Posts Tagged ‘International Monetary Fund’

Is China Starting The Trade War Everyone Fears? Beijing Slaps EU, Japan, S. Korea with Steel Duties — Owns South China Sea Despite International Court Ruling

July 24, 2016


© AFP/File | A Chinese worker polishes steel at an offshore oil engineering platform in Qingdao, east China’s Shandong province on June 1, 2016

BEIJING (AFP) – China said Sunday it has started imposing anti-dumping tariffs on certain steel imports from the European Union, Japan and South Korea, as Beijing itself comes under fire for similar trade practices.

Duties on the materials, used in power transformers and electric motors, will range from around 37 to as high as 46.3 percent, the commerce ministry said on its website.

The measures are intended to prevent the sale of the product at below cost, a practice known as dumping, it added.

A Chinese worker labors at a steel mill in a village of Jiangyin city, Jiangsu Province, China. (AP Photo/Eugene Hoshiko, File)

The world’s second largest economy, which makes more than half the world’s steel, finds itself under attack by EU countries for allegedly flooding world markets with steel and aluminium in violation of international trade agreements.

On Friday Premier Li Keqiang told a group of visiting leaders from the World Bank, International Monetary Fund and other organisations that China “will not engage in a trade war or currency war”.

Nevertheless, the EU sees itself under attack. Earlier this month in Beijing, EU Commission head Jean-Claude Juncker pledged to defend the group’s steel industry against China using “all the means at our disposal”.


He also said there was a “clear link” between the steel issue and the EU’s decision on whether to grant China “market economy status” — a prize eagerly sought by Beijing.

China has been pressing the EU to grant it the status — which would make it harder for the bloc to levy anti-dumping tariffs — before the year’s end, citing World Trade Organisation rules.

China’s announcement is the latest in a tit-for-tat fight with other countries over the special metal known as oriented electrical steel.

In May last year the EU imposed similar duties on imports of Chinese oriented electric steel as well as products from other countries, in a move which Bloomberg News said was intended to curb competition for EU producers.

Chinese Premier Li Keqiang and International Monetary Fund Director Christine Lagarde arrived at a roundtable discussion in Beijing on Friday. Mr. Li said his nation is a ‘stability anchor’ for the global economy.
Chinese Premier Li Keqiang and International Monetary Fund Director Christine Lagarde arrived at a roundtable discussion in Beijing on Friday. Mr. Li said his nation is a ‘stability anchor’ for the global economy. PHOTO:MARK SCHIEFELBEIN/EUROPEAN PRESSPHOTO AGENCY

The decision prompted China to launch an investigation into imports from the European manufacturers.

China has imposed such duties before. In 2012 the World Trade Organisation ruled that Chinese duties on high-tech steel from the US violated trade rules. In 2015 the organisation censured Beijing for continuing the practice despite the judgement against it.


G-20’s Focus Shifts From China to Europe

July 24, 2016

Geopolitical concerns allow Beijing to return to role it prefers — showcasing its growing clout

Chinese Premier Li Keqiang and International Monetary Fund Director Christine Lagarde arrived at a roundtable discussion in Beijing on Friday. Mr. Li said his nation is a ‘stability anchor’ for the global economy.
Chinese Premier Li Keqiang and International Monetary Fund Director Christine Lagarde arrived at a roundtable discussion in Beijing on Friday. Mr. Li said his nation is a ‘stability anchor’ for the global economy. PHOTO: MARK SCHIEFELBEIN/EUROPEAN PRESSPHOTO AGENCY


Updated July 24, 2016 12:42 a.m. ET

CHENGDU, China—A few short months ago, China’s economic problems were fueling global panic in markets and drawing unwanted attention and rebuke by the world’s largest economies.

Now, China’s economic challenges have taken a back seat to more pressing geopolitical concerns among finance ministers and central bankers from the Group of 20 largest economies, allowing Beijing to return to the role it prefers: showcasing its growing clout on the world stage.

Britain’s surprise vote to leave the European Union, Turkey’s recent coup attempt, a series of horrific terror attacks, souring global growth prospects and threats of an Italian banking crisis are drawing the scrutiny of the world’s finance chiefs. July’s meeting in Chengdu stands in contrast to the last G-20 finance leaders’ meeting, held in February in Shanghai.

China — Premier Li Keqiang chats with IMF director Christine Lagarde

Then, fears of a China-induced currency war and an economic meltdown in the world’s second-largest economy left the host nation on the defensive. The Chengdu meeting, which ends Sunday, is the last major G-20 event before the financial group’s September summit in Hangzhou.

“The Chinese economy is a ‘stability anchor’ for the global economy,” Premier Li Keqiangsaid Friday ahead of the meeting of the G-20, which acts as the world’s economic executive board. “Prophecy of China’s economy heading for a hard landing is rarely heard now.”

China continues to face questions about its currency policy and its steel exports, amid concern that overcapacity could become a global flashpoint in much the way that currency policy has been over the past decade. Another worry: China’s rising metal exports could worsen the weak inflation problem that central banks are grappling with around the world.

Foreign industries and their governments accuse the country of undercutting their markets unfairly by selling goods at prices below the cost of production. But those worries currently pale against much hotter fires elsewhere in the world.

“Brexit, the Turkish coup, and the U.S. elections have certainly helped redirect attention away from China,” said Standard Life Investments Ltd. economist Alexander Wolf, adding that markets often have a “limited attention span.”

The U.K. vote to leave the EU has cast a pall over the global economy, prompting the International Monetary Fund to downgrade its outlook and warn that growth could slip dangerously lower if U.K. and EU leaders don’t quickly address investor concerns about their future together. The coup against Ankara’s leadership revived political-risk worries in many emerging markets. And Republican presidential candidate Donald Trump’s talk of hiking tariffs is spurring worries the U.S. could pull the world into a global trade war.

China is undergoing an important structural transformation. Any transition has bumps here and there, but the overall direction of the change has been positive

—Italian Finance Minister Pier Carlo Padoan

Meanwhile, G-20 officials say Chinese management of the economy has risen to the challenge. Beijing has recalibrated its communication on exchange-rate policy and monetary and fiscal policies after global markets shuddered under what many said last year were management missteps.

“China is undergoing an important structural transformation,” said Italian Finance Minister Pier Carlo Padoan. Unlike earlier this year and last, no officials at the Chengdu G-20 mentioned China’s economy as a fundamental vulnerability to the global economy, Mr. Padoan said.

“Any transition has bumps here and there, but the overall direction of the change has been positive,” he said.

Beijing has taken active steps to restore confidence, repeatedly pledging since February not to depreciate the currency for competitive advantage. That helped allay fears of an imminent currency war.

The Asian powerhouse has also benefited from the Federal Reserve’s decision to delay an interest-rate increase, allowing authorities here to gradually depreciate the yuan, also known as the renminbi or RMB, without alarming investors.

“China has committed to moving in an orderly way toward a more market-oriented exchange rate,” a senior U.S. Treasury official said. “I’ve observed over the last months…a willingness to actually intervene to support the RMB to keep the RMB from depreciating more.”

China in recent months addressed fears of a financial crisis sparked by a flood of capital leaving its shores by tightening bank supervision, cracking down on unauthorized foreign-exchange traders and making it more difficult for customers to exchange funds. Foreign-exchange reserves have declined by $30 billion to $40 billion a month recently, compared with a $514 billion decline in 2015 and nearly $100 billion in January.

Also fueling the world’s more sanguine view of China, economists say: policy makers’ view that more fiscal spending, greater stability of capital outflows and other moves to curtail volatility are important as global growth slows, issues that play to China’s strength.

Beijing answered global concerns that its economy was slowing faster than it acknowledged by injecting a flood of money into the financial system, frontloading infrastructure spending and easing restrictions on its massive property sector. That saw second-quarter growth match the 6.7% rate in the first quarter, which was the economy’s slowest pace since the global financial crisis.

China on Friday reported 6.7% economic growth for the second quarter, slightly better than expected. Here’s how various sectors performed, by the numbers. Photo: Menglin Huang/The Wall Street Journal

The stimulus keeps China’s economy humming along, allowing Beijing to claim economic stability and put growth on track to hit the government’s annual target of 6.5% to 7%.

But, many economists caution, China may be buying growth now at the expense of output later.

The return to credit-fueled growth pushes up already-high corporate debt levels, fuels the problem of industrial overcapacity, blunts reform efforts and sets back efforts to shift the economy from state-directed growth.

“There is already a big problem of impaired loans which are on banks’ books which have not really been dealt with,” said IMF chief economist Maurice Obstfeld. “There needs to be a re-intensification of efforts in that area.”

Economists warn medium-term risks in China are rising. Standard & Poor’s Financial Services says corporate-credit quality is deteriorating faster than at any time since 2009. Corporate debt levels are estimated at 145% of gross domestic product, up from less than 100% of GDP in 2007.

Those levels, the IMF says, “are high by any measure.”

Write to Mark Magnier at and Ian Talley at



IMF chief Lagarde to stand trial in French arbitration deal

July 22, 2016

July 22, 2016 at 5:21 am Updated July 22, 2016 at 6:00 am

International Monetary Fund (IMF) Managing Director Christine Lagarde speaks during a press conference for the 1+6 Roundtable on promoting economic growth at the Diaoyutai State Guesthouse in Beijing, Friday, July 22, 2016. (IMF) Managing Director Christine Lagarde speaks during a press conference for the 1+6 Roundtable on promoting economic growth at the Diaoyutai State Guesthouse in Beijing, Friday, July 22, 2016. The IMF called Friday to end uncertainty over Britain’s vote to leave the European Union she says is dampening global economic growth. (AP Photo/Mark Schiefelbein)

The Associated Press

PARIS (AP) — France’s top court has ruled that International Monetary Fund chief Christine Lagarde must stand trial in France over a 2008 arbitration ruling that handed 400 million euros to a politically-connected business magnate.

Lagarde, who was French finance minister at the time of the deal in favor of tycoon Bernard Tapie, is accused of negligence in the case. She has denied wrongdoing.
A special court ruled in December that Lagarde should stand trial, but she appealed. France’s Court of Cassation on Friday rejected the appeal.

Lagarde’s lawyers did not immediately respond to the decision. Lagarde, who was in China on Friday at a Group of 20 summit, has said she had acted “in the best interest of the French state and in full compliance with the law.”

The unusually generous 2008 arbitration deal, paid from public funds, prompted years of legal disputes that remain unresolved.

The investigation began in 2011, soon before Lagarde was named to head the IMF in the wake of sexual assault allegations against her predecessor, French economist Dominique Strauss-Kahn. The executive board of the IMF has expressed confidence in Lagarde despite the investigation.

The decision last year to send her to trial had come as a surprise because a prosecutor had earlier argued that the case against her should be dropped.

“Negligence” by a person invested with public authority carries a risk of up to a year in prison and a 15,000 euro ($16,500) fine.

She will be tried at the Court of Justice of the Republic, a special body that tries government ministers for alleged wrongdoing while in office. A date has not been set for the trial.

The case is part of a larger legal saga centering on Tapie, a flamboyant magnate and TV star who had sued French bank Credit Lyonnais for its handling of the sale of his majority stake in sportswear company Adidas in the mid-1990s. With Lagarde’s approval, a private arbitration panel ruled that he should get 400 million euros in compensation, including interest.

The deal was seen by critics as a sign of a too-close relationship between magnates and the French political elite. Tapie was close to then-President Nicolas Sarkozy, Lagarde’s boss.

IMF Calls for ‘Urgent’ G-20 Action to Shore Up Vulnerable Global Economy — But U.S. Treasury Secretary Jacob Lew Says Not Yet, China Also Backs Off

July 22, 2016

Treasury Secretary Jacob Lew says coordinated crisis response isn’t necessary given the current outlook

Christine Lagarde, managing director of the International Monetary Fund, spoke in New York on Monday.
Christine Lagarde, managing director of the International Monetary Fund, spoke in New York on Monday. PHOTO: GETTY IMAGES

Updated July 21, 2016 5:25 p.m. ET

MUSCAT, Oman—Painting a dark outlook for the global economy, the International Monetary Fund on Thursday issued an “urgent” call for the world’s largest economies to roll out more growth-boosting policies.

The IMF said central banks need to maintain their easy-money policies and the Group of 20 largest economies must prepare contingency plans should a stagnating outlook turn into a downturn.

“Policy makers should stand ready to act more aggressively should the impact of financial market turbulence and higher uncertainty threaten to materially weaken the global outlook,” the IMF said in a briefing written for the G-20 ahead of a group meeting of finance officials later this week in China.


“A coordinated use of fiscal space would be beneficial should the global outlook weaken materially,” the IMF said.

U.S. Treasury Secretary Jacob Lew, jetting to the meeting late Thursday, said such a crisis response isn’t necessary given the current outlook.

“I don’t think this is a moment that calls for the kind of coordinated action that occurred during the ‘great recession’ in 2008 and 2009,” Mr. Lew said. “It really is a moment where we each need to do what we can to ensure that where growth is soft it gets stronger, and that prospects for the medium- and long-term are improved.”

Some countries already have begun leveraging budgets to boost growth. Canada has become a poster child for the G-20, and the U.K.’s new government has signaled it may use state coffers to goose a shaky economy. China juiced its economy with fresh credit, but fund economists warn those efforts delay needed economic overhauls and come at a cost given the country’s high debt levels and overcapacity.

Earlier this week, the IMF downgraded its forecast for global growth and warned that the U.K.’s decision to leave the European Union and problems elsewhere around the world risked pushing the economy into a deeper rut.

The U.K. and Europe are likely to face pressure from other G-20 members to resolve their divorce expeditiously and in a way that averts further market turmoil. Mr. Lew last week pressed his counterparts in a whirlwind trip across Europe to negotiate a relationship that preserved as much of the key trade and financial terms the U.K. and EU currently share.

“The best outcome is one that maximizes the integration of the U.K. and Europe,” he said Thursday. Washington is urging leaders to ensure discussions are “characterized by amicable, pragmatic engagement where the focus is on maximizing integration and cooperation,” Mr. Lew said.

The IMF warned that an “unnecessarily long period of political and economic uncertainty” surrounding Brexit and the deterioration of financial conditions in some European countries “could have severe macroeconomic repercussions.” Advanced economies would likely get hit hardest, “including through the intensification of bank distress in vulnerable economies.”

The fund said heightened uncertainty also exposes the world to unforeseen negative shocks translating into “global disruptions.”

Those risks are why the IMF is pushing the G-20 to ramp up efforts on all fronts.

Besides urging the G-20 to deliver on long-promised but half-delivered economic overhauls meant to boost productivity and using budgets to revive growth prospects, the fund said anemic growth means central banks should keep their feet on the cheap-cash accelerator.

“Central banks should continue to use all available instruments to raise inflation, including negative interest rates,” the fund said.

And even though the U.S. economy appears on the verge of taking off, the fund says the U.S. Federal Reserve should push back rate increases. “There is a clear case for the Fed to proceed along a very gradual upward path for the fed-funds rate, conscious of global disinflationary trends,” the IMF said.

Write to Ian Talley at

Corrections & Amplifications:
The IMF warned that an “unnecessarily long period of political and economic uncertainty” surrounding Brexit and the deterioration of financial conditions in some European countries “could have severe macroeconomic repercussions.” An earlier version of this article incorrectly stated the IMF warned about a “necessarily long period of political and economic uncertainty.” (July 21)


World should not rely on China to lead global economic recovery, says Premier Li Keqiang — China is still a developing country — Defends China’s steel practices

July 22, 2016

The task should be done in concert with many countries, Li tells leaders of finance and trade institutions

By Jane Cai and Zhuang Pinghui
South China Morning Post

Friday, July 22, 2016, 3:16pm

The world should not pin its hopes on China being the sole engine of growth to bolster the global economy, Premier Li Keqiang told heads of major international finance and trade organisations in Beijing on Friday.

China is still a developing country. We cannot shoulder the major responsibilities of the world economy

At an unprecedented round table talk with six global trade and finance leaders, Li said world economic recovery should not be driven by mainly China, but in concert with many countries.

“China is still a developing country. We cannot shoulder the major responsibilities of the world economy,” Li said.

The IMF’s upward revision of China’s gross domestic product growth had put “pressure” Beijing’s efforts to stabilise the economy, he said.

 World Bank President Jim Yong-kim

The Washington-based International Monetary Fund revised up its forecast of China’s 2016 GDP growth by 0.1 per cent to 6.6 per cent on Tuesday, citing the country’s “recent policy support”, including interest rate cuts, fiscal expansion and rising investment.

At the same, the fund trimmed its global growth forecasts again due to uncertainty following Britain’s decision on June 23 to leave the European Union, to 3.1 per cent for 2016 and 3.4 per cent for 2017 – a 0.1 percentage-point reduction for each year.

The “1+6” round-table meeting was held ahead of the G20 central bank governors’ meeting in Chengdu tomorrow. The meeting was the first of its kind and underline Beijing’s ambitions to expand its influence in multilateral institutions.

Those attending the event were World Bank president Jim Yong-kim, IMF managing director Christine Lagarde, World Trade Organisation director-general Roberto Azevedo, International Labour Organisation director-general Guy Ryder, Angel Gurria, secretary-general of the Organisation for Economic Cooperation and Development, and the Financial Stability Board chairman Mark Carney.

The leaders agreed that it would take time for the world economy to recover amid increasing uncertainty, Xinhua reported.

 World Trade Organisation director-general Roberto Azevedo

To cope with the various risks, they would mobilise “forceful, comprehensive and coordinated” currency and fiscal policies and structural reforms, and foster new economic engines including innovation, a new industrial revolution and the digital economy.

On Thursday, the IMF issued an “urgent” call for the world’s largest economies to roll out more growth-boosting policies. Central banks should maintain monetary easingwhile the Group of 20 largest economies should prepare contingency plans should the stagnating outlook become a downturn, the IMF said in a briefing for the G20 finance officials meeting in Chengdu.

“China’s transition could further raise volatility around the baseline path of the global economy,” the IMF noted in the report. “Against this background, insufficient rebuilding of policy buffers and tackling of corporate and financial weaknesses in emerging economies would leave them highly vulnerable to shocks.”

China had cut steel capacity by nearly 5 million tonnes, and coal capacity by 100 million tonnes this year amid domestic economic restructuring, Li said.

However, the capacity reduction was a based on slowing domestic demand, and not because of international pressure, Li said. Ninety per cent of China’s steel and iron output was used in domestic industrialisation and urbanisation, he said.

Li said China was willing to tackle trade frictions over steel and coal through bilateral negotiations and vowed to push ahead with marketisation.



The Business Case for Brexit — Britain will thrive outside the EU

June 22, 2016

Britain will thrive outside the EU, free from Brussels’ regulation and empowered to cut its own trade deals.


June 21, 2016 6:47 p.m. ET

In voting Thursday on whether to leave the European Union, the British people face perhaps the most momentous decision since Henry VIII broke from the Roman Catholic Church in the 16th century so he could marry as he pleased. Though lust is not the motivation this time, there are other similarities. The Catholic Church five centuries ago was run by an unelected supranational elite, answerable to its own courts, living in luxury at the expense of ordinary people, and with powers to impose its one-size-fits-all rules despite the wishes of national governments. We were right to leave.

The European Union is quite unlike any of today’s international organizations and has never been emulated elsewhere. Britain has no desire to withdraw from NATO, the United Nations, the International Monetary Fund, the Council of Europe or, for that matter, the Olympics. These bodies are agreements between governments. The EU is a supranational government run in a fundamentally undemocratic, indeed antidemocratic, way. It has four presidents, none of them elected. Power to initiate legislation rests entirely with an unelected commission. Its court can overrule our Parliament.

This was deliberate. In the mid-20th century, French and German politicians, with bad memories of brief and chaotic democratic interludes between autocracies, designed a way to ensure that power would shift gradually to a technocratic elite. Britain’s history of democracy is happier. Long ago we had a “glorious revolution” to establish the principle that laws cannot be passed or taxes raised except by the consent of the people as represented in Parliament.

A centrally planned, regional customs union—though not one run with a colonial mind-set, chaotic accounts, a bureaucratic surplus and a democratic deficit—might have made some sense in the 1950s. That was before container shipping, budget airlines, the internet and the collapse of tariffs under the World Trade Organization made it as easy to do business with Australia and China as with France and Germany. But today, Britain—the most outward-facing of the major European economies—will thrive if it leaves. Europe’s GDP has only just staggered back up to where it was before the 2008 financial crisis.

This is because the EU’s obsession with harmonization (of currency and rules) frustrates innovation. Using as an excuse the precautionary principle or the need to get 28 countries to agree, the EU gets in the way of the new. “Technological progress is often hindered or almost impossible in Europe,” says Markus Beyrer, director general of BusinessEurope, a confederation of industry groups. Consequently, we’ve been left behind in digital technology: There are no digital giants in Europe to rival Amazon, Google, Apple and Facebook.

The EU is also against free trade. It says it isn’t, but its actions speak louder. The EU has an external tariff that deters African farmers from exporting their produce to us, helping to perpetuate poverty there, while raising prices in Europe. The EU confiscated Britain’s right to sign trade agreements—though we were the nation that pioneered the idea of unilateral free trade in the 1840s. All the trade agreements that the EU has signed are smaller, as measured by the trading partners’ GDP, than the agreements made by Chile, Singapore or Switzerland. Those the EU has signed usually exclude services, Britain’s strongest sector, and are more about regulations to suit big companies than the dismantling of barriers.


Even worse than in Westminster or Washington, the corridors of Brussels are crawling with lobbyists for big companies, big banks and big environmental pressure groups seeking rules that work as barriers to entry for smaller firms and newer ideas. The Volkswagen emissions scandal came from a big company bullying the EU into rules that suited it and poisoned us. The anti-vaping rules in the latest Tobacco Products Directive, which will slow the decline of smoking, came from lobbying by big pharmaceutical companies trying to defend the market share of their nicotine patches and gums. The de facto ban on genetically modified organisms is at the behest of big green groups, many of which receive huge grants from Brussels.

In a fine speech in 2013, David Cameron, the British prime minister, called for fundamental reform, but this year he settled for far more modest demands in a travesty of a “renegotiation.” He has since campaigned for a vote to Remain, making increasingly implausible claims about the wars, depressions and plagues of Egypt that will follow if the world’s fifth-biggest economy tries to survive in a world where Norway, Switzerland, Japan and Singapore seem to manage fine. His latest claim is that the leaders of Islamic State would welcome Brexit, for which he has adduced no evidence. George Osborne, his chancellor of the exchequer, has bizarrely promised a punitive budget of tax rises and spending cuts to deepen any recession after our departure.

The most striking feature of the campaign is that nobody on the Remain side is prepared to make a positive case for the European Union and its further integration. By contrast, the Leave campaigners, led by Boris Johnson, the former mayor of London, and Michael Gove, the justice secretary, talk of Britain’s escaping a regional backwater and getting into the global mainstream, while remaining an ally and friend of Europe. I shall be voting Leave.

Mr. Ridley is a columnist for the Times (U.K.) and a member of the House of Lords.

IMF urges China to tackle ‘high’ corporate debt immediately

June 11, 2016

China has accumulated debt faster than any Group of 20 nation over the past decade, climbing to 247 per cent of gross domestic product, analyst says

By Scot Lanman
Bloomberg News

The International Monetary Fund’s No. 2 official urged China to take immediate steps to tackle rising corporate debt or risk “dangerous detours” during the country’s transition to a consumption-oriented economy.

“Corporate debt remains a serious — and growing — problem that must be addressed immediately and with a commitment to serious reforms,” David Lipton, the IMF’s first deputy managing director, said in the text of a speech to an economics conference on Saturday in Shenzhen, China.

David Lipton

David Lipton
Photographer: Kiyoshi Ota/Bloomberg

The comments build on other recent warnings from the global crisis lender about China’s debt, including an estimate of a possible $1.3 trillion in loans extended to borrowers that don’t have sufficient income to cover interest payments. China has accumulated debt faster than any Group of 20 nation over the past decade, climbing to 247 percent of gross domestic product, according to Tom Orlik, an economist for Bloomberg Intelligence.

Premier Li Keqiang said in March that the country may use debt-to-equity swaps to cut the leverage ratios of Chinese companies. An IMF staff report in April said China’s plan to rid banks of bad loans could backfire, allowing debt-laden “zombie” companies to stay afloat and creating conflicts of interest for bankers.

China has made “limited progress” in addressing corporate debt and restructuring, Lipton said. He gave an estimate of total debt at 225 percent of GDP and corporate debt at 145 percent of GDP, “which is very high by any measure.”

Rapid Increase

“With the rapid increase in credit growth in 2015 and early 2016, and the continued high rates of investment, the problem is growing,” said Lipton, a former U.S. Treasury and White House official. “This is a key fault line in the Chinese economy. It is surely within China’s powers to address this problem. And it is important that China tackles it soon.”

In addition to addressing the problem quickly, China must fix balance sheets at companies as well as banks, and improve governance to prevent a new debt bubble, he said.

 IMF headquarters. AP photo
Lipton and other IMF staff members are meeting with officials in China as part of an annual assessment of the nation’s economy.

Macquarie Capital Ltd. said in a June 8 report that China’s debt is a concern but unlikely to result in a crisis. The borrowing is backed largely by bank deposits instead of other, more volatile funding, and the central bank could intervene quickly if needed, according to the report by Hong Kong-based analysts Larry Hu and Jerry Peng.




Putin Visits Russian Orthodox Monastic Community in Greece — Is Putin Working to “Break Away” Greece From EU, US

May 28, 2016


The Associated Press, May 28, 2016

ARYES, Greece — Russian President Vladimir Putin visited a Russian Orthodox monastery Saturday as he wrapped up a two-day visit to Greece, which is looking for more Russian investment and tourism as it copes with a prolonged financial crisis and a massive wave of migrants.

Putin, who has sought to capitalize on the strained relations between Greece and many other European Union members, said Russia seeks to cooperate with Greece in the energy sector. Several Russian ministers also expressed interest in the privatization of Greek railways and in the northern port of Thessaloniki, but no major deals were announced. Only lower lever “cooperation agreements” were reached during the visit.

Greek Prime Minister Alexis Tsipras had said the Russian president’s visit was a chance to “upgrade” relations.


Russian President Vladimir Putin visits the Russian monastery St. Panteleimon at Karyes, on Mount Athos, Greece, Saturday, May 28, 2016. Russian President Vl...

Russian President Vladimir Putin visits the Russian monastery St. Panteleimon at Karyes, on Mount Athos, Greece, Saturday, May 28, 2016. Russian President Vladimir Putin visited an Orthodox Christian monastery on the northern Greek peninsula of Mount Athos on Saturday, a sacred place that is off-limits to women. (Alexei Druzhinin/Sputnik, Kremlin Pool Photo via AP)


On Saturday, Putin visited a Russian Orthodox monastery Saturday on the northern Greek peninsula of Mount Athos. The Russian leader praised the spiritual uplift and moral guidance provided by the austere monastic community in a sacred place. Putin said the Orthodox tradition shared by Russia is particularly important at this moment in history.

“Today, as we resurrect the values of patriotism, historical memory and traditional culture, we hope for … a strengthening of relations” with Mount Athos, he said.

During his trip, Putin expressed gratitude for Greece’s friendship — and used his visit to blast U.S. policy toward Moscow. He described a newly expanded U.S. missile defense system in Europe as a threat to Russia’s national security and said his country would retaliate.

At the height of Greece’s financial crisis last year, Athens had sought aid from Russia as a counterbalance to its difficult negotiations with its EU and International Monetary Fund creditors. The limited concrete results of Putin’s long-anticipated visit left some disappointed.

Panagiotis Lafazanis, a former energy minister who has left the ruling Syriza party, said the Greek government had de-emphasized the Putin visit in order to curry favor with U.S. and NATO officials.

Greek opposition figures were pleased with Putin’s decision to meet opposition leader Kyriakos Mitsotakis. Greek tourist officials said Putin’s visit would help encourage more Russians to visit Greece. Strained ties with Turkey and lax airport security in Egypt have reduced the number of Russian tourists going to those sun-drenched countries.

During his visit to Mount Athos, where women are not allowed to visit any of the 20 monasteries there, Putin repeatedly praised the spirit of the monastic community.

“Here in Mount Athos, there is great and important work done on moral values,” Putin said after a Mass in his honor, where he was seated in the bishop’s throne.

Russian St Panteleimon Monastery, in Mount Athos, Greece (28 May 2016)The St Panteleimon Monastery has benefited from Russian investment. AFP

Putin flew from Athens to Thessaloniki on Saturday morning, traveled by road to a port near Mount Athos and then took a boat — the only way to reach the isolated community. Instead of the usual small ferry, the Russian president used a 33-meter (110-foot) yacht provided by the Greek navy.

Patriarch Kirill of Moscow traveled to the monastery with Putin to help celebrate 1,000 years of Russian presence at Mount Athos.

At Karyes, the administrative center of Mount Athos, Putin was greeted by the 20 abbots of the monasteries and 20 representatives of the monks on the peninsula, as well as a representative of the Greek Orthodox Patriarch of Constantinople, under whose jurisdiction Mount Athos falls.

Security in Mount Athos was extremely tight. Besides Putin’s large entourage, there was a heavy Greek police and coast guard presence, with divers guarding and inspecting the landing site and snipers deployed throughout Putin’s route.

Trips by other male pilgrims to the Russian St. Panteleimon monastery were canceled two weeks ago.

Putin headed to Thessaloniki on Saturday night for a flight back to Moscow.


Nellas reported from Athens, Greece.

Cyprus far right enters parliament as voters protest

May 23, 2016


© AFP / by Charlie Charalambous | A woman casts her ballot for the parliamentary elections at a polling station in the capital Nicosia on May 22, 2016

NICOSIA (AFP) – Cypriots disaffected by three years of economic downturn have protested at the polls, staying away in droves and electing two far-right lawmakers in an echo of the populist wave sweeping Europe.

Final results released on Monday showed that 3.7 percent of voters backed the National Popular Front (ELAM), a party which defends the Athens-inspired coup of 1974 that triggered a Turkish invasion that has left the island divided to this day.

Turnout in Sunday’s election was a record low of 67 percent on an island where voting is in theory compulsory.

The rightwing Democratic Rally (DISY) of President Nicos Anastasiades, who negotiated a 2013 bailout for the island with international creditors, took 30 percent of the vote and 18 seats in the 56-seat parliament, down two on the last election in 2011.

The main opposition communist party AKEL fared worse, taking just 25 percent of the vote and 16 seats, a loss of three, as a protest vote hit both the major parties.

An unprecedented eight parties won seats in the new parliament, making it potentially the most fractious ever and posing a major challenge for the president in pushing through unpopular reforms promised to lenders.

The centre-right Democratic Party (DIKO), which gave key backing to Anastasiades on the reforms demanded by the European Central Bank and the International Monetary Fund, won an unchanged nine seats.

The right-wing Solidarity Movement (KA) took three.

The Movement for Social Democracy (EDEK), the leftwing populist Citizens Alliance (SYPOL) and the Ecological and Environmental Alliance (KOP) all also won seats.

Half of the new members of the House of Representatives are first-time lawmakers, and the number of women MPs has jumped from four to 11.

The president had issued a polling day plea for voters to turn out, insisting that the economic austerity of the past three years had been worth it to rescue the island’s economy.

“I believe that the decision of much of the electorate abstaining from the elections should trouble everyone,” he said.

His party leader Averof Neophytou was more upbeat.

“We are the only governing party in Europe that introduced the toughest bailout programme and we are still the first party,” he said, while also acknowledging that politicians needed “to win back the trust of the voters”.

– ‘Didn’t show up’ –

Communist opposition leader Andros Kyprianou said: “AKEL voters have not gone to other parties, they just didn’t show up.”

A spate of corruption scandals in public office and parliament’s handling of the eurozone bailout agreement have sparked widespread anger and disenchantment with the political scene.

ELAM’s winning of two seats in parliament was a first for the island.

It mirrored the result from a presidential election in Austria on Sunday that saw populist Freedom Party (FPOe) leader Norbert Hofer neck-and-neck to become the European Union’s first president from the anti-immigrant far-right.

ELAM defends the 1974 coup that sought to unite the island with Greece and that triggered Turkey’s invasion of its northern third, ushering in the island’s division.

It opposes the European Union and has organised demonstrations against both Turkish Cypriots and African and Middle Eastern migrants on the island.

Progress on UN-backed talks to reunify Cyprus was not an election issue because both the main Greek Cypriot parties support reunification under a federal roof.

But the weakened position in parliament of AKEL, a vocal supporter of the talks, could spell trouble for the process.

The negotiations are at a crucial stage, and Greek Cypriot leader Anastasiades and his Turkish Cypriot counterpart Mustafa Akinci must make painful compromises to reach a deal.

Cyprus has emerged from three years of economic slowdown after the government imposed harsh austerity measures in exchange for a European Union and International Monetary Fund bailout.

In return for 10 billion euros ($13 billion at the time), Cyprus agreed in March 2013 to wind down its second-largest bank, Laiki, and impose losses on depositors in undercapitalised top lender Bank of Cyprus.

In March this year, the euro group of finance ministers praised Nicosia for its successful exit from the bailout programme.

by Charlie Charalambous

G-7 warns on weak global growth as Japan bristles over the yen

May 21, 2016

SENDAI, JAPAN (BLOOMBERG) – Finance chiefs from the world’s biggest developed economies meeting in Japan underscored concerns that global growth is flagging and reaffirmed a pledge not to deliberately weaken their currencies, even as Japan again warned on the yen’s surge.

At the end of two days of talks, Group of Seven central bank governors and finance ministers highlighted risks from terrorism, refugee flows, political conflicts and the potential for a British exit from the European Union.

While officials agreed not to target currencies to stoke growth and warned of the negative consequences from disorderly moves in exchanges rates, host Japan repeated a stance that recent trading in the yen has been one sided and speculative.

Comments on the yen’s moves by Finance Minister Taro Aso hint at a growing frustration inside Japan’s government about the impact on exporters after the currency surged 9 per cent this year, spurring speculation that the government may intervene.

Mr Aso raised the issued in a meeting with United States Treasury Secretary Jacob Lew on Saturday.

Jacob “Jack” Lew, US Treasury secretary, speaks at a news conference following the G-7 finance ministers May 21, 2016. Bloomberg photo

“I told him that one-sided, abrupt, and speculative moves were seen in the FX market recently, and abrupt moves in the currency market are undesirable and the stability of currencies is important,” Mr Aso said to reporters.


Tensions over the yen were evident over the course of the meetings, which were held at a hot springs resort in the country’s north. As Japan warned about the impact of disorderly trading, Lew repeated his view that the yen’s movement hasn’t been overly volatile.

“It’s a pretty high bar to have disorderly conditions,” Mr Lew told reporters.

To be sure, Japan remains a long way from its first intervention since 2011, when the G-7 sanctioned selling the yen to aid the country’s recovery after a devastating earthquake, tsunami and nuclear meltdown. A strengthening dollar amid rising bets that the US Federal Reserve may lift interest rates over coming moths is helping ease pressure on Japan’s exporters.

Mr Aso also made it clear that the difference of opinion with the US is manageable. “They have an election and we have an election and we both have TPP talks,” Mr Aso said. “There are various things on our plates and we of course have to say various things as that’s our jobs.”


Still, by choosing to be so vocal on the yen, Mr Aso is both attempting to jawbone the currency lower and put a marker down in the event the currency again starts to appreciate rapidly.

“There’s no sign that Japan and the U.S. will move closer together,” said Mr Hiroaki Muto, chief economist at Tokai Tokyo Research Centre.

Beyond currencies, the G-7 didn’t agree on details of how best to revive the world’s economy. The group said central banks, governments and structural reforms should be involved but stopped short of any coordinated push or an agreed to-do list.

“There was agreement that at the end of the day it’s the mix between monetary policy, fiscal policy and structural reforms that matters,” said Bundesbank President Jens Weidmann.


The position emerged that country-specific conditions need to be taken into account. This may reflect the divergent views among the G-7 on whether to unleash extra government spending, as advocated by Japan and Canada, but opposed by Germany. A summary of the meeting released by Japan said it’s important to implement fiscal strategy flexibly while putting debt as a share of gross domestic product on a sustainable path.

“It is both disappointing and unexpected that there is a lack of ideas and will to secure new sources of global growth,” said Mr Douglas Paal, a vice-president at the Carnegie Endowment for International Peace.

As planned, no communique was issued after the event. Japan said its summary didn’t purport to be an official consensus.

The G-7 agreed that if British voters decide in a June referendum to leave the European Union, it would be the wrong decision and hurt the country’s economic growth. Officials also signaled confidence that the European Union will reach a deal with Greece at the meeting of his counterparts next week.


Other discussions included tackling cross border tax evasion and an agreement on new ways to combat terrorist financing.

The talks took place against the background of slowing global growth and continuing concerns about the health of Japan’s economy, the world’s third largest. It dodged recession in the first quarter on the back of government spending.

Falling prices and low growth across much of the developed world has stoked concerns that governments aren’t doing enough to stimulate demand as the influence of monetary policy wanes.

The meeting brought together finance ministers and central bank governors from Britain, Canada, Italy, France, Germany, Japan and the US, plus leaders from the International Monetary Fund, World Bank and European Union.



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