World Economic News

China, Russia Expect To Sign Agreements Worth Over $43 Billion

These economic agreements and contracts are expected to be signed during Chinese President Hu Jintao's visit to Russia March 26-28. Assistant Chinese Foreign Minister Li Hui told journalists that Hu Jintao and Vladimir Putin will open the China national exhibit for the Year of China in Russia, which will be the biggest such exhibition ever sponsored by China in a foreign country. It will feature over 15,000 Chinese products.

While China-Russia trade has been growing rapidly—Russia is China's eighth-largest trade partner and China is Russia's fourth-largest–—there are real problems to be solved in trade structure. Yu Guangzhou, China's Vice Minister of Commerce, said in Beijing that machinery and electronic products are too small a part of bilateral trade, and mutual investment has not grown fast enough.

Konstantin Vnukov, director of the first Asian department at the Russian Foreign Ministry, said, "The issue of improving the trade structure is on the agenda." Russian exports are dominated by resources, of which 54% is oil and petrochemicals, and consumer goods dominate Chinese exports to Russia.

Li Hui also announced from the Chinese side, that the Shanghai Cooperation Organization will hold a joint anti-terrorism military exercise in Russia this year.

Germany's Chief Financial Market Regulator warns on hedge funds

In an interview with Welt am Sonntag, published March 18, Jochen Sanio, who heads Germany's financial market regulatory agency BaFin, warned that hedge fund collapses could blow the entire system apart. He said the Amaranth collapse last September within just a few days, was a "clear warning signal, strong lightning in the distance. In the next case that size, the lightning could strike and shake up the financial system." Sanio also said he is worried about the U.S. mortgage market. "I can only hope that we are not now at the beginning of a collapse in the U.S. housing market, which through the U.S. conjuncture would affect the global conjuncture... That would be the last thing we would need."

Sanio endorsed the German initiative for an international discussion about hedge funds, the discussion as such would be valuable, because "from now on, the issue can no longer be played down... The highly speculative hedge funds pose a great danger to the stability of the financial system."