News Headline

U.S. wind power growing fast but still lags

Mike Elk — Fri, 19 Mar 2010 09:04:16 -0700

Wind-generated electricity is growing rapidly in the United States but the pace still lags far behind that in China, the organizer of an industry conference in North Carolina said.

"With the right policies in place, we can see explosive growth ... It's a global footrace," said Jeff Anthony, business development director of the American Wind Energy Association.

Although the United States has the largest amount of installed wind power capacity in the world, the wind power industry is "fighting to get on a level playing field" with other government-subsidized power-providers, Anthony told a conference of parts manufacturers, suppliers, wind project developers and economic development officers from around the southeastern United States.

"What the wind industry looks like in the U.S. in 10 years depends a lot on what comes out of Washington ... Policy does drive the industry," he told the conference in Greensboro, North Carolina.

IMF Head Says Yuan Remains Undervalued

OurFuture.org Staff — Thu, 18 Mar 2010 14:05:52 -0700

"The opinion of the IMF from this point of view is still that the renminbi is very much undervalued," he said at a conference at the European Parliament.

Mr. Strauss-Kahn said that in economies with persistent current account surpluses—such as China, Germany, and many oil-producing countries—domestic demand must go up.

Broadly speaking, this meant boosting growth in consumption, and in some cases, exchange rate appreciation would also play an important role, he said. "Some currencies are obviously undervalued, especially in Asia, especially the renminbi," he said.

Will Obama Pursue Promised New Approach to Trade, or Continue Bush Model?

OurFuture.org Staff — Thu, 18 Mar 2010 08:26:00 -0700

As President Obama prepares for his trip to Asia next week, his administration’s trade negotiators are busy in Australia this week in the first round of talks about a new Trans-Pacific Partnership Trade Agreement (TPA).

Although the idea originated in the Bush administration, labor officials and other progressive critics of past trade deals see the TPA talks as a test of whether Obama will develop a new model for such agreements, as he promised on the campaign trail.

“This is a great opportunity for the administration to show how they’re going to reform trade policy or whether they’ll continue with the past policies,” says AFL-CIO deputy chief of staff Thea Lee, a longtime trade policy expert. “It’s not clear at this point what they will do. But there’s a high level of anxiety.” Public Citizen’s Global Trade Watch Director Lori Wallach struck the same note: “As a candidate Obama committed to specific trade policy reforms. This is where the rubber hits the road. We’ll se if we get a new model of trade as Obama promised or revert back to the Bush model following NAFTA.”

Fair trade advocates have reasons to worry. Obama already has backed off promises to re-negotiate parts of NAFTA and has urged Congress to approve Bush-negotiated trade agreements with South Korea, Panama and Colombia, an egregious violator of worker rights. And when Rep. Michael Michaud (D-ME), chair of the House Trade Working Group, asked U.S. trade representative Ron Kirk (a longtime supporter of NAFTA and similar trade deals) a series of questions about how TPP would protect worker rights and good jobs, “We did not get any clear answers or commitments from him on any of these,” he said.

TPP talks involve four countries with which the U.S. already has bilateral trade agreements–Chile, Peru, Australia and Singapore, as well as New Zealand, Brunei and Vietnam. They grew out of a four-way trade deal–“the Pacific Four,” including Singapore, Chile, Brunei and New Zealand.

Many analysts see the TPP talks as a way for the U.S. to be included in and heavily influence any broad new Asian trade agreement, implicitly challenging intra-Asian agreements such as the recent China-ASEAN (southeast Asian) trade deal that might be dominated by China and Japan. From that perspective, TPP is just a preliminary to the U.S. trying to open talks involving all of the 21 nations in the Asian-Pacific Economic Cooperation. “The idea of the Obama administration is to use this [TPP] as the framework for an APEC-wide trade agreement,” says AFL-CIO global economic policy analyst Jeff Vogt.

In its own right, TPP would only slightly expand the economic openings for the U.S., since its free-trade agreements cover already 86 percent of the TPP’s gross domestic product.

The Obama administration’s decision about whether to confront China over its manipulation of its currency to keep it undervalued carries far greater influence on global trade and prospects for growth of the U.S. economy and jobs. Rebalancing China’s currency policy will do far more than any trade deal to advance Obama’s recent pledge to double exports in the next five years.

But TPP talks will give a clue about how seriously Obama will follow the model laid out in the TRADE (Trade Reform, Accountability, Development, and Employment) Act that Michaud and others have sponsored and that groups like Global Trade Watch and Citizens Trade Campaign take as their model. TRADE would mandate periodic review by the Comptroller and Congress of all trade agreements, prohibit expedited approval of trade agreements unless they included a long list of labor, environmental, public health, and other standards, and require renegotiation of past agreements to meet those standards.

Fair trade groups also want to limit the rights given to corporations in earlier treaties, such as investor rights to sue governments over any interference in their profiteering, private corporation rights to compete for public services, and restrictions on government selectivity in procurement contracts. They want TPP and other trade deals only to involve democratic governments, which immediately poses a problem about including Brunei and Vietnam.

Polling suggests the public supports most of the fair trade agenda, and from a political point of view, Obama and the Democrats would certainly gain by putting good jobs and worker rights at the center of their trade agenda, not corporate protection and “free trade.” Also, while Republicans in Congress might support the old model of trade deals, Wallach argues that politically Obama can’t promote a trade agreement that has only minority Democratic support, especially in the House.

The big questions TPP talks raise are not so much economic as political and policy-oriented. The political people around Obama see the need for a new approach to trade, Wallach says, but the president’s economic and trade advisors are still old-school, NAFTA supporters of a politically and economically losing strategy. So the big question—probably not to be answered after even this week’s talks—is, as Wallach asks, “Will this be the first Obama agreement or just a continuation of the Bush model?”

U.S. Treasury Says China Should Let Yuan Resume Appreciating

Mike Elk — Wed, 17 Mar 2010 13:57:42 -0700

March 16 (Bloomberg) -- The Obama administration has serious concerns about China’s exchange-rate policy and wants the yuan to be allowed to rise, a U.S. Treasury Department official said.

China has seen its exports and economy grow while continuing to accumulate reserves, indicating that the yuan should resume its appreciation, the official said in a statement today in Washington. The Treasury will be reviewing a proposal from Senator Charles Schumer, a New York Democrat, to put pressure on China to revalue its currency, the official said.

U.S. and Foreign Wind Energy Companies Creating Local American Jobs

Mike Elk — Wed, 17 Mar 2010 13:32:48 -0700

Recently there have been some questions in the media (see Green Inc. and Washington Post articles) and in the U.S. Senate about stimulus grants for wind energy projects going to foreign countries. On March 3rd, a group of Senators called for the suspension of the renewables grant program until “Buy American” rules had been passed that made sure projects used American components and labor.

But there is more to that story than meets the eye.

Empirical evidence demonstrates that predictable support for wind power improves local manufacturing capacity and creates local jobs. Consistent support in the form of the stimulus and long term programs such as a Renewable Energy Standard will give investors the certainty they need to plan and create jobs in the United States.

In the United States, wind energy has received policy support in the form of federal tax credits and a number of state-level programs. As the state-level programs have grown more numerous and ambitious and the federal support has stabilized (the production tax credit has not been allowed to expire since 2005), the wind industry has experienced a period of rapid growth. In 2008 alone, 55 new facilities producing wind turbines and components opened and there are now a total of 85,000 jobs in the American wind industry, up from 50,000 in 2007, according to the American Wind Energy Association.

Of the 15 leading global wind turbine manufacturers, 11 operate production facilities in the US or plan to begin operating this year, as my colleagues and I have found in a working paper recently published by the World Resources Institute and the Peterson Institute for International Economics. As part of the Recovery Act, wind park developers can now apply for a cash grant instead of the tax credit. This grant program has funneled more than $2.2 billion
and has attracted $10billion in foreign investment as well.

Martin Wolf: China, Germany Commiting World to Deflation

OurFuture.org Staff — Wed, 17 Mar 2010 13:11:20 -0700

The Financial Times’ Martin Wolf gives a cogent and sober assessment of what he deems to be a destructive refusal to adjust policies on behalf of the world’s two biggest exporters, China and Germany. The problem is that both simultaneously want to have their cake and eat it too.

As we stressed in a recent post, large foreign exchange surpluses, beyond what is useful to defend a currency, is NOT a sign of strength. They cannot be spent without causing the currency to appreciate, something that surplus-dependent countries are unwilling to do. Thus these holdings, which were incurred by acting as de facto export subsidies, cannot be utilized without serving as import subsidies. As Wolf elaborates:

China and Germany are, of course, very different from each other. Yet, for all their differences, these countries share some characteristics: they are the largest exporters of manufactures, with China now ahead of Germany; they have massive surpluses of saving over investment; and they have huge trade surpluses.

Both also believe that their customers should keep buying, but stop irresponsible borrowing. Since their surpluses entail others’ deficits, this position is incoherent. Surplus countries have to finance those in deficit. If the stock of debt becomes too big, the debtors will default. If so, the vaunted “savings” of surplus countries will prove to have been illusory: vendor finance becomes, after the fact, open export subsidies.

Momentum Building for Action on China Currency Manipulation

OurFuture.org Staff — Tue, 16 Mar 2010 09:08:55 -0700

The momentum is building for the United States to take strong action to counteract manipulation of its currency by China’s government.

More than 130 members of Congress signed on to a letter from Reps. Mike Michaud (D-Maine) and Tim Ryan (D-Ohio) delivered today that urges Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke to take strong action up to and including countervailing duties (CVD) or tariffs because of currency manipulation.

Michaud and Ryan’s letter is the latest in growing calls by Congress and by top economists for the United States to act on the manipulation of currency by China’s government. If Geithner does act, the administration could impose remedies, such as tariffs, to create a fairer trade balance with China.

AFL-CIO President Richard Trumka, who co-chairs the Fair Currency Coalition, thanked Michaud and Ryan for their letter:

The working families of this country need jobs now. If we want a recovery that will invest in manufacturing, boost exports, balance trade, and create jobs we must stop China and other countries from illegally manipulating their currency. China’s prolonged undervaluation…is an illegal export subsidy. That is why the U.S. government must allow CVD cases to proceed. American workers expect their government to stand up for them.

Bubble or not, China’s rise is real

OurFuture.org Staff — Tue, 16 Mar 2010 08:09:25 -0700

Is China like the US in 1890? Or is it more like Japan in 1980? If the parallel with America is right, China is likely to be the dominant power of the next century. If the Japanese comparison is more accurate, then the Chinese challenge to American hegemony could prove ephemeral.

The current mood in the US certainly feels like an exaggerated version of the “declinism” that set in towards the end of the 1980s, when the US was transfixed by the rise of Japan. A recent Pew opinion survey showed that a majority of Americans now believe that the Chinese economy is larger than that of the US. This is plain wrong. At the time the poll was taken, the Chinese economy was around half the size of America’s.

Gideon Rachman blog
Gideon Rachman

Across the globe: Read the FT’s international affairs columnist’s authoritative and lively commentary

It was this kind of scare that took hold in the late 1980s. Japanese investors provoked angst by buying the Rockefeller Centre in New York – and it was Japan that was the world’s largest creditor nation.

Democrats Increase Pressure on Obama Over Yuan’s Peg

OurFuture.org Staff — Tue, 16 Mar 2010 08:02:21 -0700

March 16 (Bloomberg) -- Democratic lawmakers, prodding President Barack Obama to take a tougher line on China’s currency, are drawing up legislation and convening hearings on the yuan’s effects on U.S. companies.

Senators Sherrod Brown of Ohio, Charles Schumer of New York and Debbie Stabenow of Michigan will propose legislation setting criteria to find a country has a misaligned currency, and the consequences, according to a draft of the proposal. The House Ways and Means Committee plans a March 24 hearing on the yuan, held at about 6.83 per dollar since July 2008.

The moves reflect pressure on the Obama administration to demand that China allow appreciation in the yuan and end a policy that provides Chinese competitors an unfair advantage, said Scott Paul, executive director of the Alliance for American Manufacturing. Chinese Premier Wen Jiabao on March 14 rebuffed calls for an end to the currency link, saying he doesn’t “think the renminbi is undervalued.”

“We’re in a wretched stretch in the economy,” said Paul, whose Washington-based organization represents U.S. Steel Corp. and the United Steelworkers union. “There is an increasing anxiety about jobs, the economy and the role of China.”

The trouble with China's economic bubble

OurFuture.org Staff — Mon, 15 Mar 2010 10:25:30 -0700

The bubbly enthusiasm that many analysts express about the Chinese economy reminds me of the old-time variety show host Lawrence Welk, who banished worries each week with soothing sounds from his Champagne Music Makers.

China watchers should turn off the music and listen to Premier Wen Jiabao, who has been surprisingly frank in warning that overinvestment and lack of domestic demand are producing an economic bubble in his country.

"The biggest problem with China's economy is that the growth is unstable, unbalanced, uncoordinated and unsustainable," Wen cautioned at a March 2007 news conference during the National People's Congress. That comment had about as much effect as then-Fed Chairman Alan Greenspan's 1996 concern about the stock market's "irrational exuberance."