China Economic News

Good move indeed. But their local investors are inherently gamblers. Its a pressing problem for the prc govt. Its hard to educate these folks overnite into value investors...

China to step up fiscal incentives for growth

• AFP
  
• SEPTEMBER 10, 2015 7:23AM
  

[Image: 466059-772c0a44-5739-11e5-b307-8bba061166e0.jpg]
A Chinese worker assembles lithium batteries. Beijing has unveiled new measures to support growth.Source: AP
[b]China will adopt “stronger” fiscal policies to support growth, Beijing said, as it seeks to soothe increasing fears about the world’s second-largest economy following turmoil in domestic and overseas markets.[/b]
The government will accelerate major construction projects, allow more small companies to benefit from tax cuts, and encourage private capital to invest in key areas, among other measures, the finance ministry said in a statement.
Global markets have been in turmoil for weeks on worries about slowing growth in China, a key driver of global expansion, wiping trillions off share prices. The panic has also hammered mainland Chinese markets, with Shanghai’s exchange plummeting after a debt-fuelled bubble burst.
The finance ministry gave no specific values for future spending. But it said that by the end of August the central government had already spent 96 per cent of its annual infrastructure investment budget.
To achieve China’s 2015 growth target of around seven per cent, the ministry said it would step up and improve a “proactive fiscal policy, finetune the measures in a timely manner and accelerate reforms that will help stabilise growth”.
In share trading yesterday, the Shanghai stock market surged 2.29 per cent, extending a rally of almost three per cent on Tuesday on hopes for government measures to support the economy.
Economic expansion stood at 7.0 per cent in each of the first two quarters this year, but on Monday the government lowered its 2014 growth reading to 7.3 per cent, from the 7.4 per cent announced in January.
Leaders have taken a series of measures to bolster growth and curb falling share prices, including cutting interest rates last month for the fifth time since November and lowering the Chinese currency’s central rate against the US dollar by nearly five per cent in a single week.
But the benchmark Shanghai Composite Index has slumped nearly 40 per cent since mid-June despite official interventions that investment bank Goldman Sachs estimates have cost $US234 billion.
Official data released on Tuesday showed the country’s imports decreased for the 10th consecutive month in August by dropping 13.8 per cent, adding to concerns over sluggish domestic demand.
AFP

No hard landing for China, says Premier Li Keqiang

• GRACE ZHU
  
• DOW JONES
  
• SEPTEMBER 10, 2015 2:21PM
  

[b]China has the capacity to prevent its economy from a hard landing and to achieve major economic targets this year, Chinese Premier Li Keqiang said today in a speech at the World Economic Forum in the north-eastern city of Dalian.[/b]
The remarks came after China released a raft of weak economic data that suggest the world’s second-largest economy is grappling with growth momentum.
Economists worry that China may miss its growth target of around 7 per cent this year if there is no fresh stimulus measure to keep the economy growing.
“The Chinese economy will not have a hard landing,” Mr Li said.
He also said China would introduce a more proactive import policy to boost domestic demand.
This follows an earlier announcement from Beijing that it would accelerate major construction projects, allow more small companies to benefit from tax cuts, and encourage private capital to invest in key areas, among other measures.
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Global markets have been in turmoil for weeks on worries about slowing growth in China, a key driver of global expansion, wiping trillions off share prices. T
he panic has also hammered mainland Chinese markets, with Shanghai’s exchange plummeting after a debt-fuelled bubble burst.
China’s finance ministry gave no specific values for future spending. But it said that by the end of August the central government had already spent 96 per cent of its annual infrastructure investment budget.
To achieve China’s 2015 growth target of around seven per cent, the ministry said it would step up and improve a “proactive fiscal policy, finetune the measures in a timely manner and accelerate reforms that will help stabilise growth”.
Dow Jones Newswires, AFP

China’s fiscal options a buffer for economy
Source: Xinhua | September 10, 2015, Thursday | Print Edition

ALTHOUGH growth uncertainties abound home and abroad, China has plenty of policy options — especially on the fiscal front — to put the economy on track to achieve the target of around 7 percent annual growth.

In its latest effort, the Ministry of Finance on Tuesday put forward multiple fiscal policies aimed at stabilizing growth, such as coordinating funds to accelerate project construction, activating idle money and widening tax breaks.

Other measures include guideline on funds for small and emerging businesses, and promoting public-private-partnerships (PPP).

China is battling a property downturn, industrial overcapacity, sluggish demand and struggling exports, which dragged growth down to 7 percent for the first half of the year.

On top of that, fresh pressures from capital market volatility, currency devaluation in emerging markets, and slumping global commodity prices are further muddying growth prospects.

To achieve the full-year growth target, the ministry said it will closely monitor the changing dynamics in the economy and respond with more effective and targeted fiscal policies to support growth, an area where analysts say hold vast potential to shore up growth.

Fiscal surplus for the January-July period was 383 billion yuan (US$60 billion), leaving plenty room for expansionary policies to increase the budget deficit to 2.3 percent of gross domestic product for 2015, up from last year’s target of 2.1 percent.

Within the annual budget, China could record a fiscal deficit of 2.1 trillion yuan for the August-December period, 200 billion yuan more than the same period of last year, according to a recent report by China International Capital Corp.

In addition, the government’s ongoing drive to activate unspent fiscal funds will make the expansionary fiscal policy more sustainable.

According to the finance ministry, some 13.1 billion yuan of idle fiscal funds have been retrieved and will be redistributed to needed sectors, and 243.8 billion yuan recovered to local budgets.

The more efficient use of idle fiscal funds is equivalent to increasing the government’s disposable funds beyond the budget without raising the government sector’s debt ratio, noted a CICC report.

Meanwhile, to dissolve debt risks of local governments, China has allowed them to replace existing debts with new bonds. The top legislature has approved the expansion of a debt swap program for local governments worth 3.2 trillion yuan in 2015.

On the back of such fiscal support, China has stepped up spending on key infrastructure such as railways in the western regions, renovation of substandard housing and underground utilities, which have all helped boost economic activity already.

“We think infrastructure-investment growth will likely be revived from July’s 16 percent year on year to 20 percent in the coming months, which in turn will provide, at the very least, a counterbalance against China’s ongoing property and heavy industry downturn,” noted a UBS report.

In an assuring message to the market, China’s top economic planner on Monday said the world’s second-largest economy is stabilizing.
BusinessEconomy

Those companies involved in auto sector in China, may be affected...

China auto sales down 2.98% in August: industry group
10 Sep 2015 17:23
[BEIJING] Car sales in China fell 2.98 per cent in August from a year ago, an industry group said Thursday, as concerns rise over slowing growth in the Chinese economy.

A total of 1.66 million vehicles were sold in the country last month, the China Association of Automobile Manufacturers (CAAM) said in a statement.

It was the fifth straight month the figure had declined, according to CAAM's data.
...
AFP

Source: Business Times Breaking News

(10-09-2015, 09:06 PM)CityFarmer Wrote: Those companies involved in auto sector in China, may be affected...

China auto sales down 2.98% in August: industry group
10 Sep 2015 17:23
[BEIJING] Car sales in China fell 2.98 per cent in August from a year ago, an industry group said Thursday, as concerns rise over slowing growth in the Chinese economy.

A total of 1.66 million vehicles were sold in the country last month, the China Association of Automobile Manufacturers (CAAM) said in a statement.

It was the fifth straight month the figure had declined, according to CAAM's data.
...
AFP

Source: Business Times Breaking News

Its a reflection of the economic fundamentals... slowing new car sales but overall vehicle population still growing albeit at a slower rate. In addition, that doesn't mean that the usage of vehicles will not increase further...

China inflation jumps to 2pc

• AFP
  
• SEPTEMBER 10, 2015 1:16PM
  

[b]Consumer inflation in China rose to 2 per cent in August, driven by the rising cost of pork, but factory gate prices fell at their fastest in nearly six years, in a mixed picture for the world’s second-largest economy.[/b]
The diverging figures released today underline the task facing China’s leaders as fears of a growth slowdown have rocked global financial markets in recent weeks.
Moderate inflation can be a boon to consumption as it pushes consumers to buy before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt economic expansion.
The reading for the consumer price index (CPI), a main gauge of inflation released by the National Bureau of Statistics (NBI), was higher than July’s 1.6 per cent and the strongest since a similar 2 per cent in August last year.
In August, food prices were again the key factor for inflation, NBS analyst Yu Qiumei said in a statement.
Prices of pork and vegetables soared 19.6 per cent and 15.9 per cent respectively, contributing to more than half the CPI increase, Yu said.
But the NBS said the producer price index — a measure of costs for goods at the factory gate and a leading indicator of the trend for CPI — declined 5.9 per cent in August, the worst since a 7 per cent fall in September 2009.
It was steeper than a 5.4 per cent retreat in July and marked the 42nd consecutive monthly drop — illustrating oversupply from China’s factories.
Slowing economic growth and declines in commodity prices have helped keep China’s consumer inflation in check, with some economists even voicing concerns about possible deflation.
CPI touched 0.8 per cent in January — its lowest in more than five years. The latest reading compared with the median estimate of 1.8 per cent in a survey of economists by Bloomberg News.
“Looking ahead, we expect both measures of inflation to rebound over the coming quarters,” Julian Evans-Pritchard, China economist at Capital Economics, said in a note.
He added that steep falls in pig numbers would keep food prices high while declines in global commodity prices mean both inflation measures should strengthen due to a weaker base of comparison “which ought to help assuage any lingering concerns over deflation”.
Growth in China’s gross domestic product (GDP) hit a 24-year low last year, expanding 7.3 per cent amid a steady slowdown from years of double-digit expansions. GDP has slowed further this year, expanding 7 per cent in each of the first two quarters.
Premier Li Keqiang said yesterday the government was capable of maintaining high economic growth, trying to stem fears about slowing economic growth that have sent global financial markets on a rollercoaster ride recently.
Li’s comments came after China said it would adopt “stronger” fiscal policies to support growth.
The inflation survey collects prices from more than 63,000 outlets including grocery stores, supermarkets, shopping malls and agricultural trade markets across 500 cities and counties in the country, according to the NBS.

(10-09-2015, 01:11 PM)greengiraffe Wrote: No hard landing for China, says Premier Li Keqiang

• GRACE ZHU
  
• DOW JONES
  
• SEPTEMBER 10, 2015 2:21PM
  

[b]China has the capacity to prevent its economy from a hard landing and to achieve major economic targets this year, Chinese Premier Li Keqiang said today in a speech at the World Economic Forum in the north-eastern city of Dalian.[/b]
The remarks came after China released a raft of weak economic data that suggest the world’s second-largest economy is grappling with growth momentum.
Economists worry that China may miss its growth target of around 7 per cent this year if there is no fresh stimulus measure to keep the economy growing.
“The Chinese economy will not have a hard landing,” Mr Li said.
He also said China would introduce a more proactive import policy to boost domestic demand.
This follows an earlier announcement from Beijing that it would accelerate major construction projects, allow more small companies to benefit from tax cuts, and encourage private capital to invest in key areas, among other measures.
Start of sidebar. Skip to end of sidebar.

• MOREChina inflation jumps to 2pc
  
• MOREChina steps up growth incentives
  

End of sidebar. Return to start of sidebar.
Global markets have been in turmoil for weeks on worries about slowing growth in China, a key driver of global expansion, wiping trillions off share prices. T
he panic has also hammered mainland Chinese markets, with Shanghai’s exchange plummeting after a debt-fuelled bubble burst.
China’s finance ministry gave no specific values for future spending. But it said that by the end of August the central government had already spent 96 per cent of its annual infrastructure investment budget.
To achieve China’s 2015 growth target of around seven per cent, the ministry said it would step up and improve a “proactive fiscal policy, finetune the measures in a timely manner and accelerate reforms that will help stabilise growth”.
Dow Jones Newswires, AFP

Li: China has many tools to manage slowing growth

   PM Li Keqiang said that "China will not see a hard landing", a comment aimed at increasing confidence in China, which had been shaken after a rout of Chinese shares and yuan devaluation last month triggered a global sell-off in commodities, equities and emerging market currencies.PHOTO: REUTERS
Published
2 hours ago

Chinese Premier strikes an upbeat tone as Beijing seeks to reassure global community
DALIAN (China) • Premier Li Keqiang likened managing slowing growth to a "Chinese chess game", balancing short-term stimulus moves against longer-term reform efforts to open up the world's second-largest economy.
"We have plenty of tools at our disposal," Mr Li said yesterday in a keynote address at the World Economic Forum's "Summer Davos" meeting here. "You need to be careful with immediate moves you take... we need to take targeted measures to resist downward pressure on the economy; at the same time, we need to build momentum for sustainable and healthy economic growth."
Mr Li is seeking to buttress global confidence in his nation's slowing economy after a stock market rout and surprise currency devaluation last month triggered a worldwide sell-off in commodities, equities and emerging market currencies.

Quote:ECONOMIC MOVES REQUIRE CARE
We have plenty of tools at our disposal. You need to be careful with immediate moves you take... we need to take targeted measures to resist downward pressure on the economy; at the same time, we need to build momentum for sustainable and healthy economic growth.
MR LI KEQIANG, Chinese Premier

His remarks echo those of People's Bank of China (PBOC) governor Zhou Xiaochuan, who said over the weekend the stock rout is close to ending and that state intervention stopped a free-fall.
"He's trying to strike a more upbeat note, telling the world that China remains a reassuring force for the international economy, and all countries will benefit from China's economic reforms eventually," said Professor Wang Yukai of the Beijing-based Chinese Academy of Governance.
"The Premier's speech is a response from China's central leadership to ease the growing doubts across the world over the country's future development and the wisdom of the government's economic plans."
Downward pressure on the economy has increased, with exports falling 5.5 per cent last month from a year earlier and the nation's official factory gauge falling to a three-year low. Data yesterday underscored the challenge facing policymakers, as factory-gate deflation deepened last month while consumer price gains increased.
China's Shanghai Composite Index dropped 1.4 per cent as the biggest tumble in producer prices in six years reignited concern about a deeper economic slowdown.
This led investors to take cash off the table, and put Asian equity traders on edge as markets retreated from a two-day rally.
Regional markets sank, with Shanghai losing 1.39 per cent, Hong Kong 2.57 per cent lower, Singapore 1.37 per cent down and Tokyo finishing 2.51 per cent off. Sydney ended 2.42 per cent lower.
If the economy were to "show signs of slipping out of the reasonable range, we have sufficient capability to respond", Mr Li said. "China will not see a hard landing."
While Mr Li said China has the tools it needs, the central bank's buying of yuan and selling of dollars to defend against a rapid currency depreciation cut foreign exchange reserves by a record US$93.9 billion (S$132 billion) last month.
China faces capital outflow pressures after devaluing the yuan as investors expect the currency to keep depreciating, which, coupled with the depletion of reserves, could complicate efforts to open the economy, according to Mr Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight here.
"This could constrain further capital account liberalisation measures if capital outflows continue in coming months" and force PBOC to use reserves to prevent yuan devaluation, he said.
Mr Li said Chinese policymakers have eschewed strong fiscal and monetary stimuli so far, and will not slow the pace of structural reform as they shift the economy's reliance from manufacturing and exports to services and consumption.
"Policymakers want to make it clear to foreign investors and politicians that it is still opening, its reform is still on track," said Mr Larry Hu, head of China economics at Macquarie Securities in Hong Kong.
BLOOMBERG

Part of the Script:

Beijing to open domestic forex market to foreign central banks

Published
2 hours ago

DALIAN • China will open its domestic foreign exchange market to overseas central banks, making it easier for other nations to hold yuan assets as Asia's biggest economy pushes for the currency to win reserve status at the International Monetary Fund (IMF).
China will keep the yuan stable at a reasonable, equilibrium level, Premier Li Keqiang said while announcing the easing of controls in a speech at a World Economic Forum (WEF) meeting yesterday.
The nation does not want a currency war, he said, after the People's Bank of China (PBOC) shook up global markets with a devaluation on Aug 11.

Overseas monetary authorities have already been granted access to China's interbank bond market.
"The participation of foreign central banks will make the onshore yuan's exchange rate more globally recognised," said Mr Banny Lam, co-head of research at Agricultural Bank of China International Securities in Hong Kong.
"Allowing direct access gives the central banks more flexibility and control over costs, compared with going through local banks for trades," he added.
The decision will help further China's push for the yuan to join the dollar, euro, yen and pound in the IMF's Special Drawing Rights (SDR) basket of reserve currencies.
A key indicator used to determine qualification is a currency's share of official reserves, and the yuan ranked seventh last year, behind the four SDR members as well as the Australian and Canadian dollars, according to the IMF.
The Chinese currency's share was 1.1 per cent, compared with 63.7 per cent for the US dollar.
More than 60 global central banks and sovereign wealth funds have invested in yuan-denominated assets, with combined holdings of US$70 billion (S$100 billion) to US$120 billion, Standard Chartered estimated in a May report.
"Not long ago, we allowed foreign central banks to participate in the interbank bond market," Mr Li said at the WEF meeting. "The next step is to allow foreign central banks to directly participate in the interbank foreign exchange market. Before the end of this year, we will complete the cross-border yuan payment system that facilitates the development of the offshore yuan market."
The first phase of the China International Payment System will begin in Shanghai to handle deals in Asia, Oceania and Europe, the PBOC said in a June statement.
BLOOMBERG

http://www.cnbc.com/2015/09/13/china-iss...inhua.html

China issues plans for reforming state-owned enterprises: Xinhua
2 Hours AgoReuters

[/url]COMMENTSStart the Discussion

[Image: 102923034-GettyImages-53275224.530x298.jpg?v=1441807917]China Photos | Getty Images
BEIJING -- China has issued guidance on reforming state-owned enterprises (SOEs), including the introduction of "mixed ownership" of state firms and efforts to improve their corporate governance, the official Xinhua news agency said on Sunday.
The guidance was jointly issued by the Communist Party's Central Committee and the State Council, China's cabinet, Xinhua said in its official Weibo microblog. No further details were given.
Read More[url=http://www.cnbc.com/2015/09/13/china-august-industrial-output-up-61-on-year-vs-64-expected.html]China's economic growth sputters in August
The step comes nearly two years after President Xi Jinping called for market forces to play a decisive role in the better allocation of resources in the world's second-largest economy.

Read MoreWhy China slowdown isn't all bad for shipping industry
China will push firms to merge and sells shares as part of the most far-reaching reforms of its sprawling and inefficient state sector in two decades, according to documents seen by Reuters.