TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issue manager
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While the China-US monthly trade surplus has reached a record, a new US Fed study shows that China shares little of the blame for America’s economic malaise
Tom Holland
12 August 2011
Much of the world might be running scared at the prospect of an economic slowdown, but earlier this week China announced that its exports climbed to an all-time monthly record of US$175 billion in July.
Shipments to the United States were especially buoyant, reaching a record US$30 billion, even as American exports to China stagnated. As a result, China’s monthly trade surplus with the US hit a record US$21 billion, according to figures from China’s customs authority.
In reality, however, that figure certainly understates the true magnitude of the trade imbalance between the two countries, because trans-shipments bound for the US via Hong Kong are not included.
Given that China’s own data typically understate the size of its trade with the US by slightly more than a third, we can estimate with a fair degree of confidence that the real size of China’s surplus with the US in July was actually closer to US$33 billion (please see the first chart).
The sheer size of this surplus, and its continued expansion, looks set to create friction with the US on two separate fronts. First, it will intensify US demands on Beijing to allow the yuan to strengthen more rapidly. Even though the Chinese currency has appreciated against the US dollar by 6 per cent over the last 12 months - and 0.6 per cent in the last few days (see the second chart) - lobby groups in Washington continue to insist that the yuan is undervalued by almost 30 per cent, a mispricing that angry Congressmen complain has cost more than a million American jobs.
Second, the ubiquity of Chinese products in US shops is stoking fears that China is exporting its own domestic inflation to America in the form of more expensive exports - and that yuan appreciation will only exacerbate the problem.
On closer examination, however, it is clear that both of these sources of friction have been greatly exaggerated. A new study by no less an authority than the Federal Reserve Bank of San Francisco indicates that the effect of Chinese imports on both US jobs and US inflation is much smaller than it appears at first glance.
To get a handle on the importance of Chinese imports in the US economy, Galina Hale and Bart Hobijn of the San Francisco Fed examined how much US consumers spend on imported goods in general and on imports from China in particular.
Their results are an eye-opener. Given that two-thirds of US personal consumption expenditure goes on services, and that almost all services are produced domestically, imports make up only a small proportion of US consumer spending.
Very small: in fact most consumer goods - two thirds of durables and three-quarters of non-durables - are produced at home too. As a result, just 11.5 per cent of what US consumers spend goes on imports.
And relatively few of those imports come from China. Believe it or not, items with “made in China” stickers captured just 2.7 per cent of US consumer spending last year. The most popular Chinese products were clothes and shoes, capturing about 36 per cent of what US consumers spent on things to wear.
Next came furniture, household appliances and consumer electronics, where Chinese-made products captured 20 per cent of expenditure (compared with 60 per cent for US-made items). However, even these figures exaggerate the true extent of US spending on imports from China. That’s because only a small proportion of the sticker price ever finds its way back to the Chinese manufacturers.
This low spending on Chinese imports by US consumers has two major implications. First, it means US accusations that the under-valuation of the Chinese yuan has cost more than a million American jobs look wildly over-blown, especially as most US spending on Chinese imports goes on low-margin shoes and clothes that would certainly be imported from elsewhere if they didn’t come from China.
Second, it means that the impact of Chinese inflation and yuan appreciation on the US consumer inflation rate are negligible. Even if they were passed on to the US consumer - which they haven’t been - 6.5 per cent Chinese inflation and six per cent yuan appreciation would have added just 0.2 per cent to the cost of US consumers’ shopping baskets.
As usual US complaints about China’s exports simply do not stand up to scrutiny.