China - Economic Data & News 05 (Oct 10 - Jun 11)

[LenaHuat]

Hi investar
Yes, it's excellent. The China story, esp of the interior urbanization, is good for the next 20 to 25 years.
Fotos are so well taken too, juz like K's of London. ThankQ .

[LenaHuat]

Ikea and McDonald's are expanding in China Consumption and investments, both engines are turbocharging.

[winston]

ANALYSIS-China's QDII funds boom faces bumpy road ahead

* 20 QDII funds launched in 2010, tripling total number under scheme
* Most new QDII funds see early redemptions
* Rising yuan deters investments in QDII funds
* Some see long-term potential, 10-fold rise in QDII assets to $100 bln

By Samuel Shen and Jacqueline Wong

SHANGHAI, Dec 17 (Reuters) - China's asset managers are using speedy regulatory approvals to launch overseas investment funds despite flagging demand and lackluster returns for such products, likely leading to a shakeout in an important part of the nation's $350 billion funds industry.

About 20 funds have been launched this year under the Qualified Domestic Institutional Investor (QDII) programme, which allows Chinese money to be invested overseas, bringing the total under the scheme to 30 now, triple the number at the end of last year, and some expect even more next year.

The funds, however, are not being launched because investors are clamouring for them. They are being introduced because Beijing has resumed giving the green light for them this year and has stepped up the pace of approvals with a view to getting the Chinese to diversify their assets.

But investors, who lost money in offshore funds during the financial crisis in 2008, are wary of them. Reinforcing that cautious view is the appreciation this year of the Chinese currency, which is discouraging them from taking foreign exchange risks through such investments.

"Investors remain cautious after they were burnt by QDII products during the crisis, while the rising yuan also curbs demand," said Zeng Linghua, analyst at fund consultancy Howbuy.


Source: Reuters

[winston]

sure ...

Banking Regulator: China Will Have Control Over Inflation Next Year

(RTTNews) - China's top banking regulator said on Friday that the country has the power to control price rises and inflation would be at a relatively reasonable level next year.

Liu Mingkang, chairman of the China Banking Regulatory Commission, said the recent inflation is completely different from the periods of very high inflation that China saw in the past.

China's inflation surged to a 28-month high of 5.1% in November, driven by a sharp increase in food and commodity prices.

China's central bank on December 10 raised banks' reserve requirement by 50 basis points for the sixth time this year.

The bank's governor Zhou Xiaochuan has said on Wednesday that the increases were intended to sterilize excess liquidity in the domestic market. He also noted that central bank will continue to use measures to mop up additional liquidity from the country's financial system.

Liu said China's industrial sector could feel the pinch of higher inflation as increased competition prevents them from transmitting the price rises to the downstream.

He said China's inflation was mainly due to higher food and property prices.


http://www.rttnews.com/ArticleView.aspx?Id=1509662

[winston]

On CNBC this morning:-

The guy from Shenyin Wanguo mentioned that China, is in the middle of adjusting the components of the CPI

[behappyalways]

A picture says a thousand words on China progress......

http://news.wenxuecity.com/messages/201 ... 39812.html

[winston]

An "expert" commenting from half the world away. How many times do they visit China ? Four times a year ?
These are all long term trends but the title says "crash in 2011". I can agree if they change the title to 'crash in this decade" ...

5 Reasons China Will Crash in 2011 By Michael Shulman

NEW YORK (InvestorPlace) -- According to the Chinese zodiac, 2011 will be the "Year of the Rabbit," which is considered to be a lucky sign. But I think China's luck is about to run out, and I'm not the only one who sees the writing on the wall.

Despite what you hear from the China bulls out there -- and there are plenty of them -- 2011 will not be the "Year of China" for investors ... unless they plan on shorting China stocks and ETFs, that is.

Here are five reasons to bet against China in 2011:


1. The Great Chinese Credit Bubble

The most pernicious impact China is having on world markets stems from a massive credit bubble similar to the one that blew up Japan in the early 1990s and the U.S. markets in 2007-2008. Hedge fund manager Mark Hart, who made a killing anticipating the U.S. subprime mortgage meltdown and the European debt crisis, is now focusing on China, saying in an article in The Telegraph that China is in the "late stages of an enormous credit bubble," and the "economic fall-out" will be as "extraordinary as China's economic out-performance over the last decade." Here are some of the problems Hart highlights:

a) Property construction: Excess floor space exceeds 3.3 billion square meters, yet 200 million square meters per year is being constructed.

Winston: What 's his definition of excess floor space ?


b) Property prices: The average price-to-rent ratio of eight key cities is 39.4 times, which compares to 22.8 times in the United States just before the housing crisis.

Winston: Is taking averages going to give you an accurate picture ?


c) Banking: Chinese banks are concealing the extent of their exposure to the credit bubble in shell entities that borrow from the banks and invest in fixed assets. In short, this bubble is ready to burst.

Remember, Chinese state banks are arms of the government, and their debts are assumed to be backed by the government. (Do the names Fannie and Freddie come to mind?) And, according to Hart's analysis, the government-debt-to-GDP ratio is 107%, which is five times higher than "official" numbers.

Winston: And what is the government to debt ratio of Japan and the US ?


2. The Great Chinese Labor Force

According to Chinese data, as well as more reliable sources such as the World Bank, in the next five years, the Chinese labor force available for industry will add the same number of industrial workers as currently employed in the United States and Europe. This mass increase is the single greatest deflationary force on the planet.


3. The Great Chinese Commodity Gobbler

China's commodity imports are driving the price of everything from iron and coal to rare earth minerals. The country's excess capacity is staggering. For example, Mark Hart's analysis states that China's steel output is more than that of the next seven largest producers combined, and their excess steel capacity is more than the EU and Japan's combined total production so far this year. Additionally, only 65% of the cement produced (after exports) has been consumed.

This has created false prosperity and inflated asset values in exporting countries. The bulls believe the country will eventually use this capacity and consume these commodities as it builds out roads, bridges and other public works. However, this kind of public-funded consumption can only go on for so long since it is fueled by government credit, which is already overextended.


4. The Great Chinese Currency Reserve

The Chinese love to remind the world about their currency reserves and drop hints about shifting away from the U.S. dollar if the United States does not do this or that. China is now in a trap of its own making by restricting the flow of capital and pegging its currency, the yuan, to the dollar.

As the value of Chinese foreign reserves diminishes, so does the capital base supporting the credit bubble, meaning China is not likely to revalue its currency, and so the trade war begins.


5. The Great Chinese Nation-State

China has the world's largest population, and this has manifested itself in behavior similar to emerging nation-states in the middle of the 19th century. More and more, the country is characterized by its bellicose gesturing and militant statements when anyone steps on its toes.

Recent events on the sea, on the Korean peninsula, in cyberspace and in Chinese prisons have laid bare China's grasp for world power, exposing the nation to harsh criticism, and with this politicians in the United States and Europe have begun to abandon a veneer of tolerance for Chinese trade policies. The trade war, if it comes, will be a trigger for major market problems

Winston: This I can agree but will the market crash because of this ?




http://www.thestreet.com/story/10955366 ... -2011.html

[winston]

China's Wen seeks to assure public about inflation

Chinese Premier Wen Jiabao tried Sunday to reassure the public about the government's ability to control inflation, a day after China raised interest rates amid worries that rising prices could hurt social stability.

Wen's remarks underscore the government's concerns about anger over inflation — an especially sensitive topic in a society where poor families spend up to half their incomes on food. Rising incomes have helped offset price hikes, but inflation undercuts economic gains that help support the ruling Communist Party's claim to power.

"I can tell everybody, the government has complete confidence in tiding over this difficult stage together with the masses," Wen said while taking questions from callers during a visit to China National Radio's offices, according to a report on the station's website. The callers were not identified by name.

Wen expressed confidence in the government's ability to control price increases, pointing to large grain reserves as well as moves to support production by reducing and waiving taxes.

He also mentioned the government's twice raising interest rates and hiking the banks' reserve requirement ratio — meaning they have to hold more deposit funds in reserve rather than lending them out — six times this year to curb lending.

Wen also pledged to focus more efforts on easing home prices, acknowledging that measures taken this year had not been well implemented.

The government will work to increase the supply of affordable housing and will strictly control speculation in property, he said.

"I believe after a period of efforts, housing prices will be back to reasonable levels. I have such confidence," he said.

Wen, the leadership's most popular figure, also sought to demonstrate that the government recognizes the problem.

Responding to a listener's laments about rising prices, Wen said: "Your words hurt my heart. Indeed, in recent times prices have risen across the nation, and under these circumstances, the lives of middle- and low-income earners are evidently more difficult."

The State Council, China's Cabinet, has been trying to rein in food prices by launching efforts to increase production of vegetables and other basic goods. Authorities are cracking down on hoarding and speculation they say are partly to blame for the price rises.

Inflation jumped to 5.1 percent in November, a 28-month high, despite a crackdown on speculation and repeated moves to curb a flood of money circulating in the economy from massive stimulus spending and bank lending.

On Saturday, the government announced that the benchmark one-year lending rate will climb 25 basis points to 5.81 percent, while the one-year deposit rate will go up the same amount, to 2.75 percent — effective Sunday.

Chinese banks lent a total of 7.45 trillion yuan ($1.1 trillion) in January-November and are certain to overshoot the government's official 2010 lending target of 7.5 trillion yuan.

A frenzy of lending over the past two years has helped China rebound quickly from the global crisis but, combined with bad weather and rising global commodity prices, has also complicated efforts to cool inflation.

Source: AP News

[winston]

How come Chinese Equities did not go up because of their strong growth ?

So why would US equities go up because of the improving US economy ?


China’s Dog Of A Year By Prieur du Plessis

The Shanghai Composite fell 11.4% this year even as China overtook Japan as the world’s second largest economy.

Yet Chinese equities are still in demand internationally, leading to wildly divergent valuations, as James Mackintosh, FT’s investment editor, explains.

http://www.dailymarkets.com/stock/2010/ ... of-a-year/

[winston]

China to crack down on lavish public-funded fetes

China plans to crack down in the coming year on lavish parties and seminars organized by government officials, hoping to placate a public angered by corruption and accounts of sex and booze-fueled fetes held at taxpayer expense.

Along with vast improvements in quality of life for most Chinese, China's booming economic growth has led to an ever-larger gap between rich and poor and a surge in corruption that brings unwanted public criticism. The Communist leadership sees any public discontent as a threat to government stability.

Many of the parties made headlines this year, including some at which excessive drinking led to deaths of revelers. Other bashes were memorialized in a diary that ended up on the Internet — allegedly written by an official who was later arrested — chronicling casual sex, drinking and under-the-table payments at parties.

Lavish official tours to Las Vegas and other places cost taxpayers about 400 billion yuan ($58 billion) every year, according to state broadcaster CCTV. On one such trip two years ago, officials spent taxpayers' money on a $700-a-night Las Vegas hotel and visits to a San Francisco sex show.

It reached a point where President Hu Jintao gave a speech in April warning officials of the temptations of beautiful women, money and power.

Still, the government says some progress is being made. Spending of public money on overseas junkets, receptions and cars declined 5.7 billion yuan ($860 million) in 2010, according to Wu Yuliang, the ruling Communist Party's top corruption-fighting official. He did not say how much was spent on such activities overall.

Wu said 113,000 officials were punished this year for corruption, with more than 4,300 cases transferred to judicial authorities for possible legal action.

Wu, speaking at a news conference Wednesday, addressed the lavish parties specifically, saying a special campaign was under way to "eradicate the phenomenon of extravagance and waste."

China has launched numerous anti-graft campaigns in recent years. Some have seen judges and high-profile party figures sentenced to years in prison. Others have brought down some of China's top corruption hunters, who were found to be lining their own pockets. One even saw the head of the country's food and drug agency executed for approving fake medicine in exchange for cash.

Still, some critics say graft is too deeply ingrained in the system and can't be solved with regulations.

Source: AP News