Like his father, Venkatappah has spent his life growing rice and vegetables on two acres of land in this village three hours from Bangalore. Harvesting a good crop from these dry, rocky slopes has become tougher in recent years as the monsoon rains have become more erratic.
Rainfall was poor last year, and worse this past summer. “There was a lot of rain in a few days, then there was nothing for a long time,” says Mr. Venkatappah, who uses only one name.
This year, however, he hoped that a new government project would help him avert the worst. With the aid of officials, Venkatappah dug ponds upland to catch and store rainwater, scooped trenches and bunds around his fields to help conserve the run-off, and diversified his crops to lower his risks.
A number of new initiatives in India are testing ways to help farmers like Venkatappah cope with changing weather as concerns about climate change bring fresh urgency – and funding – to longstanding challenges in sustainable agriculture.
The biggest of these efforts is the National Initiative for Climate Resilient Agriculture (NICRA), a $63-million government pilot program covering 130 villages including Nagenahalli. Like the other projects, it promotes water and soil conservation and tries to improve access to better seeds and infrastructure as well as modern weather and crop data.
“The aim is to offer a model for reducing the vulnerability of farmers” in drought or flood prone areas, says Sreenath Dixit, a principle scientist and coordinator for the NICRA program.
QUIZ How well do you know Asia? Take this quiz
Projected increases in temperature and variable rainfall are expected to most affect farmers in developing countries like India, where the majority of people are still employed in agriculture and most farms depend on monsoon rains for irrigation.
Small farmers are especially vulnerable as they lack the resources to cope with an unexpected drought or flood.
“It’s not about fail safe [measures] but ‘safe fail,’” says Radha Kunke of the Watershed Organization Trust, which runs a climate adaptation program in 53 villages in western and central India. “Things can fail but in such a way that it does not cause devastation.”
Agriculture has received relatively little attention in international climate agreements, and much of that has focused on the sector's greenhouse-gas emissions. Only 4.5 percent of the 3,380 climate mitigation projects undertaken in 2011 under the Clean Development Mechanism were related to agriculture, according to the UN-funded Consultative Group on International Agricultural Research (CGIAR).
“Agriculture is still considered a sideshow in the climate arena,” said Bruce Campbell, head of CGIAR’s climate change research program, in a statement calling for "global action to ensure food security under climate change.”
In India, crop yields need to increase by 30 to 50 percent in the next 20 years to keep pace with its growing population, according to a government report. But a temperature increase of one degree Celsius could significantly bring down wheat and soy yields in the same period, while more erratic rainfall may reduce rice yields in some regions.
Without intervention, “it will be difficult to bridge the yield gaps under climate change scenarios,” says Suhas Wani, a senior scientist with the International Crops Research Institute for the Semiarid Tropics.
REVIVING OLD TRADITIONS
The farmers of Nagenahalli may not know much about global climate change, but they do know about changing weather.
READ THIS Monitor Focus story on drought and food prices.
Rainfall records for Nagenahalli show that while the total annual rainfall has stayed the same over the past 30 years, the number of rainy days has fallen, and dry spells lasting more than 15 days have tripled in the same period. “Bursts of torrential rain aren’t of much use to farmers,” says L B Naik, the local program coordinator. Much of the water washes away, eroding the nutrient-rich topsoil.
Soil and water conservation measures in the form of ponds, tanks, and trenches are thus a big part of the adaptation program. Farmers are also encouraged to plant a variety of crops, including a millet variety developed for shorter growing seasons. Tamarind, gooseberry, and mango tree saplings were distributed. “The fruit boosts incomes for the farmers, while the trees nourish the soil,” says Mr. Naik.
Many of these ideas aren’t new – they revitalize traditional practices. Nagenhalli has old rainwater harvesting structures including ponds and tanks. These had fallen into disuse over the years, as drilling deep wells became possible and popular. Eventually, excess demand lowered groundwater tables.
Similarly, many farmers moved to monoculture crops after high-yield rice and wheat seeds became available following the Green Revolution of the 1960s. Rice and wheat sell for high prices but consume a lot of water, another reason for groundwater depletion.
“Even better-off farmers with a large-scale monocrop can be wiped out in one bad monsoon,” says Kunke. Her group is encouraging farmers to return to older seeds. “We find the traditional, indigenous seeds to be more resilient and diverse,” she says.
The new initiatives also build on older watershed development programs. A big lesson from those projects was the importance of “building support systems in terms of grassroots institutions and infrastructure,” says NICRA’s Dixit. That’s why the adaptation program includes setting up a village seed bank and an equipment rental center, as well as a “ Village Climate Risk Management Committee,” to help keep the ideas alive after the project ends.
FINDING NEW SOLUTIONS
During drought, Venkatappah has seen some benefits to caching water. The pond he built captured enough water to irrigate an early crop of asters. “The yield was bigger than the entire crop last year,” he says.
But the absence of a second round of rains in September means that his remaining crops are still at risk. Like most Indian farmers, he has no access to insurance.
Existing conservation measures may help with climate adaptation in the short-term, says ICRISAT's Wani from the Crop Research Institute. But in the long term, scientists and policymakers will need to collaborate to find new solutions.
“To tackle climate challenges, the science must be in place,” he says. “Who is going to tell farmer what is going to happen next year?” Crop growth, for instance, is changing in ways not fully understood – crops such as coconut and groundnut may benefit from warmer temperatures.
Some programs are trying new approaches. The NICRA project has installed local weather stations in villages. Kunke’s group has roped in the Indian Meteorological Department to produce detailed advisories for 41 villages, based on locally gathered data on weather and crops.
“We want to combine the best of both worlds,” she says. “Technology, which is modern, and traditional knowledge, which understands local ecosystems.”
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NJ residents go home after toxic chemicals cleared
Labels: HealthPAULSBORO, New Jersey (Reuters) - Residents of New Jersey evacuated after a freight train derailment last week spewed toxic vinyl chloride began returning home on Friday as tests of the air came back clean, a Coast Guard official said.
Exactly one week after a bridge collapsed, derailing seven of the 82 Conrail freight-train cars crossing the Mantua Creek in southern New Jersey, residents who were ordered out of more than 200 homes nearest the wreck were allowed back into their homes on Friday afternoon.
Coast Guard Captain Kathy Moore said air tests in Paulsboro showed no further evidence of vinyl chloride, which had leaked from a gash in one tanker that tumbled into the waterway that feeds into the Delaware River near Philadelphia.
At the time of the wreck, authorities said 12,000 gallons (45,425 liters) of vinyl chloride had escaped.
Groups of residents were being led to their homes by law enforcement and air quality officials. The Coast Guard also offered in-home air quality checks to any resident seeking further assurance that their home is safe.
One of those set to return home Friday was Yasmen Stafford, 19, the mother of 6-month-old twin boys who has been living in a motel for the last week.
"I just want to get settled back in and get back to my regular routine," said Stafford as she waited at the Paulsboro volunteer fire department for an escort by a police officer and air quality specialist.
Koren Warrington, 39, who has also been living in a nearby hotel, confessed she was a "little nervous" about returning home, fearing her home would smell of toxic chemicals.
Paulsboro Mayor Jeff Hamilton said 680 people from some 204 houses had been evacuated after the train crash. He said he knew of nobody that has reported an air quality problem upon returning home.
Vinyl chloride is a highly toxic and flammable industrial chemical. Exposure to it can cause respiratory problems, coughing and light-headedness, said Lawrence Ragonese, spokesman for the state Department of Environmental Protection.
The failed rail-bridge is near both residential and commercial sections of the town of 6,100 people, which is also home to two oil refineries as well as chemical plants.
Conrail is jointly owned by rail operators CSX Corp and Norfolk Southern Corp.
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Supreme Court to hear "pay-for-delay" drug case
Labels: Health(Reuters) - The Supreme Court agreed on Friday to decide whether brand-name drug companies may pay money to generic drug rivals to keep their lower-priced products off the market, a practice estimated to cost consumers and the government billions of dollars each year.
The arrangements, known as "pay-for-delay" or "reverse payments," have for more than a decade vexed antitrust enforcers, including the Federal Trade Commission (FTC), which have been stung until recently by a series of court decisions allowing such practices.
In a typical case, a generic rival challenges the patent of a brand-name competitor, which then pays the rival a sum of money to drop its challenge. Defenders of the practice call it a legitimate means to resolve patent litigation.
The court accepted an appeal by the FTC, which had challenged annual payments of $31 million to $42 million by Solvay Pharmaceuticals Inc, now owned by Abbott Laboratories, to stop generic versions of AndroGel, a treatment for the underproduction of testosterone, until 2015.
These payments went to rivals such as Watson Pharmaceuticals Inc, Paddock Laboratories Inc and Par Pharmaceutical Cos, and were intended to help Solvay preserve annual profits estimated at $125 million.
The 11th U.S. Circuit Court of Appeals in Atlanta ruled against the FTC and upheld the arrangement in April. Two other circuit courts have also upheld such arrangements.
But the federal appeals court struck down a similar arrangement in July involving Merck & Co Inc. The Supreme Court often steps in to resolve such splits.
"This will be one of the most important business decisions that the court will have issued in quite some time," said Michael Carrier, a professor at Rutgers Law School in Camden, New Jersey. "These agreements cost consumers billions of dollars a year."
'WIN-WIN' FOR DRUGMAKERS
According to the FTC, 127 reverse payment arrangements were struck between 2005 and 2011, at an annual cost to consumers of $3.5 billion.
The agency calls the arrangements a "win-win" for drug companies that can share the benefits of high prices, while consumers, pharmacies and insurers miss out on generic drug prices that could be as much as 90 percent lower.
And in November 2011, the nonpartisan Congressional Budget Office said a U.S. Senate bill to ban reverse payments would save the government $4.79 billion and lower U.S. spending on prescription drugs by $11 billion over a decade. (http://aging.senate.gov/publications/s27.pdf)
That bill has not become law.
Under the Hatch-Waxman Act, the first company to win U.S. Food and Drug Administration approval to sell a generic drug before the underlying patent expires has a 180-day exclusive right to market that product.
This typically results in litigation by the brand-name rival, which can lead to reverse payment settlements.
MERCK CASE
In the Merck case, the 3rd U.S. Circuit Court of Appeals had struck down payments by Schering-Plough Corp, later bought by Merck, to rivals to delay generic versions of its potassium supplement K-Dur 20. Upsher-Smith Laboratories Inc was paid more than $60 million, court records show.
The U.S. Department of Justice, acting on the FTC's behalf, urged that the Supreme Court accept the FTC case for review and reverse the 11th Circuit decision.
It said the 3rd Circuit was correct to conclude that reverse payment agreements are presumptively anticompetitive and unlawful. Thirty-one states led by New York also urged the Supreme Court to hear the FTC appeal.
"The court has an opportunity to clarify the law," said Keith Hylton, a professor at Boston University School of Law. "It's very important to the drug industry because companies have many investments tied up in these drugs and that would be put at risk if pay-for-delay agreements were overturned."
The FTC case will be decided by an eight-member court. Justice Samuel Alito recused himself, without giving a reason.
A decision is expected by the end of June.
The case is Federal Trade Commission v. Watson Pharmaceuticals Inc et al, U.S. Supreme Court, No. 12-416.
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FDA panel opposes recommending painkiller, cites safety
Labels: HealthWASHINGTON (Reuters) - A U.S. Food and Drug Administration panel of outside experts voted against recommending Zogenix Inc's Zohydro painkiller for FDA approval on Friday, citing concerns about the danger of addiction posed by the drug class known as opioids.
But FDA officials said the regulatory agency could still approve the drug for sale in the United States by imposing restrictions to protect public safety.
In an 11-2 vote, advisory committee members said the San Diego-based pharmaceutical company had met narrow FDA targets for safety and efficacy but worried that the drug known generically as hydrocodone bitartrate could become a drug of choice for people addicted to other opioid painkillers including those based on the drug oxycodone.
"The primary thing has to be the public health," said Dr Judith Kramer of Duke University. "And I don't see how we can't see this as a promised repeat performance."
FDA officials will consider the committee's recommendation in deciding by March 1 whether to approve Zohydro for sale in the United States for people who require a round-the-clock painkiller for an extended period of time.
Dr Bob Rappaport, director of the FDA's division of anesthesia, analgesia and addiction products, said regulators must decide whether the panel's decision was based on a tangible difference between Zohydro and opioid-based medications already available in the marketplace.
Otherwise, he told the panel, "you're punishing this company and this drug because of the sins of the previous developers and their products. And from a regulatory standpoint, that's not really something we can do."
POSSIBLE SALES BOOST
Wall Street analysts say FDA approval could bring Zogenix up to $500 million in annual sales from Zohydro by 2019, or more than ten times the pharmaceutical company's expected 2012 annual revenue of $45.5 million.
Trading of Zogenix shares was suspended on Friday because of the FDA hearing. The stock closed at $2.36 on Thursday.
Zohydro is a single-entity, extended-release product containing the narcotic painkiller hydrocodone with no other pharmaceutical ingredient such as acetaminophen, which can lead to liver damage if used too often.
"Zogenix recognizes and appreciates that prescription opioid misuse and abuse is a critical issue. However, it is also important to remember that there is a documented patient need for an extended-release hydrocodone medicine without acetaminophen," the company said in a statement.
"We remain confident in the measures we have proposed to support safe use of Zohydro and are committed to continuing to work with the FDA through the review process to bring this treatment option to this specific patient population," it added.
Health officials say hydrocodone, the active ingredient in Zohydro, is already the most widely abused drug in an opioid class linked to a prescription drug abuse epidemic that has ballooned over the past 20 years.
Law enforcement officials say prescription drugs now pose a bigger public safety hazard than more traditional narcotics, including heroin and cocaine.
An estimated 7 million Americans abuse pharmaceutical drugs. Prescription drugs account for about 75 percent of all drug-related U.S. overdose deaths, according to the U.S. Centers for Disease Control and Prevention. Three of every four deaths from pills involve opioid pain relievers including oxycodone.
SHARPLY CONTRASTING TESTIMONY
Before voting, the panel heard testimony from more than a dozen public witnesses, including chronic pain sufferers who see drugs like Zohyrdo as needed treatments to control their chronic discomfort and allow them to lead normal lives without endangering their health.
But some speakers before the panel implored the experts not to recommend another potentially addictive opioid.
"Today we have a chance to save people," said Avi Israel, father of an 18-year-old boy who suffered from Crohn's disease and committed suicide after becoming addicted to hydrocodone that was prescribed to slow his bowels.
"Ask yourself this question," he added, "do we really need another narcotic pill to help anybody with pain? We can't handle what we have."
Earlier on Friday, the panel conducted separate and sharply divided votes on safety and efficacy.
Committee members voted 9-5 to find that the drug was not safe for treating patients with moderate to severe chronic pain, after voting 7-6 to find the treatment effective against pain. A panel member later changed her vote on efficacy from "no" to "yes," saying she had made a technical error.
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Judge rejects bid to block Washington state "stoned driving" rules
Labels: HealthOLYMPIA, Washington (Reuters) - A judge on Friday rejected a request by a medical marijuana user to block Washington state from enforcing tougher "stoned driving" rules after it became one of the first U.S. states to legalize the recreational use of marijuana.
Washington state voters last month approved marijuana legalization by a margin of 56 percent to 44 percent, making the state, along with Colorado, the first in the country to legalize recreational pot use.
The new rules, which for most marijuana smokers would put them over the legal driving limit for a couple hours after taking two or three hits from a joint, took effect on Thursday.
The legal challenge came from Arthur West, an Olympia-based lawyer and medical marijuana patient who said the ballot initiative's title wrongly left out any mention of the DUI provisions.
He also argued that those provisions will enable police to target medical marijuana users, who typically have higher residual blood levels of THC--the active ingredient in marijuana--for car stops.
"I don't think it's fair that the tens of thousands of patients in the state of Washington have to choose between whether they take their medicine or be subject to arrest for driving under the influence every time they get in their cars," he said.
In rejecting West's request for a preliminary injunction, Judge Lisa Sutton noted that police have long been empowered to pull over drivers they suspect of impaired driving.
"That is the same case today, after the passage of this initiative, as it was before," Sutton said.
Though the hearing Friday dealt primarily with the DUI provisions, West's lawsuit also asserts that the initiative wrongly earmarks tax money raised by regulating marijuana for unrelated services such as primary health and dental care, and that state legislators improperly advocated its passage.
West said he will push ahead with his case, taking it all the way to the state's supreme court if necessary.
Assistant Attorney General Bruce Turcott, who defended the new marijuana law in court, said he was satisfied with the ruling.
"I would have been very surprised" if the judge had ruled differently, Turcott added.
Alison Holcomb, an attorney with the Washington state ACLU who led the legalization campaign, declined to comment on the case.
Previously, Holcomb told Reuters that she included the DUI provisions in the initiative after an internal poll in May showed that 62 percent of 602 likely voters said a pot-impaired driving standard would make them more likely to vote for legalization
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US manufacturing shrinks in November to 3-year low
Labels: BusinessWASHINGTON (AP) — U.S. manufacturing shrank in November to its weakest level since July 2009, one month after the Great Recession ended. Worries about automatic tax increases in the New Year cut demand for factory orders and manufacturing jobs.
The Institute for Supply Management said Monday that its index of manufacturing conditions fell to a reading of 49.5. That's down from 51.7 in October.
Readings above 50 signal growth, while readings below indicate contraction. Manufacturing grew in October for only the second time since May. The ISM is a trade group of purchasing managers.
A gauge of new orders dropped to its lowest level since August, a sign that production could slow in the coming months. Manufacturers also sharply reduced their stockpiles, indicating companies expect weaker demand.
"Today's report suggests that the manufacturing sector is likely to remain a weak point in the recovery for a few months yet," Jeremy Lawson, an economist at BNP Paribas, said in a note to clients.
Stocks declined after the survey was released, giving up early gains. The Dow Jones industrial average was down 12 points in midday trading. Broader indexes rose only slightly.
The weak manufacturing survey overshadowed other positives economic reports. Greater home building boosted U.S. construction spending in October by the most in five months. Manufacturing activity in China grew in November for the second straight month. And U.S. auto sales rebounded last month after Superstorm Sandy held sales back in October.
U.S. manufacturers are concerned about the "fiscal cliff," the ISM survey noted. That's the name for sharp tax increases and government spending cuts that will take effect in January if Congress and the Obama administration fail to strike a budget deal before then.
Worries about the fiscal cliff have led many companies to pull back this year on purchases of machinery and equipment, which signal investment plans. The decline could slow economic growth and hold back hiring in the October-December quarter.
A measure of hiring in the ISM survey fell to 48.4, the lowest reading since September 2009.
Companies "are just backing off and not making any moves until things clear up a bit," Bradley Holcomb, chairman of the ISM's survey committee, said.
Consumers also appear nervous about higher taxes. Economists cited the fiscal cliff as a key reason consumer spending fell in October by the most since May.
When consumers cut back on spending, businesses typically reduce their pace of restocking. Both trends are expected to slow economic growth at the end of the year.
The economy grew from July through September at an annual rate of 2.7 percent, largely because of strong growth in inventories. Most economists predict growth is slowing in the current October-December quarter to a rate below 2 percent.
Superstorm Sandy had little impact on factory activity last month, according to the ISM survey. The storm hit the East Coast on Oct. 29 and affected businesses in 24 states.
A gauge of production in the ISM survey rose in November for the third straight month. That's a sign that Sandy didn't force many factory shutdowns.
A slowdown in global growth has weighed on U.S. manufacturers. New export orders slipped in November for the second straight month.
Surveys show consumers remain upbeat about the economy, despite the looming taxes and spending cuts. A measure of consumer confidence reached a five-year high in November.
If lawmakers and President Barack Obama can work out a budget deal that averts the tax increases, most economists predict a good year for the economy.
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The Institute for Supply Management said Monday that its index of manufacturing conditions fell to a reading of 49.5. That's down from 51.7 in October.
Readings above 50 signal growth, while readings below indicate contraction. Manufacturing grew in October for only the second time since May. The ISM is a trade group of purchasing managers.
A gauge of new orders dropped to its lowest level since August, a sign that production could slow in the coming months. Manufacturers also sharply reduced their stockpiles, indicating companies expect weaker demand.
"Today's report suggests that the manufacturing sector is likely to remain a weak point in the recovery for a few months yet," Jeremy Lawson, an economist at BNP Paribas, said in a note to clients.
Stocks declined after the survey was released, giving up early gains. The Dow Jones industrial average was down 12 points in midday trading. Broader indexes rose only slightly.
The weak manufacturing survey overshadowed other positives economic reports. Greater home building boosted U.S. construction spending in October by the most in five months. Manufacturing activity in China grew in November for the second straight month. And U.S. auto sales rebounded last month after Superstorm Sandy held sales back in October.
U.S. manufacturers are concerned about the "fiscal cliff," the ISM survey noted. That's the name for sharp tax increases and government spending cuts that will take effect in January if Congress and the Obama administration fail to strike a budget deal before then.
Worries about the fiscal cliff have led many companies to pull back this year on purchases of machinery and equipment, which signal investment plans. The decline could slow economic growth and hold back hiring in the October-December quarter.
A measure of hiring in the ISM survey fell to 48.4, the lowest reading since September 2009.
Companies "are just backing off and not making any moves until things clear up a bit," Bradley Holcomb, chairman of the ISM's survey committee, said.
Consumers also appear nervous about higher taxes. Economists cited the fiscal cliff as a key reason consumer spending fell in October by the most since May.
When consumers cut back on spending, businesses typically reduce their pace of restocking. Both trends are expected to slow economic growth at the end of the year.
The economy grew from July through September at an annual rate of 2.7 percent, largely because of strong growth in inventories. Most economists predict growth is slowing in the current October-December quarter to a rate below 2 percent.
Superstorm Sandy had little impact on factory activity last month, according to the ISM survey. The storm hit the East Coast on Oct. 29 and affected businesses in 24 states.
A gauge of production in the ISM survey rose in November for the third straight month. That's a sign that Sandy didn't force many factory shutdowns.
A slowdown in global growth has weighed on U.S. manufacturers. New export orders slipped in November for the second straight month.
Surveys show consumers remain upbeat about the economy, despite the looming taxes and spending cuts. A measure of consumer confidence reached a five-year high in November.
If lawmakers and President Barack Obama can work out a budget deal that averts the tax increases, most economists predict a good year for the economy.
AP IMPACT: China overtaking US as global trader
Labels: BusinessThe South Korean businessman supplied components to American automakers for a decade. But this year, he uprooted his family from Detroit and moved home to focus on selling to the new economic superpower: China.
In just five years, China has surpassed the United States as a trading partner for much of the world, including U.S. allies such as South Korea and Australia, according to an Associated Press analysis of trade data. As recently as 2006, the U.S. was the larger trading partner for 127 countries, versus just 70 for China. By last year the two had clearly traded places: 124 countries for China, 76 for the U.S.
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EDITOR'S NOTE — This is the first installment in "China's Reach," a project that will analyze China's influence with its trading partners over three decades, and explore how that is changing business, politics and daily life. Keep up with AP's reporting on China's Reach, and join the conversation about it, using the hashtag (hash)APChinaReach on Twitter.
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In the most abrupt global shift of its kind since World War II, the trend is changing the way people live and do business from Africa to Arizona, as farmers plant more soybeans to sell to China and students sign up to learn Mandarin.
The findings show how fast China has ascended to challenge America's century-old status as the globe's dominant trader, a change that is gradually translating into political influence. They highlight how pervasive China's impact has been, spreading from neighboring Asia to Africa and now emerging in Latin America, the traditional U.S. backyard.
Despite China's now-slowing economy, its share of world output and trade is expected to keep rising, with growth forecast at up to 8 percent a year over the next decade, far above U.S. and European levels. This growth could strengthen the hand of a new generation of just-named Chinese leaders, even as it fuels strain with other nations.
Last year, Shin's ENA Industry Co. made half his sales of rubber and plastic parts to U.S. factories. But his plans call for China, which overtook the United States as the biggest auto market in 2009, to rise fivefold to 30 percent of his total by 2015. He and his children are studying Mandarin.
"The United States is a tiger with no power," Shin said in his office, where three walls are lined with books, many about China. "Nobody can deny that China is the one now rising."
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Trade is a bit like football — the balance of exports and imports, like the game score, is a neat snapshot of a jumble of moves that make up the economy, and both sides are apt to accuse each other of cheating from time to time. Also, the U.S. and China are both rivals and partners who can't have a match without each other, and a strong performance from both is good for the entire league.
Trade may get less publicity than military affairs or diplomacy, yet it is commerce that generates jobs and raises living standards. Trade can also translate into political power. As shopkeepers say, the customer is always right: Governments listen to countries that buy their goods, and the threat to stop buying is one of the most potent diplomatic weapons.
China has been slow to flex its political muscle on a large scale but is starting to push back in disputes over trade, exchange rates and climate change.
"When a German chancellor or French president goes to China, right at the top of the list, he's trying to sell Airbuses and other products and is being sensitive to China's political concerns, like on human rights," said C. Fred Bergsten, a former U.S. Treasury Department official who heads the Peterson Institute for International Economics in Washington.
The United States is still the world's biggest importer, but China is gaining. It was a bigger market than the United States for 77 countries in 2011, up from 20 in 2000, according to the AP analysis.
The AP is using International Monetary Fund data to measure the importance of trade with China for some 180 countries and track how it changes over time. The analysis divides a nation's trade with China by its gross domestic product.
The story that emerges is of China's breakneck rise, rather than of a U.S. decline. In 2002, trade with China was 3 percent of a country's GDP on average, compared with 8.7 percent with the U.S. But China caught up, and surged ahead in 2008. Last year, trade with China averaged 12.4 percent of GDP for other countries, higher than that with America at any time in the last 30 years.
Of course, not all trade is equal. China's trade is mostly low-end goods and commodities, while the U.S. competes at the upper end of the market.
Also, even though Chinese companies invest abroad and employ thousands of foreign workers, they lag behind American industry in building global alliances and in innovation, which is still rewarded in the marketplace. China's competitive edge remains low labor and other costs, while the U.S. is the world's center for innovation in autos, aerospace, computers, medicine, munitions, finance and pharmaceuticals. The Chinese have yet to build a car that will pass U.S. or European emission standards.
And the United States still does more trade overall — but just barely. If the trend continues, China will push past the U.S. this year, a remarkable feat for a country so poor 30 years ago that the average person had never talked on a telephone.
"The center of gravity of the world economy has moved to the east," said Mauricio Cardenas, the finance minister in Colombia. Like most of Latin America, his country is still more closely tied to the U.S., but its trade with China has risen from virtually nothing to 2.5 percent of GDP, a more than tenfold increase since 2001. "I would say that there is nothing comparable in the last 50 years."
In one sense, China's growing presence in trade is just restoring the Middle Kingdom to its historic dominance. China was the biggest economy for centuries until about 1800, when the Industrial Revolution propelled first Europe and then the U.S. into the lead.
China began its return to the global stage in the 1990s as a manufacturer of low-priced goods, from T-shirts to toys. Factories in other countries slashed costs to meet the "China price" or were pushed out of the market.
As the new millennium dawned, the U.S. remained by far the world's dominant trader, rivaled collectively by Europe but no single nation. However, from 2000 to 2008, China's imports grew 403 percent and exports 474 percent, driven in part by its entrance into the World Trade Organization and its move to higher-value production.
China's imports of oil and raw materials for its factories propelled resource booms in parts of Asia, Africa and Latin America. China's demand for steel for manufacturing and construction grew so fast that its mills now consume half the world's output of iron ore.
Zambia, a major copper producer, switched to the China column in 2000. Australia, a coal and iron ore exporter, followed in 2005. Chile, another copper supplier, moved in 2009.
Meanwhile, exports surged as Apple, Samsung, Nokia and other electronics giants shifted final assembly to China. Shipments of mobile phones, flat-screen TVs and personal computers have jumped sevenfold over the past decade to nearly $500 billion. That made China a major customer for high-tech components supplied by countries such as South Korea, which swung into China's column in 2003, followed by Malaysia in 2007.
In the U.S., Vermont-based manufacturer SBE Inc. started exporting capacitors — energy-storage devices used in computers, hybrid cars and wind turbines — in 2006. The company now gets 15 to 20 percent of its revenue from China, and has hired 10 employees there.
As China grew richer, its people spent more.
Chinese ate more pork, fried chicken and hamburgers, rapidly sending up the demand for soybeans to make cooking oil and feed for pigs and cows. Some cattle ranchers in Latin America turned grazing land into fields of soy, a crop few in their region consume. Soybean exports helped push Brazil into the China column in 2010, and put China neck and neck with the U.S. as Argentina's top trading partner.
In the Brazilian state of Mato Grosso, some 10,000 miles (17,000 kilometers) from Beijing, farmer Agenor Vicente Pelissa and his family raise cattle and soy on 54,300 acres, a farm twice the size of Manhattan. Half their 21,000-ton annual soybean harvest goes to China.
"We've invested more in technology and in better machines and equipment to meet this rising demand," Pelissa said. "If it hadn't been for China, we would not have not modernized our operations, at least not as quickly as we did."
Even in the U.S., better known for manufacturing, farmers are rushing to sell to China. The United States is the largest exporter of soybeans to China, followed by Brazil and Argentina. China's purchases of American soybeans have risen from almost nothing 20 years ago to a quarter of the crop: 24 million tons worth $12.1 billion, America's largest export to China.
The boom is having a profound effect on farming communities, said Grant Kimberley, whose family farm near Des Moines, Iowa, now grows 4,000 acres of soybeans, up from 3,500 eight years ago.
"It's provided more revenue for these farmers than they've ever seen in their lives," said Kimberley, who is also director of market development at the Iowa Soybean Association. He said he sees more young people returning to the farm. "People can see there's an opportunity to make nice livings for their families."
___
It was the 2008 global crisis that showed the resilience of China's exporters.
The recession set everyone back, but China less so than the U.S. or other major traders such as Germany. China does a bigger share of its trade with developing countries that suffered less and rebounded faster, while the United States sells to rich economies that are struggling. Chinese companies have boosted exports by 7 percent this year despite anemic global demand.
During the recession, Shin, the South Korean auto parts manufacturer, saw his sales fall 50 percent. He shut one of three production lines, and banks stopped lending him money.
But China's auto market was powering ahead. So Shin hired an employee in China, and is now making plans for his first factory there. On a business trip to Germany, clients told him their Chinese factories would be larger than those at home.
Parents like Shin, who work at companies doing business with China, in turn fed enrollment growth at schools such as Teacher Ching, a Chinese-language kindergarten in Seoul.
Nancy Ching, the daughter of immigrants from Taiwan, opened the school with 15 students in 2004, the year after South Korea first moved from the U.S. column to the China column. Today she has 60.
"Mothers who send their kids here believe our children's generation is the China generation," she said in Chinese-accented Korean. "In the future, without learning Chinese, one won't be able to get a job."
China resumed its upward trajectory in the last two years. Even with key Western markets in a slump, exports are up 58 percent since 2009. Imports are up an even sharper 73 percent.
Rising incomes have driven demand for wine and other luxury goods, making China a lifeline for European and American vineyards when the global crisis battered traditional markets.
The Chinese have "helped Bordeaux a lot these past three years," said Florence Cathiard, owner of Chateau Smith Haut Lafitte in the Pessac-Leognan area of France's southwest, home of high-end Bordeaux wine.
France's wine exports to China first surged in 2009, and by last year, China had surpassed the U.S. as a customer by volume. Americans still spend more, because they buy more expensive wines. But China is developing a taste for grand cru wine, the "great growths" that are considered exceptional and command higher prices.
Cathiard acknowledged that she was initially wary of China as a reliable market for her high-end wines. But the turning point for her came around 2008, when she was blown away by the number of people showing up for a master class by her chateau at a wine expo in Hong Kong.
China now accounts for 25 percent of Cathiard's sales, making it her largest market.
The owners of Chateau Haut-Bailly, also in Pessac-Leognan, first traveled to China to test the waters in 2000, and it was too early.
"At the time, they didn't know what a cork or a corkscrew was," said Veronique Sanders, the chateau's general manager.
Chinese sophistication has since advanced rapidly, she said.
"The difference with other emerging markets we've gone into in the past is the size of the country, which means it has an absolutely incredible potential."
___
The next step in China's trade evolution is to move beyond exporting TVs and lawn furniture to selling services and investing abroad.
The investment trend started with state-owned companies that bought stakes in foreign mines and oil fields. Smaller and private Chinese companies followed, acquiring foreign enterprises to gain a bigger foothold in overseas markets, more access to resources and better technology for their own development.
China is now pushing into construction and engineering, where U.S. and European companies have long dominated.
In Algeria, Chinese state-owned companies pushed aside established French and German rivals to win contracts to build a $12 billion cross-country highway and the $1.3 billion Great Mosque of Algeria. The Chinese have also built highways, dams and other projects in developing countries and are starting to win contracts in the U.S. and Europe.
On a new 50-kilometer (30-mile) highway leading north of Nairobi, the capital of Kenya, dark asphalt stretches across six to eight lanes.
The $300 million road was built by three Chinese companies and financed by the African Development Bank and the Export-Import Bank of China. It has cut a trip that took several hours 18 months ago to 10 minutes, said Joseph Makori, a professional driver.
"When we see the people from America, they say, 'We want to assist Kenya'," said Makori as he looked for work at an interchange about 10 kilometers from downtown. "But I don't see it. China comes and I see one thing: the road."
Chinese companies are starting to win government contracts in Kenya, which has ports that offer access to landlocked Uganda, South Sudan and Rwanda. Governments in Africa are keen to work with China because it does not tie development to human rights or democracy, said Stephen Mutoro, secretary general of the Consumer Federation of Kenya.
"China appears to have a long-term plan based on increasing its commercial interests where governance issues are given a back burner," Mutoro said. The experience of Congo might foreshadow a more complex approach that Beijing envisages for other African nations. In 2008, the two governments signed a $9 billion deal for Chinese companies to build 177 hospitals and health centers, two hydroelectric dams and thousands of miles of railways and roads. In exchange, Congo was to provide 10.6 million tons of copper and 600,000 tons of cobalt.
The deal has since been scaled back to $6 billion under pressure from the International Monetary Fund, which felt Congo was taking on too much debt.
China's outbound investment totaled $67.6 billion last year — just one-sixth of America's nearly $400 billion — but it could reach $2 trillion by 2020, according to a forecast by Rhodium Group, a research firm in New York City.
As a result, Chinese companies are using a new export — jobs.
Employees at Volvo Cars worried after Chinese automaker Geely Holdings bought the money-losing Swedish brand from Ford Motor Co. in 2010. But two years later, instead of moving jobs to China, Geely has expanded Volvo's European workforce of 19,500 to about 21,500.
Majority-owned U.S. affiliates of Chinese companies support about 27,000 American jobs, up from fewer than 10,000 five years ago, according to Rhodium.
In Goodyear, Arizona, Stacey Rassas was laid off in May 2010 after a 16-year career in quality control for aerospace and aluminum manufacturers. By late autumn, she and her husband were worried they might lose their house.
She finally landed a job that December at a new factory that makes solar panels for one of the world's biggest solar manufacturers.
"It was the best day ever," she said.
Her new employer? Suntech Power Holdings Co., a Chinese company.
___
McDonald reported from Beijing. AP Business Writers Sarah DiLorenzo in Paris and Jonathan Fahey and Scott Mayerowitz in New York and AP writers Michelle Faul in Johannesburg; Louise Nordstrom in Stockholm; Luis Andres Henao in Santiago, Chile; Cesar Garcia in Bogota, Colombia; Paul Schemm in Algiers, Algeria; Stan Lehman in Sao Paulo; Troy Thibodeaux in New Orleans; and Jason Straziuso and Tom Odula in Nairobi, Kenya; and AP interactive producer Pailin Wedel in Bangkok contributed.
Read More..
In just five years, China has surpassed the United States as a trading partner for much of the world, including U.S. allies such as South Korea and Australia, according to an Associated Press analysis of trade data. As recently as 2006, the U.S. was the larger trading partner for 127 countries, versus just 70 for China. By last year the two had clearly traded places: 124 countries for China, 76 for the U.S.
___
EDITOR'S NOTE — This is the first installment in "China's Reach," a project that will analyze China's influence with its trading partners over three decades, and explore how that is changing business, politics and daily life. Keep up with AP's reporting on China's Reach, and join the conversation about it, using the hashtag (hash)APChinaReach on Twitter.
___
In the most abrupt global shift of its kind since World War II, the trend is changing the way people live and do business from Africa to Arizona, as farmers plant more soybeans to sell to China and students sign up to learn Mandarin.
The findings show how fast China has ascended to challenge America's century-old status as the globe's dominant trader, a change that is gradually translating into political influence. They highlight how pervasive China's impact has been, spreading from neighboring Asia to Africa and now emerging in Latin America, the traditional U.S. backyard.
Despite China's now-slowing economy, its share of world output and trade is expected to keep rising, with growth forecast at up to 8 percent a year over the next decade, far above U.S. and European levels. This growth could strengthen the hand of a new generation of just-named Chinese leaders, even as it fuels strain with other nations.
Last year, Shin's ENA Industry Co. made half his sales of rubber and plastic parts to U.S. factories. But his plans call for China, which overtook the United States as the biggest auto market in 2009, to rise fivefold to 30 percent of his total by 2015. He and his children are studying Mandarin.
"The United States is a tiger with no power," Shin said in his office, where three walls are lined with books, many about China. "Nobody can deny that China is the one now rising."
___
Trade is a bit like football — the balance of exports and imports, like the game score, is a neat snapshot of a jumble of moves that make up the economy, and both sides are apt to accuse each other of cheating from time to time. Also, the U.S. and China are both rivals and partners who can't have a match without each other, and a strong performance from both is good for the entire league.
Trade may get less publicity than military affairs or diplomacy, yet it is commerce that generates jobs and raises living standards. Trade can also translate into political power. As shopkeepers say, the customer is always right: Governments listen to countries that buy their goods, and the threat to stop buying is one of the most potent diplomatic weapons.
China has been slow to flex its political muscle on a large scale but is starting to push back in disputes over trade, exchange rates and climate change.
"When a German chancellor or French president goes to China, right at the top of the list, he's trying to sell Airbuses and other products and is being sensitive to China's political concerns, like on human rights," said C. Fred Bergsten, a former U.S. Treasury Department official who heads the Peterson Institute for International Economics in Washington.
The United States is still the world's biggest importer, but China is gaining. It was a bigger market than the United States for 77 countries in 2011, up from 20 in 2000, according to the AP analysis.
The AP is using International Monetary Fund data to measure the importance of trade with China for some 180 countries and track how it changes over time. The analysis divides a nation's trade with China by its gross domestic product.
The story that emerges is of China's breakneck rise, rather than of a U.S. decline. In 2002, trade with China was 3 percent of a country's GDP on average, compared with 8.7 percent with the U.S. But China caught up, and surged ahead in 2008. Last year, trade with China averaged 12.4 percent of GDP for other countries, higher than that with America at any time in the last 30 years.
Of course, not all trade is equal. China's trade is mostly low-end goods and commodities, while the U.S. competes at the upper end of the market.
Also, even though Chinese companies invest abroad and employ thousands of foreign workers, they lag behind American industry in building global alliances and in innovation, which is still rewarded in the marketplace. China's competitive edge remains low labor and other costs, while the U.S. is the world's center for innovation in autos, aerospace, computers, medicine, munitions, finance and pharmaceuticals. The Chinese have yet to build a car that will pass U.S. or European emission standards.
And the United States still does more trade overall — but just barely. If the trend continues, China will push past the U.S. this year, a remarkable feat for a country so poor 30 years ago that the average person had never talked on a telephone.
"The center of gravity of the world economy has moved to the east," said Mauricio Cardenas, the finance minister in Colombia. Like most of Latin America, his country is still more closely tied to the U.S., but its trade with China has risen from virtually nothing to 2.5 percent of GDP, a more than tenfold increase since 2001. "I would say that there is nothing comparable in the last 50 years."
In one sense, China's growing presence in trade is just restoring the Middle Kingdom to its historic dominance. China was the biggest economy for centuries until about 1800, when the Industrial Revolution propelled first Europe and then the U.S. into the lead.
China began its return to the global stage in the 1990s as a manufacturer of low-priced goods, from T-shirts to toys. Factories in other countries slashed costs to meet the "China price" or were pushed out of the market.
As the new millennium dawned, the U.S. remained by far the world's dominant trader, rivaled collectively by Europe but no single nation. However, from 2000 to 2008, China's imports grew 403 percent and exports 474 percent, driven in part by its entrance into the World Trade Organization and its move to higher-value production.
China's imports of oil and raw materials for its factories propelled resource booms in parts of Asia, Africa and Latin America. China's demand for steel for manufacturing and construction grew so fast that its mills now consume half the world's output of iron ore.
Zambia, a major copper producer, switched to the China column in 2000. Australia, a coal and iron ore exporter, followed in 2005. Chile, another copper supplier, moved in 2009.
Meanwhile, exports surged as Apple, Samsung, Nokia and other electronics giants shifted final assembly to China. Shipments of mobile phones, flat-screen TVs and personal computers have jumped sevenfold over the past decade to nearly $500 billion. That made China a major customer for high-tech components supplied by countries such as South Korea, which swung into China's column in 2003, followed by Malaysia in 2007.
In the U.S., Vermont-based manufacturer SBE Inc. started exporting capacitors — energy-storage devices used in computers, hybrid cars and wind turbines — in 2006. The company now gets 15 to 20 percent of its revenue from China, and has hired 10 employees there.
As China grew richer, its people spent more.
Chinese ate more pork, fried chicken and hamburgers, rapidly sending up the demand for soybeans to make cooking oil and feed for pigs and cows. Some cattle ranchers in Latin America turned grazing land into fields of soy, a crop few in their region consume. Soybean exports helped push Brazil into the China column in 2010, and put China neck and neck with the U.S. as Argentina's top trading partner.
In the Brazilian state of Mato Grosso, some 10,000 miles (17,000 kilometers) from Beijing, farmer Agenor Vicente Pelissa and his family raise cattle and soy on 54,300 acres, a farm twice the size of Manhattan. Half their 21,000-ton annual soybean harvest goes to China.
"We've invested more in technology and in better machines and equipment to meet this rising demand," Pelissa said. "If it hadn't been for China, we would not have not modernized our operations, at least not as quickly as we did."
Even in the U.S., better known for manufacturing, farmers are rushing to sell to China. The United States is the largest exporter of soybeans to China, followed by Brazil and Argentina. China's purchases of American soybeans have risen from almost nothing 20 years ago to a quarter of the crop: 24 million tons worth $12.1 billion, America's largest export to China.
The boom is having a profound effect on farming communities, said Grant Kimberley, whose family farm near Des Moines, Iowa, now grows 4,000 acres of soybeans, up from 3,500 eight years ago.
"It's provided more revenue for these farmers than they've ever seen in their lives," said Kimberley, who is also director of market development at the Iowa Soybean Association. He said he sees more young people returning to the farm. "People can see there's an opportunity to make nice livings for their families."
___
It was the 2008 global crisis that showed the resilience of China's exporters.
The recession set everyone back, but China less so than the U.S. or other major traders such as Germany. China does a bigger share of its trade with developing countries that suffered less and rebounded faster, while the United States sells to rich economies that are struggling. Chinese companies have boosted exports by 7 percent this year despite anemic global demand.
During the recession, Shin, the South Korean auto parts manufacturer, saw his sales fall 50 percent. He shut one of three production lines, and banks stopped lending him money.
But China's auto market was powering ahead. So Shin hired an employee in China, and is now making plans for his first factory there. On a business trip to Germany, clients told him their Chinese factories would be larger than those at home.
Parents like Shin, who work at companies doing business with China, in turn fed enrollment growth at schools such as Teacher Ching, a Chinese-language kindergarten in Seoul.
Nancy Ching, the daughter of immigrants from Taiwan, opened the school with 15 students in 2004, the year after South Korea first moved from the U.S. column to the China column. Today she has 60.
"Mothers who send their kids here believe our children's generation is the China generation," she said in Chinese-accented Korean. "In the future, without learning Chinese, one won't be able to get a job."
China resumed its upward trajectory in the last two years. Even with key Western markets in a slump, exports are up 58 percent since 2009. Imports are up an even sharper 73 percent.
Rising incomes have driven demand for wine and other luxury goods, making China a lifeline for European and American vineyards when the global crisis battered traditional markets.
The Chinese have "helped Bordeaux a lot these past three years," said Florence Cathiard, owner of Chateau Smith Haut Lafitte in the Pessac-Leognan area of France's southwest, home of high-end Bordeaux wine.
France's wine exports to China first surged in 2009, and by last year, China had surpassed the U.S. as a customer by volume. Americans still spend more, because they buy more expensive wines. But China is developing a taste for grand cru wine, the "great growths" that are considered exceptional and command higher prices.
Cathiard acknowledged that she was initially wary of China as a reliable market for her high-end wines. But the turning point for her came around 2008, when she was blown away by the number of people showing up for a master class by her chateau at a wine expo in Hong Kong.
China now accounts for 25 percent of Cathiard's sales, making it her largest market.
The owners of Chateau Haut-Bailly, also in Pessac-Leognan, first traveled to China to test the waters in 2000, and it was too early.
"At the time, they didn't know what a cork or a corkscrew was," said Veronique Sanders, the chateau's general manager.
Chinese sophistication has since advanced rapidly, she said.
"The difference with other emerging markets we've gone into in the past is the size of the country, which means it has an absolutely incredible potential."
___
The next step in China's trade evolution is to move beyond exporting TVs and lawn furniture to selling services and investing abroad.
The investment trend started with state-owned companies that bought stakes in foreign mines and oil fields. Smaller and private Chinese companies followed, acquiring foreign enterprises to gain a bigger foothold in overseas markets, more access to resources and better technology for their own development.
China is now pushing into construction and engineering, where U.S. and European companies have long dominated.
In Algeria, Chinese state-owned companies pushed aside established French and German rivals to win contracts to build a $12 billion cross-country highway and the $1.3 billion Great Mosque of Algeria. The Chinese have also built highways, dams and other projects in developing countries and are starting to win contracts in the U.S. and Europe.
On a new 50-kilometer (30-mile) highway leading north of Nairobi, the capital of Kenya, dark asphalt stretches across six to eight lanes.
The $300 million road was built by three Chinese companies and financed by the African Development Bank and the Export-Import Bank of China. It has cut a trip that took several hours 18 months ago to 10 minutes, said Joseph Makori, a professional driver.
"When we see the people from America, they say, 'We want to assist Kenya'," said Makori as he looked for work at an interchange about 10 kilometers from downtown. "But I don't see it. China comes and I see one thing: the road."
Chinese companies are starting to win government contracts in Kenya, which has ports that offer access to landlocked Uganda, South Sudan and Rwanda. Governments in Africa are keen to work with China because it does not tie development to human rights or democracy, said Stephen Mutoro, secretary general of the Consumer Federation of Kenya.
"China appears to have a long-term plan based on increasing its commercial interests where governance issues are given a back burner," Mutoro said. The experience of Congo might foreshadow a more complex approach that Beijing envisages for other African nations. In 2008, the two governments signed a $9 billion deal for Chinese companies to build 177 hospitals and health centers, two hydroelectric dams and thousands of miles of railways and roads. In exchange, Congo was to provide 10.6 million tons of copper and 600,000 tons of cobalt.
The deal has since been scaled back to $6 billion under pressure from the International Monetary Fund, which felt Congo was taking on too much debt.
China's outbound investment totaled $67.6 billion last year — just one-sixth of America's nearly $400 billion — but it could reach $2 trillion by 2020, according to a forecast by Rhodium Group, a research firm in New York City.
As a result, Chinese companies are using a new export — jobs.
Employees at Volvo Cars worried after Chinese automaker Geely Holdings bought the money-losing Swedish brand from Ford Motor Co. in 2010. But two years later, instead of moving jobs to China, Geely has expanded Volvo's European workforce of 19,500 to about 21,500.
Majority-owned U.S. affiliates of Chinese companies support about 27,000 American jobs, up from fewer than 10,000 five years ago, according to Rhodium.
In Goodyear, Arizona, Stacey Rassas was laid off in May 2010 after a 16-year career in quality control for aerospace and aluminum manufacturers. By late autumn, she and her husband were worried they might lose their house.
She finally landed a job that December at a new factory that makes solar panels for one of the world's biggest solar manufacturers.
"It was the best day ever," she said.
Her new employer? Suntech Power Holdings Co., a Chinese company.
___
McDonald reported from Beijing. AP Business Writers Sarah DiLorenzo in Paris and Jonathan Fahey and Scott Mayerowitz in New York and AP writers Michelle Faul in Johannesburg; Louise Nordstrom in Stockholm; Luis Andres Henao in Santiago, Chile; Cesar Garcia in Bogota, Colombia; Paul Schemm in Algiers, Algeria; Stan Lehman in Sao Paulo; Troy Thibodeaux in New Orleans; and Jason Straziuso and Tom Odula in Nairobi, Kenya; and AP interactive producer Pailin Wedel in Bangkok contributed.
Stocks edge lower after weak manufacturing report
Labels: BusinessThe Dow Jones industrial average fell 59.98 points to close at 12,965.60. The Standard and Poor's 500 dropped 6.72 points to 1,409.46. The Nasdaq composite was down 8.04 points to 3,002.20
U.S. manufacturing declined in November to its weakest level since July 2009, the Institute for Supply Management reported. The ISM's index fell to 49.5 from 51.7 a month earlier, below the 51.2 reading forecast by analysts. Any number below 50 on the scale means that manufacturing is contracting. Businesses expressed concerns about the "fiscal cliff," a series of sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit.
"The ISM numbers probably took a little air out of what was some hope for better news on where the economy is going," said Jim Dunigan, executive vice president at PNC Wealth Management in Philadelphia. "We're still in the camp that this gets resolved and we don't go over the cliff, but there's a lot of angst between now and then."
The White House and Congress are still seeking to hammer out a budget deal that will avoid the "cliff." Republicans, led by House Speaker John Boehner, have balked at President Barack Obama's opening proposal of $1.6 trillion in higher taxes over a decade, a possible extension of the temporary Social Security payroll tax cut and heightened presidential power to raise the national debt limit.
House Republicans on Monday proposed their own 10-year blueprint to President Barack Obama that calls for increasing the eligibility age for Medicare and lowering cost-of-living hikes for Social Security benefits.
"There's a sense of insecurity until the President and Boehner get their act together," said Ben Schwarz, chief market strategist at New York-based brokerage Lightspeed Financial. "If they put together a package in short order, if they do it in the next couple of weeks, you'll see a strong rally."
Stocks have fluctuated since the Nov. 6 election as investors worried that a deal may not be reached in time to avoid the tax hikes and spending cuts, which economists say could push the U.S. back into recession. The S&P 500 is still 1.3 percent below its closing level on the day that Americans went to the polls, having fallen as much as 5 percent in the weeks following the election.
Wall Street opened higher Monday following news that manufacturing in China, the world's second-largest economy, grew for the first time in 13 months and after Greece announced details of a bond buyback program. The Dow had been up as much as 62 points shortly after the opening bell.
December is historically the best month for stocks. The S&P 500 has advanced an average of 2 percent over the past 30 years during the month of December, according to research from Schaeffer's Investment Research. The next best month is April, with an average return of 1.7 percent. The worst month is September, where investors lose an average of 0.7 percent.
The yield on the 10-year Treasury note rose 1 basis point to 1.62 percent.
Other stocks making big moves:
—Dell rose 42 cents, or 4.4 percent, to $10.06 after Goldman Sachs raised its rating to "Buy" from "Sell." Goldman cited Dell's healthy cash balance and said a recent decline in the stock may have been overdone. Dell has slumped this year as consumers migrated away from desktop PCs and laptops to portable devices such as tablets and phones.
— Health Management Associates fell 45 cents, or 5.7 percent, to $7.50 after the CBS news program "60 Minutes" broadcast a segment critical of the company's patient admission policies. The program included interviews with former employees who said HMA pressured its emergency room doctors to admit patients.
Read More..
U.S. manufacturing declined in November to its weakest level since July 2009, the Institute for Supply Management reported. The ISM's index fell to 49.5 from 51.7 a month earlier, below the 51.2 reading forecast by analysts. Any number below 50 on the scale means that manufacturing is contracting. Businesses expressed concerns about the "fiscal cliff," a series of sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit.
"The ISM numbers probably took a little air out of what was some hope for better news on where the economy is going," said Jim Dunigan, executive vice president at PNC Wealth Management in Philadelphia. "We're still in the camp that this gets resolved and we don't go over the cliff, but there's a lot of angst between now and then."
The White House and Congress are still seeking to hammer out a budget deal that will avoid the "cliff." Republicans, led by House Speaker John Boehner, have balked at President Barack Obama's opening proposal of $1.6 trillion in higher taxes over a decade, a possible extension of the temporary Social Security payroll tax cut and heightened presidential power to raise the national debt limit.
House Republicans on Monday proposed their own 10-year blueprint to President Barack Obama that calls for increasing the eligibility age for Medicare and lowering cost-of-living hikes for Social Security benefits.
"There's a sense of insecurity until the President and Boehner get their act together," said Ben Schwarz, chief market strategist at New York-based brokerage Lightspeed Financial. "If they put together a package in short order, if they do it in the next couple of weeks, you'll see a strong rally."
Stocks have fluctuated since the Nov. 6 election as investors worried that a deal may not be reached in time to avoid the tax hikes and spending cuts, which economists say could push the U.S. back into recession. The S&P 500 is still 1.3 percent below its closing level on the day that Americans went to the polls, having fallen as much as 5 percent in the weeks following the election.
Wall Street opened higher Monday following news that manufacturing in China, the world's second-largest economy, grew for the first time in 13 months and after Greece announced details of a bond buyback program. The Dow had been up as much as 62 points shortly after the opening bell.
December is historically the best month for stocks. The S&P 500 has advanced an average of 2 percent over the past 30 years during the month of December, according to research from Schaeffer's Investment Research. The next best month is April, with an average return of 1.7 percent. The worst month is September, where investors lose an average of 0.7 percent.
The yield on the 10-year Treasury note rose 1 basis point to 1.62 percent.
Other stocks making big moves:
—Dell rose 42 cents, or 4.4 percent, to $10.06 after Goldman Sachs raised its rating to "Buy" from "Sell." Goldman cited Dell's healthy cash balance and said a recent decline in the stock may have been overdone. Dell has slumped this year as consumers migrated away from desktop PCs and laptops to portable devices such as tablets and phones.
— Health Management Associates fell 45 cents, or 5.7 percent, to $7.50 after the CBS news program "60 Minutes" broadcast a segment critical of the company's patient admission policies. The program included interviews with former employees who said HMA pressured its emergency room doctors to admit patients.
Asia stocks down on US manufacturing report
Labels: BusinessU.S. manufacturing shrank in November to its weakest level since July 2009. The Institute for Supply Management said Monday that its index of manufacturing conditions fell 49.5 from October's 51.7. Numbers above 50 signal growth, while those below indicate contraction.
One reason for the downturn, the trade group said, was that businesses are concerned about the so-called fiscal cliff, which is a package of tax increases and government spending cuts that will take effect in 2013 unless lawmakers take action. Worries about automatic tax increases cut demand for factory orders and manufacturing jobs.
President Barack Obama and Republican lawmakers have yet to work out a budget deal as the clock continues ticking toward the year-end deadline.
Ric Spooner, chief market analyst at CMC Markets in Sydney, said that while most analysts think U.S. political leaders will negotiate some kind of deal before the deadline, there will still be some degree of tax increases and spending cuts that will impinge on the growth of the world's No. 1 economy.
"It's important to remember that there will still be a significant fiscal drag on the U.S. economy next year. So I think markets have arrived at a level that reflects that state of affairs, or close to it," Spooner said. "The market has arrived around a level which reflects the risk that is still out there."
Japan's Nikkei 225 index fell 0.2 percent to 9,441.75. Hong Kong's Hang Seng lost 0.2 percent to 21,728.80. South Korea's Kospi fell 0.5 percent to 1,930.68.
Australia's S&P/ASX 200 shed 0.5 percent to 4,510.30 after the Reserve Bank of Australia, as expected, cut its benchmark interest rate by a quarter of a percentage point to 3 percent, its lowest level since the global financial crisis.
The bank voiced concerns for the Australian economy amid uncertainty over the United States' fiscal policy and stubbornly weak conditions in Europe.
Australia's Newcrest Mining Ltd. fell 2 percent and Energy Resources of Australia Ltd. lost 2.9 percent.
Elsewhere, struggling electronics maker Sharp gained 1.7 percent in Tokyo. Japanese news reports said Sharp and U.S. mobile phone chipmaker Qualcomm Inc. have reached a basic agreement on a capital and business tie-up.
On Wall Street on Monday, the Dow Jones industrial average dropped 0.5 percent to close at 12,965.60. The Standard & Poor's 500 index fell 0.5 percent to close at 1,409.46. The Nasdaq composite fell 0.3 percent to 3,002.20.
Benchmark oil for January delivery was down 18 cents to $88.91 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 18 cents to close at $89.09 in New York on Monday.
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One reason for the downturn, the trade group said, was that businesses are concerned about the so-called fiscal cliff, which is a package of tax increases and government spending cuts that will take effect in 2013 unless lawmakers take action. Worries about automatic tax increases cut demand for factory orders and manufacturing jobs.
President Barack Obama and Republican lawmakers have yet to work out a budget deal as the clock continues ticking toward the year-end deadline.
Ric Spooner, chief market analyst at CMC Markets in Sydney, said that while most analysts think U.S. political leaders will negotiate some kind of deal before the deadline, there will still be some degree of tax increases and spending cuts that will impinge on the growth of the world's No. 1 economy.
"It's important to remember that there will still be a significant fiscal drag on the U.S. economy next year. So I think markets have arrived at a level that reflects that state of affairs, or close to it," Spooner said. "The market has arrived around a level which reflects the risk that is still out there."
Japan's Nikkei 225 index fell 0.2 percent to 9,441.75. Hong Kong's Hang Seng lost 0.2 percent to 21,728.80. South Korea's Kospi fell 0.5 percent to 1,930.68.
Australia's S&P/ASX 200 shed 0.5 percent to 4,510.30 after the Reserve Bank of Australia, as expected, cut its benchmark interest rate by a quarter of a percentage point to 3 percent, its lowest level since the global financial crisis.
The bank voiced concerns for the Australian economy amid uncertainty over the United States' fiscal policy and stubbornly weak conditions in Europe.
Australia's Newcrest Mining Ltd. fell 2 percent and Energy Resources of Australia Ltd. lost 2.9 percent.
Elsewhere, struggling electronics maker Sharp gained 1.7 percent in Tokyo. Japanese news reports said Sharp and U.S. mobile phone chipmaker Qualcomm Inc. have reached a basic agreement on a capital and business tie-up.
On Wall Street on Monday, the Dow Jones industrial average dropped 0.5 percent to close at 12,965.60. The Standard & Poor's 500 index fell 0.5 percent to close at 1,409.46. The Nasdaq composite fell 0.3 percent to 3,002.20.
Benchmark oil for January delivery was down 18 cents to $88.91 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 18 cents to close at $89.09 in New York on Monday.
Lincoln brand changes name as new MKZ goes on sale
Labels: BusinessDETROIT (AP) — Lincoln is getting a new car and a new name designed to reverse 20 years of falling sales.
The 97-year old luxury brand, synonymous with presidential limos and black Town Cars, is returning to its original name, Lincoln Motor Co. Lincoln hopes the name will help restore the brand's luster as the new MKZ sedan goes on sale this month.
Lincoln Motor Co. founder Henry Leland — who also started Cadillac — named the company after his hero, Abraham Lincoln. He sold it to Ford, which wanted a luxury brand, in 1922. Lincoln Motor Co. was used in advertising all the way through the 1970s and 1980s, but had fallen out of use more recently, Lincoln chief Jim Farley said Monday. That's not unlike the brand itself, whose sales have been slipping since buyers began defecting to foreign brands like Lexus and BMW in the 1990s.
Ford is depending on the MKZ to start reversing that slide. It's the first of seven new or revamped Lincolns due out by 2015.
The MKZ, which was unveiled in concept form at the Detroit Auto Show last January, is longer and wider than the current version. It starts at $35,925, or about the same as its archrival, the Lexus ES 350. A hybrid version is the same price.
Among its new features are a push-button transmission instead of a shifter and an optional panoramic glass roof. It still has Lincoln's split-wing grille, a tribute to the 1938 Lincoln Zephyr and one of the brand's most recognizable features. But designers made the grille thinner and more tapered after complaints about the ungainly maw on the most recent Lincolns.
CEO Alan Mulally said the MKZ's elegant design is its most striking feature.
"It's smooth and soft. It will stand the test of time," he told The Associated Press on Monday. The new car, he said, is the "proof point" of Ford's commitment to the Lincoln brand.
Lance Willis, a Lincoln dealer with the Bayway Auto Group in Houston, likes the new MKZ but is frustrated that it's not in showrooms yet. Ford has built up a lot of hype but needs to deliver the MKZ and the rest of its new cars if it wants to keep people interested.
"One car itself won't do the job," he said. "They need to shorten the timetable."
But Willis applauds the name change, saying it helps separate Lincoln from the Ford brand.
Lincoln was the top-selling brand in the U.S. two decades ago, when sedans like the Continental and the Town Car were the pinnacle of luxury and elegant, uncluttered design. But then Ford bought up other luxury brands, like Jaguar and Volvo, and ignored Lincoln. Its lackluster products couldn't compete in the hotly contested luxury market.
Lincoln now has the lowest U.S. sales of any luxury brand, with around 75,000 vehicles sold in the U.S. so far this year. BMW has sold more than four times that number.
Ford has sold off its other luxury brands so it can concentrate on Lincoln. On Monday, Mulally and Farley were promoting the MKZ with an event Monday at New York's Lincoln Center. Ford has hired former football star Emmitt Smith as Lincoln's new pitchman. It's also developing Lincoln's first Super Bowl ad, which will feature Tweets from actual consumers that have been put into script form by comedian Jimmy Fallon.
Farley said Lincoln is targeting customers who want a warmer, more personal experience in the showroom.
"After the great recession, luxury customers really changed. People are really buying luxury to treat themselves, not to impress others," Farley said.
He said Ford's research indicates that 25 percent of the luxury market is made up of quirkier, so-called progressive buyers who aren't attracted to current brands.
But even moderate success will take a long time and require a constant stream of compelling vehicles that are different from Fords, said Michelle Krebs, a senior analyst at Edmunds.com.
"Lincoln is just starting out on a long journey to gaining luxury car credibility and it is miles behind its competitors," she said. "Success will take more than a company name change and a Super Bowl ad."
The brand hopes to attract buyers by ramping up its customer service. It will offer a 24-hour live shopping concierge who can help buyers navigate their purchase as well as lavish gifts for customers and "date nights," where potential buyers can take someone to dinner in a new MKZ.
"We know that for Lincoln to be successful we have to do two things: Surprise people with the product and deliver competitive service in the dealership," Farley said.
Read More..
The 97-year old luxury brand, synonymous with presidential limos and black Town Cars, is returning to its original name, Lincoln Motor Co. Lincoln hopes the name will help restore the brand's luster as the new MKZ sedan goes on sale this month.
Lincoln Motor Co. founder Henry Leland — who also started Cadillac — named the company after his hero, Abraham Lincoln. He sold it to Ford, which wanted a luxury brand, in 1922. Lincoln Motor Co. was used in advertising all the way through the 1970s and 1980s, but had fallen out of use more recently, Lincoln chief Jim Farley said Monday. That's not unlike the brand itself, whose sales have been slipping since buyers began defecting to foreign brands like Lexus and BMW in the 1990s.
Ford is depending on the MKZ to start reversing that slide. It's the first of seven new or revamped Lincolns due out by 2015.
The MKZ, which was unveiled in concept form at the Detroit Auto Show last January, is longer and wider than the current version. It starts at $35,925, or about the same as its archrival, the Lexus ES 350. A hybrid version is the same price.
Among its new features are a push-button transmission instead of a shifter and an optional panoramic glass roof. It still has Lincoln's split-wing grille, a tribute to the 1938 Lincoln Zephyr and one of the brand's most recognizable features. But designers made the grille thinner and more tapered after complaints about the ungainly maw on the most recent Lincolns.
CEO Alan Mulally said the MKZ's elegant design is its most striking feature.
"It's smooth and soft. It will stand the test of time," he told The Associated Press on Monday. The new car, he said, is the "proof point" of Ford's commitment to the Lincoln brand.
Lance Willis, a Lincoln dealer with the Bayway Auto Group in Houston, likes the new MKZ but is frustrated that it's not in showrooms yet. Ford has built up a lot of hype but needs to deliver the MKZ and the rest of its new cars if it wants to keep people interested.
"One car itself won't do the job," he said. "They need to shorten the timetable."
But Willis applauds the name change, saying it helps separate Lincoln from the Ford brand.
Lincoln was the top-selling brand in the U.S. two decades ago, when sedans like the Continental and the Town Car were the pinnacle of luxury and elegant, uncluttered design. But then Ford bought up other luxury brands, like Jaguar and Volvo, and ignored Lincoln. Its lackluster products couldn't compete in the hotly contested luxury market.
Lincoln now has the lowest U.S. sales of any luxury brand, with around 75,000 vehicles sold in the U.S. so far this year. BMW has sold more than four times that number.
Ford has sold off its other luxury brands so it can concentrate on Lincoln. On Monday, Mulally and Farley were promoting the MKZ with an event Monday at New York's Lincoln Center. Ford has hired former football star Emmitt Smith as Lincoln's new pitchman. It's also developing Lincoln's first Super Bowl ad, which will feature Tweets from actual consumers that have been put into script form by comedian Jimmy Fallon.
Farley said Lincoln is targeting customers who want a warmer, more personal experience in the showroom.
"After the great recession, luxury customers really changed. People are really buying luxury to treat themselves, not to impress others," Farley said.
He said Ford's research indicates that 25 percent of the luxury market is made up of quirkier, so-called progressive buyers who aren't attracted to current brands.
But even moderate success will take a long time and require a constant stream of compelling vehicles that are different from Fords, said Michelle Krebs, a senior analyst at Edmunds.com.
"Lincoln is just starting out on a long journey to gaining luxury car credibility and it is miles behind its competitors," she said. "Success will take more than a company name change and a Super Bowl ad."
The brand hopes to attract buyers by ramping up its customer service. It will offer a 24-hour live shopping concierge who can help buyers navigate their purchase as well as lavish gifts for customers and "date nights," where potential buyers can take someone to dinner in a new MKZ.
"We know that for Lincoln to be successful we have to do two things: Surprise people with the product and deliver competitive service in the dealership," Farley said.
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