China Economy Forum

[Obambam]

BBC News - Chinese exports grew faster than expected in September

14 October 2012 Last updated at 11:53


Chinese exports grew faster than expected in September

Chinese exports grew faster than expected in September, easing worries about a slowdown in the economy.

US Treasury chief Timothy Geithner said China must do more to stimulate domestic growth

Customs data issued on Saturday showed that exports grew 9.9% year-on-year, a big jump on the 2.7% growth recorded in August.

Imports bounced back 2.4% in September, after three months of consecutive declines.

Copper imports rose to a four-month high, while purchases of iron ore were the biggest since January 2011.

Many economists had forecast that September exports would expand by about 5%.

According to the data, China's exports to the US increased at their fastest pace in three months, but those to the European Union fell by 10.7%.

The World Bank cut its growth forecast for China this year to 7.7% from its May outlook of 8.2%.

That is much stronger than the US, where growth is forecast in to be in the low single digits, but painful for Chinese companies that have enjoyed rapid expansion.

The World Bank said China faces the risk of an even deeper downturn if conditions in its key export markets worsen.

In a research commentary from HSBC, analysts said that the "stronger than expected rebound of September exports is helpful to alleviate concerns of a sharper slowdown of the Chinese economy".

The more modest rise in imports will fuel the debate about the strength of Chinese consumers' buying power.

'Modernise'

US Treasury Secretary Timothy Geithner said at the weekend that China should do more to bolster domestic demand.

Speaking in Tokyo at the annual meeting of the International Monetary Fund and the World Bank, he said there had been "some progress" in China's trade relationship with the US, but "domestic consumption still does not play a sufficient role in driving China's economy".

Mr Geithner said: "Progress toward strengthening domestic demand will be good for China, and good for the global economy. In a rapidly changing world, it is crucial that we continue to modernise."

Washington has often complained that China's exports are disproportionate to its imports, accusing Beijing of deliberately skewing the relationship by keeping its currency artificially low.

 

[Chinese-Dragon]

On an interesting note, this is from the last few days:

October 12, 2012

Financial Times - RMB hits 19-year high against dollar

--------------------------

This theoretically would have hurt our exports, but we also just posted a widening trade SURPLUS.

October 14, 2012

Financial Times - Chinese exports grow faster than expected





EDIT: Obambam beat me to it.

 

[kawaraj]

China economy is stronger than expected.

I always wonder what's the ultimate strength of Chinese economy. Seems it can withdraw all difficulties ahead of others.

Again, Good job, China.

 

[shuttler]

China's inflation eases to 1.9 pct in Sept.

2012-10-15

Xinhuanet

A stall keeper selling eggs in a farmers market greets the customers in Hangzhou City, capital of east China's Zhejiang Province, Oct. 15, 2012. China's Consumer Price Index (CPI), the main gauge of inflation, grew 1.9 percent year on year in September, the National Bureau of Statistics (NBS) announced on Monday. (Xinhua/Han Chuanhao)


BEIJING, Oct. 15 (Xinhua) -- Inflation in the world's second-largest economy saw a mild month-on-month deceleration in September, stirring concerns over whether authorities would further relax monetary policies in the rest of the year to bolster a slowing economy.

The Consumer Price Index (CPI), the main gauge of inflation, grew 1.9 percent year on year in September, the National Bureau of Statistics (NBS) announced Monday. The index eased from a 2-percent rise in August.

Analysts said that slowing growth in food prices and fewer carry-over effects from last year contributed to the slight drop in inflation.

"Price declines on many farm produce items, especially that of vegetables, has led to the slight drop in inflation," said Lian Ping, chief economist at Bank of Communications.

Food prices, which account for nearly one-third of the weighting in the calculation of China's CPI, rose 2.5 percent last month from one year earlier. This was down from the 3.4-percent year-on-year increase in August. Vegetable prices rose 11.1 percent last month, but the growth rate slowed sharply by 12.7 percentage points compared to August.

On a month-on-month basis, CPI in September was up 0.3 percent from the previous month, according to NBS data. The growth rate also marked a decline compared to the 0.6-percent monthly-based increase in August.

China's producer price index (PPI), which measures inflation at the wholesale level, dropped 3.6 percent year on year in September. It marked the seventh straight month of decline since PPI fell in March for the first time since December 2009.

"Monday's data indicated that inflation has been significantly weakened in China. Meanwhile, domestic demand still remained low, which means that further policy loosening is needed in the Chinese economy," said Liu Ligang, an economist with ANZ National Bank Ltd.

According to the NBS, the nation's CPI grew averagely 2.8 percent year on year in the first nine months. Liu said he believes the country is poised to meet the target of keeping inflation under 4 percent for the full year.

Liu said that as inflation lessened and the economy faces downward pressure, cutting banks' reserve requirement ratio (RRR) is still needed to spur the economy, which grew 7.6 percent in the second quarter, marking the slowest pace of growth in more than three years.

The NBS is scheduled to issue an update on GDP data for the third quarter on Thursday.

However, Alaistair Chan, an economist with Moody's Analytics, a division of Moody's Corporation, said that the mild deceleration of inflation in September is unlikely to give the government much scope for further stimulus actions.

Chan noted that inflation in housing and household goods has been resilient, and the likelihood of further interest rate and reserve ratio cuts has been diminished.

The central bank said Saturday that China's M2, which measures cash in circulation and all deposits, rose 14.8 percent year on year in September, marking the highest level since July 2011.

E Yongjian, a researcher with Bank of Communications, also said that it has become less necessary to lower RRR or interest rate than it was during the rest of the year, as M2 growth expanded at a record speed in September and current inflation stands at a low level.

E forecast that monetary policies in the country will remain stable for the rest of the year.

In order to buoy growth, the central bank has cut RRR twice this year. It has also lowered the benchmark interest rates twice.

The analyst said that CPI was unlikely to see a significant rebound in the rest of the year. However, they said that China should be prepared for so-called "imported inflation" caused by a new round of quantitative easing (QE3) by the United States.

"QE3 will lift commodity prices. The price rises will be passed on to China because the country is a huge importer of commodities such as crude oil," said Zhuang Jian, a senior economist with Asia Development Bank.

 

[shuttler]

China focuses on managing inflation: senior official
2012-10-14

Xinhuanet


TOKYO, Oct. 14 (Xinhua) -- Yi Gang, vice governor of the People 's Bank of China, made a speech at the last day of the International Monetary Fund and the World Bank annual meeting Sunday here to explain the monetary policy of China.

Yi stressed that the most important job for central bank is to control inflation. China is developing dramatically, and local governments have desires of pursuing higher growth, so the central bank need to remind the governments the danger of inflation.

He said the moral explanation is not enough, so the central bank has to use some tools, including required reserved ratio, open market operation, and exchange rate policy, to control the growth rate in a manageable range.

Yi said China is in the process of opening up to the world, so the macro economy policy in China has to consider not only domestic problems, but also external issues. China is facing the dual challenges to balance the internal and external markets.

China made a lot of efforts on transforming China's economy from centrally planed economy to market oriented one in recent years, including banking reform, interest liberalization, and exchange reform, he said.

 

[shuttler]

China's September PPI slumps 3.6 pct
2012-10-15
Xinhuanet

BEIJING, Oct. 15 (Xinhua) -- China's producer price index (PPI), which measures inflation at the wholesale level, dropped 3.6 percent year on year in September, National Bureau of Statistics (NBS) revealed Monday

The figure compares with a 3.5 percent decline in August and marks the seventh straight month of decline. China's PPI dropped in March for the first time since December 2009.

On a month-on-month basis, the PPI moved down 0.1 percent in September, according to the NBS.

The bureau also announced Monday that the country's consumer price index (CPI), a key gauge of inflation, grew 1.9 percent year-on-year in September.

Xu Lianzhong, an economist from the price monitoring center of the National Development and Reform Commission, said the data was "quite normal and within expectations", signaling that the Chinese economy had started to stabilize.

Although the country's economy, especially industrial enterprises, are facing increasing deflationary pressure, Xu does not expect huge stimulus measures to be issued within the year. However, fine tuning of fiscal and monetary policies could be possible.

With the 18th National Congress of the Communist Party of China around the corner, Xu said policymakers would place more attention on stabilizing the economy rather than looking for a fast rate of growth.

 

[shuttler]

Chinese manufacturers woo foreign buyers amid gloomy trade
2012-10-15
Xinhuanet

GUANGZHOU, Oct. 15 (Xinhua) -- Chinese manufacturers are striving to clinch deals at the country's largest trade fair as they feel the pinch from the economic downturn.

The Canton Fair, which kicked off on Monday in Guangzhou, capital of south China's Guangdong Province, has attracted 24,840 exhibitors from home and abroad. This is an increase of 196 from the spring session, according to the event's spokesman Liu Jianjun.

Demand for exhibition booths, which have all been filled, was double what was being offered, said Liu.

"It is an indication that numerous Chinese export-oriented manufacturers are eager to expand into the overseas market under the current global economic uncertainty," Liu said.

China has reported better-than-expected trade, rebounding in September. Exports surged 9.9 percent from a year ago to a record monthly high of 186.35 billion U.S. dollars. This increase is in sharp contrast with a previous year-on-year gain of 2.7 percent in August.

Imports in September also rose 2.4 percent year on year after consecutive falls in previous months.

In the first three quarters of the year, China's foreign trade expanded 6.2 percent to 2.84 trillion dollars, widening the country's trade surplus to 148.31 billion dollars.

However, growth has dwindled compared with the same period last year, when China registered a foreign trade growth of 24.6 percent.

"In general, the foreign trade situation over the next few months will remain grim because the global economy is still in a downturn," Liu said.

"Under these circumstances, export-oriented Chinese enterprises will have to adjust structures and change their development modes to boost their productivity and competitiveness," Liu added.

This autumn's Canton Fair, the 112th since its establishment in 1957, is expected to attract almost the same number of visitors from home

and abroad as the spring session, organizers said. However, they are pessimistic about the event's turnover.

The spring session registered a record number of purchasers of more than 210,000, with a slightly shrinking turnover of 36.03 billion dollars compared with previous events.

Officially known as the China Import and Export Fair, the event has become an important barometer for the country's foreign trade as well as overall economy.

 

[Chinese-Dragon]

Inflation is down to 1.9%, that is really remarkable.

Exports are surging upwards as well. The indicators are looking good.

 

[Obambam]

BBC News - China to open atomic bomb site to tourists

China to open atomic bomb site to tourists

China has unveiled a plan to open the site where it detonated its first atomic bomb to tourists, state-run media reports.

China detonated its first atomic bomb in 1964

About 6m yuan ($960,000, £595,000) will be spent making the remote Malan base in Xinjiang region tourist-friendly, an official told Xinhua news agency.

Visitors will be able to see scientists' laboratories and a 300-metre tunnel used for air strikes.

China tested its first atomic bomb on 16 October 1964.

More than 40 nuclear tests have been carried out in Xinjiang over the decades before a moratorium was called in the 1990s.

Beijing's Tsinghua University and the local government are developing the site, located in a desert area in south-eastern China, Xinhua says.

Officials say that the base at Malan will be turned into a "red tourism site" - locations designated by the Communist Party to celebrate what it regards as historic events, says the BBC's Martin Patience in Beijing.

However it is not clear how many tourists the nuclear facilities will actually attract, as it is in one of the remotest regions in the country, our correspondent adds.

Hope this will bring tourism and more investments into this remote part of the region.
Today marks our 48th year since we became the 5th Nuclear power.

 

[shuttler]

Iron ore stockpiles fall at China's ports

2012-10-16

Xinhuanet.com

BEIJING, Oct. 16 (Xinhua) -- Stockpiles of iron ore fell at 25 major Chinese ports during the week ending on Oct. 15, according to Xinhua's latest iron ore price report released on Tuesday.

Inventories of imported iron ore at the ports stood at 100.6 million metric tons, down by 1.04 million metric tons, or 1.02 percent, from a week earlier.

The price index for 63.5-percent-grade iron ore imports rose eight points to 117 points during the period, while the index for 58-percent-grade imports increased nine points to stand at 99 points, according to the report.

Buoyed by rising steel prices, import prices of iron ore gained last week but are unlikely to report further increases. This is because steel companies may be slow to replenish their stocks of steel-making raw materials in the short term, Xinhua analysts said in the report.

China, the world's top iron ore consumer and buyer, imported 65.01 million metric tones of the raw material in September, rising 4.1 percent month on month and 7.3 percent from one year earlier, according to customs data.

Inflation is down to 1.9%, that is really remarkable.

Exports are surging upwards as well. The indicators are looking good.

CD: better than expected due mainly to seasonal effects but not enough to lift us out of the global gloom! Let's see how it goes @ 2012 - The 112th China I & E Fair in Guangzhou!

 

[shuttler]

BBC News - China to open atomic bomb site to tourists

Hope this will bring tourism and more investments into this remote part of the region.
Today marks our 48th year since we became the 5th Nuclear power.

Good move by the Central Govt shutting the separatists, bashers and haters up!

 

[shuttler]

Yuan rises to new high against dollar

Peopledaily

By Wang Fei’er (Global Times)
October 15, 2012

The Chinese yuan traded at an intraday peak of 6.2654 against the dollar on China's spot currency market Friday, a record high against the greenback according to data provided by the State Administration of Foreign Exchange (SAFE), a development which likely signals the weakening value of the dollar rather than the start of another major round of appreciation by the renminbi, experts told the Global Times Sunday.

Meanwhile, the People's Bank of China (PBC), the country's central bank, set the yuan's midpoint against the dollar at 6.3264 Friday, a three-month high.

The launch of a third round of quantitative easing (QE3) by the US Federal Reserve in mid-September sparked concerns about the interest risks facing dollar-denominated assets in the global financial market, Sheng Hongqing, chief economist for China Everbright Bank, told the Global Times. These concerns dented the dollar's value and created space for the yuan to rise 0.2 percent against the US currency, as it has done since the start of the Fed's QE3, said Sheng.

Last week's rise aside, the yuan is not expected to appreciate as sharply as it did six years ago after central financial authorities introduced foreign exchange reforms, said Sheng, who predicted that the yuan's value to the dollar would plateau at 6.25 by the end of this year.

In 2005, planners in Beijing eased some of their controls on the yuan's price and started pegging the yuan against a basket of foreign currencies rather than the dollar alone, a move aimed at giving the international market more of a say in the worth of Chinese currency. From then until the end last year, the yuan's value increased 23.88 percent, according to data from the SAFE.

Since the start of 2012, many prominent figures within the Chinese government - including Chinese Premier Wen Jiabao, and Zhou Xiaochuan, the governor of the PBC - have stated on several occasions that the yuan's value is approaching equilibrium.

Sheng supported these remarks and explained that the gradual balancing of China's trade portfolio also indicates that the yuan is getting closer to equilibrium.

China's trade surplus relative to its GDP shrank to 5.2 percent in 2011, down from 10.1 percent in 2007, according to data from the International Monetary Fund which predicted that the contracting trend would continue in 2012.

But as the government slowly increases the yuan's exposure to market forces, it will likely also take appropriate steps to moderate the currency's appreciation, Chen Xuebin, deputy director of the Institute for Financial Studies at Fudan University, told the Global Times. A stronger yuan will make Chinese goods more expensive abroad in dollar terms, which will put further pressure on the country's export sector just as overseas demand falters, explained Chen.

 

[shuttler]

Analysis: Record M2 growth signals Chinese economic recovery
(Xinhua)
October 15, 2012

People's Daily Online

A working staff counts the Chinese currency at a credit union. (Photo/Xinhua)


China's broad measure of money supply (M2) grew at a record speed in September, leading experts to believe that the country's pro-growth policies are working and market liquidity is improving.

The People's Bank of China (PBOC), the country's central bank, said Saturday that China's M2 rose 14.8 percent in September from a year ago, accelerating from the 13.5-percent growth registered in August.

The growth rate was the highest since July 2011 and well above the central bank's annual target of 14 percent.

Qu Hongbin, chief economist with HSBC China, said the rapid growth of the money supply shows that market liquidity is improving and the government's fine-tuning of its monetary policies has taken effect.

The PBOC has cut the reserve requirement ratio for banks twice and lowered benchmark interest rates this year to buoy economic growth, which slowed to its slowest rate in more than three years in the second quarter.

China's economy expanded by 7.6 percent year on year in the second quarter, slowing from 8.1 percent in the first quarter.

The growth rate marked the sixth consecutive quarter of decline and was the slowest pace since the first quarter of 2009.

Outstanding yuan-denominated loans reached 61.51 trillion yuan (9.72 trillion U.S. dollars) at the end of last month, up 16.3 percent year on year, the central bank said.

"Judging from the total volume of social financing, the overall liquidity at present is relatively eased and aggregate demand has seen signs of stabilizing," Qu said.

E Yongjian, a researcher with the Bank of Communications, noted that the structure of new yuan-denominated loans has improved.

In September, new mid- and long-term loans extended to enterprises stood at 127.7 billion yuan, accounting for 20 percent of total new loans last month, up from 17 percent in August, according to the central bank.

The structural change shows that the government's moves to speed up project approvals has driven up lending by commercial banks, especially mid- and long-term loans, E said.

E said enterprises' production demand is going to recover on the back of expanding fixed-asset investment, favorable export policies and the country's economic restructuring drive.

"The growth of value-added industrial output is likely to stabilize and rebound in the fourth quarter," said E.

China's exports rose 9.9 percent year on year to 186.35 billion U.S. dollars in September, hitting a record monthly high, according to figures released by the General Administration of Customs on Saturday.

China's foreign exchange reserves, the world's largest stockpile, rose to 3.29 trillion U.S. dollars at the end of September from 3.24 trillion U.S. dollars at the end of June, the PBOC said.

The official purchasing managers' index (PMI) improved to 49.8 percent in September from 49.2 percent in August, although it was still slightly below the 50-percent threshold that divides expansion and contraction.

"Since previous policies to boost growth have gradually taken effect, China's economic growth is likely to pick up speed in the fourth quarter," Qu said.

The government is scheduled to release its third-quarter GDP data on Oct. 18, which analysts expect to be below the second quarter's 7.6-percent increase.

 

[shuttler]

This news is a bit dated but pretty encouraging:

Renmin University receives $32m donation
(Chinadaily.com.cn)
08:26, September 21, 2012

People's Daily Online

Renmin University of China received an endowment of 200 million yuan ($32 million) from alumnus 裘国根 Qiu Guogen on Thursday.

The donation will be used to fund five key projects in the school's next 10-year development plan, as well as the construction and renovation of its campus, said Chen Yulu, president of the university.

Qiu expressed his gratitude to Renmin during the donation ceremony in Beijing. He called for more social capital and private funds to be donated to higher education, saying it is vital for the realization of China's economic transformation.

The endowment is one of the largest donations ever made to the university and one of the largest in the history of Chinese higher education.

Qiu studied investment economics at Renmin from 1987 to 1993 and obtained his bachelor's and master's degrees in economics. The 43-year-old is now president of the hedge fund Shanghai Chongyang Investment, a leading private money manager in China.

中国人民大学

Renmin Univeristy of China

 

[ahfatzia]

China's economic power mightier than the sword


China is facing intensifying political and economic disputes with Japan, the United States and the European Union. Meanwhile, the outlook for the global economy is decidedly grim, with the International Monetary Fund forecasting a prolonged recession in Europe and severe budgetary woes in the US.

At this crucial juncture, China's leadership is exploring avenues for leveraging the country's growing economic clout into geopolitical gains. If used wisely and consistently, China's economic power could be a powerful instrument for advancing its foreign-policy goals. The government's push to use financial capabilities to further diplomatic objectives will have dramatic effects on the international system.

On Wednesday, the Ministry of Foreign Affairs announced the establishment of the Department of International Economic Affairs. Zhu Caihua, vice-dean of China Foreign Affairs University's School of International Economy, very candidly stated the goals of the new Department: "China's soaring economic strength enables it to provide due assistance to developing countries and the European Union hit by the debt crisis. These moves also give China more say and flexibility in foreign relations." Zhu went on to state that this new department would be tasked with handling "economic disputes with political backgrounds".

The establishment this department is a sign that the leadership is increasingly aware of the strategic implications of China's expanding economy and immense foreign-currency reserves. The government is seeking to exploit directly its growing financial and economic clout for increased geopolitical authority and flexibility.

The world should take notice - Beijing has publicly signaled the ability and the willingness to link access to vital Chinese loans and markets with the overall aims of its foreign policy.

That China is a major force to reckon with in international finance is nothing new - in recent years it has lent more money to poor nations than did the World Bank. What is new is China's open willingness to link economic goals with geopolitical objectives. As Europe and the US face a prolonged economic crisis, China's leadership is feeling confident that the country's new position in the global financial hierarchy will pay geopolitical dividends.

The timing of this announcement is extremely meaningful. Currently, China is coming under increased political and economic pressure from three major rivals (and trade partners) - Japan, the US, and the EU.

The dispute between China and Japan over the Diaoyu/Senkaku Islands is having pronounced economic effects in both nations. Popular calls for a Chinese boycott of Japanese goods have gained serious traction. Toyota's Chinese sales were down 40% from a year earlier in September. [3] Tens of thousands of seats on flights between the two countries have been cancelled, leading to the suspension of some routes. Dozens of Japanese companies have been expelled from the Western China International Trade Fair.

The Chinese government has already publicly stated an ability to punish the Japanese government economically for the purchase of the disputed islands from their private owner. Last month, an article in the Communist Party-run People's Daily, "Consider sanctions against Japan", warned: "Japan's economy will suffer severely if China were to impose sanctions on it. China's loss would be relatively less."

This threat is based on objective reality - China is still a relatively underdeveloped economy with huge potential for internal growth, while Japan has suffered from two decades of economic stagnation. China's willingness to use economic threats to further its territorial claims is a significant aspect of the current dispute.

The new Department of International Economic Affairs may find itself busy dealing with the US as well as Japan. The domestic politics of the United States will have important implications for China's emerging economic diplomacy.

A recent report from the Congressional Intelligence Committee has warned US corporations not to do business with the Chinese telecommunication companies Huawei and ZTE. Instead of finding a specific instance of wrongdoing, the report warned of the potential for future trouble. Mike Rogers, chairman of the committee, warned: "As this report shows, we have serious concerns about Huawei and ZTE, and their connection to the Communist government of China. China is known to be the major perpetrator of cyber-espionage, and Huawei and ZTE failed to alleviate serious concerns throughout this important investigation. American businesses should use other vendors."

The US presidential race has additional repercussions for China's international trade. Both incumbent President Barack Obama and his challenger Mitt Romney have played the tough-on-China card for votes. Obama recently blocked the installation of Chinese-made wind turbines on the Oregon coast over concerns of the potential for spying on a nearby military base. [5] This was the first time a president had prevented a foreign investment deal since 1990.

Meanwhile Romney has come out with his most forceful criticism of China to date, saying it has "taken advantage of our laxity in enforcing fair trade ... We will not allow them to keep taking our jobs." [6] Romney has accused the Chinese government of manipulating its currency to compete unfairly with foreign manufacturers, and has promised officially to declare China a currency manipulator - a move that could lead to economic sanctions - on his first day in office.

China is facing further economic heat in the European theater. The EU has started an anti-dumping investigation of Chinese solar panels. This could threaten billions of euros in Chinese exports to Europe.

China not only faces economic difficulties from potential US and EU sanctions, but also long-term political challenges from these Western powers. The United States' strategic pivot toward Asia is seen as a direct threat to China's regional security. Meanwhile, both the US and the EU regularly involve themselves in China's domestic politics. Beijing views Western support for pro-reform political activists as aggressive interference in China's internal affairs.

As China faces political and economic pressure from other major powers, the leadership is examining means to counter this pressure. Economic leverage - if used correctly - could be an excellent tool for promoting Beijing's current foreign-policy objectives.

China's potential for economic growth is still much greater than that of any of its major rivals, even in the midst of a relative slowdown. The Chinese economy is highly dependent on trade with the US, Japan and the EU, but they are even more dependent on access to China's manufacturing capability and expanding domestic markets. Furthermore, these comparatively wealthy nations are also highly dependent on Chinese purchases of their government debt.

Economic warfare is a double-edged sword. Japanese companies have been hurting more than Chinese businesses in the recent standoff, but both sides will be negatively affected by a reduction in trade. All contenders stand to lose in a trade war - but China less so than its rivals. Its growth and liquidity mean it has more room to maneuver than its potential opponents in any economic confrontation.

If sufficiently pressured, China may engage in economic brinksmanship to secure its interests.

The EU and the US face debt crises, while China holds roughly US$3 trillion in foreign-currency reserves. The balance of financial power should be obvious to all sides. By forming the Department of International Economic Affairs, the government is signaling an awareness of its ability to use China's economic strength as a foreign-policy tool.

This new department will use financial means to defend the leadership's core interests: access to foreign markets, territorial integrity, and the Communist Party of China's monopoly on political power. The government may not been keen on bailing out Europe if European governments continue to bankroll Chinese dissidents. Beijing may be even less keen on lending to Washington the funds needed to expand America's military presence in Asia.

The formation of the Department of International Economic Affairs is an important step in formalizing the use of China's economic power as an instrument in diplomatic disputes. As China continues to develop economically, its leadership has little interest in starting costly confrontations. China will only use economic leverage to retaliate for sanctions, or to secure its core interests. Its financial weapons are likely to remain sheathed so long as other nations do not directly threaten the Chinese economy or the main policy objectives of the Chinese government.

Asia Times Online :: China's economic power mightier than the sword


Indeed China is finally learning the power of money by establishing the "Department of International Economic Affair". Hire the best of professionals and seek the utmost benefits for the money she's lending out and not a single Yuan should be wasted on those projects that show no returns and on those who do not appreciated.