Even as China celebrates the start of the Beijing Olympics—and by extension its role as a rising colossus on the world stage—there are signs that its economy is slowing, says Business Week, which writes: “In a worrisome sign that China’s growth streak is losing more steam, the latest official statistics on manufacturing show the output of Chinese factories may have actually contracted in July.” The reality of being not just a driver of the global economy when it goes well but also a passenger when it applies the brakes is apparent in new Chinese government figures showing growth has slowed to 10.2 percent this year—down from 11.9 percent in 2007—”on the back of sagging global demand and government measures to rein in excessive credit,” adds the BBC.
The Economist, never a publication that could be accused of being backward-looking, skips past China to consider London’s challenge of upstaging the Beijing Games, given that the United Kingdom is facing recession, as the New York Times also discusses today. The Economist notes that financing for the 2012 Olympic village has been hampered by the credit crunch and that the economic conditions “could mar plans for what was to have been a glorious Olympic legacy” of former Prime Minister Tony Blair.
What a bunch of killjoys. At least the corporate sponsors in Beijing should be happy, right? Perhaps not; NPR reports that the top 12 official Olympic sponsors have spent $866 million in direct advertising and support but that “most [Chinese] consumers have no idea who the actual official sponsors are,” in the words of Shaun Rein, head of the China Market Research Group. Take Coke, which spent $70 million to be one of the top 12. “We found 40 percent of consumers thought Coke was the sponsor, versus 60 percent for Pepsi,” Rein says. Gulp.
Most bartenders will attest to Wall Street traders’ love of a buyback. However, the news that both Merrill Lynch and Citigroup have agreed to buy back $17 billion in auction-rate securities from individual investors must be pretty hard for those bankers to swallow. As the Wall Street Journal explains, the banks’ largesse is “aimed at defusing a regulatory and legal showdown [with New York State and the SEC] about their sales practices for securities that were touted as safe but then couldn’t easily be sold” when they lost value.
Seeing that the likes of Goldman Sachs, Lehman Brothers, JPMorgan Chase, Morgan Stanley, UBS, and the Wachovia Corp. are also being investigated for similar practices, yesterday’s moves by Citi and Merrill “are likely to pave the way for other banks and brokerage firms to take similar actions,” notes the NYT. Reimbursing 100 percent of the investment points to the potential exposure felt by Citi and Merrill, says CNN Money. Some “40,000 Citi customers, whose holdings are worth more than $7 billion, are expected to benefit,” it notes.
The U.N., World Bank, and European Union all have warned about the effect that biofuel production is having on global food prices and the world’s poor, but the U.S. Environmental Protection Agency yesterday rejected a call to reduce the Bush administration’s ethanol quota for gasoline, arguing that the “national goal of reducing oil use trumps any effect on food prices from making fuel from corn,” reports the NYT.
For now maybe, but the combination of high oil prices, an expanding global middle class, and ramped-up biofuel production continues to influence the price of grains. That affects costs throughout the agricultural food chain, and “consumers are likely to bear the brunt in the form of rising food prices,” writes the WSJ.
High oil prices have sent commuters flocking back to the railroads, says another WSJ report. Unfortunately Amtrack can’t cope, as many of its trains are “overcrowded, and a backlog of infrastructure problems stands in the way of expanded service,” it writes. No doubt this is true, but the story feels very reminiscent of this NYT piece from June.
No room to read a paper but have all that commuting time to kill? Sounds like the perfect environment for Twitter. Fortune serves up this profile of the microblogging Web 2.0 ingenue that hopes to emulate the success of Facebook and YouTube. And just as with the media-changing social network and video-sharing site, Fortune (and everyone else) continues to wonder how Twitter “will evolve from hip technology to moneymaker.” If any of you has the answer, tweet us.