Denied!

Those who blamed the Lunar New Year holiday for the slump in FDI entering China’s can no longer live in denial. Now equipped with a suitably depressing figure for February (FDI down 16% year-on-year), optimism-hating statisticians have removed the LNY distortion (the holiday was in January this year and in February last year) by combining the two monthly totals. The result: FDI declined 26% year-on-year in the first two months of 2009, extending the investment slump to five months. Chinalco’s bid for Rio Tinto is facing another kind of denial, namely a potential rejection by the Australian regulators or the Rio shareholders, whoever gets there first. The shareholders’ complaint is twofold: that Rio is trying to water down its stock without letting them in on the fun; and that Chinalco, a customer and competitor of Rio, is getting preferential treatment in exchange for glass baubles and wampum beads. The regulators have extended the regulatory review period for the deal as they attempt to make sense of the mess, which means this once engaging investment saga is turning into a drab and bitter potboiler with no end in sight. As for politics, some of Taiwan’s defense wonks appear to be in denial of warming cross-strait relations. They would like the US to sell them some F-16s and submarines, please, just in case those naked, plank-hurling mainland sailors decide to make a port call. The upshot of this may be Beijing, Taipei, and Washington arguing over another arms deal, just when everyone needed it least.