China says: Pollution complaints unfair

China: Pollution complaints unfair -- Shanghai Daily | -- English Window to China News
2007-6-22

CHINA said yesterday that it is unfair for rich countries to buy its cheap goods and then condemn its greenhouse gas pollution, a day after one study suggested the nation was already the world's biggest carbon dioxide emitter.

Foreign Ministry spokesman Qin Gang said other countries need to consider China's role as a low-cost export powerhouse that in effect helps rich Western consumers avoid emissions at home.

"China is now the factory of the world," Qin told a regular news briefing in Beijing. "The developed countries have moved a lot of manufacturing to China. What many Western consumers wear, live in, even eat is made in China."

The Netherlands Environmental Assessment Agency said on Tuesday that China's carbon dioxide emissions - the main greenhouse gas responsible for global warming - surpassed those of the United States by 7.5 percent in 2006.

But Qin pointed out that per-capita emission of greenhouse gases in the Netherlands was 11.4 tons per year, while the figure for China was just 3.66 tons.

Surging Oil Demand Fuels Higher Prices

Surging Oil Demand Fuels Higher Prices, Volatility - WSJ.com
Global Growth Adds To Strain on Industry Operating Near Edge [not to say peak]

By BHUSHAN BAHREE
June 21, 2007 2:13 p.m.

World oil demand is growing twice as fast as a year ago, straining the petroleum industry's ability to keep up with global needs and likely resulting in higher and more-volatile prices for some time to come.

On a short-term basis, many industry specialists see prices rising in the second half of the year unless the Organization of Petroleum Exporting Countries relents from its recent tough stance and starts pumping more crude oil very soon, and unless refiners can churn out more products such as gasoline and diesel. Longer term, the trends suggest the growing global economy has adapted to the doubling of oil prices over the past three years, bolstering demand and paving the way for higher prices in coming years.

"I wouldn't be surprised to see prices at new highs" this year, says Roger Diwan, an analyst at PFC Energy, a Washington-based industry consulting group. "It just needs a trigger to go to $79 a barrel." The trigger could be anything that threatens to reduce the flow of oil, he said, ranging from a Gulf of Mexico hurricane to turmoil in the Middle East to an industrial accident at producing or refining facilities.

Trust issues at Whole Foods Market

Plus ça change, plus c’est la même chose...
Organic food grows up: attempts to adopt dominant paradigm...

FTC Says Whole Foods, Wild Oats Merger Unhealthy - Forbes.com
Ruthie Ackerman, 06.05.07, 5:31 PM ET

Whole Foods Market, one of the leading retailers of organic and natural foods, and Wild Oats announced Tuesday that the Federal Trade Commission will file a lawsuit barring Whole Foods from buying its rival because of concern that the acquisition will squash competition in the natural and organic food store market.

The FTC’s position is that the organic food store is its own business and that Whole Foods (nasdaq: WFMI - news - people ) would create a monopoly by buying its competitor. John Mackey, chairman and chief executive officer of Whole Foods Market, said both companies will challenge the FTC’s decision because Whole Foods and Wild Oats (nasdaq: oats - news - people ) are by definition supermarkets. “The FTC has failed to recognize the robust competition in the supermarket industry, which has grown more intense as competitors increase their offerings of natural, organic, and fresh products,” said Mackey.

Home Depot sells US wholesale supply division, buys 12-store Chinese retail chain

Hit hard by the US housing market downturn Home Depot posted a 30% decline in profits last month. This month they are cashing out their wholesale supply division and buying a 12-store retail chain in China. Guess you gotta go where the money is...

Home Depot agrees to sell supply division - U.S. Business - MSNBC.com
Report: Unit sale to three private equity firms is worth $10 billion

Reuters: NEW YORK - Home Depot Inc. has agreed to sell its supply division to three private equity firms, sources said on Tuesday, in a roughly $10 billion deal that unloads a business the home-improvement retailer’s former chief executive worked to expand.

Bain Capital, Carlyle Group and Clayton, Dubilier & Rice won the auction and were finalizing the deal early on Tuesday, sources close to the process told Reuters.

HD Supply, which sells building materials, waste water and utility products to municipalities and contractors, was put up for sale earlier this year, with investment bank Lehman Brothers overseeing the auction....

The sale price of about $10 billion was somewhat lower than investors and analysts had expected, said Keith Davis, an analyst with Farr Miller Washington.

With the sale of the supply business done, Davis said Home Depot would be free to take steps to improve retail sales that have slumped amid the housing weakness and aggressive competition from smaller rival Lowe’s Cos Inc.

Davis said Home Depot, which is boosting capital spending by 29 percent this year to improve stores and win back market share, can improve shareholder returns by raising its dividend as it matures.

“Over the long term, I don’t think (Home Depot’s) growth is going to be anywhere near where it was historically,” Davis said.

Home Depot and the other firms declined to comment.

Nova Scotia News - TheChronicleHerald.ca
Home Depot boss: We’ll reinvent for Chinese
By BILL POWER Business Reporter

You cannot sell lawn mowers in China — not yet, at any rate.

That’s why Home Depot will totally reinvent itself in the world’s biggest emerging consumer marketplace, Annette Verschuren, president of the home renovation chain for Canada and China, said Friday in Halifax.

"In 10 years we will be the biggest home renovation retailer in China, but entering one of our stores there will be nothing like entering one of our stores in Canada or in the United States," the North Sydney-raised corporate chief said.

"When people obtain a home in China, they obtain just the shell. All the interior work is up to them."

Ms. Verschuren, whose Dutch family moved to Nova Scotia when she was a child, said Home Depot will modify its operations in China to meet the demands of the marketplace, as it has in Canada with such tremendous success.

The next few years will be crucial for Home Depot in China, she said.

She said the potential of a customer pool of over $1.3 billion is "phenomenal" and the competition will be fierce.

With the recent acquisition of a 12-store retail chain in China, Home Depot in Canada gained immediate access to a marketplace larger than Canada and Mexico combined.

"The biggest challenge will be to keep up with this growing market," she said.

China Sells Treasuries, Signaling Diversification

Or is China actually signaling their irritation with our posturing protectionist senators?

Bloomberg.com: Worldwide
China Sells Treasuries, Signaling Diversification (Update1)
By Kevin Carmichael and Ye Xie

June 15 (Bloomberg) -- Chinese investors sold more U.S. Treasury securities in April than any time in at least seven years, a signal the nation may be diversifying the world's largest foreign-exchange reserves.

China, which owns more U.S. debt than any foreign nation except Japan, sold a net $5.8 billion of Treasuries, the first drop in holdings since October 2005, according to Treasury Department figures that go back to 2000. The nation held $414 billion of the $4.4 trillion of marketable Treasuries in April, according to today's report.

China, whose reserves reached $1.2 trillion in March, and other Asian and oil-exporting nations are seeking to lift returns on their investments. That may push up yields on Treasuries, traditionally among the top investments for reserves, and erode demand for the dollar.

Interest rates beyond the Fed's control?

A Brave New World

This note (below) from the RGE Monitor email teaser/newletter acknowledges an important point that is often glossed over:

Discussions of US currency depreciation note the relationships between trade balances, deficit spending, global liquidity, bond yields and dollar denominated foreign reserves held by the rest of the world's Central Banks. Yet, discussions of whether or not the Federal Reserve is going to raise target interest rates focus on the US Consumer Price Index or other measures of US inflation / or economic performance making little or no reference to global dynamics.

As global economic growth continues to out perform current US economic weaknesses there will be less and less need for foreign Central Banks to buy weakening US dollars. Global factors may then begin to dominate real US interest rates regardless of US economic performance or internal rates of inflation and regardless of the policies of the Federal Reserve.

Last week, U.S. yields on the 10-year notes shot above 5%. Explanations for the sudden move abound: Bill Gross, mortgage convexity hedging, a shift in Asian demand toward the short-end of the curve, stronger global growth, concerns about rising global inflation and monetary tightening by central banks, capitulation by long-standing U.S. economy bears/bond bulls. Check out “Recasting the Outlook for U.S. Bonds: 10yr Note Exceeds 5%.”

Certainly expectations for stronger U.S. growth and the possibility of a mild acceleration of inflation – still the Fed’s “predominant” concern – played a role. Talk has shifted from a future Fed cut to a persistent Fed pause or even a possible year-end rate hike. But it is also possible that U.S. rates – not just rates in the formerly capital-importing emerging world – are increasingly shaped as much by global as by local developments. Are U.S. long-term yields being pushed up by changing expectations about the U.S., or by stronger growth, rising inflation and expectations of higher rates globally?

(This note originally had several links to more in depth articles, unfortunately they were all within the subscribers only sections of the RGE Monitor site. You'll have to settle for the teaser...)

U.S. Sets New China Duties

While these measures intend to protect US companies the impact on US companies busy moving manufacturing capacity overseas may be quite different. New duties could significantly impact IP's cost/benefits analysis of "downsizing" domestic mills coupled with "ambitious expansion plans into Russia, China and Brazil."

I googled Printing Industries of America (PIA) to find out which companies are members, but the main website has no public listing...

US places tariffs on Chinese paper imports to rescue local industry | printweek.com
Matt Whipp, printweek.com, 08 June 2007

The US Commerce Department has said it will impose tariffs on paper imports from China to help save its struggling paper industry...

The planned tariffs will also affect paper imported from South Korea and Indonesia, although these will be lower than those imposed on imports from China.

Nearly 100 paper and paperboard mills have closed in the US over the past six years.

However, industry body Printing Industries of America (PIA) reacted negatively to the news, which will result in higher paper prices for printers...

"PIA is a strong supporter of free and fair trade both at home and globally. As such, we believe that striking an appropriate balance between protecting the domestic producer and the end-user of an internationally traded product is critical. We hope that the full anti-dumping and countervailing duty investigations weigh seriously the impact of the printing industry as it considers the economic ramifications of imposing tariffs on foreign sources of CFS paper, and that it determines such penalties are unwarranted."

...

US giant International Paper has closed four US mills in the past two years and laid off 25,000 staff – more than a fifth of the its total workforce...
The other side of the equation has been rising timber prices, eating into paper margins, especially with the news that Russia is to impose export duties on timber in order to bolster its domestic paper industry...
It's something International Paper is well aware of. At the same time as its domestic downsizing, it is funding ambitious expansion plans into Russia, China and Brazil with £1bn ($2bn)."

...

The paper industry in Canada is also troubled, this time by the dynamics of currency more than competition... UPM-Kymmene executive vice president, magazine division, Jyrki Ovaska told printweek.com: “The combination of weak rates between the US dollar and Canadian dollar and between the Euro and US dollar have meant operation is not profitable.”

And, globally, paper is under pressure from overproduction, he added. “There is still overcapacity in the magazine paper production industry (not just UPM but all businesses operating in this area).

“In addition, the continued decreasing prices for magazine papers means the combination of poor exchange rates, operating costs and unprofitability means the company has taken the decision for a minimum nine-month shutdown.”

Over the past year, UPM-Kymmene permanently ceased production of 530,000 tonnes of coated magazine paper to reduce overcapacity and improve profitability...

U.S. Sets New China Duties - WSJ.com
Move Opens Door For a Wide Array Of Trade Complaints
By GREG HITT
March 31, 2007; Page A3

WASHINGTON -- The Bush administration imposed new economic sanctions against China, a vivid reflection of the increasingly tough climate in the U.S. toward free trade -- particularly with Beijing.

The new duties apply narrowly to complaints that Chinese producers of glossy, high-quality paper used in books and magazines are unfairly subsidized by their government -- just $224 million of annual imports, or less than 1% of the total goods and services Americans buy each year from China.

But the action is likely to have much wider ramifications. It opens the door to a potential rush of similar complaints by American manufacturers, from steel to plastics producers, that face stiff competition from the Chinese. And it signals, more broadly, an increasingly harder line on trade emerging both at the White House and in Congress.

John Engler, president of the National Association of Manufacturers, has long called on the Bush administration to take a tougher stance on trade and praised the decision for giving U.S. companies new "recourse" to blunt "China's distortions of trade."

The dollar slipped in the foreign-exchange market following the late-morning announcement, as currency traders showed nervousness about rising trade tensions -- particularly since China happens to hold a large quantity of U.S. currency, stocks and bonds.

Bush administration calls for cutting spotted owl habitat

Might as well call for cuts in log and lumber prices.

The housing (read framing lumber) market is in the tank, interest rates are on the rise and lumber mills have cut production all over the northwest and beyond. The last two weeks Random Lengths' Framing Lumber Composite Price made some incremental moves off the bottom after first quarter production levels were down 17% relative to the same period last year. In this context mandating increased logging on federal lands only ensures that western framing lumber prices, and log prices, will stay low for private landowners as well as federal forest managers. Of course below cost log sales could subsidize struggling lumber mills, but as free market advocates will tell you, such subsidies will only distort the market (and create windfall profits) and delay a rational drop in production.

It will offer little protection to struggling rural communities as mill efficiencies rise and markets fall.

Humboldt forest managers should take note that green Doug fir managed to fall an additional couple of bucks to $240 a thousand board feet in spite of the general uptick off the bottom.

Bush administration calls for cutting spotted owl habitat
JEFF BARNARD
June 12, 2007

GRANTS PASS, Oregon -- The Bush administration Tuesday proposed cutting 1.5 million acres (610,000 hectares) from Northwest forests considered critical to the survival of the northern spotted owl, reopening the 1990s battle between timber production and wildlife habitat on public lands...

Recent research has noted that while old growth forests suitable for owl habitat have increased, owl numbers have continued to decline, and that the owl faces a new threat from a cousin, the barred owl, that has been invading its territory.

The proposal by the U.S. Fish and Wildlife Service was published in the Federal Register. It calls for cutting critical habitat for the owl from the 6.9 million acres (2.79 million hectares) designated in 1992 to 5.4 million acres (2.19 million hectares)...

Under court order, timber production on national forests in Washington, Oregon and Northern California was cut by more than 80 percent in 1994 to protect owl habitat, contributing to mill closures and job losses that were particularly painful in rural areas with no other industry. Since then, the Northwest economy has turned to other industries, particularly high-tech, retirement and tourism, but some rural areas continue to struggle.

Since taking office in 2000, the Bush administration has been working to change the Northwest Forest Plan to allow more timber production, but has been largely stymied by court rulings, including several that tossed out plans to log in critical habitat for the owl.

Senate bill aims to press Beijing on currency

The recent (and continuing) rise in bond yields halted, at least temporarily, the stock market's ability to "climb a wall of worry". There is speculation that rising yields are the result of Asian Central banks holding back on purchases of US debt, sending a signal to US policy makers that unpegging China's currency from the dollar could have repercussions for the US economy perhaps not fully understood by US lawmakers. But this isn't necessarily punitive retaliation for aggressive US policy. In the ROTW (rest of the world) the global economy is heating up. As global markets gain strength, there is less reason for China and other exporters with a positive current accounts balance to continue to invest in subsidizing US markets.

In any case the implications for the US housing market are dire. With many adjustable rate mortgages originated in 2005-2006 due to reset these rising rates kick the housing market while it's down.

FT.com / World
Senate bill aims to press Beijing on currency
By Eoin Callan in Washington
Published: June 11 2007 03:00

A bill will be introduced in the US Senate this week that intends to increase pressure on China to float its currency but avoid action that would violate international trade rules, according topeople close to the process.

The legislation is viewed by the Bush administration as the best chance for Congress to let off some steam without blowing a hole in relations with Beijing.

The Senate bill is more moderate than alternatives being floated on Capitol Hill, but will still create headaches for the administration and could become a dividing issue in the next election.

"We don't have any tools to forestall the potential legislation coming down the tracks," said James Baker, former US secretary of state, in a speech on US-China relations.

Lawmakers argue China's weak currency unfairly subsidises the country's exports and contributes to a record annual bilateral US trade deficit of $233bn (€174bn; £118bn). Beijing says it wants to shift the economy towards consumer-driven growth, but fears instability if it moves too quickly.

The Senate bill will serve to step up the pressure after unsuccessful attempts by Hank Paulson, US Treasury secretary, to persuade Beijing to accelerate reform."