It seems that China may be known for more than a low cost export model in the short term following a profitable discovery by the nation?s top oil producer. Announcing one of the biggest oil discoveries in the country?s history, PetroChina Co. has come across an oil deposit in the Bohai Bay, estimated to have approximately 7.5 billion barrels of oil.
[B]PetroChina Shares Vault Higher, Places Chinese Oil In Focus[/B]
It seems that China may be known for more than a low cost export model in the short term following a profitable discovery by the nation?s top oil producer. Announcing one of the biggest oil discoveries in the country?s history, PetroChina Co. has come across an oil deposit in the Bohai Bay, estimated to have approximately 7.5 billion barrels of oil. As a result, the company?s shares surged 14 percent higher, helping to push the market value of the company to HK$1.82 trillion. Subsequently, PetroChina has now surpassed OAO Gazprom and BP Plc to become the world?s third ranked oil company after Exxon Mobil and Royal Dutch Shell. The discovery is not only significant in its relation to the equity market, it also shows the country?s devotion to reducing its reliance on outside resources. So much so, that the company is already set to increase drilling and exploration expenses way above the pace of Exxon and Shell this year in order to expand on resources at Daqing, China?s biggest and oldest oil field. Subsequently, putting the magnitude of the discovery into perspective, the last time the region made such a find, one over 1 billion barrels worth, was back in 1974 in the Back Ho field in Vietnam.
[B]China[/B][B], Japan, South Korea Attempt To Prevent Repeat Of 1997[/B]
Meeting in Kyoto tomorrow, officials from Japan, China and South Korea are set to meet in order to discuss the possible pooling of reserves in order to prevent massive outflows of capital. Along with 10 finance ministers from Southeast Asia, the monetary amalgamation will attempt to forge together $2.7 trillion in foreign reserves to help central banks shield themselves from another 1997 fallout, where massive restructuring plans left countries in disarray. Supported by loans of $100 billion by the IMF, countries in the region were forced to raise domestic interest rates and sell off state owned companies in order to save systems, and subsequent currencies, from utter collapse. Incidentally, the move comes as no surprise considering the amassed reserves that have swelled in the past couple of years. Notably, China?s reserves have reached $1.2 trillion, the most in the world. Subsequently, holdings have also increased to $244 billion in South Korea, and $888 billion in Japan.
[B]All Eyes On End Of May Meeting[/B]
US Treasury Secretary Henry Paulson issued further statements regarding the Chinese currency policy at an event sponsored by the Peterson Institute for International Economics this past week. Already exhibiting frustration with the current currency regime, Paulson made note of the ineffectiveness of a revaluation at this point on the country?s widening surplus. On this note, Paulson pointed to the fact that there is not a whole lot that Chinese policy makers can "do with the currency that would make a big difference.? Already raising interest rates and banking reserve requirements numerous times throughout the year, policy makers may be considering widening the currency?s trading band as the economy continues to exhibit rampant growth and inflation. According to the government?s last GDP report, the economy is churning ahead at an 11 percent pace, subsequently boosting consumer prices by a 3.3 percent annualized rate. Ultimately, further statements can be expected throughout the month, ahead of the highly anticipated trade talks, taking place during the weekend of May 22-23. Chinese Vice Premier Wu Yi, along with other delegates from the country, will be visiting Washington in hopes of establishing better trade relationships with the US following the recently applied sanctions on Chinese exports.