Euro debt crisis hits Chinese exporters, says a survey
28 November, 2011
LONDON: Nearly all Chinese export companies have already been hit by Europe's debt woes, according to a survey released on Monday showing just how fast the crisis is rippling through the global economy.
Global Sources, a Hong Kong firm that facilitates trade with Greater China, said 35 percent of 581 suppliers it polled this month reported a significant impact from the crisis, while 60 percent said there had been some impact.
Two-thirds of the manufacturers surveyed said shipments to Europe had dropped in the past few months, while 40 percent said they envisaged a further fall in exports next year.
European buyers were placing smaller orders, especially for computers and consumer electronics; they were also negotiating lower prices and showing more interest in entry-level models, Global Sources said.
Many Chinese suppliers were reacting to Europe's woes by doing more business with Latin America, the Middle East, Africa, Eastern Europe and Asia; close to 20 percent planned to expand in the domestic market to tap rising Chinese consumption.
"China suppliers are already taking proactive measures to sustain their export business in view of slowing orders from Europe," said Craig Pepples, Global Sources' president of corporate affairs.
In another sign that the crisis is taking a toll on business, international air freight traffic in October was 4.8 percent lower than a year earlier, the International Air Transport Association said on Monday.
The euro zone has already entered a mild recession and much worse could follow unless policymakers take decisive action to get ahead of the market, the Organisation for Economic Cooperation and Development warned on Monday.
But only 3 percent of the manufacturers surveyed by Global Sources said they might relocate their factories to lower-cost areas because of the slowdown in Europe, and only 1 percent said they might have to close down if business did not improve soon.
BOJ Governor: Japan Faces Severe Situation
Wall Street Journal, 28 November, 2011
NAGOYA, Japan—Europe's debt troubles and the yen's continued rise will likely put the Japanese economy in a severe situation, Bank of Japan Gov. Masaaki Shirakawa said, urging Europe to act boldly to prevent a repeat of the 2008 global financial crisis.
"The Japanese economy is expected to continue facing a severe situation for the time being, particularly with respect to exports," Masaaki Shirakawa said at a meeting Monday with business leaders in Nagoya, central Japan, and the central bank's aggressive credit easing reflects "a sense of crisis" about the economy.
The biggest risk comes from European sovereign debt, he said, reiterating the message the central bank delivered in downgrading its assessment of Japan's economy earlier this month. In a "negative feedback loop," he said, growing fiscal problems have raised questions about the stability of the financial system, hitting the real economy. Concern about euro-zone debt has spread from peripheral member countries such as Greece to core states including Italy, where the 10-year bond yield has crossed the crucial 7% level.
"A high strain in the financial markets has persisted," Mr. Shirakawa said at a later press conference.
European nations need to solve their debt problems by themselves, he said, first by putting their comprehensive October agreement—though tapping into funds from the International Monetary Fund and outside the region is a possibility.
Mr. Shirakawa said the debt crisis has been a factor in the yen's strength since summer, with risk-averse investors drawn to the currency by Japan's current account surplus and large foreign reserves.
The yen's rise could hurt the export-oriented economy in the Nagoya area, home to Toyota Motor Corp. and its related companies, Mr. Shirakawa said, by slashing profits and damping corporate sentiment, as well as accelerating the shift of manufacturing overseas, which could have an negative impact on labor-market conditions.
"We are well aware that the yen's strength will have an adverse impact on companies and economy in the region," he said.
Mr. Shirakawa pledging that the central bank, seeking to return the economy to a sustainable growth path, will maintain its easy policy. At its policy-setting meeting earlier this month, the BOJ decided to maintain its asset-purchase program, the main vehicle for credit easing, at ¥55 trillion ($708 billion). It had boosted the fund by ¥5 trillion in October.
Business executives at the meeting Monday expressed concern about the yen's strength, which erodes their overseas profits when they're converted to yen and threatens the competitiveness of their manufacturing operations.
The current foreign-exchange rate "stays beyond the limit" for exporters and could invite a hollowing-out of domestic industry, said Jiro Takahashi, head of the Nagoya Chamber of Commerce and Industry.
The dollar rose as high as ¥79.55 after large-scale currency intervention by the Japanese authorities Oct. 31. But the euro-zone debt crisis has continued to put upward pressure on the yen, which is regarded as a safe-haven currency. At 0755 GMT, the dollar was at ¥77.71.
Fukushima fallout: time to quit nuclear power altogether
28 November, 2011
In August, just months following the tsunami-induced crisis at Japan’s Fukushima nuclear plant, the 2011 World Conference Against Atomic and Hydrogen Bombs gathered in Hiroshima and Nagasaki, the two Japanese cities destroyed in 1945 by atom bombs, becoming forever linked to the birth of nuclear weapons and the nuclear age. The world conference was formed in 1995 to work toward a nuclear-weapon ban and foster solidarity and support for A-bomb survivors and victims of nuclear disasters.
A few of the 70,000 victims of the Fukushima disaster joined us at the August meeting, riveting the attendees with first-hand accounts of the devastating effects of radioactive contamination. According to the reports delivered by these eyewitnesses, nearly 300,000 Fukushima children continue to live in wretched conditions, continuously exposed to the dangers of radioactivity. The health hazards of radioactivity are far deadlier to children than the effects of radiation on adults. Annual blood tests are now a life-preserving necessity to track the potential onset of disease.
Because of soil contamination, one-eighth of Fukushima’s soil can never be plowed again, and the consumption of crops grown on such plots is strictly forbidden. Many local companies have gone bankrupt, while 20,000 individual proprietors are on the brink of insolvency. The Tokyo Electric Power Company recently laid off 7,400 employees due to the cash settlements it will pay to the victims of the nuclear accident. Though the company is still afloat, it’s expected to soon go under due to its enormous capital investment in nuclear power, which now faces an uncertain fate in Japan and elsewhere.
At the risk of being melodramatic, the ripple effects of Fukushima go well beyond northern Japan. Clearly, nuclear accidents have become global events. Though fully 25 years have passed since the Chernobyl disaster in Ukraine during the former Soviet Union, residents still cannot pick the mushrooms growing in certain parts of southern Germany due to radiation damage carried by the wind. Radiation knows no geographic borders. If a nuclear accident occurs on China’s shores, the citizens of Korea and Japan are inevitably vulnerable to radioactivity.
Even ignoring the numerous environmental risks, nuclear power doesn’t make sense on a pure dollars-and-cents analysis. Nuclear power simply isn’t economical when you factor the impact of indirect expenses and fees, and thus can’t compete in an open, unsubsidized market for electricity. More often than not, in fact, taxpayers are forced to foot the bill for radioactive waste disposal and storage. Costs for insurance coverage of nuclear energy facilities have become astronomical. And the costs to shutter a nuclear plant after it has passed its life expectancy nearly equal the construction costs of building the plant in the first place.
Like many, we believe the only rational alternative to fill the void likely to be left by waning interest in nuclear power is greater investment in and accelerated production of natural, renewable energy, such as solar and wind, to augment what’s produced globally by fossil fuels. The amount of wind power alone generated worldwide could expand by roughly 30 percent annually, based on most conservative estimates. Denmark already generates one-fourth of its power from wind, while three German states meet nearly 60 percent of their needs from this ever-pervasive source. In Iowa, which is the US benchmark for wind-power investment, wind is generating about one-fifth of the state’s energy needs.
A report in Science magazine contends that the Chinese could increase the country’s current output by a factor of 16 from wind-generated electricity. A single wind-generating complex in Gansu Province in northwestern China will, when completed, have 38,000 megawatts of generating capacity, enough to supply the total electricity needs of entire countries like Poland and Egypt.
Such clean, renewable energy sources should continue to get the bulk of our new capital investments in power production. From the 1979 Three Mile Island accident in Pennsylvania to Chernobyl to Fukushima, nuclear power has proven to be unpredictable and risky at best. Physical structures built by man are inherently vulnerable to the forces of mother nature, particularly amid more extreme storms and weather patterns globally and instability caused by the earth’s ever-shifting tectonic plates.
We fully realize this is a radical thought for many, but our experience in northern Japan illustrates that even incremental investment in nuclear power threatens the very existence of human civilization as we know it. The Fukushima disaster – which now stands, at least in Japan, as a new generation’s Hiroshima and Nagasaki – should once and for all drive global society firmly down a nuclear-free energy path.
Lester R. Brown is a US environmental analyst, founder of the Worldwatch Institute, and president of the Earth Policy Institute in Washington, D.C. Yul Choi is founder and president of the Korea Green Foundation. He was awarded the Goldman Environmental Prize in 1995 for the movement against toxic and nuclear contamination.