Group: Companies might cut China investment

Via email here is another update from Michael Pettis at China Financial Markets. What follows is from Michael Pettis. Special points

Drug companies in China reported sales of 1.11 trillion yuan or $179.6 billion in 2012. Today Credit Suisse Group AG announced its Q1 report, showing increase in net profits due to the cut in operating cost and investment banking operations. Gold prices increased by more than 1% on Wednesday after it decreased in the previous session. China Easter Airlines conducted a test flight on its A320 aircraft with palm biofuel oil produced in China.  

It’s not a health care story, but this from the FT strikes me as incredibly important:

CHINA'S rise is, by any account, a remarkable story. The world's most populous country, China represented an outsized share of global output for centuries prior to the Industrial Revolution. As the industrial west rose, China fell behind, then fell further behind amid occupation, revolution, and communist mismanagement. But then, about thirty years ago, China's luck changed. Its leaders embarked on a path toward liberalisation, and its economy began to grow. Having fallen so far behind, China had plenty of ground to make up, and growth rates soared toward double-digits.

Via Wei Yao of Societe Generale, Imagine a hard landing in China... The Chinese economy has been enjoying a cyclical rebound since the beginning of Q4 2012. SocGen's central scenario is that this recovery will last until early Q2 2013 and then gradually lose momentum. In the medium term, they still anticipate a bumpy path of secular deceleration, leading to an average growth rate of 6-7% over the next five to seven years, down from 10% per annum over the last three decades.

Commerce, USTR and USDA welcome concrete results in trade negotiations, reiterate need to achieve greater market access for U.S. exportersToday marked the conclusion of the 22nd session of the U.S.-China Joint Commission on Commerce and Trade (JCCT) in Chengdu, China.  U.S. Secretary of Commerce John Bryson and United States Trade Representative Ron Kirk co-chaired the JCCT along with Chinese Vice Premier Wang Qishan. U.S. Secretary of Agriculture Tom Vilsack also participated in the discussions. Secretary Bryson, Ambassador Kirk and Secretary Vilsack announced meaningful progress on key elements of the U.S.-China trade relationship but also underscored that much more work remains to be done to open China’s market to U.S. exports and investment.  Today’s progress will help boost U.S. exports and jobs through the removal of important barriers related to electric vehicles, strengthened measures to eliminate discriminatory indigenous innovation policies, and stricter enforcement of intellectual property rights in China.  “The JCCT gives us a mechanism to address the toughest issues in our trade relationship, and we must judge it by our ability to make concrete progress,” Ambassador Kirk said. “We have reached agreement on a number of important outcomes, though we had hoped to accomplish even more. In our discussions with our Chinese counterparts, we spoke frankly about the need to redouble our efforts going forward.” “Both sides worked hard to produce some meaningful progress that will help provide a needed boost to U.S. exports and jobs,” Secretary Bryson said. “This is a step in the right direction. But we must continue to actively engage our Chinese counterparts to open additional opportunities for U.S. businesses.” “China is one of the most important agricultural trade partners for the United States and the meetings and discussions in recent days have helped to strengthen this partnership and build greater export opportunities for our farmers, ranchers and growers,” said Agriculture Secretary Vilsack. “We intend to continue these discussions in the months ahead on beef and other agricultural products to break down additional trade barriers so Chinese consumers can benefit from the high quality products that are produced in America.”

This week, Commerce Secretary Gary Locke will convene the 21st annual U.S.-China Joint Commission on Commerce and Trade (JCCT), which is our most important bilateral dialogue for resolving trade and investment issues between the two nations. To help set the stage for this meeting, Secretary Locke recently convened a full-day policy conference at Georgetown University exploring the U.S.-China Commercial relationship -- with most discussion panels focusing on finding ways to resolve the trade disputes that animate so much of the coverage of U.S.-China commercial interaction.  It is an important discussion. China is the United States’ second-largest trading partner, with our bilateral trade in goods alone amounting to $365 billion last year. Moreover, China and the U.S. are currently partnering to find solutions to some of the world's most pressing problems, including climate change and energy security. For that reason, Secretary Locke made clear that the U.S. government welcomed continued strong growth in China as a way for China to improve the well-being of its citizens. As more and more Chinese move into the middle class, they will want world-class, American-made goods and that will mean more jobs here in the U.S. as our companies work to meet that demand.  

By Simon Johnson