China Economic News

[weijian]

Banks Bracing for Debt-Equity Swaps Revival

More than a decade after ending debt-for-equity swaps, China is preparing for a revival to manage 4 trillion yuan in bad debt

http://english.caixin.com/2016-04-05/100928274.html

[Behappyalways]

There you have the nub of the matter. Stripped of IMF circumlocutions, he is telling us that the Communist Party has once again let rip with debt-driven stimulus for the housing market and rust-bowl industries already chocking with overcapacity, stoking yet another mini-cycle to put off the day of reckoning.

Fitch Ratings says the efficiency of credit - the extra yuan of GDP growth generated by each extra yuan of debt - has collapsed by two-thirds to a ratio of 0.2 since the lending spree began in 2009. The risks are rising exponentially for little gain. Beijing is buying time in a Faustian Pact that grows more dangerous every month.

China's leaders are blowing their last chance to avert an economic crisis
http://www.telegraph.co.uk/business/2016...n-economi/

[corydorus]

They can't just stop printing suddenly. Is a keen to cardiac arrest. There needs to be a medicated control slow down through currency. Therefore Yuan has to be de-valued in many stages for the World and China to advert a disaster. This will help to maintain their stock market while continuing to drive internal demands and support competitive export jobs.

[weijian]

There is an old maxim in politics - No good deed goes unpunished.

This holds true for democracies where popular votes are given to populist policies (read: socialist, expansionary and inflation prone type). This seems to hold even true(er) for a Communist Gov that holds its legitimacy to rule by maintaining the social pact with a population still wary of its instable past.

[specuvestor]

For decades nobody believes China can do a soft landing, even after so many boom bust. Their next strategy is going to be quality driven growth at 6.5% over a 2X 5years plan. The next president will be tough dealing with stagnating work force. Growth by perspiration will grind to a halt and growth by inspiration will have to come. I don't think the government doesn't know that which is what they are trying to pave the way now. They try to arrest short term problems, which leads to volatility, but unlike many governments they actually have a long term plan.

"China reported stronger than expected trade data on Wednesday, the latest sign of a tentative revival in fortunes that paves the way for Friday’s release of first-quarter economic growth.

Exports surged 18.7 per cent in renminbi terms in March over the same month last year, after declines in both January and February. Imports also stabilised, dropping just 1.7 per cent compared with an 8 per cent fall in February."

http://www.ft.com/intl/cms/s/0/1a2bfa38-...z45m0sjujt

[BlueKelah]

For decades nobody believes China can do a soft landing, even after so many boom bust. Their next strategy is going to be quality driven growth at 6.5% over a 2X 5years plan. The next president will be tough dealing with stagnating work force. Growth by perspiration will grind to a halt and growth by inspiration will have to come. I don't think the government doesn't know that which is what they are trying to pave the way now. They try to arrest short term problems, which leads to volatility, but unlike many governments they actually have a long term plan.

"China reported stronger than expected trade data on Wednesday, the latest sign of a tentative revival in fortunes that paves the way for Friday’s release of first-quarter economic growth.

Exports surged 18.7 per cent in renminbi terms in March over the same month last year, after declines in both January and February. Imports also stabilised, dropping just 1.7 per cent compared with an 8 per cent fall in February."

http://www.ft.com/intl/cms/s/0/1a2bfa38-...z45m0sjujt

figures for china import export cant really be taken at face value, would look at their trading partner like korea/taiwan/jap import/export figures to get a clearer gauge. important thing is the trend, which is still in downwards, though this month reading is encouraging. The forex reserve also increased slightly so they may have succeeded to reign in capital flight.

This is likely due to the infrastructure spending of 800 billion by gov last quarter of 2015 (which was originally earmarked to be done over 3 years). They intend to spend another 400b each quarter this year until things improve. But that just means they will end up with excess road/rail/airports/etc. that will be left empty. analyst would be calling it "ghost infrastructure" soon. That's a lot of stimulus just to keep GDP above 6.5%
http://www.bloomberg.com/news/articles/2...g-projects

Imports should also be increasing % wise if export is jumping so much. Imports are an important indicator of new business investment and capex in the various sectors as the raw materials used in these activites are mostly imported from around the world.

still a lot of structural things they have to fix, that is if their debt doesn't kill them first.

[BlueKelah]

Just love soros...
But I reckon it's more comparable to Japan in 1990s.

Bloomberg - Soros Says China's Debt-Fueled Growth Echoes U.S. in 2007-08 http://www.bloomberg.com/news/articles/2...in-2007-08

Sent from my MotoG3 using Tapatalk

[CityFarmer]

It might help for those companies operate in China...

China's biggest tax reform in two decades set to buoy growth

BEIJING (April 22): China's biggest tax overhaul in more than two decades starts May 1, with changes set to reduce the burden on services companies and encourage factories to upgrade and innovate.

Under the new system, taxes in the construction, property, finance and consumer service sectors will now be applied to the value added - such as the difference between wholesale and final sales price for a retailer. That's in contrast to the existing revenue-based levy. Manufacturers, which already operate under a value-added tax structure, will now get tax breaks on research and development to help them modernize.

The plan will ease corporate payments by 500 billion yuan ($104 billion) this year, with much of that total coming at the expense of local governments. The central government plans to further expand its budget deficit to help cover the shortfall and may redistribute some VAT revenue back to provinces.
...
http://www.theedgemarkets.com/sg/article...uoy-growth

[CityFarmer]

The labor cost in China, is getting higher, and has gone beyond blue-collar workers...

China’s white-collar wages outstrip South-east Asian salaries

HONG KONG — The labour cost advantage enjoyed by some South-east Asian economies over China goes beyond factory jobs, according to a new study by Willis Towers Watson.

Average base professional salaries in China are 1.9 to 2.2 times those of Vietnam and the Philippines, the study said.

Entry-level white-collar professionals in China receive an average annual base salary of about US$21,000 (S$28,440), or 30 per cent more than their counterparts in Indonesia, according to WTW’s 2015/2016 Global 50 Remuneration Planning Report.

“Wages in China have been rising for a while,” Mr Sambhav Rakyan, WTW’s data services practice leader for the Asia Pacific, said in a phone interview on Friday (April 22). “The lower salaries in Association of Southeast Asian Nations economies are giving them a real competitive edge and we feel this will lead companies to reconsider whether they need to relocate operations that were once based in China. The ageing workforce and shrinking workforce in China suggest salaries there will remain higher than in the ASEAN markets minus Singapore.”
...
http://www.todayonline.com/chinaindia/ch...n-salaries

[gzbkel]

Consumption in China is resilient, despite the economic slowdown
Free-spending consumers provide comfort to a troubled economy

IF YOU believe that China’s economy is in trouble and that Chinese consumers are clinging tightly to their yuan, a visit to a local automobile dealership may make you think again. China has already roared past America to become the world’s biggest car market. In March sales of passenger cars zoomed again, by nearly 10% year on year. Shiny sport-utility vehicles (SUVs), the hottest items at this week’s biennial Beijing Auto Show (pictured), did even better: sales jumped by 46% in March from a year earlier. The car market is forecast to keep growing briskly for the rest of this decade (see chart 1).
[...]

http://www.economist.com/news/business-a...-resilient