China-Bashing Lets EU Embrace Jekyll and Hyde: Cutting Research

European countries adopting a “Jekyll and Hyde” strategy toward China have a greater chance of winning more exports to the world’s fastest-growing major economy, according to University of St. Gallen economists.

Nations that pushed the European Union to probe China for product dumping later secured greater trade with the country, the study said.

The biggest complainers in the last decade were France and Germany, with 51 protests, followed by Italy with 41, according to Simon J. Evenett, the lead author. France, the Netherlands and Spain would all have seen their share of exports to China reduced had they not so frequently complained about the nation’s trade practices, the report said.

At the same time, the number of trade missions and visits by government ministers to China also yielded a positive result in terms of exports, the paper said. Trips by French and Luxembourg officials raised their countries’ share of exports sent to China by one-tenth and one-sixth respectively, according to the analysis of trade data.

“Running to Brussels to complain pays, as does buttering up the Chinese with visits to Beijing,” said Evenett in an e- mail. “A Jekyll and Hyde strategy worked.”

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The U.S. could fall victim to a strain of Dutch Disease.

That’s economic parlance for the negative side effects afflicting a country when a natural resources boom sparks an export-driven surge in the currency, hurting domestic manufacturing. It’s named for the experience of the Netherlands in the 1960s and 1970s when it developed offshore oil and gas supplies.

The growth of shale oil production in the U.S. could have a similar, albeit smaller, impact, according to Michael Feroli of JPMorgan Chase & Co.

The rise in energy independence will push up the dollar by about 0.5 percent on a trade-weighted basis, JPMorgan says. Feroli, in a March 19 report, estimated total energy input prices would need to decline by 26 percent to offset that loss in competitiveness.

Given that such prices increased 2.5 percent annually over the past five years, that decrease may be a tall order and so “it’s possible the U.S. could catch a very mild case of Dutch Disease,” said Feroli, JPMorgan’s New York-based chief U.S. economist.

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Aging populations in major economies threaten the health of financial markets as a large group of retirees sell assets to a smaller group of savers.

So warn strategists at Morgan Stanley, who estimate that by 2030 the number of people 65 years old or more will have increased 45 percent in the U.S., Europe and Japan.

Looking at the U.K., the March 18 report estimates household wealth including pensions rises from a median of 12,900 pounds ($19,600) in the 16-24 age cohort to a peak of 416,100 pounds between the ages of 55 to 64. This then falls over the next two decades.

“It is logical that there may be pressure on asset prices as more people reach the point at which they need to significantly draw down their own savings for consumption purposes,” said the strategists.

Investors looking to take advantage of demographics should seek stocks with high and secure dividends, such as French electrical-equipment distributor Rexel SA (RXL) and Norwegian phone operator Telenor ASA (TEL), according to Morgan Stanley.

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Rising inequality among American males is due to a permanent rather than temporary shift in incomes, according to a study co-written by two Federal Reserve economists. They suggest the gulf between rich and poor is being driven by skill-biased technical change and revamped compensation policies.

The authors drew that conclusion after studying inequality in male earnings in the U.S. from 1987 to 2009, using what they call a “new, large and confidential panel of tax returns.”

They also used the data to examine whether the federal tax system helped reduce inequality. They concluded that the structure is still progressive, taxing the rich at higher rates than the poor. That “helped mitigate” the increase in household income inequality, though not by enough to alter the increasing trend.

The report was published yesterday by the Brookings Institution, a Washington-based research group, and written by Jason DeBacker, an associate professor of economics at Middle Tennessee State University, Vasia Panousi and Ivan Vidangos of the Fed’s Research and Statistics division, Bradley Heim, an associate professor at Indiana University and Shanthi Ramnath, an economist at the U.S. Treasury.

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Countries that intervene in foreign-exchange markets swell their current-account balance by as much as one dollar for every dollar spent.

That’s according to a study published this month by Joseph Gagnon of the Peterson Institute for International Economics. It says efforts to weaken currencies lead countries to buy foreign assets, pushing up trade imbalances. Such distortions helped trigger the 2008 financial crisis, which led to the worst global recession since the Great Depression.

Current account imbalances such as a large surplus in China and a deficit in the U.S. “probably would not have occurred, and certainly would not have persisted, without massive official net purchases of foreign assets,” said Washington-based Gagnon, a former Federal Reserve official.

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Reductions in poverty caused by insufficient incomes are being outstripped by declines in so-called multi-dimensional poverty, Oxford University reports. Nepal and Rwanda are the “star performers,”

Multi-dimensional poverty measures deprivation in health, education and living standards as well as income.

The Oxford Poverty and Human Development Initiative estimated in a March 18 report that 1.6 billion people are suffering from it in 104 countries.

Nepal, Rwanda and Bangladesh have done the most to reduce the broader measure of poverty, followed by Ghana and Tanzania. Nepal did best in areas such as improving nutrition and child mortality, while Rwanda showed the biggest improvement in sanitation and water.

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Americans are delaying marriage in part because of the weak economy, according to a new study.

The average age of marriage has reached historic highs for both genders -- 26.5 for women and 28.7 for men -- said the study from the University of Virginia, the National Campaign to Prevent Teen and Unplanned Pregnancy, and the RELATE Institute.

Part of the delay is due to less-educated workers finding it harder to get jobs. In addition, those wanting middle-class employment are seeking more training and education to secure it, delaying marriage until they reach their goal.

There is a financial reward from delay. Women who finish college and don’t get married until after 30 earn an average $18,152 more per year than those who are in their 20s or teens when they wed.

The result is marriage is now viewed as a “capstone” of life, entered into after other part of life are addressed, rather than a “cornerstone,” the authors said.

To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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