Legion of Angels News Archive

NEW YORK (CNNMoney.com) – The United States has sneezed. And while it may be too strong to say that China has now caught a cold, it has, at the very least, come down with a bit of a runny nose.

And that’s not an encouraging sign for the U.S. economy.

China’s government reported on Monday that its economy grew 9% in the third quarter. That is, of course, still robust expansion by any measure.

But it is a cause for concern considering that China’s gross domestic product increased at a greater than 10% clip in the first two quarters of this year and has been growing at a double-digit pace annually since 2002.

The Chinese economy was expected to slow a bit following the Olympics in Beijing this past summer. But this is clearly more than a post-Olympic pullback.

It’s even more troubling when you take into account the fact that China is a big investor in U.S. stocks and bonds. The Chinese sovereign wealth fund China Investment Corp. has stakes in U.S. financial firms Morgan Stanley (MS, Fortune 500), Visa (V) and Blackstone (BX), for example.

And as I pointed out last week, foreign purchases of U.S. securities - with the notable exception of Treasurys - is starting to slow.

Simply put, a slowing Chinese economy is not good news for the United States. Consider another reason: China is an important customer of U.S. goods.

According to figures from the U.S. Department of Commerce, exports to China increased 18% last year. And China is now the country’s third-largest export market. China surpassed Japan in 2007 and trails only Canada and Mexico.

Christian Broda, an economist with Barclays Capital, said in a research report last week that China helped keep the U.S. economy from slipping into a deeper recession in 2001 since it was just beginning to become a more active trading partner with the rest of the world at that time.

China was only added to the World Trade Organization in December 2001.

But Broda pointed out that China’s exposure to the global economy is now double what it was in 1998-2002 because of its more active role as an importer and exporter. In other words, it’s now too big to be immune from the financial crisis.

“We don’t expect China to provide a buffer this time,” Broda wrote. “As growth decelerates in the developed world, there is unlikely to be a region in emerging markets that will act as a natural countervailing force.”

To be sure, China’s economy is not going to grind to a halt. But even a marginal slowdown could hurt large U.S. firms. Many of them have been able to offset sluggish growth in the United States with sales to China and other developing markets.

And it’s not certain that China’s economy will continue to keep expanding at such a rapid pace in the next few years if this credit crunch continues to persist for much longer.

“This enormous shock to the worldwide banking business, which was really magnified in mid-September, should probably lead to a reduction of 2.5% in the growth for all global economies next year. So if you thought China would grow 10% in 2009, you now have to figure it will grow 7.5%,” said Alexander “Sandy” Cutler, CEO of Eaton, a Cleveland -based manufacturer of industrial equipment.

Cutler said he expected China to remain a big growth opportunity for the company. Still, Eaton (ETN, Fortune 500) warned Monday that its fourth-quarter results would be lower than expected in large part due to slowing demand around the globe.

Construction equipment giant Caterpillar (CAT, Fortune 500) also hinted that China’s economy would slow down next year when it reported slightly lower-than-expected results for the third quarter Tuesday.

Stuart Hoffman, chief economist of PNC Financial Services in Pittsburgh, said it would not be a surprise if China’s slowdown affected other industrial companies, as well as tech firms that have increasingly looked to China as a growth market.

However, he added that there is one piece of good news worth mentioning - China is now the world’s second-largest importer of oil. So the sharp decline in crude prices could help keep China spending more than other countries.

And since China doesn’t rely as heavily on oil production as other developing nations - Russia being the most notable - it is unlikely to experience as much economic hardship due to falling oil prices.

Still, it’s crucial for the health of the U.S. economy that China’s doesn’t suffer a severe meltdown.

To that end, Treasury Secretary Henry Paulson is giving a speech in New York on Tuesday night about China and the global economy. It will be very interesting to hear what he has to say.

There is already some evidence to suggest that the two nations may need to work together to avert more global economic pain.

When the Fed announced a coordinated interest rate cut on Oct. 8 with banks in Europe and Canada, China’s central bank also lowered interest rates that day.

The Fed’s announcement didn’t mention the Chinese rate cut and China’s central bank didn’t acknowledge the rate cuts in the United States and Europe. But does anyone honestly think that the United States and China coincidentally decided on the same day to lower interest rates?

Make no mistake. The two countries clearly realize they need each other and that economic hardship suffered by the other is not good for either. China may not have the exact problems that the U.S. does but its third-quarter GDP slowdown is definitely a sign that the credit crunch is hitting China as well.

“This is proof positive that the world is very much interconnected and not decoupled. The U.S. is not the only locomotive for growth. China’s growth is likely to continue slowing down,” Hoffman said.

Source — CNN

JIUQUAN, China - On the eve of its most ambitious and riskiest manned space mission yet, Chinese officials introduced the three-man crew Wednesday and said Russian technicians will help guide one of them on China’s first spacewalk.

The three-man mission, expected to last about three days, is China’s most challenging since it launched its first “taikonaut” into space in 2003. The spacewalk is expected to help China develop the technology for docking two orbiters to create China’s first space station in the future. But it will also expose a spacesuited Chinese astronaut to the vacuum of space for the first time ever.

The two astronauts donning suits for the maneuver will be “supported by Russian experts throughout the mission,” space program spokesman Wang Zhaoyao told reporters at the Jiuquan launch site in northwestern China. Only one will actually leave the module to retrieve scientific experiments placed outside.

China’s secretive military-backed space program has relied overwhelmingly on domestic technology and know-how, and cooperation with Russia has been highly limited. One of the astronauts will wear China’s homemade Feitian suit, while the other will wear a Russian-made suit.

After the spacewalk, “the spacecraft will release a small monitoring satellite,” Wang told reporters. The Shenzhou 7 descent capsule is due to land in the northern region of Inner Mongolia at the end of the mission, but Wang did not provide a date for the landing.

International cooperation sought
Wang said Russian support for the latest mission could translate into a broader relationship in future.

“The successful cooperation on the Shenzhou 7 manned mission will create favorable conditions for future cooperation between our two countries,” Wang said, without giving details.

The official Xinhua news agency quoted Chen Shanguang, head of China’s astronaut training center, as saying that astronauts from other countries may be trained there.

“China’s two successful manned space missions so far showed the country’s technical ability of independently training astronauts, and it was one of the center’s goals to train international astronauts in future,” Chen said. “International cooperation is an inevitable trend in manned spaceflights, which are large-scale projects with complex technologies and huge investment.”

Astronauts trained for a decade
Fighter pilot Zhai Zhigang, 42, an unsuccessful candidate for the previous two manned missions, has been touted by Xinhua as the leading astronaut to carry out the spacewalk. Zhai and his comrades Jing Haipeng and Liu Boming — both 42 also — have been training together for a decade, ensuring effective, smooth cooperation among the three, Liu said.

“It is a great honor for all three of us to fly the mission, and we are fully prepared for the challenge,” Zhai said.

Jing told journalists that the training was a “massive test” of the trio’s physical and psychological fitness. “We’ve overcome hardship, won out over ourselves and challenged the extreme limits,” he said.

Wang gave no exact date or time for the spacewalk, but said the launch window for the mission at Jiuquan was set for between 9:07 p.m. and 10:27 p.m. (9:07 a.m. and 10:27 a.m. ET) on Thursday. Xinhua reported that the rocket was being fueled, meaning that the countdown to launch is “irreversible.”

Source — MSNBC

XIANGFEN, China - A landslide that unleashed a three-story wave of mud and iron ore waste at an illegal mining operation has killed at least 151 people and authorities fear the death toll could climb by hundreds more, state media said Thursday.

In a matter of minutes, the mud and waste on Monday inundated an entire village of and an outdoor market with hundreds of customers in Shanxi province’s Xiangfen county, the China Daily newspaper reported, citing witnesses.

State media put the official death toll at 151 people.

Authorities have declined to state a figure on the number of missing, saying an investigation is continuing. But news reports said hundreds may be buried in the mud.

“There’s almost no hope of their survival … they have been buried for three days under two meters (6 1/2 feet) of slush,” Wang Jun, head of the State Administration of Work Safety, said in the China Daily report.

Wang said there could be several hundred people buried under the sludge, according to the report.

But Huang Yi, a spokesman of the administration, later told The Associated Press that Wang had not commented on the possible number of people buried.

Calculating that number is made particularly difficult because most of the mine workers were migrants from elsewhere in Shanxi, or from Chongqing and central Hubei province.

Village inundated
One of the worst-hit areas was Yunhe, the village where the market was located. Yunhe sits in a valley at the foot of Tashan, the hill on which the iron ore mine was operating.

Yunhe’s 1,300 residents were mainly farmers of wheat, corn and other crops, but also supplemented their wages by providing transport to the nearby mines, according to a local government Web site’s official description of the place.

Most of the patrons of the outdoor market were migrant workers from the mine and residents of neighboring villages, with many buying food to prepare for the upcoming mid-autumn festival holiday, state media reported.

All that was left after the mudslide were a handful of two-story buildings that remained standing on the fringe of the sludge, which spanned an area the size of four football fields.

More than 2,000 police, firefighters and villagers were mobilized in the search for the missing, while police sealed off the village with checkpoints on all roads leading to it, blocking access to unauthorized vehicles.

Officers were still visiting various households in the area and interviewing residents for a final tally on the number of people missing or buried, state news broadcaster CCTV said in its midday bulletin.

A deadly history
A preliminary investigation showed the landslide was triggered by heavy rains that brought down a retaining wall at a waste dump operated by an illegal mine, said Wang Dexue, deputy head of the State Administration of Work Safety.

The wall’s collapse sent a wave of mud and iron waste over the town, located just below the waste site. Gray sludge also flooded the valley, washing out homes, cars, and buildings, including one where more than 100 people from a local mining company were holding a weekly meeting, the Shanghai Morning Post said.

The disaster underscores two major public safety concerns in China: the failure to enforce protective measures in the country’s notoriously deadly mines, and the unsound state of many of its bridges, dams and other aging infrastructure.

There are more than 9,000 mine waste dumps throughout China, and more than half of them operate without work safety permits, the CCTV report said.

Source — MSNBC

(CNN) – A weakened Typhoon Fung-Wong neared the Taiwan Strait Monday afternoon after whipping the island with powerful winds and heavy rain, the Joint Typhoon Warning Center reported.

Torrential rains inundated parts of Taiwan, dropping up to 36 inches (900 mm) in some areas, but the island’s rugged landscape had taken much of the storm’s punch. Sustained winds from Fung-Wong eased to 80 mph after roaring in as a Category 2 at 95 mph.

The typhoon is expected to make a second landfall in southeastern China early Tuesday, coming ashore in China’s Fujian Province, south of the city of Fuzhou, as a Category 1 storm with winds of at least 75 mph.

Fujian authorities evacuated about 275,000 people on Sunday as the storm approached, Xinhua reported. More than 50,000 fishing boats returned to harbor.

Government offices and schools in Taiwan closed ahead of the storm’s landfall early Monday, authorities said, according to Taiwan’s Central News Agency. Local stock and foreign exchange markets also closed for the day.

Officials suspended ferry service linking Taiwan and the Chinese mainland, according to China’s Xinhua news service.

Fung-Wong delivered a glancing, but powerful blow to the northern Philippines as it passed on Sunday.

Two people were reported missing by authorities, the Philippines News Agency reported Monday. Officials said about 2,000 families were affected by storm-related flooding.

Source — CNN

BEIJING - China opened a high-speed rail link between Beijing and nearby Tianjin on Friday to provide easy access to Olympic football matches in the booming port city.

The railway is part of China’s heavy investment in new infrastructure for the Olympics, including a new Beijing airport and additional subway lines.

The new train cuts the travel time for the 75-mile (120-kilometer) journey from 70 minutes to about 30 minutes, a notice on the Ministry of Railways said.

The trains, which will travel at speeds up to 217 miles per hour (350 kilometers per hour), will depart from Beijing’s revamped South Railway station — also the departure point for high-speed trains to Shanghai. It is the country’s first high-speed intercity train.

A first-class ticket costs 69 yuan (US$10) and a second-class ticket 58 yuan (US$8.5). Regular service will begin Saturday.

Source — Yahoo!