World Bank warns of Greenback's declining role in global finance

(NYT) WASHINGTON — The president of the World Bank said on Monday that America’s days as an unchallenged economic superpower might be numbered and that the dollar was likely to lose its favored position as the euro and the Chinese renminbi assume bigger roles.

Zoellick

“The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency,” the World Bank president, Robert B. Zoellick, said in a speech at the School for Advanced International Studies at Johns Hopkins. “Looking forward, there will increasingly be other options to the dollar.”  Mr. Zoellick, who previously served as the United States trade representative and as deputy secretary of state under President George W. Bush, said that the euro provided a “respectable alternative” for financing international transactions and that there was “every reason to believe that the euro’s acceptability could grow.”  In the next 10 to 20 years, he said, the dollar will face growing competition from China’s currency, the renminbi. Though Chinese leaders have minimized their currency’s use in international transactions, largely so they could keep greater control over exchange rates, Mr. Zoellick said the renminbi would “evolve into a force in financial markets.” 

‘The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency.’  -World Bank president, Robert B. Zoellick

The World Bank, which is financed by governments around the globe and lends money primarily to poor countries, has no say over the economic policies of large nations or over currency matters.  But Mr. Zoellick’s comments were unusual, in part because he seemed intent on being provocative. He argued that the United States and a handful of other rich nations could no longer dominate the world economy and suggested that America was losing its clout. He also took issue with a central piece of the Obama administration’s proposal regarding the country’s financial regulatory system.

“The greenback’s fortunes will depend heavily on U.S. choices,” Mr. Zoellick said. “Will the United States resolve its debt problems without a resort to inflation? Can America establish long-term discipline over spending and its budget deficit?”  Read more here.

LA Times:  The Twilight of ‘Pax Americana’..??

China's African strategy for oil resources

In yet another example of its increasingly competitive global strategy, China is shopping aggressively for commodity resources in the Dark Continent.  If you’ve kept up to date as I try to with China’s oversea investments in the African continent’s commodity and energy sectors you’re probably aware of the fact China has been shopping for commodities in emerging markets. Africa, and to a lesser extent South America, have been the primary beneficiaries of China’s FDI dollars between 2000-08. The two continents are home to abundant supplies of natural resources that China needs to sustain its robust economic growth. The two continents are also home to various countries that are hungry for foreign direct investment in their commodity sectors which until recent had been the main fuel behind their respective economics booms.

Under China’s foreign policy principle of ‘no political strings attached,’ China’s trade with the continent has no hidden ideological agenda. China and most Africa nations share the view that countries should not meddle in each other’s affairs. They have acknowledged that they can achieve common development only through cooperation based on mutual trust and mutual benefit. The pursuit of their own interests has brought them closer. Economic cooperation between the two sub-continents has grown at a robust pace. And China has stated its ambitions to move its trade with Africa to top $100 billion by 2010. That’s why this piece from today’s Financial Times of London is so interesting:

Lagos (FT) — A Chinese state-owned oil company is in talks with Nigeria to buy large stakes in some of the world’s richest oil blocks in a deal that would eclipse Beijing’s previous efforts to secure crude overseas. The attempt could pitch the Chinese into competition with western oil groups, including Shell, Chevron, Total and ExxonMobil, which partly or wholly control and operate the 23 blocks under discussion. Sixteen licenses are up for renewal.

CNOOC, one of China’s three energy majors, is trying to buy 6bn barrels of oil, equivalent to one in every six barrels of the proven reserves in Nigeria, sub-Saharan Africa’s biggest crude producer and a major supplier to the US.

FT Editor’s Choice

Nigeria feels pull from east and west - Sep-28

Energy Source: The unanswered questions - Sep-28

In depth: Africa – China – Oct-25

Details of the talks were revealed in a letter from the office of Umaru Yar’Adua, Nigeria’s president, to Sunrise, CNOOC’s representative, a copy of which was obtained by the Financial Times. The overall value of the Chinese offer is not disclosed, although some details suggest a figure of about $30bn. Some oil sector executives said the total on the table was $50bn. A spokesman for Mr Yar’Adua said: “Negotiations are ongoing not only with Sunrise/CNOOC but also with all other stakeholders in the industry. The federal government has not taken any final position on the issue.”

The letter, dated August 13, said an initial offer was “unacceptable” but added: “Your interest in all the listed blocks will be considered if your revised offer is favourable.”  Details of how the Nigerian government would allocate equity in the blocks to CNOOC have yet to emerge and it is unclear whether this would involve forcing western groups to relinquish stakes.  Read more here.

U.S. Foreign Policy and the Global Economy: a 'New Era of Engagement'

Echoing the theme and concept of the Global Markets & Foreign Policy blog, ‘The Caucus,’ the New York Time’s political blog, in honor of the opening plenary session of the United Nations’ (UN) General Assembly is featuring a blog page titled Foreign Policy and the Global Economy.  It’s an interesting read. 

‘[W]hen a superpower becomes an agent of change—in word and deed, in policy and tone…we are demonstrating that the United States is willing to listen, respect differences, show mutual respect and consider new ideas from nations large and small. Even more importantly, we are advancing our interests and making Americans safer.’  

                                       –United States  UN Ambassador, Susan E. Rice

The blog covers largely the main points President Obama will address as he attempts to re-establish the U.S. to a position of global leadership through a set of initiatives titled ‘A New Era of Engagement’ with the world introduced earlier this year by his U.N. Ambassador, Susan E. Rice.  The Caucus blog also covers — or attempts to — the various global markets and economic foreign policy issues facing leaders of nations in attendance at this session of the UN General Assembly. Among the topics high on the Economic Foreign Policy agenda are:

• Economic Imbalances resulting from the Global financial crisis
• Agreeing on a global framework for financial regulatory reforms
• Threat of Economic Nationalism (Protectionism) among nations
• Globalization and the Doha Round of WTO talks 
• Coordinating Cap & Trade climate change policy
• The threat of a severe period of global inflation
• Framework for global labor standards

President Obama called on big developing powerhouses like India and China to commit to “strong measures” to combat climate change around the world, saying that rich countries which have contributed to much of the world’s global warming cannot fix the problem alone.

 “Yes, the developed nations that caused much of the damage to our climate over the last century still have a responsibility to lead,” Mr. Obama said, speaking before a United Nations summit on climate change that is being held on the outskirts of the opening of the General Assembly. “And we will continue to do so — by investing in renewable energy, promoting greater efficiency, and slashing our emissions to reach the targets we set for 2020 and our long term goal for 2050.” But then, without specifically naming them, Mr. Obama shifted the onus on to India and China. “Those rapidly growing developing nations that will produce nearly all the growth in global carbon emissions in the decades ahead must do their part as well,” he said. “They need to commit to strong measures at home and agree to stand behind those commitments just as the developed nations must stand behind their own. We cannot meet this challenge unless all the largest emitters of greenhouse gas pollution act together. There is no other way.”

As he spoke, Chinese Premier Hu Jintao sat in the front row with his delegation, listening. Mr. Obama, speaking in the cavernous hall at the United Nations, was the headline speaker in a disparate program put together by U.N. Secretary General Ban Ki Moon, which spanned . . .

Read more here.

Source:  www.unausa.org, Photos: NYTs Caucus blog; www.unausa.org

Don’t know who’s heading the Brazilian delegation..?? How the U.S. plans to face down challenges to President Obama’s import tariffs..??  Or what China really wants out of the Pittsburgh summit? We’ve got you covered.

BOSTON — The world is coming to Pittsburgh. Twenty countries (well, if you count the European Union as a single entity) and 20 delegations. That’s a lot of names, faces and political priorities to keep straight.

But don’t worry. Here’s our interactive guide to surviving the Pittsburgh 2009 G20 summit, put together by our friends at GlobalPost’ – affiliated bloggers and well-informed correspondents in the field worldwide. 

Read more from our friends at GlobalPost here.

Also, Huffington Post is reporting that a fresh threat of Protectionism is the most pressing concern being expressed by various leaders of G-20 nations. 

As economies escape the grips of recession, the pressure to work together appears to be lessening. National economic self-interest [i.e., Economic Nationalism] is reasserting itself. That includes a desire to protect battered home industries from overseas competition as governments look toward the day when they can dial back stimulus measures.

Read more here.

See video: Pittsburgh G-20 Summit: The Basics

Source: World Affairs Council of Pittsburgh video

Photo: www.globalpost.com/commerce

Will trade and finance globalization require world-wide Central Bank..??

When the finance ministers and central bankers of the world’s 20 largest economies gather in Pittsburgh on Sept. 24, they can congratulate themselves for averting a 1930s-type meltdown. But nothing the G-20 has done, or is likely to do, will prevent or substantially moderate the next global crisis. That will require deep-seated, global financial reforms. And for such change to take root, something else will be needed: the establishment of a global central bank.

I can hear the howls of critics. World Government! A Conspiracy of Bankers! In the U.S. Congress the aversion to such an institution would make the dogfight over health care look like a genteel dinner party. So right now there is zero chance that the U.S.—and other countries, such as China, that zealously guard their sovereignty—would support the idea. But if critics could suspend the hyperventilating for a few minutes, they’d realize a global central bank is becoming a necessity in today’s complex, interconnected world economy.

Why? Think about the responses to previous financial meltdowns—the Latin American debt crisis of the 1980s, the Asian financial crisis and the collapse of Long-Term Capital Management in the 1990s, the Internet stock implosion early in this decade. Following each crisis, governments promised to create new rules and institutions—a fresh “financial architecture,” in the parlance of pundits. But little was done. As a result, each successive crisis has been worse than the last. Each has involved more countries and asset classes. Each has been more globally synchronized. Each has more clearly shown that private financial institutions compete too fiercely for markets and profits to regulate themselves. Bottom line: The cost of failing to implement a global structural response—the lost economic growth, the lives destroyed—has escalated dramatically.

At the heart of this reality is a simple fact: Governmental oversight remains national, while financial institutions are more globally intertwined. No top official denies this dichotomy. Jean Claude Trichet, president of the European Central Bank, recently bemoaned the lack of international coordination needed to manage the “deeply integrated global economy.” U.S. Treasury Secretary Timothy Geithner warned that “we need a common global solution to these markets, not separate regional solutions.”

As the current credit crisis has shown…  Read more here.

Source: BusinessWeek,  by Jeffrey E. Garten;

Photo: www.prisonplanet.com (Feb 2009)

G-20 to confront global economic imbalance created by financial crisis

Pittsburgh, PA will host the next G-20 Summit slated for Thursday & Friday, September 24-25th, 2009.  President Obama will chair this meeting of leaders from countries around the world who represent 85%  of the global economy.  At the Pittsburgh G-20 Summit, leaders will review the progress made since the  London Summits and discuss further actions to assure a sound and sustainable recovery from the global financial and economic crisis.  According to today’s Financial Times of London (FT), the global economic imbalances between nations resulting from the global financial crisis will be front and center on the agenda.  An interesting debate with economic foreign policy implications is brewing between high-consumption (e.g., U.S., UK, Germany) and high- savings nations (China, India, Japan). The push on global imbalances is motivated in part by the US belief that high savings rates in emerging economies with export-led growth models helped to foster the financial crisis by creating a global savings glut that depressed borrowing costs and induced excessive borrowing by US consumers. That assessment is contested by officials from high-savings nations, who argue that the problem lay in the misallocation of abundant global capital by mismanaged and badly regulated financial sectors in New York and London.

FT EDITOR’S CHOICE

G20 nations break ‘No Protectionism’ vows - Sep 14

G20 calls for better capital buffers at banks - Sep-06

In depth: G20 - Sep-04

But it is still unclear how far China and other trade surplus nations will be willing to go, and whether the G20 as a whole really is ready to submit to meaningful global policy co-ordination.

“We hope to reach agreement on a framework for balanced growth, for agreeing on how to address the imbalances that led to this crisis and on some process for holding each other accountable,” Michael Froman, deputy national security adviser for international economics, told reporters yesterday.

One idea – promoted by some European governments – is for the G20 to establish a high-level task force of senior officials from the major economies to co-ordinate a global push to reduce imbalances, with support from the International Monetary Fund. The IMF held so-called multilateral consultations on global imbalances before the crisis, but without strong political backing the discussions led nowhere.

Read more from FT here.

One Stop Regulatory Shop..??

I have written before that Sheila Bair, Elizabeth Warren and Eliot Spitzer are among the smartest and most out-spoken policymakers on how we need to restructure the regulatory frame work of the nation’s financial system and banking industry.  In fact I think either one would be a tremendous improvement as Secretary of the Treasury as a replacement for Tim Geithner, who, in my humble opinion, is an industry tool.   

FDIC Chair Bair

In a terrific New York Times Op-Ed piece, Sheila Bair, the Chair of the Federal Deposit Insurance Corporation (FDIC) outlines a compelling litany of reasons why the Obama administration’s proposed changes, while good in many respects, does not sufficiently address the issues that caused the current – or will prevent future – financial sector crises.  In her editorial, Bair said she supports “key pillars” of the plan, like the national bank regulator and consumer agency, but thinks lawmakers who advocate just one, central regulator are taking it too far, and too cozy with the Wall Street and Bank industry lobby. She blamed the financial crisis on banks taking advantage of regulatory loopholes and using exotic financial products that also fell between the regulatory cracks. I think she has a strong points and legitimate concerns. 

I also admire her, integrity, independence and willingness to stand her ground and to maintain the need to enforce market discipline on ‘too big to fail’ companies. See videoInterestingly Sheila Bair, a Republican originally appointed by Bush 43, but re-appointed by President Obama as FDIC Chair is from, of all places, Independence, KS and was also one of only few regulators who openly opposed the deregulation fervor of fellow Republicans such as former Texas Senator, Phil Gramm, during the 106^th Congress (2000-2001).

——–

By SHEILA C. BAIR

NYT, August 31, 2009 – The Obama administration has proposed sweeping changes to our financial regulatory system. I am an active supporter of the key pillars of reform, including the creation of a consumer financial protection agency and the administration’s plan to consolidate the supervision of federally chartered financial institutions in a new national bank supervisor. This consolidation would improve the efficiency of federally chartered institutions while not undercutting our dual system of state and federally chartered banks.

But some are advocating even more drastic changes, like the creation of a single regulator for all banks (and bank holding companies). We clearly need to streamline the system, but a single regulator is not the solution. Calls for consolidation beyond the administration’s plan fail to identify the real roots of last year’s financial meltdown. The truth is, no regulatory structure — be it a single regulator as in Britain or the multi-regulator system we have in the United States — performed well in the crisis.

The principal enablers of our current difficulties were institutions that took on enormous risk by exploiting regulatory gaps between banks and the non-bank shadow financial system, and by using unregulated over-the-counter derivative contracts to develop volatile and potentially dangerous products. Consumers continue to face huge gaps in personal financial protections. We also lack a credible method for closing large financial institutions without inflicting severe collateral damage on the economy.

The creation of a single regulator for all federal- and state-chartered banks would not address these problems. Rather, it would endanger a thriving, 150-year-old banking system that has separate charters for federal and state banks. Within this system, state-chartered institutions tend to be community-oriented and very close to the small businesses and consumers they serve. They provide loans that support economic growth and job creation, especially in rural areas. Main Street banks also are sensitive to market discipline because they know that they’re not too big to fail and that they’ll be closed if they become insolvent.

Concentrating power in a single regulator would inevitably benefit the largest banks and punish community ones. A single regulator’s resources and attention would be focused on the largest banks. This would generate more consolidation in the banking industry at a time when we need to reduce our reliance on large financial institutions and put an end to. . .

Read more here.

Web Resources:

Sheila Bair is on your side

Sheila Bair for Treasury Secretary

Sheila Bair & the CFTC

The Obama administration’s regulatory overhaul plan would incorporate the Office of the Comptroller of the Currency and the Office of Thrift Supervision – both of whom have a reputation of regulatory incompetence after its handling of IndyMac — into one national bank supervisor. The FDIC would then handle state-chartered banks and the Federal Reserve would act as a broader referee of sorts, overseeing the largest institutions and monitoring systemic risk. This last point leaves wide open legitimate concerns that the Federal Reserve would remain victim to regulatory arbitrage and influence peddling by Wall Street and the Banking industry lobby. A separate consumer-protection agency would also be created under the President’s plan. Bair insists that Wall Street and big banks in the U.S. be held accountable in their role in causing the financial crisis; and, she argues, that market discipline should be enforced to prevent future reckless risk-taking, and that financial institutions that are too big to fail, are simply too big and pose an inherent risk to our financial system. I think she’s right.

Why Africa matters to American mational interests

Every so often the Rev. Jesse Jackson makes a few notable and insightful comments. His most recent HuffPo article about ‘Why Africa Matters’ is one of those moments. I have postulated in the past that as the demographics of the nation evolves, so too will our foreign policy and international relations voice, values, interests, priorities and objectives change. We’ve seen that most recently in how this president chooses to engage the world.  Some call it “smart power” or “public diplomacy” as a paradigm shift.  Other’s most recently have framed these changes in terms of ‘The End of Macho‘ or a decline in the underlying paradigms of the Anglo-American or Eurocentric male dominance ethos in framing foreign policy issues and international relations.  The sharp contrast, for instance, between George Bush – a semi-literate, go-it-alone, blue-blood, poker playing, red-meat eating, “macho” Texan; and Barack Obama – a bi-racial, up from the bottom, community organizing, consensus building, wine-sipping, intellectually nuanced, constitutional law teaching, internationalist from the South side of Chicago by way of Hawaii are excellent example of how demographic changes “shift” foreign policy values and priorities.

Further our U.N. Ambassador Susan E. Rice and State Department Secretary, Hillary Clinton’s recent roll-out of the Obama Administration’s view of U.S foreign policy called for a ‘New Era of Engagement‘ with the world based on common values, shared interests and mutual respect.  Similarly, the development of official government websites such as America.gov that conveys the America we aspire to as a nation.

Despite the impact of the global economic crisis, GDP growth in Africa has declined from a robust 6.0% in 2007 to 5.1%  in 2008, and is expected to be 2.6%  in 2009 and then a rebound in 2010 based on World Bank estimates. And according to 2008 figures from the World Bank and the African Development Bank, global trade with Africa is approximately $500Bn, while the trade and economic potential of the continent is twice that amount at $1 Trillion.  The U.S. – largely driven by AGOA – accounts for only $66Bn of that amount, while Europe and increasingly China, South Asia and Brazil driving 80% of the remaining trade and commerce with the African continent. In addition, unbeknownst to most, Africa has joined the ‘space race’ led by the continent’s two economic powers; and several nations are developing close military ties with China and India which will help to fuel the emergence of future markets for military and technological commerce – directly competing with U.S. leadership in that market.

Further, non-traditional, but still every bit quintessentially American interests representing hundreds of billions in business, technology, entertainment, faith-based, professional sports, agricultural, food distribution and charitable interests increasingly owned or controlled by Native and African Americans, Latinos, East and South Asian Americans, and women need to have a voice in the development and execution of U.S. foreign policy as a bridge to expanding our national interest into new and interesting places that may pave the way for better relations with the rest of the world – not to mention increasing our global competitiveness and expanding national GDP.  Is anyone listening..??

—–

From HuffPo, Rev. Jesse L. Jackson –

We ignore Africa at our peril.

Africa Matters

In vital resources — oil, copper, diamonds, gold, timber and more — the continent is rich beyond imagination. Indeed, Africa is more breadbasket than basket case. The United States is projected to import some 25 percent of its oil from Western Africa in the coming years.  While the U.S. media pays Africa little attention, the Chinese leads by far in the mad dash for a share of the continent’s natural treasures. Using some of the money it makes in trade with the U.S., China is investing heavily across Africa, building highways, hotels, bridges and dams, seeking to lock up long term access to resources and the good will of African leaders. The United States is way behind.

The African continent will only become more important in the future. The whole world has a stake in what happens there. For decades, Africa was little more than a pawn in the Cold War, before that the playing field of competing imperialist nations. Now it is a key geographic territory in the fight against terror after al-Qaida blew up embassies in Somalia and Kenya. The continent’s mineral resources reinforce its strategic importance. 

 That is why I recently spent five days in Cote d’Ivoire, meeting with its current President and opposition leaders and addressing youth groups and religious figures, as the West African nation prepares for a crucial Presidential election on Nov. 29 — a day that will go a long way in determining the future of democracy in the region.  For most of its 49-year history as an independent nation, Cote d’Ivoire has been a shining light of a dimly viewed West Africa. Politically stable, culturally tolerant and economically vigorous, Cote d’Ivoire was and is a regional powerhouse. As one U.S. Embassy official described the nation of 18 million people to me, Cote d’Ivoire was to its neighbors what the United States is to Mexico and Central America. “This is where people went to find work,” the official said. “If this economy gets shut down you will see a dramatic impact on the entire region.”  Cote d’Ivoire produces 40 percent of the world’s coco and is a major exporter of bananas, coffee, cotton, palm oil, pineapples, rubber, timber and tuna. In recent years, according to U.S. Embassy figures, petroleum exports have risen significantly, and petroleum is now the country’s largest foreign exchange earner.  As I toured its sprawling port — the second largest in Africa — I saw five cargo ships loaded with fruit and vegetables headed to Europe. Abidjan, its biggest city once known as “Little Paris,” was a popular destination for tourists from the United States and Europe for years.

That was my message as I met separately with President Laurent Gbagbo and leaders of the two opposition parties who are vying for the Presidential Palace. I had a long and fruitful discussion by phone with Henri Konan Bedie, a former president running for his old job, and I sat down with representatives of Alassane Ouattara, who was out of the country, seeking medical treatment in Paris.

As I made clear whenever and to whomever I spoke, I was there not to support a candidate but to support the process of democracy. In addressing a pan-African youth conference and a meeting of Muslim and Christian religious leader I asked the people and the candidates to agree to three basic principles.

Number one: Campaign diligently and fairly.

Number two: Use the language of reconciliation and not destruction.

Number three: Publicly pledge to support the winner.

Susa E. Rice, US Amb. to the United Nations

I took note with great interest an announcement by U.S. Ambassador to the United Nations, Susan E. Rice that appeared on the Obama Administration’s White House.gov blog (www.whitehouse.gov).  Ambassador Rice, outlined the administration’s purpose and goal in the speech that was delivered later in the day at NYU’s Center for Global Affairs, and has been termed by the Administration a ‘New Era of Engagement’ with the world. Finally, it seems we have a President whose first instinct, in the face of an international crisis, is to resist the impulsive urge to blow the shizzle out our enemies as the first solution.  In the letter Amb. Rice also noted:

Everyone notices when a superpower becomes an agent of change—in word and deed, in policy and tone. We are demonstrating that the United States is willing to listen, respect differences, and consider new ideas. Even more importantly, we are advancing our interests and making Americans safer.

Today, as we steer a new course at the United Nations, our guiding principles are clear: We value the UN as a vehicle for advancing U.S. policies and universal rights. We work for change from within rather than criticizing from the sidelines. We stand strong in defense of America’s interests and values, but we don’t dissent just to be contrary. We listen to states great and small. We build coalitions. We meet our responsibilities. We pay our bills. We push for real reform. And we remember that, in an interconnected world, what’s good for others is often good for America as well.

Specifically, this development carries with it numerous implications with regard to our nation’s economic foreign policies and the myriad international relations emanating from it.  Amb. Rice noted, for example, that “We cannot champion important U.N. missions in Iraq and Afghanistan and then oppose the budgets to fund them.”  Further, she said the world body is “essential to our efforts to galvanize concerted actions that make Americans safer and more secure and as a vehicle for advancing US policies and universal rights.”

While US leadership is needed to tackle global challenges like nuclear proliferation, the financial crisis, mass atrocities, climate change and drug trafficking, “it is rarely sufficient,” said Rice, who has cabinet rank. She urged instead the effective cooperation of a broad range of friends and partners. Other countries, Rice added, “will likely shoulder a greater share of the global burden if the United States leads by example, acknowledges mistakes, corrects course when necessary, forge strategies in partnership and treats others with respect.”

Noting that in the age of globalization, troubles affecting fragile nations can menace strong ones, she made a call “to grow the ranks of capable, democratic states… that can deliver on both their international responsibilities and their domestic responsibilities to their own people.”

Adding that “We are demonstrating that the United States is willing to listen, respect differences and consider new ideas” with global partners.  “There is no substitute for the legitimacy the UN can impart or its potential to mobilize the widest possible coalitions,” Rice said in outlining President Barack Obama’s new diplomatic priorities, including a commitment to work constructively with nations large and small.

Read more here. . . 

Source: AFP newswire with reporting by Gerard Aziakou. 

Americans in China

The New York Times featured an interesting article in today’s paper spotting a trend that more college graduates and corporate professionals are flocking to China in search of greener pasteurs for their careers. It’s thought-provoking and something even I might consider. . .

BEIJING — Shanghai and Beijing are becoming new lands of opportunity for recent American college graduates who face unemployment nearing double digits at home.

Even those with limited or no knowledge of Chinese are heeding the call. They are lured by China’s surging economy, the lower cost of living and a chance to bypass some of the dues-paying that is common to first jobs in the United States.  “I’ve seen a surge of young people coming to work in China over the last few years,” said Jack Perkowski, founder of Asimco Technologies, one of the largest automotive parts companies in China.

“I didn’t know anything about China,” said Mr. Stephens, who worked on market research and program development. “People thought I was nuts to go not speaking the language, but I wanted to do something off the beaten track.”

Two years later, after stints in the nonprofit sector and at a large public relations firm in Beijing, he is highly proficient in Mandarin and works as a manager for XPD Media, a social media company based in Beijing that makes online games.

Jonathan Woetzel, a partner with McKinsey & Company in Shanghai who has lived in China since the mid-1980s, says that compared with just a few years ago, he was seeing more young Americans arriving in China to be part of an entrepreneurial boom. “There’s a lot of experimentation going on in China right now, particularly in the energy sphere, and when people are young they are willing to come and try something new,” he said

And the Chinese economy is more hospitable for both entrepreneurs and job seekers, with a gross domestic product that rose 7.9 percent in the most recent quarter compared with the period a year earlier. Unemployment in urban areas is 4.3 percent, according to government data. 

Read more here…