Economic Growth in First Quarter Slows to 1.3 Percent, Its Weakest Pace in Four Years
http://biz.yahoo.com/ap/070427/economy.html?.v=14

WASHINGTON (AP) — Economic growth slowed to a near crawl of 1.3 percent in the first three months of 2007, the worst performance in four years. The main culprit: the housing slump.

The fresh reading on gross domestic product, released by the Commerce Department on Friday, was even weaker than the 2.5 percent growth rate logged in the final three months of last year. The new figures underscored just how much momentum the economy has been losing as it copes with the strain of the troubled housing market, which has made some businesses more cautious in their spending.

China warned that it must act to keep its economy from overheating and said it will take a multipronged approach rather than rely on just one policy tool.

China must better coordinate trade, foreign investment, foreign-exchange, monetary, fiscal, industrial and investment policies in addressing external imbalances, the State Administration of Foreign Exchange said.

And the National Development and Reform Commission, an agency under the State Council, China’s cabinet, said China must take steps to prevent the economy from overheating, including cutting export incentives and limiting energy-intensive industrial expansion.

The remarks add to increasing expectations that policies will soon be introduced to cool growth… The comments also come just a few weeks before Vice Premier Wu Yi flies to the U.S. for the Strategic Economic Dialogue between both countries.

China’s national social-security fund says it is reducing exposure to the nation’s soaring stock market, the latest sign that professional money managers are uneasy about its lofty levels.

as for oil always being quoted/traded in dollars, that’s what the congenital optimists say. the pessimists are saying that russia is quietly organising iran and other oil/gas producers, and their customers, to enter into stabilising long term bilateral agreements and avoiding spot markets altogether.

agree that a falloff in securities purchases (notably debt) = sign of trouble. note that the growth in total foreign purchases of us debt has semi-stalled, with the composition shifting toward the official sector (if you believe the survey data — there is a gap between the survey and the tic).

there also has been a buildup of $ in the int. banking system (new bis data should be out) but that buildup is coming from central banks $ holdings (at least in part). i cannot see the banks taking the currency risk outright — i.e. if someone deposits funds in $ they are willing to lend to the us in $. but they aren’t willing to take in euros and lend in $ unless they can hedge the fx risk.

hope that answers your question.

The world would be a much more sensible place if borrowing rates for the past five years had been set by the private, rather than the public, sector.

Prior to the 911 terrorist attack, the top Chinese leadership was well aware that prominent Neo-conservatives in the Bush Adminstration had China in their target sights. With the majority of US Strategic Nuclear missiles redeployed targeting Chinese cities, Defense Secretary Rumsfeld referred to the Chinese as a “strategic threat” to the United States in testimony to Congress. The rising level of hostility eventually led to the EP-3 spy plane crisis on Hainan island. The ultimate goal of Neo-con think tanks PNAC and AEI continues to be the regime change of the Chinese government. In that respect, the tragic events of the terrorist attack on 911 represented a window of opportunity for the Chinese to further concentrate on the development of their economy while the US was distracted by Middle East events. In any case, since the Chinese don’t retain long range military projection capability, what could the Chinese have done other than diplomatically protest the US invasion of Iraq.

I wouldn’t call the 3,000 dead and 25,000 seriously wounded US soldiers, complete BS. The Iraq war is an obvious attempt to extend US military hegemony over the Middle East, associated with the oil backed US Dollar hegemony over the global economy. For the Washington Consensus elites, the human sacrifice and economic price of the Iraqi conflict must be worth the prize. I always thought terrorist Bin Laden was in Afghanistan; why then are 150,000 soldiers patrolling the Iraqi oil fields?

The answer to this seems twofold:
1. Middle East adventures preclude much in the way of Far East adventures.
2. Export volumes have enabled the rise of China as a significant regional industrial power, which buys it a whole lot of regional political influence.

*IF* this really is a driver of Chinese economic policy, it follows that they’ll try to stick with it until the US debt creation machine cycles past consumers, through corporates, and into government.

If the Chinese did make the yuan convertible and Iran chose to sell oil to Chinas denominated in yuan, are you seriously suggesting that the US would pursue all means necessary to stop it? If so, why have we not already read about the US invasion of Iran for Tehran’s temerity in pricing oil in euros?

The US strong dollar policy is a myth- The Bush administration has not lifted finger one to put in place policies that would strengthen the dollar, and the only comments on directional preference it has made have favoured a wekaer dollar. So you can file it in the same folder as the conspiracy of “dollar hegemony” perpetrated by time travelling Treasury secretaries who wish to flood the world with worthless debt, and with Chinese resolutions to rebalance its economy: complete B.S.