China Economic News

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http://www.cnbc.com/2015/09/13/china-aug...:topnews:2

China's economic growth sputters in August
3 Hours AgoReuters

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[Image: 102829484-RTX1K5BE.530x298.jpg?v=1436805775]China Daily | Reuters
A worker stands on piles of industrial products before exporting, at a port of Lianyungang, China, July 13, 2015.
BEIJING -- Growth in China's investment and factory output missed forecasts in August, pointing to a further cooling in the world's second-largest economy that will likely prompt the government to roll out more support measures. 
The downbeat data came on the heels of weak trade and inflation readings, raising the chances that third-quarter economic growth may dip below 7 percent for the first time since the global crisis.
Fears of a China-led global economic slowdown have roiled global markets in recent weeks, prompting speculation that the U.S. central bank may hold off on raising interest rates later this week.
"The pace of slowdown in fixed-asset investment is relatively fast - dragged by the property sector, while the factory sector remains sluggish," said Zhou Hao, senior economist at [url=http://data.cnbc.com/quotes/CBK-DE]Commerzbank AG in Singapore.
Read MoreWhy China slowdown isn't all bad for shipping industry
"Overall, the economy is very weak and the central bank may have to continue cutting interest rates and banks' reserve requirement," Zhou said, adding he expected growth was very likely to dip below 7 percent in the July-September quarter.
Some economists believe current growth is already much weaker than official data suggest.
August power output, for example, was up just 1 percent year-on-year, and production of key industrial commodities such as steel and coal weakened.
Growth in China's fixed-asset investment, one of the crucial drivers of the economy, slowed to 10.9 percent in the first eight months of 2015 - the weakest pace in nearly 15 years, data from the National Bureau of Statistics showed on Sunday.
Analysts polled by Reuters had forecast an 11.1 percent rise, compared with 11.2 percent in January-July.
Factory output also was weaker than expected, rising 6.1 percent in August from a year earlier. Markets had expected a 6.4 percent increase, compared with July's 6.0 percent.
Property continues to drag
Annual growth in China's real estate investment also continued to cool, slowing to 3.5 percent in the first eight months, the weakest since early 2009, from 4.3 percent in January-July.
While home sales and prices are slowly recovering from a slump last year - the area of property sold rose at a slightly faster pace of 7.2 percent in January-August - analysts say it will take time for developers to work off a huge overhang of unsold houses and a sharp falloff in new construction will continue to dampen demand for materials from cement to steel.
Read MoreChina again warns against dark side of the mooncakes
Sales of earth excavators fell 33 percent in August from a year earlier, hitting heavy machinery makers such as China's Sany and U.S. heavyweight Caterpillar Inc., Bank of America Merrill Lynch said in a note last week.
"The property sector is the biggest drag on China's economy," said Yu Pingkang, chief economist at Huatai Securities in Shenzhen.
"A pick-up in infrastructure investment is insufficient to offset the slowdown in property investment." Yu has pencilled in 6.9 percent growth for the third quarter.
Retail sales were the lone positive surprise, growing 10.8 percent in August from a year earlier, above forecasts of 10.5 percent, the same as July.
But the increase did not appear to jibe with recent reports from local and foreign firms in China of slowing sales.
Chinese e-commerce giant Alibaba Group Holding Ltd., which dominates online sales in the country, on Tuesday lowered its sales forecasts in a fresh signal that the economic slowdown is taking a bite out of consumer spending.
Vehicle sales fell 3 percent in August from a year earlier, the China Association of Automobile Manufacturers said.
Data last week showed that China's manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled, signalling stubborn deflationary risks in the economy and adding to expectations of further stimulus measures.
Imports tumbled more than expected while exports shrank again, pointing to persistently weak demand both at home and abroad.
China's surprise yuan devaluation last month and a plunge in its stock markets since June have fuelled fears of more shocks to the economy, although Premier Li Keqiang last week brushed off concerns it was facing a hard landing.
Most analysts agree the economy is likely facing a prolonged but gradual slowdown, rather than a sharp loss of momentum.
China's central bank has cut interest rate five times since November and repeatedly relaxed banks' reserve requirements (RRR) in a bid to put a floor beneath the sputtering economy.
Further policy easing is widely expected in coming months, and the government is also trying to boost investment in infrastructure projects to support growth.
The government is aiming for annual economic growth of around 7 percent this year, which would the slowest in half a quarter century.

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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. 

China unveils overhaul of state sector

• LINGLING WEI
  
• THE AUSTRALIAN
  
• SEPTEMBER 14, 2015 6:55AM
  

[Image: 768710-3eb6019a-5a5b-11e5-9877-6b1eb7594cef.jpg]
Chinese President Xi Jinping wants to show Beijing is committed to change even as the economy slows.Source: AP
[b]Chinese President Xi Jinping set in motion the overhaul of the country’s bloated state companies just ahead of his US visit, in a bid to show Beijing is committed to change even as the economy slows.[/b]
A plan released yesterday, however, represents a modest fix to China’s brand of state capitalism. It attempts to enhance state companies’ returns by letting them add private investors. It also tries to improve state companies’ competitiveness overseas by making them bigger, but critics say that is likely to beget more inefficiency and further stymie private enterprise.
Crucially, the plan doesn’t specify whether underperforming state firms will be allowed to fail, a measure economists have deemed critical for its chances of success.
The plan reflects Mr Xi’s belief, according to officials familiar with his thinking, that the state sector, rather than taking a back seat, should be improved to continue to play a dominant role in the Chinese economy.
“Xi never had the intention to weaken the state’s role in the economy, and the plan reflects that,” said a government adviser.
Mr Xi is struggling to maintain growth while trying to push ahead with overhauls that could squeeze the economy in the short run. Many of the country’s big state companies are in industries that have suffered persistent overcapacity, such as steel and coal mining, and a lot of them are hoarding credit and other resources to the detriment of both private firms and consumers.
Disagreement among the government agencies involved in the drafting process had led to delays and revisions of the document several times, people with knowledge of the process say.
One draft, submitted by the commission that oversees the largest state companies in China, was rejected by Mr Xi earlier this year because he didn’t think it went far enough to give the market greater sway in the state sector, the people said.
“In the end, it’s a compromise among different interest groups,” the adviser said. “But it’s still a step in the right direction.”
The blueprint was released jointly by the Communist Party and the State Council, China’s cabinet, yesterday. Some details of it were reported by The Wall Street Journal on September 7, including that even though it calls for more private participation in state firms, it still emphasises the Communist Party’s control over the companies.
“In the process of deepening reforms of state-owned enterprises, the leadership of the party can only be strengthened, not weakened,” said Zhang Yi, head of the State-Owned Assets Supervision and Administration Commission, or Sasac, in an official statement.
Officials with knowledge of Mr Xi’s thinking say his views on the role of state companies were partly shaped by his time as a top provincial official. In the 2000s, when Mr Xi served as the Communist Party secretary of eastern Zhejiang province, he was struck by how a vibrant private sector had turned the coastal area into one of the wealthiest regions in the country, these officials said. At the same time, his dismay with state-owned enterprises that for years had been mired in the red increased.
Then, in 2007, after he went on to run Shanghai and saw the successful transformation of some of the big state companies in the city, including SAIC Motor Corp., now China’s largest automaker by sales, Mr Xi arrived at a new view, according to the officials: State companies should continue to be the pillar of China’s economy.
In SAIC, whose two subsidiaries were listed on the Shanghai Stock Exchange when Mr Xi was running Shanghai, he saw the benefits of diversified ownership in state companies and having the market serve as a gate keeper of those companies, the officials say. The entire company of SAIC Motor went public in 2012 and has been one of the most profitable companies owned by the city government.
That view formed the basis for the plan released yesterday, officials say. The central design of the plan is a departure from the approach of Mr Xi’s predecessors, who encouraged local experiments that could be given a broader trial if successful. The broad blueprint for overhauling state companies will be followed by more detailed rules to be issued by various government agencies in the coming months, officials say.
The plan gives no definitive time frame for reforms but says “decisive results” in reforming state companies must be made by 2020.
Over the years, China has moved in fits and starts to restructure its vast state sector. In the 1990s, then-Premier Zhu Rongji closed thousands of state-owned firms. But little has been done to improve the way state companies are run. Returns in the state sector have consistently lagged behind those of their private brethren.
Reform of state companies should be “the top priority” for the Chinese government, said Chen Xingdong, chief China economist at BNP Paribas. But when it comes to how forceful and effective the new measures will be, Mr Chen said, “I’m concerned.”
Concerns over weakening Chinese growth are a top item on the agenda for Mr Xi’s visit to the US, along with contentious issues such as alleged Chinese cyberattacks and island-building in the South China Sea. Beijing’s massive interventions to prop up the country’s stock market as well as its currency have led to questions over the Chinese leadership’s commitment to giving market forces a greater role in the economy.
Yesterday, data showed China’s factory output and fixed-asset investment were both weaker than expected in August, highlighting the growing challenge for the government in reaching its full-year growth target of about 7 per cent.
When drawing up the plan, some officials looked at Singapore’s holding company for state firms, Temasek Holdings, according to people close to the process. Under the Temasek model, the government would confine itself to the role of a stakeholder, receiving dividends but leaving day-to-day running of the companies to professional managers at the asset-investment firms hired at market rates.
The plan unveiled yesterday doesn’t fully hew to the Temasek model, in part because of fierce opposition from some corners of the government, including from officials at Sasac who are concerned about seeing their roles diminished, according to officials close to the process. The plan calls for better supervision of the state companies by corporate boards, but the government will continue to appoint senior managers of the firms.
Officials at the Finance Ministry and Sasac couldn’t be reached to comment Sunday night.
The document doesn’t specify which industries will be targeted for consolidation. But people with knowledge of the government’s thinking have listed the energy, resources and telecommunications sectors as ones marked for mergers. The merged entities would then be reorganised as asset-investment firms, with a mandate to make sure they run more like commercial operations than arms of the government. Upper management will be under orders to maximise returns and prepare many of the companies for listing on stock markets, these people say.
The plan encourages private funds to join forces in investing in projects with state companies in industries ranging from oil, natural gas, electricity, transportation and other public-services areas. But it reaffirms the government’s controlling stakes in those strategic sectors.
Some local governments have started selling stakes in some of their companies to private investors. Last year, the Shanghai government sold a 12.4 per cent stake in Shanghai Jin Jiang International Hotels (Group) Co. for about $488 million to Hony Capital, a Chinese private-equity firm. Executives at Hony expect the deal to encourage better management practices at Jin Jiang.
Still, the plan stresses the need to “avoid the losses of state assets” during the diversification process. “That means nobody dares to privatise state companies in any big way,” said an official in south-western China’s Guizhou province.
The reform plan also leaves open the question whether the government would choose to close down underperformers — a move many economists have urged. State firms have thrived on access to loans from state banks and government-set rules that limit competition from private businesses, which complain of being muscled out of the market unfairly. Economists have said the special status has come at a cost to Chinese taxpayers and consumers.
Huang Yiping, a Peking University professor of economics and a member of the monetary policy committee of China’s central bank, said there are many “zombie” state companies in north-eastern China, known as China’s Rust Belt. “When they fail, they need to exit.”
Wall Street Journal

[CityFarmer]

The "mixed ownership" may further open up the SOEs. The new update comes with a date-line...

China issues state-firm reform plans, expects results by 2020

BEIJING — China issued some details today (Sept 13) on plans to reform state-owned enterprises (SOEs), including the introduction of “mixed ownership” by bringing in private investment, and said it expected decisive results by 2020.

The guidelines, jointly issued by the Communist Party’s Central Committee and the State Council, China’s cabinet, will help improve corporate governance and asset management, the official Xinhua news agency said.

It will also help prevent the loss of state assets.
...
http://www.todayonline.com/chinaindia/ch...sults-2020

[CityFarmer]

It is an side-effect of the anti-graft campaign. No wonder the comment from the Chinese Premier Li, on the following...

Chinese Premier Li Keqiang again blasts lazy officials as corrupt
http://www.scmp.com/news/china/policies-...-officials


China seizes up to US$157b of unspent local government budgets: sources
14 Sep 2015 18:28
[BEIJING] Angry Chinese authorities have seized up to 1 trillion yuan (US$157 billion) from local governments who failed to spend their budget allocations, sources said, as Beijing seek ways to stimulate economic growth which is at its slowest for 25 years.

The huge underspend, linked to officials' reluctance to spend on big-ticket projects while authorities crack down on corruption, supports the argument of some economists that Chinese state investment has grown too slowly this year.

"In the past, local governments had asked for the money. Money was given, but no one acted," said one of two sources, both of whom are close to the government.
...
REUTERS

Source: Business Times Breaking News

[BlueKelah]

This means  that China's gov just saved 1 trillion that could have otherwise been potentially spent on useless property/infrastructure projects linked to corruption and lining their local gov official's pockets. China has had to a cap on the rapidly rising debt amongst its local govs as well this year. not lookin good at all.

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China ramps up spending as economy slows further

• DOW JONES
  
• SEPTEMBER 15, 2015 2:44PM
  

[b]China’s government stepped up spending in August as it moves to prop up slowing economic growth.[/b]
China’s fiscal spending surged 25.9 per cent from a year earlier to 1.28 trillion yuan ($US200 billion) last month, accelerating from a 24.1 per cent pace in July, the Ministry of Finance said.
In the first eight months of the year, fiscal expenditure rose 14.8 per cent from the same period last year to 10 trillion yuan, according to the official data.
The world’s second-largest economy has ramped up spending in recent months as the country showed more signs of weakness. Economic data including industrial production and fixed-asset investment came in weaker than expected in August.
China has made moves on the monetary front to rekindle growth, including five cuts in benchmark interest rates since November injecting more funds into the nation’s banking system to boost lending.
A number of economists, however, have said China needs to loosen its purse strings because monetary easing alone isn’t enough to stimulate the economic growth. Many also have said that Beijing might miss its own 7 per cent growth target this year if the economy continues its current sluggishness.
Yesterday, China’s economic planner said it would implement measures to allocate more money to support infrastructure construction, including extending additional funds from a government-backed fund as soon as the end of September to projects that would have foreseeable returns.
Government officials have said slower growth in investment, which is a major pillar of the economy, was mainly due to lack of funds, as banks scaled back lending amid a build-up of bad debt.
Meanwhile, the slowdown also damped government revenue. Fiscal revenue increased 6.2 per cent in August from a year earlier to 967.1 billion yuan, down from a 12.5 per cent rise recorded in July, according to data from the finance ministry.
In a bid to encourage more spending and reduce the nation’s local-government debt burden, Beijing this year approved a 3.2 trillion yuan debt-swap program, which enables local governments to swap their higher-cost, short-term bank loans for cheaper, longer-term bonds.
Dow Jones

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Xi Jinping banks on technological innovation to boost China economy

• THE AUSTRALIAN
  
• SEPTEMBER 16, 2015 12:00AM
  

0

Glenda Korporaal
[Image: glenda_korporaal.png]
Senior Journalist
Sydney

[Image: 243653-65cd4e12-5aa8-11e5-a7dc-18321c6979b2.jpg]
Chinese President Xi Jinping made it clear that technology is one of the future pillars of the Chinese economy.Source: AP
[b]When Chinese president Xi Jinping visits the US next week he will be stopping off in Seattle on the way.[/b]
Silicon Valley is abuzz with the news of the visit, which will see some of its top executives fly north for meetings with the Chinese leader and his entourage.
Xi is rumoured to be having a private dinner with Microsoft founder Bill Gates at his home in Seattle.
He is also expected to attend a meeting organised by the Paulson Institute between Chinese and America business leaders in industries including technology, finance and entertainment.
No one quite knows what will come of the meetings, given issues such as US internet companies like Google no longer operating in China. But like all overseas visits by international leaders, the visit may be as much symbolic as practical.
As the world queries the strength of the Chinese economy, which has been the powerhouse of world economic growth in recent years, Chinese leaders are pitching to the world their story of the “new normal”.
The “new normal” is a new Chinese economy where headline growth rates will be lower than the world has come to expect — but it is not growth which is about to collapse into recession.
Under the “new normal” the economy is shifting from investment-driven growth to consumption-driven growth and the country’s manufacturing industry is moving from low tech to high tech.
The “new normal” is also about encouraging a shift from the state-owned enterprise sector to the private sector and from manufacturing to more high tech, innovative products of the future, away from the cheap T-shirts and Barbie dolls of the past.
Chinese officials are pointing to the importance of a keynote address to the summer Davos meeting in the port city of Tianjin last week by Premier Li Keqiang.
It was a detailed, high-level speech clearly designed to communicate the current thinking of Chinese leaders to a world asking questions about the future of Chinese financial markets and its economy.
The speech had two major themes. The first was that the Chinese economy may be slowing (the official rate for this year is 7 per cent) but its leaders are very focused on the need for “stability” and will do whatever it takes to make sure the Chinese economy is not headed for a “hard landing”.
“Despite the moderation in speed, the performance of the Chinese economy is stable and moving in a positive direction,” Li said. “China’s steady economic development has benefited the people.”
Trying to head off some of the near hysteria about the Chinese economy in recent months, he pointed out that China has created more than seven million new urban jobs in the first six months of this year, with the unemployment rate in the big cities around 5.1 per cent, while retail sales in the cities are growing at more than 10 per cent.
He also pointed to the growing numbers of Chinese tourists travelling the world. Last year Chinese tourists made more than 100 million trips overseas — a figure already up by 10 per cent this year. Their willingness to travel and spend money abroad, he argued, was a sign of their own economic optimism.
Chinese authorities, he argued, were “stepping up risk management to make sure that no regional or systematic financial risk will occur”.
“The high savings rate and large foreign exchange reserves mean China has ample financial reserves. There is plenty of water in the pool, so to speak.”
Li then went on to explain the transition that is occurring in the economy. The Chinese economy, he said, was “supported not by single pillars but multiple pillars”.
The service sector already accounted for half of China’s GDP, with consumption contributing 60 per cent to growth.
The future, he said, would see a China where “mass entrepreneurship and innovation is a strong power driving development”.
Li pointed to the seven million new graduates China is producing each year, which he argued had the potential to start up their own businesses using the latest in technology.
“Millions of small and micro enterprises are the hope and future of China,” he said.
In many ways China is the opposite of Australia. Both countries have people with bright ideas, but with a market of more than a billion people — a large percentage of which are becoming increasingly tech-savvy — Chinese entrepreneurs have the mass scale to get their companies growing.
One leading example is WeChat, a social media and payments platform launched by a company called Tencent. Little known outside China, the social media app is a Facebook on steroids which has become the communication and business platform of today’s increasingly affluent Chinese youth.
America’s Vice-President Joe Biden last year dismissed China’s potential for innovation, implying that the country’s technological growth had been achieved by copying the developments of the West.
But modern mainland Chinese are both tech-savvy and entrepreneurial and it would be foolish to underestimate the potential for China to produce the next generation of technological and social media business applications.
Li began his speech with the example of a Dalian company he had just visited which had been founded two years ago.
The internet-based company had a register of some 280,000 companies needing machine tools which it was linking up with more than 100 machine tool manufacturers around the country.
The company was not only efficiently linking buyers and sellers, he said, it had created a public platform of users to discuss ways to develop “smart solutions” for upgrading machine tools.
Li made it clear that technology is one of the future pillars of the Chinese economy, a point he will stress in the US.
For countries such as Australia, doing business with China means connecting with the emerging trends in its economy.

[CityFarmer]

These indicators are valuable, and shouldn't be ignored...

China’s slowdown doesn’t look so bad in data From Alibaba and Baidu

BEIJING (Sept 22): Data culled from China’s most-used search engine, biggest online outlet and main bank-card network are signaling stabilization in the nation’s economy.

Three alternative indicators suggest less of a deceleration in the world’s second-largest economy, and reduced risk of a hard landing. That was also the conclusion of a private survey released this week showing little danger of economic collapse after the stock-market plunge and currency devaluation.

* Rebounds at smaller businesses
* Rising prices in Alibaba shopping carts
* Booming business at luxury hotels
...

http://www.theedgemarkets.com/sg/article...-and-baidu

[BlueKelah]

Wait for next month PMI then we should know. So far pmi is trending downwards nia. But a rebound may be around soon, since ccp is trying to redirect easy credit back to their property market to try to prop up their decelerating economy.

sent from my Galaxy Tab S

[Behappyalways]

Peston: How will China cope with slowdown?
http://www.bbc.com/news/34311493