For the second time in a few weeks, China rebuffed calls by a major trading partner for it to allow its currency to rise. But Beijing did tell visiting EU leaders that it was prepared to co-operate on efforts to combat climate change.
The 27-member EU, which is China's biggest trading partner, and the US complain that China is manipulating its currency to gain an unfair trade advantage. Barack Obama, the US president, similarly failed to secure concessions on the currency during his visit in November.
Addressing a press briefing yesterday with the European Commission president Jose Manuel Barroso and the Swedish prime minister Fredrik Reinfeldt, the Chinese premier Wen Jiabao said that calls on Beijing to push up the yuan's exchange rate were unfair, especially in the context of what he saw as protectionist measures by the West.
Mr Wen said that maintaining the basic stability of the yuan exchange rate, especially against the background of the economic crisis, was "critical" and had helped China's development, thus aiding the world economic recovery.
"Now some countries on the one hand want the [yuan] to appreciate, but on the other hand engage in brazen trade protectionism against China," Mr Wen said after the talks in the eastern Chinese city of Nanjing, which amounted to the most significant dialogue between the two sides in two years.
"Faced with the present complex economic conditions, we must appropriately handle trade friction and not engage in trade protectionism. I hope the EU will relax its controls on high-technology exports to China," Mr Wen said.
China is committed to allowing the value of the yuan to be set by the markets, but has not yet made some of the necessary reforms to allow the currency to trade freely, saying such measures could lead to instability in the financial system.
In the past six months, the yuan has fallen 6.5 per cent against the euro. China has effectively kept its currency at about 6.83 against the US dollar since July last year. Because of worries that a rising euro could stall recovery in the euro zone as the region tries to compete with exports from China, the EU leaders had hoped for a reversal in the euro's climb against the yuan. About 20 per cent of China's exports go to Europe, and the EU runs a large trade deficit with China.
In the run-up to the summit, the top financial officials of the 16 nations that use the euro made clear their dissatisfaction with controls on the Chinese currency.
"We think an orderly and gradual appreciation of the [yuan] would be in the best interests of China and of the global economy," Jean-Claude Juncker, the prime minister of Luxembourg who also heads economic talks in the euro zone, said on Sunday.
The Chinese have also said they were not planning to stop their fiscal stimulus spending to help prime the economy and offset the impact of the credit crunch, and they urged the Europeans to act in similar fashion.
"China and Europe must maintain the intensity of their economic stimulus and strengthen co-ordination and co-operation in macroeconomic policy and financial oversight, encouraging the recovery and sustainable development of the world economy," Mr Wen said.
China's economic growth is getting close to levels seen before the economic crisis pushed the government to adopt a 4 trillion yuan (Dh2.15tn) economic stimulus package.
While China was not too forthcoming on the currency, it did have more positive news for the Europeans on efforts to combat the worsening global warming situation.
Mr Wen said China was "solemn and serious" in its vow to cut the amount of carbon dioxide emitted per unit of economic output by 40 to 45 per cent by 2020 compared with 2005, and said that China placed "high importance" on global talks that will take place in Copenhagen from December 7-18, aimed at reaching a new climate change pact.
However, Mr Wen restated China's position that developed countries must lead the way in the talks by offering big cuts in carbon emissions.
@Email:business@thenational.ae
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Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Fire and Fury
By Michael Wolff,
Henry Holt
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
SPECS
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The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
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Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
The specs
Price, base / as tested Dh1,100,000 (est)
Engine 5.2-litre V10
Gearbox seven-speed dual clutch
Power 630bhp @ 8,000rpm
Torque 600Nm @ 6,500rpm
Fuel economy, combined 15.7L / 100km (est)
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind