AmChi collaboration to determine future courses of global economy
Friday, 22 May 2009
From Fazle Rashid
NEW YORK, May 21: "We can’t keep on just borrowing from China," said US president Barack Obama.
"We have lent a huge amount of money to the US. Of course we are concerned about the safety of our assests," said Wen Jiabao, prime minister of China.
Despite these cautionary words from the top two leaders' recent indicators point to growing interdependence between the two of largest economies of the world. AmChi (America and China) collaboration will determine the courses of the global economy in future.
China is trading long-term treasuries for short-term notes highlighting Beijing's concerns that inflation will erode the value of dollar in the long run as America amasses record debt, the New York Times (NYT) in a report said. An astounding 82 per cent of China's over $2.0 trillion in foreign reserves are in dollar. China now earns more than $50 billion a year in interest from the United States. China is the largest buyer of the US securities.
The Chinese leaders are feeling uncomfortable about the fact that foreign exchange reserve is growing at a faster rate than expected. China is strongly opposed to any significant appreciation or depreciation of its currency. But if international investors conclude that the Chinese economy has stabilised ahead of economies elsewhere, they may start pumping more money into the Chinese economy, the NYT quoted a Chinese official as saying. The government is encouraging private sector to invest more money overseas.
If overseas demand for Chinese exports accelerate, it would naturally fatten foreign exchange reserve. The government is trying to foster channels for the foreign currency to be pumped out of the country without the involvement of the central bank. The central bank will ease conditions that would make it easier for the private companies to invest abroad. China has a gold reserve of 1054 tons, may be equal to paddy reserve in many countries.
Meanwhile, Pakistan is faced with a doubled-edged sword. The United States was nagging that Islamabad is not doing enough to crush the rising the strength of the Islamic insurgency. Islamabad in a move to calm speculations in Washington launched a blitzkrieg assault on Taleban and al-Qaeda sancturies and in the process has displaced more than two million people from the area.
Pakistan has made it clear that it would not compromise with its nuclear programme but hastened to assure the west that its nuclear arsenal are well secured and there is no chance of their going to the hands of the insurgents.
Pakistan is seeking $600 million in emergency funds to rehabilitate the swelling number of displaced persons described by the UN as one of the worst refugee crisis since Rwandan genocide of 1994. The US administration has already committed $110 million in emergency aid.
In the Middle East, the political and financial instability continues to throw the Arab nations into a great quandary. The United Arab Emirates (UAE) has withdrawn itself from the Gulf Monetary Union objecting to a proposal to locate the central bank in Saudi Arabia thus once again putting into jeopardy the intention of Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain and Oman to create a monetary union.
Kuwait's rule has reappointed his nephew Sheik Naser Sabah as prime minister after the election in the country. The frequent clashes between the legislature and the executive have forced the cabinet to resign five times in three years.
In the Gulf region, Iran launched a new long range missile in a show of strength and defiance of western concerns over Teheran's missile and nuclear programme. The missile has a range of 2000 km and is capable enough to reach Israel. President Ahmedinejad was present to see the historic launching. The announcement came only two days after Israel's hawkish prime minister demanded that Iran's nuclear ambitions be effectively frustrated.
NEW YORK, May 21: "We can’t keep on just borrowing from China," said US president Barack Obama.
"We have lent a huge amount of money to the US. Of course we are concerned about the safety of our assests," said Wen Jiabao, prime minister of China.
Despite these cautionary words from the top two leaders' recent indicators point to growing interdependence between the two of largest economies of the world. AmChi (America and China) collaboration will determine the courses of the global economy in future.
China is trading long-term treasuries for short-term notes highlighting Beijing's concerns that inflation will erode the value of dollar in the long run as America amasses record debt, the New York Times (NYT) in a report said. An astounding 82 per cent of China's over $2.0 trillion in foreign reserves are in dollar. China now earns more than $50 billion a year in interest from the United States. China is the largest buyer of the US securities.
The Chinese leaders are feeling uncomfortable about the fact that foreign exchange reserve is growing at a faster rate than expected. China is strongly opposed to any significant appreciation or depreciation of its currency. But if international investors conclude that the Chinese economy has stabilised ahead of economies elsewhere, they may start pumping more money into the Chinese economy, the NYT quoted a Chinese official as saying. The government is encouraging private sector to invest more money overseas.
If overseas demand for Chinese exports accelerate, it would naturally fatten foreign exchange reserve. The government is trying to foster channels for the foreign currency to be pumped out of the country without the involvement of the central bank. The central bank will ease conditions that would make it easier for the private companies to invest abroad. China has a gold reserve of 1054 tons, may be equal to paddy reserve in many countries.
Meanwhile, Pakistan is faced with a doubled-edged sword. The United States was nagging that Islamabad is not doing enough to crush the rising the strength of the Islamic insurgency. Islamabad in a move to calm speculations in Washington launched a blitzkrieg assault on Taleban and al-Qaeda sancturies and in the process has displaced more than two million people from the area.
Pakistan has made it clear that it would not compromise with its nuclear programme but hastened to assure the west that its nuclear arsenal are well secured and there is no chance of their going to the hands of the insurgents.
Pakistan is seeking $600 million in emergency funds to rehabilitate the swelling number of displaced persons described by the UN as one of the worst refugee crisis since Rwandan genocide of 1994. The US administration has already committed $110 million in emergency aid.
In the Middle East, the political and financial instability continues to throw the Arab nations into a great quandary. The United Arab Emirates (UAE) has withdrawn itself from the Gulf Monetary Union objecting to a proposal to locate the central bank in Saudi Arabia thus once again putting into jeopardy the intention of Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain and Oman to create a monetary union.
Kuwait's rule has reappointed his nephew Sheik Naser Sabah as prime minister after the election in the country. The frequent clashes between the legislature and the executive have forced the cabinet to resign five times in three years.
In the Gulf region, Iran launched a new long range missile in a show of strength and defiance of western concerns over Teheran's missile and nuclear programme. The missile has a range of 2000 km and is capable enough to reach Israel. President Ahmedinejad was present to see the historic launching. The announcement came only two days after Israel's hawkish prime minister demanded that Iran's nuclear ambitions be effectively frustrated.