NEWS,20. AND 21.08.2013

Tepid US growth fuel part-time hiring

US businesses are hiring at a robust rate. The only problem is that three out of four of the nearly 1 million hires this year are part-time and many of the jobs are low-paid.
Faltering economic growth at home and abroad and concern that President Barack Obama's signature health care law will drive up business costs are behind the wariness about taking on full-time staff, executives at staffing and payroll firms say.
Employers said part-timers offer them flexibility. If the economy picks up, they can quickly offer full-time work. If orders dry up, they know costs are under control. It also helps them to curb costs they might face under the Affordable Care Act, also known as Obamacare.
This can all become a less-than-virtuous cycle as new employees, who are mainly in lower wage businesses such as retail and food services, do not have the disposable income to drive demand for goods and services.
Some economists, however, say the surge in reliance on part-time workers will fade as the economy strengthens and businesses gain more certainty over how they will be impacted by Obamacare.
Executives at several staffing firms told Reuters that the law, which requires employers with 50 or more full-time workers to provide healthcare coverage or incur penalties, was a frequently cited factor in requests for part-time workers. A decision to delay the mandate until 2015 has not made much of a difference in hiring decisions, they added.
"Us and other people are hiring part-time because we don't know what the costs are going to be to hire full-time," said Steven Raz, founder of Cornerstone Search Group, a staffing firm in Parsippany, New Jersey. "We are being cautious."
Raz said his company started seeing a rise in part-time positions in late 2012 and the trend gathered steam early this year. He estimates his firm has seen an increase of between 10% and 15% compared with last year.
Other staffing firms have also noted a shift.
"They have put some of the full-time positions on hold and are hiring part-time employees so they won't have to pay out the benefits," said Client Staffing Solutions' Darin Hovendick. "There is so much uncertainty. It's really tough to design a budget when you don't know the final cost involved."
Cautious strategy
The delay in the Obamacare employer mandate "confused people even further," said Bill Peppler, managing partner at Kavaliro, a technology staffing firm in Orlando, Florida. "When we talk to customers, I still don't think anyone has a handle on this."
Obamacare appears to be having the most impact on hiring decisions by small- and medium-sized businesses. Although small businesses account for a smaller share of the jobs in the economy, they are an important source of new employment.
Some businesses are holding their headcount below 50 and others are cutting back the work week to under 30 hours to avoid providing health insurance for employees, according to the staffing and payroll executives.
Under Obamacare, any employee working 30 hours or more is considered full-time. An effort to trim hours might have helped push the average work week down to a six-month low in July.
"As organizations and companies reduce the hours of part-time workers, they still have to replace the capacity, so they go out and hire additional part-time workers," said Philip Noftsinger, president of CBIZ Payroll in Roanoke, Virginia, which manages payroll for more than 5 000 small businesses.
Some large companies are also leaning more heavily on part-timers.
Walmart has been hiring more part-time workers, although it says the move is to ensure proper staffing when stores are busiest and is not an effort to cut costs.
Spokesperson Kory Lundberg said the world's largest retailer promotes about 75000 people from part time to full time work each year and is on track to do so again in 2013.
Similarly, a memo that leaked out from teen and young adult retailer Forever 21 last week showed it was reducing a number of full-time staff to positions where they will work no more than 29.5 hours a week, just under the Obamacare threshold.
In a statement, the company said the move will affect fewer than 1% of its US store employees, and was taken to better align staffing with sales expectations - not to lower costs under the Affordable Care Act.
Some public school boards and local governments, including the city of Long Beach in California, are also cutting hours.
"The difference between 30 and 40 hours can be the difference between being able to make ends meet month-to-month," said Heidi Shierholz, a senior economist at the Economic Policy Institute in Washington.
"That contributes to reduced living standards for American families and translates into having less income to spend on goods and services, which holds back the economy."
Weak economy not helping
Obamacare is only one factor. The surge in part-time employment also reflects an economy that has struggled to maintain decent growth.
That has left business owners such as Jason Holstine, who owns a building supply store in Baltimore, Maryland, reluctant to take on full-time staff.
Holstine said he was more concerned about budget policy in Washington than about Obamacare, given that federal government furloughs tied to across-the-board spending cuts led some of his clients to put home renovations on hold.
"We are still working in an environment that is very hard to forecast the near future and remains very cash-constrained," said Holstine. "We were always nimble, but we had to become more reactive. Using part-timers gives us more flexibility."
In a paper published last month, the San Francisco Federal Reserve Bank said uncertainty over fiscal and regulatory policy had left the US unemployment rate 1.3 percentage points higher at the end of last year than it otherwise would have been. The jobless rate stood at 7.8% in December; it has since fallen to 7.4%.
"That's about 2 million jobs below where we should have been in 2012 because of policy uncertainty," said Keith Hall, a senior research fellow at George Mason University's Mercatus Center in Arlington, Virginia.
Economists and staffing companies are cautiously optimistic that part-time hiring and the low wages environment will fade away as the economy regains momentum, starting in the second half of this year and through 2014.
But businesses, accustomed to functioning with fewer workers, might not be in a hurry to change course. A study by financial analysis firm Sageworks found that profit per employee at privately held companies jumped to more than $18 000 in 2012 from about $14 000 in 2009.
"Private employers are either able to make more money with fewer employees or have been able to make more money without hiring additional employees," said Sageworks analyst Libby Bierman. "The lesson learned for businesses during the recession was to have lean operations."

 

Disasters cost insurers $20bn

Catastrophes cost global insurers more than $20bn (€15bn) in just the first six months of 2013, including $17bn for natural disasters alone, Switzerland-based reinsurance giant Swiss Re said on Wednesday.
While the insurance bill is huge, it is below the average for the past decade.
And it covers less than half of the estimated $56bn in global economic losses suffered during the first six months of the year owing to man-made and natural disasters, Swiss Re said in a statement.
About 7 000 lives were lost because of such catastrophes during the same period, it pointed out.
Flooding was responsible for $8.0bn of the disaster-related insurance claims during the first half of the year, according to a Swiss Re survey called sigma.
This noted that massive June floods in Central and Eastern Europe alone cost insurers $4bn and killed 22 people, while floods in Alberta, Canada left insurers with a $2bn bill.
At least 1 150 people meanwhile died in India because of floods in June, while Australia, Southern Africa, Indonesia and Argentina also experienced cyclones and heavy rains that sparked large-scale flooding.
"As a result, 2013 is already the second most expensive calendar year in terms of insured flood losses on sigma records," Swiss Re said, pointing out though that in 2011, flooding in Thailand caused record flood losses of more than $16bn.
Other natural disasters during the first half of the year included deadly tornadoes in the Midwestern United States, which left 28 people dead and slapped insurers with $1.8bn in claims.
"Though 2013 has so far been a below-average loss year, the severity of the ongoing North Atlantic hurricane season, and other disasters such as winter storms in Europe, could still increase insured losses for 2013 substantially," Swiss Re chief economist Kurt Karl warned in the statement.

UK govt criticised for tax cut

Britain's government has come under fire for abolishing a tax on top earners after data released on Tuesday showed companies delayed paying employees £1.7bn ($2.66bn) in bonuses until the tax cut took effect.
Bonuses are traditionally paid between December and March, the so-called "bonus season", but an Office of National Statistics (ONS) report revealed that a number of companies deferred payouts until April, after the top income tax rate was reduced from 50 percent to 45%.
Bonuses paid to Britain's workers were £2.9bn in April 2013 compared to £1.9bn in April 2012, according to the ONS. In the finance and insurance industry, which pays more than a third of all bonuses, bonuses in April totalled £1.3bn, more than double the figure a year earlier.
The data show almost 30% of companies in the finance and insurance sector deferred bonus payments until April.
Chris Leslie, from the opposition Labour party which introduced the tax in 2010 and the shadow financial secretary to the Treasury, said on Tuesday the data showed the government was putting the richest before ordinary Britons.
"While ordinary families on low and middle incomes are seeing their living standards fall, those at the top are reaping the benefits of David Cameron's tax cut for millionaires," he said in a statement, adding that millions of pounds of revenue will have been lost as a result.
The issue of bankers' bonuses has triggered public anger in Britain, where despite signs of an economic recovery, ordinary citizens' incomes remain stuck at some of their lowest levels in a decade.
In January, US investment bank Goldman Sachs scrapped plans to delay paying bonuses to its Britain-based bankers after the then Bank of England Governor Mervyn King criticised the idea.
A spokesman for The Robin Hood Tax Campaign, which is lobbying for financial transaction taxes to help the government fund welfare programmes and reduce poverty, attacked the government's tax cut on top earners.
"The Government's manipulation of the tax code to benefit the super-rich has made a bad situation worse. It should put substance to its phrase that 'we are all in this together' and ensure the City pays its dues," a statement said.
A spokeswoman for the Treasury said the bonus figures were in line with forecasts in finance minister George Osborne's budget and said bankers' bonuses were well below their peak before the financial crisis.
The ONS figures show bonuses across the UK economy stood at £37bn in the 2012/2013 financial year (April to March), up 1% from the year earlier. Workers in finance and insurance got the largest bonuses, taking home on average an £11 900 bonus, nearly twice the next highest payment of £6 700 paid to those working in mining and quarrying.

Risky crisis derivatives return

Collateralised debt obligations, the complex financial instruments that cratered disastrously in the financial crisis, are back.
The market for the instruments, which were based on subprime mortgages, shrank from $520bn in 2006 to just $4.3bn in 2009 after the housing bust. Warren Buffett once called CDOs "financial weapons of mass destruction" because of their riskiness.
This time around, the investment has shifted from a mortgage-based CDO into a "collateralised loan obligation," a cash-generating asset structured similarly to CDOs, but consisting of loans to businesses.
Financial institutions have issued $50bn in CLOs in the US in 2013, estimates the Loan Syndication and Trading Association, a trade group. The LSTA estimates the industry will issue $7bn worth in the US overall in 2013 and $100bn worldwide.
Goldman Sachs, Morgan Stanley, Barclays and Citigroup are among the banks most active in structuring CLOs in 2013. Citigroup alone has sold about 20 of the instruments this year.
"There really isn't a CDO market anymore," but "the CLO market has been quite active" for a couple of quarters, said an executive at a major Wall Street bank, who asked not to be named.
Still, observers note the comeback is only partial.
"There's an uptick, but it's still small compared with the pre-crisis peak," said Campbell Harvey, a finance professor at Duke University.
CLOs are structured financial products in which financial institutions pool loans of varying risk and market the securities to investors.
The securities can be sliced into tranches of different underlying loan risk levels. The riskiest "junior" or "equity" tranches - which were at the heart of the financial crisis of 2008 - remain popular with speculative funds because they pay higher yields.
"With interest rates still very low and borrowing costs so cheap, some investors are searching for risk," said Ruben Marciano, a trader at Societe Generale.
Tranches packed with loans of moderate risk are known as "mezzanine" loans, while "senior" tranches are the safest.
Before the financial crisis, many CDO slices that were categorised "senior" and rated highly by credit ratings agencies were actually high-risk and contained many subprime mortgages that ended up in default.
Moreover, because all of the loans packaged in the same derivative products were in the same sector - housing - the instrument itself was vulnerable when the housing market collapsed.
An analyst who specialises in CDOs for a large British bank said the investments are better bets when they contain loans from different sectors.
Buyers of the current batch of CLOs have hired independent specialists to analyse the instruments and no longer rely on credit-rating agencies, said the analyst.
Even as new CDO issues have vanished, Marciano said there remains an active secondary market since the crisis.
"There are investors out there who have made a lot of money from buying low-quality CDOs at very low prices," Marciano said.

EU set for big wheat crop

The European Union's main wheat producers have gathered a bumper harvest despite worries the long winter and hot summer would damage crops, traders and analysts said on Tuesday.
"It looks as though wheat came through the long winter and scorching start to the summer better than feared," one German trader said. "EU wheat supply for export and domestic use will be better than expected only a few weeks ago and the problems in Britain have not spoiled the overall good picture."
In France, the EU's largest wheat producer, harvesting is almost over and a bumper crop is expected.
Analyst Agritel estimates France's 2013 soft wheat crop at 37.0 million tonnes, up 4 percent on 2012 and the largest in nine years.
"There were fears at first but the good weather at the end of the growth cycle helped yields," a French trader said.
Harvesting is 90% complete in France, but some producers said harvesting could last until mid-September in the far north of the country.
The French crop's specific weight and Hagberg values, two essential criteria for bread-making, are good but protein levels differed, sometimes below the 11 percent threshold for export in large producing regions such as Poitou-Charentes, analyst Strategie Grains said.
In the EU's second largest producer Germany, harvesting is in its final stages. Germany's Farm Cooperatives Association forecasts Germany will harvest 24.35 million tonnes of wheat in 2013, up 8.8% from 2012.
"Overall quality is satisfactory and the crop size good," a German trader said. "The extreme weather we had this year has led to some regional variations in quality but overall the crop is reaching a decent quality standard and I think there will be ample supplies of bread-quality wheat for German exports in the coming year."
In the UK, the third largest producer, harvesting is now in full swing, with traders forecasting a crop of around 12 million tonnes, down from 13.3 million tonnes last year and the smallest crop in over a decade.
ODA UK consultant Jake French estimates around 28% of the crop has now been collected. He said yields were better than expected, pegging the estimated average yield at 7.26 tonnes per hectare, close to the five year average of 7.7 tonnes.
He said quality is generally good but better quality wheat may be harvested first so early cuttings may not indicate the end result.
The wheat area in England fell to a 30-year low this season after wet autumn weather ruined sowings.
In the EU's number four wheat producer Poland, the harvest should rise to 9.03 million tonnes from 8.6 million tonnes last year, said ODA Polska director Regis Miola.
"Wheat has been harvested from over 80% of the sown area but there have been delays, especially in north Poland due to recent rain," Miola said.
"Yields are good and grain quality good until now, but we have to be careful about making overall judgements because recent showers may have impacted quality parameters."
Better weather is expected at the end of this week and 3-4 days without rain should see the harvest complete, Miola said.
Harvesting of wheat in Italy, a major grain importer, has ended, and the smaller crop was gathered after earlier heavy rains delayed and reduced plantings.
"The qualities are good," said Paolo Abballe, crop analyst at farmers group Coldiretti.
Soft wheat output is seen at 2.99 million tonnes, down from 3.41 million tonnes last year. The durum wheat crop, used for making pasta, is forecast at 3.71 million tonnes from 4.18 million tonnes.

NEWS,12.07.2013

Vatican freezes funds of a cleric

The Vatican said on Friday it had frozen funds belonging to a senior cleric at the centre of a suspected money smuggling operation, and could open investigations into other individuals.
Monsignor Nunzio Scarano, who has close links to the Vatican Bank, was arrested last month, accused of plotting to bring millions of euros in cash into Italy from Switzerland for rich friends.
The case was the latest in a series of scandals to tarnish the Catholic Church's image.
Details of the investigations, including police wiretaps and allegations of plots to smuggle the cash past customs, were also seen as a particular embarrassment for Pope Francis who has focused on the Church's duty to care for the poor since his election in March.
The Vatican's chief judicial official had ordered the freezing of Scarano's own funds in the Vatican Bank, the tiny city state said in a statement.
"The inquiries may also be extended to other persons," it said, without giving details.
The bank, known formally as the Institute for Works of Religion (IOR), had appointed US financial consultancy Promontory Financial Group to conduct a review of all accounts potentially affected, and was cooperating with the investigation, the statement added.
Scarano, a former senior accountant in the Holy See's financial administration, was arrested with Giovanni Zito, an Italian secret service agent, and financial broker Giovanni Carenzio.
They have been accused of plotting to bring in €20m ($26.08m) for Scarano's rich friends in the shipping industry in the southern city of Salerno.
Although the Vatican bank has not been directly implicated in the case, it is already caught up in a separate investigation into suspected money laundering.
Scarano, currently held in Rome's Queen of Heaven jail, is also under investigation in another case linked to his accounts in the Vatican bank.
Two of IOR's top managers resigned earlier this month in the wake of Scarano's arrest and prosecutors are considering seeking to have the two, former director Paolo Cipriani and former deputy director Massimo Tulli, sent to trial.

Britain, carmakers invest in research

The British government and the auto industry will invest £1bn pounds ($1.5bn) in a research centre to develop low-carbon technologies and help secure the jobs of 30 000 people working in the country's car engine supply chain.
The government and a group of 27 firms including oil major BP, Indian carmaker Tata Motors and component maker GKN will each invest £500m over the next decade in an Advanced Propulsion Centre, which will look to research, develop and commercialise those technologies.
Sixteen straight months of rising car sales in the UK are a rare bright spot for Europe's recession-hit motor industry and the government aims to persuade more of the world's top carmakers and automotive suppliers to base operations in Britain.
"The UK automotive sector has been incredibly successful in recent times, with billions of pounds of investment and new jobs," Business Secretary Vince Cable said on Friday. "With the next generation of vehicles set to be powered by radically different technologies we need to maintain this momentum and act now."
Other companies backing the investment include BMW, Bosch, Ford, Caterpillar and Nissan.

US surprises with large budget surplus

The US government posted an unexpectedly large budget surplus in June, a further sign of the rapid improvement in public finances that has taken the heat off Congress to find savings and raise the nation's borrowing limit.
Rising tax revenue, public spending cuts and big payments to the Treasury from government-backed mortgage companies helped the government take in $117bn more last month than it paid out, the US Treasury said on Thursday.
Analysts had expected a surplus of $39.5bn.
June's surplus was the largest on record for that month.
While the government is still $510bn in the red with three months to go in the fiscal year, June's big surplus will buy it time before it runs up against the limit on borrowing set by Congress. Analysts expect the Treasury to hit the debt ceiling by early November.
The surplus in June also highlighted how much an improving economy and existing legislation have helped improve the fiscal outlook. That has made overhauling public pension and healthcare systems a little less pressing.
Rising incomes and tax increases enacted earlier in the year helped cause government receipts to rise to $287bn in June, up 10% from a year earlier. While economic growth has been lackluster in the first half of 2013, job growth has been more steady. In June, 195 000 jobs were added to the nation's nonfarm payrolls.
Across-the-board budget cuts that began in March also contributed to the surplus.
Gross outlays at the department of defence and for military programmes, for example, are down about 7% in the fiscal year to date from the same period a year earlier. The current fiscal year began in October 2012.
Government-backed mortgage companies Fannie Mae and Freddie Mac, which were bailed out by taxpayers during the financial crisis but have since returned to profitability, also helped drive June's surplus by pouring billion of dollars into public coffers.
Fannie Mae, which said in May it would return $59bn to the Treasury in quarterly dividends, provided most of the funds. The big dividend payment reflected an extraordinary gain from the reversal of a tax-related writedown.

Doubts over UK 'no work' contracts

No work, no pay, but still employed? Welcome to Britain's 'zero-hours contracts', which offer no guaranteed amount of work and pay, and some weeks provide nothing.
Almost unheard of in the rest of Europe and the United States, the rapid growth of this type of work helps explain how Britain's barely growing economy has nonetheless been able to provide jobs for a record number of people.
One in five jobs created in Britain since late 2008 has come with a zero-hours contract, many of them in low-paid roles such as caring for the elderly or stacking shelves, but increasingly in work that requires more qualifications.
Under a zero-hours contract, an employer has no obligation to provide a minimum number of shifts, unlike other jobs.
Workers are not obliged to accept hours either. But critics argue that the flexibility mostly benefits employers because workers who reject being called up on one occasion risk being frozen out of all future work.
This has engendered criticism. Opposition Labour party leader Ed Miliband said the contracts make some British workplaces "nasty, brutish and unfair".
His colleague Julie Elliott, who led a parliamentary debate criticising the contracts, said it put too many people's life "on call".
Some Labour politicians are trying to push through legislation to ban the contracts. But they stand little chance of success, with the governing coalition of Conservatives and Liberal Democrats convinced there is a place for them.
Flexibility in hiring is viewed by many as key to employment growth, and Britain has long had easier rules on hiring and firing workers than other European countries.
Even so, some change may still be on the way. Britain's business ministry is holding informal talks with employers and unions, which Lib Dem Employment Minister Jo Swinson said this week may presage a more in-depth inquiry.
Lawmakers also say plenty of their constituents face difficulties with the contracts. The experience of one 26-year-old man who spoke to earlier this year is typical.
He worked in warehouse jobs in central England for several months under a zero-hours contract from an employment agency. He did not wish his name to be published in case he got sacked.
Usually he gets a text message to tell him if there is work the following day. But often the number of hours is unclear, and sometimes he is required at even shorter notice.
"It is very sporadic and unpredictable, making it virtually impossible to budget or plan for my other commitments," he said. "I don't earn enough, and since I've been doing zero-hours contracts I've been getting more and more in debt."
Some weeks he works eight hours, others more than 40, generally at a minimum wage of £6.19 an hour. The unpredictable income plays havoc with his state benefit entitlements, which assume a steady amount of work each week.
'Dodgy' data
How many people are in a similar situation is unclear.
The latest official data from the Office for National Statistics - which covers the last three months of 2012 - suggests just 200 000 people are employed under zero-hours contracts, up from 116 000 in late 2008.
This is 0.7% of the workforce, but the 70% increase is a fifth of the net jobs increase over the period.
But the numbers may significantly undercount the number of people on zero-hours contracts, as its survey relies on workers knowing the precise legal status of their jobs.
Earlier this week the government said that it was possible that 300 000 people were employed on zero-hours contracts last year in the social care sector alone.
"The numbers are dodgy, really dodgy," said Ian Brinkley, a former chief economist for Britain's Trades Union Congress who now heads the Work Foundation, a labour market think.
Brinkley said he expected such contracts to grow further in the future and did not advocate a ban, but he predicted a damaging effect on worker morale would limit their use.
Data on whether the contracts acted as a stepping stone into more permanent employment or left workers stuck in a rut was largely absent, he added.
Kevin Green, director of the Recruitment and Employment Confederation, whose members place a lot of people into temporary work, does not dispute that some bad practice exists.
But he questions whether it is more prevalent in zero-hours work than in other types of contract, and added that it benefited people who might not be able to work otherwise.
"It's hugely important for businesses that they can flex and provide the right resource and the right capability to meet their customers' needs."

China watchdog warns against nepotism

China's regulator of major state-run industries has warned senior executives to control their impulses and manage their family connections as the government steps up the fight against corruption.
Zhang Yi, Communist Party chief of the State-Owned Assets Supervision and Administration Commission (Sasac), told a meeting of more than 150 senior executives that they should treat battling graft as one of their most important tasks.
"Cultivate your moral character and nurture virtue, raise your ability to fight corruption," the watchdog quoted Zhang saying on its website (www.sasac.gov.cn) on Friday.
"Properly manage your relatives and those close to you; don't be encumbered by your emotions, damaged by your emotions or misled by your emotions," he added.
Sensitive to public outrage and warning that corruption threatens the party's very survival, President Xi Jinping has pledged to crack down on corruption at all levels, though only a few senior officials have been fired or investigated for corruption since he came to power last year.
Sasac is a ministerial-level body run by China's cabinet, the State Council, and is directly responsible for 116 state-owned companies, including national industrial champions such as CNOOC, PetroChina, China Mobile, State Grid Corp and Air China.
Xi has gone after extravagance and warned officials to be morally upstanding as part of his graft-fighting strategy.
Government departments and ministries have held meetings similar to the State-Owned Assets Supervision and Administration Commission gathering over the past few weeks and months.
A string of high-profile incidents, including a high-speed Ferrari crash reportedly involving the son of a senior public official, and numerous scandals with family members of government employees, have enraged many Chinese who have taken to the internet to vent their anger.

US, China restart investment treaty talks

The United States and China agreed on Thursday to restart stalled negotiations on an investment treaty, with Beijing dropping previous efforts to protect certain sectors of its economy from the start.
The agreement to resume negotiations was welcomed by the U S  business community as a major advance during annual Strategic and Economic Dialogue talks in Washington, which have often produced few agreements of substance.
Top officials from both sides strived to project a friendly, businesslike tone as they tried to build what China calls a "new model of major country relations" between the world's two biggest economies in the first year of Chinese President Xi Jinping's mandate.
But talks struck a sour note over China's handling of former spy agency contractor Edward Snowden, who hid out in the Chinese territory of Hong Kong last month as he revealed a secret US  surveillance programme before fleeing to Russia.
Disputes over cyber security topped the agenda going into this year's talks, which were launched in 2008 to manage a relationship that was growing more complex and tense with China's emergence as major economic and military power.
US  Treasury Secretary Jack Lew hailed the investment treaty commitment as a sign of positive change in Beijing, as China retools its economic growth model away from heavy investment and exports toward growth driven by consumption.
"China announced its intention to negotiate a high standard bilateral investment treaty with us that will include all stages of investment and all sectors - a significant breakthrough, and the first time China has agreed to do so with another country," he said as the talks concluded.
China and the United States began negotiations on a pact to govern bilateral investment in 2008 under then-US president George W Bush, but discussions were put on hold after President Barack Obama took office the following year.
Previously, Beijing had agreed to talks only if certain Chinese industries, especially in its service sector, were exempt. But it agreed to drop blanket restrictions for the current talks, a US  Treasury official said.
The official, briefing reporters at the US-China economic talks, said the move was an encouraging sign the world's second-largest economy was willing to open up more sectors to foreign competition.
Chinese Commerce Minister Gao Hucheng told reporters China and the United States share "a common purpose, which is to try to find ways to reduce and mitigate differences and barriers that both sides place in our trade and investment relations".
Explaining China's motives for reopening the investment talks, Chinese Vice-Finance Minister Zhu Guangyao said China had about $20bn of direct investment in the United States and $1.2trn in US treasury bills.
"With such an extensive investment relationship, it is necessary for the two sides to have an institutional environment for the protection of these investments," he told reporters.
In addition, Zhu said: "Business leaders from China and the United States have a strong desire to invest in the market of the other. They both want an open and more transparent market."
Analysts and US officials said another factor was a relative reversal of fortunes from previous years, with the United States enjoying economic recovery while China grappled with a slowing economy that showed the limits of its model.
"This set of meetings, as many of the meetings that I've had in recent months have had this character to them, that there's a renewed recognition and respect for the resilience of the American economy," said Lew.
US business groups welcomed the agreement to resume negotiations, but warned that both sides still faced many other tough issues and that negotiations on a treaty could be lengthy. Any pact would need to be ratified by the US Senate.
"The US chamber called for this last year as a pre-condition, and we are very pleased that both governments rose to the challenge," said Myron Brilliant, head of international affairs at the US Chamber of Commerce.
Barriers to business
US investors face barriers or ownership limits in about 90 Chinese sectors, while Chinese companies seeking to invest in the United States often fear a political backlash in Congress or rejection on national security grounds.
"If China negotiates a treaty that not only protects investments after they are made but also improves US investors' access to the Chinese market, this would be a real breakthrough," said Michael Smart of consultants Rock Creek Global Advisors, who worked on investment issues in the Bush White House.
The talks opened just weeks after Snowden' disclosure of extensive US electronic surveillance of American citizens and foreign countries, including China, which undercut years of complaints from Washington about Chinese hacking.
In remarks at the end of the talks, the United States said it had made clear its displeasure that Chinese authorities allowed Snowden, on the run in Hong Kong, to leave for Moscow rather than send him back to face US justice.
"We were disappointed with how the authorities in Beijing and Hong Kong handled the Snowden case, which undermined our effort to build the trust needed to manage difficult issues," US Deputy Secretary of State William Burns said.
Chinese State Councilor Yang Jiechi swiftly brushed off Burns' criticism of Hong Kong, the former British colony that h is a special administrative region of China. Hong Kong answers to Beijing on matters of foreign policy, but unlike China, it has an extradition treaty with the United States.
"The central government has always respected the Hong Kong SAR government's handling of cases in accordance with law," he said.
"The Hong Kong government handled the Snowden case in accordance with law, and its approach is beyond reproach," Yang said about the decision to not detain Snowden.
Douglas Paal, of the Carnegie Endowment for International Peace, said Snowden's case "makes it impossible for any countries to make concessions to the United States for the time being, because we look like big cyber offenders."
Burns said the two powers "need to reach a shared understanding of the rules of the road" in cyber space and repeated US complaints about the cyber theft of intellectual property that most American experts blame on China.
"The cyber-enabled theft of trade secrets, intellectual property, and confidential business information is unacceptable," he said.
Chinese leaders did not publicly address the cyber-theft issue during the Washington talks, although Gao said China was determined to improve protection of intellectual property.
A US official said that Washington's lobbying on the issue had made some headway - in part because China was generating more of its own intellectual property.
"What we're seeing is an acknowledgment that this realm of activity is distinct, is important and needs to be addressed," said the official, speaking on condition of anonymity.
Both countries' officials said they were clear-eyed about the differences in political system, wealth and values that divided them, saying the key was to manage relations.
"Of course, because of differences, there's a need for us to make rules. And to formulate those rules, we need to have dialogue," Chinese Vice-Premier Wang Yang said in a dinner speech late on Thursday.

French super rich thrive despite crisis

The economic crisis in France has spared the super rich, according to a survey published Thursday, which showed the combined wealth of the country's 500 richest people up nearly 25% in the last year.
Challenges magazine's 2013 ranking of the country's biggest fortunes estimated the top 500 earners to have combined assets of €330bn ($423bn), the highest level since the ranking began in 1996.
The 500 richest people accounted for 16% of gross domestic product and 10% of the total financial assets of the French, meaning one-hundredth-thousandth of the population controlled one-tenth of the nation's wealth.
"It's enough to make you dizzy and to lend arguments to a country that has always hated the rich, especially in times of crisis," Challenges wrote.
Keeping his top spot was the boss of luxury goods conglomerate LVMH, Bernard Arnault, who was estimated to be worth €24.3bn.
Second came Liliane Bettencourt, the elderly heiress to the L'Oreal cosmetics fortune, with an estimated fortune of €23.2bn.
Luxury goods, defence, retail, telecommunications and wines and spirits were all represented in the Top 10.
Bertrand Puech, chief executive of high-end handbags-maker Hermes and the Hermes family were ranked fourth behind Gerard Mulliez, founder of Auchan supermarket chain, and his family.
Of the richest 500, 55 were billionaires, 10 more than in 2012.
The statistics showed the 10 wealthiest people getting richer faster than others in the elite club, meaning more wealth concentrated in the hands of a few.
The Top 10 accounted for 40% of the riches of the Top 500, up from 25% in 1996.
The survey was likely to reignite debate about whether France's highest earners are sharing the burden of the crisis.
President Francois Hollande's attempts to push through a 75% super tax on top earners last year was condemned by business leaders, who warned of an exodus of top talent if it passed.
He was eventually forced to abandon the proposal after it was struck down by the Constitutional Council.

NEWS,29.01.2013

RBS faces £500m fine over Libor scandal

Britain's Royal Bank of Scotland could face a £500m ($786m, €585m) fine from British and US authorities for its role in the Libor rate-rigging affair, media said Tuesday.The Wall Street Journal, citing people briefed on negotiations, added that US authorities were pushing for a settlement of allegations that would result also in an RBS division pleading guilty to criminal charges.The newspaper said that the deal could be completed within the next fortnight and added that RBS was resisting any guilty plea amid fears it would lose clients and spark costly litigation.A spokesperson for the state-rescued bank would not be drawn on the article, simply saying: "Discussions with various authorities in relation to Libor setting are ongoing."We continue to co-operate fully with their investigations," he added in a statement.Investors meanwhile took flight at Tuesday's development. RBS shares sank 5.98% to finish at 345.80 pence on London's FTSE 100 index of leading shares, which ended 0.71% higher at 6 339.19 points.The Edinburgh-based lender is 82% owned by the British government after a vast bailout during the global financial crisis.The Libor affair erupted in June 2012 when Barclays bank was fined 290m by British and US regulators for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009.In December, Swiss banking giant UBS was slapped with fines totalling $1.5bn after a major probe by Swiss, British and US regulators revealed evidence of massive misconduct."It cannot be said that this comes as a surprise given that it was well flagged that authorities will chase RBS following the successful takedowns of Barclays and UBS," said analyst Ishaq Siddiqi at trading group ETX Capital."However, it does serve to remind us just how careless and brazen traders at these banks were, taking excessive risk to manipulate rates."The response in markets may be somewhat muted in the sessions ahead as over the months we have learnt just how deep this corruption ran through the Libor market and instead, investors are likely to breathe a sigh of relief as these charges will remove an overhang in the stock price."The Libor rate is used as a benchmark for global financial contracts worth about $300 trillion. However, the system was found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.The London Interbank Offered Rate, or Libor, is a flagship instrument used all over the world, affecting what banks, businesses and individuals pay to borrow money. Euribor is the eurozone equivalent.

Global tourism peaked in 2012 - UN

International tourist arrivals exceeded one billion for the first time last year, with the Asia-Pacific region posting the biggest increase in foreign visitors, and numbers will rise further in 2013, a UN body said on Tuesday. The number of international tourist arrivals grew by 4.0% to 1.035 billion in 2012, up from 996 million in 2011, the Madrid-based United Nations World Tourism Organisation said in an annual survey."2012 was a year of constant economic instability in the entire world, especially in the euro zone. Despite this international tourism managed to maintain its course," the body's Secretary General Taleb Rifai told a news conference.The organisation forecasts international tourist numbers will grow in 2013 although at a slightly lower rate of 3.0%  4.0%.Global tourism figures were hit hard by the 2008 global financial crisis, with the rise in international arrivals that year slowing to 2.1% after jumping 6.6% in the previous year.Arrivals plunged by 3.9% in 2009, its worst performance in 60 years, as the outbreak of the swine flu virus contributed to cash-strapped consumers' decision to stay home.But international tourism arrivals bounced back the following year, rising 6.6% in 2010 and by 5.0% in 2011 even though global economic crisis had not yet ended. The Asia-Pacific region posted the largest growth in visitor arrivals last year with the number of foreign tourists up by 14 million or 6.5% to 233 million.Growth in the number of foreign visitors was highest in Southeast Asia, with the number of arrivals up by 8.7% over 2011.Tourist numbers climbed 4.1% in emerging economies compared with a 3.6% rise in advanced economies.The only region to report a decline in tourist numbers compared with 2011 was the Middle East with 2.0% fewer arrivals because of political instability in popular tourist spots such as Egypt and Syria.But the drop in the number of visitors to the region was smaller than the decline of 7.0 posted in 2011, the UN body said.Asia and Africa are expected to post the greatest growth in tourist numbers this year.The agency predicts tourist arrivals will increase by 5.0%-6.0% in the Asia-Pacific region this year and by 4.0%-6.0% in Africa.The Middle East will see the number of foreign visitors to the region rise by 0 and 5.0% this year while Europe will post growth of 2.0%-3.0%.The forecast of continued growth in international tourist arrivals next year comes a week after the International Monetary Fund (IMF) predicted the global economy will grow slightly less in 2013 than expected.The IMF projects global gross domestic product annual growth of 3.5% this year, a dip of 0.1 point from its October forecast owing largely to weakness in the eurozone, and 4.1% in 2014.The UN World Tourism Organisation predicts international tourist arrivals will rise by an average of 3.8% each year between 2010 and 2020 and will reach 1.8 billion in 2030.

Japan to approve $1.02 trillion budget

Japan's cabinet was Tuesday set to approve a $1.02 trillion annual budget with boosts in defence and public works spending amid a festering territorial row with China and a renewed assault on deflation.The cabinet is expected to approve a ¥92.61 trillion budget for fiscal 2013, with revenue estimated at ¥43.10 trillion and new bond issuance at ¥42.85 trillion - the first time in four years revenue will have been greater than new bond issuance, local reports have said.The budget is down from the ¥92.9 trillion allocated in the fiscal 2012 initial budget, the first decrease in seven years, they said.But the defence budget is up by ¥40bn or about 0.8% from the previous year to ¥4.75 trillion, the first rise in 11 years, at a time Japan is embroiled in a row with China over a chain of islands in the East China Sea.Beijing has repeatedly sent vessels to the disputed waters, prompting calls in Japan for more measures to defend the Tokyo-controlled islands, called the Senkakus in Japan but known as the Diaoyus in China.Defence Minister Itsunori Onodera has said the military will add nearly 300 personnel to help defend the disputed islands.Meanwhile, public works spending rises for the first time in four years, growing by ¥710bn to ¥5.29 trillion, reports said.Prime Minister Shinzo Abe, who took office in December, has pledged to pull Japan out of years of deflation by active government spending coupled with aggressive monetary easing by the Bank of Japan.Abe's government announced a $226.5bn stimulus package earlier this month.In the fiscal 2013 budget, the issuance of new government bonds decreases by ¥1.4 trillion from the preceding year to ¥42.85 trillion, Jiji Press said.The government is planning an $86bn bond sale to pay for the stimulus, stoking fears about spending by Tokyo, which already owes creditors cash equal to twice the size of its economy.

 

Japan, China set to boost economic ties

Japanese Prime Minister Shinzo Abe said on Tuesday he was open to a meeting with Chinese leaders to rebuild ties damaged by a territorial dispute but said there was no room for negotiations on their row over a group of small islands.The remarks came after China's Communist Party chief, Xi Jinping, told a Japanese envoy sent to Beijing last week that he was committed to developing bilateral ties and would consider holding a summit meeting.Relations between the world's second- and third-largest economies plunged after the Japanese government bought three disputed islands from a private owner last September, sparking anti-Japan protests across China.Some Japanese businesses were looted and Japanese citizens attacked."It is precisely because we have a problem that we should hold the summit between leaders and have high-level talks," Abe said on a television programme, "I would like to consider a top-level summit if circumstances allow."The conservative prime minister has just increased the defence budget for the first time in 11 years and swept back to power in a December election calling for the protection of Japan's "beautiful seas".He reiterated Japan's stance on the islands, which it controls. Japan calls them the Senkaku while China calls them the Diaoyu."The Senkaku Islands are our land and China has taken provocative steps against them ... we have been clear that there is no room for negotiation on this matter," he said."But on top of that, there's an economic relationship. Japan invests in China and reaps benefits from exporting its goods there while China creates job places thanks to Japanese investment," said Abe, adding that maintaining strong economic ties were vital for both countries."If top-level meeting was necessary to achieve that, we should do it and from that point on rebuild our relationship."