As Chinese data continues to deteriorate, housing continues to show weakness and bad debts rise, some take solace in the fact that this is all part of China’s plan to rebalance its economy and cool growth.
In a paper, Li Zuojun, deputy director at the Development Research Center of the State Council (DRC) writes that after 30 years of rapid growth, China is beginning to restructure. And that the economy now faces 9 major challenges.
China scopefeatures excerpts from Li’s work, which we summarize here:
- Slowdown in economic growth:China’s economy is slowing and this isn’t temporary it reflects “the market’s direction”. This means that “companies will face losses to the point of bankruptcy” and the pressure on employment will rise.
- Long-term inflation:Chinese consumer price inflation has gone from 6.5 percent in 2011, down to 2.2 percent in June 2012. Inflation is an intermediate to long-term problem for China which means the country needs to increase its “tolerance” for and “resilience” to inflation.
Posted by byu2012 on September 7, 2012
BANGKOK: Asian stock markets fell on Tuesday as uncertainty persisted about what authorities in the U.S., China and Europe might do to deal with a souring global economy.
The previous day’s trading was dominated by a survey suggesting that China’s manufacturing sector was contracting. Though a bad sign for the global economy, the data raised expectations that Chinese authorities will announce additional measures to bolster growth.
But the People’s Bank of China appears to be resisting calls for more aggressive measures after the huge stimulus in response to the 2008 global financial crisis fueled inflation and a wasteful spending boom.
“We are all waiting for more monetary policy to come out,” said Linus Yip, strategist at First Shanghai Securities in Hong Kong. “We are all waiting and hope the PBOC will do something.”
Japan’s Nikkei 225 index fell 0.1 percent to 8,773.14. Hong Kong’s Hang Seng lost 0.3 percent to 19,497.47 and South Korea’s Kospi shed 0.2 percent to 1,907.70. Australia’s S&P/ASX 200 fell 0.6 percent to 4,303.30.
Posted by byu2012 on September 5, 2012
Yoshihiko Noda, Japan’s prime minister
Japan’s political gridlock threatens to curtail the government’s ability to apply fiscal stimulus as a rebound falters in the world’s third-largest economy.
Opposition parties in the upper house of parliament stymied legislation approved in the lower house Aug. 28 that enables the issuance of 38.3 trillion yen ($490 billion) of deficit- financing bonds, seeking to force Prime Minister Yoshihiko Noda into an early election. The government could hit a spending ceiling as soon as October, according to the Finance Ministry.
The freeze may suspend outlays from this year’s budget for the first time, according to Goldman Sachs Group Inc., and limits Noda from proceeding with the supplementary spending package he mooted in July. With economists increasingly seeing an economic contraction this quarter, the deadlock adds to risks facing global expansion that include a so-called fiscal cliff of spending cuts and tax increases in the U.S. at year-end.
“The impasse on deficit-covering bonds may delay the compilation of a stimulus package and would be a drag for the economy,” said Taro Saito, Tokyo-based director of economic research at NLI Research Institute and a past winner of a Japan Center for Economic Research award for accuracy in forecasting. “This is not as severe as the U.S. fiscal cliff but could be said to be Japan’s fiscal slope.”
Posted by byu2012 on September 4, 2012
Latest Treasury InternationalCapital report suggests that China has the net buying of US Treasury securities in June 2012, albeit only marginally, with holding increased by about US$300 million. China remains the largest holder of US Treasury securities, and Japan continued to come second.
In the chart below, we show the US Treasury securities holding of China and Japan as per TIC report among with the size of China’ FX reserve as reported by the People’s Bank of China. Obviously they are on different scale. The pace of FX reserve accumulation by China has already slowed, especially since last year, partly due to the FX effect of the Euro’s weakness as well asselling of FX assets due to capital outflow.
Posted by byu2012 on August 15, 2012
HTC, the Taiwanese company that is one of the leading makers of Android-powered smartphones, is the controlling shareholder in Beats Electronics, the Santa Monica (Calif.)-based producer of high-end headphones founded by rap producer Dr. Dre and Jimmy Iovine, the chairman of Interscope, Geffen and A&M. You wouldn’t know that, though, from the statement Beats issued on July 2 announcing its acquisition of MOG, an on-demand music service. The announcement trumpets the importance of the deal for Beats—and does not mention that the California company is part of HTC, which bought control of Beats last year.
The omission is just a small indicator of a problem that HTC and other Taiwanese companies face as they try to survive as consumer brands. Taiwan is an important part of the global economy, thanks largely to its electronics industry, and the backbone of the industry has long been companies that produce computers, chips, displays and other components for others. The classic example of a Taiwanese company that does this sort of work in the background, without putting its own brand on the finished goods, is Foxconn, which makes iPhones and iPads for Apple.
Posted by Admin on July 17, 2012
On a sultry afternoon in May, Richard Friedman sits in the back of a 1990s Buick with faulty air conditioning, mired in traffic in downtown Yangon (formerly Rangoon). The rainy season in Myanmar—also known as Burma—has just begun, and the sky is a leaden gray; the temperature is pushing 95F. Friedman, one of the highest-profile American investors to be lured by the siren call of this newly opened Southeast Asian country, peers out at a sweep of colonial-era buildings, many of them derelict. We drive past the old British Customs House and the former Pegu Club, where Rudyard Kipling spent his only night in Burma, in 1889, while traveling from Calcutta to San Francisco. The stories he heard there inspired his poem “Mandalay.”
A short, vigorous 72-year-old who coached the Harvard ski team after graduating from Dartmouth in the early 1960s, Friedman made his name turning neglected but historic properties into top-flight hotels. In 2005 he redeveloped San Francisco’s 1907 Williams Building into a $180 million mixed-used project that includes the St. Regis Hotel, condominiums, and the Museum of the African Diaspora. Two years later he transformed the 19th century Charles Street Jail on Boston’s Beacon Hill into the four-star Liberty Hotel. Friedman is the president and chief operating officer of Carpenter & Co., a Cambridge (Mass.)-based real estate development and management company. He’s also a major Democratic fundraiser. During the 1990s, the Clintons used his beachfront home on Martha’s Vineyard as their summer White House half a dozen times.
Posted by Admin on July 17, 2012
Japan will not import any Iranian crude in July as buyers held back to avoid any risk of running foul of EU sanctions targeting insurance, which have severely disrupted the OPEC member’s supplies, industry and government sources said on Wednesday.
Japan will join South Korea among top Asian buyers in halting all Iranian imports this month due to sanctions imposed by Brussels on Sunday that aim to cut Iran’s oil revenues and force Tehran to curb its nuclear program. The measure will cost Iran dearly in July, as Japan and South Korea imported a combined 256,000 barrels per day (bpd) of Iran’s crude in May, worth over $750 million at current oil prices.
The EU oil embargo has stopped European insurers, who dominate the maritime sector, from offering cover on Iranian crude. Industry watchers say the EU step has proven to be the hardest hitting measure in the West’s arsenal of sanctions aimed at Iran.
Posted by Admin on July 5, 2012
BY ALEX FRANGOS
As the Euro Zone Flirts With Disaster, Asian Economies Stand at Varying Degrees of Preparedness
HONG KONG—Greek elections may have assuaged fears of a European financial contagion spreading to Asia, at least for the moment. But as troubles brew in Spain, where borrowing costs shot up again Tuesday, and as Greece faces more painful cuts to meet bailout targets by September, many wonder who in Asia is most exposed should Europe’s economy and financial system finally crack.
Lessons from the 2008 financial crisis show that while all of Asia tends to get hit when the world economy shudders, the severity differs depending on which countries have the biggest trade and financial linkages to the rest …
Posted by Admin on June 21, 2012
By Dominic Lau TOKYO, June 21 (Reuters) – Japan’s Nikkei average broke above 8,800 for the first time in five weeks on Thursday, as sentiment was buoyed by a softer yen after the U.S. Federal Reserve held back from more aggressive stimulus steps to prop up the economy.
The benchmark Nikkei hit its highest closing level since May
17 and has recovered 7 percent from a six-month low on June 4.
Shrugging off a survey showing China’s vast manufacturing sector slowing for the eighth straight month, the Nikkei rose 0.8 percent to 8,824.07, driven by exporters, such as Honda Motor Co Ltd, up 3.5 percent, and Canon Inc, adding 1.4 percent. The Fed disappointed some investors by delivering only a limited expansion of monetary stimulus on Wednesday. It extended its “Operation Twist” beyond its original June expiration to the end of the year to boost the flagging U.S. recovery. It also cut its GDP growth estimates for the year.
“The fact they eased at all is a plus for the U.S. economy, while holding off on QE3 is good for the Japanese market as it didn’t strengthen the yen,” said Hideyuki Ishiguro, assistant manager of investment strategy at Okasan Securities.
Posted by Admin on June 21, 2012
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) — Evergrande Real Estate Group Ltd. was drawn into the controversy over questionable accounting practices at listed Chinese companies Thursday, as its board denied allegations of financial impropriety leveled by the Los Angeles–based stock-commentary website Citron Research.
Signing ceremony for the development projects of Chongjiang Jiangjin Evergrande Splendor International Skiing Health Resort and Chongqing Yucai Middle School n January 2012.
The Hong Kong–listed shares of Evergrande HK:3333 -11.38% EGRNF -6.14% ended down 11.4% at 3.97 Hong Kong dollars (51 U.S. cents), shedding 51 Hong Kong cents from its previous session’s close, and paring an earlier, steeper drop of as much as 88 Hong Kong cents.
Citron said in summary research posted on its website that it had concluded that Guangzhou-based Evergrande is “essentially an insolvent company that has consistently presented fraudulent information to the investing public.”
Posted by Admin on June 21, 2012