China has introduced an explicit “Buy Chinese” policy as part of its economic stimulus programme in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world.

In an edict released jointly by nine government departments, Beijing said government procurement must use only Chinese products or services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.

Most economists agree China’s economy is starting to recover as a result of its aggressive stimulus package but the country is still struggling with unemployment and fears widespread layoffs could lead to serious social unrest.

“The whole world is dying to see China spread its orders around and save their economies,” said Dong Tao, chief China economist for Credit Suisse. “But what this policy reflects is heightened anxiety about these job pressures and the potential for social unrest.”

We do not need more Protectionism in today´s crisis…

China has nearly doubled its gold reserves in the last five years as it diversified its enormous foreign exchange reserves away from US dollar assets.

The country now holds 1,054 tons of gold, up from the 600 tons it last disclosed in 2003, according to Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE) , which manages the country’s $1,954bn in foreign exchange reserves.

“China still has only a very small percentage of its forex reserves held in gold, much less than the United States or other developed countries,” said Paul Atherley, Beijing-based managing director of Leyshon Resources. “Those holdings are still too low in terms of the size of its economy and the growing significance of its currency.”

At current prices, China’s reserve of gold only accounts for around 1.6 per cent of its entire foreign exchange reserves. The value of its total holding was reported as $31bn.

The move comes as European central banks continue to sell their gold and the International Monetary Fund has discussed selling some of its bullion reserves.

China now has the fifth-largest gold pile of any country and is one of only six countries with public holdings of more than 1,000 tons, according to Ms Hu.

Hou Huimin, vice general secretary of the China Gold Association, said China should build its reserves to 5,000 tons.

After a horrible 2001 downturn for Tech companies, what is 2009 bringing for them ?

As Economist says :

“This time things are not yet that bad—and are unlikely to become so. In spite of the string of bad news, some forecasters still expect global IT spending to grow this year, at least when you allow for currency fluctuations. According to Forrester Research, a market-research firm, technology purchases will decline by 3% in 2009 when counted in dollars (see chart). But the dollar’s relative strength weighs heavily on the results of American firms by devaluing their foreign revenues. When measured in a basket of local currencies, weighted for each region’s share of the global IT market, Andrew Bartels of Forrester expects an increase of 3%.

There are many reasons why spending is more robust than during the last downturn. For a start, the IT market has become more global. Between 2003 and 2008, developed countries’ share of IT spending fell from 85% to 76%, according to the OECD’s recently published Information Technology Outlook. Demand from China and India is expected to continue to grow despite the gloomy economic outlook.”

But for sure everything will depend on the nastiness of the Global recession that we are entering…