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Finance & Economy

This category contains 281 posts

Putting China’s debt into perspective


China’s total debt quadrupled between 2007 and 2014, which was about one-third of the $57 trillion in debt added globally during that period. Can this possibly be safe? To answer this question, the McKinsey Global Institute devotes an entire chapter to China’s debt in the new report Debt and (not much) deleveraging. The key issue … Continue reading

Chinese media says India’s economy will surpass China’s


The following is based on a translation from Chinese media: Mil.huanqiu.com says in its report today that according to Indian publication The Hindu’s report on April 29, India is expected to achieve a growth rate of 8%, faster than China. If it conducts further reform and achieves steady faster growth rate, it will certainly surpass … Continue reading

Chinese state-owned company, in a first, defaults on its domestic bonds


For decades, regardless of weaknesses or inefficiencies, an overriding certainty of state-backed capitalism in China has been that the government looks after its own. That may be changing. On Tuesday, a little-known power equipment manufacturer became the first state-owned company to default in China’s huge domestic bond market, throwing doubt on the long-held notion that … Continue reading

The Domino Theory: Asia’s growing China problem


Asia has a China problem. Beijing has just initiated its biggest cut in bank reserve requirements since 2008, a move that underscores just how worried it is about its economy. But the cut is also a stark wake-up call for neighbours that have gotten used to riding China’s boom. For years, China’s steady growth served as a welcome antidote … Continue reading

The China Syndrome: Is China headed for a financial meltdown?


In the 1979 movie The China Syndrome, Jack Lemmon plays Jack Godell, a supervisor at a nuclear power plant. The facility experienced “unusual vibrations” and Jack was concerned about a potential meltdown. Today, many believe that China – a country with the world’s second largest economy – may be on the verge of a “financial” … Continue reading

Future growth of India and China to be tuned by Japan


The gear shift of Asia’s growth in the decades to come is in the hand of Tokyo as Japan is in control of the formation of the emerging India-China-Japan (I+C+J) power structure in Asia. In its “World 2050” research report, PricewaterhouseCoopers (PwC) suggested that “… in purchasing power parity (PPP) terms … India should become … Continue reading

Productivity, not reproductivity, must be the new driver of Chinese growth


Around a quarter of China’s remarkable economic growth over the past three decades or so was delivered by the dividend from its demographic structure, with a young population augmenting the workforce and lifting output in new jobs. A large proportion of the population were of working age; the proportion of the young and the old … Continue reading

What’s behind the surprise drop in Chinese exports?


China’s exports for the month of March fell by 15% from a year ago (in dollar terms), the General Administration of Customs said today. It was a big surprise to markets and investors, who were expecting a rise of as much as 12%. Imports also dropped, by 12.3%, although that was in line with expectations. As a result … Continue reading

Three ways the rise of China’s stock market might change the world


When a market gets on a roll, nothing seems to stop it. We have just learnt that China’s exports fell by an alarming 15% last month, while its imports fell by the biggest amount since the financial crash of 2008 and 2009. And the Shanghai index? Well, you might expect it to be down at … Continue reading

China’s economy is worse than you think


China’s steel and metals markets, a barometer of the world’s second-biggest economy, are “a lot worse than you think,” according to a Bloomberg Intelligence analyst who just completed a tour of the country. What he saw: idle cranes, empty construction sites and half-finished, abandoned buildings in several cities. Conversations with executives reinforced the “gloomy” outlook. … Continue reading

China, the economy and Xi Jinping’s strategy


Few economies in the world are more closely watched than China’s. It is the second largest and fastest growing economy, so there’s a lot of attention being paid to who’s running things. Chinese President Xi Jinping is the most authoritarian leader the country has seen since since Mao Zedong. Jinping is making a clear effort … Continue reading

China’s SWIFT alternative (CIPS) and the engineered death of the dollar


Forget all the nonsense and hoopla about the Apple Watch or the GM stock buy-back. Far and away the most important economic story of the week is one you won’t find on the front page of Bloomberg or MarketWatch. New reports indicate that China is ready to launch its SWIFT alternative, and for those who … Continue reading

The astounding rise of China’s currency


I sometimes wonder how the Communist revolutionary leader Mao Zedong, who warned against taking “the capitalist road,” would feel about his face on all those Chinese bills being traded around the world these days. As of this week, the renminbi is being traded in a major way in Canada as well, after Finance Minister Joe Oliver opened North America’s first Chinese … Continue reading

Chinese nickel company in the black after registering record profits as a result of Indonesian bans


China’s second largest nickel company Xinjiang Xinxin Mining Industry revealed that it’s cash generative once again following a 300 percent rise in revenue for the 2014 fiscal period. According to a report on the South China Morning Post, the income boost was due to towering nickel prices last year, lower production costs, a new copper … Continue reading

China’s real GDP growth rate plummets to 1.7 percent, not the 7.4 percent reported by the government


Diana Choyleva of Lombard Street Research, who produces an “unmassaged” calculation of China’s true economic growth, just reported that China’s fourth quarter GDP growth plummeted to 1.7 percent, versus the official 7.4 percent rate. According Choyleva, “Dire data out of China are competing head-on with the Greek political drama as the most destabilising factor for … Continue reading

China likely to end up as former would-be superpower


Forecasts for China to surpass the US as the world’s main economic power are misplaced. So says an observer who foresaw Japan’s eventual demise a year before its land-price bubble began to burst. “The vulnerabilities in China today are very similar to the vulnerabilities in Japan,” said Roy Smith, 76, who was a Goldman Sachs … Continue reading

Can China break the vicious circle of economic slowdown and foreign capital exodus?


Is China’s economic slowdown causing the foreign capital exodus or vice versa? It is like the old question: which came first, the chicken or the egg? Let’s look at both scenarios. Economic slowdown has caused capital exodus. Taiwan media Want China Times says in its report “Foreign manufacturer exodus from China”, “With the Chinese economy … Continue reading

China’s long-awaited day of reckoning is close


All the devils have come together for the Chinese economy and the country’s “long-awaited day of reckoning” is upon us, writes Societe Generale analyst Wei Yao in a recent note. To China bears who’ve said that the country is a debt bubble, Wei’s conjecture will seem obvious. To bulls it raises another question: Where would … Continue reading

China argues it’s not really world’s largest economy


China‘s statistics agency said Tuesday that the International Monetary Fund is wrong in saying China has topped the U.S. as the largest economy in the world. According to the latest IMF figures based on purchasing power parity, China produced $17.6 trillion in goods and services in 2014, surpassing the U.S.’s $17.4 trillion. But China’s National … Continue reading

China stock market crash; biggest one-day drop since 2008


China stocks suffered their biggest one-day percentage drop in more than six and a half years, dragged down by record tumbles in financial stocks as authorities battled excessive market speculation. Regulators cracked down on margin trading, which has been blamed for fuelling a wave of speculation over the past three months. Bank stocks were hit … Continue reading

China’s boom is over, and here’s what you can do about it


The powerhouse that seemed ready to propel the global economy for decades is now stuck in a period of slowing growth. Here’s what that means for your portfolio Every so often an investment theme comes along that seems so big and compelling that you feel it can’t be ignored. This happened in the 1980s with … Continue reading

China’s economic slowdown continues


In my post “China’s Economic Slowdown Is Precisely What Xi Jinping Wants” on November 17, I quoted my book Tiananmen’s Tremendous Achievements Expanded 2nd Edition to explain that China’s “old tricks of seeking export-driven and credit-fuelled growth do not work.” Xi Jinping has to conduct further economic reform of thorough economic liberalisation to maintain China’s … Continue reading

Is this the end of China’s economic miracle?


Ma Jijiang and his once poor family are the flesh and blood of China’s modern economic miracle, living proof of how radically the country has been reshaped since the late Deng Xiaoping changed the world in 1978 by proclaiming that to get rich is glorious and launching China’s experiment with market economics. Ma grew up … Continue reading

China’s president says risks to economy ‘not that scary’


China‘s President Xi Jinping was quoted as saying, “Some people worry that China’s economic growth will fall further, can it climb over the ridge? There are indeed risks, but it’s not so scary. Even at growth of around 7 percent, regardless of speed or volume, (we) are among the best in the world.” “Economic Slowdown … Continue reading

China didn’t really pass the U.S. economically


By at least one measure, China has a larger economy than the United States. But that matters less than you might think. The news is abuzz with what seems like earth shattering news: The International Monetary Fund reports that in 2014, China, not the United States, has the world’s largest economy. Sound the alarms, a … Continue reading

China’s young military leaders are destroying China


China is on the verge of destroying a geopolitical miracle. In 1980, its economy was less than one-tenth that of the United States. In 30 years, China rose to become No. 2 in the world, without disrupting the world order. Suddenly, with little warning, three decades of careful management of its external challenges have been … Continue reading

China’s exports gain steam but imports fall, signalling weaker domestic demand


China‘s exports gained steam in May thanks to firmer global demand, data showed on Sunday, but an unexpected fall in imports signaled weaker domestic demand that could continue to weigh on the world’s second-largest economy. Exports rose 7 percent in May from a year earlier, quickening from April’s 0.9 percent rise, while imports fell 1.6 … Continue reading

China PMI steadies, but doesn’t dispel growth worries


Activity in China’s factories increased marginally in April but export orders fell sharply, a government survey showed on Thursday, adding to questions about whether the world’s second-largest economy is stabilizing after its first-quarter slowdown. The data came a day after Premier Li Keqiang pledged to step up support for the trade sector, adding to measures … Continue reading

China poised to pass U.S. as world’s leading economic power this year


The U.S. is on the brink of losing its status as the world’s largest economy, and is likely to slip behind China this year, sooner than widely anticipated, according to the world’s leading statistical agencies. The US has been the global leader since overtaking the UK in 1872. Most economists previously thought China would pull ahead in … Continue reading

In wealthy Chinese city, debt guarantees spark default contagion


A network of loan guarantees set up to improve companies’ access to credit in one of China’s richest districts is creating new risks of default as some debts sour, another sign of how private firms are bearing the brunt of an economic slowdown. Chinese media have reported on a credit crunch developing among steel and … Continue reading

China opens door further to foreign stock investors


China has relaxed rules to allow more foreign participation in its main stock market, in the latest step towards liberalising the financial system in the world’s second-largest economy. From Thursday, foreign investors on the Shanghai stock exchange will be allowed to invest in more products and can invest up to 30 percent in a single … Continue reading

China’s rapid growth hits the brakes; slowest in more than a decade


New pockets of economic weakness in China emerged on Tuesday, as the collapse of a highly indebted real estate developer and weak home sales pointed to a slowdown in the sprawling property sector. The latest batch of difficulties add to the continuing debate over China’s commitment to economic reforms. While Beijing is pushing through initiatives … Continue reading

China’s premier warns on economic slowdown


Chinese Premier Li Keqiang warned on Thursday that the economy faces “severe challenges” in 2014 – comments that came as weak data fanned speculation the central bank would relax monetary policy to support stuttering growth. Li, speaking at a news conference on the final day of China’s yearly parliament, hinted Beijing would tolerate slower economic … Continue reading

China February exports plunge by 18%


China‘s exports unexpectedly tumbled in February, swinging the trade balance into deficit and adding to fears of a slowdown in the world’s second-largest economy despite the Lunar New Year holidays being blamed for the slide. The sharp drop in exports follows a series of factory surveys since the start of 2014 that point to weakness … Continue reading

Is China on final approach to an economic crisis?


January’s PMI data for China’s manufacturing sector, as released by Markit Economics and HSBC, showed a marked decline in production activity. More disturbing, however, is their analysis on the individual sectors of the manufacturing economy.  According to the report, firms cut their staffing levels at the quickest pace since March 2009, and, more importantly, “average … Continue reading

Is China about to plunge into financial crisis?


Is China about to have its own Bear Stearns moment? I have been thinking a lot about this after reading a smart report released today by BofA Merrill Lynch Chinese economist Bin Gao, which looks at the recent debt restructuring at the China Credit Trust Co., a major Chinese financial institution. Just a few days ago, the … Continue reading

Mega default on January 31 could devastate China’s banking system


On Friday, Chinese state media reported that China Credit Trust Co. warned investors that they may not be repaid when one of its wealth management products matures on January 31, the first day of the Year of the Horse. The Industrial and Commercial Bank of China sold the China Credit Trust product to its customers … Continue reading

China’s free trade zone plans herald quicker FX reforms


China plans to roll out financial sector reforms in the Shanghai special economic zone in the next three months and most will be implemented in a year, suggesting authorities are accelerating the pace of dismantling capital account controls. A People’s Bank of China (PBOC) statement on Wednesday for the first time gave a timeline for … Continue reading

China to unveil 10-year reform plan, expectations toned down


China‘s leaders will unveil a reform agenda for the next decade on Tuesday, seeking to balance the need to overhaul the world’s second-largest economy as it loses steam with preserving stability and to reinforce the Communist Party’s power. The blueprint, which past experience suggests will be first published by the official news agency Xinhua, will … Continue reading

China needs 10 million new jobs a year to survive


The Chinese economy needs to create 10 million jobs per year and must sustain growth of at least 7.2% to achieve that, Premier Li Keqiang has warned ahead of a key meeting of the Communist Party. Li’s comments, in a speech published Monday on the website of the All China Federation of Trade Unions, indicate … Continue reading

China got into bed with the U.S. Treasury and can’t get out


The Chinese sure are doing a lot of worrying these days about the stalemate in Washington. Li Keqiang, China’s Premier, told U.S. Secretary of State John Kerry that he was watching the tussle over raising the government’s debt ceilingwith “great attention” in a meeting last week. He has good reason to be concerned. With a stash of nearly $1.3 … Continue reading

China’s September export growth in surprise slide


China’s export growth fizzled in September to post a surprise fall as sales to Southeast Asia tumbled, data showed, a disappointing break to a recent run of indicators that had signalled its economy gaining strength. China’s exports dropped 0.3 percent in September from a year earlier, the Customs Administration said on Saturday, sharply confounding market … Continue reading

How to get a slice of the money flowing out of China


In 2008, I wrote an article for an international business consultancy newsletter that outlined the opportunities associated with Chinese investing abroad. In the article, I wrote that since China commenced opening up in 1979, most international capital flow has been into China rather than out of it. By 2008, this capital flow had contributed to … Continue reading

‘Hidden income’ makes China’s rich wealthier than thought


Hong Kong — China’s urban rich are making far more than they officially report, suggesting the wealth gap in the world’s second largest economy is much higher than previously thought, according to a new study. The China Society of Economic Reform released a survey Monday that found “gray income” was 6.2 trillion yuan (U.S. $1 … Continue reading

China’s economic slowdown is precisely what Xi Jinping wants


“Those who live in worries and hardship survive while those who live in ease and pleasure perish,” says Chinese sage Mencius. In Reuters’ report titled Ditch the stats: China retailers don’t buy signs of recovery, it says that recent improved government data are perhaps inaccurate and do not mean that there is any success in the … Continue reading

Analysis: Why China is better than you think


The “imminent” demise of China will have to be postponed…again. The risk to third quarter growth forecasts in the market are now to the upside. On  Thursday, HSBC’s China Flash PMI data showed a sharp rebound to 50.1 in August from 47.7 in July. Consensus estimates had it rising slightly to 48.2. Today’s manufacturing data is consistent with headline … Continue reading

Zombie borrowers haunt Chinas shadow banks


Call it the new China Syndrome: Although Asia’s biggest economy is slowing down markedly, credit continues to surge. Dead-end projects and dying industries are sucking up an ever-larger portion of new credit, while more productive borrowers are starved for funds. Nowhere is this more evident than in China’s shadow banking sector, the non-bank financiers that … Continue reading

Chinese man pays fine in coins


Bank workers in Kunming spent eight hours counting 5,000 yuan in one jiao 0.1 yuan coins thanks to a Chinese man who paid an assault fine with some serious spite. Last year, a woman with the surname Wu was eating at a noodle shop where she and her husband reportedly got into an altercation with … Continue reading

Politics, cost of living push Hong Kong residents overseas


Prior to 1997, a flood of residents left Hong Kong’s shores, worried about what would happen when the former British colony returned to Chinese control. Now, more than 15 years after the handover, the number of people emigrating from the city has started to tick up again. In the first six months of this year, … Continue reading

China to open banking sector to private capital


China‘s cabinet has unveiled plans to set up more private banks to boost financial support for cash-starved smaller firms, in the latest bid to bolster the slowing economy. “We will actively develop small-sized financial institutions and open up the channel for private capital to enter the financial sector,” the cabinet said in a set of … Continue reading

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