China

We are responsible for easing relations between India and Pakistan, claims China

Doubts have been growing in China about the legitimacy of Mars One.

Bearish sentiment on China has returned. Recent economic data has disappointed markets and last night's HSBC Flash PMI showed that manufacturing contracted for the first time in seven months. Remember, while China has been trying to rebalance its economy towards domestic consumption, it is still largely driven by investment and exports. But "the main bear story for China," according to CLSA's Christopher Wood is that it "is taking more and more credit growth in China to deliver less economic growth." Wood says that this argument only grew legs with the release of the latest total social financing (TSF) data. TSF includes trust loans, entrusted loans, FX loans, bankers’ acceptance bills, corporate bonds, and non-financial stock sales. This was up a whopping 81% on the year to 1.75 trillion yuan, but down from 2.54 trillion yuan the previous month. In the first four months of the year, TSF was up 63% on the year to 7.91 trillion yuan. From Wood: "The increase in social financing data relates to the increase in the volume of such activity. The annualized growth in terms of the overall aggregate is harder to calculate since the PBOC has only issued social financing data since 2002. Still an estimate would suggest that in aggregate terms social financing outstanding is growing at an annualized rate of around 22%. This is clearly still well above nominal GDP growth of 9.6% YoY." "This raises another issue. That is that growth rates of China credit have been bordering on the scary since the massive 2009 infrastructure stimulus prompted by the Lehman bust and the related collapse in Chinese export growth. Thus, aggregate social financing outstanding, which remember includes bank lending, has soared from an estimated 121% of GDP in 2008 to 192% of GDP in April. Another way of looking at this, as highlighted to GREED & fear by one contact, is that the Rmb64.4tn surge in social financing since 2009 is equivalent to 14% of 2012 world nominal GDP." Deutsche Bank's John Horner also shared the sentiment. He recently wrote that more weak data out of China showed that "heighten concerns of a 'broken' Chinese growth dynamic that is no longer responding to rapid credit expansion."So the two concerns stemming from this are 1. The Chinese central bank is running out of ways to help bolster growth. 2. The Chinese economy is "long addicted to debt-financed investment-driven growth," according to Wood and needs to rebalance.SEE ALSO: How China's Renminbi Went From Overpriced Certificates To Major International Currency > Please follow Money Game on Twitter and Facebook.Join the conversation about this story »

The dismal condition of the solar industry, and the response of the U.S. and Europe to Chinese solar imports, brings to the fore what the strategy being fought over is all about. On the part of the Chinese, they're attempting to build market share while temporarily forsaking profits. Revenue is what they're generating, not earnings. This has disturbed the U.S. and Europe, which aren't able to effectively compete against the Chinese strategy at this time. While this is attempted to be spun as unfair competition, it's in fact a common business practice that is employed all the time. For example, think of Facebook (FB), Twitter, and Tumblr, or any other social networking company for that matter. They build out economies of scale and from there work on ways to monetize it. This is done across all industries at some point in time. So to disingenuously assert the Chinese are

Sprint to give US government say on board, remove Chinese hardware by @thepacketrat

In a move to get approval of its acquisition of Sprint Nextel Corp., executives of Japanese telecom company SoftBank have agreed to give the US government veto power over the choice for Sprint's director responsible for oversight of national security issues, the Wall Street Journal reports. Government representatives involved in the negotiations with SoftBank also reportedly want to be allowed to approve Sprint's network hardware purchases. Additionally, the government is pushing for Sprint to pull radio base stations manufactured by Huawei already installed on the network of wireless broadband company Clearwire. Sprint is a partner in Clearwire and is in the midst of acquiring it. Clearwire markets wireless broadband in the US under the CLEAR brand. Details of the negotiation over network systems from Huawei and ZTE were first reported in March. The US government has expressed concerns about potential security threats posed by hardware and software from the two companies; a report from the House Permanent Select Committee on Intelligence found that the companies' close ties to China's People's Liberation Army posed a risk to national security and urged US telecom companies to "seek other vendors for their projects" because of the risk of cyber espionage and cyberattacks through hidden back doors in the hardware. Huawei had offered to allow a third party to certify the security of its systems; in April, the company's executives announced they were no longer interested in the US market. Read 1 remaining paragraphs | Comments

                    Chinese astronomers, actively searching for Earth-like planets using survey instruments in Antarctica, believe efforts to seek an extra-solar planet that that harbors life will soon be rewarded. "It's highly possible that human beings might find such a planet in the coming few years," said Lifan Wang, an astronomer at Texas A&M University in College Station, and director of the Chinese Centre for Antarctic Astronomy in Nanjing. "Such planets likely exist in the Milky Way, with a possible distance of thousands of light years from us. We know too little about life. Maybe there are new forms of life that do not need exactly the same environment as we have on Earth. Some can survive in very harsh environments," Wang added. Chinese astronomers installed the first of three Antarctic Survey Telescopes (AST3-1) at Dome Argus, located at the highest elevation on the Antarctic continent, at the beginning of 2012. One of its primary missions is to search for extra-solar planets suitable for life.  Dome A may be the best place on Earth to gaze at the Universe, says Wang. At 4,093 meters above sea level, Dome A has an extremely thin and stable atmosphere, and the pressure is only half that at sea level. The extreme cold — temperatures can drop to –80 °C — makes the air very dry and reduces background radiation when observing in the infrared. There is almost no air pollution and the long winter nights allow for four months of uninterrupted observation. "Antarctica has the best conditions on Earth for astronomical observation, as it has very flat ground, a transparent atmosphere and little turbulence. The ground-based telescopes here will bring us precious information from the universe," he said. "We will send people there to retrieve observation data. I hope we can find some likely candidates. It's hard to say precisely how many, but I hope there are no less than 10," Wang said. "So far, humans have yet to find an exact twin of the Earth." "We search through a wide range of main sequence stars, mainly sun-like stars, and then look for planets within a suitable distance around them. Stars that are smaller and darker than the sun, such as dwarfs, are also in our survey scope," he said."If the stars are particularly large, they are inclined to evolve faster. Some will explode soon, and their planets will go missing after the explosion." The second AST3 will be installed in Antarctica between late 2013 and early 2014, while the third one will be installed between late 2014 and early 2015. "These telescopes are expected to help us find at least 100 sun-like stars. We will work with Australian scientists to further study the movement of the stars to calculate their size," Wang said. Chinese scientists are also planning to set up an Antarctic observatory to further boost their research and broaden the search for habitable planets. If approved and included in the 12th Five-Year Plan, the observatory should go into operation by 2020. The Daily Galaxy via Nature and http://news.xinhuanet.com/english/china/2012-08/27/c_131810648.htm Related articles "Two Water Worlds Unlike Anything in Our Solar System" --Found Orbiting a Kepler-Mission Star Alien Planets of Red Dwarf Stars --"If Life is Discovered There It May Be Older & More Evolved" The Thirty Meter Telescope --"Next Generation in the Search for Extraterrestrial Life" Astronomers find more Earth-like planets

Federal Reserve Chairman Ben Bernanke’s testimony on the U.S. economic outlook on Wednesday took global markets by storm. In the wake of the financial crisis, equity markets have become addicted to central bank stimulus and even the slightest indication that the Fed will tighten the monetary drip will send tremors of selling pressure through the exchanges. This was abundantly evident on Thursday, when Japan’s Nikkei index declined 7.32 percent. The plunge is a testament to the dangers of how hot money can inflate stock prices and how sensitive market sentiment really is to monetary policy. Other major markets in Asia and Europe also declined, and Mr. Market is waking up to his worst day in weeks. NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW! Bernanke reiterated in his testimony that Fed policy will remain dynamic and adapt to incoming economic data. Recently, positive trends in labor market conditions — and increasing criticism about the size of the Fed’s balance sheet — have fueled speculation that purchases could be tapered as early as this summer. Minutes from the last FOMC meeting confirmed this speculation, with several members proposing that an exit be pursued. The news, of course, was anathema to traders, who quickly began selling. Early gains in the U.S. markets on Wednesday evaporated into losses by closing time. Now, artificially sensitive to any indicator that could influence Fed decision making, investors have turned their attention to mixed manufacturing reports out of China and the U.S. The slowdown in U.S. manufacturing continued in May, according to Markit’s Flash U.S. Manufacturing PMI report. The purchasing managers index registered 51.9, its lowest reading since October, and the second consecutive month of slowing growth. However, this reading was still better than expectations. At a glance, it appears that U.S. manufacturing is standing upright, although still heavily supported by policy. “With the PMI hitting a seven-month low, the U.S. manufacturing economy continues to show signs of weakening. Growth has slowed sharply in recent months, down from an annualised pace of 4.9 percent in the first quarter to just 1 percent in May,” commented Markit Chief Economist Chris Williamson. “The goods-producing sector is therefore likely to have provided only a modest boost to the U.S. economy in the second quarter, providing further worrying signs that growth remains lacklustre.” NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW! The purchasing managers index is a gauge of the economic health of the manufacturing sector. Broken down into five components — new orders, inventory levels, production, supplier deliveries, and employment — the flash Markit PMI index gives investors an advanced reading of what actual conditions are like in the private sector. This information will help inform the economic backdrop against which they have to make investment decisions. Perhaps most importantly, weakness in the manufacturing sector — as indicated by two periods of slowing growth, with the slowest growth in employment — suggests that premature tapering of central bank stimulus could send a tepid recovery into contraction. “Slower growth could be linked to a combination of fiscal drag hurting demand at home while at the same time many export markets remain in fragile states. The latter led to a renewed decline in export orders in May,” commented Williamson. “There was also disappointing news in relation to job creation. With employment growing at the slowest rate since last October, the survey suggests that the Fed cannot risk tapering its stimulus any time soon.” Meanwhile, the HSBC Flash China Manufacturing PMI report, compiled by Markit, read 49.6 in May, a seven-month low indicating con

Anyone who visits China comes back with harrowing accounts of driving habits from steering onto sidewalks to ignoring traffic lights or lane markers. However, even under Chinese standards, this driver may have set a record for accidents with one minute. It seemed inevitable that the driver would find the hole and hopefully he survived. Of course, his fall might have been broken by some of the ooze that we saw take over a street in China two days ago (though it likely would dissolve both the man and his motorcycle). By the way, the Chinese did not determine what the substance was or whether it was hazardous. They just used hoses to force it back into the sewers beneath the streets — the Chinese version of environmental reclamation. Kudos: Professor Don Clarke

In all the hoopla over Japan's stock market crash and China's PMI miss last night, the biggest news of the day was largely ignored: copper, and the fact that copper's ubiquitous arbitrage and rehypothecation role in China's economy through the use of Chinese Copper Financing Deals (CCFD) is coming to an end. Copper, as China pundits may know, is the key shadow interest rate arbitrage tool, through the use of financing deals that use commodities with high value-to-density ratios such as gold, copper, nickel, which in turn are used as collateral against which USD-denominated China-domestic Letters of Credit are pleged, in what can often result in a seemingly infinite rehypothecation loop (see explanation below) between related onshore and offshore entities, allowing loop participants to pick up virtually risk-free arbitrage (i.e., profits), which however boosts China's FX lending and leads to upward pressure on the CNY. Since the end result of this arbitrage hits China's current account directly, and is the reason for the recent aberrations in Chinese export data that have made a mockery of China's economic data reporting, China's State Administration on Foreign Exchange (SAFE) on May 5 finally passed new regulations which will effectively end such financing deals. The impact of this development can not be overstated: according to independent observers, as well as firms like Goldman, this will not only impact the copper market (very adversely) as copper will suddenly go from a positive return/carry asset to a negative carry asset leading to wholesale dumping from bonded warehouses, but will likely take out a substantial chunk of synthetic shadow leverage out of the Chinese market and economy. Naturally, for an economy in which credit creation is of utmost importance, the loss of one such key financing channel will have very unintended consequences at best, and could potentially lead to a significant "credit event" in the world's fastest growing large economy at worst. But before we get into the nuts and bolts of how such CCF deals operate, and what this means for systemic leverage, we bring you this friendly note released by Goldman's Roger Yuan overnight, in which Goldman not only quietly cut their long Copper trading recommendation established on March 1 (at a substantial loss), but implicitly went short the metal with a 12 month horizon: a huge shift for a bank that has been, on the surface, calling for a global renaissance in the global economy, and in which Dr. Copper is a very leading indicator of overall economic health and end demand. From Goldman: Closing: Long LME copper September 2013 contract at $7,482/t, a $236/t (3.1%) loss Following the initial sell-off in copper prices in the second half of February 2013, we established a long copper position at $7,718/t in the September contract (on March 1, 2013). We believed that the fall in copper prices, reflecting in part concerns about Chinese activity, was overdone. We reiterated this view on April 22, post further substantial price declines. Since then, prices have rebounded strongly, with the September contract closing at $7,482/t on May 22, up by 10% from the May 1 low of $6,808/t. The emergence of the risk that CCFDs unwind over the next 3 months – we had assumed that deals would continue indefinitely – has complicated our near-term bullish copper view (from current prices). On the one hand, our fundamental short-term thesis is playing out – copper inventories are drawing, copper’s main end-use markets in China are growing solidly (property sales +39% yoy, completions +7% yoy, auto’s output +14% yoy Jan-April 2013), seasonal factors are currently supportive, Chinese scrap availability is tight, positioning also remains short, and policy risks are, arguably, mildly skewed to the upside. Set against this is the likely near-term unwind in CCFDs and, critically, our view that copper is headed into surplus in 2014 (the window for higher copper prices is s