers as a benchmark for comparison is easily identifiable. For example, if a firm receives a government loan at an interest rate that is lower than the rate charged by private banks in the country of the firm, a benefit will have been conferred upon the recipient firm. However, this definition becomes less certain when the “free” marketplace is not easily identifiable. In fact, in the case of the Chinese fixed exchange rate system, it seems that the free marketplace is not only difficult to identify, but is simply non existent. There is no currency exchange market in China or elsewhere for the Yuan where its value is determined by the interaction of the forces of supply and demand.

One could say however that the free market value of the Yuan is the value that would prevail if China had a free exchange rate system reflecting the economic forces behind its balance of payments. Since the free marketplace alluded to in the WTO case law definition of benefit is not rigorously defined, and since this case law definition could evolve, this view has some merit. Although it is unlikely that a WTO panel would adopt it, one cannot say with certainty that the benefit criterion is an insurmountable legal obstacle to challenging the Chinese fixed exchange rate system as a subsidy. Of course, a convincing economic demonstration that the Yuan is currently grossly undervalued would be necessary, since without this demonstration there is no question of finding a benefit.

With regard to the governmental “financial contribution,” the clearest case would be a sum of money granted by a government to an industry. But the WTO Subsidies Agreement specifies clearly that a governmental financial contribution exists not only when it provides outright financial assistance, but also in other various cases. More precisely, according to Article 1 of the SCM Agreement, such a contribution exists if a government practice involves a direct or a potential transfer of funds (e.g., grants, loans, equity infusions and loan guarantees) and when a government provides goods or services other than general infrastructure, or purchases goods. It exists also when government revenue that is otherwise due is foregone or not collected (e.g., fiscal incentives such as tax credits) or when a government makes payments to  a funding mechanism or entrusts or directs a private body to grant financial contributions which would normally be vested in the government. Finally, any form of income or price support for producers is also a financial contribution.

At first glance, it does not seem that the Chinese “undervalued” fixed exchange rate system could fit in one of these categories.  However, it is possible that the provision or the conversion of foreign currency at a fixed rate could be perceived as equivalent to a service given by the Chinese government or by bodies entrusted by it. Since this system would most likely be challenged as a de facto export subsidy, one may look at the Illustrative List ^[4] of prohibited export subsidies annexed to the SCM Agreement in order to find any mention of exchange rates. Item (j) of this List identifies as a prohibited export subsidy any governmental “exchange risk programmes [provided] at premium rates which are inadequate to cover the long-term operating costs and losses of the programmes.” Since the Chinese fixed exchange rate system is not an exchange risk program and since it is difficult to speak in an economically meaningful sense  of “costs and losses” of this system for the Chinese government, it does not seem that the United Stated could successfully invoke Item (j) of the Illustrative List of prohibited export subsidies.

Challenging China’s fixed exchange rate as a subsidy in the WTO would not be easy.  Nevertheless, it might be possible in this case to satisfy all three of the WTO criteria for an actionable subsidy (namely, specificity, governmental financial contribution and benefit).

Of course, there could be other legal avenues for challenging the Chinese system in the WTO. For example, Article XV, paragraph 4 of the General Agreement on Tariffs and Trade (GATT 1994) might be invoked. It bars signatories from using “exchange rate action” to “frustrate” the intent of the Agreement.

About the Author:
Marc Benitah is Professor of International Law, University of Quebec. Professor Benitah has recently published at Kluwer Law International a comprehensive book on the law of subsidies entitled  “The Law of Subsidies under the GATT/WTO System.”

http://www.asil.org/insigh117.cfm

Ben S. Bernanke, “The Chinese Economy: Progress and Challenges”

“The Chinese Economy: Progress and Challenges”

Speech
Chairman Ben S. Bernanke
At the Chinese Academy of Social Sciences, Beijing, China
December 15, 2006

The emergence of China as a global economic power is one of the most important developments of recent decades. For the past twenty years, the Chinese economy has achieved a growth rate averaging nearly 10 percent per year, resulting in a quintupling of output per person. In overall size, China’s economy today ranks as the fourth largest in the world in terms of gross domestic product (GDP) at current exchange rates and the second largest when adjustments are made for the differences in the domestic purchasing power of national currencies. This strong economic performance has resulted in improved living standards for the Chinese people. By some estimates, about 200 million Chinese have been brought out of poverty since the reforms began in 1978.1 <http://www.federalreserve.gov/newsevents/speech/bernanke20061215a.htm#fn1> Moreover, by 2004 life expectancy at birth in China had reached seventy-one years, the infant mortality rate had fallen to 26 per 1,000 live births, and the literacy rate of those aged fifteen or above had reached 90 percent.2 <http://www.federalreserve.gov/newsevents/speech/bernanke20061215a.htm#fn2>  These are remarkable accomplishments.

Nonetheless, by most measures China remains a developing nation.3 <http://www.federalreserve.gov/newsevents/speech/bernanke20061215a.htm#fn3> In particular, although life in some urban centers is typical of a modern, affluent society, average household incomes and consumption remain quite low in rural and inland areas. Thus, China faces the double challenge of sustaining a high and stable overall rate of economic growth while stimulating economic development in parts of the country that have shared less fully in the economic boom. In my remarks today, I would like to offer a few thoughts on how China can continue to prosper and promote the economic welfare of its people.

Economic progress: Markets and productivity
Economists agree that the most important determinant of living standards in a country is the average level of productivity, or output per worker. On this score as well, China’s record in recent decades is excellent. Between 1978, when the Open Door policy reforms began, and 1989, output per employed person in China grew vigorously, at an estimated average rate of about 6-1/2 percent per year. However, from 1990 to 2005, productivity grew at an even more impressive rate of 9 percent per year.4 <http://www.federalreserve.gov/newsevents/speech/bernanke20061215a.htm#fn4>

Many factors have contributed to this strong productivity performance, including high rates of capital investment, increasing openness to trade, and a strengthening of the educational system.5 <http://www.federalreserve.gov/newsevents/speech/bernanke20061215a.htm#fn5> However, in my view, the single most important cause of the ongoing expansion in productivity is that China has moved, gradually but steadily, away from central planning and toward a greater reliance on markets. In 1978, almost no prices in China were determined by the market, and most production was controlled or directed by the state. Since then, the government has reduced its direct intervention in the economy and scaled back state-owned enterprises, in the process allowing more scope for market forces. By 1999, according to one estimate, about 95 percent of retail business, together with more than 80 percent of trade in agricultural commodities and producer goods, was conducted at market-determined prices.6 <http://www.federalreserve.gov/newsevents/speech/bernanke20061215a.htm#fn6>

Substantial experience has shown that modern economies, including those in early stages of development, are too complex to be managed effectively on a centralized basis. Prices set in free and competitive markets serve several critical functions, among them aggregating disparate information about supply and demand conditions and the relative scarcities of specific goods and services; directing resources to their most productive uses; and providing incentives to engage in cost reduction, innovation, and entrepreneurial activities.

A free market for labor is particularly critical for sustained economic development. China has made substantial progress in this area over the past few decades, most notably by reducing barriers to the movement of workers among regions, sectors, and firms and by allowing greater flexibility in the determination of employment and wages.7 <http://www.federalreserve.gov/newsevents/speech/bernanke20061215a.htm#fn7> Indeed, the ongoing movement of workers from relatively low-productivity, low-wage jobs in agriculture to higher-productivity, higher-wage jobs in manufacturing and services has been a significant source of Chinese economic growth. The decline in the share of the population in rural areas, from more than 80 percent in 1970 to less than 60 percent in 2005, indicates the scale of the movement of labor out of agriculture in recent decades.

Despite these shifts, differences in labor productivity among sectors remain large. For example, in 2005, estimated output per worker in agriculture and related sectors was about $800, whereas in industries such as manufacturing, utilities, and mining, output per worker was about $5,900, more than seven times as much.8 <http://www.federalreserve.gov/newsevents/speech/bernanke20061215a.htm#fn8> Moreover, a considerable portion of China’s labor force (specifically, in agriculture and in inefficient state-owned enterprises) remains underutilized. Thus, substantial additional gains in productivity for the economy as a whole might be realized through the further reallocation of the labor force to more productive and growing sectors. In particular, small- and medium-sized enterprises are emerging as an engine of job creation in China–as they are in the United States–even as they promote innovation and help to create a more dynamic and diversified economy. The government can support the process of reallocating labor to more productive uses by continuing to reduce barriers to labor mobility, helping workers obtain the education and training they need to be productive in new occupations, and encouraging entrepreneurship and small-business development.

As significant as the reallocation of labor among sectors has been, more of the improvement in productivity in recent years has resulted from increasing efficiencies within the major sectors rather than from the reallocation of resources between sectors. Here again, markets and competition have played a vital role. In particular, the opening of the economy to international trade and investment, which has accelerated since China’s accession to the World Trade Organization in 2001, has done much to harness market forces in the service of the country’s development. Exposure to the competition of the global marketplace has forced Chinese producers–alone or in partnership with foreign firms–to increase their efficiency and improve the quality of their output. Notably, globally-engaged firms (or their affiliates) operating in China have helped to foster productivity growth in the country by introducing new technologies and managerial techniques, as well as by enhancing domestic competition.

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Dan DiMicco, “Renminbi is to blame for US woes”

Martin Feldstein, “The dollar’s fall reflects a new role for reserves”

The dollar’s fall reflects a new role for reserves

By Martin Feldstein

Published: December 9 2009 22:22 | Last updated: December 9 2009 22:22

Andrew Ward and Fiona Harvey, “US rules out climate aid for China”

US rules out climate aid for China, Financial Times

By Andrew Ward and Fiona Harvey in Copenhagen

Published: December 9 2009 19:39 | Last updated: December 9 2009 19:39

China will receive no significant funding from the US to combat climate change, the US delegation leader at the Copenhagen conference vowed on Wednesday.

The statement, which shocked many negotiators, was part of a broader US attack on China and other developing countries for not promising deeper concessions to reduce greenhouse gas emissions.

“I do not envision public funds, certainly not from the US, going to China. We would intend to direct our public funds to the neediest countries,” said Todd Stern, special envoy for climate change. He said China was wealthy enough to fund its own efforts, and firmly rejected the idea that the US and other developed countries owed “reparations” for past emissions.

China has led developing countries in demanding funds from rich nations to help them cut emissions and adapt to the effects of climate change as the price of forging a deal on the climate.

Chinese officials did not respond when asked about financing but demanded more US emissions cuts.

Other developing nations accused the west of pushing an “unfair and inequitable” deal. They insisted that they needed stronger financial support to adopt green technologies.

The sharply worded statements signalled an intensification of the UN negotiations in the Danish capital, which are trying to forge a fresh agreement on global warming.

Lumumba Di-Aping, the Sudanese head of the G77 group of developing countries, accused the US, Europe and their allies of attempting a “Bretton Woods takeover” of negotiations – meaning using the World Bank and the International Monetary Fund. He said they were trying to “destroy the balance of obligations” between developed and developing worlds.

The industrialised world had a “historical responsibility” to take the biggest share of the burden.

China would account for 50 per cent of the growth in carbon dioxide emissions in the next 20 years and produce 60 per cent more greenhouse gases than the US by 2020, Mr Stern said.

The UK has led a small group of countries including Mexico, Norway and Australia to try to find a compromise on funding emissions cuts in poor countries. Their proposal, which originated with Mexico, would see all countries, including big emerging economies such as China and excluding only the world’s poorest nations, pay into a fund that would be disbursed to the most needy.

Leading countries have yet to respond to the proposal, which will be discussed at the talks.

More than 100 heads of state and government, including Barack Obama, US president, are due to attend the final day of the conference on December 18.

Mr Stern said that while a binding treaty was out of reach in Copenhagen, the US wanted negotiations to move “full speed ahead” towards a legal text as soon as possible.

There was no chance of the US joining the Kyoto protocol – the international climate change deal struck in 1997 – but there were parts of the Kyoto process that the US would agree to as part of a deal. Many developing countries are pushing for the Kyoto protocol to be kept alive as part of a new treaty.

“We’re not going to do Kyoto and we’re not going to do Kyoto with another name,” said Mr Stern.

Anders Turesson, chief negotiator for Sweden, holder of the rotating European Union presidency, acknowledged that “some problems are emerging” in the negotiations, which he said were suffering from a “lack of trust”.

EU officials complained that China and other developing countries were making it hard for developed countries to negotiate among themselves by insisting that key talks took place within the Kyoto process, from which the US is excluded.

http://www.ft.com/cms/s/0/e1b1f2e4-e4f7-11de-9a25-00144feab49a.html

“China’s currency regulator says to promote trade balance next year,” Xinhua

China’s currency regulator says to promote trade balance next year, Xinhua

December 09, 2009

China’s exchange rate regulator said Tuesday it would work to promote balance of payment next year by stabilizing exports while expanding imports.

The promotion of balance of payment should be the fundamental of the work in 2010 in order to safeguard the nation’s economic and financial security, said Yi Gang, head of the State Administration of Foreign Exchange (SAFE).

He said SAFE would continue to diversify the investment of foreign reserves, and ensure the safety, liquidity and the value of the mounting assets, which have ballooned to more than 2 trillion U.S. dollars.

The authority would also step up supervision of the cross-border money flow to protect national financial safety, he said.

Yi also noted SAFE would seek chances to push forward reforms in key areas and links of the foreign exchange management but didn’t elaborate.

Source: Xinhua

http://english.peopledaily.com.cn/90001/90778/90862/6835988.html