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Mario Monti Accepts Job as Italy’s Premier

November 14, 2011 by Leave a Comment

Mr. Monti, 68, a respected economist who has promised to be a steady hand in a time of market turbulence, said he expected to move ahead as soon as he secured a parliamentary majority for the new government.

Assembling a majority usually requires days or weeks of talks, but Italy does not have the luxury of time. Skeptical investors have pushed the country’s borrowing costs to dangerous heights, putting at risk the euro currency that 17 nations share. The crisis forced the resignation of Prime Minister Silvio Berlusconi on Saturday, turning Italy’s most complex political shift in nearly two decades into one of its most urgent transitions.

President Giorgio Napolitano, who as the head of state must approve the formation of a new government, gave a tough speech on Sunday aimed at reassuring investors about Italy’s commitment to the euro and warning the nation’s insular political class about the stakes involved. He called on lawmakers to form a broad coalition in support of Mr. Monti that would be able to push through urgent economic measures.

News media reports said that Mr. Monti initially sought to include figures from the major parties in his cabinet in an effort to share the political cost of the government’s program, including unpopular austerity measures. But while most major parties were prepared to back his government, few were willing to join it. The new cabinet is now expected to consist mainly of technical experts rather than politicians.

Mr. Napolitano, who met with leaders from across the political spectrum on Sunday to gather pledges of support, said in his speech that “it is a responsibility we perceive from the entire international community to protect the stability of the single currency as well as the European frame work.” He added that Italy understood how its actions would affect “the prospects for the recovery of the world economy.”

Italy must repay or refinance almost 200 billion euros, about $276 billion, worth of maturing bonds by April 2012. Last week, the political turmoil drove the effective yields on Italy’s bonds to 7.4 percent, a level at which other countries in the euro zone have sought bailouts. If Italy is forced to continue to pay such high rates to borrow, it will have difficulty in handling its debt load, which is among the highest in Europe.

The president’s remarks were widely seen as directed mainly at Mr. Berlusconi’s political party, the People of Liberty, which said earlier on Sunday that it would accept a Monti government, but only for a limited time before going to early elections.

Angelino Alfano, the secretary of the People of Liberty and Mr. Berlusconi’s political heir apparent, acknowledged on national television on Sunday that there was opposition to a Monti government within his party. But he confirmed that the party would back Mr. Monti if certain conditions were met concerning the composition of the cabinet and the how long the government would last before elections.

Mr. Monti declined to say how long he hoped to govern. News media reports suggested that he was aiming to remain in office until the end of the current legislature’s term in 2013. Mr. Monti said he would act “with a sense of urgency, but also with care” in forming a new government; he is expected to present his cabinet and program to Parliament in a few days.

As for his broad goals, he said his government would try to restore the country to financial health and growth without compromising “social equity.”

“We owe it to our children to give them a dignified and hopeful future,” he said.

Not one to be upstaged, Mr. Berlusconi spoke publicly on Sunday evening for the first time since his resignation, vowing in a video that was broadcast on television to redouble his efforts in Parliament to save the country and the euro.

Pale and visibly tired, Mr. Berlusconi called his resignation “an act of generosity” that was carried out with a “sense of responsibility” for Italy, and he said he had been insulted by his jeering critics.

He quoted wistfully from a speech he delivered when he first ran for office in 1994, praising Italy and its promise of freedom. “Mine was and remains a declaration of love for Italy,” Mr. Berlusconi said. “That love remains unchanged.”

In his video address, Mr. Berlusconi called on the European Central Bank to expand its role in shoring up the euro, arguing that the debt crisis extended far beyond Italy.

For their part, European leaders had come to see Mr. Berlusconi as a liability both to Italy and to the single currency after his government repeatedly fell short on promises of fiscal and economic reform. Mr. Berlusconi resigned after Parliament finally approved a package of austerity and growth measures but denied him the majority support he needed to remain in office.

The Berlusconi government had been shadowed in recent years by sex scandals surrounding the prime minister. Mr. Monti attended Mass with his wife on Sunday morning in the Roman Catholic Church of Sant’Ivo in the historic center of Rome.

Many Italians awoke on Sunday to what they felt was a new day in Italian politics, even if many did not quite believe that Mr. Berlusconi, a fixture of public life here for nearly two decades, was really gone. Some young Italians, who increasingly feel shut out by a labor market that protects older workers, considered his departure to be good sign.

“We’ve been following what happened since the summer with growing concern,” said Laura Calderoni, 36, an architect in Rome. “The government’s complete immobility, deafness and incapability to understand reality and act accordingly was very scary.”

She added: “We are part of the brain-drain generation, but I kept on telling all my friends, ‘Don’t flee; it will be over.’ A fairer country starts with citizens like us that build their lives here and believe in it.”

Others said that Italy’s problems did not begin with Mr. Berlusconi and would not end with Mr. Monti.

“I just think that Berlusconi is not the root of all our economic evil,” said Anna Costeri, 43, a dental hygienist from Sardinia who was visiting Rome and said she had voted for a right-wing party in the past. Referring to Mr. Monti’s background, she said, “I am not that hopeful that someone so close to rating agencies and the banks can do our best interest.”

Gaia Pianigiani contributed reporting.

Article source: http://www.nytimes.com/2011/11/14/world/europe/mario-monti-asked-to-form-a-new-government-in-italy.html?partner=rss&emc=rss

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Higher Oil Price Lifts Profits at Exxon and Shell

October 27, 2011 by Leave a Comment

Exxon Mobil,  the largest U.S. oil company, also said that its capital and exploration expenditures of $26.7 billion for the first nine months of the year represented a record, as the company attempted to take advantage of the nearly 50 percent rise in oil prices from a year ago.

Profits so far have been strong across the oil patch, but it may be difficult to sustain the improvement in the next quarter over last year. Oil prices have eased since the spring, when turmoil in Libya took 1.3 million barrels of crude off world markets.

Now that Libya’s rebels have taken power, exports from that country are beginning to flow again. Prices for oil and natural gas in the coming months will depend on the strength of the world economy, which remains uncertain.

Exxon Mobil reported that its net income rose to $10.33 billion in the three months through September, from $7.35 billion a year earlier, helped by the increase in oil prices.

“We continue pursuing new opportunities to meet growing energy demand while supporting economic growth, including job creation,” said Rex. W. Tillerson, ExxonMobil’s chairman, in a statement.

Net income at Shell, the biggest oil company in Europe, rose to $6.98 billion in the three months through September from $3.46 billion in the same period a year earlier.

“Shell did a lot better than expected, but Exxon came roughly in line,” said Fadel Gheit, senior oil analyst at Oppenheimer Co. “Shell had higher than expected production and better than expected refining and chemical results. Exxon had lower than expected production, and lower refining and chemical results.”

Shell’s chief executive, Peter Voser, said in a statement, “We are making good progress against our targets, to deliver a more competitive performance.

Mr. Voser said Shell was moving ahead with its plan to focus on its most valuable assets and invest in new projects to ensure continued production. Shell has completed $6.2 billion of assets sales so far this year, $1.8 billion of that in the third quarter, when the company sold the Stanlow refinery in Britain for $1.2 billion. Shell had planned to raise $5 billion from asset sales this year.

New project starts in Qatar and Canada helped production levels, Shell said. The projects are part of more than 20 new operations planned until 2014 as part of a $100 billion investment program.

The earnings for Shell beat forecasts of an average $6.61 billion of a group of analysts polled by Reuters.

On Tuesday, BP reported earnings that also beat analyst expectations and said it expected production to grow.

Article source: http://feeds.nytimes.com/click.phdo?i=4429263bbf374a673717d1c592f3ed6a

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E.U. Postpones Decision on How to Deal With Crisis

October 20, 2011 by Leave a Comment

In a statement, a spokesman for Angela Merkel, the German chancellor, said that a summit meeting planned for this weekend would be used to examine proposals to strengthen banks, increase the clout of the euro bailout fund, and better coordinate euro area economic policy.

But a decision will not come until a second summit meeting to be held no later than Wednesday, the statement by a government spokesman, Steffen Seibert, said. The French government issued a nearly identical statement.

The last-minute delay reinforced fears that European leaders are still far from containing a crisis that has become a threat to the world economy. “The politicians have been trying to solve the crisis, but a consistent effort has been missing,” Andreas Dombret, a member of the board of the German Bundesbank, told an audience in Berlin on Thursday, in an unusually sharp criticism by a central banker of his political counterparts.

Analysts agree that a comprehensive crisis package would include further debt relief for Greece, a more convincing bailout fund for the overindebted countries, and some means of removing doubts about the creditworthiness of Italy and Spain.

It would also include a plan to address the underlying causes of the crisis, namely the lack of any effective way to enforce budgetary discipline among euro members, and a plan to restore growth in countries like Greece and Portugal that have lost international competitiveness.

After all the face time that political leaders have already had this week, and plan to have starting Friday evening, the signs of disarray are unsettling. The French president, Nicolas Sarkozy, stoked expectations for progress Wednesday when he flew to Frankfurt for a brief meeting with Mrs. Merkel as his wife, Carla Bruni-Sarkozy, was giving birth to a daughter back in Paris.

The discussions this weekend will begin Friday evening with a meeting of euro area finance ministers. On Saturday, finance ministers from the European Union as a whole will meet. Mrs. Merkel and Mr. Sarkozy will also meet. On Sunday, heads of state or government from the Union, the European Council, will gather in the morning. Then there will be a meeting of just the 17 euro area leaders.

By saying they need more meetings next week, the leaders drew out the suspense and created the impression they were having trouble agreeing on details.

There is broad agreement on the need to restock capital cushions at European banks so they could withstand a default by Greece. But agreeing on how much money banks should raise, and where the money should come from, is another matter.

Goldman Sachs estimated the amount at €300 billion, or $412 billion, which would have to come from capital markets, or as a last resort, taxpayers. Other estimates range as low as €100 billion and as high as €400 billion, depending on assumptions about how deep a loss banks must absorb on holdings of Greek and other government debt.

European officials, according to people involved in the discussions, are leaning toward the low estimates, which would be easier to raise but might not be enough to rebuild faith in European banks and restore their access to international money markets.

Banks are fiercely resisting attempts to make them raise more capital, which would cut into profits and expose them to government control if they cannot raise what they need from private investors. There are questions whether governments have the legal authority to force recapitalization.

Meanwhile, negotiations to get banks to take bigger losses on their investments in Greek debt “are making very little progress,” said a banker with knowledge of the discussions, who spoke anonymously because the talks are still ongoing.

E.U. officials hope to reduce the amount of money that Greece owes the banks so that the country, which is virtually bankrupt, might be able to get back on its feet more quickly. This summer, banks agreed to take losses estimated at about 21 percent, but with Greece’s economy getting worse by the day, some policy makers now want the banks to accept losses on their holdings of Greek debt of between 50 to 60 percent.

Article source: http://www.nytimes.com/2011/10/21/business/global/eu-postpones-decision-on-how-to-deal-with-crisis.html?partner=rss&emc=rss

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Central Banks in Europe Move to Support Economy

October 6, 2011 by Leave a Comment

Both central banks left their key benchmark rates unchanged, at 1.5 percent for the euro area covered by the E.C.B., and 0.5 percent for Britain.

Some analysts had seen a rate cut as a possibility for the euro zone amid growing concern that Europe could again dip into recession. But the E.C.B. has remained steadfastly focused on inflation, which rose again in September.

It did respond, however, to signs that some big banks that are having trouble raising funds at reasonable rates, because other lenders doubt their creditworthiness due to their exposure to shaky government debt.

The E.C.B. said it would resume offering banks unlimited loans at the benchmark interest rate for about one year. Previously the maximum term was six months. Banks must put up collateral such as bonds or other securities, but otherwise are allowed to borrow as much as they want.

To help avert a credit crunch, the E.C.B. also said it would resume buying so-called covered bonds, which are a form of debt secured by packages of loans and guaranteed by the issuing bank. Covered bonds are one of the main ways that banks raise money. The E.C.B. also bought covered bonds in 2009 to alleviate the bank funding crunch that followed the collapse of Lehman Brothers in 2008.

At a news conference, the E.C.B. president Jean-Claude Trichet said the bank expects “very moderate” growth in coming months in “an environment of particularly high uncertainty.”

Hours earlier, the Bank of England said it would widen its so-called quantitative easing program to £275 billion, or $425 billion, from £200 billion.

“Tension in the world economy threatens the U.K. recovery,” the bank governor Mervyn King wrote in a letter to the British Treasury explaining the bank’s decision.

“Vulnerabilities associated with the indebtedness of some euro-area sovereigns and banks have resulted in severe strains in bank funding markets and financial markets more generally,” Mr. King wrote. The euro area is Britain’s biggest export market and demand from the region is vital for an economic recovery.

The British move came about a month earlier than some economists had expected but was no surprise. The Bank of England’s rate-setting committee had hinted last month that it might have to inject more money into the market to support an increasingly threatened economic recovery.

The decision shows that “they believe an already difficult outlook for the economy has deteriorated,” Howard Archer, chief economist for Britain at IHS Global Insight, said.

The pound fell against all major currencies after the announcement. The euro also fell.

Many economists have argued that the E.C.B. erred when it raised rates twice this year, most recently in July. Evidence is growing that the euro area economy is headed for a downturn caused by severe austerity programs in countries like Spain as well as the uncertainty created by the European government debt crisis.

But recent figures showed inflation in the euro area rose to an estimated 3 percent in September, well above the E.C.B. target of about 2 percent. Hard liners on the governing council are likely to have argued that the E.C.B. would violate its mandate to preserve price stability if it cut rates now.

In addition, some members of the governing council, which includes chiefs of national central banks, may have argued that a rate cut just three months after the last increase would be an embarrassing reversal that could damage E.C.B. credibility.

Still, Mr. Trichet could use his last news conference before handing the presidency of the central bank to Mario Draghi, governor of the Bank of Italy, to signal a rate cut in the coming months.

With Greece on the brink of default and problems at banks such as Dexia, a French-Belgian institution, signaling severe strain in the European banking system, European institutions are under pressure to do something to relieve the tension.

José Manuel Barroso, president of the European Commission, the executive of the European Union, said he was advocating a coordinated approach to bank recapitalization across the euro zone.

“It’s not only obvious but indispensable,” he said in Brussels. “I don’t think anyone in Europe is opposed to coordination in such a sensitive area.”

Article source: http://feeds.nytimes.com/click.phdo?i=48b47cb9c1bb2f912668917d70f11409

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European Financial Chieftains Weigh in on Global Economy Lagarde Chastises Policymakers, While Trichet Underscores Competitiveness

August 28, 2011 by Leave a Comment

Europe weighed in at the central bankers conference in Jackson Hole, Wyo., on Saturday, with the president of the European Central Bank and president of the International Monetary Fund calling on governments to do more to address the deteriorating world economy.

“The downside risks to the global economy are increasing,” Christine Lagarde, president of the I.M.F. and former French minister of finance, said during a joint appearance with Jean-Claude Trichet, president of the European Central Bank.

In the blunter of the two presentations, Ms. Lagarde said that economic risks “have been aggravated further by a deterioration in confidence and a growing sense that policymakers do not have the conviction, or simply are not willing, to take the decisions that are needed.”

Mr. Trichet avoided any mention of the European debt crisis that threatens the stability of the global financial system and may define his eight-year tenure, which ends on Oct. 31. Nor did he mention the extraordinary measures that the central bank has undertaken recently, buying Italian and Spanish bonds on the open market to contain runaway borrowing costs.

Instead, Mr. Trichet suggested that Europe’s problems are fundamentally a question of which governments have taken steps to become competitive and which have not.

“Greece, Portugal and Ireland, in particular, had progressively lost competitiveness vis-à-vis their main trading partners in the euro area,” Mr. Trichet said. “Germany is now an example of how big the dividends of reform can be if structural adjustment is made a strategic priority and implemented with sufficient patience.”

Mr. Trichet and Ms. Lagarde were speaking at the annual central bankers conference in Jackson Hole, Wyo. Their calls for governments to take more responsibility for fixing the economic crisis were in line with comments Friday by Ben S. Bernanke, chairman of the Federal Reserve, who on Friday blamed politicians for disrupting the financial system.

Ms. Lagarde, who perhaps has more freedom to speak her mind than a central banker, chastised political leaders for not doing more since the financial crisis began in 2008. Countries need to find a balance between cutting debt and promoting growth, she said.

“Developments this summer have indicated that we are in a dangerous new phase,” she continued. “The stakes are clear: we risk seeing the fragile recovery derailed.”

She said central banks should continue to pursue a loose monetary policy. “The risk of recession outweighs the risk of inflation,” she said.

She also said that banks, whose fragility is a key element of the crisis in Europe, should be recapitalized, forcibly and with public funds if need be. “They must be strong enough to withstand the risks of sovereigns and weak growth,” she said. “This is key to cutting the chains of contagion. If it is not addressed, we could easily see the further spread of economic weakness to core countries, or even a debilitating liquidity crisis.”

She also complained about European political fractiousness. “The current economic turmoil has exposed some serious flaws in the architecture of the euro zone, flaws that threaten the sustainability of the entire project,” she said.

Mr. Trichet, in a scholarly discourse on the elements of economic growth, defended the beleaguered euro project, rejecting criticism that its 17 nations are too diverse to perform well together. He argued that Europe has grown almost as fast and created more jobs in the last decade than the United States.

“Adjusted for population growth, there has been virtually no difference between U.S. and euro area growth over the first decade since the introduction of the single currency,” Mr. Trichet said. “The euro area, though, has created more jobs: 14 million compared with 8 million in the U.S.” He acknowledged, however, that Europe lags in deregulating its labor market.

Though too polite to criticize his hosts directly, Mr. Trichet said that income inequality is ultimately a threat to society. While the gap between rich and poor has also widened in countries like Germany, tax policies and more generous social programs mean that European countries still tend to be more economically egalitarian than the United States.

“Extremes of income inequality and restricted opportunity challenge our values and strain the fabric of our societies,” Mr. Trichet said. “Growth skewed towards the few (or absent for a large minority) risks social tensions, undermines institutions and encourages policy failures of one kind or another.”

Mr. Trichet was making his last appearance at Jackson Hole as European Central Bank president. He will hand the post in October to Mario Draghi, governor of the Bank of Italy.

Article source: http://feeds.nytimes.com/click.phdo?i=c7dd67f12d2971e60115147ec61f2ef0

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Fitch Ratings Keeps U.S. at Top Credit Rating

August 16, 2011 by Leave a Comment

NEW YORK (AP) — Fitch Ratings said Tuesday it will keep its rating on U.S. debt at the highest grade, AAA, and issued a “stable” outlook, meaning it expects the rating to stay there.

That’s better than the other two main ratings agencies: Moody’s lists the U.S. debt at AAA but says its outlook is negative. And Standard Poor’s set off a maelstrom in the stock market last week after it took its rating on the U.S. down to the second-highest grade, AA-plus, for the first time.

In Washington, the Obama administration welcomed the announcement from Fitch but said it would be important for Congress to take the steps called for in the budget agreement.

“The Treasury Department continues to believe that Treasury securities are AAA investments. Today’s report underscores the importance of Congress taking additional actions to address our long-term fiscal challenges,” Treasury spokesman Anthony Coley said.

The SP cited bickering in Congress over the debt ceiling earlier this summer, as well as the country’s rising proportion of debt, for its downgrade. But Fitch said that it decided to keep its rating because the “key pillars” of U.S. creditworthiness remain intact, including its “flexible, diversified and wealthy economy.”

It also said that the country’s flexibility in monetary policy gives it the ability to absorb economic shocks. The dollar’s central role in the world economy allows the U.S. to hold a higher proportion of debt to gross domestic product.

Fitch said it would revisit the rating after the congressional committee that is supposed to figure out how to cut government spending presents its findings, due by the end of November.

The rating, which measures the possibility that the U.S. will default on its debt, has been a hot-button issue in the past two weeks. Standard Poor’s downgrade on Aug. 5 ignited a volatile week on Wall Street, with the Dow rising or falling by at least 400 points for four days. The government and some analysts have criticized the SP’s decision, calling it unjustified and based on faulty math.

The SP has defended the move, and some analysts have said it is a necessary wakeup call for a government that has been spending too much. The SP said its downgrade was based on political grandstanding this summer over the debt ceiling. The SP analysts also said they predict that the country’s debt a portion of output will continue to rise.

The SP has also pointed out that its downgrade is only to the second-highest rating, saying that the psychological effects are deeper than the practical ones.

“It’s like going from indigo to navy blue,” SP analyst John Chambers said in a call after the downgrade.

Moody’s assigned a negative outlook to its rating of U.S. credit on Aug. 2. Analysts there said they were uncertain how much the congressional committee will be able to agree on cutting spending.

Article source: http://feeds.nytimes.com/click.phdo?i=e4bccefe57340b81feb20f71be81c6f3

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Draghi Receives Warm Welcome in Germany

May 26, 2011 by Leave a Comment

Invited by the economy council of the governing Christian Democratic Union party, Mr. Draghi warned at an economics conference about the perils of inflation as the world recovered from the global financial crisis.

His remarks won repeated applause from nearly 1,000 audience members, most of them company executives who have been critical of Chancellor Angela Merkel’s economic policies.

Mr. Draghi, governor of the Italian central bank, was nominated this month at a meeting of euro zone finance ministers to succeed Jean-Claude Trichet as European Central Bank president in October, when Mr. Trichet’s term ends. Mr. Draghi will need to be endorsed by European Union leaders, but that is considered a formality.

His candidacy has been the subject of strident commentary in the German news media, which has asserted that a banker from a south European country would be unsuited for a job that demanded fiscal and monetary discipline.

Even Mrs. Merkel, who was one of the government leaders in the euro zone countries to withhold support from Mr. Draghi at the early stages of his candidacy, only recently spoke out in favor of him.

Mr. Draghi’s advisers said it was not certain that he and Mrs. Merkel would meet because of scheduling conflicts. Mr. Draghi was to return to Italy late Wednesday afternoon. Mrs. Merkel, in Paris for meetings at the Organization for Economic Cooperation and Development, was to return to Berlin on Wednesday night to address the same conference.

During his 20-minute keynote address, Mr. Draghi said the recovery of the world economy was continuing, with overall gross domestic product expected to expand 4.4 percent this year, and 6.5 percent in emerging countries.

“However, the crisis is not over,” he warned. “While global growth has been gathering robustness, it is very uneven.”

Turning to the euro zone countries, Mr. Draghi said it was crucial in a monetary union that each member country satisfy three conditions: price stability, fiscal discipline and national economic policies conducive to growth.

The first condition “was and is ensured by the E.C.B,” Mr. Draghi said, “but in some countries, we do not have the second and the third. The primary responsibility for a response to a lack of confidence must be national.”

Underscoring the interdependence of euro zone countries, he noted that the sovereign debt crisis of three countries — which he did not name — whose combined gross domestic product amounted to about 6 percent of the total euro zone G.D.P. held “the potential to have a big systemic impact.”

In a specific reference to German industrialists, he said that, “with the notable exception of Germany,” economic growth “remains feeble in the advanced countries, too slow to help redress seriously weakened fiscal balances and unemployment rates.”

In emerging countries, Mr. Draghi said, “there are signs of overheating, with large capital inflows carrying a heightened potential for disruption. Commodity and oil prices have been under heavy upward pressure.”

Article source: http://feeds.nytimes.com/click.phdo?i=71e7fc893cb3da1b74ed9b22a9bd78df

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Chinese Exports Hit Record for April

May 10, 2011 by Leave a Comment

HONG KONG — China’s exports surged last month to a record level, as Chinese factories appear to have passed on rising costs to buyers who are finding that they have few alternatives in other countries.

China’s imports lagged, causing its trade surplus to widen sharply from the first three months of this year, to $11.43 billion. That was lower than last year, but still high enough to increase trade frictions with the United States and other countries worried that China is using a weak currency to claim an unusually large share of global job creation as the world economy climbs out of the recent economic downturn.

China’s regularly scheduled release of trade statistics came in between two days of negotiations in Washington between senior American and Chinese officials. In the first day of talks on Monday, American officials pressed China to improve its human rights record and allow interest rates and the Chinese currency to rise, while Chinese officials called on the United States to lead a global economic recovery and suggested that their shrinking trade surplus should not be a big concern.

China’s General Administration of Customs said that exports rose 25.9 percent in April compared with a year earlier, to a record $155.69 billion, exceeding a previous record of $154.12 billion in December. The increase was somewhat surprising because the spring is traditionally a weak period for Chinese exports.

Chinese imports rose at a slower 21.8 percent, to $144.26 billion, as government policies took effect to restrict bank lending in an attempt to control inflation.

Labor costs are surging by 10 to 30 percent a year in China and commodity costs are rising around the world, leading to warnings by suppliers of Western retailers that price tags will start rising globally. Many companies are searching for alternatives to manufacturing in China, but finding that nowhere else offers China’s combination of a large labor supply, world-class highways and ports and strongly pro-business policies, including a strict ban on independent labor unions that tended to hold down wages until very recently.

Josh Green, the chief executive of Panjiva, a New York company that advises 3,000 corporate buyers of goods from Asia, said his clients were extremely worried about the pace of price increases that they face from Chinese suppliers.

“That’s all I’ve been hearing from them over the past year, is concern verging on panic about the changing cost structure in China,” he said. “That has led to the hunt for the next China, which is a fool’s errand.”

Executives at three Chinese exporters said Tuesday that despite strong retail sales in the United States in April, they had not yet seen a sustained uptick in American orders, even as orders have risen from Europe and emerging markets. One reason might be that these and other exporters are now steadily marking up their prices to reflect the gradual appreciation of the renminbi, which has climbed 5 percent against the dollar since last summer.

“I am not worried about the rise of the renminbi since our company makes an adjustment every three months in the exchange rate used in our contracts,” said Mabel Lee, the sales manager at the Foshan Summit Sanitary Ware Company, a maker of bathtubs of toilets based in Foshan, in southern China’s Guangdong Province.

Hilda Wang contributed reporting.

Article source: http://www.nytimes.com/2011/05/10/business/global/10yuan.html?partner=rss&emc=rss

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