It’s December, and just in time for the holidays, Beijing is going on a shopping spree. A US$3 billion shopping spree on metals, no less, to support domestic metal producers. There’s some suspicion about fudging of the numbers: Yunnan province alone says it’s in line to buy more a quarter of the world’s total annual production of tin. It’s a good thing that Beijing is buying from domestic smelters since a 1% drop in the renminbi’s US-dollar exchange rate – the largest single-day drop since the currency was unpegged in 2005 – might make foreign metals more expensive. No doubt something to consider for Zhou Yuan, formerly UBS head of China investment, who has been tapped to run sovereign wealth fund China Investment Corp’s alternative investments.
Speaking of exchange rates, US Treasury Secretary Henry Paulson, whose accusations of China manipulating its currency are conspicuous only by their absence, is back in China on his final visit in his current job. He has the unenviable task of convincing China to open up its financial sector to US financial service firms. If he’s looking to relax on future unofficial trips, he might be interested to learn that the NDRC has given its approval to a long-planned Shanghai Disney theme park.
And while it might be taken as a portent of soon-to-be high prices of food, the reality is that Beijing’s announcement that it would scrap food price controls imposed earlier this year is a reflection that its priorities (and the danger of high inflation) have moved on. Compared with the risk of labor unrest – most recently by Guangzhou taxi drivers in the largest strike action since 1989 – the problem of high pork prices seems oddly quaint.