China Economic News

[CityFarmer]

Cf make a poll so we can vote 😀

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No need to vote, the outcome is "NO" 

MSCI declines to add domestic Chinese shares to global benchmark
...
http://www.todayonline.com/business/msci...-benchmark

[BlueKelah]

I kinda expected that, their stock market too state controlled liao.

Imho the lock up rules for SSH not to sell is a big sticking point.

I am surprised though that with so much gov intervention the SSE can still drop 3%plus in a day .

Now how about a brexit poll

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[fundamentalman]

li ka shing's view on chinese economy by bloomberg

Hong Kong’s richest man said China’s economic outlook is bright in the long term, casting a vote of confidence in a country that’s growing at its slowest pace in a quarter century.
China continues to have a trade surplus, the services industry is generating income and foreign money is flowing in, billionaire Li Ka-shing told Bloomberg Television’s Angie Lau in his first interview with international media since 2012. He also indicated that investors focusing on the country’s rising debt levels are missing out on the larger picture.
"The long-term outlook for the mainland is good," the 87-year-old chairman of CK Hutchison Holdings Ltd. said from his office atop the Cheung Kong Center building in downtown Hong Kong. "People only see the debt in the state-owned enterprises and in households, when they need to recognize that China is a big exporter."
Those export receipts -- a "positive for China" according to Li -- helped the trade surplus swell to 3.7 trillion yuan ($560 billion) last year, providing a buffer as the weaker yuan spurred capital outflows.
Li’s confidence in the world’s second-largest economy comes amid signs of stabilization thanks to government stimulus measures. Yet skeptics abound, with the International Monetary Fund this month citing rapidly rising credit and excess industrial capacity among risks threatening the nation’s medium-term prospects.
To read what else Li Ka-shing said in his wide-ranging interview, click here.
China’s total borrowings surged to 247 percent of economic output last year from 164 percent in 2008. That’s faster than the increase in the U.S. and U.K. during the run-up to the global financial crisis. China has accumulated debt faster than any Group of 20 nation over the past decade, according to Tom Orlik, an economist for Bloomberg Intelligence.

Li, who was born in the southeastern Chinese city of Chaozhou, has much at stake in the mainland. His real-estate unit, Cheung Kong Property Holdings Ltd., counts about half its revenue from there and has dozens of properties in the country spanning thousands of acres. His flagship company, CK Hutchison, generated 14 percent of its earnings before interest and taxes from China, where he operates about 2,500 Watsons and ParknShop stores.
Consumption has remained a prop for China’s slowing economy. Gross domestic product expanded 6.9 percent last year, the weakest pace since 1990, and is forecast by economists to increase 6.5 percent this year.
Rising China
Li, who spoke on Thursday, owes much of his success to China. In the late 1970s, the then-emerging tycoon was asked "to come in" to the Chinese market, even before it was clear that Deng Xiaoping had taken the reins of power, said Li, who forged close ties with the late paramount leader and still refers to him as "Uncle Deng." Li had a sense that things were about to change, he said.
"At that time, China gave me a very hopeful feeling," Li said.

[specuvestor]

I think I posted few times before that it is more instructive to watch what Superman Li does than listen to what he says.

On the other hand I think it is more instructive to listen to what Buffett says than does cause his patience and timeline is very different

[Behappyalways]

Closer Look: Stock Regulator Gets Tough, Needs to Keep Resolve
http://english.caixin.com/2016-06-21/100956968.html

[BlueKelah]

Closer Look: Stock Regulator Gets Tough, Needs to Keep Resolve
http://english.caixin.com/2016-06-21/100956968.html

Wah so many IPO withdraw. LOL.

if the experience of SGX listed S-Chips is anything to go by, we can expect news of many many more delisted frauds soon.

want to be included in the MSCI, want to have "face" that is what they have to do...

[specuvestor]

As RMB gets included into SDR, there should be more inflow. Interesting definition on reserve that I bolded

"Singapore's central bank said Wednesday it will make its financial investments in the yuan part of its official foreign reserves from June, reflecting the Chinese currency's increasing international acceptance.

The Monetary Authority of Singapore (MAS) said its decision "recognises the steady and calibrated liberalisation of China's financial markets, and the growing acceptance of (yuan) assets in the global portfolio of institutional investors".

MAS has been making financial investments in the yuan, or renminbi, since 2012, under a scheme that allows foreign institutional investors to buy equities and bonds listed on China's domestic exchanges.

It also buys bonds in China's over-the-counter bond trading market, which was opened to foreign central banks in 2010.

While the investments were part of MAS' foreign assets, they were excluded when computing the foreign reserves because of restrictions on the repatriation of the funds, the central bank said."

-snip-

https://sg.finance.yahoo.com/news/singap...27968.html

[BlueKelah]

Lol if ur money can be stuck there then what is the point of investing?? Give them face?? More like giving free capital for them to use.

Trust the cpc is not a very clever thing to do...

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[BlueKelah]

This is the more concerning issue which hit markets a year ago.


China Weakens Yuan Fixing by Most Since August as Dollar Surges

(Bloomberg) -- China weakened its currency fixing by the most since last August as global market turmoil spurred by Britain’s vote to leave the European Union sent the dollar surging.
The People’s Bank of China set the reference rate 0.9 percent weaker at 6.6375 a dollar. A gauge of the greenback’s strength jumped 2.1 percent in the past two days, the most since 2011, as the British pound and the euro tumbled. The yuan dropped 0.2 percent as of 2:26 p.m. in Shanghai, heading for its weakest close since December 2010.
The resurgence in the dollar is threatening to upend China’s dual strategy of allowing limited gains versus the greenback to combat capital outflows, and guiding depreciation against the currencies of trading partners, which helps exporters. The yuan has dropped almost 10 percent versus a basket of peers since its August peak.

[CityFarmer]

A common topic, in China economic discussion? The article is worth a read, thus posted fully here.

Is China the next Japan?

Despite deepening concerns about China’s economy, the country is not heading towards “lost decades” of Japanese-style stagnation. And yet a worrisome ambiguity clouds this verdict. Japan’s fate was sealed by its reluctance to abandon a dysfunctional growth model. While China’s embrace of structural rebalancing distinguishes it from Japan, it is struggling to implement that strategy. Unless the struggle is won, the endgame could be similar.

The same conclusion emerges from a seminar on “The Lessons of Japan” that I have taught at Yale for the past six years. The course is primarily one in forensic macroeconomics — distilling key lessons from the rise and fall of the modern Japanese economy and then figuring out the relevance of those lessons for other major economies.

The seminar culminates with student research papers aimed at assessing which candidates might be the next Japan. As recently as 2012, the United States was the top choice, as it struggled to regain its footing in the aftermath of the Great Financial Crisis of 2008. Not surprisingly, by 2013, the focus had shifted to crisis-battered Europe. But this year, more than half of the students in the seminar (13 of 23) chose to examine whether China might be the next Japan.

An academic setting provides a wonderful intellectual laboratory. But a couple of quick trips to China after the end of the spring term gave me a different perspective. In extensive discussions with Chinese officials, business leaders, academics and investors, I found great interest in the lessons of Japan and how they might bear on China’s conundrum.

The topic du jour was debt. China’s non-financial debt has risen from 150 per cent of GDP in 2008 to 255 per cent today, with two-thirds of the increase concentrated in the corporate sector, largely state-owned enterprises (SOEs).

As the world’s largest saver — with gross domestic saving averaging 49 per cent of GDP since 2007 — surging debt hardly comes as a surprise. High-saving economies are prone to high investment, and the lack of capital-market reform in China — exacerbated by the bursting of the equity bubble last year — reinforces the disproportionate role that bank credit has played in funding China’s investment boom.

The Japan comparison is especially instructive in assessing the risks of debt-intensive growth. At nearly 390 per cent of GDP in late last year, Japan’s overall debt ratio is about 140 percentage points higher than China’s. But, because Japan has such a high saving rate — averaging 24 per cent of GDP since 2007 — it basically owes its debt to itself. That means it is not vulnerable to the capital flight of foreign investors that often triggers crises.

With China’s saving rate double that of Japan’s since 2007, that conclusion is all the more pertinent for its debt-intensive economy. The China scare earlier this year — stoked by hand-wringing over capital flight and currency risk — missed this point altogether. Fears of a hard landing stemming from a Chinese debt crisis are vastly overblown.

Zombie firms — the economic walking dead — are also a topic of intense discussion in China. Key actors in Japan’s first lost decade during the 1990s, zombie corporates were kept alive by the “evergreening” of subsidised bank lending — masking an outsize build-up of nonperforming loans (NPLs) that ultimately brought down the Japanese banking system. Significantly, the insidious interplay between zombie corporates and zombie banks clogged the arteries of the real economy — sparking a sharp slowdown in productivity growth that Japan has yet to reverse.

In recent public statements, the Chinese leadership has made explicit reference to zombie SOEs. But, unlike Japan, which remained in denial over this problem for close to a decade, Chinese authorities have moved relatively quickly to rein in excesses in two key industries — steel and coal — while hinting of more to come in cement, glass, and shipbuilding.

China’s deteriorating loan quality is also reminiscent of Japan’s experience. The official NPL ratio of 1.7 per cent for listed banks is only the tip of the iceberg. Beneath the surface are “special mention loans” — where borrowers are in the early stages of repayment difficulties — along with bad credits in the shadow banking sector, both of which could raise China’s fully-loaded NPL ratio to around 8 per cent. In that case, the authorities will eventually need to inject capital into the Chinese banking system.

None of this is a dark secret in Beijing. On the contrary, an interview in early May with an “authoritative insider”, published in China’s flagship official newspaper, The People’s Daily, underscored an increasingly open and intense debate among senior officials over how to avoid ending up like Japan. The insider, purportedly close to President Xi Jinping, highlighted the insidious connection between China’s debt and zombie problems that might well culminate in a Japanese-like “L-shaped” endgame.

This gets to the heart of the China-Japan comparison. Two-and-a-half lost decades (and counting) is simply an unacceptable outcome for China. But knowing what it does not want is not enough to guarantee that China would not fall into a Japanese-style trap of its own.

Reforms are the decisive differentiating factor. Japan’s failure to embrace structural reforms was a hallmark of the 1990s, and it is an equally serious impediment to the current “Abenomics” recovery programme. By contrast, China’s strategy emphasises the heavy lifting of structural change and rebalancing. In the end, success or failure will hinge on the willingness of the Chinese leadership to confront the powerful vested interests resisting reform.

Interestingly, of the 13 students in my seminar who chose to consider China as the next Japan, two-thirds ultimately rejected the comparison. They argued that the lessons of modern China — especially the reforms and opening up spearheaded by Deng Xiaoping — are more important than the lessons of Japan. And they got good grades. PROJECT SYNDICATE

ABOUT THE AUTHOR:

Stephen Roach, a faculty member at Yale University and former Chairman of Morgan Stanley Asia, is the author of Unbalanced: The Codependency of America and China.
http://www.todayonline.com/chinaindia/ch...next-japan