China - Economic Data & News 02 (Nov08 - May09)

Re: China - Economic Data & News (Nov08 - May09)

Postby winston » Wed May 20, 2009 8:16 am

Need to get the number in perspective. 5b Yuan is just Sin$1b. That is not a shock & awe number. and if the economy is doing well, why the need to increase such subsidies ?

5b yuan subsidy for new cars to drive up spending

China has announced a massive expansion of subsidies for people who buy new cars and home appliances in a bid to lift the crisis- battered economy.

The State Council, or cabinet, decided to increase the money available to subsidize car replacements to 5 billion yuan (HK$5.6 billion), from 1 billion yuan when the program was announced last month, Xinhua News Agency said.

China started to subsidize car replacements in 2003 and increased the fund to 600 million yuan last year, reports said.

The government would also earmark 2 billion yuan this year to subsidize consumers who get new home appliances, Xinhua said.

A trial program would be launched in four provinces and five cities including Beijing and Shanghai to subsidize the replacement of TV sets, refrigerators and three other types of home appliances.

"In order to further boost domestic demand ... it is necessary to implement policies to encourage auto and home appliance replacements," the report said, quoting a statement issued at the end of the meeting which Premier Wen Jiabao presided over. "It will not only help expand domestic consumption but also improve energy and resources efficiency and cut pollution."

The new incentive is the latest in a series of government measures to encourage consumers to spend in the face of slumping exports as foreign demand weakened due to the global financial crisis.

Previously China introduced policies to subsidize farmers' purchases of home appliances and small cars. AGENCE FRANCE-PRESSE
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Re: China - Economic Data & News (Nov08 - May09)

Postby winston » Wed May 20, 2009 12:28 pm

Business Conditions improving or not ? Electricity usage down. Taxation down. Revenue down. Massive Stimulus ( if conditions good, why the need to stimulate ? )..

DJ China State-Owned Cos' Jan-Apr Operating Rev CNY5.98T -Xinhua

DOW JONES NEWSWIRES China's state-owned enterprises had total operating revenue of CNY5.98 trillion in the January-April period, down 7.3% from a year earlier, the official Xinhua News Agency reported Wednesday, citing the finance ministry.

The decline in revenue was 0.3 percentage points smaller than that of the first three months, Xinhua said.
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Re: China - Economic Data & News (Nov08 - May09)

Postby winston » Wed May 20, 2009 3:37 pm

China not going to save the world ?

World Bank Says China Recovery Hopes May Be Premature (Update3) By Kevin Hamlin

May 20 (Bloomberg) -- Enthusiasm about an economic recovery in China may be “premature” as private investment lags behind government spending, the World Bank said.

“Until we see a recovery in private investment, it’s hard to get too excited about the future,” David Dollar, country director for China, said at a forum in Beijing today.

The Shanghai Composite Index has climbed 47 percent this year on optimism that a 4 trillion yuan ($586 billion) stimulus package will revive growth after exports collapsed. The world’s third-biggest economy is “struggling” and may fall short of the government’s target of an 8 percent expansion this year, Oppenheimer & Co. said this week.

Private investment, the main driver of growth, was “way down” in the first quarter, Dollar said, without citing a figure. Manufacturers have excess capacity and “a lot of the real-estate sector is over-built,” he said.

( Just walk along Financial Street in BJ and Lu Jia Jui in Shanghai and see how many empty offices there are.. )

Shanghai’s stock index fell 0.3 percent as of 1:13 p.m. local time.

While China is the only one of the world’s five biggest economies still expanding, growth slowed to 6.1 percent in the first quarter, the weakest pace since at least 1999.

Private investment is “the main source of job creation,” Dollar said. “It’s very important for private investment to come back if China’s going to be able to continue to grow at a high rate that is sustainable.”

Economy ‘Stabilizes’

Stimulus spending has “stabilized” the Chinese economy, he said, adding that it can’t be the source of long-term sustainable growth and more should be done to increase consumption.

The government’s efforts to spur domestic demand include subsidies for replacing older vehicles with newer models, a program that the State Council said yesterday would be widened to include home appliances.

Other steps should include raising the ceiling on interest rates for deposits, encouraging spending by improving returns for savers, according to Dollar.

A 30.5 percent gain in urban fixed-asset investment in the first four months from a year earlier, sparked by the stimulus plan, stoked investors’ optimism that a recovery is building.

Mark Williams, an economist with Capital Economics Ltd. in London, said May 15 that the official numbers don’t tally with other indicators, such as steel prices and excavator sales, suggesting that investment remains weak.

A recovery “lacks momentum” and hopes for a rapid rebound are receding, Williams said.

The central bank cautioned in a quarterly monetary policy report released May 6 that surging lending has been overly concentrated on government projects at the expense of small businesses. The recovery’s foundations aren’t solid, it said.

The World Bank, a lender formed after World War II to help nations reduce poverty, forecast in March that China’s economy will grow 6.5 percent this year.
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Re: China - Economic Data & News (Nov08 - May09)

Postby winston » Wed May 20, 2009 7:13 pm

China tightens rules to stop misuse of loans

BEIJING - China's banking regulator is tightening rules to prevent the embezzlement of bank loans after a huge burst of lending was unleashed to support the economy, domestic media reported on Wednesday.

The China Banking Regulatory Commission will require banks to temporarily hold in escrow any loan bigger than 5 million yuan or exceeding 5 per cent of the overall investment, instead of directly giving them to the applicants, the official Shanghai Securities News reported.

Once the borrower has worked out contracts or agreements for the funds, the bank will disburse the money to third parties.

The rule is intended to make it more difficult to misuse bank loans, it said.

Caijing magazine reported that an unnamed senior regulator told a recent internal meeting that new risks were mounting in the banking system because of the wave of big investment projects initiated by local governments.

Chinese banks lent a record 5.17 trillion yuan in the first four months of 2009, more than Beijing's minimum target of 5 trillion yuan for the whole of the year. Fixed-asset investment growth in urban areas shot up 30.5 per cent in the first four months, the fastest rate in nearly three years.

Although officials have welcomed the loan surge as vital for boosting the economy, there have also been signs that they are increasingly uncomfortable with how some of the money has been used.

The National Audit Office said on Monday that some companies had used fake documentation to obtain low-rate discounted bill financing from banks and redeposited the money at a higher interest rate, which had affected support for the real economy and bloated bank loans and deposits.

The National Audit Office said local governments had stumped up only 48 per cent of their share of funding in some cases, as part of Beijing's 4 trillion yuan stimulus package. -- REUTERS
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Re: China - Economic Data & News (Nov08 - May09)

Postby winston » Wed May 20, 2009 7:14 pm

China to give some rural lenders 2% subsidy

BEIJING - China will soon provide qualified rural financial institutions with subsidies equal to 2 per cent of their loan books, the Ministry of Finance said on Wednesday, in Beijing's latest effort to support the sector.

The payouts would go to rural banks, lending companies and rural credit co-operatives that expanded their overall loans during the previous year, had a loan-deposit ratio of at least 50 per cent, and met other requirements set by the banking regulator, the finance ministry said on its website.

The subsidies would equal 2 per cent of the average loan book from the previous year of each institution and would be paid by the central government, it said.

As well as authorising a limited number of non-deposit-taking lending companies, China has also encouraged banks to establish a presence in rural areas, for example by lowering capital requirements, to help reduce the income gap between cities and the countryside.

There were 108 such rural financial institutions as of the end of January. Western lenders that have set up rural branches or lending companies in China include Citigroup, HSBC Holdings and Standard Chartered Plc. -- REUTERS
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Re: China - Economic Data & News (Nov08 - May09)

Postby winston » Wed May 20, 2009 7:16 pm

Profits at China state-owned cos down sharply

BEIJING - China's state-owned firms saw their profits fall sharply in the first four months, the government said on Wednesday, in yet another sign the Chinese economy continued to suffer from the global crisis.

State-owned enterprises across the country made 323.6 billion yuan (US$47.4 billion) in profit from January to April, down 32.3 per cent from the same period of 2008, said a statement posted on the finance ministry's website.

But the decline was smaller than that seen in the first quarter, when profits dropped by 36.8 per cent on year, according to the statement.

Revenues of the companies also decreased in the first four months of the year, falling 7.3 per cent year on year to 6.0 trillion yuan, it added.

As a result, taxes paid by state-owned companies in the period fell by 9.1 per cent to 577.6 billion yuan, the statement said.

China's trade-reliant economy has been severely impacted by the global crisis, with economic growth expected to slow to a 19-year low of 6.5 per cent in 2009, according to the World Bank.

The tougher times are hurting the corporate sector, including state companies which have increasingly been forced to operate on market conditions. -- AFP
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Re: China - Economic Data & News (Nov08 - May09)

Postby millionairemind » Thu May 21, 2009 7:08 am

China’s Recovery Is Stalling, Credit Suisse Says (Update1)
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By Allen Wan

May 20 (Bloomberg) -- China’s economic recovery began to stall in the second half of April and is slowing further this month, raising concern that the rebound won’t be as “strong as many recently have hoped,” Credit Suisse Group AG said.

Retail industries including electronics and department stores have weakened, adding to a slump in power consumption, Dong Tao, a Hong Kong-based economist said in a report.

“The pace has slowed, even reversed in some sectors,” Tao said. “The trend has become more visible in May.”

Credit Suisse, Switzerland’s biggest bank by market value, joins the World Bank and Oppenheimer & Co. this week in raising concern about the strength of the world’s third-biggest economy. The World Bank said today enthusiasm about a recovery may be “premature.” Katherine Lu, Oppenheimer’s China equities director, said the economy is “struggling” and may fall short of the government’s 8 percent growth forecast.

The slowdown may spur declines in the country’s stocks, Credit Suisse said. The Shanghai Composite Index has climbed 46 percent this year on speculation a 4 trillion yuan ($586 billion) stimulus package will revive growth as exports fell after recessions in the U.S., Japan and Europe.

“Renewed concern about China’s growth momentum could trigger a market correction,” Credit Suisse said.

China’s economy expanded 6.1 percent in the first quarter, the slowest pace in almost a decade. Overseas shipments declined 22.6 percent in April from a year earlier, the customs bureau said last week.

Investment ‘Way Down’

Manufacturing may falter in coming months after expanding in March and April, Tao said. The Purchasing Manager’s Index, or PMI, rose to 53.5 in April from 52.4 in March. A reading above 50 indicates an expansion.

“The PMI runs a risk of slipping below 50 over the next few months,” Tao wrote.

David Dollar, the World Bank’s country director for China, said today it was “hard to get too excited about the future” for the economy because private investment is lagging government spending.

Private investment, the main driver of growth, was “way down” in the first quarter, Dollar said at a forum in Beijing, without citing a figure.

Xu Lin, director general of China’s department of fiscal and financial affairs at the National Development and Reform Commission, said the economy can “definitely” reach its 8 percent growth forecast this year. Gross domestic product will expand 7.8 percent in 2009, according to the median forecast of 10 economists surveyed by Bloomberg.

Nobel Prize-winning economist Joseph Stiglitz said this month that China may emerge “a winner” from the global crisis because the nation is buffered by a high savings rate and the government “has taken very rapid action.”
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Re: China - Economic Data & News (Nov08 - May09)

Postby millionairemind » Thu May 21, 2009 8:37 am

May 20, 2009
China tightens bank lending
SHANGHAI - CHINA'S banking regulator is tightening controls on lending to prevent abuses, as auditors reported that some spending for economic stimulus programs is being diverted or delayed.

The new rules, announced by the China Banking Regulatory Commission late Tuesday, apply to bank loans worth more than 5 million yuan (S$1.66 million) or accounting for more than 5 per cent of the total investment in a project.

They require banks to hold loans until project contracts are finalised and to disburse the funds directly to the businesses supplying goods and services. The aim is to make it more difficult for project managers to embezzle or otherwise misuse the money.

The banking regulator said it was seeking public opinion on the rules until June 16.

China's banks issued 5.2 trillion yuan in new loans in January-April alone, exceeding the minimum target for the year, as authorities rushed projects backed by a 4 trillion yuan economic stimulus package that aims to combat fallout from the global slump.

The lending spree has raised worries that some of the money may not be used as intended and is being diverted for other purposes, such as stock trading or other investments. Such practices are a chronic problem for China, and the rules announced on Tuesday were drafted over two years.

But the National Audit Office said in a report released earlier this week that it found that local governments were failing to disburse funds allocated for projects, causing delays and other problems.

Less than half of the funding due from local governments had been invested, it said.

In other cases companies used bank project financing for investment purposes, the audit office said in its report on 335 projects initiated in the first quarter of the year.

The report gave no specific examples. But state media have recently carried numerous reports of banking officials warning of rising risks from the flood of stimulus-related lending. -- AP
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Re: China - Economic Data & News (Nov08 - May09)

Postby winston » Thu May 21, 2009 11:57 am

Fears mount over mainland economic recovery

The mainland's economic recovery may have slowed or even gone slightly into reverse over the past month, two international banks said in separate reports.

Credit Suisse economists said economic activity appears to have softened in the second half of last month and that the trend is more pronounced in May, with weakness in the materials sector and power consumption spreading to retail sales.

''We argue that the recovery in China is still ongoing, but that the pace may not be as strong as many have hoped recently,'' Dong Tao, Asia economist at Credit Suisse, said in a report.

He forecast that the purchasing managers' index might slip below the watershed of 50 over the next few months, suggesting that the mainland manufacturing sector is contracting.

Economists at Merrill Lynch said the PMI, closely watched by the market as a leading economic indicator, would soften but remain above the 50-point mark, pointing to a milder expansion.

''Although manufacturing investment growth is not as strong as that of infrastructure, it has actually picked up so far this year, and we believe the momentum could be maintained for another several months,'' Merrill Lynch economists Ting Lu and T J Bond said.

''We need to factor in seasonality and focus on the big picture: the V-shape recovery of PMI,'' they said, noting signs of more property transactions and faster investment growth.

REUTERS
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Re: China - Economic Data & News (Nov08 - May09)

Postby winston » Thu May 21, 2009 3:39 pm

China May Cut Rates as Recovery Falters, Capital Economics Says By Paul Panckhurst

May 21 (Bloomberg) -- China may resume interest-rate cuts from mid-year as consumer and producer prices fall and hopes fade for a rapid rebound in the world’s third-biggest economy, Capital Economics Ltd. said.

Deflation means “real rates have risen sharply,” London- based economist Mark Williams said in a note e-mailed late yesterday. “If the recovery disappoints, further interest-rate cuts could resume from the middle of the year.”

Credit Suisse Group AG said this week that China’s recovery began to stall in the second half of last month and the World Bank cautioned against “premature” enthusiasm. Those views contrast with a 44 percent rally in the Shanghai Composite Index, driven by optimism that government-led investment will revive growth after trade collapsed.

The key one-year lending rate is 5.31 percent after five cuts in the final four months of last year. The first was as Lehman Brothers Holdings Inc. filed for bankruptcy and the central bank followed up with the biggest single reduction since the 1997-98 Asian financial crisis.

Williams predicts 81 basis points of cuts in both lending and deposit rates by year’s end after consumer prices fell for three straight months and producer prices declined by a record in April.

“Huge growth” in new project announcements because of the government’s 4 trillion yuan ($586 billion) stimulus package may not yet have generated spending gains of the same size, Williams said. “While growth appears to have stabilized, there is no sign of a rapid rebound.”

Stocks May Fall

China’s economic recovery is slowing further this month, raising concern that the rebound won’t be as “strong as many recently have hoped” and adding to the likelihood of a decline in stocks, according to Credit Suisse.

Retail industries including electronics and department stores have weakened, adding to a slump in power consumption, Dong Tao, a Hong Kong-based economist, said in a report.

“The pace has slowed, even reversed in some sectors,” Tao said. “The trend has become more visible in May.”

Manufacturing may falter in coming months after expanding in March and April, Tao said. The Purchasing Manager’s Index, or PMI, rose to 53.5 in April from 52.4 in March. A reading above 50 indicates an expansion.

“The PMI runs a risk of slipping below 50 over the next few months,” Tao wrote.

China’s economy expanded 6.1 percent in the first quarter, the slowest pace in almost a decade. Overseas shipments declined 22.6 percent in April from a year earlier, the customs bureau said last week.
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