China's Sovereign Wealth Funds: Problem or Panacea?

China’s impressive economic growth has led to the accumulation of massive financial assets. The emergence of sovereign wealth funds (SWFs), as a governmental investment device for its excessive foreign reserves, symbolizes a major rebalancing of economic power. With its investment portfolios drastically diversified for well-established financial institutions as well as some strategic sectors, a seminal debate seems centered on whether China’s SWFs are in furtherance of purely commercial or geopolitically strategic purposes. Under the sophisticated hard laws associated with international initiatives, it is unlikely that the SWFs-related investment would distort the global financial system, and genuinely threaten national security, which assumption may only exist at a hypothetical level. The potential protectionism would inevitably retard the world economy’s recovery, were it not to be proportionately addressed. A most significant necessity appears to be to strike a proportionate balance between sustaining the credibility of open investment environment and efficiently minimizing implications of SWFs political arenas.

China’s National Security Review: a tit-for-tat response?

China is gradually taking its place as a major regulator, exercising concurrent jurisdiction of the national security review along with the US and EU over high-profile cross-border mergers and acquisitions. The National Security Review (NSR) regulatory regime of foreign acquisitions has attracted significant attention recently with the establishment of China's counterpart to the Committee on Foreign Investment in the United States (CFIUS). Due to the intensified activities of sovereign wealth funds (SWFs) that are closely linked with states, CFIUS's broad discretion to deal with China's SWF-based investment may have a far-reaching impact on China's implementation of the newly enacted NSR regime. It is essential to design a mechanism that allows SWFs to maximise their positive attributes while safeguarding the apolitical integrity of the marketplace. Any disproportionate use of the NSR regime would inevitably bring about more unintended consequences, such as tit-for-tat protectionism. This represents an imminent threat to the tenuous recovery from the recent economic crisis, largely because of the increasingly intertwined and interdependent nature of the global financial markets. It is of utmost significance to evaluate the extent to which the updated legislation strikes a reasonable balance between preserving genuine national security interests and maintaining an open environment for investment.

Is childhood type 1 diabetes a wealth-related disease? An ecological analysis of European incidence rates

Aims/Hypothesis: To describe the epidemiology of childhood-onset Type 1 (insulin-dependent) diabetes in Europe, the EURODIAB collaborative group has established prospective, geographically-defined registers of children diagnosed under 15 years. A total of 16,362 cases were registered by 44 centres during the period 1989-1994. The registers cover a population of approximately 28 million children with most European countries represented. Methods In most centres a primary and a secondary source of ascertainment were used so that the completeness of registration could be assessed by the capture-recapture method. Ecological correlation and regression analyses were used to study the relationship between incidence and various environmental, health and economic indicators. Findings: The standardised average annual incidence rate during the period 1989-94 ranged from 3.2 cases per 100,000 per annum in the Former Yugoslavian Republic of Macedonia to 40.2 cases per 100,000 per annum in Finland. Indicators of national prosperity such as infant mortality (r= -0.64) and gross domestic product (r= 0.58) were most strongly and significantly correlated with incidence rate, and previously-reported associations with coffee consumption (r= 0.51), milk consumption (r= 0.58) and latitude (r= 0.40) were also observed. Conclusion/Interpretation: The wide variation in childhood type 1 diabetes incidence rates within Europe could be partially explained by indicators of national prosperity. These indicators could reflect differences in environmental risk factors such as nutrition or lifestyle that are important in determining a country's incidence rate.

Transparency Proposals for European Sovereign Bond Markets

The debate over the possible extension of transparency regulation in Europe to include sovereign bonds has opened up a number of other issues in need of serious consideration. One such issue is the appropriateness of the entire infrastructure supporting the trading of European sovereign bonds. In recent years sovereign issuers have supported the development of an electronic inter-dealer market but have remained unconcerned with the opacity of dealer-to-customer trading. The degree of segmentation in this market is high relative to what exists in nearly all other financial markets. This paper explores why European sovereign bond markets have developed in such a segmented way and considers how this structure could be altered to improve transparency without adversely affecting liquidity, efficiency or the benefits enjoyed by primary dealers and issuers. It is suggested that the structure of the market could be improved greatly if the largest and most active investors were permitted access to the inter-dealer electronic trading platforms. This would solve a number of market imperfections and increase the proportion of market activity that is conducted in a transparent way. The paper argues that sovereign issuers in Europe have the means to provide incentives that would influence dealers to support reduced segmentation. Some practical examples of how this could be achieved are provided and the potential benefits are outlined.

House value as an indicator of cumulative wealth is strongly related to morbidity and mortality risk in older people: a census-based cross-sectional and longitudinal study

Background: There has been relatively little research into health inequalities in older populations. This may be partly explained by the difficulty in identifying appropriate indicators of socio-economic status for older people. Ideally, indicators of socio-economic status to be used in studies of health inequalities in older populations should incorporate some measure of life-time socio-economic standing, and house value may fill this role. This study examined whether an indicator of accumulated wealth based on a combination of housing tenure and house value was a strong predictor of ill-health in older populations.
Methods: A total of 191 848 people aged =65 years and not living in communal establishments were identified from the 2001 Northern Ireland Census and followed for 5 years. Self-reported health and mortality risk by housing tenure/house value groupings were examined while controlling for a range of other demographic and socio-economic characteristics.
Results: Housing tenure/house value was highly correlated with other indicators of socio-economic status. Public-sector renters had worse self-reported health and higher mortality rates than owner occupiers but significant gradients were also found between those living in the highest-and lowest-valued owner-occupier properties. The relationship between housing tenure and value was unchanged by adjustment for indicators of social support and quality of the physical environment. Adjustment for limiting long-term illness and self-reported health at baseline narrowed but did not eliminate the health gains associated with living in more expensive housing.
Conclusions: House value of residence is an accessible and powerful indicator of accumulated wealth that is highly correlated with current health status and predictive of future mortality risk in older populations.

Wealth concentration in the European periphery: Ireland, 1858–2001

Using annual will indexes, a series of wealth concentration is constructed for the north of Ireland on a decennial basis for the period 1858 to 2001. Wealth was highly concentrated at the beginning of the sample period, but inequality falls towards the end of the nineteenth century and continues to fall until the 1970s. However, there does not appear to be a Kuznets-type process at work. Instead, using data on socio-occupational status, it is suggested that the fall in wealth concentration appears to be associated with the demise of the titled classes. Interestingly, similar to the findings of other studies, wealth has become more concentrated since the 1970s.

Why is housing tenure associated with a lower risk of admission to a nursing or residential home? Wealth, health and the incentive to keep 'my home'

Background Previous research has shown that home ownership is associated with a reduced risk of admission to institutional care. The extent to which this reflects associations between wealth and health, between wealth and ability to buy in care or increased motivation to avoid admission related to policies on charging is unclear. Taking account of the value of the home, as well as housing tenure, may provide some clarification as to the relative importance of these factors.
Aims To analyse the probability of admission to residential and nursing home care according to housing tenure and house value.
Methods Cox regression was used to examine the association between home ownership, house value and risk of care home admissions over 6 years of follow-up among a cohort of 51 619 people aged 65 years or older drawn from the Northern Ireland Longitudinal Study, a representative sample of approximate to 28% of the population of Northern Ireland.
Results 4% of the cohort (2138) was admitted during follow-up. Homeowners were less likely than those who rented to be admitted to care homes (HR 0.77, 95% CI 0.70 to 0.85, after adjusting for age, sex, health, living arrangement and urban/rural differences). There was a strong association between house value/tenure and health with those in the highest valued houses having the lowest odds of less than good health or limiting long-term illness. However, there was no difference in probability of admission according to house value; HRs of 0.78 (95% CI 0.67 to 0.90) and 0.81 (95% CI 0.70 to 0.95), respectively, for the lowest and highest value houses compared with renters.
Conclusions The requirement for people in the UK with capital resources to contribute to their care is a significant disincentive to institutional admission. This may place an additional burden on carers.