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Newsletter for Dec 11, 2007


A weekly sampling of news, analysis and opinion on economic issues of India, China and the U.S. Articles and opinion pieces are from a variety of sources and viewpoints and do not necessarily reflect those of ICA Institute. Access to some articles may require free registration to the site or may not be cited to the original source.

In this issue
  • Free Holiday Gift!
  • Economy | Finance | Trade
  • Politics | Diplomacy | Security
  • Technology | Communications
  • Energy | Resources
  • Health | Science | Environment | Education
  • Agriculture
  • Manufacturing | Transportation
  • Tourism
  • Newsletter staff

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    Economy | Finance | Trade


    US, Chinese trade officials to begin talks on thorny issues of trade, currency, copyright (IHT, December 10)
    China and the United States downplayed their differences Monday, saying both sides needed to fend off protectionism as they prepared for difficult negotiations on economic disputes ranging from exchange rates to product safety. The talks come amid rising anger in the U.S. Congress over China's massive trade surplus and demands that Washington act forcefully to compel Beijing to halt what some members see as currency manipulation and other unfair trade practices.

    China attracts $3.18 bln venture capital in first 11 months (The People's Daily, December 10)
    China attracted 3.18 billion U.S. dollars venture capital by the end of this November, up 78.9 percent from the whole year level of 2006, according to a report released Friday by Zero2IPO corporation, a leading domestic industry research institution. Altogether 428 contracts were signed by the end of November, 104 more than the 12 months' total in 2006, said the report.

    Indian companies net $20 Bn on U.S. market in '07 (Silicon India, December 10)
    The total market value of Indian companies listed in the U.S. market has grown close to $20 billion since the beginning of 2007, in spite of a sluggish trend continuing in the American market. The largest Indian private sector lender ICICI Bank is guiding from the front, accounting for nearly half the collective gains among the 16 Indian companies listed in the market. The total market capitalization of these companies has grown beyond $140 billion, where it was about $121 billion at the beginning of this year.

    India Inc second only to China in emerging MNCs (The Economic Times, December 4)
    India has contributed the second-largest number of companies in a new study of emerging market giants by multinational consultancy firm Boston Consulting Group (BCG). As many as 20 Indian companies, including the likes of M&M, Bajaj Auto, Bharat Forge, Cipla, Ranbaxy, Reliance group, TCS, Tata Motors, Tata Steel, Wipro, Infosys and VSNL are part of BCG's 2008 top global challengers list. Other Indian companies on the roster include Dr Reddy's, Crompton Greaves, Hindalco, L&T, Satyam, Tata Tea and Videocon. Wind energy company Suzlon is the new entrant to that list this year.

    China to triple quotas for foreign investment in mainland stocks (IHT, December 10)
    China plans to triple its quota for purchases of local shares by foreign institutional investors, the government said Monday, just ahead of key trade talks with the United States. The State Administration of Foreign Exchange said in a notice on its Web site that the quota for such share purchases by so-called qualified foreign institutional investors — dubbed QFII — would rise to US$30 billion (€20 billion) from the current US$10 billion (€7 billion).

    More than 70% Hong Kong households connected to internet (The People's Daily, December 7)
    More than 70 percent of Hong Kong households have a personal computer connected to the Internet, strengthening the city's status as one of the world's leading digital hubs, an official survey released Thursday indicated. Hong Kong's Census and Statistics Department said that the figure represents a slight rise on last year when 71.7 percent of households had a computer and 67.1 percent had it connected to the Internet.

    Around the Markets: India bull turns bearish (IHT, December 6)
    India's biggest bull is on the verge of becoming its biggest bear. Sanjiv Duggal, who manages the largest holding of Indian equities in the world, may even urge his clients to cash out. "Investors aren't factoring in earnings and news flows, but valuing people's dreams," said Duggal, who oversees about $11 billion in Indian equities as investment director at Halbis Capital Management in Singapore. "The risk-reward ratio is not favorable."

    China hopes to establish free trade zone with ROK at an early date (The People's Daily, December 11)
    China hopes to accelerate studies on the possibility of a free trade zone with the Republic of Korea(ROK) in order to quickly implement the zone, said Chinese Premier Wen Jiabao on Monday. During talks with ROK counterpart Han Duck Soo, Wen also urged both countries to expand mutual investment.


    Politics | Diplomacy | Security


    US Proposes Nuclear Dialogue with China(Voice of America, Dec 5)
    The United States has proposed starting a dialogue with China on nuclear weapons and strategy. VOA's Al Pessin reports the proposal came during an annual meeting between senior U.S. and Chinese defense officials at the Pentagon, which included military officers responsible for each country's nuclear weapons. Pentagon Spokesman Bryan Whitman says the United States wants the dialogue to cover defense nuclear programs, policies and strategy.

    Revived U.S.-Indian Deal Heads to IAEA(Arms Control Today, Dec 10)
    After appearing close to expiration, the U.S.-Indian civil nuclear cooperation deal was recently resuscitated when some Indian lawmakers relaxed their opposition to government talks with the world's nuclear monitoring agency. The deal's recovery, however, could be short lived if the consultations falter or fail to satisfy the lawmakers.

    India-China war games from December 20(Sify News, Dec 4)
    The Indian and Chinese armies will conduct their first war games December 20-28, a defence spokesman said Tuesday. "The exercise will begin on December 20 and conclude on 28th. It will be conducted in China's Chengdu military region," Wing Commander RK Das of the Indian Army's Kolkata-based Eastern Command, told IANS on the telephone. The exercise will see each side fielding some 100 officers and men.

    India, China seek greater say in intl financial institutions(The Hindu, Dec 5)
    India and China have said their robust economic growth would help enhance risk resilience of the world economy, as they pledged to draw on each other's development experience and add more muscle to their combined efforts in financial and fiscal fields. The two Asian giants have also identified a sub-prime crisis spread, increasing oil and commodity prices, global economic imbalance and trade protectionism exacerbation as factors that enlarge potential risks to them to continue economic growth.

    Chinese 'border gesture' to India(BBC, Dec 7)
    China appears to have reversed its long-held policy of refusing to give visas to Indians from the disputed Indian state of Arunachal Pradesh. It has now allowed a professor from the state - in the north-east of the country - to visit China. Beijing has over much of the last four decades been claiming Arunachal Pradesh as its own territory.

    Six nations discuss energy aid to North Korea(Earth Times, Dec 11)
    Officials from six nations held talks Tuesday on energy and economic aid to North Korea in exchange for abandoning its nuclear weapons programme, host nation China said. South Korea chaired an energy cooperation working group under the framework of six-party talks that also involve North Korea, the United States, China, Japan and Russia, foreign ministry spokesman Qin Gang said.

    Chinese, U.S. presidents hold telephone talks on ties, Iranian, Korean nuclear issues(Xinhua, Dec 6)
    Chinese President Hu Jintao and his U.S. counterpart George W. Bush discussed bilateral relations and the Iranian and Korean Peninsula nuclear issues during a telephone conversation Thursday.Hu said China-U.S. relations have moved forward in 2007, adding that the two sides have continued deep dialogue and exchanges at a strategic level.

    Rise of India, China doesn't mean beginning of US decline: Rice(The Hindu, Dec 11)
    The rise of India and China does not mean that the US, which is currently experiencing a "tectonic" shift in its economy, is entering an era of decline, Secretary of State Condoleezza Rice has said. "Our society and economy are in the midst of a tectonic shift from an industrial -- to an information-based order. Globalisation is creating unprecedented opportunities, but we Americans still do not feel that they are sharing in them," Rice said at a Women's Foreign Policy Group Annual Luncheon.

    India, China team up to tackle West bullying(The Times of India, Dec 8)
    India and China along with other G-77 countries have in the past two days begun a strong campaign against the pressure mounted at Bali by the industrialised countries to trash the existing global climate change treaty called the UN Framework Convention on Climate Change.

    Analysis
    Strange bedfellows for sure, but China and India would be awesome together(Globe and Mail, Dec 5)
    India and China are the twin titans of the developing world. With a combined population of 2.4 billion, they account for more than a third of the world's population and 15 per cent of world trade. That share of trade is expected to rise to 40 per cent within a generation. By then, China is forecast to be the world's biggest economy by purchasing power parity and India the third biggest.


    Technology | Communications


    Reliance secures wireless license (IHT, December 9)
    Reliance Communications received an amended license to expand services in the third-biggest wireless market in the world by number of users. The carrier's existing global system for mobile communications, or GSM, network will be extended throughout India "in due course," Reliance, based in Mumbai, said Friday. The company, the second-largest mobile-phone operator in India, has a nationwide wireless network on the competing code division multiple access, or CDMA, standard.

    Samsung targets 15 percent of India mobile market in 2008 (Silicon India, December 10)
    Aiming big, Samsung Electronics is focusing on doubling its share of the Indian mobile phone market to 15 percent in 2008. The company hopes to sell at least 10 million handsets in the year, a senior official said. "Globally, we are number two. In India, we are not number two. We want to go step by step and this is the first step," Asim Warsi, General Manager of GSM marketing at the South Korean firm's local unit, said after the launch of a new model. "Our current market share is about seven percent. We don't consider this market share yet," he added.

    IT firms gear up to avoid facing talent crunch (Silicon India, December 10)
    With NASSCOM, the apex body of the domestic software industry, forecasting a huge talent crunch resulting in a shortage of skilled manpower in the next few years, the country's top IT firms are enhancing their interaction with colleges and universities to ensure that the graduates who pass out from these institutions match the industry's requirements. Country's leading IT organizations such as Tata Consultancy Services, Infosys Technologies, Satyam Computer and HCL are already working with engineering colleges and many others are planning to collaborate with the academia to churn out professionals with the right skills.


    Energy | Resources


    Iran signals sanctions alert by $2bn oil deal with China group(Financial Times, Dec 10)
    Iran signed a $2bn oil contract with Sinopec of China yesterday, sending a signal to western companies that they might miss out on potentially lucrative contracts with one of the world's biggest energy exporters if they continued to heed US-inspired sanctions against Tehran. "If other countries who like to invest in oil and gas hesitate, they will lose opportunities," said Gholam-Hossein Nozari, Iran's oil minister.

    US, China sign MoU on joint biofuel development - USDA(Forbes, Dec 11)
    China's National Development and Reform Commission and the US departments of agriculture and energy have signed a memorandum of understanding on the joint development of biofuels. 'As two of the world's largest consumers of oil, this MoU may help reduce each country's dependence on imported oil, benefiting US and Chinese consumers,' the US Department of Agriculture said in a statement released at the US-China Joint Commission on Commerce & Trade (JCCT) meetings.

    Govt to offer 57 oil and gas blocks for auction(The Economic Times, Dec 10)
    The govt will launch the latest round of its auctions for nearly 60 oil and gas exploration acreages as it seeks to decrease dependence on foreign fuel sources, a minister said on Monday. The number of blocks on offer would be the largest so far. "We will announce NELP-VII on December 13," Petroleum Minister Murli Deora said in the capital.

    Nuclear energy key to India's role in climate change: US (The Economic Times, Dec 6)
    As the world discusses a new agreement to fight global warming, the US says nuclear energy will be a "key piece of the equation" for the future of India's contribution to adjusting climate change. "There is no question that nuclear power has to be part of the solution," a key advisor of President George Bush told reporters Wednesday at a White House briefing on the UN conference on climate change underway at Bali, Indonesia.

    Energy sector needs $150 b investment(Sify News, Dec 8)
    India needs investments to the tune of $120-150 billion (Rs 4.8-6 lakh crore) in the energy sector over the next five years. Strong private sector participation is required to complement public sector and to bring in the required capabilities and technologies according to a report released by KPMG and Confederation of Indian Industries (CII) at the India Energy Conclave 2007 here on Friday.

    India-China diplomatic row(Times Now, Dec 8)
    India-China diplomatic row seems to be in the making. China has raised strong objections to Indian firm ONGC's exploration activities in two Vietnamese oil blocks in the South China Sea. In fact it has told the Indian Government to stop its operations - but India is in no mood to listen. India's oil exploration giant, ONGC is a Fortune 500 company caught in the middle of what appears to be a diplomatic row.

    Winds of change as China invests in renewables(Smart Planet, Dec 11)
    China's economic rocket ship may be fuelled by coal but paradoxically, the world's second largest generator of carbon emissions is also on target to meet its goal of obtaining 15 per cent of its energy from renewable sources by 2020. To do so it is recruiting outside help from renewables companies in Europe, who are relishing the multi-billion dollar opportunity.

    Why did solar energy lose its flare?(MSNBC, Dec 10)
    Solar energy is the light alternative to a carbon-rich energy diet, and it may be the only renewable energy that can significantly reduce greenhouse gas emissions, engineers say. "Wind can play some role, as can biofuels and geothermal, but they are all too small," said Erin Baker of the University of Massachusetts Amherst. "The three really big players are solar energy, nuclear power and carbon capture and storage."

    Vice premier urges experts to seek energy development path suitable for China(Xinhua, Dec 6)
    Chinese Vice Premier Zeng Peiyan Thursday encouraged specialists to actively submit suggestions and proposals for top leaders to make decisions on the nation's energy development.Zeng attended and delivered a speech at the plenum of the energy expert advisory committee under the National Energy Leading Group, which was held Thursday.He asked the specialists to make earnest research on major problems China is facing in its energy exploration and to try hard to seek an energy development path that conforms to China's characteristics.


    Health | Science | Environment | Education


    China says human-to-human transmission not confirmed in latest bird flu cases (IHT, December 10)
    Outbreaks of bird flu in poultry in China are very likely in the coming months, a top agriculture official said Monday, as health investigators worked to determine how a father and son in the country's east were infected by the disease. So far, China has made major achievements in narrowing the scope of epidemics in poultry, reducing the number of birds sickened and decreasing the instances of culling, Vice Agriculture Minister Yin Chengjie was quoted as saying on the ministry's Web site.

    China-led takeover group pulls out of US$2.6 billion takeover bid for Australia's Nufarm (IHT, December 10)
    A consortium led by China National Chemical Corp., or ChemChina, is pulling out of a takeover bid for agricultural chemicals company Nufarm Ltd., the Australian company said Monday. The bid was worth a possible 3 billion Australian dollars (US$2.6 billion; €1.8 billion). In addition to ChemChina, the bid involved U.S. private equity firms Blackstone Group and Fox Paine Management.

    US resists mention of deep emissions cuts in UN climate conference document (IHT, December 10)
    In a largely symbolic duel over numbers, the United States on Monday resisted efforts at the U.N. climate conference to suggest that upcoming negotiations consider a specific range of targets for sharp cuts in greenhouse-gas emissions. A proposed text for the Bali conference's final document notes — in a nonbinding way — a widely accepted view that reductions of 25 to 40 percent in richer nations' emissions would be required by 2020, and even deeper cuts later, to head off the worst of global warming.


    Agriculture


    US, China Sign Deals to Safeguard Food(Associated Press, Dec 11)
    The United States and China sparred over intellectual property protections and signed agreements on safeguarding the quality of food and drugs exports to the U.S. Tuesday at the start of a series of contentious economic meetings. Other agreements included one to boost the number of Chinese tourists going to the United States and several geared toward expanding U.S. access to Chinese markets, from agriculture to telecommunications.

    Demand Drives Record Fertilizer Prices(Farm Futures, Dec 11)
    Prices for fertilizer are surging to record highs due to surging global demand for all forms of crop nutrients says Michael R. Rahm, Vice President of Market & Economic Analysis at Mosaic Co., a major U.S. producer of potash and phosphate.

    Climate change may hit agri production: Study(Commodity Online, Dec 10)
    Climate change may severely affect India'sagriculture. A government-sponsored study hasthat there would be grave deficient in wheat and rice in between 5 to 40 percent due to the climate change by the end of 2100 AD. Studies conducted by the Indian Council of Agriculture Research (ICAR) on the possible impact of climate change say there is considerable uncertainty about the magnitude of loss.

    China attaches importance to agricultural work next year(Xinhua, Dec7)
    The Chinese government will focus on infrastructure construction in rural areas and protecting arable land next year, according to an executive meeting of the State Council or cabinet presided over by Chinese Premier Wen Jiabao Friday."The agriculture sector is of crucial importance to economic development and social stability," noted the meeting.


    Manufacturing | Transportation



    Sinosteel makes offer for Midwest (IHT, December 9)
    Sinosteel, the second-biggest iron ore trader in China, offered 1.2 billion Australian dollars, or $1.1 billion, to buy Midwest to secure supplies ahead of a proposed merger of two of the largest producers in the world of iron ore. Sinosteel bid 5.60 dollars a share, Midwest said Friday, 16 percent more than the stock's last traded price and 54 percent more than an offer from an Australian rival, Murchison Metals.

    GM plans $5 billion in China investment (IHT, December 6)
    General Motors, the largest automaker worldwide, plans to invest as much as $5 billion in China over the next five years to expand its share of the fastest-growing major car market in the world. The company will spend about $1 billion a year on car and engine development, production facilities, technical and after-sales support and infrastructure, said Kevin Wale, the president of GM's China unit, in Shanghai on Wednesday.


    Tourism


    Medical Tourism: The lucrative prescription for India (TravelBiz Monitor, December 10)
    The Medical Tourism phenomenon is not new to India, as people have been visiting the country for medical treatment for over a decade. Patients from US, UK, Middle East, Sri Lanka, Bangladesh and Pakistan come to India to avail of health care services. In the past five to seven years, a large number of hospitals have sprung up with the required infrastructure to provide services on par with the global standards in order to tap this segment. Earlier, patients from the neighbouring SAARC countries flocked to India for treatment due to lack of advanced facilities and skill sets, and the NRI segment also came down to India due to the cost factor, which is one third in India compared to the country of residence.


    Newsletter staff

    Publisher: Roxanne Russell
    Editor of Academic Resources: Dr. S.V. Char
    Co-Editor: Abhijit Agrawal
    Co-Editor: RJ Paulsick


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