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PRC Economy - New Reflections : April 20 2015

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sanjaykumar
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Re: PRC Economy - New Reflections : April 20 2015

Postby sanjaykumar » 16 Jan 2016 08:57

And those bania Hindus didn't. Har har and double har.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 16 Jan 2016 16:32

Jhujar wrote:Putin also did preemptive strike and locked them in with 2 major long term oil and gas contracts on high prices. China also invested huge in Canadian oil sand and in Venezuelan sour crude.


These long term contract are based on market price and not fixed price at that point in time , What it does it guarantees buying certain amount of oil/gas at prevaling price plus discount provided due to long term nature deal.

Oil prices wont be this low for long even last year the price went low only to be picked up in few month reached $61 , AFAIK the average price for Brent Crude in 2015 is $51. If Oil price were to hit the roof 6 months from now and reach $130 it wont make Chinese any smarter as no one really knows how Oil prices will move.


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Re: PRC Economy - New Reflections : April 20 2015

Postby Singha » 17 Jan 2016 16:08

http://www.nytimes.com/2016/01/18/busin ... .html?_r=0

seems there is a glut of capacity, weak finances in china shipping sector . now might be a good time for IN to pick the best of the litter and buy itself some large tankers and supply ships quickly and cheaply...while going ahead with domestic contracts too as planned.

one can never have too much logistics.

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Re: PRC Economy - New Reflections : April 20 2015

Postby NRao » 19 Jan 2016 06:49

Cover your 401Ks. The bubble is just about to burst.

Best of luck Pakis.

China economic growth slowest in 25 years

China's economy grew by 6.9% in 2015, compared with 7.3% a year earlier, marking its slowest growth in a quarter of a century.

Annual growth in the world's second-largest economy was in line with global expectations.

Beijing, meanwhile, had set an official growth target of "about 7%" for 2015.

However, Premier Li Keqiang has said a slower growth rate would be acceptable, as long as enough new jobs were created.


Oh yeah. How exactly?

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 20 Jan 2016 09:43

Chinese economy grew 6.9% in 2015

http://thebricspost.com/chinese-economy ... 9-in-2015/
China’s economy grew 6.9 per cent year on year in 2015, the slowest annual expansion in a quarter of a century, but it is still in line with the official target, according to data from the National Bureau of Statistics (NBS) on Tuesday.

Growth in the fourth quarter came in at 6.8 per cent year on year, the lowest quarterly rate since the global financial crisis, the data showed.

The Chinese government targeted an annual economic growth of around 7 per cent for 2015.

The country’s gross domestic product (GDP) reached 67.67 trillion yuan (about $10.3 trillion) in 2015, with the service sector accounting for 50.5 per cent, the first time the ratio exceeded 50 per cent, according to the NBS.

China’s economy still “ran within a reasonable range” in 2015, with its structure further optimized, upgrading accelerated, new growth drivers strengthened and people’s lives improved, NBS chief Wang Baoan told a press conference in Beijing.However, the country faces a daunting task in deepening reforms on all fronts and needs to step up supply-side structural reforms, he said.

Major economic indicators softened in 2015, with industrial output growth slowing to 6.1 per cent year on year from 8.3 per cent in 2014, NBS figures showed.

Urban fixed-asset investment continued to cool, expanding 10 per cent year on year, compared with 15.7 per cent in 2014. Retail sales rose 10.7 per cent, down from 12 per cent registered in 2014. Foreign trade ended 2015 with its first annual contraction in six years.

Sagging global trade, rising financial risks and changing domestic market conditions were among the factors affecting the economy, NBS Chief Wang told reporters on Tuesday.

He also pointed to an ailing property sector and stock market fluctuations but said their impact on the economy was either limited or yet to be evaluated.

Wang dismissed worries about China’s government debts, noting that they accounted for less than 40 per cent of the country’s GDP, well below the internationally accepted alert line of 60 per cent.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 21 Jan 2016 23:04

Ben Bernanke: "China Is Contained"; Ray Dalio Agrees

http://www.zerohedge.com/news/2016-01-2 ... lio-agrees

Although Beijing has a “balance of payments challenge,” Dalio says China’s problems are manageable.

Ben Bernanke agrees. "I don't think China's economic slowdown is that severe to threaten the global economy," the former Fed chair said at the Asian Financial Forum this week, before insisting that "the U.S. and China are not as closely tied as the market thinks."

Back in Davos, Dalio called the fact that Chinese debt is growing faster than incomes "unsustainable but understandable". Debt restructurings have been managed “superbly” in China, he adds.


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Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 27 Jan 2016 08:40

http://news.xinhuanet.com/english/2016- ... 048561.htm
Interview: China's economy on track in terms of GDP growth: BRICs creator
LONDON, Jan. 26 (Xinhua) -- British Treasury's commercial secretary Jim O'Neill has expressed his optimism about China's economic growth despite the world's second largest economy slowed to a 25-year low of 6.9 percent in 2015.

China is definitely still on track in terms of its real GDP growth, said O'Neill, who is known for the creation of BRICs acronym, which refers to emerging economies of Brazil, Russia, India and China. The grouping came to be known as BRICS after the inclusion of South Africa in 2010.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Suraj » 27 Jan 2016 12:32

The divergence of offshore Yuan (CNH) vs onshore (CNY) suggests the renminbi is still overvalued and will face speculative attacks. On cue:
China warns George Soros against going to 'war' on its currency
China has officially issued a warning to George Soros: Beware of going to "war on the renminbi."

The message comes in a piece published in China's People's Daily titled "Declaring war on China's currency? Ha ha."

People's Daily is the Communist Party's mouthpiece.

"Soros's war on the renminbi and the Hong Kong dollar cannot possibly succeed — about this there can be no doubt," the opinion piece by a commerce ministry researcher warned, according to the Financial Times.

This warning comes at time when China's officials are trying hard to get everyone confident in the renminbi again. The currency has fallen by about 5.7% since August, when China's central bank, the People's Bank of China, first depreciated it.

While Soros didn't specifically mention the renminbi or the Hong Kong dollar, he did say China was one of the "root causes" of the global bear market and the country was probably looking at a hard landing.

"The Chinese left it too long to address the changeover in the growth model that they have to adopt from — investment and export-led to domestic-led. So a hard landing is practically unavoidable," he said.

Notably, this isn't Soros' first rodeo when it comes to currencies.

Back in 1992, he "cemented his reputation as the premier currency speculator in the world" after he "broke the Bank of England."

At the time, the British government was trying to buoy its currency artificially in the European Exchange Rate Mechanism while Soros and some other speculators shorted the pound. The British ultimately withdrew from the ERM, as they couldn't keep the pound above its agreed lower limit. Soros made $1 billion on the deal.

FT has the same story:
China mouthpiece warns Soros against shorting renminbi
George Soros, the man who broke the Bank of England and, according to some, helped precipitate the Asian financial crisis has been warned off going to “war on the renminbi” by Beijing.

The warning, on the front page of China’s Communist Party mouthpiece, comes as Beijing is struggling to stem capital flight and support its currency, in part through massive intervention that has scythed its foreign reserves by about $700bn over the past 18 months to $3.3tn.

Chinese officials and state media have moved aggressively to shore up confidence in the renminbi in recent weeks. The Chinese currency has fallen 5.7 per cent since the central bank shocked global markets in August by granting the renminbi additional flexibility to depreciate.

While Mr Soros mentioned neither the renminbi nor the Hong Kong dollar in his remarks last week, he did say China was the “root cause” of this year’s global bear market, citing deflation and excessive debt as key risks. He said a hard landing for the Chinese economy was “practically unavoidable”.

However, Mr Soros also indicated that China’s economic slowdown posed a greater short-term risk to other countries than to China itself, mainly because of China’s deflationary impact on global commodity prices. “China can manage it,” he said. “It has resources and greater latitude in policies, with $3tn in reserves.”

Meanwhile $1 trillion in capital left China in 2015, twice the amount estimated by the Chinese government, and many times the amount exiting in 2014:
China Capital Outflows Rise to Estimated $1 Trillion in 2015
China’s capital outflows jumped in December, with the estimated 2015 total reaching $1 trillion, underscoring the scale of the battle facing policy makers trying to hold up the yuan amid slower economic growth and slumping stocks.

Outflows increased to $158.7 billion in December, the second-highest monthly outflow of the year after September’s $194.3 billion, according to estimates compiled by Bloomberg Intelligence. The total for the year soared more than seven times from $134.3 billion in the whole of 2014 to a record for Bloomberg Intelligence data dating back to 2006.

December’s outflows increased by almost $50 billion from a month earlier after the central bank unnerved markets by saying it would refocus the yuan’s moves against a wider basket of currencies rather than the dollar. In addition to capital exiting the economy, exporters are holding funds in dollars instead of converting them to yuan, said Tom Orlik, Bloomberg’s chief Asia economist in Beijing.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Suraj » 02 Feb 2016 11:25

I mentioned a few months back that PRC's full convertibility on the capital account would be a non starter. Voila:
China Will Probably Have to Impose Capital Controls, SocGen Says
China will probably have to resort to capital controls as even the world’s biggest foreign-exchange stockpile won’t be sufficient to defend the yuan, according to Societe Generale SA.

If 65 million residents, or about 5 percent of the population, each took the maximum allowed $50,000 out of China that would wipe out the $3.3 trillion of reserves, Jason Daw, head of Asian currency strategy at the French lender, said in an interview in Singapore. China needs a stockpile of at least $2.8 trillion to cope with a balance-of-payments crisis, Societe Generale estimates based on the International Monetary Fund’s methodology.

“Just because you have the world’s biggest foreign-exchange reserves, the domestic monetary implications of running down your reserves at a rapid pace shouldn’t be underestimated,” Kit Juckes, a global strategist at Societe Generale, said at the same interview. “They have a clear choice: tightening the capital account or allowing the currency to depreciate more quickly."

Chinese policy makers are trying to counter record outflows and prop up the yuan, while opening up the capital account and keeping borrowing costs low to revive economic growth. The balancing act challenges Nobel-winning economist Robert Mundell’s “impossible trinity” principle, which stipulates a country can’t maintain independent monetary policy, a fixed exchange rate and free capital borders all at the same time.

The yuan has weakened 2.8 percent since China won reserve-currency status from the IMF at the end of November to 6.5794 a dollar as of 11:53 a.m. in Shanghai, according to China Foreign Exchange System prices. The currency could drop as much as 12 percent this year to 7.5 if capital outflows intensify, according to a note by Societe Generale’s Daw and Wei Yao, the lender’s chief China economist. The French bank estimates $657 billion left China in the six quarters through September.

To keep the yuan from depreciating just under 3% cost them $320 billion dollars.

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Re: PRC Economy - New Reflections : April 20 2015

Postby NRao » 04 Feb 2016 03:37

Not sure how a topic like cannot be updated regularly.

Toxic Loans Around the World Weigh on Global Growth

Pakis beware

The problem is the giant, stagnant pool of loans that companies and people around the world are struggling to pay back. Bad debts have been a drag on economic activity ever since the financial crisis of 2008, but in recent months, the threat posed by an overhang of bad loans appears to be rising. China is the biggest source of worry. Some analysts estimate that China’s troubled credit could exceed $5 trillion, a staggering number that is equivalent to half the size of the country’s annual economic output.

Official figures show that Chinese banks pulled back on their lending in December. If such trends persist, China’s economy, the second-largest in the world behind the United States’, may then slow even more than it has, further harming the many countries that have for years relied on China for their growth.

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Re: PRC Economy - New Reflections : April 20 2015

Postby hanumadu » 06 Feb 2016 18:46

China says EU should take steel dumping claims to WTO

BEIJING (Reuters) - China's Ministry of Commerce said that claims it was dumping steel in Europe should be put to the World Trade Organization (WTO), responding to reports that the European Commission (EC) was preparing to impose duties on imported Chinese steel.

WTO members should fulfill their treaty obligations and stop using "surrogate countries" to pursue anti-dumping claims, a Ministry of Commerce spokesman said, according to a statement released on the ministry's website on Saturday.

The EC is set to impose provisional duties later this month of up to 16 percent on China, and of up to 26 percent on Russia, following its investigation into alleged dumping by the two countries.

Reuters reported that provisional measures are due to be announced by Feb. 14 and definitive duties, if imposed at the conclusion of the investigation, by Aug. 12. Such duties would typically apply for five years.

The Commission's investigation follows a complaint from Eurofer, the European steel association, which said Russia and China were dumping the steel - selling it below market prices at home or below the cost of production - on the EU market and thereby damaging the local industry.

The global steel industry is facing over-capacity, and the Chinese government is willing to discuss "in good faith" with WTO members "to create a fair, just and predictable international market environment," the statement said.


Awesome. If china thinks it is not dumping, it can got to WTO instead asking members to do so. China should have never been allowed into WTO.

Suraj
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Re: PRC Economy - New Reflections : April 20 2015

Postby Suraj » 07 Feb 2016 12:19

China's Foreign-Exchange Reserves Decline to $3.23 Trillion
China’s foreign-exchange reserves shrank to the smallest since 2012, indicating that the central bank sold dollars as the yuan’s retreat to a five-year low exacerbated depreciation pressure.

The world’s largest currency hoard declined by $99.5 billion in January to $3.23 trillion, according to a People’s Bank of China statement released on Sunday. The drop was less than a Bloomberg survey’s median estimate of a $120 billion loss. The stockpile fell by more than half a trillion dollars in 2015, the first-ever annual decline.

Policy makers fighting to hold up the weakening yuan amid slower economic growth, plunging stocks and increasing outflows have been burning through the reserves. The draw-down has continued since the central bank’s surprise devaluation of the currency in August, when the stockpile tumbled $94 billion, a monthly record at the time.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 08 Feb 2016 15:45

China's foreign currency stockpile fell nearly $100 billion last month

http://money.cnn.com/2016/02/07/news/ec ... -stack-dom

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Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 12 Feb 2016 04:42

http://equitablegrowth.org/must-read-ken-rogoff/
"Must-Read: Just how large is the Chinese elite’s potential demand for political risk insurance in the form of dollar assets underneath the U.S.’s legal umbrella anyway? The extremely-sharp Ken Rogoff"

Austin
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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 12 Feb 2016 16:01

David Stockman - China $30 Trillion Ponzi


Suraj
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Re: PRC Economy - New Reflections : April 20 2015

Postby Suraj » 17 Feb 2016 21:21

China's Subprime Crisis Is Here
Including ``special-mention" loans, which are those showing signs of future repayment risk, the industry’s total troubled advances swelled to 4.2 trillion yuan ($645 billion) as of December, representing 5.46 percent of total lending. That number is already higher than the $600 billion total subprime mortgages in the U.S. as of 2006, just before that asset class toppled the world into the worst financial crisis since 1929.

The amount of loans classed as nonperforming at Chinese commercial banks jumped 51 percent from a year earlier to 1.27 trillion yuan by December, the highest level since June 2006, data from the China Banking Regulatory Commission showed on Monday. The ratio of soured debt climbed to 1.67 percent from 1.25 percent, while the industry’s bad-loan coverage ratio, a measure of its ability to absorb potential losses, weakened to 181 percent from more than 200 percent a year earlier.

The news looks to have scared Chinese authorities into reacting. Note that they aren't curbing the ability of Chinese banks to lend or asking them to write off bad credit. Instead they're considering putting aside checks already in place that are aimed at ensuring the health of the financial system: by reducing the ratio of provisions that banks must set aside for bad debt, currently set at a minimum 150 percent, as Bloomberg News reported on Tuesday.

Perhaps, they're hoping banks will lend even more if they ease the rules. That's one way to keep the ratio of nonperforming loans under control. As the denominator increases the ratio remains steady or even drops. The absolute number of bad loans, however, keeps swelling.

Guess what? Banks are lending more. China's new yuan loans jumped to a record 2.51 trillion yuan in January, the People's Bank of China reported on Tuesday, way above the 1.9 trillion yuan median estimate in a Bloomberg News survey. Aggregate financing, the broadest measure of new credit, also rose to a record, at 3.42 trillion yuan.

China's bad loans have grown 256 percent in six years even as their ratio to total lending dropped. The true amount of debt that isn't being repaid is open for debate. One example of how the data can be distorted: Banks are making increasing use of their more opaque receivables accounts to mask loans and potential losses, as Bloomberg News reports today. Still, adding special-mention loans to those classed as nonperforming gives some measure of the size of the bad-debt problem. Unfortunately, the CBRC started to publish special-mention loan numbers only last year, so it's hard to put them in historical context.

The dynamic is clear. A splurge of new lending can help to dilute existing bad loans, but only at a cost. This is a game that can't continue forever, particularly if credit is being foisted on to an already over-leveraged and slowing economy. At some point, the music will stop and there will have to be a reckoning. The longer China postpones that, the harder it will be.

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Re: PRC Economy - New Reflections : April 20 2015

Postby hanumadu » 01 Mar 2016 14:06

China plans to cut 1.8 million coal and steel jobs

The Chinese government said Monday it was planning to shed 1.8 million coal and steel jobs in an effort to reduce excess capacity.

Some 1.3 million jobs will be lost in the coal sector, and 500,000 in the steel industry.


The cuts represent about 20% and 11% of China's coal and steel jobs, respectively, according to IHS Insight.


Is this big news? Will it affect world markets? China only exports, doesn't import much, so will the world market be affected by a slump in China?

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Re: PRC Economy - New Reflections : April 20 2015

Postby rsingh » 01 Mar 2016 22:05

It is big news because it will create unrest in China itself. There was overproduction of everything. Consider cement......Chini produced more cement in last 3years the rest of the workd in a dacade. Now they need to sell this and there are no buyers. Salam

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Re: PRC Economy - New Reflections : April 20 2015

Postby Suraj » 02 Mar 2016 00:16

The protests have already started:
As China slashes coal jobs, miners protest in Party’s revolutionary base
The coal mines of Anyuan in southeastern China hold a special place in the history of the Communist Party.

It was here, nearly a century ago, that Mao Zedong and other intellectuals leading the brand new Communist Party made their first connection with ordinary workers, helping to unionize and mobilize them for what is known as the Great Strike of 1922.

On Tuesday, though, hundreds of coal miners from Anyuan and nearby mines marched through the city of Pingxiang in a protest — not on behalf of the Communist Party, but against it.

China announced Monday that it expects to slash 1.8 million jobs in its coal and steel sectors, about 15 percent of the total workforce, as it struggles to reduce overcapacity in its bloated mining and industrial enterprises amid a deepening economic slowdown.

But the miners at Anyuan and Pingxiang are already hurting, because the local state-owned mining company has scaled back production, laid off workers and told others to stay home — on dramatically reduced pay of just 470 yuan ($70) a month.

About 150 miners got together on Monday morning to complain to the company, gathering at a crossroads and temporarily blocking traffic, according to the Communist Party propaganda department of the Pingxiang Mining Group.

Up to 1,000 workers from three mines marched Tuesday with banners that said, “Workers want to survive, workers need to eat,” according to social media posts and witnesses.

“How do you survive on 470 yuan?” said one 30-year-old worker contacted by telephone who spoke on the condition of anonymity for fear of reprisals.

“My parents and grandparents worked at the mine. The workers built the mine with their hands. It is where Mao Zedong led the Great Strike, and that’s how the Communist Party rose — and now this?”

There has been a dramatic increase in strikes and workers protests across China in the past six months, as the economic slowdown starts to bite. But the significance of those protests spreading to Anyuan will not be lost on anyone steeped in the Communist Party’s founding stories and myths.

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Re: PRC Economy - New Reflections : April 20 2015

Postby ArmenT » 02 Mar 2016 10:20

hanumadu wrote:China plans to cut 1.8 million coal and steel jobs
Is this big news? Will it affect world markets? China only exports, doesn't import much, so will the world market be affected by a slump in China?

It will affect world markets as well. First, it is not true that China only exports. To produce all that steel, they import a huge amount of coal and iron ore from other countries. In fact, despite their being the world's largest producer of coal, they are also the world's largest importer of coal as well, because their domestic suppliers could not meet the demand since about 2008 or so. Therefore, if they cut jobs, they will stop importing and go back to only their domestic suppliers. Indonesia, Vietnam, Australia, Brazil etc. (i.e.) all the countries that produce raw materials for China will now be sitting on idle excess mining capacity.

Second, they're going to have to get rid of all that excess steel capacity, so look for them to try and undercut everyone else and dump that steel onto the world markets.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Suraj » 02 Mar 2016 21:03

ArmenT wrote:Second, they're going to have to get rid of all that excess steel capacity, so look for them to try and undercut everyone else and dump that steel onto the world markets.

It isn't as easy as that. They can try. But others are within their WTO rights to impose anti-dumping duties on them for dumping excess production on others below cost. India has already imposed them.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Singha » 03 Mar 2016 10:12

a falloff in resources imports has already happened.

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Re: PRC Economy - New Reflections : April 20 2015

Postby hanumadu » 05 Mar 2016 15:57



I think 15% is only the beginning of the lay offs. Can go up to 50% or more. What were they thinking with all that excess capacity. Perhaps, they can pave the entire country. And build up the entire country. Buy every chinese a car and an iphone.

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Re: PRC Economy - New Reflections : April 20 2015

Postby subhamoy.das » 05 Mar 2016 17:44

There were chinese posters who used to claim that world economic rules does not apply to china. In china, it is like left hand taking the loan from the right hand and it all stays in the books of the govt and loans can easily be written off or money printed to be paid off. So if that was true, then the govt should simply buy all excess goods and give it free to the citizens and every thing will be hunky dory! They said that china had so much excess supply that that excess money will not cause inflation. But alas. it is not working out that way. people are getting laid off and factories are getting closed following the world economic order!

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Re: PRC Economy - New Reflections : April 20 2015

Postby soumik » 05 Mar 2016 19:32

http://wap.business-standard.com/articl ... 639_1.html
http://timesofindia.indiatimes.com/busi ... 205456.cms

5-6 million job losses in China Coming!
The glory of having a government not answerable to the people.

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Re: PRC Economy - New Reflections : April 20 2015

Postby hanumadu » 05 Mar 2016 19:36

China aims to maintain growth pace, fend off unemployment in five-year plan

Overall, China aims to lay off 5-6 million state workers over the next two to three years, two sources said, in Beijing's boldest retrenchment program in almost two decades.


Li said the country will create 10 million new jobs, address zombie firms through mergers, bankruptcies and debt deals, and hold the urban registered unemployment rate below 4.5 percent in 2016.

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Re: PRC Economy - New Reflections : April 20 2015

Postby hanumadu » 05 Mar 2016 19:49

“They have proposed this dedicated fund only to pay the workers, but there is no money for the bad debts, and if the bad debts are too big the banks will have problems and there will be panic,” said Xu Zhongbo, head of Beijing Metal Consulting, who advises Chinese steel mills.

Factories shut down would have to repay bank loans to avoid saddling state banks with a mountain of non-performing loans, the sources said. “Triangular debt”, or money owed by firms to other enterprises, would also have to be resolved, they added.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 05 Mar 2016 20:13

http://sputniknews.com/asia/20160305/10 ... -grow.html

"GDP growth in 2016 is expected at the level of 6.5-7 percent," Premier Li Keqiang said in his report delivered at a session of the National People’s Congress (NPC), adding that "GDP growth in the 13th five-year period (2016-2020) is expected to be 6.5 percent or higher."


http://sputniknews.com/asia/20160305/10 ... -grow.html

"By that time [2020] the total volume of China’s economy will surpass 90 trillion yuan, its quality and development effectiveness will substantially increase," the government said in a Saturday report.


Renminbi to Be Listed Separately in IMF Foreign Exchange Reserves Database

http://sputniknews.com/world/20160305/1 ... ately.html

"The International Monetary Fund (IMF) will separately identify the renminbi (RMB) in its official foreign exchange reserves database starting October 1, 2016. The change will be reflected in the survey for the fourth quarter of 2016 that will be published at the end of March 2017," the Friday statement says.

"The renminbi will join the group of currencies that are currently identified in the [COFER, or Currency Composition of Official Foreign Exchange Reserves] survey: U.S. dollar, Euro, Yen, Pound Sterling, Swiss Franc, Australian Dollar, and Canadian Dollar," the IMF said.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Chinmayanand » 06 Mar 2016 16:01

Where are the 50 centers ? Got unemployed or what ?


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Re: PRC Economy - New Reflections : April 20 2015

Postby TSJones » 08 Mar 2016 19:52

Dow briefly falls 100 points after China trade data

http://finance.yahoo.com/news/us-stocks ... 00536.html

China's exports fell 25.4 percent year-over-year in February , more than expected and the largest since May 2009, according to Reuters

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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 09 Mar 2016 16:07

Peter Schiff China is Bleeding its Secret Account


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Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 10 Mar 2016 16:57

The World Economy Wreckers Of Beijing

http://davidstockmanscontracorner.com/t ... f-beijing/

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Re: PRC Economy - New Reflections : April 20 2015

Postby hanumadu » 10 Mar 2016 18:43

^^Long article with plenty of figures.

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Re: PRC Economy - New Reflections : April 20 2015

Postby hanumadu » 13 Apr 2016 10:00

http://www.bloomberg.com/news/articles/2016-04-11/chinese-debtors-have-never-faced-such-hard-times-paying-interest-imw6qo91?cmpid=yhoo.headline

"We will likely see a wave of bankruptcies and restructurings when the interest coverage ratio drops further,” said Xia Le, chief economist for Asia at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. “Return on assets for Chinese companies has been declining due to rising debt. Profitability is also slowing due to overcapacity in many sectors, which has weakened the ability of companies to repay their debts."

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Re: PRC Economy - New Reflections : April 20 2015

Postby hanumadu » 15 Apr 2016 15:44

Its business as usual in china.

http://finance.yahoo.com/news/china-averts-hard-landing-credit-094442324.html

Credit growth exploded in the first quarter, in an economy already awash in debt and industrial overcapacity.


Amid a deluge of data that was released on Friday, one number stands out: aggregate financing, a broad measure of credit that spans commercial banks to the unofficial shadow lenders. It totaled 2.34 trillion yuan ($361 billion) in March, the People’s Bank of China said, far exceeding all 24 forecasts in a Bloomberg survey.


Quarter-on-quarter credit growth in the first three months of this year was more than double the pace than the prior period, estimates Tim Condon, head of Asian research at ING Groep NV in Singapore.

That’s a big contrast from the focus earlier in the terms of Xi and Premier Li Keqiang, when China’s so-called fifth generation of Communist leaders dedicated themselves to restructuring and dialing back the surge in borrowing embraced by their predecessors during the global financial crisis. Now, policy makers appear more determined to deliver a short-term adrenaline shot to the economy than making changes needed to rebalance away from manufacturing and investment and towards services and consumption.


The stimulus being rolled out this time in the form of an enlarged fiscal deficit and liquidity injections from the central bank is far more targeted than the unrestricted efforts rolled out after the global financial crisis in 2008. Xi has aimed to keep central government oversight to a greater degree than under his predecessor, when local authorities set up opaque funding vehicles for projects with scant oversight.

"I think this stimulus was intended to ensure that economic deceleration remains gradual, rather than to re-accelerate growth, " said Andy Rothman, a San Francisco-based investment strategist at Matthews Asia, and previously a U.S. diplomat in Beijing.

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Re: PRC Economy - New Reflections : April 20 2015

Postby Christopher Sidor » 15 Apr 2016 17:34

PRC's economy slowed to its weakest since 2009. At 6.2% it is still a decent growth rate according to world standards. And that is expected. As PRC gets prosperous it will slow down. Moreover its population growth is also slowing and in certain metrics it is declining. So they need not have 8% or 10% or 15% growth rate as in past. Simply put PRC need not grow at the brisk pace that they grew in the past. As long as PRC's economy grows and the citizens of PRC see their quality of life improving we will not see any upheaval inside PRC. So a blow up due to slowing economy is not on the horizon.



Now let us discuss about PRC's so called mammoth foreign reserves. Their size hides two facts
1) Their size relative to their economy size and especially in terms of import bill is still not that high. According to IMF's Feb-2016 data PRC has approximately 3.5 Trillion USD of foreign exchange reserves. Now again according to IMF’s Assessing Reserves Adequacy framework PRC should have 2.7 to 2.6 Trillion USD of reserves. Anything below that is a matter of concern. Please note that these figures are for Feb-2016. Due to the nature of these figures they vary. So PRC only has 900 Billion USD of leeway before things start to go south.
2) How much of PRC's foreign exchange is in liquid form and how much of it is in non-liquid form? This fact is deeply unappreciated in our calculations. Consider the case of British Empire in 1939 or the case of Lehman Brothers in 2008. British empire had massive assets spread across the globe to finance the war against Nazi Germany in 1939. After all it ruled over a quarter of worlds population and sizeable land area. If required it could call up these assets. The problem was liquidating these assets. Similarly Lehman went into bankruptcy with more than 600 billion USD of assets. But most of these assets were hard to dispose off in Sept-2008. If it has some more years or quarters Lehman would have downsized and survived. But it could not.


There is one aspect of CPC which rules PRC that is highly unappreciated. Namely its ability to do the right thing. CPC knows that it has to restructure the economy. Its SOE are bloated and highly inefficient. And the recent proposals to restructure SOE into two buckets are the right step in the direction.
The new guidelines for state companies include splitting them into two main groups -- those that are profit orientated and those that aren’t.

CPC knows what has to be done. Will it be able to do it in time and reap the benefits?

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Re: PRC Economy - New Reflections : April 20 2015

Postby Christopher Sidor » 19 Apr 2016 11:15

This looks like a Uh-Oh moment for PRC's onshore bond market. After the 5 Trillion USD value being wiped out from the PRC's stock market, this looks like the next domino to get impacted.

It's All Suddenly Going Wrong in China's $3 Trillion Bond Market

The scary part from the article
Listed firms’ ability to service their debt has dropped to the lowest since at least 1992, while analysts are cutting profit forecasts for Shanghai Composite Index companies by the most since the global financial crisis.
....
....
Economic figures for March reveal a growing dependence on debt. China’s aggregate financing -- a broad measure of credit that includes corporate bonds -- almost doubled from a year earlier to 2.34 trillion yuan, exceeding all 24 forecasts in a Bloomberg survey as policy makers turned on the taps to support economic growth.
....
....
Non-financial companies traded in Shanghai and Shenzhen are generating just enough operating profit to cover the interest expenses on their debt twice, down from almost six times in 2010, data compiled by Bloomberg show.
....
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A reversal in China’s bond markets would likely have a greater impact on the economy than the rout in stocks, given the country’s reliance on debt. Corporate obligations climbed to a record 165 percent of GDP at the end of last year, the latest figures from Bloomberg Intelligence show.


But all is not bad. There is a silver lining
allowing troubled companies to default forces money managers to pay more attention to credit risk and accelerates government efforts to curb overcapacity.
....
....
Rising defaults are actually healthy for China’s bond market, said Xia Le, the chief economist for Asia at Banco Bilbao Vizcaya Argentaria SA in Hong Kong.
“It shows the government is taking away the implicit guarantee,” Xia said. “Now risk awareness is rising, so we will see which issuers are swimming naked.”
....
....
PBOC, which has cut official lending rates six times since November 2014, still has “ample monetary ammunition” to counter a deeper selloff in the bond market, said Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp.

If PRC leaders are adamant on letting the markets play a bigger role in their economy, then this is a good development. There will be pain no doubt about it. But the long term benefits will be better. PRC and its economy will emerge stronger, more efficient and without the dead lead weight to hold it back. Investors will price in risk accordingly and not depend on an implicit guarantee of PRC. Something similar happened with the Euro Zone too, where all countries were considered equal since they belonged to Euro group of currencies, despite the fact that some countries economies were not in good shape.


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