China Economic News

The change might eventually end the Variable Interest Entity (“VIE”) structure, which was commonly used on regulated industries in China...

Foreign investors can ‘fully own e-commerce firms in Shanghai FTZ’

HONG KONG — China will allow foreign investors to fully own e-commerce companies in Shanghai’s free trade zone as part of a pilot scheme, the official Xinhua news agency said yesterday, citing the Ministry of Industry and Information Technology (MIIT).

Foreign investors previously required a Chinese joint-venture partner to operate an e-commerce firm in the highly competitive market.

The pilot scheme could provide an easier route for overseas companies to enter the ring and fight for a slice of one of the world’s biggest e-commerce markets.

Telecommunications authorities in Shanghai will regulate the scheme and the foreign investors, said an MIIT statement reported by Xinhua.
...
http://www.todayonline.com/tech/foreign-...anghai-ftz

The lower oil price will speed up the market consolidation of China shipyards. Those companies with prudent strategy, has avoided the impact e.g. YZJ...

China's shipyards brace for leaner times as oil slump sours rig building spree

SHANGHAI/SINGAPORE (Jan 19): For China's shipyards, the oil rig market that was supposed to be a blessing is in danger of becoming a curse.

As crude prices slide, oil producers are slashing new project spending.

With a near 40 percent slice of a global market worth tens of billions of dollars, Chinese rig builders that offered juicy financing terms and discounts to leapfrog Asian rivals in recent years are now the most exposed to a slowdown.
...
http://www.theedgemarkets.com/sg/article...ding-spree

The stock markets were pushed up by locals...

China stocks plunge on margin-trading suspensions

SHANGHAI (Jan 19): Chinese stocks tumbled, led by brokerages, after regulators took measures to rein in margin trading at three of the nation’s biggest securities firms.

The Shanghai Composite Index sank as much as six percent to 3,175.16 at 9:36am local time.

Citic Securities and Haitong Securities, two of the brokerages targeted by regulators, slumped by the 10 percent daily limit.

The penalties have raised concern that policy makers are trying to curb a surge in stock purchases using borrowed money, after outstanding margin loans jumped to 1.08 trillion yuan (US$174 billion) as of Jan 13 from about 400 billion yuan at the end of June.

The Shanghai Composite index has jumped 61 percent during the past 12 months on record volumes as individual investors piled into the market.

“Regulators are concerned that shares have run too hard, too fast,” said Hao Hong, a strategist at Bocom International Holdings in Hong Kong.

“They want a measured increase in the stock market. After all, margin financing is one of the reasons for people to be bullish on brokerage stocks, and these stocks have run particularly hard.”

The Shanghai gauge advanced 2.8 percent last week, a 10th week of gains that’s the longest winning streak since May 2007, after credit growth expanded and speculation grew the central bank will cut reserve-requirement ratios.
...
http://www.theedgemarkets.com/sg/article...uspensions

(19-01-2015, 10:17 AM)CityFarmer Wrote: The lower oil price will speed up the market consolidation of China shipyards. Those companies with prudent strategy, has avoided the impact e.g. YZJ...

China's shipyards brace for leaner times as oil slump sours rig building spree

SHANGHAI/SINGAPORE (Jan 19): For China's shipyards, the oil rig market that was supposed to be a blessing is in danger of becoming a curse.

As crude prices slide, oil producers are slashing new project spending.

With a near 40 percent slice of a global market worth tens of billions of dollars, Chinese rig builders that offered juicy financing terms and discounts to leapfrog Asian rivals in recent years are now the most exposed to a slowdown.
...
http://www.theedgemarkets.com/sg/article...ding-spree

I digress but YZJ has a lot of debt on the HTM and should have quite a bit of debt on oil rig side too??

China Stocks Plunge on Margin-Trading Suspensions as Citic Sinks

There is just no way of reigning in a property bubble which has now evolved into a stock bubble.

May be wrong but China likely goinging the way of Japan twenty plus years back. History often repeats itself unfortunately.

(19-01-2015, 11:07 AM)BlueKelah Wrote:

(19-01-2015, 10:17 AM)CityFarmer Wrote: The lower oil price will speed up the market consolidation of China shipyards. Those companies with prudent strategy, has avoided the impact e.g. YZJ...

China's shipyards brace for leaner times as oil slump sours rig building spree

SHANGHAI/SINGAPORE (Jan 19): For China's shipyards, the oil rig market that was supposed to be a blessing is in danger of becoming a curse.

As crude prices slide, oil producers are slashing new project spending.

With a near 40 percent slice of a global market worth tens of billions of dollars, Chinese rig builders that offered juicy financing terms and discounts to leapfrog Asian rivals in recent years are now the most exposed to a slowdown.
...
http://www.theedgemarkets.com/sg/article...ding-spree

I digress but YZJ has a lot of debt on the HTM and should have quite a bit of debt on oil rig side too??

Yes, YZJ has quite a bit of debt, total debt of RMB 10.8 billion, with HTM asset of RMB 12.6 billion, on top of cash/restricted cash of RMB 7.7 billion.

YZJ only has one rig project, secured end 2012, with value of US$170 million or approx RMB 1 billion, and due to delivery around mid 2015. The 2nd rig project was canceled due to lack of down-payment. The total annual volume of shipbuilding for YZJ was between RMB 11-14 billion in the last 3 years.

(vested)

China Dream Ends for Handan as Steel Slump Spurs Property Losses
http://www.bloomberg.com/news/2015-01-18...osses.html

Short-term pain is always better, than a long term damage. The China CSRC has done a right thing, IMO...

China’s CSRC defends actions after stocks tumble 7.7%

BEIJING (Jan 20): China's securities regulator said it isn’t trying to curb equity trading after its efforts to rein in record margin lending spurred the biggest drop in the nation’s stocks in six years.

Investors’ interpretation that regulators are suppressing the stock market through Friday’s action isn’t accurate, China Securities Regulatory Commission (CSRC) spokesman Deng Ge said, according to a statement on the regulator’s website today.

The Shanghai Composite Index sank 7.7 percent on Monday after the CSRC last week suspended three brokerages from loaning money to new equity-trading clients and said brokers shouldn’t lend to investors with assets below 500,000 yuan (US$80,380).

The regulator took action “to protect investors’ rights and support the healthy growth of margin trading,” Deng said, according to the statement.

Investors with less than 500,000 yuan in their margin-trading account will not be forced to sell their positions, Deng said. Instead, brokers should strengthen risk evaluation and education for such investors.

Outstanding margin loans used to buy shares on China’s exchanges surged to 1.1 trillion yuan (US$177 billion) as of Jan 16 from about 400 billion yuan at the end of June.

“Brokerages’ businesses in margin trading are going smoothly and the overall risk is controllable,” based on a regular inspection led by the CSRC, Deng said.
http://www.theedgemarkets.com/sg/article...-tumble-77

Chinese Growth at 7.4% Is the Slowest Since 1990
China’s stimulus efforts began kicking in late last year, boosting industrial production and retail sales, and helping full-year economic growth come close to the government’s target. The yuan and local stocks rose.

Gross domestic product rose 7.3 percent in the three months through December from a year earlier, compared with the median estimate of 7.2 percent in a Bloomberg News survey. GDP expanded 7.4 percent in 2014, the slowest pace since 1990 and in line with the government’s target of about 7.5 percent.

A soft landing for China would help a global economy contending with weakness that spurred the International Monetary Fund’s steepest cut to its world growth outlook in three years. China’s central bank cut interest rates for the first time in two years in November and has added liquidity in targeted steps to buoy demand.

“The economy’s performance in 2014 stands out against the widespread hard-landing fears that prevailed early last year,” said Tim Condon, head of Asia research at ING Groep NV in Singapore. “That the authorities were able to sustain close-to-target growth and increase the tempo of economic reforms –- shadow banking, local government finances -– and sustain the property-cooling measures demonstrates the effectiveness of the targeted measures.”
Read more here ->

China’s ticking demographic time bomb
PETER CAI BUSINESS SPECTATOR JANUARY 22, 2015 11:54AM

WHEN China released its GDP growth figures earlier this week, all eyes were on the hard economic data, such as the rate of growth and retail sales figures.

Most reports, however, have overlooked one of the most important datasets, which was buried at the end of a lengthy press release: the country’s shrinking labour force.

China’s working age population (between 16 and 60) declined by 3.7 million, the third consecutive year of continuous decline. The number of new urban workers also decreased from 11.88 million in 2012 to 10.70 million last year.

What is interesting is that China’s National Bureau of Statistics just changed its definition of working age from 15 to 59 to 16 to 60 in 2013 in an attempt to shore up the alarming numbers.

The trend is unmistakable: China is losing able-bodied workers at an ever faster rate. Who would have thought that China, the most populous country in the world, would eventually run out of surplus workers!

The contraction in the workforce is likely to get worse. The Chinese Academy of Social Sciences estimates the labour force will decline by 1.55 million people every year before 2020, 7.9 million between 2020 and 2030 and a staggering 8.35 million between 2030 and 2050.

The country’s population decline is also made worse by China’s notorious one-child policy, which was relaxed considerably last year and the longstanding culture of preference for men over women. Thanks to the one-child policy, China has one of the lowest birthrates in the world. In 2011, the fertility rate was 1.04 and 1.18 the year before, according to data from the National Bureau of Statistics.

The birthrate in China is less than half of the world’s average and significantly below the fertility replacement rate of 2.2, which the country needs to maintain its current level of population. Models tell us if the current trend persists — which is likely — China’s population could shrink by as much as one third between 2030 and 2070.

In addition, China also has one of the worst sex ratio imbalances in the world. There were 100 female babies born to 115 male babies in 2014. By comparison, a healthy sex ratio should be between 102 and 107.

After years of foot-dragging, data fabrication and resistance, Beijing finally relaxed its one-child policy, allowing eligible young couples to have a second child. The county’s Family Planning Commission estimates there are up 20 million eligible young people who could have a second child, yet the take-up rate has been extremely disappointing.

In Sichuan, one of the country’s most populous provinces with more than 80 million inhabitants, only 28,646 couples applied — and only 5,530 of these applications were approved. Figures for major metropolises like Beijing and Shanghai are much worse. In Beijing, only 2,300 couples applied to have a second child in a megacity of more than 20 million people.

Instead of a mini baby boom after relaxing the one-child policy, the country will continue to face first a gradual and then sharp decline in the working age population, which will put more and more pressure on China’s fragile and inadequate social security system.

China needs to do couple of things quickly. First, it must eliminate or at least significantly cut back on the regressive and harmful one-child policy. It goes to the heart of China’s economic future as well as its social stability. Beijing only needs to look at Japan to have a glimpse of its potential future.

China’s leading economists and demographers have argued that the government needs not only to get rid of the one-child policy, but it must also introduce measures to entice more young people to have babies. Maybe the government needs to come up with a slogan like former treasurer Peter Costello’s “One for mum, one for dad and one for Australia.”

One of the leading advocates is Liang Jiangzhang, a successful entrepreneur and a Stanford-trained economist taught by the late Gary Becker, one of the world’s most influential population economists. He says it is possible that China would face another collapse in the birthrate, similar to the one experienced in 1990.

“The government should not only completely free up its birth policy, it must also seriously think about introducing a range of incentives to boost birthrates and launch a campaign to promote young people to have more babies,” he told Caixin, a leading business publication.

The power of the Family Planning Commission must be curtailed. The irresponsible bureaucracy has been consistently understating the country’s demographic crisis and fabricating the fertility rate in the face of mounting evidence to contrary. There are also question marks over the billions that the commission collected from citizens that breached the one-child policy.

Japan’s current woes should be a wake-up call for Beijing. There is every possibility that China might end up in a worse position than its neighbour. At least Japan got rich before it turned grey, whereas China may end up with a lot of wrinkles before it becomes prosperous.

It is highly possible that we see wages going up as ratio of applicants to jobs falls. This is in line with what the Chinese government wants, to increase the income of the masses, especially on the lower end.

I see this as a good thing as once people get/feel rich, they will consume more goods and services and this bodes well for the general economy.

(22-01-2015, 10:24 AM)greengiraffe Wrote: China’s ticking demographic time bomb
PETER CAI BUSINESS SPECTATOR JANUARY 22, 2015 11:54AM

WHEN China released its GDP growth figures earlier this week, all eyes were on the hard economic data, such as the rate of growth and retail sales figures.

Most reports, however, have overlooked one of the most important datasets, which was buried at the end of a lengthy press release: the country’s shrinking labour force.

China’s working age population (between 16 and 60) declined by 3.7 million, the third consecutive year of continuous decline. The number of new urban workers also decreased from 11.88 million in 2012 to 10.70 million last year.

What is interesting is that China’s National Bureau of Statistics just changed its definition of working age from 15 to 59 to 16 to 60 in 2013 in an attempt to shore up the alarming numbers.

The trend is unmistakable: China is losing able-bodied workers at an ever faster rate. Who would have thought that China, the most populous country in the world, would eventually run out of surplus workers!

The contraction in the workforce is likely to get worse. The Chinese Academy of Social Sciences estimates the labour force will decline by 1.55 million people every year before 2020, 7.9 million between 2020 and 2030 and a staggering 8.35 million between 2030 and 2050.

The country’s population decline is also made worse by China’s notorious one-child policy, which was relaxed considerably last year and the longstanding culture of preference for men over women. Thanks to the one-child policy, China has one of the lowest birthrates in the world. In 2011, the fertility rate was 1.04 and 1.18 the year before, according to data from the National Bureau of Statistics.

The birthrate in China is less than half of the world’s average and significantly below the fertility replacement rate of 2.2, which the country needs to maintain its current level of population. Models tell us if the current trend persists — which is likely — China’s population could shrink by as much as one third between 2030 and 2070.

In addition, China also has one of the worst sex ratio imbalances in the world. There were 100 female babies born to 115 male babies in 2014. By comparison, a healthy sex ratio should be between 102 and 107.

After years of foot-dragging, data fabrication and resistance, Beijing finally relaxed its one-child policy, allowing eligible young couples to have a second child. The county’s Family Planning Commission estimates there are up 20 million eligible young people who could have a second child, yet the take-up rate has been extremely disappointing.

In Sichuan, one of the country’s most populous provinces with more than 80 million inhabitants, only 28,646 couples applied — and only 5,530 of these applications were approved. Figures for major metropolises like Beijing and Shanghai are much worse. In Beijing, only 2,300 couples applied to have a second child in a megacity of more than 20 million people.

Instead of a mini baby boom after relaxing the one-child policy, the country will continue to face first a gradual and then sharp decline in the working age population, which will put more and more pressure on China’s fragile and inadequate social security system.

China needs to do couple of things quickly. First, it must eliminate or at least significantly cut back on the regressive and harmful one-child policy. It goes to the heart of China’s economic future as well as its social stability. Beijing only needs to look at Japan to have a glimpse of its potential future.

China’s leading economists and demographers have argued that the government needs not only to get rid of the one-child policy, but it must also introduce measures to entice more young people to have babies. Maybe the government needs to come up with a slogan like former treasurer Peter Costello’s “One for mum, one for dad and one for Australia.”

One of the leading advocates is Liang Jiangzhang, a successful entrepreneur and a Stanford-trained economist taught by the late Gary Becker, one of the world’s most influential population economists. He says it is possible that China would face another collapse in the birthrate, similar to the one experienced in 1990.

“The government should not only completely free up its birth policy, it must also seriously think about introducing a range of incentives to boost birthrates and launch a campaign to promote young people to have more babies,” he told Caixin, a leading business publication.

The power of the Family Planning Commission must be curtailed. The irresponsible bureaucracy has been consistently understating the country’s demographic crisis and fabricating the fertility rate in the face of mounting evidence to contrary. There are also question marks over the billions that the commission collected from citizens that breached the one-child policy.

Japan’s current woes should be a wake-up call for Beijing. There is every possibility that China might end up in a worse position than its neighbour. At least Japan got rich before it turned grey, whereas China may end up with a lot of wrinkles before it becomes prosperous.