May 20th, 2010
01:47 AM GMT
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I love visiting the U.S., but while traveling there I sometimes get a little concerned about its future.  I find myself managing down my expectations - preparing for long lines at the airport, overpriced fares for flights and train rides, and spotty mobile phone service.  Meanwhile, travel in China gets more efficient and affordable by the day. And I can talk on my cell on the subway uninterrupted.

On a recent subway ride in Hong Kong I kept my phone in my pocket as my traveling companion was U.S. Commerce Secretary Gary Locke.  Secretary Locke is in China for several days with a delegation of American executives from the clean energy sector.  He's here to promote U.S. technologies, hoping the Chinese will adopt American wind turbines and solar panels.

China is throwing a mountain of money into sectors like green energy in the belief that it is laying the groundwork for superpower status.  Beijing has already overtaken the U.S. in renewable energy investments.  It's earmarked billions on new airports, rail lines and highways – an ambitious investment in infrastructure that’s an order of magnitude more than anything being committed to rebuild the U.S. Sure, China is starting from a lower base, but it's moving ahead faster than a speeding bullet train to become a more efficient, competitive rival to America.

In a decade, which country will be the better bet - the U.S. or China?

April 14th, 2010
12:32 PM GMT
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After a series of safety recalls, the Japanese automaker has been trying to move on, pledging better safety to its customers.

Now Toyota's luxury sports utility vehicle, the Lexus GX 460, has been slapped with a rare "Don't Buy" warning from influential magazine Consumer Reports.

The magazine's testers believe that the SUV has a handling problem around sharp turns. During the tests, the testers found the vehicle slid nearly sideways before the electronics stability controls kicked in.

Their verdict? They wouldn't want to drive it with their families in the car.

The safety warning is the latest blow to Toyota's battered image. However, the carmaker's attitude appears to have changed. Toyota moved swiftly to address the issue. It suspended the sale of the GX460, is offering loaner vehicles to concerned customers, and says its engineers are already working hard to correct any problem.

Toyota certainly wants to salvage its reputation as a maker of safe, reliable cars.

Would you buy a Toyota car today?

April 12th, 2010
08:34 AM GMT
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Hong Kong, China – The leadership of the world's largest aluminum producer believes metals prices are making a comeback in 2010.

"We are bullish," Vladislav Soloviev, first deputy CEO of Rusal, told me in Hong Kong.

Demand, he believes, is strong, especially in China. The recovery in prices helped turn around his company's fortunes in 2009.

China's demand for commodities has been all over the news as of late. The country posted its first trade deficit in six years in March mainly because of the surge in imports of raw materials. Exports dropped because Chinese factories were slow to reopen after the Lunar New Year holiday.

The trade deficit is complicating the debate over the Chinese currency. Beijing has been under pressure to loosen its controls on the yuan, which many in Washington believe is set too low and contributes to the big U.S. trade deficit with China.

Soloviev believes Beijing will make a move this year. But unlike those in the manufacturing sector, he thinks a more flexible currency will give him a competitive edge.

Do you anticipate China will ease its currency controls soon?  If so, what does that mean for your business?

April 5th, 2010
12:42 PM GMT
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Hong Kong, China - While politicians and business leaders in the United States lobby for a stronger Chinese currency, many of the people who work in the manufacturing belt of southern China quietly hope their government will keep the yuan more or less where it is.

The Chinese government has been controlling the rate of its currency, the yuan, for years, mainly because officials believe a stable currency is key to supporting their exporters. However, now that China is the world's biggest exporter, more critics of Beijing's tactics are emerging in Washington. They argue Beijing is setting the yuan too low, keeping it artificially cheap, a policy that hampers American businesses and contributes to the U.S.'s trade deficit with China.

Yet at this shirt factory in Dongguan, the people are grateful for that stability. China's predictable currency rate has helped tens of thousands of factories to thrive here. The boss at this factory though acknowledges momentum is building for Beijing to loosen its reins on the yuan. He's preparing for the possible changes. His biggest question - how much more are American consumers willing to spend on clothes from China if the yuan appreciates? Because if the currency appreciates, he says he would need to pass on some of the costs.

Eunice Yoon looks at China's currency control

How much more would you be willing to spend?

December 28th, 2009
06:51 AM GMT
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The end of a year (or the start of a new one) is a time of reflection, a time to reassess life and your financial portfolio.  Last year was tough for the global economy but a lucrative one for investors in stocks or gold.

So what about 2010?  These are some of the trends to consider when investing.

1) Interest rates are bound to stay low. With governments trying to encourage economic growth, financial experts expect central banks to keep money cheap.  What does that mean?  "People are getting no return on their cash, no return on their bank accounts," Keith Wade, economist at Schroders, told me.  "They will continue to look for yield."

2) Emerging markets will be in focus. With fund managers concerned about sluggish growth in the U.S. and Europe, many say they will hunt for higher returns in places like Asia.  Asia has been recovering faster than the West.  Stocks and property have run up in the past several months and brokerages like UBS believe the trend will only continue all year.  Some governments have taken measures to rein in speculators, but in places like Hong Kong, their hands are tied.  This city's monetary policy tracks the U.S. because its dollar is pegged to the greenback.

3) The U.S. dollar will likely stay weak but be prepared for a few surprises. Richard Duncan, author of "The Dollar Crisis," argues the U.S. economy is structurally flawed and too burdened with debt, which hurts the prospects for the dollar.  He says with the U.S. government borrowing so much to finance its massive spending programs plus two wars, the outlook for the dollar will only worsen.  However, with so many financial experts down on the dollar, some are starting to wonder if the greenback might swing in the other direction at least for a short while in 2010.  One theory is that the dollar makes a comeback as investors flee to dollars to shelter themselves from market volatility.

And given the lingering fears of another Dubai debt crisis or a double dip recession, there will be no shortage of market jitters.

November 27th, 2009
05:36 AM GMT
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Driving around the Chinese town of Yi Wu, my crew and I were listening to the radio when an ad came on encouraging listeners to trade in their old TVs and washers for new ones.

"You can get a 13-percent rebate!" the speakers blared.

The government is going all out to promote its rebate programs and get its citizens spending. The manager of Xin Hong Electric, a store selling electronics and appliances, told us his sales were up as much as 30 percent. Not only can Chinese get discounts on new refrigerators, dryers or microwaves but cars too. Car sales were up nearly 80 percent in October compared to a year ago, driven in part by tax breaks and China's version of the U.S.'s "Cash-for-Clunkers" program. China is expected to overtake the United States as the world's biggest car market this year.

At Xin Hong Electric, I was struck by how many people were taking advantage of the rebate. We met up with a paper fan maker who had just bought a new fridge to add to his recent purchases: a TV, an air conditioner, a washer, and a microwave. He told us he had wanted to upgrade his appliances, anyway, and thought, why not do it now and save some cash?

That savers' mentality is said to have contributed to the imbalances in the world economy. Americans have been taking on too much debt and overspending, while Chinese (and certainly many other consumers in Asia) have been saving for a rainy day. Many economists say the government trade-in programs have had some success, but getting Chinese to feel comfortable spending will take a lot more work. They say the government will need to improve its retirement and health care programs so that people don't have to worry as much about paying large potential medical bills. The bottom line is consumers need to feel confident enough in the future to open their wallets today.

How confident are you in your home country's economy?

October 29th, 2009
10:53 AM GMT
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Gary Locke may be the top commerce official in America, but he's a rock star in China.

Locke was a hit with locals on a recent visit to China.
Locke was a hit with locals on a recent visit to China.

This week, the Chinese-American politician who is now U.S. Commerce Secretary, visited cities in the manufacturing heartland of China ahead of his high-level trade talks in Hangzhou.

Locke is joined by U.S. officials such as Agriculture Secretary Tom Vilsack, Trade Representative Ron Kirk, and Ambassador Jon Huntsman, who are here meeting with top Chinese officials including Vice Premier Wang Qishan.

I managed to catch up with Locke in Guangzhou, the capital of the province of Guangdong, where his grandfather was born. You would have thought Locke was a celebrity. During his tour of a Sam's Club superstore and a local university, Locke was mobbed by fans, press, and curious on-lookers all eager to catch a glimpse of their hometown hero.

Locke's grandfather lived in a village in this part of China before leaving for the United States in the hope of a better life. Grandfather Locke emigrated to Washington state where he took a job as a servant for a local family who lived one mile away from the Governor's Mansion. I wonder if Grandfather Locke ever dreamed his grandson would be serving people as well - as governor and now commerce secretary.

Locke told me his personal story is "thoroughly American" but that his Chinese heritage comes in handy in trade negotiations here. "I bring, perhaps, a greater understanding of the culture and history of the Chinese people," he said during our exclusive interview.

These days, the U.S. and China could use a little more understanding. Because of the economic crisis, the bond between the two trading partners has been stretched.

Earlier this year, the Obama administration slapped tariffs on Chinese tires sold in the U.S. Soon after, the Chinese threatened to cut off imports of American poultry products and auto parts.

Locke played down fears of a coming trade war. "When you look at the relationship of say brothers and sisters, the relationship when you are small and young might be very simplistic. But as the families get older they get into more complicated issues," he explained. "But it is the sign of a healthy relationship."

Locke insists the trade disputes won't distract the two nations from cooperating on larger issues such as climate change or regional security. However, even before Secretary Locke has left China, Beijing has informed Washington it is launching a trade investigation that could lead to new import duties on vehicles made by Detroit's struggling Big Three automakers (General Motors, Ford, and Chrysler), according to a U.S. auto industry official.

Hopefully, Locke's experience bridging two cultures will help bridge any economic split.

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Filed under: AsiaBusinessChina

October 26th, 2009
03:15 PM GMT
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Hong Kong, China - As long as there are free markets and humans remain emotional creatures, there will always be financial crises.

So says renowned British historian Niall Ferguson. The Harvard University professor and I had a chance to meet in Hong Kong at a recent investors' conference. He shared his observations on the current economic crisis.

CNN: Is there anything unique about this recession?

Ferguson: This isn't a recession is the first point to make. It's a near depression. In fact, I am calling it the Slight Depression to distinguish it from the Great Depression of 1929 to 1933. And the unique thing is that we nearly repeated history. In other words we nearly repeated the Great Depression, but we avoided it with massive monetary and fiscal stimulus. So we are in new territory.

CNN: When does government intervention work?

Ferguson: We need to be very careful when we talk about government intervention. That covers a multitude of sins. There was a lot of government intervention in the Soviet Union and we know how that story ended. So we are talking very specifically here about two policies: one is the use of central bank money creating power to avoid a liquidity crisis that crunches the entire banking system. So intervention by the (U.S.) Federal Reserve beginning in 2007 and escalating in September of 2008 was primarily designed to avoid massive bank failures of the sort that made the Depression so serious in the early 1930s. And I think there is no question that we have learned from history and Ben Bernanke, as chairman of the Fed, has learned from history, that it's a good idea to avoid a generalized collapse of the banking system.

CNN: When does government intervention not work?

Ferguson: The other kind of government intervention, which is slightly more problematic, is the sort in which the government runs a large deficit in order to stimulate the economy by building roads and building bridges in order to get people back to work in the hope that in doing that, it will generate a recovery. This is the model developed by John Maynard Keynes back in the 1930s and it's been used by countries around the world to varying degrees. And to some extent, this has been effective. But the problem is, in the United States, you are adding a stimulus on top of an already huge structural deficit in the public finances, and the prospect of a trillion dollars of new borrowing every year for the decade ahead, that scares me and it should scare everybody.

CNN: There's been a backlash against the financial world, especially Wall Street. Have we seen the same level of fury after past crises and where does that vitriol lead?

Ferguson: It's not, by any means, the first time that people have felt furious of what they have seen going on in Wall Street: a financial speculative bubble that bursts and causes a recession which drives other people, ordinary folks out of jobs. The question is just how far this populous backlash is going to go in the United States and indeed around the world now. My suspicion is that it's got a ways to go. Each time an American loses his or her job, not surprisingly, he or she looks around and asks who's to blame for this. And when they see on Wall Street, the banks paying out million-dollar bonuses with what appears to be, and in some cases is, taxpayer money from the TARP fund, I am not at all surprised that people feel mad. And when they feel mad, they turn around and they say, 'How can I express this anger? Who can I vote for who is going to articulate my feelings of frustration?' And I wouldn't be at all surprised to see, as we approach the mid-term elections, more and more politicians, particularly Republicans, trying to articulate that sense of popular grievance.

What lessons have you learned from the current economic crisis? Tell us what your experiences are.

October 19th, 2009
05:11 AM GMT
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Sometimes I think if you want to be a serious investor, you shouldn't become a business journalist. Sure, you learn a lot about various industries and get insightful advice from experts at the top of their game. On the other hand, you know all too well how everything can go terribly awry.

Jim Rogers, the famed commodities investor and author of new book "A Gift to My Children: A Father's Lessons for Life and Investing," admitted to me that he is a horrible short-term investor.  However, he says you don't need to be a good trader to make money.

Here are his tips for anyone looking to invest in the current economic crisis:

1) Buy what you know. "You should only buy things that you yourself know a lot about - whether it's cars, sports, hairdressing, fashion, or whatever it is," he told me.  "Do some research, do some homework, and if you see something really dramatic changing that is cheap, buy it.  You are going to know about it long before I am, long before a broker on Wall Street is, and that is how you are going to make a lot of money. "

2) Don't be cocky. "Being overactive is usually a mistake," Rogers mused.  "It always leads to problems.  People don't like it.  They want to jump around all the time.  That's not the way to succeed as an investor."

3) Buy low, sell high. "It's as simple as that," he said.  "Nobody likes to hear it.  Now that is so simple and so easy, but you cannot believe how difficult it is to buy low and sell high.  That is the hard part."

So what is Rogers doing with his money?

He wouldn't buy stocks today - not even in emerging markets.  He is selling the U.S. dollar because "it's a flawed currency."  Today, he would put new investments into commodities or what he thinks are "sound" currencies such as the Canadian dollar and the Japanese yen.  And one of his favorites - farmland.  With food prices rising, he believes farmland "may be one of the best investments a person can make in 2010."  But get to know the farmer and the industry first, he reminded me.

In other words, be sure to do your homework.

October 4th, 2009
09:01 PM GMT
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Forgive me for gearing this blog to a selected group of people, but if you are anything like me (which I am convinced most of you are), you procrastinate doing your taxes until days before the filing deadline.

Many Americans I know are befuddled by the new and seemingly urgent demands of the U.S. Internal Revenue Service to declare all foreign accounts.  They must do so by October 15.  Sure, filing the TDF 90-22.1 form isn't a new requirement.  However, because of the crackdown on tax evaders by governments worldwide, including the United States, the IRS is tightening its rules on offshore accounts.

Here is a little quiz that I hope is helpful:

1) Is this you?

a) An American expatriate

b) A U.S. green card holder living overseas

c) A foreigner residing in the U.S.

(If the answer is YES to any of the above, keep reading.)

2) Do you have any account with the following in a country outside of the U.S.?

a) Banks

b) Brokerages

c) Mutual funds

d) Unit trusts

e) Pre-paid credit cards

f)  Business account where you sign the checks (even if the account is not in your name)

g) Any other financial account

(If the answer is YES, keep going...)

3) Look at all your account statements and find the highest balance for the calendar year for every account.  Add up the balances from all the accounts for a grand total.  How much do you get?

a) More than US$10,000

b) Less than US$10,000

(If you chose A, this blog is for you.)

So what now?  The IRS wants you to declare all your accounts.  You need to write on the form the most money you had in every account to the dollar.  (No more ranges.)  And you have to file for past years, too.  Evan Blanco, partner with Deloitte in Hong Kong, told me filers should make a good faith effort to "go back over the past six years and look at any accounts that they had anything to do with."

The penalty?  A hefty fine or, if it is deemed you willfully hid money, prison time.

So better get cracking.

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