Title: PRC Economy updates
Description: Chinese econ. powerhouse growing
Description: Chinese econ. powerhouse growing
possible - July 16, 2005 11:10 PM (GMT)
CNOOC buy of Unocal would pose risk to US Asian interests - armed services panel
WASHINGTON (AFX) - If China National Offshore Oil Corp (CNOOC) were successful in its bid for Unocal Corp, it would threaten US interests in southeast and central Asia, said Duncan Hunter, chairman of the House Armed Services Committee.
In a hearing by the committee, Hunter said: 'Although it is a relatively small player in the United States energy market, Unocal is a significant provider of natural gas in Southeast Asia.'
He added that the Unocal's pipelines also run though several Central Asian republics friendly with the US.
'China's purchase of Unocal would dramatically increase its leverage over these countries, and therefore its leverage over US interests in those regions,' Hunter warned.
Witnesses mostly agreed.
'One has to ask, why is the Chinese government willing to spend so much money to buy this company?' said Richard D'Amato, chairman of the US-China Economic and Security Review Commission.
'If it affects the national security of the United States, intervention by the US government must be seriously considered,' he said.
James Woolsey, former US CIA director, was even blunter: 'Oil can be used as a tool of war,' he told the panel, and dismissed the view held by some that the regime will become less hard-line as its economic interests become more intertwined with those of the rest of the world.
The lone dissenting voice, Jerry Taylor of the free-market CATO Institute think tank, said that the risk posed by China is overplayed, and cautioned against alarm.
'The more China invests here, the less likely that we will be running into conflict,' said Taylor, director of natural resource studies at Cato.
'America has enough enemies abroad without conjuring new ones out of thin air.'
http://www.forbes.com
WASHINGTON (AFX) - If China National Offshore Oil Corp (CNOOC) were successful in its bid for Unocal Corp, it would threaten US interests in southeast and central Asia, said Duncan Hunter, chairman of the House Armed Services Committee.
In a hearing by the committee, Hunter said: 'Although it is a relatively small player in the United States energy market, Unocal is a significant provider of natural gas in Southeast Asia.'
He added that the Unocal's pipelines also run though several Central Asian republics friendly with the US.
'China's purchase of Unocal would dramatically increase its leverage over these countries, and therefore its leverage over US interests in those regions,' Hunter warned.
Witnesses mostly agreed.
'One has to ask, why is the Chinese government willing to spend so much money to buy this company?' said Richard D'Amato, chairman of the US-China Economic and Security Review Commission.
'If it affects the national security of the United States, intervention by the US government must be seriously considered,' he said.
James Woolsey, former US CIA director, was even blunter: 'Oil can be used as a tool of war,' he told the panel, and dismissed the view held by some that the regime will become less hard-line as its economic interests become more intertwined with those of the rest of the world.
The lone dissenting voice, Jerry Taylor of the free-market CATO Institute think tank, said that the risk posed by China is overplayed, and cautioned against alarm.
'The more China invests here, the less likely that we will be running into conflict,' said Taylor, director of natural resource studies at Cato.
'America has enough enemies abroad without conjuring new ones out of thin air.'
http://www.forbes.com
possible - July 16, 2005 11:19 PM (GMT)
CNOOC – Unocal: A Strategic Perspective for Southeast Asia
China's acquisition of Unocal might be more than a bid for more oil to feed Chinese economic growth. The purchase might be a strategic ploy by the Chinese government to become the leading supplier of natural gas to several key economies in Southeast Asia, and to use the natural resources in the area as leverage in its quest for expansion and power projection.
The view of many in Congress of the CNOOC bid for Unocal is that China is planning on taking over the United States energy industry and that the buyout of Unocal would be a threat to the national security of the United States. But the possibilities are much more complex and complicated than that.
The Wall Street Journal notes the following: "such a deal probably would do little to resolve China's most pressing energy needs -- and even less to disrupt the flow of oil to other markets. Much of Unocal's Asian production is tied up in contracts with Thailand and other nations. That means it is highly unlikely those supplies could be diverted to China for years, if ever. In other cases, China would wind up buying assets whose production it would have bought anyway, even if those assets were owned by rival Unocal bidder Chevron Corp., analysts and industry executives in the region say."
More interesting is the notion that China is not making a very smart play based on its needs for oil, since Unocal "isn't a major player when it comes to crude oil, the one commodity China is especially keen to buy. Instead, Unocal's Asian assets are weighted heavily toward natural gas, an important and hard-to-transport energy source that is relatively plentiful in the region."
According to the Journal "Cnooc says it has no intention of disobeying market demand, and analysts say the company may be just as likely as Chevron or Unocal to sell oil and gas to countries other than China. The bid for Unocal has ["little to do with security of supply for China,"] says Derek Butter, an analyst at energy consultancy Wood Mackenzie in Edinburgh, Scotland. Instead, he says, it has more to do with China's desire to create a large corporation that ["can compete with the other international companies, and has the skills in the future to negotiate its way into large projects."]"
The bottom line, according to this alternative point of view is that China's bid for Unocal is a bid toward becoming a major oil producer with a global presence, rather than to add to China's reserves for its own personal use.
What makes no sense is why China would want to become a competitor to Exxon instead of improving its own domestic situation through the addition of geographically sensible reserves.
The only conclusions are that China doesn't really know what it's getting into, that it's getting bad advice from Goldman Sachs and the rest of its American advisors on the Unocal deal, or that there is something deeper involved in its quest for Unocal. In our opinion, the latter is the more likely case.
Here are three interesting facts put forth by the Journal:
1. "In the case of Thailand, all of Unocal's gas production is committed to a single Thai buyer. The gas is committed through long-term sales agreements that have expiration dates ranging from 2010 to 2029. Even if those contracts weren't in place, it would be difficult and costly for China to send the gas elsewhere because the pipelines or other infrastructure to do so don't exist. Building such infrastructure likely would require the consent of the Thai government, which relies on Unocal's gas to fuel its booming power sector."
2. "The idea that China might build a gas terminal to ship liquefied Thai gas to China ["is absolutely preposterous,"] says John Vautrain, a vice president and director in Singapore of Purvin & Gertz, a Houston oil and gas consultancy. ["The Thais wouldn't let you."]
3. "Unocal's Myanmar output also is sold to Thailand. Its Bangladesh gas generally is reserved for Bangladeshi consumption. The picture is somewhat different in Indonesia, where Unocal holds interests in a number of promising fields whose output probably would be earmarked by Cnooc for the China market, according to people familiar with the company's strategy."
In our opinion, the Journal, while clearly listing some interesting observations is missing an important point.
China's purchase of Unocal, even if it did not lead to the diversion of natural gas toward its own borders, would give it control of the energy supply used by Thailand, Myanmar, Bangladesh, and Indonesia. It would also put some pressure on Japan and South Korea.
In other words, in one fell swoop, China would become the energy czar for a significant portion of South East Asia, and would gain valuable leverage with which to further its other goals, the expansion of its influence, and the ability to project its power. A scenario in which China could use its leverage to gain concessions from the four countries mentioned, including the placement of military bases, fueling stations for submarines and merchant ships, and the placement of surveillance equipment and communication relay stations in all of those countries is an easy next step to visualize.
All the while, China could also make money by continuing to sell energy to those countries by honoring existing contracts, while negotiating more lucrative ones in the future.
Indeed, the Unocal purchase can easily be looked upon as a threat to national security, especially if you live in Thailand, Myanmar, Bangladesh, Indonesia, Japan, or anywhere else in Asia.
http://www.rigzone.com
China's acquisition of Unocal might be more than a bid for more oil to feed Chinese economic growth. The purchase might be a strategic ploy by the Chinese government to become the leading supplier of natural gas to several key economies in Southeast Asia, and to use the natural resources in the area as leverage in its quest for expansion and power projection.
The view of many in Congress of the CNOOC bid for Unocal is that China is planning on taking over the United States energy industry and that the buyout of Unocal would be a threat to the national security of the United States. But the possibilities are much more complex and complicated than that.
The Wall Street Journal notes the following: "such a deal probably would do little to resolve China's most pressing energy needs -- and even less to disrupt the flow of oil to other markets. Much of Unocal's Asian production is tied up in contracts with Thailand and other nations. That means it is highly unlikely those supplies could be diverted to China for years, if ever. In other cases, China would wind up buying assets whose production it would have bought anyway, even if those assets were owned by rival Unocal bidder Chevron Corp., analysts and industry executives in the region say."
More interesting is the notion that China is not making a very smart play based on its needs for oil, since Unocal "isn't a major player when it comes to crude oil, the one commodity China is especially keen to buy. Instead, Unocal's Asian assets are weighted heavily toward natural gas, an important and hard-to-transport energy source that is relatively plentiful in the region."
According to the Journal "Cnooc says it has no intention of disobeying market demand, and analysts say the company may be just as likely as Chevron or Unocal to sell oil and gas to countries other than China. The bid for Unocal has ["little to do with security of supply for China,"] says Derek Butter, an analyst at energy consultancy Wood Mackenzie in Edinburgh, Scotland. Instead, he says, it has more to do with China's desire to create a large corporation that ["can compete with the other international companies, and has the skills in the future to negotiate its way into large projects."]"
The bottom line, according to this alternative point of view is that China's bid for Unocal is a bid toward becoming a major oil producer with a global presence, rather than to add to China's reserves for its own personal use.
What makes no sense is why China would want to become a competitor to Exxon instead of improving its own domestic situation through the addition of geographically sensible reserves.
The only conclusions are that China doesn't really know what it's getting into, that it's getting bad advice from Goldman Sachs and the rest of its American advisors on the Unocal deal, or that there is something deeper involved in its quest for Unocal. In our opinion, the latter is the more likely case.
Here are three interesting facts put forth by the Journal:
1. "In the case of Thailand, all of Unocal's gas production is committed to a single Thai buyer. The gas is committed through long-term sales agreements that have expiration dates ranging from 2010 to 2029. Even if those contracts weren't in place, it would be difficult and costly for China to send the gas elsewhere because the pipelines or other infrastructure to do so don't exist. Building such infrastructure likely would require the consent of the Thai government, which relies on Unocal's gas to fuel its booming power sector."
2. "The idea that China might build a gas terminal to ship liquefied Thai gas to China ["is absolutely preposterous,"] says John Vautrain, a vice president and director in Singapore of Purvin & Gertz, a Houston oil and gas consultancy. ["The Thais wouldn't let you."]
3. "Unocal's Myanmar output also is sold to Thailand. Its Bangladesh gas generally is reserved for Bangladeshi consumption. The picture is somewhat different in Indonesia, where Unocal holds interests in a number of promising fields whose output probably would be earmarked by Cnooc for the China market, according to people familiar with the company's strategy."
In our opinion, the Journal, while clearly listing some interesting observations is missing an important point.
China's purchase of Unocal, even if it did not lead to the diversion of natural gas toward its own borders, would give it control of the energy supply used by Thailand, Myanmar, Bangladesh, and Indonesia. It would also put some pressure on Japan and South Korea.
In other words, in one fell swoop, China would become the energy czar for a significant portion of South East Asia, and would gain valuable leverage with which to further its other goals, the expansion of its influence, and the ability to project its power. A scenario in which China could use its leverage to gain concessions from the four countries mentioned, including the placement of military bases, fueling stations for submarines and merchant ships, and the placement of surveillance equipment and communication relay stations in all of those countries is an easy next step to visualize.
All the while, China could also make money by continuing to sell energy to those countries by honoring existing contracts, while negotiating more lucrative ones in the future.
Indeed, the Unocal purchase can easily be looked upon as a threat to national security, especially if you live in Thailand, Myanmar, Bangladesh, Indonesia, Japan, or anywhere else in Asia.
http://www.rigzone.com
Dancing Fire - July 18, 2005 07:58 AM (GMT)
Its just a business deal and a tactical move to mitigate PROC's power crisis brought about by its rapid economic growth.
MSantor - December 23, 2007 04:09 PM (GMT)
Here are further reasons why no one must ignore the Dragon that is gaining strength to the North of the RP; the PRC's prosperous economy may hold another key to the continued econ. development of the RP.
http://www.msnbc.msn.com/id/22362982/
http://www.msnbc.msn.com/id/22362982/
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MSNBC.com China controlling more of U.S. economy Country leads surge of foreign investments in Wall Street banks The Associated Press updated 2:21 p.m. PT, Fri., Dec. 21, 2007 NEW YORK - There's a good reason schools across the country are scrambling to find people who can teach Chinese: It's quickly becoming business' second language as Wall Street seeks to tap China's $1.3 trillion in foreign reserves. China has been making increasingly aggressive investments in some of the world's most prestigious financial companies in recent months — most of them American. Morgan Stanley, Bear Stearns, Blackstone Group, and Britain's Barclays have all negotiated major stakes by Chinese government-controlled investment funds. Investment banks ailing from the subprime mortgage mess are looking for money to shore up their balance sheets. And China is leading a surge of strategic investments from Asia and the Middle East that so far have sunk about $25 billion into Wall Street banks.That's just the start of what some believe is a dramatic reversal of financial power in the shadow of Wall Street's credit turmoil. "Both Chinese private and government interests are controlling more and more of the U.S. economy, and this is a result of the big trade and budget deficits we have," said Alan Donziger, professor of economics at Villanova School of Business. "These investments will make the U.S. somewhat less independent, but this is inevitable when we live in a global economy."To be sure, Wall Street's current predicament is "our own doing," he said. Turmoil in the credit markets have been fueled by defaults on subprime mortgages, and that's caused the Federal Reserve to attempt a bailout of the industry through interest rate cuts. Lower interest rates have caused the dollar to slide in value against other major currencies. And, for foreign governments, the devalued dollar makes investments in these financial institutions cheap. In the 1980s, Japanese investors snapped up real estate and invested in businesses across a number of sectors. This new wave of foreign investment is different because Asian and Middle Eastern governments are taking stakes in financial institutions — a cornerstone of the U.S. economy. China agreed to pay $5 billion for a 9.9 percent stake in Morgan Stanley, and those securities pay 9 percent a year until they convert to shares in 2010. That translates to a gain of about $450 million of cash next year.But, for Morgan Stanley investors, the infusion of new stock two years from now will dilute their shares — and potentially make owning Morgan Stanley's securities less valuable. The same can be said about other banks that receive foreign investments. The deals have been structured so that the sovereign funds are passive investors with no seat on the board, and this escapes regulatory scrutiny. This week President Bush said Thursday he was "fine" with foreign investors snapping up big stakes in U.S. banks and financial firms. By keeping investments under 10 percent, it does not trip an automatic review by the government. Bush, and others, believe the injection of foreign capital helps keep the banks competitive and restores faith in an industry beaten down this year. "These are non-controlling investments, provides capital, and really is a statement of confidence," said John Douglas, a partner with law firm Paul Hastings who heads its global bank regulatory practice. "There's a lot of good things here." But, some banking analysts believe these government-sponsored funds might get more say than the banks are admitting. "The Chinese are putting $5 billion into Morgan Stanley without there being some kind of quid pro quo of what they're going to get other than interest on their investment," said Dick Bove, an analyst with Punk Ziegler & Co. "It's part of a major shift in the worldwide financial system that I think will be very negative to the U.S." He said these kind of investments are not over, and expects to see others surface next year. In some cases, investment banks that have already received investments might strike other deals to increase capital. Next up? Speculation swept through Wall Street on Friday that Merrill Lynch & Co. is on the hunt for a foreign investment to help cushion what could be a huge fourth-quarter writedown in January. "The whole situation has changed with financial power moving dramatically toward China and the Middle East, and that will have significant impact over time," Bove said. © 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. © 2007 MSNBC.com |
Here's another article I don't necessarily agree with or believe.
URL: http://www.msnbc.msn.com/id/22317937/
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MSNBC.com China's economy not that mighty U.S. holds steady as world's economic power with 23 percent GDP The Associated Press updated 4:57 p.m. PT, Tues., Dec. 18, 2007 SHANGHAI, China - The World Bank said the economies of China and India are about 40 percent smaller than earlier estimates after it revised calcuations using consumers' relative purchasing power to measure economic might. The new figures released by the World Bank on Monday differ from conventional gross domestic product figures, which are calculated by simply converting local statistics into U.S. dollars — but don't take into account the wide variations in the purchasing power of a dollar from country to country. A dollar converted into 7.4 yuan will generally buy more food in China, for example, than it would buy in the U.S. The bank's latest revision under its purchasing power parity method, based on updated data, shows that India and China — two of Asia's fastest-growing economies — are about 40 percent smaller than originally thought. "While PPP is not useful for commercial purposes, it is far and away the best measure of a country's standard of living," the Carnegie Endowment for International Peace commented on the report. By the new figures, China is ranked the world's second-largest economy, with its gross domestic product accounting for 9.7 percent of the world total, behind the U.S., which accounts for 23 percent, it said. Earlier estimates based on older data said China's economy accounted for 14 percent of global GDP. Japan was No. 3, Germany was ranked fourth, and India came in fifth, with more than 4 percent of total world output. Together, those five countries account for half of world economic output, the Washington-based bank said. "These results are more statistically reliable estimates," the World Bank said in a statement. "It was the most extensive and thorough effort ever to measure PPPs across countries." Still, the report noted that PPP estimates, like all statistics, are subject to errors and should be treated as approximations. Under the new estimates, the number of Chinese living on less than $1 a day — a widely used benchmark for poverty — is nearly 300 million, according to the Carnegie Endowment for Peace. The earlier estimates put that figure at 100 million. However, World Bank President Robert Zoellick, in Beijing as he wrapped up a visit to China, cautioned that the new estimate also may be flawed in that the price benchmarks were collected from urban areas. "One has to be extremely careful about trying to draw judgements about poverty based on these statistics," Zoellick told reporters in Beijing on Tuesday. He said even more accurate measures would be based on the kinds of goods that China's poor majority would buy, which would be weighted toward food. "We're working with the Chinese government to refine that work and as I think that will be out some time next year," he said. © 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. © 2007 MSNBC.com |
MSantor - April 2, 2009 05:46 PM (GMT)
If it ends being the Ren Min Bi(ÈËÃñ±Ò)/Yuan (Ôª) used in mainland China, however, I will eat my shirt.
:banana:
:banana:
| QUOTE |
China pushes for bigger role in reshaping the world economy Chinese leaders have criticized the U.S. financial system and proposed a new international currency to replace the dollar. The nation sees the global downturn as a huge opportunity. April 2, 2009 Reporting from Shanghai -- At a time when the U.S. and other traditional economic powers are weakening, China is flexing its muscles, signaling it will seek a much more assertive role in shaping the future of the world financial order. The apparent shift in Beijing's approach is likely to be displayed at the Group of 20 nations' summit today in London, as China presses for changes in a global finance system long dominated by the U.S. and Western Europe. Full article at: http://www.latimes.com/business/la-fi-chin...,0,217135.story |
saver111 - June 3, 2009 04:03 AM (GMT)
They will no longer be called, copycats as
GM to sell Hummer to Chinese company
AP
By TOM KRISHER and BREE FOWLER, AP Auto Writers Tom Krisher And Bree Fowler, Ap Auto Writers – Tue Jun 2, 6:30 pm ET
Hummer vehicles sit on the sales lot of a Niles, Mich. dealership Thursday May 14, 2009. As part of the GM reorganization the future of the H2 Hummer vehicle is uncertain. The H2 is produced at the AM General plant in Mishawaka, Ind. 10 miles south of this dealership. (AP Photo/Joe Raymond)
DETROIT – General Motors Corp. took a key step toward its downsizing on Tuesday, striking a tentative deal to sell its Hummer brand to a Chinese manufacturer, while also revealing that it has potential buyers for its Saturn and Saab brands.
China's Sichuan Tengzhong Heavy Industrial Machinery Co. said Tuesday afternoon that it reached an agreement to acquire the brand from GM for an undisclosed ammount. The Detroit automaker had announced Tuesday morning that it had a memorandum of understanding to sell the brand of rugged SUVs, but it didn't identify the buyer.
Sichuan Tengzhong deals in road construction, plastics, resins and other industrial products, but Hummer would be its first step into the automotive business.
GM said the sale will likely save more than 3,000 U.S. jobs in manufacturing, engineering and at various Hummer dealerships. Tengzhong said it will assume GM's existing agreements with Hummer dealers.
"We will be investing in the Hummer brand and its research and development capabilities, which will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S," Chief Executive Yang Yi said in a statement.
As part of the proposed transaction, Hummer will continue to contract vehicle manufacturing and business services from GM during a transitional period. For example, GM's Shreveport, La., assembly plant would continue to contract to assemble the H3 and H3T through at least 2010, GM said. AM General LLC in Mishawaka, Ind., makes the larger H2 under contract for GM.
Hummer will keep its existing management team and remain based in the United States, the companies said. Tengzhong said it expects to expand the brand's dealer network worldwide, including to China.
"GM is close to a sale of its Hummer brand, which is good news for the 3,000 Americans who will be able to keep their jobs, the two American plants that will remain open and the more than 100 Hummer dealers that should be able to stay in business all around the country," White House spokesman Bill Burton said earlier in the day.
On Monday, the Shreveport plant, which has about 800 workers, escaped being among 12 plants that GM said would be shut down by next year. The plant, which employed 3,000 several years ago, also produces Chevrolet and GMC pickups.
Johnny Bell, 59, who has worked at GM for 28 years, said many workers are still concerned about the plant's long-term future.
"Good news is good news, but we want all the news," he said. "We're concerned about what happens after 2010."
Morgan Johnson, head of the United Auto Workers local at the plant, said GM indicated to the union that pickup assembly would continue in Shreveport through 2012.
"We're just happy that the doors are still open considering all the plant closings," said Sharon Brock, 52, who has worked at the sprawling plant for 26 years.
GM also said Tuesday that it has 16 buyers interested in purchasing its Saturn brand, while three parties are interested in the Swedish Saab brand.
Chief Financial Officer Ray Young told reporters and industry analysts on a conference call that GM is continuing to pursue manufacturing agreements with a new Saturn buyer.
GM would like to sell the money-losing Saturn brand's dealership network, contracting with the new buyer to make some of its cars while the buyer gets other vehicles from different manufacturers.
At the same time, bridge loan discussions with the Swedish government are progressing, Young said.
GM, which filed for Chapter 11 bankruptcy protection in New York on Monday, is racing to remake itself as a smaller, leaner automaker. In addition to its plan to sell the Hummer, Saab and Saturn brands, GM will also phase out its Pontiac brand, concentrating on its Chevrolet, Cadillac, Buick and GMC nameplates.
The company hopes to follow the lead of fellow U.S. automaker Chrysler LLC by transforming its most profitable assets into a new company in just 30 days and emerging from bankruptcy protection soon after.
But GM is much larger and complex than its Auburn Hills-based rival and isn't up against Chrysler's tight June 15 deadline to close its deal with Fiat Group SpA.
Sharon Lindstrom, managing director at business consulting firm Protiviti, said the companies pose different challenges. But as with Chrysler, she notes that the Treasury Department made sure many of GM's moving parts were in order ahead of time so a quick bankruptcy reorganization might be possible.
"They had a lot of their ducks in a row because the terms of the government financing forced them to get all the parties to the table in a very, very short period of time," Lindstrom said.
Separately, the German government said Tuesday it paid out the first euro300 million ($425 million) in bridge loans to GM's Adam Opel GmbH division. The loans are part of a deal to shrink GM's stake in Opel and shield it from GM's bankruptcy protection filing in the U.S.
Canadian auto supplier Magna International Inc. and Russian-owned Sberbank will acquire 55 percent of Opel.
A sale of the Hummer brand had been expected. Chief Executive Fritz Henderson had said in April that the automaker was expecting final bids from three potential buyers within the month.
Eric Lane, vice president of Baton Rouge, La.-based Gerry Lane Enterprises, which has four dealerships — including one offering Hummers — welcomed the sale.
Lane said a lack of new products and the recession figured into the Hummer equation much more than last year's runup in gasoline prices. "I haven't had a single owner complain about mileage. Nobody buys a Hummer because of the gas. You don't buy a vehicle for $60,000 and worry about the price of gas."
Critics had seized on the rugged but fuel-inefficient Hummer as a symbol of excess as GM's financial troubles grew and gas prices rose. Sales at Hummer, which is known for models with military-vehicle roots, have been in a steep slide since gasoline prices rose to record heights last summer. For the first five months of this year, Hummer sales are down 64 percent.
GM nailed down deals with its union and a majority of its bondholders and arranged the Opel deal in order to appear in court Monday with a near-complete plan to quickly emerge with a chance to become profitable.
The government has said it expects GM to come out of bankruptcy protection within 60 to 90 days. By comparison, the judge overseeing Chrysler's case approved the sale of its assets to a group led by Italy's Fiat in just over a month. Some industry observers think Chrysler could emerge as early as this week.
During Monday's hearing, GM attorney Harvey Miller stressed the magnitude of the case and the importance of moving GM through court oversight as fast as possible. He noted that the automaker only has about $2 billion in cash left.
"If there's going to be a recovery of value, it's absolutely crucial that a sale take place as soon as possible," Miller said in his opening statement.
The automaker wants to sell the bulk of its assets to a new company in which the U.S. government will take a 60 percent ownership stake. The Canadian government would take 12.5 percent of the "New GM," with the United Auto Workers union getting 17.5 percent and unsecured bondholders receiving 10 percent. Existing shareholders are expected to be wiped out.
U.S. Judge Robert Gerber moved swiftly through more than 25 mostly procedural motions during the automaker's first-day Chapter 11 hearing.
Gerber set GM's sale hearing for June 30, putting it on a path similar to that of Chrysler. Objections are due on June 19, with any competing bids required to be submitted by June 22.
Gerber also gave GM immediate access to $15 billion in government financing to get it through the next few weeks, and interim approval for use of a total $33.3 billion in financing, with final approval slated to be ruled on June 25. The funds are contingent on GM's sale being approved by July 10. Gerber also approved motions allowing the company to pay certain prebankruptcy wages, along with supplier and shipping costs.
The sheer size of GM makes it a more complicated case than Chrysler.
GM made twice as many vehicles as Chrysler's 1.5 million last year and employs 235,000 people compared with Chrysler's 54,000. GM also has plants and operations in many more countries, meaning it will likely have to strike separate deals to navigate the bankruptcy laws of those places.
Henderson said GM has learned a few things by watching Chrysler's case.
"Certainly the court showed that it can address 363 (sale) transactions in an expeditious fashion," Henderson said at a news conference Monday. "Particularly in our case with what will be a very large 363 transaction."
GM's filing for Chapter 11 bankruptcy protection is the largest ever for an industrial company. GM, which said it has $172.81 billion in debt and $82.29 billion in assets, had received about $20 billion in low-interest loans before entering bankruptcy protection.
http://news.yahoo.com/s/ap/20090602/ap_on_...e/us_automakers
China saving the U.S... The Mighty Hummer, symbol of American power. :drunk:
GM to sell Hummer to Chinese company
AP
By TOM KRISHER and BREE FOWLER, AP Auto Writers Tom Krisher And Bree Fowler, Ap Auto Writers – Tue Jun 2, 6:30 pm ET
Hummer vehicles sit on the sales lot of a Niles, Mich. dealership Thursday May 14, 2009. As part of the GM reorganization the future of the H2 Hummer vehicle is uncertain. The H2 is produced at the AM General plant in Mishawaka, Ind. 10 miles south of this dealership. (AP Photo/Joe Raymond)
DETROIT – General Motors Corp. took a key step toward its downsizing on Tuesday, striking a tentative deal to sell its Hummer brand to a Chinese manufacturer, while also revealing that it has potential buyers for its Saturn and Saab brands.
China's Sichuan Tengzhong Heavy Industrial Machinery Co. said Tuesday afternoon that it reached an agreement to acquire the brand from GM for an undisclosed ammount. The Detroit automaker had announced Tuesday morning that it had a memorandum of understanding to sell the brand of rugged SUVs, but it didn't identify the buyer.
Sichuan Tengzhong deals in road construction, plastics, resins and other industrial products, but Hummer would be its first step into the automotive business.
GM said the sale will likely save more than 3,000 U.S. jobs in manufacturing, engineering and at various Hummer dealerships. Tengzhong said it will assume GM's existing agreements with Hummer dealers.
"We will be investing in the Hummer brand and its research and development capabilities, which will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S," Chief Executive Yang Yi said in a statement.
As part of the proposed transaction, Hummer will continue to contract vehicle manufacturing and business services from GM during a transitional period. For example, GM's Shreveport, La., assembly plant would continue to contract to assemble the H3 and H3T through at least 2010, GM said. AM General LLC in Mishawaka, Ind., makes the larger H2 under contract for GM.
Hummer will keep its existing management team and remain based in the United States, the companies said. Tengzhong said it expects to expand the brand's dealer network worldwide, including to China.
"GM is close to a sale of its Hummer brand, which is good news for the 3,000 Americans who will be able to keep their jobs, the two American plants that will remain open and the more than 100 Hummer dealers that should be able to stay in business all around the country," White House spokesman Bill Burton said earlier in the day.
On Monday, the Shreveport plant, which has about 800 workers, escaped being among 12 plants that GM said would be shut down by next year. The plant, which employed 3,000 several years ago, also produces Chevrolet and GMC pickups.
Johnny Bell, 59, who has worked at GM for 28 years, said many workers are still concerned about the plant's long-term future.
"Good news is good news, but we want all the news," he said. "We're concerned about what happens after 2010."
Morgan Johnson, head of the United Auto Workers local at the plant, said GM indicated to the union that pickup assembly would continue in Shreveport through 2012.
"We're just happy that the doors are still open considering all the plant closings," said Sharon Brock, 52, who has worked at the sprawling plant for 26 years.
GM also said Tuesday that it has 16 buyers interested in purchasing its Saturn brand, while three parties are interested in the Swedish Saab brand.
Chief Financial Officer Ray Young told reporters and industry analysts on a conference call that GM is continuing to pursue manufacturing agreements with a new Saturn buyer.
GM would like to sell the money-losing Saturn brand's dealership network, contracting with the new buyer to make some of its cars while the buyer gets other vehicles from different manufacturers.
At the same time, bridge loan discussions with the Swedish government are progressing, Young said.
GM, which filed for Chapter 11 bankruptcy protection in New York on Monday, is racing to remake itself as a smaller, leaner automaker. In addition to its plan to sell the Hummer, Saab and Saturn brands, GM will also phase out its Pontiac brand, concentrating on its Chevrolet, Cadillac, Buick and GMC nameplates.
The company hopes to follow the lead of fellow U.S. automaker Chrysler LLC by transforming its most profitable assets into a new company in just 30 days and emerging from bankruptcy protection soon after.
But GM is much larger and complex than its Auburn Hills-based rival and isn't up against Chrysler's tight June 15 deadline to close its deal with Fiat Group SpA.
Sharon Lindstrom, managing director at business consulting firm Protiviti, said the companies pose different challenges. But as with Chrysler, she notes that the Treasury Department made sure many of GM's moving parts were in order ahead of time so a quick bankruptcy reorganization might be possible.
"They had a lot of their ducks in a row because the terms of the government financing forced them to get all the parties to the table in a very, very short period of time," Lindstrom said.
Separately, the German government said Tuesday it paid out the first euro300 million ($425 million) in bridge loans to GM's Adam Opel GmbH division. The loans are part of a deal to shrink GM's stake in Opel and shield it from GM's bankruptcy protection filing in the U.S.
Canadian auto supplier Magna International Inc. and Russian-owned Sberbank will acquire 55 percent of Opel.
A sale of the Hummer brand had been expected. Chief Executive Fritz Henderson had said in April that the automaker was expecting final bids from three potential buyers within the month.
Eric Lane, vice president of Baton Rouge, La.-based Gerry Lane Enterprises, which has four dealerships — including one offering Hummers — welcomed the sale.
Lane said a lack of new products and the recession figured into the Hummer equation much more than last year's runup in gasoline prices. "I haven't had a single owner complain about mileage. Nobody buys a Hummer because of the gas. You don't buy a vehicle for $60,000 and worry about the price of gas."
Critics had seized on the rugged but fuel-inefficient Hummer as a symbol of excess as GM's financial troubles grew and gas prices rose. Sales at Hummer, which is known for models with military-vehicle roots, have been in a steep slide since gasoline prices rose to record heights last summer. For the first five months of this year, Hummer sales are down 64 percent.
GM nailed down deals with its union and a majority of its bondholders and arranged the Opel deal in order to appear in court Monday with a near-complete plan to quickly emerge with a chance to become profitable.
The government has said it expects GM to come out of bankruptcy protection within 60 to 90 days. By comparison, the judge overseeing Chrysler's case approved the sale of its assets to a group led by Italy's Fiat in just over a month. Some industry observers think Chrysler could emerge as early as this week.
During Monday's hearing, GM attorney Harvey Miller stressed the magnitude of the case and the importance of moving GM through court oversight as fast as possible. He noted that the automaker only has about $2 billion in cash left.
"If there's going to be a recovery of value, it's absolutely crucial that a sale take place as soon as possible," Miller said in his opening statement.
The automaker wants to sell the bulk of its assets to a new company in which the U.S. government will take a 60 percent ownership stake. The Canadian government would take 12.5 percent of the "New GM," with the United Auto Workers union getting 17.5 percent and unsecured bondholders receiving 10 percent. Existing shareholders are expected to be wiped out.
U.S. Judge Robert Gerber moved swiftly through more than 25 mostly procedural motions during the automaker's first-day Chapter 11 hearing.
Gerber set GM's sale hearing for June 30, putting it on a path similar to that of Chrysler. Objections are due on June 19, with any competing bids required to be submitted by June 22.
Gerber also gave GM immediate access to $15 billion in government financing to get it through the next few weeks, and interim approval for use of a total $33.3 billion in financing, with final approval slated to be ruled on June 25. The funds are contingent on GM's sale being approved by July 10. Gerber also approved motions allowing the company to pay certain prebankruptcy wages, along with supplier and shipping costs.
The sheer size of GM makes it a more complicated case than Chrysler.
GM made twice as many vehicles as Chrysler's 1.5 million last year and employs 235,000 people compared with Chrysler's 54,000. GM also has plants and operations in many more countries, meaning it will likely have to strike separate deals to navigate the bankruptcy laws of those places.
Henderson said GM has learned a few things by watching Chrysler's case.
"Certainly the court showed that it can address 363 (sale) transactions in an expeditious fashion," Henderson said at a news conference Monday. "Particularly in our case with what will be a very large 363 transaction."
GM's filing for Chapter 11 bankruptcy protection is the largest ever for an industrial company. GM, which said it has $172.81 billion in debt and $82.29 billion in assets, had received about $20 billion in low-interest loans before entering bankruptcy protection.
http://news.yahoo.com/s/ap/20090602/ap_on_...e/us_automakers
China saving the U.S... The Mighty Hummer, symbol of American power. :drunk:
saver111 - June 9, 2009 01:24 PM (GMT)
Official: Purchase of Hummer against China's development trend
www.chinaview.cn 2009-06-09 18:39:17
HANGZHOU, June 9 (Xinhua) -- A domestic company's purchase of the gas-guzzling Hummer brand is against China's economic situation and the country's development, said an official with the Development Research Center of the State Council, the country's Cabinet Tuesday.
"If the Chinese company is just trying to stir media hype, that is understandable; if it really takes this step to buy, relevant departments should be strict and cautious with the approval, or reject the application if necessary," said vice director Lu Zhongyuan, at the China Opening-up Forum in Ningbo of eastern China's Zhejiang Province.
Tengzhong Heavy Industrial Machinery Co., which is based in southwestern Sichuan Province, said last Wednesday that it was buying Hummer and a preliminary deal had been inked.
"Buying a fuel-hungry and high-emission brand is directly against the current trend of energy saving and emission reduction," Lu said.
"The entire society should form the concept of energy-saving and environmental protection, no matter producers, investors, or consumers," he added.
The preliminary deal for a little-known Chinese company to buy Hummer from General Motors has triggered doubts and criticism from analysts.
Tengzhong has no experience in the passenger-vehicle market and mainly produces industrial machinery.
Editor: Xiong Tong
http://news.xinhuanet.com/english/2009-06/...nt_11515652.htm
www.chinaview.cn 2009-06-09 18:39:17
HANGZHOU, June 9 (Xinhua) -- A domestic company's purchase of the gas-guzzling Hummer brand is against China's economic situation and the country's development, said an official with the Development Research Center of the State Council, the country's Cabinet Tuesday.
"If the Chinese company is just trying to stir media hype, that is understandable; if it really takes this step to buy, relevant departments should be strict and cautious with the approval, or reject the application if necessary," said vice director Lu Zhongyuan, at the China Opening-up Forum in Ningbo of eastern China's Zhejiang Province.
Tengzhong Heavy Industrial Machinery Co., which is based in southwestern Sichuan Province, said last Wednesday that it was buying Hummer and a preliminary deal had been inked.
"Buying a fuel-hungry and high-emission brand is directly against the current trend of energy saving and emission reduction," Lu said.
"The entire society should form the concept of energy-saving and environmental protection, no matter producers, investors, or consumers," he added.
The preliminary deal for a little-known Chinese company to buy Hummer from General Motors has triggered doubts and criticism from analysts.
Tengzhong has no experience in the passenger-vehicle market and mainly produces industrial machinery.
Editor: Xiong Tong
http://news.xinhuanet.com/english/2009-06/...nt_11515652.htm
MSantor - August 19, 2009 07:00 PM (GMT)
The stability and growth of China are interesting subject, especially when you realize you are not actually getting the numbers you need. The normalized GDP figures and the mouontain of non performing debt that the Chinese government is taking on seems very similar to the situation the United States was getting into starting in the 1990's:
http://fabiusmaximus.wordpress.com/2009/08/19/dinner-party/
http://fabiusmaximus.wordpress.com/2009/08/19/dinner-party/
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A revolution is not a dinner party. Thoughts about the future of China Filed under: Geopolitical news — Tags: china, gordon chang, mao tse-tung, michael pettis, revolution — Fabius Maximus @ 12:01 am This is a follow-up to Will China collapse? (5 August 2008). Recent analysis: “Get ready for lower Chinese growth“, Michael Pettis, op-ed in the Financial Times, 29 July 2009 ”The spend is nigh“, Economist, 30 July 2009 — “The second article in our series on global rebalancing asks whether China can reduce its trade surplus by consuming more.” “China’s economic policy: A ‘Great Wall’ or Capuan complacency?“, Arthur Kroeber, Financial Times, 11 August 2009 — See excerpt below. Excerpt from The Coming Collapse of China, Gordon G. Chang — See excerpt below. Quote of the decade about China Secondly, a revolution is not a dinner party, or writing an essay, or painting a picture, or doing embroidery; it cannot be so refined, so leisurely and gentle, so temperate, kind, courteous, restrained and magnanimous. A revolution is an insurrection, an act of violence by which one class overthrows another. — Mao tse-tung, “”Report on an Investigation of the Peasant Movement in Hunan”, March 1927 (3) China’s spirit is not a Great Wall “China’s economic policy: A ‘Great Wall’ or Capuan complacency?“, Arthur Kroeber, Financial Times, 11 August 2009 — Excerpt: The Romans bounced back from calamity because they had a resilient set of alliances based on well-developed political and economic ties and a constitutional system that enabled a broad array of talent to come forward and express itself. No error lasted too long unchecked. … China’s ability to maintain economic growth of around 8% despite the global shock took many by surprise. But this ability has nothing to do with systemic advantages, a distinct “China model” of growth, or skill in macroeconomic management. … China’s present economic vitality results from a Great Wall all right – a Great Wall of borrowed cash. There is nothing remarkable or spiritual about an economy growing at 8 per cent when credit is allowed to expand by 34%. The fact becomes even less remarkable when we recognise that nominal GDP (the appropriate comparator for nominal credit growth) grew just 3.8% in the first half. In other words, 10 dollars of new loans were required to generate just one dollar of economic growth. In fact China’s first-half growth shows one thing and one thing only: the existence of a powerful state with the ability to commandeer its citizens’ wealth and plough it into more buildings, bridges and roads, with no regard for the return those investments will bring. (4) Excerpt from The Coming Collapse of China, Gordon G. Chang (2001) There are plenty of Chinese this evening, but nothing is horrible and no one is sad. If anything, some are a bit too merry. The crowd, numbering in the hundreds, is boisterous as free-flowing liquor enlivens the revelers on the rooftop terrace of Shanghai’s historic Peace Hotel. The city around them is sparkling, floodlit in clashing colors against a pitch black sky, and the Huangpu River just below is bustling with commerce even at this late hour. On the roof this perfect evening the wealthy and the famous mingle with Shanghainese on the make; pride, arrogance, and envy all on display. Personalities in black tie chat with gentlemen in long gray robes, and women in floor-length gowns mix with friends in tight-fitting qi pao split almost to the waist. Guests have traveled across China and halfway around the world to be on display this evening in the radiant city that is Shanghai. But now the guests take their seats and the table chatter slowly dies. They look at the figure standing before them this Saturday evening in October 1999, just days after the fiftieth anniversary of the People’s Republic. The ornate ballroom at the top of the Peace Hotel is finally quiet. The tall American woman is particularly striking; she’s in her finest revolutionary red. Her gown, covered in hundreds of Mao buttons of red and gold, is a fashion statement, however, not a political one, because she’s here to have fun. She takes a look around the room before starting. “The Revolution has become a dinner party,” says Maggie Farley, and the crowd cheers. Yes, the revolution has become a dinner party. The People’s Republic today is not gentle, temperate, or kind, but it is not revolutionary either. The country and the party that leads it are now both old in their ways. The zeal that carried Mao from near defeat to total victory has been spent, lost in all the campaigns and programs that have gone wrong. Here, in the city where the Chinese Communist Party was born, there is nothing that is revolutionary. Nothing, that is, except the opponents of the current regime. They are weak today, but that will change. The Chinese now want something different, as they did at the end of the Qing Dynasty and at the fall of the Kuomintang. The people are no longer poor and blank. They know what they want. The Chinese will take what they want one day, and that day will be soon. The truth is that Party cadres will have only themselves to blame when that time comes. They have, over more than five decades, failed. Their republic is corrupt, repressive, and brutal. Its sheet of paper is no longer unblemished. China, for all its recent progress, is still poor. Chinese history has a pattern: governments like the current one fall. |
MSantor - September 14, 2009 03:35 PM (GMT)
And the PRC responds to a tire tariff imposed on them by the Obama administration:
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http://www.theglobeandmail.com/report-on-b...article1285968/ China-U.S. trade tensions mount Beijing launches antidumping probes into imported U.S. auto, chicken products after U.S. slaps tariffs on tires Gillian Wong Beijing The Associated Press Sunday, Sep. 13, 2009 China is launching antidumping investigations into imported U.S. auto and chicken products, the government said Sunday, adding to a string of trade disputes with Washington including a recent decision to raise tariffs on Chinese-made tires. The Commerce Ministry said it would look into complaints that American auto and chicken products are being dumped into the Chinese market or are benefiting from subsidies. The ministry said there are concerns the U.S. imports have “dealt a blow to domestic industries.” The ministry statement did not elaborate on the complaints or how the investigation would proceed. Washington and Beijing have recently traded accusations of protectionism, which they agree will hurt efforts to end the global economic crisis. The U.S. and China, the world's largest and third-largest economies, have been engaged in a series of battles over access to each other's markets for goods such as tires, steel pipe, music and movies. President Barack Obama on Friday approved new tariffs on all car and light truck tires coming into the U.S. from China, a move Beijing condemned as protectionist and a violation of global trade rules. The Commerce Ministry's statement said China remained firmly opposed to protectionism. “Since the financial crisis, China's actions have proven this point,” it said. “China is willing to work with countries around the world to act together to promote the quick recovery of the world economy.” China and the U.S. banned each others' poultry in 2004 following an outbreak of bird flu in Asia. But China lifted the ban after a few months and has complained that Washington refused to do the same. Since then, China has imported more than 4 million tons of U.S. poultry — mostly feet and other parts that are popular in China but not elsewhere. The World Trade Organization launched an investigation of the U.S. ban on Chinese poultry at the end of July. Beijing told the WTO's dispute settlement body that Washington had imposed protectionist measures in completely banning Chinese chicken products entering the U.S. market. The United States said it was still examining whether Chinese poultry was safe for human consumption. Last month, China said it revised its tariffs on imported auto parts after losing an appeal of a WTO ruling against its policy of requiring foreign automakers to buy more than 40 per cent of the components used in any China-made vehicle from local suppliers or pay more than double the usual tariff on imported parts. Beijing's revision was such that all imported auto parts will be taxed at the same rate regardless of the percentage of foreign-made parts used to make a vehicle. China argued the higher tariffs were needed to prevent auto makers from evading steep vehicle import duties by importing cars in large chunks. The U.S., the 27-nation EU and Canada contended that the tariffs encouraged car parts companies to shift production to China, costing Americans, Canadians and Europeans their jobs. |
MSantor - November 17, 2009 03:47 PM (GMT)
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| On Friday, as President Obama crossed the Pacific to begin his first trip to Asia, the Census Bureau released its monthly trade tally. The headline was that the U.S. trade deficit grew to $36.5 billion in September, more than forecasters expected and the biggest such figure since January. But the really dramatic number was that 60.5% of the deficit, or $22.1 billion, was with just one country: China. Obama arrived in Beijing Monday, but don't expect anything to get resolved. The U.S.-China economic relationship has become way too complicated and contradictory for simple solutions. (See pictures of Obama's trip to Asia.) Within the U.S., the imbalance is mainly seen as the product of protectionist policies by China, in particular China's refusal to let its currency, the yuan, appreciate against the dollar. There's certainly something to this - it's now universally agreed just about everywhere but China that a freely floating yuan would be worth significantly more than the 15 cents it currently goes for. By keeping its currency's value artificially low, China makes its products cheaper in the U.S., thus encouraging imbalanced trade. (See a story about China's consumers and the world economy.) But when China linked its currency to the dollar in the early 1990s, it was out not to create trade surpluses but to carve out a bit of stability in turbulent global currency markets. During the emerging-market currency crises of 1997 and 1998, China's success in keeping the yuan fixed at 8.3 yuan to the dollar was applauded in the West as a major contribution to averting financial chaos. Since 2005, China has been willing to allow the yuan to appreciate a bit (the current exchange rate is 6.8 yuan to the dollar). It just hasn't been willing to do this on any but its own extremely conservative terms. In China, meanwhile, it is fashionable to blame U.S. trade deficits on the debt-addicted ways of American citizens and their government. There's an element of truth to this too. If the U.S. borrowed and spent less, its trade imbalances would be smaller. But China has been enabling this profligate behavior for years by buying trillions of dollars in U.S. government debt and mortgage securities as part of its continuing effort to - you got it - keep the yuan from appreciating too much against the dollar. It's a bit reminiscent of the seemingly endless wrangles in the late 1980s and early 1990s with Japan, which accounted for the bulk of the U.S. trade deficit in those days. The trade deficit with Japan never shrank much in dollar terms, but it became smaller as a share of GDP starting in the mid-1990s, and was eclipsed by the trade imbalance with China in 2000 (in September the U.S. trade deficit with Japan was $4.1 billion, compared to $22.1 billion with China). The issue was never resolved, but it ceased to seem so important. Could that happen with China? Probably not. There are two crucial differences. One is that much of today's U.S. trade deficit comes from U.S.-based corporations selling products at home that were partly or entirely made in China. As a result, the trade relationship with China has become far more ingrained in the economic fabric of the U.S. than that with Japan ever was. Some evidence: in the first nine months of 2009, the global economic slowdown cut the U.S. deficit with Japan 47% compared with the first nine months of 2008. The deficit with China dropped just 16%. An even more important difference is that the stakes are higher with China. Japan seemed like a fearsome economic rival a quarter-century ago, but it wasn't really a political rival and, with a population less than half that of the U.S., it was unlikely ever to surpass the U.S. as an economic power. China, with its billion-plus population, seems destined to surpass the U.S. in economic clout, and it appears to have designs on rivaling the U.S. as a political and military power. Which means there's no easy way out of the U.S.-China trade impasse. |