World Economic News
China's Exports Continue To Surge
Despite change in the yuan exchange rate, the People's Bank of China reports that exports have continued to rise, according to the China Daily on Nov. 1. In July, the PBOC had pushed through a 2.1% up-valuation of the yuan against the dollar and other currencies, despite opposition from the export-fixated Ministry of Commerce which warned that a stronger currency would hit Chinese exporters. Many Chinese economists are warning that China is far too dependent upon its exports, most of which are the products of totally foreign-owned industries based in China to exploit its cheap labor. The export fixation has done nothing to develop the real Chinese economy, but exploits China's overburdened infrastructure as well as labor.
China Freight Transport Is Energy-Inefficient
The cost to the economy of freight transport and storage in China is some 21% (in GDP terms)this is 8-10% higher than in developed nations, Xinhua reported Nov. 1. China's freight transport is very energy-inefficient.
'Devastating Energy Crunch' Forecast for UK
A potentially very cold winter will cause a "devastating energy crunch" in Britain, the chemicals firm Ineos told the Trade and Industry Select Committee Inquiry on British gas supply, the Independent reported Nov. 2. The Meteorological Office and others are forecasting a 67% chance of a very cold winter, and this would lead to "massive" rises in the price of gas, which "is very likely to put many manufacturers out of business for good," Ineos experts wrote. "We expect the UK to be short of gas leading to a gas deficit emergency. This will have consequences such as 'three day weeks,' wide-scale power cuts, loss of essential services such as water and sewerage, and further business closure."
"We are faced with the nightmare scenario that, in the event of very cold winter weather conditions, the UK will essentially be 'closed for business.' Much of this business will not recover and is unlikely to operate again."
Britain, although the EU's biggest gas producer, has much higher prices. Energy Minister Malcolm Wicks said there is "concern" about electricity rationing in the winter, but rejected "exaggerated" talk. Confederation of British Industry head Sir Digby Jones has also warned of energy shortages, but Wicks rejected that as "scare-mongering."
Rising Bankruptcies, Repossessions in Britain
British corporate insolvencies are up more than 20% over the past year, a new report says. According to Consultants Experian, 4,787 firms went under during July-September, up from 3,954 in the third quarter of 2004. The sectors doing the worst are those most exposed to the housing market and shopping streets, the Observer reported Oct. 30. Insolvencies in non-food retailing were up 71% in the third quarter, to 205, and in the property sector, there were almost 60% more business failures than the third quarter of 2004.
Also this week, official figures are expected, which will show a huge rise in personal insolvencies. This Is Money newsletter reported, "There were just under 36,000 bankruptcy orders made in England and Wales last year. The figure is likely to be 46,000 for this year." This could be a record, higher even than 1992, at the depths of the last housing crash. Consumers are burdened with huge debt, and at the same time, a new and "easier" bankruptcy law was introduced in 2002, and many are taking what advantage they can of it.
Finally, the Telegraph personal finance editor, Ian Cowie, wrote Oct. 30 warning of the "alarming spike in repossessions before the housing bubble bursts." UK County Courts announced a 66% increase in debt repossession orders in late October, to nearly 20,000. This is not so bad as 1991, when repossessions were up to 1,500 a week, but now, consumers are in much, much more debt. Cowie pointed out that British consumers owe 1.1 trillion poundsmore than the combined national debts of Africa and South America.