The AFP reports that US special envoy to Sudan Scott Gration had "very positive meetings" with Chinese special representative for Darfur Liu Guijin, according to a US State Department spokesperson.
"Gration, a retired US Air Force general, participated in Doha on Wednesday in the first ever meeting of the Darfur envoys from the five permanent members of the UN Security Council (Britain, China, France, Russia and the United States) and the European Union, Duckworth said."China has a large presence in Sudan's oil sector. Meanwhile, Leslie Hook at the Wall Street Journal reports that Beijing has begun denying license renewals to law firms in the country which take human rights cases. Every year lawyers in China must renew their license to practice law by May 31.
"When asked about this trend, an official at the Beijing Judicial Bureau pointed out that the deadline for license renewal is still some days away. 'All lawyers are treated equally,' said Dong Chunjiang, a deputy director at the Judicial Bureau. He disputed the premise that some lawyers were 'rights lawyers,' saying: 'Our 19,000 lawyers are all protecting people's rights.'"In April, China published its "National Human Rights Action Plan of China (2009-10)" which had outlined further protections it had as goals including specifically the legal rights of defendants--see Daily Sources 4/4 #1. (The two year plan included as aims broader access to social security, health care and education. Beijing officially identified rule of law as an area which it wants to develop over time at some point last year. In that vein, Michael M. Phillips at the Wall Street Journal reports that Treasury Secretary Timothy Geithner will urge Beijing to take "drastic" measures to convert the economy to one primarily driven by household consumption.
"That means encouraging Beijing to offer more generous health-care, retirement, welfare, educational and other benefits in order to persuade the average Chinese citizen that spending now doesn't mean starving later.Geithner is scheduled to arrive in China on Sunday for meetings on Monday and Tuesday.
'The efforts China could take would be efforts to strengthen the comfort that Chinese households have in spending, which largely involves reducing or addressing the reasons why they feel such a great need to save for precautionary purposes,' said the senior Treasury official, who briefed reporters Thursday in advance of Mr. Geithner's departure on Saturday."
2. ONE CHILD POLICY MAY MAKE SEXUAL COMPETITION ONE MAJOR CAUSE OF CHINESE SAVINGS RATE
In an interesting conjecture, Zubin Jelveh at the Stash reports that Shang-Jin Wei of Columbia University and Xiaobo Zhang of IFPRI argue that China's one child policy, which has pushed the boy-girl ratio from 107-100 in 1980 to 120-100 currently, is responsible for an increase in the general savings rate in the country.
"The reason a shortage of women would cause an increase in savings is not clear. In order to compete for wives, a shortage could cause men and families with sons to save more in order to signal their wealth to potential brides. On the other hand, these groups might also spend more money on status goods like expensive clothes and cars to achieve the same end. However, the researchers find that across different provinces across China between 1978-2006, 'local savings rates are systematically and positively correlated with local sex ratios.'"Jelveh includes a link to the Shang-Jin/Xiaobo working paper. Clearly sexual competition would be an especially difficult social force to overcome should China want to encourage more consumption domestically.
3. CHINESE AUTO FUEL ECONOMY STANDARDS BEING DEBATED--WELL IN EXCESS OF U.S. PROPOSAL; E.U. CHAMBER OF COMMERCE OFFICIAL ACCUSES BEIJING OF FREEZING FOREIGN FIRMS OUT OF STIMULUS PACKAGE-FUNDED PROJECTS
Meanwhile, Keith Bradsher at the New York Times reports that Chinese officials have drafted new automobile fuel economy standards plan which is now going through the process of interagency review.
"Mr. An [Feng, a leading architect of China’s existing fuel economy regulations who is now the president of the Innovation Center for Energy and Transportation, a nonprofit group in Beijing,] estimated that the average new car, minivan or sport utility vehicle in China already gets the equivalent of 35.8 miles a gallon this year based on the American measurement system of corporate averages and will be required to get 42.2 miles a gallon in 2015."More cars have been sold in China so far this year than in the United States. Meanwhile, Kathrin Hille and Josh Chaffin at the Financial Times report that Joerg Wuttke, president of the European Union Chamber of Commerce in China, has accused Beijing of deliberately locking out foreign corporations from stimulus-related projects.
"At a meeting in Brussels earlier this month, the EU and China discussed the importance of ensuring that their companies were able to compete fairly for contracts arising from their respective economic stimulus packages."Wuttke was specifically addressing a package of wind turbine orders worth €5 billion (~ $6.98 billion).
"The failure of the world’s leading wind turbine makers including Vestas, Gamesa, Suzlon and GE to even make it into the second round of the bidding has caused frustration as they have invested big in response to Beijing’s demand that they source at least 70% of their components locally."4. U.S. AND SOUTH KOREA RAISE MILITARY ALERT LEVEL IN RESPONSE TO PYONYANG'S THREATS
Jon Herskovitz at Reuters reports that South Korea and the US have raised the military alert level for the peninsula following Pyongyang's nuclear bomb test Monday and the reiteration of its view that the 1953 armistice was a dead letter.
"North Korea kept up its steady string of strident rhetoric, saying in its official media that 'a minor accidental clash could lead to nuclear war.'Foggy Bottom reportedly hopes that the recent provocations from Pyongyang will drive Moscow and Beijing to take a tougher stand with the Hermit Kingdom.
'As circumstances show, provocations of war on the part of the US and South Korea have gone well beyond the risky level. It's a matter of time when a fuse for war is triggered,' the North KCNA news agency reported a commentary in a state newspaper as saying."
"But many Chinese analysts say Washington overstates Beijing's sway over Pyongyang, as well as their government's willingness to use that influence.5. TURKISH JETS STRIKE KURDISH REBEL POSITIONS IN NORTHERN IRAQ
'Undoubtedly, China also wants a swift and united response, but it probably won't give the United States all it wants. China has its own worries,' said Shi Yinhong, an expert on regional security at Renmin University in Beijing."
The Associated Press reports that Turkish airplanes struck Kurdish rebel positions in northern Iraq today, per a statement from the Turkish military.
"Thursday's attack came after six soldiers died when a military vehicle struck a land mine in Hakkari province, which borders Iraq. Authorities said the land mine, which wounded eight other soldiers, was planted by the rebels of the Kurdistan Workers' Party, or PKK."6. OPEC LEAVES QUOTAS UNCHANGED, MINISTERS DIVIDED AS TO CAUSES FOR CURRENT RELATIVELY HIGH PRICES, JOGMEC ECONOMISTS EXPECTS OIL TO FALL TO $45/B BY END OF JULY
Ayesha Daya and Fred Pals at Bloomberg report that OPEC left its production quotas unchanged at its meeting today in Vienna, at 24.845 mb/d.
"'The market is oversupplied, it’s true,' OPEC Secretary General Abdalla el-Badri said at a press conference after today’s announcement. The group decided against cutting output in the face of excess supply to avoid sending the 'wrong signal' and disrupting an economic recovery, he said. 'If we are able to keep this $60 to $70 price for the remainder of the year, it will be fine.'"Javier Blas at FT Energy Source reports that OPEC oil ministers are divided on whether the current price environment is due to fundamentals or a speculative bubble. Ali Naimi, Saudi Arabia's oil minister, reportedly thinks that the price is due to fundamentals, and is bullish on a global economic recovery, though he did "concede" that the price is not wholly due to fundamentals.
"Speculative money is exactly what Chakib Khelil, Algeria’s oil minister--an influential voice in Opec and a former senior World Bank official--thinks is behind the price increase, in sharp contrast with Mr. Naimi.Blas notes that OPEC's economists appear to think the current price is more due to "market sentiment"--animal spirits--than fundamentals. Takeo Kumagai at Platts reports that Takayuki Nogami, a senior economist at Japan Oil, Gas and Metals National Corporation, said in an interview with the journalist that NYMEX sweet light was likely to drop to $45/b by the end of July, given that the current demand situation would only justify a $40/b price. (Nogami estimates that the OECD countries held 62.6 days in stocks at the end of April.)
The Oil markets may be in a 'bubble' because prices are higher than fundamentals would indicate, Mr. Khelil said arriving in Vienna.
The Algerian minister is not alone. Abdullah al Attiyah, Qatar's oil minister, also thinks something is wrong. 'This price of oil now is functional but not related to demand and supply. We should not be too optimistic,' he said.
Abdalla Salem El-Badri, OPEC’s secretary general, agrees with the speculator’s camp. 'It is not the fundamentals behind the oil price rise,' he said, warning that it was 'sentiment' in spite of weak demand and high inventories what was propelling oil prices."
"However, he expects crude oil prices to hover at around $60-65/b, prior to the drop to around $45/b by the end of July, due to growing optimism of an economic recovery in the stock market, which has been a driver of the recent rise in crude oil prices, coupled with the start of summer driving season in the US."7. BRAZILIAN SENATE LAUNCHES INVESTIGATION INTO PETROBRAS
Alexei Barrionuevo at the New York Times reports that the Brazilian Senate has launched an investigation into Petrobras, and whether it had avoided taxes and awarded contracts illegally among other allegations.
"The investigation could prove an embarrassment for Mr. da Silva’s government, which is seeking to overhaul oil legislation to extract a much higher percentage of revenues from the deepwater oil fields, which are expected to hold five billion to eight billion barrels of oil and natural gas.8. MANUFACTURING ORDERS FOR DURABLE GOODS UP 1.9% IN APRIL FROM MARCH, DOWN 27.3% FROM A YEAR PREVIOUS; FITCH EXPECTS MOST REWORKED MORTGAGES TO BE DELINQUENT WITHIN 12 MONTHS
It could also be damaging to Dilma Rousseff, Mr. da Silva’s chief of staff and his handpicked candidate to succeed him in next year’s presidential elections, since she is also the chairwoman of the Petrobras board of directors."
The Commerce Department announced that manufacturing orders for durable goods in April rose 1.9% from March, and fell 27.3% from a year previous. Meanwhile, E. Scott Reckard at the Los Angeles Times reports that Fitch Ratings released a report Tuesday which suggested that 55% to 65% of subprime mortgages, jumbo loans and little-documented home loans that banks had securitized currently being renegotiated will end up 60 days delinquent anyway within 12 months.
"For the subprime loans--the mortgages for the riskiest borrowers, with credit dings, bankruptcies and outsized debt loads--the projected 60-day delinquent rate was 65% to 75%.9. TOTAL NORTH AMERICAN RAIL TRAFFIC DOWN 21.5% FOR THE WEEK ENDED MAY 23 FROM A YEAR PREVIOUS
Fitch based its projection partly on 'shrinking disposable income, escalating job losses and possibly some deceptive practices on the part of the borrowers themselves,' the New York company said."
Atlantic Systems has published it's railshare data, and total traffic year over year is down 21.5% in North America for the week ended May 23:
The biggest drop in cargo is still for metals and autos. The volume of coal transported by rail is down 9.3% for the year ended May 28 from the year previous.
10. U.S. ENERGY SECRETARY SAYS RAISING GAS TAXES POLITICALLY IMPOSSIBLE, COMMERCIAL CRUDE STOCKPILES DROP BY 5.4 MILLION BARRELS, NY HARBOR USLD SPOT CLOSED AT $1.42/B DISCOUNT TO NO. 2
Carola Hoyos, Fiona Harvey and Clive Cookson at the Financial Times interviewed US Energy Secretary Steven Chu and he said in response to a question of whether it would be best to raise taxes on gasoline in the US that "At this moment, let me be frank, it is not politically feasible."
"Higher petrol prices are likely to be one of the biggest potential sticking points of President Barack Obama’s cap-and-trade system when the bill moves from the Democrat-controlled House of Representatives to the more conservative Senate late this year.Meanwhile, the EIA reported that commercial crude inventories declined by a whopping 5.4 million barrels to 363.1 million barrels in the week ended May 22. The number is still well above the give year historical average range for this time of year, but well above the median expectation of analysts for a 150,000 barrel decline, per a Bloomberg survey. Gasoline stocks fell by 600,000 barrels, well short of the median expectation of a 1.3 million barrel draw-down, but below the historical five year average range for this time of year. Distillate stocks rose by 300,000 barrels, and are 39 million barrels above the level seen for the week last year, or 35.6% more. Interestingly, the NY Harbor spot price for ultra low sulfur diesel closed yesterday at $1.5117/gallon, or a $0.0337/gallon discount to the spot price for No. 2--a $1.4154/b discount.
Mr. Chu’s move against using taxes to raise US petrol prices is likely to frustrate environmental advocates who believe that the only way seriously to change Americans’ consumption habits is through higher prices."