Author: Graeme Smith, UTS and ANU

With China’s hunger for resources, its mining ventures into the Pacific continue to expand. With the discovery of vast tracts of copper deposits in New Britain, there are likely to be new investments in PNG undertaken by Chinese state-owned enterprises, quite possibly in partnership with Australian mineral exploration companies.

To date, China’s flagship project in the Pacific islands has been the Ramu nickel and cobalt mine, a US$1.4 billion investment in PNG’s Madang province managed by the China Metallurgical Corporation (MCC), in partnership with Brisbane-based Highlands Pacific. Read more…

Author: Evan A. Feigenbaum, CFR

India has concluded a raft of trade agreements — with Japan, South Korea, ASEAN, and many others — and it looks set to launch negotiations for many more. But the United States is the forgotten player, in part because Washington has yet to sort out its own trade priorities with India.

First, the good news: US-India trade has grown rapidly, more than doubling from 2004 to around US$66 billion in goods and services trade in 2008. Read more…

Author: Peter Drysdale, Editor, EAF

There is increasing anxiety about global food security as food prices have spiked in many countries and the inflation of food prices appears as one of the sparks that ignited political protest in North Africa and throughout the Middle East.

The IMF and World Bank chiefs warned that high food prices and joblessness remain dangerous barriers to the world’s economic and social stability despite global macroeconomic gains on the way to recovery from the global financial crisis. Read more…

Author: Luke Nottage, The University of Sydney

In its recent review of Bilateral and Regional Trade Agreements (BRTAs), the majority report from Australia’s Productivity Commission remained opposed to including treaty provisions for investor-state dispute settlement (ISDS).

Recommendation 4(c) advised that Australia should not include ISDS ‘provisions in BRTAs that grant foreign investors in Australia substantive or procedural rights greater than those enjoyed by Australian investors.’ Read more…

Author: Ross Buckley, UNSW

There are curious aspects of the proposal by the Singapore Stock Exchange (SGX) to take over the Australian Stock Exchange (ASX). However, Australian Treasurer Wayne Swan’s decision to block it is not one of them.

The relevant legislative test is whether this takeover is in the national interest. Read more…

Author: Max Corden, University of Melbourne

People critical of global imbalances often blame the surplus countries and their currency manipulation. This column introduces a Policy Insight that argues that the basic problem has been the inefficiency of the world’s financial sector, which led to unfruitful investment in the US rather than productive investment in emerging economies.

The global imbalances are widely seen as a problem, especially by the US government and US economists. Read more…

Authors: Bijun Wang and Yiping Huang, ANU and Peking University

China is an important overseas direct investor. But this is a recent development: before 2004, the size of Chinese overseas direct investment (ODI) was trivial. From 2004, ODI grew significantly, alongside a dramatic expansion of China’s current account surplus. Total ODI increased from US$2.85 billion in 2003 to US$56.53 billion in 2009, registering an average growth rate of 55 per cent a year. During the same period, its share in global ODI flow also rose from 0.45 to 5.1 per cent.

In 2009, China was not only the largest developing country investor but also the fifth largest investor in the world, following the US, France, Japan and Germany. Read more…

Author: Theodore H. Moran, Georgetown University and Peterson Institute

Foreign direct investment is helping to propel China to become an export superpower, ‘displacing Japan as the predominant economic power in East Asia,’ as economist Ernest Preeg argues, making the country the ‘economic hegemon’ in the region.

So are multinationals trading technology, and competitiveness, for sales in China? Read more…

Author: Jagdish Bhagwati, Columbia University

The Doha Round of Multilateral Trade Negotiations (MTN) is the first negotiation to take place under the auspices of the World Trade Organization (WTO), founded in 1995.

The eight previous rounds of global trade talks were conducted under the General Agreement on Tariffs and Trade (GATT), following its creation in 1947. Read more…

Author: Mauricio Mesquita Moreira, IDB

In December 2004, during an official visit from President Hu Jintao, and amid great euphoria, Brazil signed a Memorandum of Understanding, granting China eagerly sought market economy status.

It was sold as a sign of great confidence in the benefits of the relationship and as part of a bargain whereby China would … well, that was never very clear (although there was talk of China accepting to talk about Brazil’s aspirations for a seat in the UN Security Council).

Almost seven years later, this euphoria has turned into unease. It became clear that the impact of China’s emergence is much more complex and nuanced than initially thought. Read more…

Author: David Dapice, Harvard University

Vietnam recently devalued its currency to about 21,000 dong to the US dollar. At the end of 2008, the rate was 17,000 — a decline of 24 per cent in about two years. In fact, it is worse since the ‘free market’ rate is over 22,000, and many people wanting dollars need to pay that rate. That rate would make it nearly 30 per cent depreciation. Since interest rates on dong bank deposits are only about 15 per cent, it seems safer to keep dollars under the mattress than dong in the bank.

While most Asian nations are worrying about excessive capital inflows and currencies that will be too strong to support exports, Vietnam is in the unenviable position of having almost run out of foreign exchange reserves  — the exact amount is secret but probably worth six weeks of imports and half of reserves a year or so ago. Read more…

Author: Evan A. Feigenbaum, Council on Foreign Relations

There was a rather extraordinary back-and-forth from Hillary Clinton’s budget testimony last week. The Secretary of State told Congress that China is not just competing with the United States around the world but, for all intents and purposes, is eating America’s lunch.

‘Let’s just talk, you know, straight realpolitik,’ Mrs. Clinton told the Senate Foreign Relations Committee. ‘We are in a competition with China. Take Papua New Guinea: huge energy find … ExxonMobil is producing it. China is in there every day in every way, trying to figure out how it’s going to come in behind us, come under us.’ Read more…

Author: Tom Schiller, Standard & Poor’s

Despite good progress, Asia Pacific still has a long way to go before its local corporate bond markets realise their full potential. Fostering national credit cultures built on transparency, creditors’ rights, and independent and objective credit analysis is essential.

Nearly every Asia Pacific government has started building local corporate debt markets in order to benefit from the diversification that such markets provide. Read more…

Authors: Terutomo Ozawa, CSU and Colombia University and Christian Bellak, WU Vienna

China has developed increasingly close economic relations with Africa in its quest for oil and minerals through investment and aid. The World Bank recently called upon China to transplant labour-intensive factories onto the continent. A question arises as to whether such an industrial relocation will be done in such a fashion to jump start local economic development — as previously seen across East Asia and as described in the flying-geese (FG) paradigm of FDI.

Many studies have examined China’s and other countries’ investments in Africa’s light industries (notably leather goods and textiles) and pointed out a host of difficulties they face because of poor local institutional conditions. Read more…

Author: Harry G. Broadman, Albright Stonebridge Group

The dramatic increase in recent years of trade and foreign direct investment (FDI) in sub-Saharan Africa by firms from Asia — notably China and India — has become an emotionally charged issue.

This is not surprising, since the resulting greater integration into international markets is exposing African firms and workers to greater competition, an inevitable by-product of development in today’s globalized economy. Read more…