ARTICLE ASSIGMENT PART 01

To:

Mr. J. van Hettema Mr. A. Blootens Ms. M. van Beek

From: Class:

Nguyen Thi Nguyet IBMS DIM1VC

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Saxion Hogescholen, Saxion Universities of Applied Sciences

Student Number: 313441 Subject: Macroeconomics and Law (Course code L.MIM.4426) English 019(Course code: L.MIM.2273) Date: 27th, September, 2011

Table of Contents
1. Introduction......................................................................................................................3

2. China vows to boost European Investment...................................................................3-4

3. European Institution accelerates on soaring oil as business confidence drops .............4-5

4. European Central Bank is fighting fires on all fronts....................................................6-7

5. Conclusion ......................................................................................................................8

6. References........................................................................................................................8

7. Appendices..................................................................................................................9-16 7.1 China vows to boost European Investment...........................................................9-11 7.2 European Institution accelerates on soaring oil as business confidence drops....12-14 7.3 European Central Bank is fighting fires on all fronts..........................................15-16

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1. Introduction
In this article assignment I used three articles: China vows to boost European Investment, European Institution accelerates on soaring oil as business confidence drops and European Central Bank is fighting fires on all fronts to write the personal comment on these articles. Firstly, I was going to summarize the article, and then I was going to explain why I like it or not and what is the link between the article and the lectures Macro Economics & Law. These articles were from internet websites which are guardian.co.uk, bloomberg.com and from europe.chinadaily.com.cn.

2. China vows to boost European investment

2.1 Summary The main content of this article is a discussion about the investment in Europe. Should China increase its investment in debt-ridden Europe and urge the European Union to recognize China as a full market according to the leaderships in China. 2.2 Personal comment In general, I like this article because of its content. It is easy to understand what the author wrote about the World Economic forum in China. And it is also interesting to know if China will invest in Europe when there is a crisis in this Eurozone. I think the most important information presented by the author is to report the main content of annual meeting in Dailan, Liaoning province, China. The writer delivered the relevant evidence and accurate information because most of the content is the speech of people who joined in meeting.
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Secondly, I like this article because of its simple structure and easy to read. The author started the article with the brief content, and then she reported important speech of founder, executive chairman, chief director at the Europe Research Center of Fudan University and many other important persons in China. However, I do not perceive the conclusion or how is the final decision of the leaders in China if they will increase European investment or not. This article basically did not contain the author point of views but mostly stated what had been said by Chinese economic representation. I think this article is also helpful for me because through this article I could get some information about China that they are concerning of the European crisis. And Chinese is very carefully analysing the advantages and disadvantages if Chinese government will buy European dept. Although this article mostly presented the information of the forum Annual Meeting, it can be used for references if investment of Chinese authorities on buying bonds in Europe. That is why I will not recommend this article unless the readers just want to learn something about point of view of China in present Europe problem. In the connection to the lectures Macro Economics & Law, the article mentioned about the Investment in chapter 5 Expenditure1. China may invest their capital in Europe because China wants to help Europe. Actually, at least, in my opinion Chinese business also has benefit from this investment such as lowering the default risk. Even Chinese government invests on European market; they cannot get profit directly, so this called floating investment. I suggest that if the author can give some more detail data how China is going to solve their difficulties in European investment, it will be more interesting for the readers. For example, how is Chinese government going to deal with the barriers in the EU to Chinese company; or how are they going to prepare for the worst case scenario if Chinese government purchase the Italian treasury bonds. Actually, this article just confirmed a part of lecture in the class but did not explain deeper how is Chinese government going to invest in Europe or not. Consequently, this article did not confirm or contradict what we have learned in class, but only mentioned of a part of the lesson. Furthermore, my idea is that this article is not enough information to illustrate Chinese investment in Europe. Because it did not indicate what is the most important idea in Annual Meeting. Although the author kept the original information of the Annual Meeting, they did not supply any static data for the readers. This article may keep the readers wondering how China plans about the opportunities and threats in Europe market. Besides this, I think the article is quite helpful for me because I have learned from Chinese policy about the l consideration to enter a new economic market. It means we should analyse carefully the economic situation of companies or countries before we decide to do business with them. Also this article gave me some up-to-date information which could be necessary for studying China economic policy.

W. Hulleman, & A. J. Marijs (2008). Chapter 5 Expenditure . In Economics and Business environment. Groningen, The Netherlands: Noordhoff Uitgevers.

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Overall, it is clear to say that this article succeeded in addressing the connection between the title and content. The author made clear point of view of different Chinese business leaders. I would recommend this article as reference information.

3. European Institution accelerates on soaring oil as business confidence drops

3.1 Summary The inflation spreads fastest in Europe in two and a haft year and confidence in the economic outlook decreases. This problem was reflected on different aspects such as: German Output, Debt Crisis, Significant Sales, Wage Demands and Inflation Pressure.

3.2 Personal comments: I feel this article is very interesting and I like it very much. The title of this article was addressed clearly through every following paragraph. It gave the statistic information which persuaded the reader and explained clearly how the inflation had influenced in Europe. The authors opinion and content were easily understood. The writer had explained about how inflation negatively affected in Europe. For example: the reducing of consumer sentiment, the increasing crude-oil prices, raising the interest rates, the up surging of raw-material costs It helps me to understand deeper what the connection among these different industries is. For example, when the raw-material likes crude-oil costs raises, the price of oil or petrol will also grow accordingly. Then the people have to take care for their expenses every month which may lead to the reduction of consumption and also industry profits. If the government does not issue the solution to ease inflation, it may cause the crisis for that country. Above of this information, it would be very helpful if the author could suggest some methods to Europe for solving their troubles. Overall, the author supplied much information with specific figure; I would highly recommend this article for overview of Europe crisis at present. This article linked well to the lecture Macro Economics & Law, especially in Chapter 6, item 6.2 about Inflation2. In the class of Macro Economics, we have studied about causes and effects of inflation. And this article helped me to imagine how the real inflation looks like. For instance, the article said: crude-oil prices have soared 38 per cent in the past six months, pushing inflation above the European Central Banks 2 per cent limit and prompting policy makers to raise interest rates this month for the first time in almost three years. At the same time, higher raw-material costs are weighing on consumption and company profits reflected exactly the lecture in the class. It said: an increase in the price of raw materials and semi2

W. Hulleman, & A. J. Marijs (2008). Chapter 6 The business cycle and polycy. In Economics and Business environment. Groningen, The Netherlands: Noordhoff Uitgevers.

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finished products and an increase in profit and capital cost (interest and depreciation) 3. Or the inflation rate in Italy climbed due to the cost of energy rose. This confirmed what we have learned from class that the growing price of raw materials, semi-finished products, or increasing profit and capital are some main causes of inflation. The article also explained the consequence of inflation in Europe very detail. For instance, the unemployment increases because the company intend to replace labour by capital or invest in machinery than to employ extra staff. This confirmed what Mr. A. Blootens Macro Economics lecturer explained in class. Mr. A. Blootens gave students also some examples that the companies tend to spend their money on buying machine than hire the labour with high salary. Through this article, I understand deeper and deeper what had been discussed in class. I realized that inflation is not just as simple as I though. It can ruin the country economic development and drop the profit of exporter of the country. In my opinion this article delivered an agreeable picture of how the Europe crisis situation is. And Europe Central Bank is trying to reduce inflation pressure. After reading this article, I am quite knowledgeable about this subject and find no issue with the content. Besides this, the article is also educational because it learned us that, although the economy is developing fast, we still have to care for the consequence of it. It might contain jeopardy of an economic bubble. However, if we want to search more information, we should read also other reliable resources on internet, TV or Newspaper. In conclusion, this article can be used to illustrate the main causes and effects in Europe crisis because the author used logical structure, easy content access, and smooth writing style. I was interested in reading this article.

4. European Central Bank is fighting fires on all fronts

4.1 Summary The quarrels between Eurozone members about Greek bailout have been discussing and the warning about the world economic is swinging closer to recession. European Central Bank has to face with the protest of the other EU member about its liquidity 4.2 Personal comments: This article is quite interesting to me because its content mainly described about how the other country in Eurozone react to Greek bailout which is one of the most popular topics in Europe at present. The writer explained the concept orderly. Firstly, he mentioned his idea about the quarrel of German chancellor and French President about new options for Europe economic government. Then the reality of the development in Germany, after that he supposed some ending for Germany economy. Finally, the author of the article predicted about European
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W. Hulleman, & A. J. Marijs (2008). Chapter 6 The business cycle and polycy. In Economics and Business environment. Groningen, The Netherlands: Noordhoff Uitgevers.

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Central Bank situation have to fighting fire on all fronts. Moreover, Mr Nils-the author engaged an easily understandable writing style which makes the students who are not used to reading the article style can access most of the given information. I am quite knowledgeable about this subject and also general agreement with all the Nilss state positions and he made some good points that it is rather useful for me. For instance, after reading the article I have known that European Central Bank plays an important role in helping the Eurozone financial markets. Also, the article stated that the Greek economy is facing the most difficult situation and it influences on the other countries economies in Europe particularly and in the world generally. However, I do not agree with some points of the Author. For example, the author point of view was quite negative about the Europe Economy. It may cause a panic to people that the world is going to recession and increase the anxiety for investors in the market. This might make the economic development even worse. Secondly, in the article title had mentioned about all fronts, but I do not understand if the title was addressed or not. In my point of view, if the Author can suggest more information about the solution for quarrel in Eurozone and how the Central Bank can do to stop this fire, the reader will get the connection between the content and the title of this article easily. Overall, I would recommend this article as general information. If we want to have the clear idea about how the economic situation in Europe and the reaction of the Eurozone to Greek bailout, we should study more information through reliable source on the internet, TV news, or Newspaper To understand how is the link between the article-the lectures Macro Economics & Law, and about European Central Bank-one of the European Institutions in particular, we should know about the role of that institution. As Mr. J. van Hettema lecturer said and I also did some research which indicated that Europe Central Bank performs a very important role to keep prices stable. Especially in countries use the Euro currency. Secondly, European Central Bank purpose is to keep the financial system stable. Mr Nils author of the article wrote: the Europe Central Bank that is had provided a $500m facility to one bank4, this is a proof that The Europe Central Bank have done some actions trying to keep the Europe Economy stable. Moreover, when Greek had debt crisis, Europe Central Bank lent them money because Greek is one of European Union members. If the Greek is bankruptcy, the economy of Europe will be negatively influenced. In addition, the article confirmed about the role of European Central Bank which had been discussed during Mr. J. van Hettema lectures. Because we had discussed about how the EU Bank can interfere the Eurozone economy when it has problem. Also in this article said that The Central Bank is fighting fires on all fronts means they have to responsible for European financial market and payment system. For example, when they lent Greek money, they have to predict if Greek have ability to pay back or not. Personally, I suppose this article can be used to illustrate the role of the European Central Bank. They have difficulties to control the money supply, and meet the protest of different members in Eurozone but there is still a need for economic government to manage the European economic system. Through this article, I have learned deeper about the European
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European Central Bank is fighting fires on all fronts. http://www.guardian.co.uk/business/2011/aug/18/european-central-bank-fighting-fires.

(2011,

August

18).

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Central Bank responsibilities, and I have been awareness of recession if the leadership of the country does not take care of their management. It warned us about the risk of world recession even when it is on positive condition. So we can enrich our knowledge of Economy and find solution to prevent it before it happens.

5. Conclusion
This is my first Article Assignment about Macro Economic & Law. This is my personal comment about these articles which were mentioned in the Introduction of this assignment. This comment does not have legal validity or critique, but only for references.

6. References
China vows to boost European Investment. (2011, September 15). http://www.chinadaily.com.cn/business/2011-09/15/content_13690485.htm. European Inflation Accelerates on Soaring Oil as Business Confidence Drops. (2011, April 29). http://www.bloomberg.com/news/2011-04-29/european-inflation-quickens-on-oilbusiness-confidence-drops.html. European Central Bank is fighting fires on all fronts. (2011, August 18). http://www.guardian.co.uk/business/2011/aug/18/european-central-bank-fighting-fires.

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7. Appendices
7.1 China vows to boost European Investment
Updated: 2011-09-15 07:10 By Qin Jize and Ma Liyao (China Daily)

DALIAN, Liaoning - Premier Wen Jiabao said on Wednesday that China is ready to increase its investment in debt-ridden Europe, and urged the European Union (EU) to recognize China as a full market economy.

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Premier Wen Jiabao and Klaus Schwab, founder and executive chairman of the World Economic Forum, arrive for the opening of the forums Annual Meeting of the New Champions in Dalian, Liaoning province, on Wednesday.[Photo/China Daily]

"European countries are facing sovereign debt problems and we've expressed our willingness to give a helping hand many times. We will continue to expand our investment there," Wen said while addressing 1,500 business leaders and government officials at the opening of the World Economic Forum, known as the "Summer Davos". Wen said that he reiterated China's support to European Commission President Jose Manuel Barroso in a recent phone call. However, he added that "EU leaders and the leaders of (Europe's) major countries must look at Sino-EU relations from a strategic viewpoint. "Based on WTO rules, China's full market economy status will be recognized by 2016. If EU nations can demonstrate their sincerity several years earlier, it would be the way a friend treats a friend," he said. He said he hoped his scheduled summit meeting with EU leaders next month will lead to a breakthrough in recognition. Wen also expressed concern over the spread of the sovereign debt crisis in Europe. China sits on more than $3 trillion in foreign exchange reserves. He urged the United States and some European countries to tackle their problems properly. "Europe and the US must adopt responsible and effective fiscal and monetary policies in a bid to reduce debt pressures," Wen said during discussions with business leaders at the forum. Wen's comments came as global markets have been rocked by renewed fears that Greece will default on its debt obligations. Portugal and Ireland have also received rescue packages. There is growing speculation that Italy and Spain could follow suit. The Financial Times reported on Monday that Italy had asked Beijing to buy "substantial quantities" of its debt. Li Daokui, a professor of finance at Tsinghua University and an academic member of the central bank's monetary policy committee, said China should not blindly buy EU debt since it would only prolong difficulties in the euro zone. The purchase of Italian treasury bonds should be conditional, requires further study and China should be prepared for the worst-case scenario, he said. Ding Chun, chief director at the Europe Research Center of Fudan University, said buying bonds is a direct way to deal with the debt crisis.
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"To invest in real assets in the European market is surely a good thing for China, as it lowers the default risk while helping the EU. But there are barriers in the EU to Chinese companies," Ding said. Chen Fengying, director of the Institute of World Economic Studies under the China Institutes of Contemporary International Relations, said that the debt crisis could very likely lead to a total collapse of the euro and the European Union. "And that will end in a situation that no one wants to see - a single international financial system dominated by the US dollar," she said. She noted that that EU's biggest problem is not their huge debt and high unemployment, but lack of unity. There are now two foreseeable measures to deal with the problem, she said. The first is to let Greece go bankrupt and stabilize the euro zone, ensuring the safety of other economies, such as Italy. The second is for Germany, the largest economy in the EU, to reorganize the entire European market to tackle the crisis. "I think China should support the EU on tackling the crisis, because we'd like to see diversity in the global financial market, with the euro playing an important part," she said. The problem for the US is that it won't take any responsibility to find a way out of its debt problem, she said. The US has twice launched quantitative easing, and is likely to do it again but this only serves to shift the problem to other countries, Chen said.

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7.2 European Institution Accelerates on Soaring Oil as Business Confidence Drops

By Jana Randow - bloomberg.com Apr 29, 2011 12:00 PM GMT+0200

European inflation accelerated to the fastest pace in two and a half years and confidence in the economic outlook declined as surging energy prices threatened to undermine growth. Inflation in the 17-nation euro region quickened to 2.8 percent in April from 2.7 percent, the European Unions statistics office in Luxembourg said today in an initial estimate. Economists had expected inflation to remain unchanged, according to the median of 34 forecasts in a Bloomberg News survey. An index of executive and consumer sentiment slipped to 106.2 from 107.3 in March, the sharpest drop since May 2010, and unemployment held at 9.9 percent, separate reports showed. Crude-oil prices have soared 38 percent in the past six months, pushing inflation above the European Central Banks 2 percent limit and prompting policy makers to raise interest rates this month for the first time in almost three years. At the same time, higher raw-material costs are weighing on consumption and company profits, just as governments across the region cut spending to narrow budget deficits. The inflation numbers support the view that the ECB will deliver another interest rate hike before long, said Aline Schuiling, senior economist at ABN Amro Bank NV in Amsterdam. Growth was exceptionally strong in the first quarter, but will slow from here. The labor market is still very sluggish and paired with inflation thats not good for purchasing power. German Output The euro was little changed after the data were released, trading at $1.4867 at 11:31 a.m. in Brussels, up 0.2%.
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European services and manufacturing growth unexpectedly accelerated in April, driven by higher output in Germany and France, the regions largest economies. Still, European investor confidence declined as faster inflation and higher interest rates may hurt the recovery. Euro-region growth will slow to 1.6 percent this year from 1.8 percent in 2010, the European Commission forecast last month. A gauge of sentiment among euro-region manufacturers slipped to 5.8 in April from 6.7 in the previous month, the European Commission said today. Services confidence dropped to 10.4 from 10.8 and an index of consumer confidence eased to minus 11.6 from minus 10.6. Sentiment among builders rose to minus 24.2 from minus 25.4. Debt Crisis Capacity utilization rose to 81.3 percent in the second quarter from 80.3 percent in the previous three months, the commission said. As governments from Ireland to Spain cut spending to contain a sovereign debt crisis, eroding consumer and investment spending, European companies have relied on fastergrowing markets to bolster sales. Volkswagen AG (VOW), Europes biggest automaker, this week reported record operating profit in the first quarter on stronger demand from China. An indicator of manufacturers export order books jumped to 0.6 from minus 0.7 in March while a gauge of production expectations slipped to 15.7 from 17.9. Companies confidence in their ability to hire workers eased, with a gauge of employment expectations dropping to 7.2 from 8.6. About 15.6 million people were unemployed in March, down 9,000 from the previous month, todays report showed. In the 27- nation EU, unemployment remained at 9.5 percent. At 20.7 percent, Spain had the highest jobless rate and the Netherlands the lowest, with 4.2 percent. Nine EU member states reported a drop from a year earlier, while four had an increase in unemployment. Significant Sales Closely held automotive supplier ZF Friedrichshafen AG plans to create 5,000 jobs by the end of this year, including 2,000 in Germany, on expectations of significant sales and profit growth, Chief Executive Officer Hans-Georg Haerter said on April 21. Puma AG, Europes second-largest sporting-goods maker, is targeting revenue of 3 billion euros ($4.5 billion) after first- quarter profit rose 7.2 percent, the Herzogenaurach, Germanybased company said on April 26. Puma will raise prices in the fourth quarter to adjust for higher raw-material costs, Chief Executive Officer Jochen Zeitz said. An indicator measuring households assessment of price developments over the coming 12 months remained close to the highest level in almost three years, easing to 30.7 from 30.8, the commission said. A gauge of consumers willingness to spend on big-ticket items dropped to minus 25.4 from minus 24.1 and households grew less confident in their ability to
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save money. A gauge of euro-region manufacturers selling-price expectations slipped to 21.5 from 24.4. Wage Demands ECB officials are worried that workers will demand higher wages in compensation for rising costs. Germanys Ver.di services union seeks 6.5 percent more pay for workers in the state of North Rhine-Westphalia, the countrys most populous. Spanish inflation accelerated to 3.5 percent in April from 3.3 percent and retail sales plunged, just as the government is trying to steer Europes fourth-largest economy back to growth.Spain will unveil a crackdown on underground employment in an effort to shrink one of the regions largest shadow economies, bolster tax revenue and reduce the Europe Unions highest jobless rate. The inflation rate in Italy, the euro regions third- biggest economy, climbed in April to 3 percent, the highest in more than two years as the cost of energy rose. Inflation Pressure At their May 5 meeting, the ECBs Governing Council will have to weigh threats to economic growth with the risks of faster inflation and decide whether to signal an interestrate increase in June. The Frankfurt-based central bank last month forecast euro-region inflation to average about 2.3 percent this year and 1.7 percent in 2012. The ECBs benchmark rate is still too low in light of economic growth and inflation expectations, Andrew Bosomworth, a fund manager at Pacific Investment Management Co., wrote in a guest commentary for Germanys Boersen-Zeitung yesterday. The ECB has to raise interest rates higher than markets expect to damp increasing inflation pressure in the euro region. Economists forecast two more quarter-point increases in the ECBs benchmark rate to 1.75 percent this year, the median of 29 forecasts in a Bloomberg News survey shows. Eurostat will release a breakdown of April consumer prices including core rates excluding volatile costs on May 16. To contact the reporter on this story: Jana Randow in Frankfurt at jrandow@bloomberg.net To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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7.3 European Central Bank is fighting fires on all fronts

The ECB needs the eurozone to stop quarrelling over the Greek bailout with US manufacturing weak and recession looming

Nils Pratley guardian.co.uk, Thursday 18 August 2011 20.16 BST Article history

Germany's chancellor Angela Merkel, Greece's PM George Papandreou, and France's president Nicolas Sarkozy. Photograph: Yves Herman/Reuters

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Let's face it, another drop in investor confidence and another lurch downwards in stock markets, had been coming. The contributors were important: a weak report from US manufacturers; a quarrel between eurozone members over collateral to be used in the Greek bailout; and a warning from Morgan Stanley that the world is veering dangerously close to recession. But these worries are all underpinned by the sense that policymakers still haven't grasped the severity of the crisis. The big fightback on Tuesday by German chancellor Angela Merkel and French president Nicolas Sarkozy was presented as a major shift in thinking. In one sense it was a new "economic government" for Europe, imposing budget disciplines on member states, sounds terribly important (if other countries agree to sign up: no guarantees there). But it would have been more useful 10 years ago, before the debts were racked up and before southern Europe became uncompetitive with the north. Last year's great hope was that growth in Germany would stir demand for goods from Spain, Italy and elsewhere; this year's reality is that even the German economy is in danger of stalling. Investors can see only two possible endings. Either Germany finds a way to underwrite the debts of the eurozone stragglers and thereby attempts to kick-start growth or it leaves the single currency. Until that choice is made businesses, consumers and investors don't know which way to jump. Naturally, these tensions are now showing up in the banking system, where most of the sovereign debt is held. Perhaps the main factor behind the market chaos was the disclosure by the European Central Bank that it had provided a $500m facility to one bank. Are US banks becoming fearful of providing dollars to their eurozone counterparts? If so, the ECB's promise to provide ample liquidity to the system will be tested. The central bank now finds itself fighting fires on all fronts. Worryingly, even as yields on US, UK, German and French 10-year bonds plunged again, those of Spanish and Italian bonds were moving in the opposite direction. The ECB needs the eurozone's politicians to make its life easier.

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