Wen Jiabao

Image by World Economic Forum via Flickr

25 People to Blame for the Financial Crisis - TIME:

If cheap credit was the crack cocaine of this financial crisis — and it was — then China was one of its primary dealers. China is now the largest creditor to the U.S. government, holding an estimated $1.7 trillion in dollar-denominated debt. That massive build-up in dollar holdings is specifically linked to China's efforts to control the value of its currency. China didn't want the renminbi to rise too rapidly against the dollar, in part because a cheap currency kept its export sector humming — which it did until U.S. demand cratered last fall."

Related articles by Zemanta

• China's demise much exaggerated (telegraph.co.uk)

Economy Strains Under Weight of Unsold Items - washingtonpost.com

Image by futureatlas.com via Flickr

Economy Strains Under Weight of Unsold Items - washingtonpost.com: "Some analysts see ending the credit crunch as soon as possible as critical to preventing lasting damage. Harvard economist Diego A. Comin, in his research on Japan's decade-long bout of economic stagnation in the 1990s, found that demand stayed low long enough that businesses didn't make necessary investments. Computer adoption rates, for example, slowed, as did productivity growth. Businesses lost ground to competitors in countries such as South Korea, which made it harder for Japan to emerge from its slump.

Investing in new products and processes matters even more in highly competitive global industries plagued by over-capacity."

Related articles by Zemanta

• Lessons from Japan - more money, faster (americablog.com)
• The Japan comparison (samizdata.net)

Japan Heads for Worst Postwar Slump

Image by ivva via Flickr

Bloomberg.com: Worldwide: "Jan. 30 (Bloomberg) -- Japan headed for its worst postwar recession as factory output slumped an unprecedented 9.6 percent in December, unemployment surged and households cut spending.

The drop in production eclipsed the previous record of 8.5 percent set only a month earlier, the Trade Ministry said today in Tokyo. The jobless rate soared to 4.4 percent from 3.9 percent, the biggest jump in 41 years.

Recessions in the U.S. and Europe and a slowdown in China have smothered demand for Japanese cars and electronics. Toshiba Corp., which is firing 4,500 workers, yesterday forecast a record annual loss and said it will delay building a chip factory. Honda Motor Co. this week widened production cuts.

“Japan’s economy is falling off a cliff,” said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo. “There’s really nothing out there to drive growth.”

The Nikkei 225 Stock Average sank 3.4 percent at the morning close in Tokyo, led by Toshiba and Nintendo Co., which cut its profit forecast by a third yesterday. The Nikkei has fallen 10.1 percent this year, extending last year’s record 42 percent drop."

Related articles by Zemanta

• Big slump in Japan factory output (news.bbc.co.uk)
• Honda cuts production by 50,000 cars (cnn.com)
• Japan's Nikkei 225 slumps to worst year on record (telegraph.co.uk)

Is China Heart of Slowdown?

Image by House prices in Shanghai, Shenzhen and Guangzhou are plunging, and the global economy may grind almost to a halt next year because of it."

Full article on CBS News at: China Is `Heart of Global Slowdown' as Property Slump Stalls Driver of GDP

Related articles by Zemanta

• Chinapolis: A Bit About China's Big Five Cities
• Shanghai players detained after restaurant attack
• China's Property Slump