China Economic News

It is unclear how much money the CSF channeled into the stock market this summer. People with knowledge of the agency's operations said it bought at least 1 trillion yuan worth of shares between July 6 and 10. Of this amount, about 300 billion yuan was spent on July 8.

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The report was published after Inner Mongolia Yili Industrial Group, a dairy company, said that as of July 9 the CSF held 371 million, or 6.05 percent, of its shares, and that by July 17 that amount had fallen to 110 million.

The CSF executive said the agency did not sell the dairy company's shares but had them transferred to accounts that the agency had with a fund manager. He offered no details of stock purchases and sales.

Villain or Hero for Stock Market Saga?
http://english.caixin.com/2015-07-28/100833788.html

Chinese laugh off share turmoil, says Westpac survey
BUSINESS SPECTATOR JULY 29, 2015 12:43PM

Michael Roddan

Reporter

Investors watch stock prices at a security company in Qingdao. Source: AP
Chinese consumers have “laughed off” the country’s stockmarket turmoil.

The market slump, while grabbing headlines across the globe, failed to dent Chinese consumer confidence, which managed to lift during the month, according to Westpac.

The Westpac-MNI China consumer sentiment indicator rose 1.9 per cent to 114.5 in July, building on a modest increase in the previous month.

The July survey was completed while the equity market turmoil was at its most extreme, when the Shanghai stock market dived around 30 per cent, wiping more than $US4 trillion off the market’s value.

Beijing stepped in and announced a series of measures to prop up the troubled market, including a ban on major institutions selling stocks and tighter controls on margin lending practices.

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This period of market uncertainty tested the importance of the equity market in the collective psyche of Chinese households, Westpac said.

“The July survey is, in isolation, an extremely valuable experiment regarding the connection between China’s onshore equity market and the collective psyche of ‘Main Street’,” Westpac said.

“The conclusion is equally stunning. The majority of consumers didn’t just shrug at the stock market turmoil — they laughed it off.”

Consumer sentiment in China is now roughly back at the level recorded a year ago, just before concerns about the housing market and the economy began to surface.

Westpac said the scale of the plunge on the stockmarket encouraged investors to argue that the correction has rendered stocks undervalued.

“Much airtime has focused on the potential negative wealth impact of the stock market correction, but the survey bears out our own view that it will be limited,” MNI indicators chief economist Philip Uglow said.

The market, while experiencing dramatic turmoil, has still retained much of its value gained over the last 12 months.

On Monday, Shanghai’s index dived 8.5 per cent, its second-biggest one-day fall on record. But the index was still up more than 6 per cent from its lowest point in July — albeit 28 per cent lower than June’s high.

Today Chinese stocks opened 0.73 per cent higher, rebounding from a more than 11 per cent plunge in the past three sessions as concerns over another market rout eased.

The Shanghai Composite is still up around 15 per cent since the start of the calendar year, and more than 70 per cent higher over the last 12 months.

Business Spectator

Expansion and growth through debt. However when you are bleeding too much still have to cut cost. Closing 40/99 of its stores in China.

Could be a good barometer of how the retail / consumer scene is really going in China and a show of how the attempt at shifting from manufacturing to consumer based economy is not really working...

Dalian Wanda to Close 120 Venues as Retail Business Struggles

(01-08-2015, 11:55 AM)BlueKelah Wrote: Expansion and growth through debt. However when you are bleeding too much still have to cut cost. Closing 40/99 of its stores in China.

Could be a good barometer of how the retail / consumer scene is really going in China and a show of how the attempt at shifting from manufacturing to consumer based economy is not really working...

Dalian Wanda to Close 120 Venues as Retail Business Struggles

I was curious so I went in to read detail of article.
Dalian Wanda last market cap as reported was 49b. Looking to be 200b company by 2020... It needs to grow at 30+% CAGR. I would not place my money in such castle-in-the-sky targets.

The China govt knows that increasing consumer spending is extremely hard.. Unless it drops interest rates dramatically, which has profound implications for the health of the economy. Actual change is slow and China wants to continue to paint a rosy picture to foreign investment while managing the actual challenges.


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China a capital market powerhouse
1444 words
31 Jul 2015
The Australian Financial Review
AFNR
English

The Boao Forum for Asia's Sydney Conference is providing those caught up in the sharemarket-induced pessimism about China good reason to consider the country's long-term upside potential. Showing his penchant for looking over the horizon, Reserve Bank of Australia governor Glenn Stevens said capital markets should prepare for a world where China invests $400 billion a year offshore.

That portfolio investment will mainly find its way into Asia. Stevens said that could test the "depth and quality" of regional capital markets and called for better regulation of financial markets. He said it also posed problems for Chinese authorities in sequencing the opening process and said they had to be "pragmatic and opportunistic".

Stevens was speaking on the same panel as KC Chan, secretary of the Treasury of Hong Kong, who predicted the recent volatility of the Shanghai stock exchange would not stop China opening up its capital markets. "From Hong Kong's perspective, we see the current volatility as part of an emerging market situation. Investors are taking higher risk and taking high leverage. Chinese regulators are also improving regulation in shadow banking and margin financing sector," Mr Chan said.

"They are making good effort into that, and I do not think recent volatility will slow down financial markets opening, which is very important and very well understood by Chinese leadership."

Australian business is getting its mind around these big picture issues as shown by comments made to Chanticleer on Thursday by Henderson Group chief executive Andrew Formica from London, who said Henderson's board is watching developments in China's capital markets and trying to position the company to take advantage of the long-term opportunities that will flow from China's deregulation and opening of its capital markets.

Henderson's Asian funds management team is based in Singapore but the company has opened an office in China. This week it appointed the former head of Macquarie Capital Asia, Kalpana Desai, to its board as a non-executive director. She is based in Hong Kong and has worked for Bank of America Merrill Lynch, BZW, Schroders and Coopers & Lybrand. Boards have an obligation to their shareholders to be familiar with the risks and opportunities presented by China for the simple reason that its power and influence in global markets will inevitably increase.

Global fund manager AllianceBernstein this week released a report highlighting the potential dangers from underestimating "China's extraordinary capacity to marshal its social and economic resources in the pursuit of policy objectives".

The report, written by Hayden Briscoe, Anthony Chan and Stuart Rae, listed six likely disruptive changes from reform. The first three were the use of the remnimbi expanding to account for nearly half of the country's global trade settlements, GDP growth falling to 5 to 6 per cent, with a larger proportion of consumer demand, and the inclusion of China's indices in global market indices taking China's share of emerging market equity indices from 20 per cent to 30 per cent.

The rest were the maturing of China's capital markets, including growth in local pension funds, China moving up the manufacturing supply chain and the creation of the Asia Infrastructure Investment Bank, which will challenge the World Bank and International Monetary Fund. That last disruptive force was a topic of discussion at the Boao Forum in Sydney. The chief executive of the Asian Strategy & Leadership Institute, Tan Sri Michael O.K. Yeoh, said China was under-represented in global multi-lateral groups which were dominated by the United States, Japan and Europe. He said the AIIB was an essential addition to the investing framework in Asia given the forecast showing ASEAN needs about $US9 trillion in infrastructure investment.

Australia is well positioned to take advantage of the increase in China's international investment forecast by Stevens.

Andrew Forrest, who co-chairs the Australia China Senior Business Leaders Forum and is chairman of Fortescue Metals Group, which met at the Boao Forum this week, is focused on the opportunities in Northern Australia.

Forrest dismissed the recent xenophobia in relation to the Australia-China free trade agreement. Former Australian ambassador to China and FMG director, Geoff Raby, said the latest survey by the Lowy Institute showed strong Australian support for closer links with China.

Forrest said the SBLF conversations at the Boao Forum in Sydney had demonstrated the value of the "dynamic and open discussion that this group can lead". "We have covered topics of critical importance to China and Australia's shared future, providing both thought leadership and pragmatic commercial input to the ongoing development of the bilateral relationships between our two countries."

China will play a leading role in the transition of the Australian economy from a resources reliant economy to one that is increasingly reliant on the services sector. Analysis published this month by HSBC's chief economist Paul Bloxham found the services sector was getting significant support from rising demand from Asia, particularly China.

"Although resources dominate the value of Australia's exports and will continue to do so, it is worth keeping in mind that services are a larger share of value-added and are likely to have a larger impact on the domestic economy than the resources sector," he said. "Estimates from the RBA, based on numbers from the World-Input-Output-Database, reveal that although services have only accounted for 22 per cent of the value of Australia's exports in recent years, they accounted for 41 per cent on a value-added basis, which is little ahead of resources exports."

Bloxham said tourists from China are driving growth in tourism exports.

"Chinese visitors now make up around 13 per cent of total visitor arrivals, up from 6 per cent in 2009," he said. "Arrivals from China over the 12 months to May 2014 were 21 per cent higher than over the previous year. The increase in Chinese arrivals reflects the increased propensity of Chinese people to travel. Chinese visits to Australia have increased to 920,000 over the past year, from 370,000 five years ago."

But the real numbers to focus on are the total Chinese outbound tourism in 2014 of 109 million people. About a million jobs would be created in Australia if Chinese tourists matched their travel plans to their stated preferences which rank Australia highly in many areas, according to research by a major listed company.

Bloxham quoted recent work by the RBA suggested that demand for leisure tourism from China generated $1.9 billion in export receipts in 2013-14 and has accounted for half of the growth in Australia's leisure travel exports over the past decade. This could rise to $4.4 billion by 2022-23, according to Tourism Australia.

Mr Stevens said China's move to create the Asian Infrastructure Investment Bank was a sign of "leadership and engagement". Australia has joined the AIIB but Japan and the US are wary of it.

He said a lot of progress had been made since the global financial crisis in improving coordination between financial regulators in Asia but it was still "a journey".

At the same panel discussion KC Chan, secretary of the Treasury of Hong Kong, predicted the volatility of the Shanghai stock exchange would not stop China opening up its capital markets but it had exposed weaknesses in financial regulation in the country. "I don't see it slowing down financial market deregulation."

Human resources still safe

If the experience of Caltex is any guide, abandoning traditional performance reviews will not mean the death of the human resources department.

Caltex got rid of its performance review system last year and started a new system from January 1.

The company told Chanticleer the old system was bureaucratic, unproductive and uninspiring. The performance ratings for individuals was out of five. But the company found if you rated someone a 3, they acted like a 3 and not a 5.

Now, there are no performance ratings, labels or descriptors. Managers have twice-yearly discussions with other managers to ensure assessment of their employees is calibrated with what other managers are doing for their own employees.

Caltex wants to create a "highly capable organisation" and to do this, it needed a performance management framework that was "inspiring, engaging and continually drove higher levels of performance, learning and growth". The new system, Personal Best, abandons the end of year review. In place of performance ratings, managers are required to prepare a summary narrative outlining their employee's strengths, achievements, lessons and development areas.

TONY BOYD

Twitter: @TonyBoydAFR

tony.boyd@afr.com.au

China’s growth engine tipped to rev up
THE AUSTRALIAN AUGUST 04, 2015 12:00AM

Paul Garvey

Resources Reporter
Perth

Gene Sperling, former economic adviser to the Clinton and Obama administrations. Picture: Travis Anderson Source: Supplied

China should not yet be written off as a significant source of economic growth, one of the White House’s most experienced economic minds says.

In a far-reaching address on the opening day of the Diggers & Dealers mining forum in Kalgoorlie yesterday, Gene Sperling — who spent more than 11 years serving as an economic adviser to the Clinton and Obama administrations — said a promising outlook for China and a continuing devaluation of the Australian dollar should offer hope to a mining ­industry grappling with falling commodity prices.

And Mr Sperling also urged the US Federal Reserve to take a ­cautious approach to raising interest rates, warning that the downside from raising too early could outweigh the downside from waiting too long.

Mr Sperling, director of the White House National Economic Council up until last year, said he agreed with forecasts that China could continue to meet its targeted 7 per cent growth rate for the next 10 to 15 years. “I have a more optimistic view of their long-term growth than a lot of people, regardless of how the immediate problems over the next quarter or two shake out,” Mr Sperling said. “They are quite committed to 7 per cent growth and I think that they have much more capacity to achieve it than people mention.”

While acknowledging that China was moving more towards consumption-led growth, rather than the export and infrastructure-led growth that inspired the mining boom, Mr Sperling believed China would continue to invest extensively in infrastructure. In addition, he said, concerns about debt within China missed the bigger picture.

“People like to say ‘oh my God they have ballooning debt’. Well they have corporate debt issues, they have issues of state-owned enterprise debt, but their government debt is 40 per cent of GDP. That would be the envy of most countries,” he said.

“They have plenty of room to do some pump-priming in the economy. Hopefully they can do it in a smarter way without the overbuilding by local governments that’s been wasteful.”

Uncertainty around China’s economic situation has been inflamed by the recent slump in its stockmarkets, which prompted the government to intervene and suspend many of the nation’s biggest stocks from trading.

While the Chinese authorities were struggling to stabilise a falling stockmarket, he said they would be more confident in their ability to stimulate the economy through infrastructure investment and stimulus.

In addition, India should not be dismissed as a future source of commodity demand growth. “If China couldn’t grow that much forever, well on the other side India can’t have this little demand forever,” he said. “It would be wise for more companies to look 5-10 years out and ask not just what is their China strategy, but what is their India strategy. Because there is no way there will not be an increase in demand.”

His optimism around China and India did not extend to gold, however. “It’s hard to be here and be wildly optimistic that the winds are heading in the right direction on the gold front,” he said.

“With interest rates in the US looking like they might be higher, with more companies in the US particular sitting on lots of cash and giving out greater dividends, there may be more people feeling that the opportunity cost of holding gold is going up.”

Mr Sperling predicted the Australian dollar to fall below US70c in the next six to nine months as the RBA continued to consider an additional interest rate cut and the US Fed moved closer to ­finally lifting rates.

But he urged the Fed to show patience when raising rates, despite an appetite within the body to lift rates before year end. He said the downside of waiting until January or February was minimal, while raising too quickly could prompt the US dollar to strengthen too much and rattle the US economy.

2015.07.26文茜的世界財經周報／北載河會議前夕　習近平處理令計劃
https://www.youtube.com/watch?v=VDldohCRxns

Shipbuilder Fails to Tell Stock Market about 29 Lost Orders
http://english.caixin.com/2015-08-05/100836765.html

The "official" NPL still hovering around 1-2%, after the rise. Based on the clue from YZJ "loan" investment, the allowance is doubled, from ~5% to ~8-9%. I guess the overall sector "real NPL" should be much more than 10%...

China bank NPLs rise 11% in second quarter: regulator
10 Aug 2015 18:18
[BEIJING] The amount of bad loans in China's commercial banking sector increased by 11 per cent in the second quarter of the year, the country's banking regulator said on Monday, as a slowing economy continued to weigh on lenders.

Commercial bank non-performing loans (NPLs) at the end of June amounted to 1.09 trillion yuan (US$175.53 billion), up 109.4 billion yuan from the end of the first quarter, the China Banking Regulatory Commission (CBRC) said in a statement.

The average non-performing loan ratio of China's commercial banks rose by 0.11 per centage points in the second quarter to 1.5 per cent at end of June, the regulator said.
...
Source: Business Times Breaking News

Aggregate financing slumped to 718.8 billion yuan ($116 billion) in July, from 1.86 trillion originally reported for June, according to the People’s Bank of China, missing the estimate for 1 trillion yuan in a survey of economists. New yuan loans jumped to 1.48 trillion yuan, almost double economists’ estimate, with 891 billion yuan going to financial institutions as the central bank backed stock rescue efforts.


China’s Credit Slumps as Funds Used to Prop Up Stock Market
http://www.bloomberg.com/news/articles/2...es-in-july