April 3 (Bloomberg) -- The International Monetary Fund, dismissed as increasingly irrelevant when the world economy was booming, will now wield more than $1 trillion to help bring it back to life.
Leaders from the world’s most powerful nations, meeting in London yesterday, agreed to triple the money the IMF can lend to rescue crisis-stricken nations, to $750 billion. The agency will also get another $250 billion in Special Drawing Rights, an overdraft facility for its 185 members.
The Group of 20 is turning to the Washington-based agency to prevent the worst financial crisis since the Great Depression from swamping more developing nations. In the past six months, the IMF has approved loans totaling more than $55 billion to countries including Ukraine, Iceland and Pakistan. That is a turnaround from last year, when newly hired Managing Director Dominique Strauss-Kahn was forced to cut staff as lending sank to the lowest in a quarter century.
“A year ago the very same countries were forcing the IMF to go through a very damaging set of budget cuts,” said Simon Johnson, a senior fellow at the Washington-based Peterson Institute for International Economics and a former chief economist at the IMF. “Now the IMF has been asked to come to the rescue. I think the motif for the day is ‘Oops, sorry. Please come and help countries with massive amounts of money.’”
World Bank
The World Bank and other lenders to poor nations will receive another $100 billion, and a further $250 billion will be devoted to trade finance, the G-20 decided. The IMF and the World Bank were founded in 1944 to help rebuild the global economy after World War II.
“This is the biggest increase in resources in the history of our international institutions,” said U.K. Prime Minister Gordon Brown, who presided over the talks in London that led to the agreement.
G-20 leaders also called for stricter limits on hedge funds, executive pay, credit-rating firms and risk-taking by banks as part of what their statement called a “global plan for recovery on an unprecedented scale.” The leaders avoided the divisive question of whether to deliver more fiscal stimulus to their own economies.
Japan, the European Union and China agreed to provide the first $250 billion of the increase in IMF rescue funds, and Strauss-Khan said work would begin to secure the remaining $250 from other countries.
Managing Globalization
“If you look at the governance of globalization, if you look at the resources to deal with the crisis, at each stage of what the G-20 is working on, you find the IMF,” Strauss-Kahn said yesterday in London at a press conference. “The IMF is now back.”
The $250 billion increase in Special Drawing Rights will allow countries to tap IMF money without having to accept changes to economic policies often demanded as a condition of loans. The money is disbursed in proportion to the money each member-nation pays into the fund. Rich nations will be allowed to divert their allocations to countries in greater need.
The larger pool of SDRs will enable nations to boost their foreign-exchange reserves, augmenting global liquidity and helping defend against speculative attacks.
“It is the beginning of increasing the role of the IMF not only as lender of last resort, not only as a forecaster, not only as an adviser in economic policy in the traditional role, but also in providing liquidity to the world which is the role of a monetary institution like ours,” Strauss Khan told reporters at the G-20 summit.
Mexican Credit Line
Yesterday’s measures are the latest evidence of the IMF’s growing role. Mexico this week said it would seek a $48 billion line of credit from the IMF.
In the past six months, the fund has approved $16.4 billion for Ukraine, $15.7 billion for Hungary, $10.4 billion for Latvia, $2.5 billion for Belarus, $2.1 billion for Iceland, $7.6 billion for Pakistan and $516 million for Serbia. Turkey is negotiating an IMF loan accord, and Romania has expressed an interest in borrowing.
Increased IMF lending is improving its finances, which depend on interest it charges its members. The fund may turn a profit of almost $650 million next year, former IMF officials said last month. Two years ago, the fund was forecast to lose $360 million in 2010.
A year ago, the IMF was reducing its payroll to fit a diminished role. The fund said last April that 591 staff members had accepted incentives to quit, more the goal of 380 cuts in its 2,900 positions.
Improving Efficiency
The G-20 said yesterday it was seeking steps to improve the “long-term relevance, effectiveness and efficiency” of the IMF and World Bank, and it pledged to give emerging countries such as India, China and Brazil a greater say in how the agencies are run.
The G-20 also pledged a more “open, transparent, and merit-based” selection of people to lead the institutions. The head of the IMF has always been a European, while the World Bank chief is traditionally nominated by the U.S.
The G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union.
Thursday, April 2, 2009
Citic, CICC Reap Fee Bonanza in China’s Protected Bond Market
April 3 (Bloomberg) -- Citic Securities Co. and China International Capital Corp. are reaping multimillion-dollar fees arranging bond sales in a year-old market where China’s 105 other brokerages are barred from competing.
The two firms underwrote a combined 33.7 billion yuan ($4.9 billion) of so-called medium-term notes in the first quarter, according to data compiled by Bloomberg. That compares with 20.8 billion yuan for the whole of 2008.
CICC, the Chinese partner of Morgan Stanley, and Citic, Asia’s largest securities firm by market value, are the only companies besides banks allowed to underwrite medium-term notes and commercial paper. Sales of the securities have swelled as a government moratorium on initial public offerings prompts companies to turn to debt markets, providing CICC and Citic with a cushion as IPO fees vanish.
“We’ll see quite a large increase this year in commercial paper and medium-term note issuance,” said Peng Xingyun, director of the monetary theory and policy research center at the Chinese Academy of Social Sciences in Beijing. “Companies need those two types of bonds to raise cash when selling shares isn’t an option.”
CICC and Citic ranked third and sixth, respectively, in underwriting medium-term note sales this year, Bloomberg data show. CICC worked on 21 billion yuan of deals, more than four times the total for 2008. Citic’s haul was 12.65 billion yuan, or 78 percent of what it garnered last year. The two didn’t arrange any commercial-paper deals, according to Bloomberg data.
Spokespeople for the firms, both based in Beijing, declined to comment.
Others Want In
China introduced medium-term notes, bonds that typically mature in three to five years, in April 2008. Sales of the bonds were suspended between July and September.
Arrangers charge 0.3 percent per year of maturity for underwriting medium-term notes. Fees are paid upfront. Assuming an average four-year maturity on the sales CICC and Citic managed in the first quarter, the two would have reaped 404 million yuan in combined fees.
Companies sold 167.1 billion yuan of the bonds in the first quarter, up from 100.2 billion yuan in the previous three months, according to ChinaBond, the nation’s biggest clearing house.
National Association of Financial Market Institutional Investors, supervised by the central bank, awards permits for underwriting medium-term notes and commercial paper. Sales of other types of bonds are overseen by China’s securities regulator and the nation’s top planning agency.
Rival securities firms have sought underwriting approvals, and “haven’t gotten the green light yet,” He Fei, an official at the association’s medium-term notes department, said in an interview. She declined to say which brokerages applied.
IPO Halt
As the two biggest underwriters of equity sales on China’s two exchanges in 2008, Citic and CICC have the most to lose from the ban on stock offerings.
The securities regulator hasn’t approved an IPO since September, and there have been no stock sales in 2009. Together, Citic and CICC had a 43 percent share of the market for equity offerings in 2008, when companies raised 232 billion yuan, data compiled by Bloomberg show.
Citic’s profit plunged 41 percent last year to 7.28 billion yuan, the company said Jan. 20, citing unaudited figures. The brokerage, which is scheduled to report earnings on April 30, has rallied 44 percent in Shanghai trading this year after falling 60 percent in 2008. CICC is privately held.
‘Great Advantage’
While fees for advising on stock sales are higher at around 3 percent, underwriting bonds requires less work, a banker with direct knowledge of the matter said, speaking on condition of anonymity. A deal typically takes about three months to complete, the person said. That compares with about a year for an IPO.
“Bond underwriting will be a key support for Citic’s profit from investment banking this year,” said Liang Jing, a Shanghai-based analyst at Guotai Junan Securities Co. who rates Citic as “add.”
Arranging bond sales accounted for about a third of the firm’s investment banking revenue last year, Liang estimated. Citic doesn’t break out bond underwriting revenue.
Being the only brokerages able to underwrite commercial paper and medium-term notes offers other advantages, said Tian Liang, a Shenzhen-based analyst at Pingan Securities Co.
“They can use bond underwriting to boost their asset- management portfolios and offer other products to clients,” he said. “Compared with other brokerages, CICC and Citic have a great advantage.”
The two firms underwrote a combined 33.7 billion yuan ($4.9 billion) of so-called medium-term notes in the first quarter, according to data compiled by Bloomberg. That compares with 20.8 billion yuan for the whole of 2008.
CICC, the Chinese partner of Morgan Stanley, and Citic, Asia’s largest securities firm by market value, are the only companies besides banks allowed to underwrite medium-term notes and commercial paper. Sales of the securities have swelled as a government moratorium on initial public offerings prompts companies to turn to debt markets, providing CICC and Citic with a cushion as IPO fees vanish.
“We’ll see quite a large increase this year in commercial paper and medium-term note issuance,” said Peng Xingyun, director of the monetary theory and policy research center at the Chinese Academy of Social Sciences in Beijing. “Companies need those two types of bonds to raise cash when selling shares isn’t an option.”
CICC and Citic ranked third and sixth, respectively, in underwriting medium-term note sales this year, Bloomberg data show. CICC worked on 21 billion yuan of deals, more than four times the total for 2008. Citic’s haul was 12.65 billion yuan, or 78 percent of what it garnered last year. The two didn’t arrange any commercial-paper deals, according to Bloomberg data.
Spokespeople for the firms, both based in Beijing, declined to comment.
Others Want In
China introduced medium-term notes, bonds that typically mature in three to five years, in April 2008. Sales of the bonds were suspended between July and September.
Arrangers charge 0.3 percent per year of maturity for underwriting medium-term notes. Fees are paid upfront. Assuming an average four-year maturity on the sales CICC and Citic managed in the first quarter, the two would have reaped 404 million yuan in combined fees.
Companies sold 167.1 billion yuan of the bonds in the first quarter, up from 100.2 billion yuan in the previous three months, according to ChinaBond, the nation’s biggest clearing house.
National Association of Financial Market Institutional Investors, supervised by the central bank, awards permits for underwriting medium-term notes and commercial paper. Sales of other types of bonds are overseen by China’s securities regulator and the nation’s top planning agency.
Rival securities firms have sought underwriting approvals, and “haven’t gotten the green light yet,” He Fei, an official at the association’s medium-term notes department, said in an interview. She declined to say which brokerages applied.
IPO Halt
As the two biggest underwriters of equity sales on China’s two exchanges in 2008, Citic and CICC have the most to lose from the ban on stock offerings.
The securities regulator hasn’t approved an IPO since September, and there have been no stock sales in 2009. Together, Citic and CICC had a 43 percent share of the market for equity offerings in 2008, when companies raised 232 billion yuan, data compiled by Bloomberg show.
Citic’s profit plunged 41 percent last year to 7.28 billion yuan, the company said Jan. 20, citing unaudited figures. The brokerage, which is scheduled to report earnings on April 30, has rallied 44 percent in Shanghai trading this year after falling 60 percent in 2008. CICC is privately held.
‘Great Advantage’
While fees for advising on stock sales are higher at around 3 percent, underwriting bonds requires less work, a banker with direct knowledge of the matter said, speaking on condition of anonymity. A deal typically takes about three months to complete, the person said. That compares with about a year for an IPO.
“Bond underwriting will be a key support for Citic’s profit from investment banking this year,” said Liang Jing, a Shanghai-based analyst at Guotai Junan Securities Co. who rates Citic as “add.”
Arranging bond sales accounted for about a third of the firm’s investment banking revenue last year, Liang estimated. Citic doesn’t break out bond underwriting revenue.
Being the only brokerages able to underwrite commercial paper and medium-term notes offers other advantages, said Tian Liang, a Shenzhen-based analyst at Pingan Securities Co.
“They can use bond underwriting to boost their asset- management portfolios and offer other products to clients,” he said. “Compared with other brokerages, CICC and Citic have a great advantage.”
Asian Stocks Rise, Extending Global Rally, on Recovery Optimism
April 3 (Bloomberg) -- Asian stocks climbed, extending a rally that drove the MSCI World Index to a two-month high, as world leaders agreed on measures to fight the global recession and manufacturing grew in China.
Toyota Motor Corp. jumped 7.5 percent in Tokyo after the company obtained low-cost loans from a government-backed bank. Harbin Power Equipment Co., China’s No. 2 maker of electricity- generation equipment, advanced 3.3 percent in Hong Kong as production in the country expanded for the first time in six months. National Australia Bank Ltd. rose 4.9 percent as the U.S. relaxed accounting rules to boost bank profits and ease the credit crisis.
“We’ve seen some tangible evidence that the global economy is on the path to recovery,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co., which oversees about $6.1 billion. “This is all about sentiment and people are interpreting whatever they see in a positive way.”
The MSCI Asia Pacific Index gained 0.5 percent to 86.71 at 12:43 p.m. in Tokyo, taking its advance this week to 1.4 percent. The gauge has climbed 23 percent from a more than five-year low on March 9 amid speculation governments will succeed in easing the global financial crisis. A 20 percent gain is the technical level that indicates stocks may have entered a bull market.
Japan’s Nikkei 225 Stock Average added 0.3 percent to 8,747.28, cutting its decline this year to 1.3 percent.
Australia’s S&P/ASX 200 Index rose 1 percent. Markets advanced except in Hong Kong, Singapore, Thailand and Malaysia. The MSCI World Index added 0.1 percent to 853.75, set to close at its highest level since Feb. 9.
Accounting Standards
BHP Billiton Ltd. climbed 3.5 percent in Sydney even as oil pared its biggest advance in three weeks. Newcrest Mining Ltd., Australia’s largest gold producer, slumped 7.2 percent as demand for bullion as a haven declined.
Futures on the Standard & Poor’s 500 Index slipped 0.3 percent. The gauge climbed 2.9 percent yesterday as Group of 20 policy makers meeting in London pledged $750 billion to the International Monetary Fund to rescue recession-stricken nations. The agency will also get another $250 billion in Special Drawing Rights, an overdraft facility for its 185 members.
The U.S.’s Financial Accounting Standards Board also agreed to relax fair-value, or mark-to-market, accounting that requires banks to revalue assets each quarter to reflect market prices. Writedowns and credit-related losses at financial institutions have swelled to $1.29 trillion.
Toyota, the world’s largest automaker, surged 7.5 percent to 3,710 yen. The company said its finance arm will borrow from the Japan Bank for International Cooperation as a freeze in credit markets made other debt options more expensive.
Banks Climb
The automaker also rose after the yen earlier fell to 100.18 versus the dollar, a level not seen since Nov. 4. A weaker currency raises the value of exporters’ overseas sales.
National Australia Bank, the nation’s largest by assets, rose 4.9 percent to A$22.55. KB Financial Group Inc., which controls South Korea’s largest lender, rose 2.5 percent to 37,700 won in Seoul. Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, rose 1 percent to 534 yen.
A measure of bank shares included in the MSCI Asia Pacific Index has rebounded 29 percent in the last month. The gauge is still down 24 percent in the last six months, the second-worst performer among the benchmark’s 10 industry groups.
The MSCI Asia Pacific’s rally in the past month has driven the average valuation of companies on the index to 17.7 times reported profit, the highest since Nov. 30, 2007, data compiled by Bloomberg show.
Fast Rally
“There’s growing optimism that the world economy has reached a bottom,” Yoshinori Nagano, a senior strategist at Daiwa Asset Management Co., which oversees about $96 billion, said in an interview with Bloomberg Television. “We’ve seen a fairly fast rally lately, and people will likely start getting wary of its pace.”
Harbin Power rose 3.3 percent to HK$5.66. Komatsu Ltd., a machinery maker that counts China as its fastest growing market, jumped 2.4 percent to 1,210 yen in Tokyo.
China’s Purchasing Manager’s Index, which was released yesterday, rose to a seasonally adjusted 52.4 in March from 49 in February, exceeding the threshold of 50 that divides expansion and contraction for the first time since September. statement. A reading above 50 indicates an expansion.
Growth in manufacturing may help President Hu Jintao achieve his target of 8 percent expansion for the world’s third- biggest economy.
BHP rose 3.5 percent to A$34.53. Crude oil dropped 1.5 percent in after-hours trading, after soaring 8.8 percent to $52.64 a barrel in New York yesterday, the most since March 12. Copper rose 2.2 percent to the highest since Nov. 4 as the prospect of growth in China boosts demand for industrial demands.
Rio Tinto Group, the world’s third-largest mining company, gained 3.3 percent to A$59.87. Jiangxi Copper Co., China’s largest producer of the metal, rose 2.3 percent to HK$8.98.
Newcrest Mining Ltd., Australia’s largest gold producer, slumped 7.2 percent to A$30.82. Bullion fell to the lowest in three weeks as investors shifted into risky assets from the relative safety of gold.
Toyota Motor Corp. jumped 7.5 percent in Tokyo after the company obtained low-cost loans from a government-backed bank. Harbin Power Equipment Co., China’s No. 2 maker of electricity- generation equipment, advanced 3.3 percent in Hong Kong as production in the country expanded for the first time in six months. National Australia Bank Ltd. rose 4.9 percent as the U.S. relaxed accounting rules to boost bank profits and ease the credit crisis.
“We’ve seen some tangible evidence that the global economy is on the path to recovery,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co., which oversees about $6.1 billion. “This is all about sentiment and people are interpreting whatever they see in a positive way.”
The MSCI Asia Pacific Index gained 0.5 percent to 86.71 at 12:43 p.m. in Tokyo, taking its advance this week to 1.4 percent. The gauge has climbed 23 percent from a more than five-year low on March 9 amid speculation governments will succeed in easing the global financial crisis. A 20 percent gain is the technical level that indicates stocks may have entered a bull market.
Japan’s Nikkei 225 Stock Average added 0.3 percent to 8,747.28, cutting its decline this year to 1.3 percent.
Australia’s S&P/ASX 200 Index rose 1 percent. Markets advanced except in Hong Kong, Singapore, Thailand and Malaysia. The MSCI World Index added 0.1 percent to 853.75, set to close at its highest level since Feb. 9.
Accounting Standards
BHP Billiton Ltd. climbed 3.5 percent in Sydney even as oil pared its biggest advance in three weeks. Newcrest Mining Ltd., Australia’s largest gold producer, slumped 7.2 percent as demand for bullion as a haven declined.
Futures on the Standard & Poor’s 500 Index slipped 0.3 percent. The gauge climbed 2.9 percent yesterday as Group of 20 policy makers meeting in London pledged $750 billion to the International Monetary Fund to rescue recession-stricken nations. The agency will also get another $250 billion in Special Drawing Rights, an overdraft facility for its 185 members.
The U.S.’s Financial Accounting Standards Board also agreed to relax fair-value, or mark-to-market, accounting that requires banks to revalue assets each quarter to reflect market prices. Writedowns and credit-related losses at financial institutions have swelled to $1.29 trillion.
Toyota, the world’s largest automaker, surged 7.5 percent to 3,710 yen. The company said its finance arm will borrow from the Japan Bank for International Cooperation as a freeze in credit markets made other debt options more expensive.
Banks Climb
The automaker also rose after the yen earlier fell to 100.18 versus the dollar, a level not seen since Nov. 4. A weaker currency raises the value of exporters’ overseas sales.
National Australia Bank, the nation’s largest by assets, rose 4.9 percent to A$22.55. KB Financial Group Inc., which controls South Korea’s largest lender, rose 2.5 percent to 37,700 won in Seoul. Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, rose 1 percent to 534 yen.
A measure of bank shares included in the MSCI Asia Pacific Index has rebounded 29 percent in the last month. The gauge is still down 24 percent in the last six months, the second-worst performer among the benchmark’s 10 industry groups.
The MSCI Asia Pacific’s rally in the past month has driven the average valuation of companies on the index to 17.7 times reported profit, the highest since Nov. 30, 2007, data compiled by Bloomberg show.
Fast Rally
“There’s growing optimism that the world economy has reached a bottom,” Yoshinori Nagano, a senior strategist at Daiwa Asset Management Co., which oversees about $96 billion, said in an interview with Bloomberg Television. “We’ve seen a fairly fast rally lately, and people will likely start getting wary of its pace.”
Harbin Power rose 3.3 percent to HK$5.66. Komatsu Ltd., a machinery maker that counts China as its fastest growing market, jumped 2.4 percent to 1,210 yen in Tokyo.
China’s Purchasing Manager’s Index, which was released yesterday, rose to a seasonally adjusted 52.4 in March from 49 in February, exceeding the threshold of 50 that divides expansion and contraction for the first time since September. statement. A reading above 50 indicates an expansion.
Growth in manufacturing may help President Hu Jintao achieve his target of 8 percent expansion for the world’s third- biggest economy.
BHP rose 3.5 percent to A$34.53. Crude oil dropped 1.5 percent in after-hours trading, after soaring 8.8 percent to $52.64 a barrel in New York yesterday, the most since March 12. Copper rose 2.2 percent to the highest since Nov. 4 as the prospect of growth in China boosts demand for industrial demands.
Rio Tinto Group, the world’s third-largest mining company, gained 3.3 percent to A$59.87. Jiangxi Copper Co., China’s largest producer of the metal, rose 2.3 percent to HK$8.98.
Newcrest Mining Ltd., Australia’s largest gold producer, slumped 7.2 percent to A$30.82. Bullion fell to the lowest in three weeks as investors shifted into risky assets from the relative safety of gold.
Wednesday, April 1, 2009
China Vies to Be World’s Leader in Electric Cars
TIANJIN, China — Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that.
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Doug Kanter for The New York Times
Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years.
The goal, which radiates from the very top of the Chinese government, suggests that Detroit’s Big Three, already struggling to stay alive, will face even stiffer foreign competition on the next field of automotive technology than they do today.
“China is well positioned to lead in this,” said David Tulauskas, director of China government policy at General Motors.
To some extent, China is making a virtue of a liability. It is behind the United States, Japan and other countries when it comes to making gas-powered vehicles, but by skipping the current technology, China hopes to get a jump on the next.
Japan is the market leader in hybrids today, which run on both electricity and gasoline, with cars like the Toyota Prius and Honda Insight. The United States has been a laggard in alternative vehicles. G.M.’s plug-in hybrid Chevrolet Volt is scheduled to go on sale next year, and will use rechargeable batteries imported from LG in South Korea.
China’s intention, in addition to creating a world-leading industry that will produce jobs and exports, is to reduce urban pollution and decrease its dependence on oil, which comes from the Mideast and travels over sea routes controlled by the United States Navy.
But electric vehicles may do little to clear the country’s smog-darkened sky or curb its rapidly rising emissions of global warming gases. China gets three-fourths of its electricity from coal, which produces more soot and more greenhouse gases than other fuels.
A report by McKinsey & Company last autumn estimated that replacing a gasoline-powered car with a similar-size electric car in China would reduce greenhouse emissions by only 19 percent. It would reduce urban pollution, however, by shifting the source of smog from car exhaust pipes to power plants, which are often located outside cities.
Beyond manufacturing, subsidies of up to $8,800 are being offered to taxi fleets and local government agencies in 13 Chinese cities for each hybrid or all-electric vehicle they purchase. The state electricity grid has been ordered to set up electric car charging stations in Beijing, Shanghai and Tianjin.
Government research subsidies for electric car designs are increasing rapidly. And an interagency panel is planning tax credits for consumers who buy alternative energy vehicles.
China wants to raise its annual production capacity to 500,000 hybrid or all-electric cars and buses by the end of 2011, from 2,100 last year, government officials and Chinese auto executives said. By comparison, CSM Worldwide, a consulting firm that does forecasts for automakers, predicts that Japan and South Korea together will be producing 1.1 million hybrid or all-electric light vehicles by then and North America will be making 267,000.
The United States Department of Energy has its own $25 billion program to develop electric-powered cars and improve battery technology, and will receive another $2 billion for battery development as part of the economic stimulus program enacted by Congress.
Premier Wen Jiabao highlighted the importance of electric cars two years ago with his unlikely choice to become minister of science and technology: Wan Gang, a Shanghai-born former Audi auto engineer in Germany who later became the chief scientist for the Chinese government’s research panel on electric vehicles.
Mr. Wan is the first minister in at least three decades who is not a member of the Communist Party.
And Premier Wen has his own connection to the electric car industry. He was born and grew up here in Tianjin, the longtime capital of China’s battery industry, 70 miles southeast of Beijing.
Tianjin has thrived in the six years since Mr. Wen became premier. It now has China’s first bullet train service (to Beijing), a new Airbus factory and an immaculate new airport. Tianjin has also received a surge of research subsidies for enterprises like the Tianjin-Qingyuan Electric Vehicle Company.
Electric cars have several practical advantages in China. Intercity driving is rare. Commutes are fairly short and frequently at low speeds because of traffic jams. So the limitations of all-electric cars — the latest models in China have a top speed of 60 miles an hour and a range of 120 miles between charges — are less of a problem.
First-time car buyers also make up four-fifths of the Chinese market, and these buyers have not yet grown accustomed to the greater power and range of gasoline-powered cars.
But the electric car industry faces several obstacles here too. Most urban Chinese live in apartments, and cannot install recharging devices in driveways, so more public charging centers need to be set up.
Rechargeable lithium-ion batteries also have a poor reputation in China. Counterfeit lithium-ion batteries in cellphones occasionally explode, causing injuries. And Sony had to recall genuine lithium-ion batteries in laptops in 2006 and 2008 after some overheated and caught fire or exploded.
These safety problems have been associated with lithium-ion cobalt batteries, however, not the more chemically stable lithium-ion phosphate batteries now being adapted to automotive use.
The tougher challenge is that all lithium-ion batteries are expensive, whether made with cobalt or phosphate. That will be a hurdle for thrifty Chinese consumers, especially if gas prices stay relatively low compared to their highs last summer.
China is tackling the challenges with the same tools that helped it speed industrialization and put on the Olympics: immense amounts of energy, money and people.
BYD has 5,000 auto engineers and an equal number of battery engineers, most of them living at its headquarters in Shenzhen in a cluster of 15 yellow apartment buildings, each 18 stories high. Young engineers earn less than $600 a month, including benefits.
When Tianjin-Qingyuan puts its entirely battery-powered Saibao midsize sedan on sale this autumn, the body will come from a sedan that normally sells for $14,600 when equipped with a gasoline engine. But the engine and gas tank will be replaced with a $14,000 battery pack and electric motor, said Wu Zhixin, the company’s general manager.
That means the retail price will nearly double, to almost $30,000. Even if the government awards the maximum subsidy of $8,800 to buyers, that is a hefty premium.
Large-scale production could drive down the cost of the battery pack and electric motor by 30 or 40 percent, still leaving electric cars more expensive than gasoline-powered ones, Mr. Wu said.
But Mr. Wu has plenty of money to pursue improvements. He interrupted an interview at his company’s headquarters on Thursday to take a call on his cellphone, politely declined an offer from the caller, and hung up.
The general manager of a state-controlled bank had called to ask if he needed a loan, he explained.
Skip to next paragraph
Enlarge This Image
Doug Kanter for The New York Times
Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years.
The goal, which radiates from the very top of the Chinese government, suggests that Detroit’s Big Three, already struggling to stay alive, will face even stiffer foreign competition on the next field of automotive technology than they do today.
“China is well positioned to lead in this,” said David Tulauskas, director of China government policy at General Motors.
To some extent, China is making a virtue of a liability. It is behind the United States, Japan and other countries when it comes to making gas-powered vehicles, but by skipping the current technology, China hopes to get a jump on the next.
Japan is the market leader in hybrids today, which run on both electricity and gasoline, with cars like the Toyota Prius and Honda Insight. The United States has been a laggard in alternative vehicles. G.M.’s plug-in hybrid Chevrolet Volt is scheduled to go on sale next year, and will use rechargeable batteries imported from LG in South Korea.
China’s intention, in addition to creating a world-leading industry that will produce jobs and exports, is to reduce urban pollution and decrease its dependence on oil, which comes from the Mideast and travels over sea routes controlled by the United States Navy.
But electric vehicles may do little to clear the country’s smog-darkened sky or curb its rapidly rising emissions of global warming gases. China gets three-fourths of its electricity from coal, which produces more soot and more greenhouse gases than other fuels.
A report by McKinsey & Company last autumn estimated that replacing a gasoline-powered car with a similar-size electric car in China would reduce greenhouse emissions by only 19 percent. It would reduce urban pollution, however, by shifting the source of smog from car exhaust pipes to power plants, which are often located outside cities.
Beyond manufacturing, subsidies of up to $8,800 are being offered to taxi fleets and local government agencies in 13 Chinese cities for each hybrid or all-electric vehicle they purchase. The state electricity grid has been ordered to set up electric car charging stations in Beijing, Shanghai and Tianjin.
Government research subsidies for electric car designs are increasing rapidly. And an interagency panel is planning tax credits for consumers who buy alternative energy vehicles.
China wants to raise its annual production capacity to 500,000 hybrid or all-electric cars and buses by the end of 2011, from 2,100 last year, government officials and Chinese auto executives said. By comparison, CSM Worldwide, a consulting firm that does forecasts for automakers, predicts that Japan and South Korea together will be producing 1.1 million hybrid or all-electric light vehicles by then and North America will be making 267,000.
The United States Department of Energy has its own $25 billion program to develop electric-powered cars and improve battery technology, and will receive another $2 billion for battery development as part of the economic stimulus program enacted by Congress.
Premier Wen Jiabao highlighted the importance of electric cars two years ago with his unlikely choice to become minister of science and technology: Wan Gang, a Shanghai-born former Audi auto engineer in Germany who later became the chief scientist for the Chinese government’s research panel on electric vehicles.
Mr. Wan is the first minister in at least three decades who is not a member of the Communist Party.
And Premier Wen has his own connection to the electric car industry. He was born and grew up here in Tianjin, the longtime capital of China’s battery industry, 70 miles southeast of Beijing.
Tianjin has thrived in the six years since Mr. Wen became premier. It now has China’s first bullet train service (to Beijing), a new Airbus factory and an immaculate new airport. Tianjin has also received a surge of research subsidies for enterprises like the Tianjin-Qingyuan Electric Vehicle Company.
Electric cars have several practical advantages in China. Intercity driving is rare. Commutes are fairly short and frequently at low speeds because of traffic jams. So the limitations of all-electric cars — the latest models in China have a top speed of 60 miles an hour and a range of 120 miles between charges — are less of a problem.
First-time car buyers also make up four-fifths of the Chinese market, and these buyers have not yet grown accustomed to the greater power and range of gasoline-powered cars.
But the electric car industry faces several obstacles here too. Most urban Chinese live in apartments, and cannot install recharging devices in driveways, so more public charging centers need to be set up.
Rechargeable lithium-ion batteries also have a poor reputation in China. Counterfeit lithium-ion batteries in cellphones occasionally explode, causing injuries. And Sony had to recall genuine lithium-ion batteries in laptops in 2006 and 2008 after some overheated and caught fire or exploded.
These safety problems have been associated with lithium-ion cobalt batteries, however, not the more chemically stable lithium-ion phosphate batteries now being adapted to automotive use.
The tougher challenge is that all lithium-ion batteries are expensive, whether made with cobalt or phosphate. That will be a hurdle for thrifty Chinese consumers, especially if gas prices stay relatively low compared to their highs last summer.
China is tackling the challenges with the same tools that helped it speed industrialization and put on the Olympics: immense amounts of energy, money and people.
BYD has 5,000 auto engineers and an equal number of battery engineers, most of them living at its headquarters in Shenzhen in a cluster of 15 yellow apartment buildings, each 18 stories high. Young engineers earn less than $600 a month, including benefits.
When Tianjin-Qingyuan puts its entirely battery-powered Saibao midsize sedan on sale this autumn, the body will come from a sedan that normally sells for $14,600 when equipped with a gasoline engine. But the engine and gas tank will be replaced with a $14,000 battery pack and electric motor, said Wu Zhixin, the company’s general manager.
That means the retail price will nearly double, to almost $30,000. Even if the government awards the maximum subsidy of $8,800 to buyers, that is a hefty premium.
Large-scale production could drive down the cost of the battery pack and electric motor by 30 or 40 percent, still leaving electric cars more expensive than gasoline-powered ones, Mr. Wu said.
But Mr. Wu has plenty of money to pursue improvements. He interrupted an interview at his company’s headquarters on Thursday to take a call on his cellphone, politely declined an offer from the caller, and hung up.
The general manager of a state-controlled bank had called to ask if he needed a loan, he explained.
Tata Motors Full-Year Sales Fall 14% on Slowing India Demand S
April 1 (Bloomberg) -- Tata Motors Ltd., India’s biggest commercial vehicle maker, said sales fell 14 percent in the year ended March as slowing economic growth damped demand for trucks.
Tata Motors sold 498,581 vehicles in India and overseas last year, compared with 582,390 a year earlier, the company said in a statement today. March sales totaled 54,485 vehicles in India and overseas, it said without giving a comparative figure for the year earlier.
Slowing growth in Asia’s third-biggest economy has hurt demand for Tata Motors’ vehicles, prompting Standard & Poor’s and Moody’s Investors Service to lower the company’s credit rating. Tata Motors, after incurring its first loss in seven years in the October-December period, will take orders for the world’s cheapest car, Nano, this month, as it seeks to boost sales by attracting motorcycle buyers wanting to trade up to four wheels.
“Demand for commercial vehicles isn’t likely to improve at least till September-October,” said Amish Shah, a Mumbai-based analyst at Antique Stock Broking Ltd. “Unless the industrial production picks up, movement of goods will remain lower and freight operators will have excess capacity.” Shah has a “sell” rating on Tata Motors.
Local sales of vehicles in March were 52,686 vehicles, 13 percent less than a year ago, Tata Motors said.
Sales of Tata Motors’ trucks and buses in the local market fell 19 percent in March to 29,006. Indica hatchbacks and Safari utility vehicles’ sales fell 4 percent to 23,680.
“The financial stimulus announced by the government, particularly for commercial vehicles, has had a positive impact, the retail market would still take some time to reach the corresponding period levels of the last fiscal,” Tata said in a statement.
India forecast the economy expanded 7.1 percent in the year ended yesterday, after growing at 9 percent and 9.7 percent in the previous two years.
Tata Motors fell 0.2 percent to 180 rupees at close of trading in Mumbai today.
Tata Motors sold 498,581 vehicles in India and overseas last year, compared with 582,390 a year earlier, the company said in a statement today. March sales totaled 54,485 vehicles in India and overseas, it said without giving a comparative figure for the year earlier.
Slowing growth in Asia’s third-biggest economy has hurt demand for Tata Motors’ vehicles, prompting Standard & Poor’s and Moody’s Investors Service to lower the company’s credit rating. Tata Motors, after incurring its first loss in seven years in the October-December period, will take orders for the world’s cheapest car, Nano, this month, as it seeks to boost sales by attracting motorcycle buyers wanting to trade up to four wheels.
“Demand for commercial vehicles isn’t likely to improve at least till September-October,” said Amish Shah, a Mumbai-based analyst at Antique Stock Broking Ltd. “Unless the industrial production picks up, movement of goods will remain lower and freight operators will have excess capacity.” Shah has a “sell” rating on Tata Motors.
Local sales of vehicles in March were 52,686 vehicles, 13 percent less than a year ago, Tata Motors said.
Sales of Tata Motors’ trucks and buses in the local market fell 19 percent in March to 29,006. Indica hatchbacks and Safari utility vehicles’ sales fell 4 percent to 23,680.
“The financial stimulus announced by the government, particularly for commercial vehicles, has had a positive impact, the retail market would still take some time to reach the corresponding period levels of the last fiscal,” Tata said in a statement.
India forecast the economy expanded 7.1 percent in the year ended yesterday, after growing at 9 percent and 9.7 percent in the previous two years.
Tata Motors fell 0.2 percent to 180 rupees at close of trading in Mumbai today.
India’s Exports Decline the Most in at Least 13 Years (Update1)
April 1 (Bloomberg) -- India’s exports fell the most in at least 13 years in February as recessions in the U.S. and Europe damped demand for the nation’s products.
Merchandise shipments dropped 21.7 percent from a year earlier to $11.9 billion, the government said in New Delhi today. That was the biggest decline since 1995, according to Bloomberg data. Imports fell 23.3 percent to $16.8 billion, narrowing the trade deficit to $4.9 billion.
Policy makers in India have injected about $85 billion into the economy by cutting taxes and interest rates ahead of elections to be held in April and May. Prime Minister Manmohan Singh joins leaders of the Group of 20 nations in London tomorrow to hammer out a solution to the world economy’s worst crisis since the Great Depression.
“India essentially only started feeling the pinch of the global downturn in the December quarter and the worst is yet to come,” said Sherman Chan, an economist at Moody’s Economy.com in Sydney. The economy is likely to grow by 6.3 percent in the 12 months to March, less than the government’s estimate of 7.1 percent, she said.
Global trade will plunge 9 percent this year, the most since World War II, the World Trade Organization said last week. Declining exports will slow economic growth in Asia to the weakest since the 1998 financial crisis, the Asian Development Bank said yesterday, cutting its forecast for the second time in four months.
Global Recession
Asia is being hit hard by the global recession as the region is almost twice as reliant on exports as the rest of the world. Japan’s overseas sales plunged a record 49.4 percent in February from a year earlier and China’s shipments tumbled 25.7 percent in the same month.
India’s overseas sales in the 11 months to Feb. 28 rose 7.3 percent to $$156.6 billion, today’s report showed. Imports in the same period increased 19.1 percent to $271.7 billion.
“The global economic downturn adversely affected foreign clients’ confidence and as a result new work from abroad fell at a considerable pace,” Gaurav Kapur, an economist with ABN Amro Bank NV, said in a report today. Output at factories and utilities also contracted in March on weak external demand, according to ABN Amro.
Efforts to protect India from the impact of the global slump started in October when central bank Governor Duvvuri Subbarao cut the key interest rate for the first time since 2004. The Reserve Bank of India has lowered the repurchase rate five times to an all-time low of 5 percent.
Stimulus Packages
Prime Minister Singh for his part has announced three stimulus packages to spur slowing demand. Initiatives have included tax cuts on consumer products and services and higher spending on roads, ports and utilities.
Declining overseas orders and shrinking local demand caused growth to slow for the third straight quarter. The $1.2 trillion economy grew 5.3 percent in the three months to Dec. 31, the weakest pace of expansion since the last quarter of 2003, after 7.6 percent growth in the previous quarter and 7.9 percent in the three months before that.
Slowing external demand suggests India’s economic growth “will moderate more than we had earlier thought,” Governor Subbarao said last week.
Oil imports fell 47.5 percent to $4.04 billion in February, while non-oil imports fell 10.2 percent to $12.7 billion, the statement said.
The collapse of the nation’s exports led to India’s current-account deficit widening to a record in the three months to Dec. 31, the central said in a report yesterday. The shortfall in the broad measure of trade and investment flows swelled to $14.64 billion in the three months through December, from $12.82 billion the previous quarter.
Merchandise shipments dropped 21.7 percent from a year earlier to $11.9 billion, the government said in New Delhi today. That was the biggest decline since 1995, according to Bloomberg data. Imports fell 23.3 percent to $16.8 billion, narrowing the trade deficit to $4.9 billion.
Policy makers in India have injected about $85 billion into the economy by cutting taxes and interest rates ahead of elections to be held in April and May. Prime Minister Manmohan Singh joins leaders of the Group of 20 nations in London tomorrow to hammer out a solution to the world economy’s worst crisis since the Great Depression.
“India essentially only started feeling the pinch of the global downturn in the December quarter and the worst is yet to come,” said Sherman Chan, an economist at Moody’s Economy.com in Sydney. The economy is likely to grow by 6.3 percent in the 12 months to March, less than the government’s estimate of 7.1 percent, she said.
Global trade will plunge 9 percent this year, the most since World War II, the World Trade Organization said last week. Declining exports will slow economic growth in Asia to the weakest since the 1998 financial crisis, the Asian Development Bank said yesterday, cutting its forecast for the second time in four months.
Global Recession
Asia is being hit hard by the global recession as the region is almost twice as reliant on exports as the rest of the world. Japan’s overseas sales plunged a record 49.4 percent in February from a year earlier and China’s shipments tumbled 25.7 percent in the same month.
India’s overseas sales in the 11 months to Feb. 28 rose 7.3 percent to $$156.6 billion, today’s report showed. Imports in the same period increased 19.1 percent to $271.7 billion.
“The global economic downturn adversely affected foreign clients’ confidence and as a result new work from abroad fell at a considerable pace,” Gaurav Kapur, an economist with ABN Amro Bank NV, said in a report today. Output at factories and utilities also contracted in March on weak external demand, according to ABN Amro.
Efforts to protect India from the impact of the global slump started in October when central bank Governor Duvvuri Subbarao cut the key interest rate for the first time since 2004. The Reserve Bank of India has lowered the repurchase rate five times to an all-time low of 5 percent.
Stimulus Packages
Prime Minister Singh for his part has announced three stimulus packages to spur slowing demand. Initiatives have included tax cuts on consumer products and services and higher spending on roads, ports and utilities.
Declining overseas orders and shrinking local demand caused growth to slow for the third straight quarter. The $1.2 trillion economy grew 5.3 percent in the three months to Dec. 31, the weakest pace of expansion since the last quarter of 2003, after 7.6 percent growth in the previous quarter and 7.9 percent in the three months before that.
Slowing external demand suggests India’s economic growth “will moderate more than we had earlier thought,” Governor Subbarao said last week.
Oil imports fell 47.5 percent to $4.04 billion in February, while non-oil imports fell 10.2 percent to $12.7 billion, the statement said.
The collapse of the nation’s exports led to India’s current-account deficit widening to a record in the three months to Dec. 31, the central said in a report yesterday. The shortfall in the broad measure of trade and investment flows swelled to $14.64 billion in the three months through December, from $12.82 billion the previous quarter.
India’s economy ‘more durable’ than China
By James Lamont, Alec Russell and Amy Kazmin in New Delhi
Published: March 31 2009 17:26 | Last updated: March 31 2009 23:20
Manmohan Singh
Democracies have a far better chance of sustaining economic reform than one party states Manmohan Singh, India’s prime minister, has told the Financial Times in a rare top-level assertion of his country’s stance over neighbouring China.
EDITOR’S CHOICE
Analysis: Mission for a mandate - Mar-31
Transcript: FT interview with Manmohan Singh - Mar-31
Shifting ties keep Indian race open - Mar-18
Indian inflation nears zero - Mar-19
Special report: India and globalisation - Mar-31
The architect of India’s market liberalisations and a well-respected economist, Mr Singh has placed the long-term success of the world’s largest democracy over the potential fragility of the fastest growing large economy under Communist party rule.
“The Chinese have certain advantages: the fact that it’s a single party government,” Mr Singh said in an interview with the Financial Times before travelling to the G20 meeting in London on Thursday.
“But I do believe in the long run in the fact that India is a functioning democracy, committed to the rule of law. Our system is slow to move but I’m confident that once decisions are taken they are going to be far more durable.”
Mr Singh’s comments come as China is asserting its leadership among emerging markets of the global economic policy debate. His remarks come as a tacit reminder to China that it lacks one of the key credentials to contribute to the global policy debate – democracy.
His defence of India’s, often cumbersome, democracy is intended to address concerns of local businesspeople and foreign investors, who often weigh the ability to formulate and implement policy in the world’s two fastest growing large economies. Indian executives often speak in awe of China, struck by its fast improving infrastructure and what they see as forthright policy-making from the centre.
India, meanwhile, faces criticism for its overburdened infrastructure and squabbling politicians as it has strived tries to match the, now diminished, double-digit economic growth of its neighbour.
On the eve of hotly contested parliamentary elections, the 76-year old Mr Singh said India’s financial reforms, which transformed India’s economy when he was finance minister in 1991, had been carried forward by successive governments in New Delhi, regardless of their composition, and did not face the threat of major reversals in the future.
“We’ve seen since 1991 there have been four or five governments in our country and none have dared to reverse the path of reform that we started,” Mr Singh said. “Democracy has its problems. It’s slow moving. The decision making process is slow. But once decisions are taken they are far more durable.”
Mr Singh was critical of neighbouring Pakistan for its response to the devastating terror attacks on Mumbai, India’s financial centre, last year that left nearly 200 people dead. He said ”no effective action has been taken to control terror” and accused Islamabad of either being ”unable” or ”unwilling” to crack down on militant groups like the one blamed for the atrocity, Lashkar e Taiba.
As he prepared to travel to the G20, Mr Singh voiced support for a group of experts, possibly outside of the International Monetary Fund, to assess efforts made by major economies to revive their economies from the ravages of the global financial crisis.
To avoid worsening the damage to emerging markets, he said major economies had a responsibility to assist in the “clean up” of the banking system’s balance sheets and encourage the resumption of credit flows.
Mr Singh warned against financial protectionism, saying that the withdrawal of capital resources from developing countries by large banking institutions was “worrisome”.
“The phenomenon of industrialised countries pressurising their banks to give preference to lending at home does present a problem. It is a form of financial protectionism which should be avoided,” he said.
The Indian prime minister was cautious about a Chinese proposal that the world should switch in to establish a new reserve asset in place of the US dollar currency. He said it was too early to discuss this at the G20 and described it as a complicated issue that would be determined by the power balance among nations.
“The power to issue money is an indication of the power of a country and no-one gives up power voluntarily ... There are virtuous technical solutions but I don’t see these are the issues that can be resolved through technical analysis.”
In an effort to moderate expectations about what the G20 meeting would achieve, Mr Singh said many of the issues before world leaders concerned the redistribution of power among nations and could not be solved in a short period of time.
“If you are talking about global reform, it requires a lot more work,” he said.
Published: March 31 2009 17:26 | Last updated: March 31 2009 23:20
Manmohan Singh
Democracies have a far better chance of sustaining economic reform than one party states Manmohan Singh, India’s prime minister, has told the Financial Times in a rare top-level assertion of his country’s stance over neighbouring China.
EDITOR’S CHOICE
Analysis: Mission for a mandate - Mar-31
Transcript: FT interview with Manmohan Singh - Mar-31
Shifting ties keep Indian race open - Mar-18
Indian inflation nears zero - Mar-19
Special report: India and globalisation - Mar-31
The architect of India’s market liberalisations and a well-respected economist, Mr Singh has placed the long-term success of the world’s largest democracy over the potential fragility of the fastest growing large economy under Communist party rule.
“The Chinese have certain advantages: the fact that it’s a single party government,” Mr Singh said in an interview with the Financial Times before travelling to the G20 meeting in London on Thursday.
“But I do believe in the long run in the fact that India is a functioning democracy, committed to the rule of law. Our system is slow to move but I’m confident that once decisions are taken they are going to be far more durable.”
Mr Singh’s comments come as China is asserting its leadership among emerging markets of the global economic policy debate. His remarks come as a tacit reminder to China that it lacks one of the key credentials to contribute to the global policy debate – democracy.
His defence of India’s, often cumbersome, democracy is intended to address concerns of local businesspeople and foreign investors, who often weigh the ability to formulate and implement policy in the world’s two fastest growing large economies. Indian executives often speak in awe of China, struck by its fast improving infrastructure and what they see as forthright policy-making from the centre.
India, meanwhile, faces criticism for its overburdened infrastructure and squabbling politicians as it has strived tries to match the, now diminished, double-digit economic growth of its neighbour.
On the eve of hotly contested parliamentary elections, the 76-year old Mr Singh said India’s financial reforms, which transformed India’s economy when he was finance minister in 1991, had been carried forward by successive governments in New Delhi, regardless of their composition, and did not face the threat of major reversals in the future.
“We’ve seen since 1991 there have been four or five governments in our country and none have dared to reverse the path of reform that we started,” Mr Singh said. “Democracy has its problems. It’s slow moving. The decision making process is slow. But once decisions are taken they are far more durable.”
Mr Singh was critical of neighbouring Pakistan for its response to the devastating terror attacks on Mumbai, India’s financial centre, last year that left nearly 200 people dead. He said ”no effective action has been taken to control terror” and accused Islamabad of either being ”unable” or ”unwilling” to crack down on militant groups like the one blamed for the atrocity, Lashkar e Taiba.
As he prepared to travel to the G20, Mr Singh voiced support for a group of experts, possibly outside of the International Monetary Fund, to assess efforts made by major economies to revive their economies from the ravages of the global financial crisis.
To avoid worsening the damage to emerging markets, he said major economies had a responsibility to assist in the “clean up” of the banking system’s balance sheets and encourage the resumption of credit flows.
Mr Singh warned against financial protectionism, saying that the withdrawal of capital resources from developing countries by large banking institutions was “worrisome”.
“The phenomenon of industrialised countries pressurising their banks to give preference to lending at home does present a problem. It is a form of financial protectionism which should be avoided,” he said.
The Indian prime minister was cautious about a Chinese proposal that the world should switch in to establish a new reserve asset in place of the US dollar currency. He said it was too early to discuss this at the G20 and described it as a complicated issue that would be determined by the power balance among nations.
“The power to issue money is an indication of the power of a country and no-one gives up power voluntarily ... There are virtuous technical solutions but I don’t see these are the issues that can be resolved through technical analysis.”
In an effort to moderate expectations about what the G20 meeting would achieve, Mr Singh said many of the issues before world leaders concerned the redistribution of power among nations and could not be solved in a short period of time.
“If you are talking about global reform, it requires a lot more work,” he said.
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