October 20, 2017

Zone to Test Renminbi as Currency for Trading

SHANGHAI — China has taken another step toward loosening its capital controls and making its currency more freely convertible by approving the creation of a new kind of free trade zone here.

China’s State Council, or cabinet, said it was establishing a pilot zone in Shanghai to test some of the government’s financial overhauls, including interest rate liberalization and full convertibility of China’s currency, the renminbi, according to reports Thursday in the state-run news media.

Analysts say the free trade zone will not just promote interest rate liberalization and currency convertibility but also will allow “financial product innovation” and the raising of money abroad or investment in foreign stocks by corporations.

Since taking office early this year, Prime Minister Li Keqiang has been promising bold changes aimed at restructuring the economy and improving the nation’s global competitiveness.

Last May, a State Council meeting presided over by Mr. Li said that by the end of the year the government would outline a plan for full convertibility of the renminbi and make it easier for Chinese individuals to invest. Still, many analysts believe China’s currency will not be fully convertible until 2015 to 2018.

“The State Council expects this experiment as an essential step towards upgrading China’s economy,” Qu Hongbin, an economist at HSBC in Hong Kong, said in a report Thursday. “It also expects the pilot’s eventual national rollout.”

It is unclear exactly how the free trade zone would operate, but within the zone, businesses and traders would probably be more free to import and export goods without customs approvals, and to convert foreign currency into renminbi more freely.

The approval of the free trade zone is a boost for Shanghai, which in 2009 won State Council approval to become a financial center to compete better with Hong Kong, London, New York and Tokyo.

Although China has the world’s second-largest economy, after that of the United States, the government maintains strict controls over capital flows and cross-border investments. It also has tight control over interest rates.

The government does that, in part, to guard against perceived threats from international currency speculators and to prevent huge inflows or outflows of money from rocking the banking sector and the economy.

But the government is moving ahead with plans to integrate with the global economy more fully by loosening controls over interest rates and cross-border trade and investment deals.

Analysts say loosening those controls could strengthen the financial system and make it more efficient.

The overhauls could also make it easier to trade the renminbi, setting the stage for it to rival the U.S. dollar some day as a reserve currency. The government controls its value, and beginning in 2005, Beijing began allowing the renminbi to strengthen against a basket of other major currencies, including the dollar.

Analysts say the experimental zone is another move toward allowing the global financial markets to determine to value of the renminbi, also known as the yuan.

After years of spectacular economic growth, China’s economy has been showing signs of weakening this year, and economists are warning about looming risks in the banking industry.

Shanghai, a city of 20 million, already has major ports and transportation hubs, and it is setting its sights on becoming a global logistics center. In 2005, Shanghai opened the first phase of the Yangshan Deep Water Port, which could eventually become the world’s largest shipping container port. The facility, projected to cost $18 billion — is on an island that is reached by a bridge that stretches out 32 kilometers, or 20 miles, across the sea.

Article source: http://www.nytimes.com/2013/07/05/business/global/zone-to-test-renminbi-as-currency-for-trading.html?partner=rss&emc=rss

Durable Goods Orders Up More Than Expected

New orders for durable goods, which range from toasters to aircraft, increased 3.3 percent last month, the Commerce Department said on Friday.

The data was the latest to show the U.S. economy exhibiting surprising resilience in the face of harsh fiscal austerity measures enacted this year.

“(It’s) another sign that growth is holding up quite well,” said Paul Ashworth, an economist at Capital Economics in Toronto.

While Washington hiked taxes in January and sweeping budget cuts began in March, consumer spending has looked relatively robust and many economists think the U.S. Federal Reserve could begin tapering a monetary stimulus program by the end of the year.

Economists polled by Reuters had expected new orders for durable goods, which are meant to last three years or more, to rise 1.5 percent last month. The Commerce Department also revised prior readings for orders to show a smaller decline in March than previously estimated.

The better-than-expected news helped contain losses on Wall Street, where stocks slipped for a third straight day. Investors fear that less monetary stimulus could crimp the supply of money for investing. Yields on U.S. government debt also declined.

NOT RIP-ROARING

Data earlier this month showed U.S. factory output fell in April for the second straight month, hurt by the European debt crisis which has weighed on demand at factories from Los Angeles to Shanghai.

Friday’s report showed a measure of underlying demand in the factory sector, which strips out aircraft and military goods and is an indicator of future business spending, advanced 1.2 percent. That was a faster clip than analysts had expected.

Even if that signals a return to growth in the factory sector, economists expect government austerity will nevertheless sap strength from the economy as the year progresses.

“While (Friday’s data) was definitely better than expected, I would not mistake this for rip-roaring strength,” said Stephen Stanley, an economist at Pierpont Securities in Stamford, Connecticut.

Shipments of core capital goods, which go into calculations of equipment and software spending in the gross domestic product report, fell 1.5 percent.

That suggests that while there were signs businesses could spend more in coming months, actual transactions got off to a weak start in the second quarter, reinforcing the view that economic growth has slowed.

Economists polled by Reuters earlier this month expect GDP to grow at a 1.5 percent annual rate in the second quarter, down from a 2.5 percent pace in the January-March period.

Shipments of capital goods in the defense sector, which is shouldering a large share of Washington’s austerity drive, fell 5.6 percent in April.

And while the strength in overall new orders was broad based, it received a boost from a rise in demand for aircraft, which is often volatile. The increase in aircraft orders was expected; plane-maker Boeing received orders for 51 aircraft, up from 39 in March, according to information posted on its website.

(Editing by Andrea Ricci)

Article source: http://www.nytimes.com/reuters/2013/05/24/business/24reuters-durable-goods.html?partner=rss&emc=rss

Economix Blog: Accounting Oversight Board Proposes Making Companies Name Their Auditor

Do you know who audits the books of the companies in which you own stock?

The answer almost certainly is that you do not. You may know the name of the firm, but you don’t know the name of the partner in charge of the audit. And you don’t know how much of the work was farmed out to other firms in other countries, or the names of those firms.

FLOYD NORRIS

FLOYD NORRIS

Notions on high and low finance.

The Public Company Accounting Oversight Board this week put out a proposal to require audit reports to state the name of the engagement partner. Advocates of the idea hope that a partner whose name is out there might show more backbone, since it would be easier to identify him or her if an audit later blows up.

A less obvious benefit, the board suggested, was that it would be easy to see when an engagement partner was changed. They have to be changed every five years, but sometimes it happens sooner because a company demands a more pliable auditor. The board thinks it might be a good idea to require firms to say why a change was made.

The proposal also asks that firms identify other firms — like foreign affiliates — that worked on the audit, and say how much they did. With that disclosure, we could know, for example, if the Shanghai affiliate of Deloitte Touche worked on an audit. That is the auditor I wrote about in May after it concluded that its audits of a New York Stock Exchange-listed company named Longtop Financial had failed to notice that the cash wasn’t there. The Securities and Exchange Commission asked Deloitte Shanghai for its audit papers. The firm stalled for a few weeks, and then told the S.E.C. to mind its own business. The commission has gone to court, but so far has seen no documents.

The audit industry has long insisted that only the name of the firm matters, and there is no need for investors to know any names of actual people. I went back to the old comment letters from when the board last broached this idea, back in 2009, to get a flavor of the arguments, and found the one from Ernst Young to be among the more interesting.

“We are puzzled,” the company wrote, “as to how the general public might responsibly benefit from or act upon this information.” Instead, it worried, there could be “guilt-by-association” in which a partner’s reputation was hurt by the fact he was “associated with a company with financial reporting difficulties.” That might make auditors reluctant to lead difficult audits. It might also make them more likely to be named in lawsuits by defrauded investors.

The letter ends by saying, “We would be pleased to discuss our comments with members of the Public Company Accounting Oversight Board or its staff.”

Arranging such a conversation might not have been easy, however. The letter is signed “Ernst Young LLP” but gives no indication which person might be responsible for it. The phone number on the letterhead is the general number for Ernst Young’s New York headquarters.

You can’t be too careful when it comes to disclosing sensitive information.

Article source: http://feeds.nytimes.com/click.phdo?i=050e08a9721078ba52a30ca4682058d8

Square Feet: A. Eugene Kohn

Q How is business these days?

A It’s been good despite the economy. Our decision to go into Europe and Asia back in the ’80s was key. The area of the world with the greatest population growth — Korea, Hong Kong, Singapore — has kept us busy for many years. China has been one of the great markets for us.

Across the globe, we’re working on about 100 projects at the moment. They’re in different stages: some are under construction, some in design, some in working drawings and studies.

Q What percentage of your work is overseas?

A If you asked me a year ago, I would have said 80 or 90 percent. But today it’s changing. I would say a greater percentage has picked up here in the last year. So now just in the states, it’s about 25 to 30 percent. Particularly in New York — more so than most places — things have picked up.

Q I know you’ve been busy, on and off, with Hudson Yards, which will include 12 million square feet of office towers, apartments, a hotel and a park over the 26-acre railyards.

A We’ve been on it for about three and a half years. The last year and the year before that we didn’t do a lot. But Steve Ross and Related, and Oxford Properties, are committed to build this soon and are convinced that by next year they’re going to be moving ahead quite well. Which tenant goes first is up in the air.

The first phase is this: three towers with offices and residences and big retail. It’s all over the railroad tracks, so a big platform has to be built. We’re going to build the platform on the east and west end. This should be completed in 2016, and the entire project in 2025. That sounds like a lot of time, but look at the World Trade Center.

Q Speaking of which, what are your thoughts about the rebuilding at ground zero?

A It’s sad that it’s taken this long. In 20 years Shanghai built a city, added eight million people.

I think the Port Authority and everybody has done a good job, but they’ve been up against a lot of issues.

Q You had hoped to have a major role in the design, hadn’t you?

A We did have a scheme, but unfortunately it got published in one of the magazines and we got disqualified.

Q KPF was supposed to build JPMorgan Chase’s headquarters at 5 World Trade Center.

A I think that’s dead.

We had just gotten approval from JPMorgan and from the Port Authority for the latest design, which never got published, when the crash came and JPMorgan ended up buying Bear Stearns. That decision killed the project, because they got a building as part of it, and it’s right next to their other building. So why not use it?

Q Let’s move on to some of your recent residential projects.

A Well, they’re all certainly very modern, but each one relates to its site. One Jackson Square, for example, changed that whole place. That building we’ve never done before — that particular form, shape. It was viewed almost as if it were flowing ribbons or rivers. It’s really made a contribution well beyond just being a building.

Q Did you always want to be an architect?

A I wanted to be a sportscaster, and when I was young my parents thought that was a ridiculous idea. They said, ‘You have to be a professional, preferably a doctor or lawyer.’ Architect came down the line. My mom was a great artist, had a show at the Guggenheim at age 100.

Q What has been your most memorable project?

A When we started the firm in ’76 — when the recession was pretty bad and unemployment for architects in the city was 60 percent — a wealthy friend said to me, ‘Your success will be measured by the work you turn down.’ I’m thinking, ‘We don’t have any work, and I have three kids going to school and no money.’ But my friend was absolutely right.

The first job offer comes from a bank in Iran asking us to do a new headquarters, just before the shah is booted out. We were offered, for the design, $1.3 million.

I had worked in Iran for 10 years, and I began to think about my experience there. My stomach was really sick turning down a job and that money. But if we hadn’t, we wouldn’t have gotten a job from ABC converting an armory they bought on 66th to a soap opera studio. That was the start of all the great breaks.

Article source: http://www.nytimes.com/2011/05/15/realestate/a-eugene-kohn.html?partner=rss&emc=rss