Assigned News Items
Note: I will list here, for most of the term, the major news items that have appeared that are relevant for the course. I will usually discuss these, if only briefly, on Tuesdays (or the following Thursdays when Tuesdays are not available). You should be sure to be familiar with them from whatever news sources you are using. Where possible, I will provide links to the items online. I will include questions about some of them on exams.
- US to file WTO complaint against China over aluminum
-- WSJ: 1/12
| FT: 1/12
- President Obama has filed a new case at the World Trade Organization objecting to the cheap financing that China provides to its industry, specifically its aluminum industry. The claim is that this financing constitutes and illegal subsidy. Since similar financing is provided to other industries in China, the case has implications beyond aluminum, to other products such as steel which China has also been over-producing.
- Obama: "China gives its aluminium industry an unfair advantage through underpriced loans and other illegal government subsidies. These kinds of policies have disadvantaged American manufacturers and contributed to the global glut in aluminium, steel, and other sectors."
- This US action against China is not unusual. This is the 16th case that the Obama administration has brought against China in the WTO, in addition to many anti-dumping cases brought against China under US law.
- Indonesia relaxes export ban
-- FT: 1/12
- In 2014, Indonesia had banned export of some mineral ores, in an effort to promote the growth of its domestic industries for processing these minerals. This week it announced and end to the ban on exports of nickel ore and bauxite, and extended permission to export copper concentrate.
- The ban, though opposed by mining companies, had prompted them to pledge investment in smelters and other processing facilities. Now those companies and other investors fear that their investments will lose money. Removing the ban also caused the world price nickel (used to produce stainless steel) to fall 5% on Thursday to a 4-month low.
- The government of Indonesia has been under political pressure over various issues, including social inequality. According to one commentator, "The government is doing this at least in part because it is so spooked by the social unrest"
- Currency news
-- WSJ: 1/9
| WSJ: 1/11
| WSJ: 1/12
- China's reserves of foreign currency continue to drop, as it supports the yuan. Its reserves are now the smallest since March 2011. The declining value of the yuan has prompted capital outflows from China, which are resisted by capital controls but nonetheless make the problem worse.
- Turkey's currency, the lira, has been falling ever since the government imposed a state of emergency after the failed coup attempt in July. Efforts to stem the decline, such as exhorting the public to sell off their foreign-currency savings, have not succeeded, and the currency tumbled 1.9% in Istanbul on Tuesday.
- Mexico's peso has fallen to record lows, prompted by concerns about President Trump's trade policies toward Mexico. In his press conference this week, Trump said "Mexico has taken advantage of the United States. It’s not going to happen anymore."