• NOVEMBER 27, 2008, 5:22 P.M. ET

Morgan Stanley Selects Chief for Southeast Asia

By ELLEN SHENG

HONG KONG — Morgan Stanley said Thursday it appointed Kate Richdale as the firm’s new chief executive for Southeast Asia, succeeding Ronald Ong who will become chairman.

The appointments came after Greg Terry stepped down as chairman to become senior adviser to the firm in the region.

In her new role, Ms. Richdale will also head of investment banking for Southeast Asia. She will be based in Singapore.

Ms. Richdale was most recently managing director, based in Hong Kong, heading the firm’s Asia Pacific general industries group within investment banking.

Mr. Ong has been the firm’s chief executive for Southeast Asia since 2004.

Morgan Stanley announced earlier this month that it had been granted a regulatory license to offer onshore investment banking, underwriting and brokerage services in Indonesia.

Earlier this year, the firm formed Morgan Stanley Gateway Securities in Vietnam to offer investment banking advisory and underwriting, brokerage services, research and principal investing.

Write to Ellen Sheng at ellen.sheng@dowjones.com

http://online.wsj.com/article/SB122782284476262281.html?mod=googlenews_wsj

Economics focus

The great wall of unemployed

Nov 27th 2008
From The Economist print edition

Joblessness in China is rising, prompting fears of social unrest. But how high is the true unemployment rate?

THE employment outlook is “grim” according to Yin Weimin, China’s minister of human resources and social security. So grim, in fact, that on November 26th the People’s Bank of China slashed rates by more than a percentage point—the most in 11 years—to boost growth. The slowing economy has led factories to cut jobs, and there are mounting fears that the swelling ranks of the unemployed might one day take to the streets and disrupt China’s economic miracle. To assess such risks one must consider how high unemployment might rise.

The snag is that both the level and trend of China’s official jobless figures are meaningless. Until the 1990s, the government more or less guaranteed full employment by providing every worker with an “iron rice bowl”—a job for life. But when soaring losses at state-owned firms forced the government to lay off about one-third of all state employees between 1996 and 2002, the official unemployment rate rose only slightly. Today it is 4% in urban areas, up from 3% in the mid-1990s.

But the official rate excludes workers laid off by state-owned firms. Thus at the start of this decade, when lay-offs peaked, it hugely understated true unemployment. Over time, as laid-off workers have found jobs or left the labour force, the distortion will have shrunk. Another flaw is that the official unemployment statistics cover only people who are registered as urban dwellers. An estimated 130m migrant workers have moved from the country to the cities, but there is no formal record that they live there, so they are ignored by the statisticians. After adjusting the official figures for these two factors, several studies earlier this decade concluded that the true unemployment rate was above 10%—and might be even as high as 20%.

If unemployment is already so high, it would not take much of an economic slowdown to push it to crisis levels. However, a more recent study suggests that the jobless rate has fallen a lot since the start of this decade. Albert Park, of the University of Oxford, and Cai Fang and Du Yang, of the Chinese Academy of Social Sciences, have analysed China’s 2000 census and 2005 mini-census (covering 1% of the population), which include migrant workers. The raw census data suggest that the total urban jobless rate fell from 8.1% in 2000 to 5.2% in 2005. But when the jobless figures are adjusted to an internationally comparable definition, the rate in 2005 was less than 4%.

As a crosscheck, the economists also used the 2005 Urban Labour Survey of five big cities. This confirmed that the urban unemployment rate, including migrant workers, had indeed fallen—from 7.3% in 2002 to 4.4% in 2005 (see chart). But the rate for migrant workers is lower than for permanent residents because they return home if they cannot find work. As the chart also shows, excluding migrants, the urban unemployment rate fell from 11.1% to 6.7%. And since 2005, unemployment has undoubtedly fallen further. Earlier this year, factory bosses complained that they could not find enough workers; and faster real-wage growth also suggested that demand for labour was outpacing supply. Thus before China’s economy started to sputter this summer, its jobless rate was probably only 3-4%. One important qualification to these numbers is that China’s labour-force participation rate—ie, those in work or seeking it—fell to 65% in 2005 from 69% in 2000. If discouraged workers have left the labour force because they could not find a job, then the unemployment rate may understate the hardship they face.

But the finding that unemployment has fallen sharply in China over the past five years makes sense. The right-hand chart, from the World Bank’s latest China Quarterly Update, shows GDP growth relative to its estimated potential growth rate if the economy operated at full capacity. From 2003 to 2007, actual growth ran ahead of potential, so unemployment should indeed have dropped. However, the bank expects China’s growth to fall below trend in 2008 and 2009, implying that unemployment will climb. The bank forecasts growth of only 7.5% next year, its slowest for almost 20 years and well below its estimated potential growth rate of around 9.5%. Jobs are already disappearing—especially in southern China, where thousands of small exporting firms have closed this year.

Time to rebalance

Chinese commentators are currently fixated upon whether the economy can continue to grow by at least 8% a year. That was the old rule of thumb for the growth needed to absorb new entrants into the labour market. But that 8% figure has little scientific basis. Over the past decade, the trend growth rate has increased as a result of heavy investment and faster improvements in productivity. Maybe that is why the World Bank reckons that China’s potential growth rate (ie, the rate needed to keep unemployment steady) is now about 9.5%.

For employment, the type of growth matters as much as its pace. China is creating fewer new jobs than it used to. In the 1980s, each 1% increase in GDP led to a 0.3% rise in employment. Over the past decade, 1% GDP growth has yielded, on average, only a 0.1% gain in jobs. Growth has become less job-intensive, so the economy needs to grow faster to hold down unemployment.

One reason for this is that the government has favoured capital-intensive industries, such as steel and machinery, rather than services which create more jobs. Louis Kuijs, the main author of the World Bank’s report, argues that China needs to shift the mix of its growth from industry, investment and exports to services and consumption. To adjust the structure of production requires a further strengthening of the yuan, raising the price of energy, scrapping distortions in the tax system which favour manufacturing, and removing various shackles on the services sector.

More labour-intensive growth would also boost incomes and consumption and so help to reduce China’s embarrassingly large trade surplus. But most important, by allowing more workers to enjoy the rewards of rapid growth, it could help to prevent future social unrest.

http://www.economist.com/finance/displaystory.cfm?story_id=12677296

Norinchukin

Published: November 26 2008 08:49 | Last updated: November 26 2008 20:14

Banks raise capital wherever they can these days; even on the paddy fields. Norinchukin Bank, whose activities range from investing agricultural co-operatives’ money to sitting on the panel that sets US dollar interbank rates in London, wants to raise up to $10bn to boost its capital base. Rather than a deeply discounted rights issue or pricey government bail-out, however, the privately held bank plans to tap its members for funds.

Japanese farmers may put it differently but this is chutzpah on a grand scale. Agricultural co-operatives filter their surplus deposits up to Nochu in the belief it should be able to garner superior returns. After subprime and other overseas bets turned out to be anything but superior, members are now being asked to stump up to repair the tattered capital base. In Japanese terms, Nochu’s tier one ratio of 8.8 per cent at the end of June is perfectly respectable. But it has deteriorated from 9.4 per cent at the end of March and the composition of the balance sheet hints at more damage to come. The bank is a modest lender – loans made up just 16 per cent of the $650bn assets at the end of March – but a big holder of securities. At the end of September, total exposure to securitised products was $72bn; as recently as August the bank was trumpeting plans to accumulate more of the stuff.

All the more reason, then, to be grateful for those captive 4,000-plus co-operative members. Japan’s three megabanks, in the throes of raising an aggregate $20bn, might wish they were so lucky. The trio are raising equity at a time when few buyers are clamouring for banking stock of any description. Still, at least domestic institutions are stepping up to the plate: seven took part in Mitsubishi UFJ Group’s recent $4bn issue. Most have cross-shareholdings with the bank and thus have an incentive to co-operate. Not, perhaps, so different from the farmers after all.

http://www.ft.com/cms/s/1/af01de26-bb96-11dd-ae97-0000779fd18c.html

Get women on board, bailed-out banks urged

By John Willman

Published: November 19 2008 22:41 | Last updated: November 19 2008 22:41

Newest entrant to top 100 leadership: Katherine Garrett-Cox became chief executive of Alliance Trust this year, after joining in 2007

Women should be appointed to the boards of banks bailed out by the government, according to a bellwether report on women in the boardroom that shows the rise of female executives is continuing at a glacial pace.

.

.

.EDITOR’S CHOICE

Iceland calls in women bankers to clean up ‘young men’s mess’ - Oct-14

.

.

.

Women are ambitious to join corporate boards, with four out of five female executives in FTSE 350 companies wanting to find non-executive director roles, the survey found. But most women said they were rarely approached by executive search consultants about potential appointments.

Only 16 of the 149 appointments to boards in the past 12 months have been women, in spite of what the survey describes as a growing talent pool of more than 1,800 senior female directors and managers in smaller listed companies.

One senior woman interviewed in the survey said it was difficult to land the first appointment. “Many non-executive directors have multiple appointments and this seems to be preferred to those with no track record.”

The report, published by Cranfield University School of Management, calls on companies to do more to improve the gender diversity on corporate boards, including advertising all directorships and aiming to have females representing 30 per cent of candidates on long lists for appointments.Female candidates should also be considered when the government is nominating executives for board positions in Britain’s recapitalised banks, the report adds.

Ruth Sealy, one of the authors, said: “We might not be in quite such a dire situation if there had been more females on the boards of banks. The evidence is that women are not more risk-averse, but they are more risk-aware.”

More diverse boards were “less likely to fall into group-think or to accept the status quo,” she said. “Decisions can take longer to reach, but they will be better.” Iceland has appointed two women executives to lead the rescue of its financial institutions.

The survey found women were continuing to break through the glass ceiling, with five female chief executives in the FTSE 100 and two female chairmen. One in eight directors of the largest listed companies is a woman, and 39 companies have two or more women on their boards – three times the number 10 years ago.

Top of the Cranfield league table this year is Alliance Trust, which has entered the FTSE 100 since last year and has three women board members out of seven – including a female chairman and a female chief executive.

Amec, the engineering and project management consultancy, and retailer Marks and Spencer were joint second, with women making up a third of their boards

But 10 years after the survey began, the pace of change remains incremental with the proportion of female directors in the FTSE 100 just 5 percentage points higher than in 1999.Some said they had been discouraged by the experience of applying for non-executive board roles. “On one occasion I was interviewed,” said one senior executive. “I was asked why I was interested in such a position given that I had two children at home and should be spending more time with them.”

Most female executives were gloomy about the prospects for an acceleration in the pace of change.

Top of the class

The seven leading executives of FTSE 100 companies

When asked what they thought the percentage of female FTSE 100 directors would be in the future, the answer averaged less than 14 per cent in five years and 18.5 per cent in 10 years. The current level is 11.7 per cent.

Pessimists thought boards and head-hunters were fixed on “older white men”, while some blamed women for not pushing themselves forward. Others said some top appointments had been “token women” who had struggled in the role.

But some thought companies were more aware of the need for greater board diversity, and pointed to the growing talent pool. The majority of women executives were against positive discrimination, but saw a need for new measures such as targets.

“Emotionally I think it should be non-interventionist,” said one female director. “But I know from the work I’ve done that unless you have targets/quotas, it doesn’t change.”

Copyright The Financial Times Limited 2008

http://www.ft.com/cms/s/0/12a66456-b66f-11dd-89dd-0000779fd18c,dwp_uuid=fc1ed142-a0ec-11dd-82fd-000077b07658.html

.

.

.

.

Iceland calls in women bankers to clean up ‘young men’s mess’

By Sarah O’Connor in Reykjavik

Published: October 14 2008 03:00 | Last updated: October 14 2008 03:00

Iceland has turned to two women to rebuild its financial system after the banking empire built by its young, male business-schooled elite collapsed.

Elín Sigfúsdóttir and Birna Einarsdóttir are set to become chief executives of New Landsbanki and New Glitnir respectively, the nationalised banks created by the Icelandic government in the wake of the crisis.

One government minister said their appointments were an attempt to signal a new culture within the banking system.

Landsbanki, Glitnir and Kaupthing - infamous for their aggressive international expansion - collapsed last week under the weight of their debt, leaving the Icelandic economy on the brink of bankruptcy.

Recriminations have been flying in Iceland over who is to blame, with the British government a popular target.

But many have also criticised the young and predominantly male bankers whose “eyes became bigger than their stomachs”, as one banker conceded.

“Now the women are taking over,” said one government official. “It’s typical, the men make the mess and the women come in to clean it up.”

The government created New Landsbanki last week and put Ms Sigfúsdóttir in place. New Glitnir was being formed yesterday, with Ms Einarsdóttir widely expected to take the top job.

The banks’ new chief executives were both promoted from within the ranks of the failed banks: Ms Sigfúsdóttir has been head of corporate banking at Landsbanki since 2003 and Ms Einarsdóttir became head of domestic commercial banking at Glitnir last summer. The women are expected to curb the bonus-driven risk-taking culture that has taken hold in Iceland over the past five years.

The nationalised banks will focus solely on domestic operations, keeping money flowing around Iceland’s hobbled economy. A New Kaupthing is also planned.

Their first task is to begin trading the Icelandic krona, an activity that all but ceased last week, leaving most Icelandic groups unable to pay suppliers.

The three failed banks’ foreign assets are being sold off but there is little idea how much money will be raised as they face firesale prices.

When asked if the new banks would return to foreign expansion, Geir Haarde, Iceland’s prime minister, said: “It’s too early to tell, but not in the same big way as before.”

Copyright The Financial Times Limited 2008

http://www.ft.com/cms/s/0/6107e59c-9988-11dd-9d48-000077b07658,dwp_uuid=fc1ed142-a0ec-11dd-82fd-000077b07658.html

Barack Obama’s team

So far, so very good

Nov 27th 2008
From The Economist print edition

The president-elect is proceeding with all deliberate speed

AFP

IN THE absence of any real detail about what he plans to do, it is Barack Obama’s staff choices that provide the best indications as to what sort of president he will turn out to be. And so far the signs are encouraging, both in terms of the process and the results. Mr Obama is moving much faster and more smoothly than most incoming presidents manage—without rancour, hiccups or (unplanned) leaks. And his choices are reassuring, especially for those who feared a shift to the left.

On the economic side, by giving the two main jobs to pragmatic centrists—Tim Geithner for treasury secretary and Larry Summers to chair the National Economic Council, the White House body that co-ordinates economic policymaking—Mr Obama has shown that he values experience over ideology, and competence over personal loyalty (see article). Some of those who worked hardest to get him elected have had only meagre reward for it, whereas Mr Geithner is someone whom Mr Obama does not know well. The appointment of Peter Orszag, a noted critic of lax spending, to run the budget office is another good move: it hints that Mr Obama will be a spending hawk as well as a stimulator. On the security side, by keeping on George Bush’s first-rate defence secretary, Robert Gates, and (probably) by choosing a former general, Jim Jones, as his national security adviser, Mr Obama is showing that he will not let himself be tagged with the “Defeaticrat” label.

There are, of course, a few potential pitfalls. For every rational businessperson reassured by the fact that Mr Obama has appointed economically literate free traders, there will be a union leader moaning that a bunch of Clintonian retreads will never deliver the change America needs. Mr Obama will need to manage the threat of disillusion among some of his more enthusiastic supporters with some care. As things look now, he should be able to deliver on the issue that many on the left care most strongly about, a phased withdrawal from Iraq (see article); and he is also likely to please them with the scale of his stimulus plans. Other sops to the left—notably the removal of secret ballots for union votes—look more dangerous.

The other worry concerns a couple of management issues. Many people had expected Mr Summers to return to his perch at the Treasury. It is not clear whether Mr Summers, brilliant but opinionated, is really the ideal man for the nominally junior role at the NEC, involving the forging of consensus.

Worth a Hill of beans

Then there is Hillary Clinton. Many of Mr Obama’s advisers are horrified by the idea that she will become secretary of state, pointing out not just that Mrs Clinton is surrounded by people who loathe him, but also that she has a bad track record as a manager (her presidential campaign and attempts at health reform in the 1990s are two examples) and that scandal seems to dog the Clintons wherever they go. On the other hand, Mrs Clinton is intelligent and formidably hard-working and has undoubted star power. She has seen a lot of the world and takes a close interest in the Middle East. She also showed that she could be a team player in the Senate (a period when her husband stayed more firmly in the background).

On balance, this is a gamble just worth taking—not least because it puts the onus on Mrs Clinton to make it work. She will have to give up her Senate seat. If she lets those around her resort to their old tricks, she will suffer most. If she focuses her remarkable energy on the task at hand, she could achieve a lot.

http://www.economist.com/opinion/displaystory.cfm?story_id=12689694

 Doing Business in China

Doing Business in China

Bilateral thinking

By John Willman

Published: October 17 2008 16:20 | Last updated: October 17 2008 16:20

China may have astonished the world with its 51 gold medals at this year’s Beijing Olympic Games, but it is not just in sport that the country is rewriting the record books. The world’s fastest growing economy has almost certainly overhauled Germany this year to become the third largest in the world.

It is the second largest exporter of goods and will become the number one within a few years. It is the largest consumer of metals, the biggest emitter of carbon dioxide and will quite soon be the world’s largest consumer of primary energy.

It also offers unrivalled opportunities for British businesses, which already export more to China than to any other Asian country and invest more in the country than any other European nation. Unsurprisingly, the UK government is keen to further strengthen trade and investment links and has increased its support for British-based organisations hoping to enter the Chinese market.

Yet the impact of the global credit crunch has dented investor confidence, as the world waits to see just how sensitive the Chinese economy will be to the slowing economies of Europe and North America. Moreover, the business environment in China remains challenging, with some sectors off-limits to UK businesses, continuing problems in protecting intellectual property rights and inflation boosted by rising commodity prices and labour shortages in the biggest centres.

Lord Digby Jones, who recently stepped down as Britain’s trade and investment minister, says that despite such considerations, the trade relationship between the UK and China is deepening rapidly. “In the current world economic climate and against the background of globalisation, a strong partnership is essential to capitalise on mutual strengths,” he says.

The evolving relationship is illustrated by the sharp increase in bilateral trade between the UK and China, which has more than doubled in the past five years. British exports of goods and services to China surged more than 40 per cent in the first half of 2008, while imports increased 10 per cent. The UK is investing in 6,000 projects in China worth more than £8bn, and is by far the biggest recipient of Chinese foreign direct investment in Europe – capturing 11 per cent of the total.

British businesses made a significant contribution to the Beijing Olympics, designing the city’s new airport terminal, helping in the design and construction of the “Bird’s Nest” stadium and the Olympic swimming pool and monitoring the capital’s air quality.

China continues to build the infrastructure needed to maintain its astonishing economic growth, buying electrical and mechanical equipment and iron and steel from the UK. It is the largest overseas market for Bentley’s luxury cars. And 10 times more people watch English football on television there than in Britain.

Earlier this year, Gordon Brown led his first trade delegation to China since becoming prime minister, attending the UK-China Business Summit in Beijing, where he reached agreement with Wen Jiabao, the Chinese premier, to increase two-way trade to £34bn by 2010.

“I want British business to set their sights on raising their exports in goods and services to China to £9bn by 2010, almost double that of 2006,” the prime minister said.

Manufacturing is one sector to have benefited from the flourishing trade between the two countries. Many of the consumer goods that come in boxes labelled “Made in China” include high value-added components made by British companies. CSR makes the chips that are used in the Sony PlayStation 3 and for Bluetooth mobile phone headsets. Wolfson Microelectronics, the Edinburgh-based company, makes chips that help Apple’s iPod music players convert digital music files into audio.

The fragmentation of the manufacturing process means many countries are involved in making products these days, with design in one, component manufacture in another, assembly in a third and marketing and after-sales service elsewhere. But the UK government says this fragmentation has provided opportunities for British companies.

“Integration into global supply chains helps British manufacturers reduce costs and improves their productivity,” said Baroness Shriti Vadera, business minister, when she launched the government’s new manufacturing strategy last month. “Britain’s history of free trade and openness gives UK companies comparative advantage in the new international structures of value creation.”

Financial services is another sector where Britain has developed strong links with China, encouraging its investment and banking institutions to use the City of London as their European base and introducing scores of Chinese companies to the London markets. HSBC and Standard Chartered, two UK lenders, are among the leading foreign banking groups in China, while insurers such as Aviva, Prudential and Lloyd’s of London are also expanding rapidly in the Chinese market.

Retailers such as Tesco and B&Q are already well-established, while Marks & Spencer this month opened a flagship store in Shanghai.

“Given that the average Chinese household saves more than 40 per cent of its annual income,” says Guy Dru Drury, the CBI’s chief representative in China, “there is a huge opportunity for UK business to tap into this domestic nest-egg by providing high-value services to the emerging middle classes.”

There is also a demand for specialist engineering and design, he adds, in building iconic landmarks such as the Olympic Stadium or the China Central Television Tower, Beijing’s tallest structure, and rebuilding schools in Sichuan that are earthquake-proof and energy-efficient.

China’s desire to increase energy efficiency and reduce pollution and carbon emissions is also providing lucrative opportunities for British companies. Investment in renewable energy increased 91 per cent in 2007 to £6.1bn, with most going into mini-hydroelectric generation, solar water heating and wind power.

Funding China’s ambitions will depend on the country continuing the stellar growth seen during the past three decades, expanding more than 10 per cent annually for the past five years. Growth is slowing, but the International Monetary Fund is still predicting growth of above 9 per cent a year between now and 2013.

Other economists are forecasting lower growth rates, as the downturn in North America, the European Union and Japan hits exports. However, their forecasts would still put China among the fastest growing economies in the world. And there are hopes that any fall in business investment – which has underpinned China’s extraordinary growth rates - will be matched by buoyant consumer spending as the new middle class spends its cash.

Nonetheless, a recent survey of Chinese finance directors by CFO Magazine found that 82 per cent were worried about an economic slowdown after the Beijing Olympics. Among those who were concerned, three-quarters were worried about a collapse of the stock market or property prices, and 70 per cent thought the slowdown of the world economy would hit the Chinese economy. Just over half said there was overcapacity in the manufacturing sector.

The Chinese government has been active in trying to cool the overheated property market without precipitating a crash. But it may need to relax monetary policy to stimulate growth – it has already made a start in reducing interest rates as consumer price inflation has eased in recent months. It also has scope to increase public spending on infrastructure such as roads and railways, having run small budget deficits and with tax revenues rising.

Some slowing of economic growth could be welcome to businesses in the main centres for foreign companies such as Beijing and Shanghai, where labour and other costs are rapidly rising. Now many overseas investors are finding more attractive opportunities in less well-known regional cities on the coast and in the country’s west and south-west. Ambitious local leaders in such cities have put the welcome mat out for businesses in priority sectors such as infrastructure, power generation and water supply – especially if they can help achieve China’s ambitious climate change targets to reduce carbon emissions.

Aside from the economic issues, the main concerns of those contemplating doing business in China remain the bureaucracy facing new entrants and the still developing framework of intellectual property protection. Sir David Brewer, chairman of the China-Britain Business Council, says entering the Chinese market is no different from entering other European countries. “There is no special recipe,” he explains. “It just takes a little longer – and you need patience and persistence.”

Sir David is no novice when it comes to China: a former Lord Mayor of London, he visited the country more than 100 times as an insurance company executive, opening Sedgwick’s first office in China in 1981 and obtaining the first broker’s authorisation for the group in 1993. He says the protection of intellectual property is still the first question on the list for most businesses that approach the Council for advice, but attitudes in China are changing fast.

“There have been court judgments recently protecting foreign intellectual property rights, and they have been upheld,” he says. “This has been helped by the fact that the Chinese have developed their own brands domestically, and want to protect them from being pirated by competitors.”

Mr Dru Drury of the CBI says IP protection remains a concern for many British companies, especially in the pharmaceutical sector. But he welcomes new legislation such as the anti-monopoly law passed this year, and says the Chinese business environment continues to improve for UK businesses.

“Regular feedback from our member companies indicates they remain profitable and will continue to expand their China operations,” he says. “Given the current economic outlook in the US and Europe, this seems like a sound strategy.”

Copyright The Financial Times Limited 2008

http://www.ft.com/cms/s/0/7dff24b8-99be-11dd-8a20-000077b07658.html?nclick_check=1

China’s Currency Reserves Rise to Record $2 Trillion (Update1)

By Zhang Dingmin

Nov. 27 (Bloomberg) — China’s foreign-exchange reserves topped $2 trillion for the first time, strengthening the nation’s finances as the government boosts spending and cuts interest rates to counter the financial crisis.

National Bureau of Statistics chief economist Yao Jingyuan cited the increase at a forum in Beijing today, without giving an exact number. Trade surpluses helped to swell China’s reserves, the world’s biggest, to $1.9 trillion at the end of September, according to the central bank.

The Peoples Bank of China cut rates yesterday by the most in 11 years, less than three weeks after the government announced a 4 trillion yuan ($586 billion) stimulus plan. Premier Wen Jiabao is trying to prevent a deeper slowdown in the world’s fourth-biggest economy as construction slumps and exports wane.

“This milestone leaves China with a strong fiscal position,” said David Cohen, an economist at Action Economics in Singapore. “It leaves them less constrained in choosing to pursue this fiscal expansionary policy.”

China reported a record $35.2 billion trade surplus last month.

Standard & Poor’s cited the reserves and the nation’s “strong fiscal position” when it upgraded China’s long-term debt rating to A+, the fifth-highest grade, on July 31.

Yao quoted the $2 trillion figure while arguing that China was stronger than when the Asian financial crisis hit in 1997 and 1998.

China is grappling with how best to manage the reserves, forecast by the International Monetary Fund to reach $2.2 trillion by the end of December and $2.7 trillion by the end of 2009. Diversifying away from U.S. Treasury bills has brought losses.

China Investment Corp., the nation’s sovereign wealth fund, put money into Morgan Stanley and Blackstone Group LP before their stocks plunged.

To contact the reporter for this story: Zhang Dingmin in Beijing at Dzhang14@bloomberg.net

Last Updated: November 26, 2008 22:00 EST

http://www.bloomberg.com/apps/news?pid=20601087&sid=abhFyK79bg2U&refer=worldwide

http://voices.washingtonpost.com/the-trail/2008/11/14/clinton_top_contender_for_secr.html?hpid=topnews

HILLARY RODHAM CLINTON

Clinton Top Contender for Secretary of State

Barack Obama and Hillary Clinton at a campaign rally in Orlando in late October. (Jim Young/Reuters)

Updated 1:30 p.m.

By Anne E. Kornblut

After an under-wraps meeting with President-elect Barack Obama in Chicago on Thursday, Sen. Hillary Rodham Clinton is now considered a top contender for the role of Secretary of State in the Obama administration, several people involved in the process said on Friday.

Clinton, in an appearance televised live on Friday, said she would not speculate about Obama’s Cabinet selections. Her aides have referred questions about the process to the Obama transition team, whose officials are not commenting. Advisors warn that only a small handful of officials know for certain where Clinton ranks on Obama’s short list, which also includes Sen. John F. Kerry of Massachusetts.

But one Clinton veteran who is in touch with the transition team called it a “real possibility.” Another said she has a “very good chance” of getting the job. Most notably, Obama advisors have done nothing to tamp down speculation about Clinton, as they did when it became clear she would not be Obama’s running mate — even though letting her name hang in the air holds real risks for Obama if he ultimately does not select her, potentially reopening the Democratic primary’s wounds.

The mere mention of Clinton’s name has set off a frenzy of speculation about the advantages — and disadvantages — of selecting his former Democratic rival and former first lady, whom Obama passed over as his vice presidential running mate.

In an interview on Friday, Sen. Lindsey Graham (R-S.C.), a close confidante of Sen. John McCain’s, said Clinton would be an excellent choice and easily confirmed by the Senate for the post. “I thought she was going to come back to the Senate. Who knows?” Graham said.

“She’ll easily be confirmed if she gets chosen,” Graham said. “That kinda surprised me, but she wouldn’t be a bad choice at all. If she were chosen, she has the portfolio and the skills that would make her uniquely qualified for the job.”

A central question is how Clinton would fare in the vetting process. Another is how well her operation, and her husband’s, would blend into an Obama operation that has been famous for its discipline and collegiality. Although Clinton campaigned hard for Obama in the fall, tensions between the two camps remain.

A third political consideration for Obama is how to handle Kerry, who set Obama’s political career in motion by having him give the keynote address at the Democratic convention in 2004. Kerry is a senior member of th Senate Foreign Relations Committee; Clinton is a member of the Senate Armed Services Committee.

When Obama did not pick Clinton over the summer, her advisors complained that he did not even extend her the courtesy of vetting her. But aides to both also said that, during a private meeting after the primaries ended, Clinton had explicitly asked Obama not to vet her — a process that would involve turning over tax returns and opening up her husband’s library and foundation records — unless he intended to choose her.

At the time, Obama aides said they did not believe Clinton could have survived their rigorous vetting process, in particular because of former president Bill Clinton’s work since leaving office. The question, then, is whether the standards for Secretary of State are lower than for vice president, and whether Clinton is now comfortable turning over her family’s private information.

To be considered for the post, Clinton, like other contenders for high-ranking executive positions, would have to undergo an onerous and far-reaching process that would force her and her husband to disclose detailed personal and financial records.

The Obama transition team is requiring that all candidates for Cabinet and other senior positions complete a 63-question application, in addition to an extensive FBI background check before their Senate confirmation hearings, according to an Obama advisor involved in vetting candidates who spoke only on the condition of anonymity, because of the sensitivity of the personnel process.

The Obama team requires candidates and their spouses to detail their finances and all corporations, partnerships, trusts, business entities, as well as political, civic, social, charitable, educational, professional, fraternal, benevolent or religious organizations they have been involved with during the past 10 years.

It is unclear whether former president Bill Clinton would be forced to disclose the benefactors of the William Jefferson Clinton Foundation, information that has not previously been made public.

The Obama questionnaire includes a request to identify any personal financial records that the candidate or spouse “will not release publicly if necessary,” and to “state the reasons for withholding them.”

Among the other requests demanded of candidates by the Obama team is any e-mail, text message, instant message or diary entry that could “suggest a conflict of interest or be a possible source of embarrassment to you, your family or the president-elect if it were made public.”