China Manufacturing DA

Chinese manufacturings key to global oil and metal demand. John Shmuel, World needs China; But as growth slows markets will need new driver, Financial Post, 3/27/2 !", #e$is %e$is, &B
he !orld economy de"ends on China to im"ort more and more metals and oil to kee" global demand healthy. he country has# after all# the !orld$s second%largest economy and it$s the biggest consumer of metals and energy. &t$s a de"endency that$s been in "lace for the better "art of the "ast decade and that has hel"ed fuel commodity "rices and the stocks of the com"anies that "roduce them.
But China's econom( is clearl( slowing) From dou*le+digit growth ,ust a -ew (ears ago, Chinese o--icials now e$.ect the countr('s gross domestic .roduct to increase *( /)01 this (ear) 2nd, o- course, somewhere down the line, China's econom( will transition to an u..er+ income and slower one) When that eventuall( ha..ens, the global market !ill need another source of demand to fill the giant hole left

behind by China. 'hich raises the (uestion) Can another country e*er become a China+ &f not# alternati*e in*estors focused on commodities may be out of luck. ,&t$s hard to see because China is *ery uni(ue#, said -u .ongbin# .S/C$s China chief economist. ,&t$s uni(ue in terms of scale# in terms of its consumer "otential# and in terms of its ability right no! to build massi*e infrastructure "ro0ects that no other country can really match.,
China's current histor( o- astronomic economic growth has its roots in !3/3, when the countr( im.lemented re-orms that o.ened u. its domestic market to -oreign investment and encouraged Chinese com.anies to *e more e$.ort oriented) For much o- the .ast three decades, the countr( has e$.erienced dou*le+digit annual growth)

/ut this month it$s become clear the status (uo is changing. China$s first%(uarter 1D2 missed e3"ectations last !eek# coming in at 7.74 *ersus economist e3"ectations of 54. Chinese manufacturing# mean!hile# a""ears to be on the *erge of contracting.
4ata -rom the Purchasing 5anagers' 6nde$ -or China this week showed a reading o- 0 )0 -or 2.ril, versus 0!)7 -or 5arch) 2n(thing *elow 0 indicates contraction) 6t's *ecoming increasingl( clear that China's a..etite -or commodities is lessening)

, rade data sho! that Chinese im"orts of commodities# and industrial metals in "articular# ha*e been falling in recent months#, said Da*id 6ees# an emerging markets economist at Ca"ital 7conomics. , hat is bad ne!s for those emerging markets in 8atin America# the 5iddle 8ast and 2-rica that .redominantl( e$.ort
commodities to China)9

Me3ico cro!ds%out Chinese manufacturing# thats key to Chinese gro!th. :hang Monan, China can make it work, 2ustralian Financial ;eview, 9/29/2 !", #e$is %e$is, &B
'hile manufacturing !ages remain significantly lo!er in China than in the :S# the ra"idly narro!ing ga" is already fuelling American reshoring. <iven that Chinese wages are rising at an annual rate o- !0+2 .er cent, .roductivit(+
ad,usted wage rates in low+cost => states are e$.ected to e$ceed those in some coastal regions o- China *( onl( ? .er cent in 2 !0) 2dd to that reduced energ( costs in the =>, owing to the countr('s shale+gas revolution, as well as the glo*al su..l( chain's com.le$it(, and China's cost advantages will soon *e negligi*le) 5eanwhile, other emerging economies + including @ietnam, 6ndia, Me3ico and eastern 8uro.ean countries + are *ying for

China$s "osition as the !orld$s factory. hese lo!er%cost alternati*es are fast becoming de*elo"ed% country in*estors$ "referred destinations. Although the enormous "otential of China$s consumer market can "ro*ide a ne! im"etus for economic gro!th# the country$s economic transformation cannot succeed unless it u"grades its manufacturing sector.
China's leaders must increase investment in science and technolog(, -ocusing on .arla(ing ke( technological *reakthroughs into higher+ value+added .roduction) ;nly by combining gro!ing Chinese consum"tion !ith enhanced Chinese

manufacturing !ill the country be able to de*elo" a ne! com"arati*e ad*antage % the key to sustainable gro!th o*er the ne3t decade.

Me3icos gaining an edge o*er China but security concerns stall in*estment. &imoth( Ae""el, 5e$ico 5anu-acturing #ooks to <ain Com.etitive 8dge on China, &he Wall >treet Journal, </25/2 !", htt.A//*logs)ws,)com/economics/2 !"/ 7/2B/me$ico+manu-acturing+looks+to+gain+com.etitive+edge+
on+china/, &B
5e$icoCs strengthening -actor( sector is hel.ing *oost that nationCs econom() BC< estimates that within -ive (ears, Me3icos

factories !ill churn out u" to =<> billion a year more in goods ? much of it destined for e3"ort. About t!o% thirds of Me3icos e3"orts currently go to the :.S. @'e kno! theres a lot of !ork lea*ing China for Me3ico# because its chea"er#A sa(s Darold #) >irkin, a BC<
senior .artner) De sa(s 5e$icoCs gains will hel. =)>) manu-acturers as well, since .roducts made in 5e$ico contain -our times as man( =)>)+made .arts, on average, as those made in China) 5r) >irkin sa(s -our industries in .articular are getting a *oostA electronics, automo*iles, a..liances, and machiner() Besides having relativel( low wages, Me3ico is also benefiting from its close "ro3imity to the =)>) and low energ( costs) 5e$ico also has more -ree trade agreements E ?? E than an( other countr() &hat makes it an attractive .lace to make goods destined -or man( markets)

he biggest "roblem the country faces in attracting in*estment is fears o*er security. 5r) >irkin sa(s some com.anies look at 5e$ico and decide the risks donCt ,usti-( the savings) But others -ind wa(s to mitigate the dangers, including investing in additional securit( and training)

/loomberg, China manu-acturing to.s estimates in sign growth is sta*iliFing, &he %ation, </3/2 !",
#e$is %e$is, &B
China's manu-acturing une$.ectedl( accelerated in 5a(, indicating that a slowdown in economic growth in the -irst Guarter ma( *e sta*ilising) &he Purchasing 5anagers' 6nde$ rose to 0 )B -rom 0 )7 in 2.ril, the %ational Bureau o- >tatistics and China Federation o- #ogistics and Purchasing said in Bei,ing (esterda() &hat was higher than all estimates in a Bloom*erg surve( o- " anal(sts and com.ares with the median .ro,ection o- 0 , which marks the dividing line *etween e$.ansion and contraction) &he re.ort ma( .rovide some com-ort to .olic(makers a-ter the .reliminar( reading o- a .rivate manu-acturing surve( .ointed to the -irst contraction in seven months) Premier #i HeGiang said last week that government measures to re-orm the econom( will *e accom.anied *( ta.ered+o-- levels o- growth and warned last month that new stimulus would create risks) 9<iven the mi$ed signals, 6'd wait -or the -ull set o- activit( data such as industrial .roduction and electricit( .roduction to ,udge the momentum o- the econom(,9 said :hang :hiwei, chie- China economist at %omura Doldings in Dong Hong) 9&he rise o- the o--icial P56 -urther reduces the chance -or monetar( .olic( easing)9 &he statistics *ureau will release 5a( industrial out.ut, retail sales, and in-lation data on June 3 along with -i$ed+asset investment -or the -irst -ive months o- the (ear) &he customs administration will re.ort 5a( trade -igures on June B) &he .reliminar( reading o- a Purchasing 5anagers' 6nde$ released *( D>BC Doldings and 5arkit 8conomics -ell to ?3)7 in 5a( -rom 0 )? in 2.ril) &he decline, i- con-irmed in the -inal re.ort tomorrow, will *e the gauge's -irst dro. *elow 0 since Icto*er) &he -ederation and D>BC will also release non+manu-acturing surve(s -or 5a( this week, .roviding a -uller .icture o- an econom( that is increasingl( reliant on service industries -or growth) Both showed slower e$.ansion in 2.ril) President Ji Jin.ing said the -undamentals o- the Chinese econom( are 9sound9 and growth is on a 9more sta*le -ooting9, according to the 8nglish+language transcri.t o- a written interview he gave to #atin 2merica media released *( the o--icial Jinhua news agenc( on 5a( "!) 9We are more interested in the Gualit( and e--icienc( o- economic growth rather than the s.eed o- growth onl(,9 he said, noting that em.lo(ment is sta*le and incomes are rising) Ji's comments, made ahead o- his visit to &rinidad and &o*ago, Costa ;ica and 5e$ico, rein-orce signals -rom .olic(makers that the government is .re.ared to tolerate a slower .ace o- e$.ansion a-ter annual average growth o- ! )0 .er cent in the .ast decade led to industrial overca.acit(, rising -inancial risks and environmental degradation) China's econom( grew /)B .er cent in 2 !2, the slowest .ace in !" (ears and the government in 5arch set a goal o- /)0 .er cent -or this (ear) #ast month, Premier #i warned that room -or stimulus .olicies and government investment to meet its targets 9is not *ig9 and that such action would create 9new .ro*lems and risks9) 9&here will *e no incremental stimulus *( the new government which understands the slowing .otential growth and wishes to -ocus more on structural re-orms,9 #u &ing, head o- <reater China economics at Bank o- 2merica in Dong Hong, said in a research note) >tocks in China -ell )/ .er cent on Frida( on concern the o--icial P56 re.ort would also show a decline) &he >hanghai Com.osite 6nde$ rose )0 .er cent -or the week and has re*ounded 0)B .er cent -rom this (ear's low on 5a( 2) 95arkets' -ear o- a -urther growth slowdown will *e alleviated and we e$.ect a .ositive market reaction tomorrow Ktoda(L, #u said)

5ichael Mecham, 5anu-acturing In 6ts Wa( Back Inshore, 2viation Week M >.ace &echnolog(, B/2>/2 !", #e$is %e$is
What a di--erence a decade makes) 6n 2 , China's la*or rates were a -raction o- those -or =)>) workers, the dollar was strong, oil .rices were relativel( low, and the .romise o- access to the Chinese market had manu-acturers ho..ing to get into China) China remains a huge market domesticall(, *ut the countr( is not as im.ortant in aeros.ace M de-ense N2M4O manu-acturing as some .redicted) 6t ma( sur.rise some readers to learn that over the .ast 2 (ears, Me3ico?not China?has dra!n the highest

number of in*estments in aeros"ace manufacturing facilities# according to an analysis of 9B> ACD original e(ui"ment manufacturers and ser*ice "ro*iders by &CD S.C7# a management consultancy. China !as second# the :.S. third and &ndia a distant fourth. he &CD study reflects A*iation 'eek$s o!n recent o*er*ie! of Me3ico$s rise EA'CS A"ril 9/5# ". FFG.
%arrow the search to ,ust 2 B+!2 and the .icture changes, 6CF @ice President Hevin 5ichaels told the 5a( /+B 2viation Week Civil 2viation 5anu-acturing NC25O con-erence) &he =)>) .ushes ahead o- 5e$ico and China Nsee gra.hO) &he d(namics o- investing -or manu-acturing var( greatl( *( countr( so investment sna.shots do not tell a com.lete stor() China draws attention *ecause its aeros.ace manu-acturing am*itions are so .ronounced) 6t still holds a la*or advantage, *ut its annual costs ,um.ed !B1 -rom 2 0+! and are slated to continue at a (earl( rate o- !2+!01) 5eanwhile, =)>) rates clim*ed ?1 and are holding stead() #a*or is not generall( a de-ining e$.ense in 2M4, *ut com*ine China's shrinking advantage with hidden costs o- o--shoring and PonshoringQEre.atriating work .reviousl( sent a*roadE*ecomes more attractive, 5ichaels sa(s) Didden costs include concerns over the-t o- intellectual .ro.ert(, higher .rices -or trans.orting goods, the costs associated with t(ing u. inventor( in transit and the decreasing advantage in the value o- the (en against the dollar) 8ngine makers are 2M4 leaders in taking dee. dives into advanced materials and technolog(, including traditional multi+a$is com.uter numerical controlled machines and the introduction o- materials and methods once reserved -or la*orator( stud(, including ceramic matri$ com.osites and additive manu-acturing) 6t is a world that Pratt M Whitne( @ice President >ergio #oureiro du*s Pclosed+door manu-acturingQ *ecause its .rocesses are monitored *ehind *arriers -or sa-et('s sake) While machines reduce la*or content, the( drive u. ca.ital costs) >ometimes, ,o* sho.s in lower+wage nations are ha..( to take the la*or hit, as in 5e$ico where a sho. -loor manager asked me, P4o (ou know how much la*or 6 can *u( -or a R" , automated de*urring machineSQ &he answerA P2 lot)Q But 5ichaels dou*ts that view is the -uture) For even with automation's tradeo-- o- higher overhead, it drives overall .roduction costs down) Citing a recent 8conomist surve( o- com.anies' intentions to change their su..liers, 5ichaels notes a signi-icant shi-t in ,ust the .ast two (ears to onshoring) While that surve( was not s.eci-ic to 2M4, when 6CF did some 2M4 evaluations taking la*or, .arts/com.onents and materials into consideration, it rings true) &he costs o- .roducing *asics, such as aluminum window -rames, -avors low+cost 5e$ico *ecause the( are high+volume .roducts and have a high la*or content) But titanium nacelle .arts -avor the =)>) *ecause their la*or content is low, with high material costs) &o -urther understand these glo*aliFation, outsourcing and .roductivit( trends, 2viation Week and 6CF *egan surve(ing I85s in Fe*ruar() Iur aim is to understand the state+o-+.la( -or engineering in driving innovation, determining which .roducts win *acking and

how .roduct develo.ment c(cles are *eing .aced) =n-ortunatel(, the surve( .eriod started ,ust as seGuestration hit 2M4 markets in the =)>), which .revented a lot o- engineers -rom .ulling su..orting data -rom their human resources de.artments) >o we are tr(ing again, ho.ing those who had to hold o-- will res.ond) &he new deadline is 5a( "!)

5alcolm Maiden, China su.er c(cle not ending, ,ust shi-ting;, &he 2ge, 7/2>/2 !", #e$is %e$is, &B
Irica was Frida('s high+.ro-ile casualt( o- the resources sector slowdown as its share .rice slum.ed in the wake o- a .ro-it downgrade, *ut the resources 9su.er c(cle9 isn't dead) 6t's ,ust having a lie down, like a toddler that's recovering -rom a sugar overdose) &he commodit( .rice *u**le that accom.anied China's in-rastructure investment *oom won't *e re.eated) When China's demand -or commodities surged a decade ago, the miners had *een closing down mines and cutting e$.loration and develo.ment -or decades) &oda( China is growing more slowl( and in a di--erent wa(, and the su..l( .i.eline is larger) &he trend that <oldman >achs glo*al research head Jim I'%eill highlighted in 2 ! when he -irst .redicted the rise o- the B;6Cs + BraFil, ;ussia, 6ndia and China + is -ar -rom over, though) 6t's di--icult now to a..reciate ,ust how revolutionar( was I'%eill's .rediction that emerging nations, and China in .articular, would *ecome .owerhouses when it was made) De e$.osed a huge emerging market d(namic, one that dominated economic management in 2ustralia as it .la(ed out) With the *ene-it o- hindsight, it seems I'%eill and <oldman underestimated China's im.act) China has consumed more steel in the .ast decade than it did in the .revious 7 (ears, and its share o- glo*al iron ore consum.tion has risen -rom 2 .er cent to 07 .er cent) 6ts share o- consum.tion o- coal used -or steel making has risen -rom 2 .er cent to 0/ .er cent in a decade, its consum.tion o- nickel is u. -rom 3 .er cent to ?! .er cent, and its consum.tion o- other commodities shows similarl( stellar increases) I'%eill's B;6C h(.othesis created two related and highl( in-luential market mantras) &he -irst was that the B;6Cs were seeding a resources 9su.er c(cle9 as the( e$.anded + and as su..l(+side *ottlenecks develo.ed) &he second was that the su.er c(cle would *e su.er not ,ust in .rice, *ut in durationA commodit( .rices would *e 9stronger -or longer9) 2nal(sis *( <oldman at the end o- 2.ril showed that the s.oils -ell unevenl( a-ter the *oom took o-- in 2 ", and will -all unevenl( again as the su.er c(cle moves into its ne$t .hase) &he iron ore .rice is 0 .er cent higher than it was in 2 ", su.ercharging the .ro-its o- the *ig three iron ore miners, BDP Billiton, ;io &into and BraFil's @ale) Iver the same decade the aluminium .rice rose *( onl( ?/ .er cent, though, as China e$.anded domestic .roduction o- the metal using ca.tive .ower su..lies) ;io there-ore ro**ed itsel- o- some o- the momentum it was getting in iron ore *( .a(ing R=>"B *illion -or the 2lcan aluminium grou. in 2 /) &he world's *iggest aluminium .roducer, 2lcoa, has also struggled, and so have iron ore 9have nots9 including 2nglo 2merican) BDP's shares have risen 2?" .er cent in the .ast decade) ;io's shares have risen !23 .er cent) 2nglo's shares are u. 2B .er cent, and 2lcoa's shares have -allen 73 .er cent) &he inter.la( *etween costs and selling .rices has also *een crucial) #a*our and materials .rices soared as the miners rushed to e$.and .roduction, *ut the( .aid what it took to get new ca.acit( online, and ho.ed that .rices would rise even -aster) 6t worked in the iron ore *usinessA costs rose at a com.ound average growth rate NC2<;O o- !0 .er cent a (ear in the decade to 2 !2, and .rices rose at a C2<; o- 22 .er cent) Co..er was also a winnerA costs rose at a C2<; o- !! .er cent, and the co..er .rice C2<; was !B .er cent) For aluminium, though, a less stee. 7 .er cent cost C2<; was outstri..ed *( a .rice C2<; o- ? .er cent over the decade, and the cost+to+.rice trade+o-- -or coal and nickel was line*all) <oldman catalogues other e--ects o- the su.er c(cle that is now a decade old) &he #ondon share and de*t markets have, -or e$am.le, *ecame the home o- the su.er c(cle as takeovers eliminated mid+siFe miners Nincluding W5C, 565, %ormand( and 8Guino$ 5inerals hereO, and as the *iggest new mining -loats went to the #ondon >tock 8$change) >even o- the to. 2 miners, including dual+listed BDP and ;io, are #ondon+listed, and while the #>8 handled onl( 2)0 .er cent o- the new mining -loats *( num*er in the decade, the( accounted -or ? .er cent o- total 6PI value) #ong+term contract .ricing was re.laced *( market+*ased current .ricing -or coal and then iron ore, and an under*ell( o- *ulk commodit( derivatives inevita*l( s.rang u., adding to .rice volatilit() 8$change+traded commodit( -unds emerged and attracted a*out R!2 *illion o- investment mone(, creating a new source o- commodit( demand and .rice .ressure) Where to -rom hereS &he >MP/2>J 2 materials su*+inde$ that contains the miners is ?7 .er cent *elow its record high in 5a( 2 B, "3 .er cent *elow its .ost+glo*al crisis .eak in 2.ril 2 !!, *ut still "2 .er cent a*ove its glo*al crisis low in %ovem*er 2 B) 5ost im.ortantl(, it is still 3B .er cent higher than it was) 9&he c(cle is not -inished, it's ,ust evolving,9 is how <oldman .uts it) &he investment *ank does not *elieve newer emerging economies including 6ndia, Bangladesh, 8g(.t, 6ndonesia, 6ran, 5e$ico, %igeria, Pakistan, the Phili..ines, &urke(, >outh Horea, and @ietnam can re.lace China's in-rastructure *oom -or intensit() 6t does, however, *elieve there is enough demand coming through to kee. the demand+su..l( eGuation tight and the su.er c(cle alive) 5ining will *e harder to do in the ne$t decade o- the su.er c(cle as environmental concerns grow and develo.ment a..rovals *ecome more time+consuming) 6t's going to *e increasingl( a game -or heav(weights, too) &he siFe o- individual .ro,ects will continue to grow to lock in economies oscale, and the *ig grou.s that have the -unding lines will dominate) 2nd as household consum.tion *ecomes a *igger .art o- China's econom( and its steel+hungr( in-rastructure *oom cools, iron ore and coking coal .rices will *e cooler, and consumer+linked commodities including co..er and .otash Na raw material -or -ertiliserO, will *e hotterA BDP's co..er mines and Canadian .otash reserves leave it well .laced)

:heng Hang"eng, Digh+end manu-acturing holds the ke(, China 4ail(, </7/2 !", htt.A//www)chinadail()com)cn/*iFchina/2 !"+ 7/ //contentT!70B2720)htm, &B
&wo ma,or develo.ments that took .lace earlier this (ear are e$.ected to have -ar+reaching im.lications -or the glo*al manu-acturing sector, and .articularl( in China) 2t -irst glance, the( a..ear to *e rather innocuous economic .redictions) But a closer look reveals that while the global manufacturing industry is tottering# China is still "ro*ing to be the lifeline for many global

com"anies.
&he 2 !" <lo*al 5anu-acturing Com.etitiveness 6nde$ .re.ared *( glo*al .ro-essional service -irm 4eloitte &ouche &ohmatsu #td and the =nited >tates Council on Com.etitiveness, released in Januar(, indicates that China is not only the most com"etiti*e

manufacturing nation in the !orld "resently# but !ill continue to retain that "osition for the ne3t fi*e years. .o!e*er# that does not mean that e*erything is hunky%dory in China# as its relati*ely strong manufacturing edifice is facing se*ere challenges such as a shar" decline in the absolute !orking%age "o"ulation.

5a Jiantang, the %ational Bureau o- >tatistics chie-, had indicated in Januar( that although China's la*or -orce had declined *( ")?0 million last (ear to 3"/ million, it still continued to *e the nation's 9*iggest resource advantage9)

Bettina 'assener, ChinaCs &rade 4ata 2re >igni-icantl( Weaker &han Forecast, &he %ew Uork &imes, 7/99/2 !", #e$is %e$is, &B
&he weak im.ort growth re-lected slack domestic demand within China, where a cash crunch engineered *( the central authorities last month has weighed on *ank lending) &he slum. in e$.orts in recent months, meanwhile, is .artl( attri*uta*le to a government crackdown on -alse e$.ort re.orting *( com.anies that had *een seeking to *(.ass currenc( controls and move mone( into the countr( as a wa( to .lace a *et on -urther a..reciation o- the renmin*i, anal(sts said) But while that e--ect ma( now have *een largel( sGueeFed out o- the data, several other -actors are likel( to continue to weigh on Chinese e$.orts in the longer term) 4emand -rom markets like the =nited >tates and 8uro.e remains lackluster, -or e$am.le, while rising wages and a gradual increase in the value o- the renmin*i mean China is no longer as com.etitive as it once was) &he renmin*i has risen more than ! .ercent against the =)>) dollar since mid+2 ! , when the authorities allowed the currenc( to -luctuate more widel( against the dollar) &he weakness in the trade data, some anal(sts said Wednesda(, could .rom.t Bei,ing to sto. the renmin*i -rom rising much -urther) Uao Wei, China economist at >ociVtV <VnVrale in Dong Hong, said she e$.ected the renmin*i to weaken slightl(, to 7)!/ .er dollar *( the end o- this (ear, -rom a*out 7)!" now) Iver all, however, the new leadershi. in Bei,ing a..ears read( to tolerate some economic .ain while it .ursues the longer+term gain o- a more *alanced econom() <rowth in China has *een cooling -or man( months as the authorities seek to shi-t the econom( awa( -rom a credit+driven and increasingl( outdated growth model) For (ears, China has relied on heav( manu-acturing, state+s.onsored investment and e$.orts to .ower growth) 2ware o- the limits o- those growth drivers, Bei,ing is now seeking to -oster more domestic demand and to raise .roductivit() Polic( makers have also *een seeking to rein in a *ig e$.ansion in credit, which has generated concerns a*out asset .rice *u**les and .ossi*le loan de-aults) #ast month's cash crunch within the *anking sector, -or e$am.le, a..eared aimed at getting lenders to ado.t more .rudent lending .ractices) &he cost o- the overhaul is slower growth, however, and a growing num*er o- anal(sts sa( that China will struggle to meet its growth targets this (ear) China is unlikel( to achieve its target -or this (ear o- B .ercent growth in trade, #iu #i+<ang, a China economist at 2ustralia M %ew :ealand Banking in Dong Hong, wrote in a note) ''&his will not onl( *ring a*out downside risk to the <)4)P) growth -or this (ear *ut also .lace severe .ressure on em.lo(ment,'' 5r) #iu wrote, re-erring to gross domestic .roduct)

Jia #(nn Hang, ChinaCs economic slowdown emerges as risk to =)>) econom(, Washington PostA Business, </29/2 !", htt.A//articles)washington.ost)com/2 !"+ 7+2!/*usiness/? !!? BBT!Tu+s+ econom(+china+s+Fhiwei+Fhang, &B
2nal(sts sa( China risks entering a vicious c(cle) &he slower the econom( grows, the harder it *ecomes to .a( *ack loans) &he more de-aults there are, the more *anks .ull *ack credit that could *e su..orting economic growth) &he un-olding events in China, the worldCs second+largest econom(, are *eing closel( watched *( =)>) economists and investors *ecause o- the close ties *etween the countries) &his week, the rate s.ike and manu-acturing slowdown contri*uted to volatilit( in =)>) stock markets) ;ates in China eased o-- their record Frida() ChinaCs leaders have acknowledged .ro*lems with its -inancial s(stem, and President Ji Jin.ing has vowed to re-orm the countr(Cs econom( in swee.ing wa(s that re*alance ChinaCs sources o- growth, -rom an econom( de.endent on s.eculative investment and real estate to one that relies more heavil( on consum.tion) We *elieve the new leaders are -ull( aware o- the -inancial risks in the econom(, wrote :hiwei :hang and Wend( Chen, economists at %omura, the investment *ank) 2s their tenure will last -or ! (ears, the( are willing to tolerate some short+term .ain in order to achieve long+term .olic( o*,ectives E .reventing -inancial crisis and delivering sustaina*le growth) But thereCs some disagreement on how much ChinaCs leaders are actuall( in control o- the situation, and how well the( can manage the .olitical .erils i- .eo.le are out o- work or see their wealth sto. growing) >tevenson+Uang said that soon, even ChinaCs -amousl( large =)>) dollar reserves will start dwindling when the government has to ste. in and shore u. its -inancial s(stem) 6tCs like going down a tunnel where the walls get closer and closer, she said) &his is not a liGuidit( crisis) &his is a de*t crisis, which is wa( more s(stemic and di--icult)

Jonathan Iaiman, ChinaCs manu-acturing out.ut slows in wake o- cash crunch, &he <uardian, 7/9/2 !", htt.A//www)guardian)co)uk/*usiness/2 !"/,ul/ !/china+manu-acturing+out.ut+slows, &B
China's vast manu-acturing out.ut slowed in June, .ainting a gloom( .icture -or growth as the countr( emerges -rom its worst cash crunch in at least a decade) &he o--icial .urchasing managers' inde$ NP56O, an im.ortant gauge o- manu-acturing activit(, -ell to 0 )!, down -rom 0 )B in 5a() With 0 *eing the .oint that se.arates e$.ansion -rom contraction, the -igures showed growth in the sector had slowed to a near standstill) &he last time the reading -ell *elow 0 was in >e.tem*er) 9&he Chinese econom( is still struggling at the *ottom,9 said Dai*in :hu, the chie- China economist o- JP5organ in Dong Hong) 6n a second re.ort also released on 5onda(, 5arkit and D>BC said their P56 hit a nine+month low o- ?B)2 in June, down -rom ?3)2 in 5a() &he measure is *ased on a surve( o- more then ?2 manu-acturing com.anies, man( o- them small and medium+siFed) &he o--icial -igures -ocus on larger enter.rises) 8m.lo(ment -igures also dro..ed in June at the 9-astest KrateL since last 2ugust, and ,oint -astest since the de.ths o- the -inancial crisis in earl( 2 3,9 according to D>BC) 5anu-acturing and e$.orts have long *een the main .illars o- China's econom(, and the -igures suggest that *oth have taken a serious hit as a result o- economic sluggishness *oth at home and a*road) For the -irst time since the 2sian -inancial crisis in !33B, China is at serious risk o- missing its o--icial annual growth target, set at /)01 this (ear) 9&he weak P56 rein-orces our view that there is " 1 chance <4P ma( dro. *elow /1 in the third or -ourth Guarter,9 said :hiwei :hang, the chie- China economist at %omura in Dong Hong) China's <4P grew *( /)/1 in the -irst Guarter o- 2 !", down -rom /)31 in the .revious Guarter and -ar *elow an average growth rate o- ! )01 over the .ast decade) &he World Bank cut its growth -orecast -or China last month, sa(ing that it would likel( grow /)/1 in 2 !") 6t had earlier .redicted B)?1) 4emand -or Chinese .roducts remains weak in 8uro.e and the =>, China's two main e$.ort markets) China's central *ank moved to slow ram.ant credit growth last month *( re-using to in,ect

liGuidit( into the countr('s -inancial s(stem, causing inter+*ank lending rates to s.ike) Bloom*erg called the event the 9worst cash crunch in a decade9) 2nal(sts said that *( allowing the liGuidit( crisis to un-old, Bei,ing had shown itsel- willing to sacri-ice some growth -or a more sta*le -inancial s(stem) China's .resident, Ji Jin.ing, said on >aturda( that local o--icials should never *e ,udged 9sim.l( *( the growth o- gross domestic .roduct,9 the state newswire Jinhua re.orted signalling that the highest level leadershi. would not res.ond to slower growth with more stimulus) &he cash crunch 9is likel( to slow e$.ansion o- o--+*alance sheet lending, -urther e$acer*ating -unding conditions -or Ksmall and medium enter.risesL,9 D>BC's co+head o- 2sian economic research Dong*in Wu said in a commentar( accom.an(ing the *ank's re.ort) 92s Bei,ing re-rains -rom using stimulus, the ongoing growth slowdown is likel( to continue in the coming months)9 >igns have emerged that the countr('s *anking s(stem is regaining its eGuili*rium, *ut although inter+*ank lending rates have dro..ed over the .ast week, the( remain signi-icantl( higher than *e-ore the cash crunch *egan in late 5a()

Cro!d%;ut
China and Me3ico com"ete for im"orts to the :S. #) 2lan 'inters et al., Pro-essor o- 8conomics at the =niversit( o- >usse$ and -ormer Program 4irector othe Centre -or 8conomic Polic( ;esearch, Ferdinand ;auch, #ecturer at the 4e.artment o- 8conomics at the =niversit( o- I$-ord, #eonardo 6acovone, >enior 8conomist o- the 6nnovation, &echnolog( and 8ntre.reneurshi. <lo*al Practice, Financial and Private >ector 4evelo.ment 4e.artment at the World Bank, &rade as an engine o- creative destructionA 5e$ican e$.erience with Chinese com.etition , Journal o6nternational 8conomics, 2 92, htt.A//users)o$)ac)uk/Xecon "7 /5e$Chn).d-, &B
&he situation is similar in the =>2 E the third+countr( market where 5e$ico has con-ronted Chinese com.etition so strongl() China's share o- total im.orts more than dou*led -rom 7)01 in !337 to !")?1 in 2 ? N=>6&C &rade InlineO, while the corres.onding e$.ansion -actors -or 5e$ico were !)!0, -or develo.ing 2sia !)?7, other #atin 2merica !) 3, -or 8uro.e !) 0 and -or develo.ed 2sia )7?) 6n *oth cases we would argue that the broad thrust of Chinese e3"ort gro!th !as largely unantici"ated and e3ogenous to the countries !e study. 'hile those countries$ im"ort "olicies had to be "ermissi*e to im"orts Nand in a -ew s.eciYc cases were less than .er-ectl( soO, the increases in Chinese out"ut and e3"orts !ere generated by

China$s internal "olicy changes !hich induced huge gro!th in "roducti*ity and in*estment# massi*e inJo!s of DD& and large increases in the labor force a*ailable to manufacturers.< urning to the effect on e3"ort markets# Me3ico is one of the countries that is likely to be most strongly affected by Chinese com"etition# gi*en that !ithin KAD A Me3ico has had a com"arati*e ad*antage in the "roduction of labor intensi*e goods and that China$s e3"orts to the :SA ha*e increased so strongly. di 1io*anni et al. E2>99G estimate that Me3ico is the se*enth most technologically similar country to China. 1i*en that o*er 5B4 of Me3ican e3"orts go to the :nited States# Chinese e3"ansion in the :S market !ill ha*e been a ma0or shock to Me3ican e3"ortersL and given, in turn, that 5e$ico's e$.ort to <4P ratio varied -rom !?1 N!33?O to 201 N2 ?O such
com.etition is clearl( likel( to *e a ma,or issue -or the 5e$ican econom( as a whole)

Me3ican Manufacturing D
5artin .utchinson, 5e$ican industr( struts its stu--, &he <lo*e and 5ail, 2/27/2 !", #e$is %e$is, &B
5e$ican manu-acturing is .utting .laces like China and BraFil in the shade) 8$.orts and industrial data .oint to stead( gains in com.etitiveness over the last decade) 5e$ico's wage costs are u. onl( 2 .er cent in dollar terms + a -raction o- the increase in China and BraFil) With 8uro.e mired in recession, glo*al market share is u. -or gra*s) I--shore investors seem to see the o..ortunit() Foreign investment in 5e$ican stocks, *onds and the like dou*led last (ear to RB + *illion N=)>)O, according to statistics released on 5onda() In the other hand, -oreign direct investment has stagnated, with a "0+.er+cent dro. in 2 !2, to R!"+*illion) 8$.lanations -or this var( and include a *ig swing caused *( the -lotation o- the 5e$ican unit o- >antander, the >.anish *ank, *ut electoral uncertaint( and a sometimes shak( securit( situation are surel( also -actors) &hat hasn't sto..ed 5e$ico's domestic industries, however) 5anu-acturing e$.orts last (ear were u. B)? .er cent and re.resented B .er cent o- all e$.orts and 20 .er cent o- <4P) 6n s.ite o- a continued decline in oil e$.orts stemming largel( -rom sti-ling government management o- Peme$, the national oil com.an(, 5e$ico in 2 !2 re.orted its -irst trade sur.lus in !0 (ears) Behind these -igures is a shar. im.rovement in 5e$ico's glo*al com.etitive .osition) Productivit( growth is -ar -rom stellarA 6t averaged ! .er cent annuall( *etween !337 and 2 ! *e-ore ticking u. to more than 2 .er cent in recent (ears, according to the Con-erence Board's &otal 8conom( 4ata*ase) But wages tell a di--erent stor() 5e$ican hourl( com.ensation increased onl( 2 .er cent in dollar terms *etween 2 ! and 2 !! while BraFil's more than tri.led, according to the =)>) Bureau o- #a*or >tatistics) China's manu-acturing wages almost Guadru.led *etween 2 and 2 ! , the Boston Consulting <rou. reckons) With the re-ormist government o- 8nriGue Pena %ieto relativel( recentl( elected and costs still rising in other *ig emerging markets, 5e$ico ma( *e a*le to attract a new wave o- direct investment -rom a*road) 8ven without that, domestic enter.rises ma( -inall( *e en,o(ing the .a(o-- .redicted when the %orth 2merican -ree trade agreement was signed 2 (ears ago)

ime C2
Juan Carlos @illa, Program 5anager o- the &e$as 2M5 =niversit( 5e$ico Cit( Center, IP&6I%> FI; ;84=C6%< CI%<8>&6I% 2& &D8 58J6C2% B;I48;, F6F&D 2%%=2# %I;&D 258;6C2% 2<;6FII4 52;H8& 6%&8<;2&6I% CI%>I;&6=5 WI;H>DIP, 2 B, htt.A//naamic)tamu)edu/austin/villa).d-, &B
Ine alternative to im.rove through.ut at *order crossings without adding in-rastructure is to increase hours o- o.eration) &he num*er ocrossings into the =)>) increases su*stantiall( during the .eak season) 6ncreasing the hours o- o.eration would smooth the demand curve) Coordination among all stakeholders is reGuired and e$tensive .lanning is needed to im.lement these actions) %ot onl( CBP and other ins.ection agencies need to add sta-- -or the additional hours o- o.eration, *ut all the other stakeholders in the .rivate sector Ncustoms *rokers, drivers, carriers, grading, warehouses, etc)O would need to also *e .re.ared to o--er services throughout the da() &he im.lementation o- this measure reGuires advance notice to all stakeholders and a s.eci-ic duration o- the measure needs to *e also s.eci-ied in advance so that the costs and *ene-its o- the measure could *e calculated) >everal short+term e$.eriments have *een tested and -ailed due to the lack o- coordination o- stakeholders and a clear assessment o- *ene-its)

China 6elations :3
Frank Ching, Back to *usiness -or China, =>, %ew >traits &imes, 7/F/2 !", #e$is %e$is, &B
B2;8#U a week a-ter the White Douse warned o- a 9negative im.act9 on =nited >tates+China relationshi. *ecause o- Dong Hong's decision to allow 8dward >nowden to de.art -or 5oscow, the =nited >tates has moderated its tone dramaticall( to em.hasise the im.ortance o- the overall >ino+2merican relationshi.) President Barack I*ama, while in >enegal to *egin an 2-rican tour, was asked a*out 9China's de-iance and ;ussia's indi--erence9 in the case o- the whistle+*lower) 6n what a..eared to *e a deli*erate attem.t to lower the deci*el level, the => .resident indicated that >nowden was sim.l( 9one case oa sus.ect who we're tr(ing to e$tradite9 and that the case could not com.are with 9a whole lot o- *usiness that we do with China and ;ussia9) I*ama .la(ed down the -ailed e$tradition attem.t, sa(ing he understood 9it's a -ascinating stor( -rom a .ress .ers.ective9 and 9there will *e a made+-or+&@ movie somewhere down the line9, *ut he was looking at the -uture and not the .ast) 6n the meantime, he saidA 9We've got other *usiness to do)))) China is .a(ing a lot o- attention to 2-rica + BraFil, &urke(, 6ndia are heavil( invested in tr(ing to e$.and trade and commerce with 2-rica) We have economic and securit( interests that are critical)9 &hat is to sa(, as -ar as the => was concerned, it was *ack to *usiness as usual with China) &his is ver( good news -or China) 6n -act, Bei,ing's to. .riorit( in handling the >nowden saga was to limit an( damage to the *ilateral relationshi., which had ,ust received a *oost at the summit *etween I*ama and his Chinese counter.art, Ji Jin.ing, at >unn(lands in Cali-ornia last month) China's goal no dou*t also motivated Dong Hong's actions, assisted *( slo..( 2merican .a.erwork) Hee.ing >nowden in the -ormer British colon( most likel( would have led to .rotracted legal *attles in and out o- courtrooms, which would inevita*l( have strained >ino+ 2merican relations) 2s -or I*ama's 2-rican so,ourn, man( anal(sts view Washington as scram*ling to catch u. with Bei,ing, which is now 2-rica's *iggest trading .artner *( -ar, having overtaken the =>) 4es.ite the -act that his -ather was *orn in Hen(a and I*ama himsel- was enormousl( .o.ular with 2-ricans when he was elected 2merica's -irst *lack leader, the .resident, over the last -our (ears had not tried to leverage => in-luence on the continent, aside -rom a two+da( visit to <hana in 2 3) 6n -act, 2merican di.lomac( in 2-rica has -allen -ar short o- the => goal o- e$ercising smart .ower) Ine e$am.le is &anFania) 6n 2 B, the Bush administration o--ered almost =>R/ million N;52)! *illionO to im.rove roads and other in-rastructure in that countr() But much o- the mone( went to .a( Chinese com.anies, not 2merican ones, who won contracts -or the .ro,ects) &he => ended u. -ooting the *ill while China got the ,o*s + and the credit in the e(es o- man( &anFanians) ;e.eatedl( asked *( the .ress a*out China, I*ama .la(ed down the idea that Bei,ing was a com.etitor, sa(ing that he welcomed the attention that 2-rica received -rom China and other countries) 6n -act, he saidA 96 want ever(*od( .la(ing in 2-rica) &he more, the merrier) 6 think that's good and it gives 2-ricans leverage)9 &he .resident went so -ar as to sa( that the => was willing to coo.erate with China in 2-rica) 9We'll .artner with the Chinese,9 he said) 9We want to .artner with others who want to hel. 2-rica, *ut we want to make sure that it's done to *ene-it 2-rica)9 6nterestingl(, the Chinese had the same idea) In >unda(, the state agenc( Jinhua said that Bei,ing and Washington, 9instead o- *eing com.etitors, undermining each other's e--orts, can actuall( work as .artners in .romoting 2-rica's develo.ment9) 2nother Jinhua commentar( de.icted the >nowden incident as an 9isolated case9 that 9should not *e allowed to hurt one o- the most critical relationshi.s in the world9) 9Bei,ing and Washington can actuall( use the case to -acilitate ongoing e--orts to deal with the issue,9 it said) 9&he two sides can sit down and talk through their mutual sus.icions)9 2ctuall(, the two countries are scheduled to talk a*out c(*er securit( ne$t week when the( sit down in Washington -or the annual strategic and economic dialogue) &he >nowden case ma( well add urgenc( to the c(*er issue and, ho.e-ull(, will lead to an agreement on rules o- the road in a new and unregulated -ield) 6n the a-termath o- the >nowden a--air, *oth countries clearl( realise that their relationshi. should not *e made hostage to an( single issue) &hat in itsel- is a ma,or *reakthrough)

Doward Schneider, Change in China sha.e =)>) talks, &he Washington Post, 7/9>/2 !", #e$is %e$is, &B
2t the .eak o- China's economic e$.ansion, man( in the =nited >tates worried a*out how the countr('s ra.id growth would increase commodit( .rices, thin out =)>) manu-acturing ,o*s and disru.t the *alance o- .ower in the glo*al econom() 2s o--icials -rom the two countries convene their latest high+level economic talks and a new government organiFes itsel- in Bei,ing, the -ocus has shi-ted dramaticall( amid an economic slowdown that has made China seem suddenl( more normal + growing at rates akin to other large develo.ing nations rather than the su.erhuman .ace that touched !? .ercent ,ust a -ew (ears ago) &hat rate is now down to *elow B .ercent and *( some accounts still -alling; growth o- =)>) e$.orts to the countr( have all *ut stalled; and trou*le in the countr('s -inancial sector rocked world markets a -ew weeks ago) China re.orted trade data Wednesda( that .ointed to weaker growth in the second Guarter) 8$.orts -ell ")! .ercent in June -rom a (ear earlier, the -irst decline since Januar( 2 !2, while im.orts dro..ed )/ .ercent) &he seemingl( unthinka*le Guestion is now *eing .osedA 6s China -alteringS 96t is a di--erent d(namic -rom what we have seen) ) ) ) &his is more+moderate growth -rom an econom( that has started maturing -rom the go+go da(s o- *e-ore,9 said John Fris*ie, .resident o- the =)>)+China Business Council) With the new government in Bei,ing still taking .ower and heading into a .otentiall( .ivotal .art( congress this -all, 9the de*ate is real) ) ) ) &he slowdown matters)9 &he annual =)>)+China >trategic and 8conomic 4ialogue *egins Wednesda( with >ecretar( o- >tate John F) Herr( and &reasur( >ecretar( Jack #ew leading the =)>) delegation, and China state counselor Uang Jiechi and vice .remier Wang Uang heading the Chinese team) &o.+level securit(, central *ank and other o--icials will also *e involved) 6n an o.+ed in &he Washington Post ahead o- the discussions, Uang .ledged a 9dee.ening9 o- China's re-orms and said that the mood set *( President I*ama and President Ji Jin.ing in their 9no+necktie9 meetings last month would carr( through to this week's talks)

&he *ackdro. is .redicta*l( com.licated, evidence o- how central the =)>)+China relationshi. has *ecome to world .olitical, securit( and economic a--airs) 2long with .erennial issues such as %orth Horea, human rights and China's .olic( o- closel( controlling the value o- its currenc(, recent =)>) allegations a*outc(*er+es.ionage and cor.orate hacking have *ecome a central .art o- the discussion) 2merican o--icials are .ressuring China -or a res.onse while simultaneousl( tr(ing to de-lect the revelations o- -ormer %>2 contractor 8dward >nowden, who during his sto.over in Dong Hong alleged that the =nited >tates does .lent( o- snoo.ing on its own) &he issue has *ecome such a core concern + .otentiall( 9desta*iliFing,9 in the words o- =)>) Cham*er o- Commerce international economics head 5(ron Brilliant + that the two sides have set u. a se.arate working grou. to hel. avoid sidetracking the rest o- the discussion) %ew .anels also have *een esta*lished on climate change and energ( securit(, issues o- increasing urgenc( in China as it *attles *oth a ra.id run+u. in energ( demand and what have *ecome dangerous .ollution levels in ma,or cities) &hose sorts o- constraints are ,ust .art o- a changing economic landsca.e that has .ulled China *ack to earth) &he countr( would need to dou*le its current .er+ca.ita annual income o- around R7,7 to *e considered among the high+income countries, and i- growth slows much more, it risks *ecoming caught in the 9middle+income tra.9 + develo.ment that stalls as rising la*or and other costs erode the advantages a countr( en,o(s earl( in the develo.ment .rocess) #a*or leaders, some mem*ers o- Congress and other grou.s in the =nited >tates still worr( a*out the loss o- ,o*s to China and argue that the countr('s currenc( and other strategies to *oost e$.orts continue to give it an un-air advantage) 8**ing Chinese growth has meant a slower rise in =)>) e$.orts to the countr() Coming at a time when the =)>) econom( seems to *e -irming and im.orts are on the rise, that .roduced a record trade de-icit with China o- R?? *illion last (ear) But investment *( =)>) com.anies into China has slowed, while Chinese com.anies + looking -or technolog(, growth and other o..ortunities that have *ecome harder to -ind at home + are increasingl( going overseas, sometimes with controversial results) &he >enate 2griculture Committee is scheduled on Wednesda( to hold a .u*lic hearing a*out the .ro.osed takeover o- >mith-ield Foods, the world's largest .ork .roducer, *( a Chinese com.an( tr(ing to lock in su..l( -or an increasingl( meat+hungr( nation and gain access to =)>) technolog() Changes in =)>) monetar( .olic( and the .otential -or rising interest rates ma( divert even more ca.ital -rom China, said Cornell =niversit( economist and China e$.ert 8swar >) Prasad) &he dro..ing cost structure -or energ( in the =nited >tates, meanwhile, cou.led with the stead( rise in China's la*or *ill, has the .otential to -urther change international investment .atterns) China, Prasad said, will likel( .ress =)>) o--icials -or a *etter understanding o- those trends) Iverall, =)>) o--icials sa( the( e$.ect the economic .ressures *eing -elt inside China to .ush the countr( toward some o- the decisions that the =nited >tates and other Chinese trading .artners have long advocatedA cutting su*sidies to state+owned *usinesses, allowing -reer movement o- investment ca.ital into and out o- the countr(, and deregulating a -inancial sector dominated *( state+owned *anks and state+dictated interest rates) &here have *een recent signs o- change) When *anks ran short o- cash a -ew weeks ago, the Peo.le's Bank o- China held *ack an( Guick hel., which man( anal(sts read as a signal that the central *ank wants market -orces to .la( a *igger role in the -inancial industr() #ast week, ahead o- the talks with the =nited >tates, Chinese regulators said the( were .re.ared to allow .rivate *anks to start .la(ing a larger role in the econom() 2s with man( earlier .ronouncements, =)>) o--icials sa( the .ace o- change will *e ke() 9From ever(thing that we have *een hearing *oth in .rivate conversations and what we have seen in senior+level statements and in their own .a.ers and communiGues, there is a strong commitment to move -orward,9 said a senior =)>) o--icial) 9Dow Guickl( the( do it is still a Guestion) 6t is criticall( im.ortant, and the( recogniFe that)9

Frank Ching, =>, China relations now at a new starting .oint, &he Business &imes >inga.ore, 7/97/2 !", #e$is %e$is, &B
6% recent (ears, there has *een a noticea*le change in China's attitudeA it now acknowledges that an increase in .ower means the countr( should assume greater res.onsi*ilities) &his was ver( evident at the high+level talks in Washington last week) => 4e.ut( >ecretar( o- >tate William Burns, who co+chaired the dialogue, said without o*,ection -rom his Chinese counter.arts that 9China and the =nited >tates have a s.ecial res.onsi*ilit( to ensure sustaina*le economic growth9) &he 2merican o--icial was s.eaking a*out action *( the two countries to reduce greenhouse gas emissions) China, he .ointed out, was the world's largest emitter toda( and the => was 9histor('s largest cumulative emitter9) 6n -act, Chinese o--icials these da(s are increasingl( willing to acknowledge that their countr( should coo.erate with Washington on glo*al governance issues) &his is in stark contrast to their .revious attitude that those issues were the sole res.onsi*ilit( o- the =>) 8ver since he assumed o--ice in 5arch, the new Chinese .resident, Ji Jin.ing, has *een talking a*out the *uilding o- a new model orelationshi.s *etween ma,or .owers, es.eciall( *etween China and the =>) 2t the in-ormal summit at >unn(lands in 5a( *etween President Ji and his 2merican counter.art, Barack I*ama, the two men agreed to develo. such a relationshi.) 2t the strategic and economic dialogue last week, *oth sides re.eatedl( re-erred to this new model o- relations) &he ver( -act that China is seeking a new model o- relations *etween itsel- and other ma,or .owers is an acknowledgement that not all countries are eGual) 2 rising China, it -ollows, should *e willing to .la( a larger role in hel.ing to resolve glo*al issues, such as climate change) 6n -act, in the dialogue last week, Chinese and 2merican o--icials e$changed views on a range o- glo*al issues) China .romised to remain committed to denuclearisation on the Horean Peninsula) 6t agreed to enhance coordination with the => on the 6ranian nuclear issue, >(ria, 2-ghanistan and other regional and glo*al issues) I- course, discussion o- an issue doesn't im.l( agreement *etween Washington and Bei,ing) &hus, the two countries also discussed issues in the 8ast China >ea, where China has a territorial dis.ute with Ja.an, an 2merican militar( all(, and in the >outh China >ea, where it has maritime issues with -our >outh+east 2sian countries, including the Phili..ines, another => all() 6n -act, =>+China di--erences were re-lected in a meeting that President I*ama held with two senior Chinese o--icials + @ice Premier Wang Uang and >tate Councillor Uang Jiechi + who were there as s.ecial re.resentatives o- President Ji) 2ccording to the White Douse, 5r I*ama 9urged China to manage its maritime dis.utes with its neigh*ours .eace-ull(, without the use o- intimidation or coercion9) 8videntl( in res.onse, the Chinese Foreign 5inistr( the -ollowing da( issued a statement calling on the => to 9res.ect the -acts and not side with an( .articular .art(9 in the >outh China >ea maritime dis.utes) 6t said that Washington had .ledged in its dialogue with China not to su..ort an( .art( involved in the dis.utes) >igni-icantl(, President Ji, in a message, .ledged to activel( coo.erate with the => on *ilateral, regional and glo*al levels while managing sensitive issues) 4i--erences are to *e e$.ected in an( relationshi.) &he im.ortant thing is that the two to. .owers coo.erate when needed) 2nd there was agreement, es.eciall( on economic issues) &he most signi-icant was an agreement to negotiate a *ilateral investment treat(, something the( -ailed to do in 2 B)

&he chances o- success are higher now *ecause China is keen to invest overseas *ut has *een re*u--ed a num*er o- times *( the =>) Currentl(, a Chinese com.an(, >huanghui 6nternational, is o--ering to .a( =>R?)/ *illion -or the .ork .roducer >mith-ield Foods, the *iggest single investment *( China in the =>, i- a..roved) &here was also .rogress on another issueA access *( 2merican securit( regulators to audit work .a.ers o- Chinese com.anies listed on => stock e$changes) 2*sence o- coo.eration *( the regulator( *od( in China has led to the de+listing o- over 0 Chinese com.anies) %ow, the Chinese regulator has agreed to coo.erate, though it is not clear to what e$tent) >till, as >tate Councillor Uang saidA 9&he two sides *elieve that the China+=> relationshi. has reached a new starting .oint and that each has a stake in the other's success)9 &he o--icial Chinese media went even -urther) 9China and the => have created a miracle,9 the <lo*al &imes e--used) 9For the -irst time in modern histor(, the e$isting .ower and the rising .ower are not enemies)9

A ) Chinese .ousing /ubble

Henneth 6a"oMa, China Dard #anding Call <etting Crowded Iut, For*es, !!/"/2 99, htt.A//www)-or*es)com/sites/kenra.oFa/2 !!/!!/ "/china+hard+landing+call+getting+crowded+out/, &B
In Wednesda(, C%% was at it again, wondering i- ChinaCs su..osed housing *u**le was a*out to *urst, as i- the term housing *u**le in China was the same as the housing *u**le 2merica -aced in 2 B) For one, the =)>) housing *u**le im.loded a-ter *ulge *racket *anks could no longer *are the losses associated with mortgage *acked securities, and the ultra leverage used to *u( su* .rime real estate loans) 6n addition, the =)>) econom( was shedding ,o*s, and an over levered consumer E es.eciall( those down market E could no longer a--ord their mortgages) &hat scenario is not the case in China, according to over a doFen 2sian and =)>) -und managers and economists interviewed *( For*es over the last several months) 2lso in Icto*er, hedge -und manager Jim Chanos told 5arketWatch that ChinaCs housing *u**le was .o..ing and would *e worse than 4u*aiCs) De *ased his estimates on a decline in real estate sales, not housing values) &he Chinese government has *een .ushing -or slower real estate construction and slower sales all (ear in its e--ort to kee. .ro.ert( .rices -rom rising -urther) 6t has even .ut .ricing ca.s on some develo.ers in >hanghai, -or instance) Bo-2Cs China strategist, 4avid Cui, told ;euters on Wednesda( that the chances o- a hard economic landing were limited) China -aces several s(stemic risks -rom the .ro.ert( market, underground *anking and non+.er-orming loans in the *anking sector, Cui told ;euters in an interview, adding that a meltdown in the .ro.ert( market could *e the *iggest trigger -or a hard landing in the worldCs second+largest econom(, although such risks were modest)

2t3 8ink
&he Daily elegra"h, => wins 5e$ican su..ort on *order, B/F/2 !", #e$is %e$is, &B
P;8>648%& Barack I*ama won the strong su..ort o- 5e$ico's new .resident to control the -low o- migrants and strengthen *order securit( ++ measures that ma( give momentum to a .ending overhaul o- => immigration laws *e-ore Congress) 5r I*ama and his 5e$ican counter.art 8nriGue Pena %ieto set a goal o- making %orth 2merica ZZthe most d(namic and com.etitive region in the world'', and .ortra(ed controls on migration as vital -or sustained ,oint economic growth) ZZIur success is shared,'' 5r I*ama said at a ,oint news con-erence with 5r Pena %ieto hours a-ter he set o-- on a three+da( tri. that will also take him to Costa ;ica) ZZWhen one o- us .ros.ers, *oth o- us .ros.er,'' he said) 2nd in a move to *olster Central 2merican nations *eleaguered *( heavil( armed drug gangs, 5e$ico and the => also agreed to harness some .rograms on issues such as economic growth, disaster management, and governance and rule o- law in the region) 5eeting in the %ational Palace, 5r I*ama and 5r Pena %ieto said the( had -ocused heavil( on economic and trade issues during the talks) 5atters o- .u*lic securit( and coo.eration in -ighting organised crime, which dominated =>+5e$ico relations -or the .ast -ive (ears, took a secondar( role at the *ehest o- 5r Pena %ieto who, since coming to o--ice -ive months ago, has vowed a di--erent a..roach on securit( issues, even as he ca.italises on a new image o- his nation as a rising economic .ower)

Jo uckman, Barack I*ama calls -or 'new realities' and im.roved =>+5e$ico relations, &he <uardian, B/3/2 !", htt.A//www)guardian)co)uk/world/2 !"/ma(/ "/*arack+o*ama+me$ico+enriGue+.ena+nieto, &B
But the s.eech also contained much that seemed designed to convince the .resident's domestic audience that 5e$ico's economic .otential should alla( -ears generated *( the *i.artisan initiative on immigration re-orm that is currentl( making its wa( through Congress) I*ama said he was 9a*solutel( convinced9 that re-orm could *e .assed this (ear) While the .resident called on 5e$icans to .ut aside their traditional vision o- the => as either disres.ect-ul o- national sovereignt( or isolationist, he .ut most stress on the need -or the => to go *e(ond the .erce.tions created *( headlines a*out violence and concerns a*out *order securit() 95e$ico is a nation that is in the .rocess o- remaking itsel-,9 I*ama said, *e-ore .raising ever(thing -rom .ro+com.etition legislative re-orms to trade -igures and the -act that most 5e$icans now identi-( themselves as middle class) 9&he long+term solution to the challenge o- illegal immigration is a growing, .ros.erous 5e$ico that creates more ,o*s and o..ortunit( right here)9 &he 5e$ican government has studiousl( avoided commenting in an( de.th on the .ossi*ilit( o- an immigration re-orm, *ut I*ama's message still -itted easil( with President Pe[a %ieto's own e--orts to .ersuade 5e$icans that, as the government slogan goes, 9&his is 5e$ico's 5oment9) &his also involves redirecting attention awa( -rom the continuing violence o- the drug wars that are killing around !, .eo.le ever( month)

6elations D
4avid Shirk, 2ssociate Pro-essor at the =niversit( o- >an 4iego, =)>)+5e$ico ;elations Com.licated, Conditioned B( 4rug War, %P;, B/F/2 !", htt.A//www)n.r)org/2 !"/ 0/ ?/!B! 0"//0/u+s+me$ico+ relations+com.licated+conditioned+*(+drug+war, &B
6n man( wa(s, the relationshi. *etween the =)>) and 5e$ico is com.licated and conditioned *( the long and the *lood( war on drugs) 6t's di--icult to sa( e$actl( how man( .eo.le have *een killed in that war, *ut 5e$ican media have estimated that around / , .eo.le have died since 2 7; man( thousands more have *een disa..eared) &he =nited >tates has *een closel( involved, .roviding mone(, technolog( and intelligence to the 5e$ican government) But 5e$ican President 8nriGue Pena %ieto has *egun to *ack awa( -rom the =)>) 2nd this week, his administration said the( would limit its contacts with 2merican agencies) 4avid >hirk is an associate .ro-essor at the =niversit( o- >an 4iego) De studies the =)>)+5e$ico relationshi., and ,oins us in our studios) &hanks so much -or *eing with us) 42@64 >D6;HA &hank (ou -or having me) >65I%A Dow closel( has the =nited >tates *een involvedS >D6;HA 6n the last !2 (ears, and es.eciall( the last si$ (ears, have reall( *een a high+water mark in =)>)+5e$ico colla*oration, .articularl( on securit( issues) #evels o- trust are so high that we have had the o..ortunit( to -l( drones in 5e$ico, we have agents o.erating in direct colla*oration with their 5e$ican counter.arts, we've seen record levels o- e$tradition) >o, the colla*oration is at a much higher level o- intensit( than we've ever seen *e-ore + or has *een, at least over the last si$ (ears or so) >65I%A 2nd has =)>) involvement *een hel.-ulS >D6;HA &hat's a great Guestion) 6 think it has *een, de.ending on what (ou consider to *e success) We have not seen violence go down) We have not necessaril( seen the -low o- drugs diminish) We have not seen necessaril( an overall reduction in corru.tion in 5e$ico) But (ou can look at tactical successes) &he dismantling o- ma,or organiFed crime grou.s, the target o- s.eci-ic organiFed crime -igures has *een accom.lished over the last several (ears, thanks to this ver( high level o- colla*oration) >65I%A >o, wh( would President 8nriGue Pena %ieto *e eager to reduce that coo.erationS >D6;HA Well, 6'm not sure that the idea is necessaril( to reduce colla*oration so much as to resha.e the d(namics o- colla*oration) 6 think that's .ro*a*l( how the Pena %ieto administration would .ortra( this) For one thing, the Pena %ieto administration is tr(ing to move awa( -rom the securit( .olicies that were em.lo(ed *( the Calderon administration) >o, these e--orts to go a-ter high+level targets and to dismantle drug+tra--icking organiFations is diminishing as a .riorit( o- the 5e$ican government) 2nd what the( have em.hasiFed instead is .romoting citiFen securit() 6 think that the Pena %ieto administration thinks that (ou had a real .ro*lem with the lack o- coordination under the Calderon administration) 2nd their idea, in the Pena %ieto government, is to tr( to tighten u. and centraliFed the mechanisms o- coordination and coo.eration with the =nited >tates) 2nd 6 think that's a deli*erate attem.t to vet and control whatever t(.es o- coo.eration we're going to see *etween the =)>) and 5e$ican government) >65I%A Well, that raises an issue that 6 think (ou've even touched on in some o- (our writings) Das this *een, in man( wa(s, a drug war that's *een an 2merican war conducted over the *orderS >D6;HA 6 think that there are a lot o- .eo.le who would agree with that idea) 2nd in some wa(s, (ou can see that the drug war, as it's .la(ed out over the last "? (ears, in .articular as a =)>) .ro$( war) &hat said, over the last si$ (ears, working with 5e$ico, =)>) o--icials have consistentl( tried to let 5e$ico set the agenda) =)>) o--icials that 6 s.oke to, re.eatedl( + and 5e$ican o--icials + re.eatedl( e$.ressed the understanding that 5e$ico and the =nited >tates were working together *ecause the( had a shared res.onsi*ilit( to deal with the .ro*lem o- drug tra--icking and organiFed crime) But 6 think =)>) o--icials are reall( waiting to see whether the( will *e a*le to coo.erate with the Pena %ieto administration and in what areas) Because there is some sense that the trust and colla*oration that was *uilt u. over the last si$ (ears is at least on hold, i- not in recession) >65I%A 6t seems to me + 6've s.oken with 5e$icans, who, to deal in shorthand, are sick o- the drug wars and sick o- the cartels and *lame them -or thousands o- deaths, and (et at the same time, in some wa(s, the( *lame 2mericans -or *eing the market -or those drugs) >D6;HA Ueah, 6 think that's true) 6 mean, -irst o- all, 6 think man( 5e$icans are tired o- having their countr( .ortra(ed as a lawless, violent and corru.t .lace) &hat said, 6 also think that, -or man( 5e$icans, this incredi*le -ight that the('ve made over the last si$ (ears to tr( to take on organiFed crime has not (ielded ma,or gains in sto..ing the -low o- drugs in even necessaril( *reaking down some o- the ma,or cartels that o.erate in 5e$ico) >o, there is a sense that the('ve made all o- this e--ort and it's .rimaril( to .revent =)>) drug consumers in engaging in an illicit market activit() 6 think some 5e$icans ma( sim.l( sa( this is not worth the e--ort) &his is not our -ight) #et's let the drug tra--ickers get *ack to *usiness as usual and we can get on with our lives)

Stratfor <lo*al 6ntelligence, 8volving =)>)+5e$ico ;elations and I*amaCs @isit, B/2/2 !",
htt.A//www)strat-or)com/anal(sis/evolving+us+me$ico+relations+and+o*amas+visit, &B
While 5e$ico reorients its internal -ocus to structural changes that its leaders ho.e will la( -oundations -or economic develo.ment, the countr( could also *e a--ected *( domestic issues under de*ate in the =nited >tates) For (ears, 5e$ico has *een .ressing the =nited >tates to enact stricter gun laws) &hough a .rominent gun control *ill -ailed in the =)>) >enate on 2.ril !/, the issue will likel( re+emerge later in 2 !", and at least some gun control measures currentl( en,o( *road .o.ular su..ort) 5eanwhile, demogra.hic changes in the =nited >tates are driving a de*ate a*out immigration re-orm that, i- im.lemented, would reGuire colla*oration with 5e$ico, man( owhose citiFens would seek to legaliFe their residential status in the =nited >tates) &hough the .assage o- these re-orms will similarl( *e determined solel( *( =)>) domestic .olitical -actors, their success would *e a signi-icant *oon -or *ilateral relations with 5e$ico) 6ndeed, -or I*ama and Pena %ieto, the e--ects each -eel o- the other's .olic( decisions will *e magni-ied *( the uniGue demogra.hic, geogra.hic and economic ties *inding their countries) Uet, the domestic environment and .olitical calculations in each countr( will ultimatel( sha.e the e--ects o- this .eriod o- .olitical change)

/ioterror D
:S /ioterror "re*ention is on o*erkill mode# its other states that dont care. ;ichard 2) Dalkenrath, >enior Fellow in the Foreign Polic( >tudies Program at the Brookings 6nstitution, =)>) #ead in Countering Bioterrorism Could Create 2cute Pro*lems, 8uro.ean 2--airs, >ummer 2 >B,
Ciao, &B
he :nited States is making enormous efforts in the areas of bioterror "re*ention# detection# and res"onse. >ince the terrorist attacks o- 3/!!, the :nited States has s"ent o*er =2> billion on biodefense of one kind or another# "rimarily on fundamental research and de*elo"ment and the "rocurement of medical counter measures and sur*eillance and res"onse systems# including a *ery large stock"ile. &wo ma,or .ieces
o- legislation have *een enacted + the Bioterrorism #aw o- 2 2 and the Bioshield #aw o- 2 N%6DO is conducting a su*stantial scienti-ic research and develo.ment .rogram) ? + and the %ational 6nstitutes o- Dealth

he :nited States has de"loyed atmos"heric sensors for biohaMards and bio"athogens in se*eral doMen cities. 'e ha*e made a *ital change in the rules for a""ro*ing the efficacy of drugs so that animal studies can no! be used to determine the efficacy of "ossible countermeasures. 'e ha*e accumulated a huge stock"ile of medical countermeasures# both drugs and other medical a""aratus# that are on "allets ready to be de"loyed any!here in the !orld at *ery short notice. 'e ha*e enough small"o3 *accine to *accinate the entire :.S. "o"ulation# "lus a small e3tra amount to hel" out !ith international crises. 'e ha*e a *ery large bio%sur*eillance initiati*e !hich seeks to integrate the many different sensors no! de"loyed.
We have engaged in an e$traordinar( *io-orensic e--ort that has -ocused on the anthra$ attacks o- Icto*er 2 ! and has signi-icantl( advanced the *oundaries o- science and *io-orensics in dealing with the anthra$ micro*e) .uge grants for biodefense are

being gi*en to state and local "ublic health agencies. Ma0or e3ercises ha*e been carried out# both at meetings of e3"erts and in the field. Some of these e3ercises ha*e in*ol*ed the 2resident# and many ha*e in*ol*ed cabinet secretaries# in order to create a realistic simulation of a bioterror attack and "ush the :.S. res"onse system and *accination efforts to the "oint of failure. 'e ha*e changed the criminal code to incor"orate ne! bioterrorism offenses# making sure that all our actions are legal# and we have revised the regulations governing the >elect 2gent Program, administered *( the Centers -or
4isease Control and Prevention, that monitors the .ossession o- *iological agents and to$ins that could .ose a severe threat to .u*lic health and sa-et() &his involves an intensit( and scale o- activit( that are uniGue in the world) =)>) e$.erts still criticiFe our activities as insu--icient or wrongl( -ocused) /ut there is huge asymmetry bet!een :.S. efforts and those of the rest of the !orld that is

already (uite "roblematic# and !ill become acutely "roblematic in the e*ent of an actual bioterror attack. 6
shall give ,ust one e$am.le)

&ts !ay too hard N *iruses !ill die before they reach their targets. Denr( >) 2arker, %ational Program #eader -or 2Guaculture at the 2gricultural ;esearch >ervice in the
=)>) 4e.artment o- 2griculture, 2gricultural BioterrorismA 2 Federal >trateg( to 5eet the &hreat, 6nstitute -or %ational >trategic >tudies, 2 >2, Ciao, &B
While biological agents have man( *ene-its as instruments o- war-are or terror, the( are not ideal !ea"ons# "articularly

in a battlefieldsituation. o be effecti*e# most agents must be !idely disseminated# infecting numerous targets simultaneously. he most effecti*e dis"ersal method !ould be an aerosol cloudL ho!e*er# microsco"ic "athogenic agents lose *irulence or die ra"idly on release because of e3"osure to ultra*iolet radiation and desiccation. here are also substantial "ractical difficulties in controlling the dis"ersal "ath of the agents in un"redictable conditions of atmos"heric or other trans"ort.3O Durther# biological !ea"ons# in contrast to high e3"losi*es# lack the o*er!helming and immediate sho! of "hysical force that demoraliMes enemies.F> Additional disad*antages of biological !ea"ons include the need to "rotect handlers from accidental contaminationL the difficulty of maintaining (uality control and containment during manufacture and har*esting of agentsL the "oor sur*i*al in storage of agentsL and the difficulty of maintaining biological !ea"ons in a deli*ery state.F9 Finall(, using !ater or food as a *ector for biological contaminants or "athogens is com"licated by the fact that agents !ould be diluted in !aterL "otable !ater is routinely "urified in munici"al treatment facilities# and cooking food !ould destroy most Ebut "robably not allG biological to3ins or "athogens.F2

/ioterror Sur*eillance C2
Barr( >) Pellen, ;esearch 4irector o- the 2rctic >ecurit( Pro,ect at the %aval Postgraduate >chool, Preventing 2rmageddon 66A Con-ronting the >.ecter o- 2griterror, >trategic 6nsights, @olume 666, 6ssue !2, 4ecem*er 2 >F, Ciao, &B
2s &om ;amstack re.orted in &he Washington &imes, Continuing *ioterrorism scares are *reathing new li-e into o*scure scienti-ic .ro,ects as the nation gro.es -or a wa( to de-end itsel- -rom deadl( micro*es)K/L Ine solution that is emerging is a handheld 9microarra(9 s(stem that tests white *lood cells to detect viruses within "7 hours o- e$.osure, sometimes even *e-ore victims know the( are sick) &he device is su..osed to *e an earl( warning s(stem against *iological *om*s) 6t was develo.ed *( the Walter ;eed 2rm( 6nstitute o- ;esearch -or the malaria soldiers might encounter in other countries, and the 2rm( .lans to re-ine the s(stem to detect anthra$, small.o$ and other diseases) 2nother case o- technolog( innovation is the use o- radar to detect *ioterror attacks) 6n one test o- such a use o- the =)>) national weather radar grid, a cro. duster released a mi$ture o- grain alcohol, cla( dust and water and .ol(eth(lene gl(col over central Iklahoma 5arch 2?) &he 2rm( and the 8nvironmental Protection 2genc( were testing whether radar could detect a *ioterrorist attack) ;amstack said that the( ho.e to develo. com.uter technolog( -or a nationwide *ioterrorism detection .rogram, and that the 8P2 has done similar tests in 5ar(land, =tah and Florida since 2 !) Federal Com.uter Week's >ara 5ichael re.orted that in an e--ort to detect *ioterrorism attacks at an earl( stage, Centers -or 4isease Control and Prevention o--icials are stud(ing wa(s to access and anal(Fe .rediagnostic health data -or indications o- a disease out*reak)KBL Bio>ense is a new .ro.osal *eing discussed with C4C's .arent agenc(, 4DD>) B( e$amining s(ndromic data -rom several national sources, .u*lic health o--icials ma( *e a*le to detect a trend, allowing -or a more ra.id res.onse) Bio>ense would draw on several national data sources, such as reGuested la* tests, over+the+counter drug sales and managed care hot lines that .atients call with Guestions or concerns) C6I's >arah 4) >calet o*served that health o--icials are working toward a so.histicated 6& network that could detect the earl( warning signs o- *ioterrorism, *ut -ormida*le o*stacles remain)K3L >he cited ;osemar( %elson, chairman o- %ational Pre.aredness and ;es.onse, a new *ioterrorism task -orce created *( the Dealthcare 6n-ormation 5anagement and >(stems >ociet( ND65>>O, who said such a s(stem, to sound the alarm in that .recariousl( short window o- time when the s.read o- disease could *e sto..ed, is now *eing de-ined and created) >calet re.orted that toda(it might take weeks or months -or the C4C to gather su--icient in-ormation to s.ot a *ioterrorist attackE*ut with a so.histicated 6& network, it would take ,ust da(s) 2t %ew 5e$icoCs >andia %ational #a*s, >calet o*served researchers have develo.ed a s(stem called the ;a.id >(ndromic @alidation Pro,ect, which reGuires health+care .roviders to actuall( log on to a secure we*site and t(.e in in-ormation a*out a .atientCs s(m.toms in return -or trend and treatment in-ormation, nearl( instantl() 6n addition, the C4C has develo.ed the %ational 8lectronic 4isease >urveillance >(stem N%84>>O, which la(s out a sort o- meta+ standard -or *oth healthcare in-ormation and 6& standards, and all state health de.artment s(stems must *e %84>>+com.ati*le ithe( want a .iece o- the R3!B million in *ioterrorism grants that the C4C is handing out this (ear) With such .ocket*ook .ersuasion, >calet *elieves things could get *etterE*ut currentl(, a national *ioterrorism surveillance s(stem seems -ar o--, indeed) 6n addition to technolog(, new .olicies are *eing cra-ted to hel. 2merica co.e with the new threat o- *ioterror) ;amstack re.orted that Congress res.onded to the Icto*er 2 ! anthra$ scare *( .assing the Pu*lic Dealth >ecurit( and Bioterrorism Pre.aredness and ;es.onse 2ct o- 2 2, known as the Bio.re.aredness 2ct, which created new restrictions on who can handle dangerous micro*es, which ones the( can handle and how and where the( can *e used) 6n addition, industr( must -ollow stricter .rocedures to .revent contamination o- -ood and water su..lies)K! L &he R0 *illion -ood+.rocessing industr( must now register -acilities and give .rior notice o- an( im.orts com.anies acce.t, and the F42 has also increased its ins.ections o- -oods that could *e contaminated with anthra$ or other to$ins) Ither .rovisions o- the Bio.re.aredness 2ct im.ose criminal .enalties on unauthoriFed handling o- organisms and chemicals, some o- which are commonl( used in academic research) With this evolving mi$ o- new, and more .ro+active, .olicies to more thoroughl( monitor the =)>) -ood su..l(, and emerging technologies to *etter detect and track a *io+attack -rom its earliest o- stages, 2merica is getting *etter a*le to res.ond to a the nightmare+scenario o- *ioterrorism i- it has to) 2nd, as >ecretar( ;idge has .ointed out, this could e--ectivel( deter such an attack -rom ever ha..ening) 2s the( sa(, an ounce o- .revention is worth a .ound o- cure) When it comes to agriterrorism, one might argue that an ounce o.revention is worth a ton o- cure, ma(*e more)

Conditional China DA 8ink

Patricia ;e( Mallen, #atin 2merica 6ncreases ;elations With ChinaA What 4oes &hat 5ean For &he =>S, 6nternational Business &imes, </25/2 !", htt.A//www)i*times)com/latin+america+increases+relations+ china+what+does+mean+us+!"!/3B!, &B
Be(ond the lack o- understanding with its -ormer main trade .artner, wh( is #atin 2merica so smitten with ChinaS Hevin <allagher, a .ro-essor o- international relations at Boston =niversit(, sa(s China s.eaks to the regionCs new-ound con-idence) China is o--ering attractive deals to #atin 2merican economies while the =nited >tates continues to lecture and dictate, <allagher wrote -or &he <lo*alist) For too long, the =nited >tates has relied on a rather im.erial mechanism, ,ust telling #atin 2merica what it needs, he added) Com.are that to ChinaCs a..roachA 6t o--ers #atin 2merica what it wants) <allagher argued that the =)>)C *iggest o--er to #atin 2merica is the &rans+Paci-ic Partnershi., which o--ers access to the =)>) market on three conditionsA deregulate -inancial markets, ado.t intellectual .ro.ert( .rovisions that give .re-erences to =)>) -irms, and allow =)>) -irms to sue governments -or violating an( o- its conditions) China, on the other hand, has *een .roviding more -inancing to #atin 2merica than the World Bank, the 6nter+2merican 4evelo.ment Bank and the =)>) 8$.ort+6m.ort Bank com*ined since 2 ", with no .revious conditions and ver( -ew strings attached) #atin 2merica is ver( sensitive to an( notions o- conditionalit( due to .ain-ul .ast e$.eriences with the 65F and the World Bank, <allagher said) China makes sure that its .olic( is not *ased on conditionalities) <allagher said the =)>) should awake -rom its .ast slum*er and sto. taking #atin 2merica -or granted)