BUSINESS NEWS

In China, Weighing Economic and Political Freedoms

China's leadership is said to be planning to unveil reforms at the next meeting of all members of the Central Committee of the Communist Party of China, likely to be held in October. Yet any policy owner changes may satisfy calls for deeper economic reforms but disappoint hopes for broader political reforms.

President Xi Jinping had taken charge of sweeping economic reform plans to be delivered at the gathering, known as the Plenum. Caixin Journal, citing sources close to the central government, disclosed that China had established seven task forces to draft the designs.

Changes to state-owned enterprises are unlikely to be on the table. And any sweeping changes that are agreed on will take months, or longer, to be put in to place. With the economy struggling, some may query whether the government can wait  a year for substantive changes. I would guess it can, though no ought to expect the remainder of this year to be an simple for China's economy.

Reducing the role of government and cutting red tape that Ronald Reagan might have appreciated, raised hopes that the government was serious about stepping back and letting the market play a bigger role. There is, however, plenty of difficult ground to cover between hope and implementation, when these mooted changes may harm powerful bureaucratic interests.

political reform in any liberal, Western sense is not part of the Mr. Xi's reform agenda. Plenty of people, inside & outside China, argue that the deep economic changes needed to propel China's next few decades of growth won't succeed without significant, liberal political shake-up. The Chinese leadership does not appear to agree, & the result of the debate may be of the most important events of this century.

In 2007, James Mann wrote The China Fantasy, a short book arguing that Western elites had misrepresented the benefits of engagement with China, and that prosperity and capitalism would not necessarily bring democracy to the country. Mr. Mann asked:

What if China manages to continue on its current economic path, yet its political process does not change in any essential way? What if, twenty-five or thirty years from now, a wealthier, more powerful China continues to be run by a one-party regime that still represses organized political dissent much as it does today, while simultaneously China is also open to the outside world &, indeed, is deeply intertwined with the remainder of the world through trade, investment & other economic ties? Everyone assumes that the Chinese political process is going to open up  but what if it doesn't? What if, in other words, China becomes fully integrated in to the world's economy, yet it remains also entirely undemocratic?

That is the query lots of may now be focused on. As much as they in the West would like to assume that more prosperity will make China more like us,is there actually solid proof to support that belief?

Foreign Companies Invest in U.S. Project to Export Liquid Gas

The companies  Mitsui and Mitsubishi of Japan, and GDF Suez of Germany  each plan to take a 16.6 percent stake in the gas export plant being developed at Hackberry, La. The complex is being built by Sempra Energy, a company based in San Diego with annual revenue of about $10 billion. The companies agreed last year to help create the project.

In a sign that the United States shale gas boom is making global waves, Japanese conglomerates as well as a huge French energy player signed agreements on Friday to invest up to $7 billion in a liquefied natural gas project in Louisiana.

GDF Suez predicts that the plant will start operations in 2017. The companies final decision to make their investment will be contingent on the project's receiving necessary permits.

 
International companies, responding to a ravenous global appetite for natural gas, in Japan & Europe, need access to shale gas from the United States, which has emerged as an important new source over the last few years. But because the United States has only recently shifted from being a gas importer to being self-sufficient in the fuel, the government has not yet agreed to permit exports except in a few cases & to the twenty countries with which it's free trade agreements, including Panama & Costa Rica.


Export approval, under consideration for several projects by the Energy Department, will be necessary before the potential of shale gas can be fully realized. On Friday, the department approved a Los angeles project called Freeport L.N.G. It's also signed off on a facility being built by Cheniere Energy at Sabine Pass in Louisiana that is expected to start exporting in 2015.

But international companies are investing all the same, betting that United States shale gas will finally be able to go onto the global market.

In a statement, Sempra Energy estimated that the foreign partners would be putting up $6 billion to $7 billion in return for under half the equity in the project, which is forecast to yield 12 million metric tons of liquefied natural gas yearly for twenty years. In return, they will get all the gas. Sempra will retain a stake of over 50 percent.

Other foreign companies that have lined up American supplies include the Korean company Kogas, Sumitomo of Japan & BG Group, the British-based company that is a sizable player in the liquefied natural gas business.

Natural gas prices in the United States are now about $4 per million British thermal units, the industry's standard measure. European-traded prices are in the $10 per million B.T.U. range, with Asian prices about $15 per million per B.T.U. Long-term contract prices are often higher, & liquefication adds to the cost over plain gas.

Japan's liquefied natural gas imports have surged after the shutdown of nuclear power in the wake of the Fukushima catastrophe & were up by 11 percent last year. Japanese imports account for about one-third of the world's total liquid gas market, according to a recent study by Bernstein research.

Japanese utility executives have said they require to reduce the prices they are paying by tying them to United States supplies.

It is a win-win situation, said Fadel Gheit, an analyst at Oppenheimer in New York. Such deals will help stabilize global fuel prices over the long term & benefit the United States economy, he said.

A sizable worry in the industry is whether United States exports could contribute to lower prices around the globe, eroding profits. It will give buyers a choice, something they have seldom had before, said Jonathan Stern, chairman of the gas program at the Oxford Institute for Energy Studies.

But industry executives think that surging demand, from Asia, will basically absorb the exports that the United States government might finally permit.

United States gas won't have a material effect on long-term pricing, Martin Houston, BG's chief operating officer, said in a recent presentation on the company's Website.