China - Economic Data & News 09 (Mar 13 - Jul 14)

Re: China - Economic Data & News 09 (Mar 13 - Dec 14)

Postby behappyalways » Mon Jun 16, 2014 10:38 am

From The Economist

Commodity finance in China

An assay-light strategy

A fraud investigation casts a shadow over China’s metal imports

Jun 14th 2014 | From the print edition

It’s hard to untangle


AT THE best of times, seizing collateral on defaulted loans in China is a fraught task, plagued by patchy enforcement. These are not the best of times in the port of Qingdao, a trading hub in the north-east. Police are investigating whether companies have committed fraud by pledging the same holdings of copper and aluminium to multiple banks, multiple times. The banks are scrambling to see how much of the metal sitting in Qingdao’s warehouses actually belongs to them.

More than just a fraud, the tale exposes China’s financial idiosyncrasies and the lengths to which firms sometimes go to borrow money. Regulators have tried to choke off credit to metal traders in recent years as part of efforts to slow pell-mell construction. Traders have devised a simple workaround. Banks have been willing to grant them letters of credit to fund purchases of metal. The traders have used the credit to buy some and then, on occasion, immediately resell it, leaving them with cash to invest in high-yielding shadow-bank products.

This ruse can earn enticing returns. The gap between the traders’ investment returns and their funding costs can reach ten percentage points. And that is before fraud enters the picture. By obtaining letters of credit from different banks to buy the same copper again and again, traders amplify their returns.

The crucial ingredient in this deceit is a receipt of ownership issued by the warehouse where the metal sits. The 21st Century Business Herald, a Chinese newspaper, said receipts tied to the same stash of metal had been issued ten times.

Financial alchemy of this kind is common on the margins of China’s banking system. But in this case, it comes with global connections. First, there is China’s demand for commodities. The Qingdao investigation will make banks more reluctant to grant letters of credit, even when legitimate, hampering imports and so weighing on prices. Second, foreign banks have been big issuers of letters of credit to Chinese metals traders. Goldman Sachs estimates that commodity-backed deals account for as much as $160 billion, or about 30%, of China’s short-term foreign-exchange borrowing. Only a tiny sliver of that is believed to be at risk in Qingdao, but foreign creditors may become more skittish. Call it collateral damage.
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Re: China - Economic Data & News 09 (Mar 13 - Dec 14)

Postby winston » Mon Jun 16, 2014 11:04 am

Li Keqiang predicts Chinese 2014 GDP growth of 7.5% at least

Chinese Premier Li Keqiang, in an article written on British Times, said it is not abnormal, nor problematic, for the Chinese economic to slow its pace, as China needs an appropriate pace for growth, and despite the downside pressure, the economy is still moving forward.

The Chinese government has prepared to adjust the policy and is confident to achieve the yearly target for a growth of 7.5% this year, Li added.

Source: AAStocks Financial News
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Re: China - Economic Data & News 09 (Mar 13 - Dec 14)

Postby winston » Mon Jun 16, 2014 1:30 pm

Xi Jinping stresses construction of nuclear power projects at eastern coastal areas

Chinese President Xi Jinping hosted the sixth meeting of Central Financial Work Leading Group, saying that on the basis of the highest international safety standards, China will strive to launch the construction of nuclear power projects at the eastern coastal areas.

While studying on the Thirteenth Five-Year Plan for energy strategy, the cooperation in gas and oil area with Central Asia, the Middle East, the Americas and Africa will be strengthened.


Source: AAStocks Financial News
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Re: China - Economic Data & News 09 (Mar 13 - Dec 14)

Postby behappyalways » Tue Jun 17, 2014 12:54 pm

Troubled Shanxi Coal Mining Giant Plays for Time amid Debt Struggles
http://english.caixin.com/2014-06-16/100691171.html
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Re: China - Economic Data & News 09 (Mar 13 - Dec 14)

Postby behappyalways » Wed Jun 18, 2014 8:03 am

Qingdao Metals Trader Facing Probe over Collateral 'Got 15 Bln Yuan in Loans'
http://english.caixin.com/2014-06-17/100691852.html

‘Am I a Good Person?’ Documentary Chronicles Life With Alibaba’s Jack Ma
http://blogs.wsj.com/chinarealtime/2014 ... s-jack-ma/
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Re: China - Economic Data & News 09 (Mar 13 - Dec 14)

Postby behappyalways » Wed Jun 18, 2014 2:34 pm

World Bank Economist: China May Face U.S.-Style Financial Crisis
http://blogs.wsj.com/chinarealtime/2014 ... al-crisis/
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Re: China - Economic Data & News 09 (Mar 13 - Dec 14)

Postby winston » Fri Jun 20, 2014 4:42 am

SOEs fuel economic hope with Jan-May profit gains

Annual profit growth at China's state firms quickened in the first five months, data showed yesterday, indicating the world's second-largest economy may be stabilizing after a weak start to the year.

Of these, non-financial SOEs made combined profits of 943 billion yuan, up 6.9 percent from a year earlier, the ministry of finance said.

Growth was up from a rise of 6.5 percent in the first four months. The faster growth came after a batch of data showed signs of growth stabilizing in May.

Firms owned by Beijing reported a profit rise of 7.7 percent in the first five months while those owned by local governments saw an increase of 4.4 percent.

Automobile, building materials and property/ construction firms posted relatively big gains in profits, while growth in the chemical, coal and light manufacturing sectors fell by a large margin.

Steel and non-ferrous metal firms suffered losses.

Total assets rose 11.3 percent to 95.7 trillion yuan at the end of May, while total liabilities climbed 11.7 percent to 62.4 trillion yuan.

Despite perennial promises from Beijing to allow more private investment in the economy, state firms continue to dominate the country' key industries.

Source: REUTERS
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Re: China - Economic Data & News 09 (Mar 13 - Dec 14)

Postby winston » Fri Jun 20, 2014 4:49 am

There is also the likely fallout from the Qingdao Port mystery, where a mining group used the same stockpile of metals as collateral for several loans, which may lead to banks losing up to 16 billion yuan (HK19.91 billion).

Is it just the tip of the iceberg?
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Re: China - Economic Data & News 09 (Mar 13 - Dec 14)

Postby winston » Sun Jun 22, 2014 9:36 pm

China Is World’s Largest Debtor

HONG KONG--China now has more outstanding corporate debt than any other country, having surpassed the US last year, 12 months sooner than expected, Standard & Poor’s (S&P) said today.

“We estimate corporate debt in China at US$14.2 trillion (RM45.7 trillion) at the end of 2013, compared with US$13.1 trillion in the US.

“We expect that through the end of 2018, the debt needs of China, with its comparatively high nominal gross domestic product growth, will reach US$20 trillion, a full one-third of the almost US$60 trillion in global refinancing and new debt needed.”

Cash flow and leverage at China’s companies, while better than global peers in 2009, have worsened in subsequent years, according to S&P, which compared corporates in Asia’s biggest economy with more than 8,500 listed companies globally.

China’s corporate issuers account for about 30% of global corporate debt, with one-quarter to one-third of it sourced from China’s shadow banking sector, S&P said.

That means as much as 10% of global corporate debt, about US$4 trillion to US$5 trillion, is exposed to the risk of a contraction in China’s informal banking sector.

“With China’s economy likely to grow at a nominal 10% per year over the next five years, this amount can only increase,” the S&P analysts wrote.

The emergence of Chinese companies as the biggest group of corporate borrowers and “faster debt growth in sectors related to the growing global middle class are likely to drive global corporate debt issuance over the next four years,” Jayan Dhru, S&P’s global head of corporate ratings wrote.

“The US continues on the path to economic recovery while the eurozone struggles with marginal growth, but the bottom line is that this is a China story. Higher risk for China’s borrowers means higher risk for the world.”


Source: Malaysia Digest
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Re: China - Economic Data & News 09 (Mar 13 - Dec 14)

Postby winston » Mon Jun 23, 2014 5:51 pm

by behappyalways

China Rising

A four-part series that gives a rare insight into the country on the move, with history in tow

http://www.aljazeera.com/programmes/spe ... 81245.html
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