For the second consecutive month, financial data revealed a net outflow of foreign exchange from China leading to expectations of another cut in the reserve requirement. Separately, Japan’s finance minister Jun Azumi said that Tokyo was looking to buy Chinese public debt, as a way of diversifying its forex holdings and getting more involved in the world’s second largest economy.
We’ve heard both sides of the debate of how China’s economy will land. Some have predicted a soft landing, others the contrary. At the same time, many others have said 2012 will be the year of the Europocalypse and the final mile for China’s economic boom. But what does the Chinese Central Bank feel about 2012, and what can we infer from the Bank’s recent reserve cut?
On Monday, eurozone ministers collectively agreed to the IMF’s firepower by 150 billion euros ($195 billion). But the target of 200 billion euros was not reached after Britain refused to provide additional resources to the IMF’s rescue fund.
As the European Central Bank struggles to garner support for its weak bond market, the IMF has in raising 150 billion euros to its crisis-fighting fund.
A quick preview of the key economic events for the upcoming week:
With key U.S housing and economic growth data expected this week, analysts are expecting stronger results and a show of resilience from the world’s largest economy – a reprieve from the slew of bad news from the EU.
Monday, 19 December
Marco Draghi, head of the ECB speaks in Brussels at the Quarterly Hearing before the European Parliament Economic and Monetary Affairs Committee, with mounting pressure for him to print more notes.
North Korean leader Kim Jong Il has passed away at the age of 69, according to the communist state’s television announcement.
In the televised report, the North Korean broadcaster, clad in a black funeral dress and weeping, reported that Kim died due to “overwork” after “dedicating his life to the people.” Kim’s funeral is set for December 28 in Pyongyang, with the mourning period expected to last till December 29.
As the banking sector continues to reel from the trauma of the financial crisis, 1,600 employees at Morgan Stanley will lose their jobs in the first quarter of the coming year.
According to Morgan Stanley, the cuts will affect 2.6 percent of its 62,648 strong global headcount. Bank spokesperson Mark Lake said that the cuts will occur globally and will include analyst, associate, vice president, executive director and managing director levels.
Last week, Citigroup announced it would eliminate 4,500 jobs, or 1.5 percent of its global headcount of 267,000 headcount.
2012 will be a bumpy year for the global economy: recession in Europe, anemic growth at best in the United States, and a sharp slowdown in China and in most emerging-market economies. To paraphrase Bette Davis in All About Eve, “Fasten your seatbelts!”
IMF Managing Director Christine Lagarde has called on all the nations around the world to come to the eurozone’s aid, warning that a failure to act collectively could eventually lead to protectionism and isolation reminiscent of the 1930s depression.
Foreign direct investment into China shrunk by 9.8 percent year-on-year to $8.8 billion last month, according to data released by the Chinese Commerce Ministry on Thursday.
The figure was the first time in 28 months that FDI growth for China had decreased, with the weakened global economy, particularly in the United States and Europe, seen as the primary cause for downturn.
Democrats are thrashing plans to impose a tax on millionaires as the Congress attempts to find its way out of a high-profile year-end spending dispute.
According to latest reports by Reuters, Obama discussed abandoning the surtax, which Republicans have been quick to criticise as a levy on job creators.
