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Paul Krugman suggests that the US should impose a 25 per cent surcharge on imports from China to protect American exports from an undervalued renminbi. The effect of the alleged undervaluation of the Chinese exports is to provide US consumers with a bonus – to subsidize their consumption. Maintaining a stable RMB also preserves for China [...] India and China need desparately to secure a decent climate change agreement in Copenhagen. Yet they have – up to now - stated firmly that they will not agree to restrictions on their emissions. They are poor and all that. Now this Guardian report says that they will take the lead! It seems they are trying to pressure Obama to [...] An excellent summing up – written and via podcast – is provided by Professor Ross Garnaut at the East Asia Forum. The full speech podcast is here. Well worth a read and [...] Hille and Harvey in the Financial Times quote a recent Chinese climate economics report as claiming reducing China’s total GGEs will cost $438bn a year within 20 years – about 7.5% of China’s forecast GDP. Developed economies will have to bear much of that. It is difficult to know what exactly this figure means – the report is unavailable. The cost figure is well above the mitigation cost estimates for developed countries prepared by the Stern Review. It might just be a bit of bellicose Chinese politics prior to Copenhagen to attempt to extract as much as possible and to give as little as possible. Continue reading China’s high price for emissions reductions There are now absurd claims by China that bribery by Rio Tinto has cost it $123b over 6 years – more than the total value of iron ore exports by Rio to China. The absurdity of these claims is compounded by the anger of the Chinese given that the current contract price offered to China by Rio is 20% below the current price of iron ore in spot markets. Cool down fellas you have got this seriously wrong. Continue reading China oversteps it on Rio & Kadeer It is important that the reasons for the arrests of three Chinese nationals and one Australian of Chinese ethnicity who work for Rio Tinto be made clear as this is damaging the China-Australia economic relationship. It is natural for foreign companies to seek ethnic Chinese to help them in China since they know the lay of the land and best appreciate the local culture. That they work for foreign firms in settings where bargains between these firms and Chinese firms are occurring inevitably will inevitably create tensions. Continue reading Arrests of Rio executives in China The current fighting in northwest China constitutes the biggest civil disturbances in China since Tiananmen in 1989 with at least 156 dead in the current violence – the most dead being Han Chinese. The fighting seems to be developing along ethnic lines with Muslim Uighur fighting the Han Chinese who provide a majority of the population. Urumqi [...] I was criticised for asserting that the key objective of Chinalco in targeting Rio was to offset its monopoly power and that of BHP-Billiton. Reports this morning suggest that I was correct – China is threatening to take anti-trust moves against BHP and Rio presumably in China. Hard to see how since, in the main, BHP-Rio sell resources [...] I had thought my comments for Australia’s national interests being best served by rejecting the Rio-Chinalco deal were self-evident. My general argument was that Australia should not give up its monopoly power in the resource sector by transferring resource assets to Chinese firms with monopsony power over the purchase of Australian raw materials. These arguments were set out more fully here. But obviously not – others have very different views. The ANU’s Peter Drysdale provides an alternative viewpoint on the East Asia forum. According to Peter the main issue is politics not economics – the Chinese will retaliate for the rejection of the Chinalco bid and we have damaged Chinese ‘generosity’ towards Australia’s many ‘failings’ as a nation, a fact that will impede future relations to the detriment of both countries. Continue reading More on Rio, BHP-Billiton & Chinalco’s rejected love An intelligent, straightforward statement of climate change problems facing Australia and China was provided by Professor Ross Garnaut at the East Asia Form blog. It is very much a summary of the main argument of the Garnaut Review – nothing wrong with that - the core proposal of (i) a ‘drift from below’ for developing countries and (ii) a ‘drift from above’ for developed countries towards equal per capita emissions by 2050 sounds like a sensible, practical global policy. Continue reading Chinese climate change policies |
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