China Economy Forum
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Chinas mammoth foreign exchange reserves rose to a record $3.66 trillion in the third quarter, as the country continued to use massive FX purchases to hold down the value of its currency.
The $163.3 billion rise since the end of June is the largest since 2011, and shows Chinas all-but-unassailable cash position at a time when other emerging economies, from India to Indonesia, are being pummeled by capital outflows.
This quarters increase dwarfs the $45 billion of new reserves China purchased between April and June, and marks a return to the heady days between 2008-2011 when Chinas FX pile regularly grew by more than $100 billion per quarter. Chinas reserves have grown tenfold in the past decade.
That reflects a continued trade surplus as well as capital inflows, which force Chinas central bank to buy foreign currency if it wants to stop the yuan from appreciating.
A big chunk of these reserves China goes to some lengths to disguise its bond purchases, so we dont know exactly how much is locked up in low-yielding U.S. Treasury bonds, one reason China is so nervous about any possibility of a U.S. default.
To diversify and seek better returns on this vast cash pile, in 2007 China hived off $200 billion to create China Investment Corporation, a new sovereign wealth fund that invests in foreign equities, bonds and other assets. CIC had $575 billion under management at the end of 2012, according to its annual report, and held stakes in everything from Londons Heathrow Airport to the Moscow stock exchange.
The State Administration of Foreign Exchange, which still guards the lions share of the reserves, has also started to spread out into a wider range of asset classes. Zhu Changhong, chief investment officer at SAFE since 2009, has branched out into stocks, real estate and corporate debt, as well as non-U.S. bonds like those issued by the European Financial Stability Fund.
Chinas exports outran its imports by a total of $61.5 billion in the three months to September, while foreign direct investment in the period could be as much as $27 billion, according to an estimate by Bank of America Merrill Lynch economist Ting Lu.
Foreign direct investment totaled $8.4 billion in August and $9.4 billion in July. Septembers FDI data have yet to be released.
Mr. Lu argues China is facing renewed pressure from incoming money, unlike other emerging markets that have seen capital leaving since the U.S. Federal Reserve suggested in May it could soon begin tightening policy by reducing its massive bond-buying program.
Chinas stable currency, large current account surplus and robust financial conditions could make China a defensive place when some other emerging markets have been hit, Mr. Lu said.
In contrast to the runup in Chinas cash hoard, India saw its foreign exchange reserves decline to $276.3 billion in September from $282.4 billion in June. Indonesias reserves dropped to $95.68 billion in September from $98.1 billion in June.
By consistently selling more goods than it buys and accepting more inbound investment money than it sends abroad, China has avoided that fate.
Chinese imports have been strong, growing 7.4% on-year in September, and outbound direct investment has also been on the rise, reaching $56.5 billion in the first eight months of the year, but the country continues to run a surplus on both counts. Portfolio investment flows are limited by Chinas system of capital controls.
Taking into account foreign-currency deposits at Chinese banks, as well as changes in the dollar value of reserves held in other currencies, there remains an unexplained inflow of about $62 billion in the third quarter, according to BAML estimates. That could reflect both legitimate transactions not captured in the data and the illicit movement of cash.
Either way, the data suggest that any move to dismantle Chinas system of capital controls would lead to dramatic cross-border transfers of money. A recent International Monetary Fund study suggested that inflows in such a case could total 2%-10% of Chinas gross domestic product, while flows out of China could be even higher, as much as 15%-25% of GDP.
Theres been a lot of talk about opening the capital account, but the latest numbers show how far they are from being able to do that, said Mark Williams of London-based research firm Capital Economics. The Peoples Bank of China is still stashing away billions in foreign exchange every month. Theyre obviously not content with leaving the yuan in the hands of market forces.
The PBOC seems to have been increasingly active in the intra-day currency market in recent weeks, Mr. Williams said, rarely letting the yuan move to the edge of the narrow range in which its allowed to float.
Chinas central bank may be reluctant to allow the yuan to appreciate much further when the countrys export sector is struggling. Exports fell 0.3% on-year in September, though questions about last years data mean the reality may be slightly better.
Export orders at Chinas factories improved a bit in September, according to the official purchasing managers index, but still lagged behind the total growth in new orders. A weaker yuan at least makes life a little easier on the factory floor.
We expect the central bank to keep the exchange rate largely stable around the current level until the end of the year, in order to alleviate the pain inflicted on the export sector, said Wei Yao, an economist at Société Générale.
Chinas mammoth foreign exchange reserves rose to a record $3.66 trillion in the third quarter, as the country continued to use massive FX purchases to hold down the value of its currency.
The $163.3 billion rise since the end of June is the largest since 2011, and shows Chinas all-but-unassailable cash position at a time when other emerging economies, from India to Indonesia, are being pummeled by capital outflows.
This quarters increase dwarfs the $45 billion of new reserves China purchased between April and June, and marks a return to the heady days between 2008-2011 when Chinas FX pile regularly grew by more than $100 billion per quarter. Chinas reserves have grown tenfold in the past decade.
That reflects a continued trade surplus as well as capital inflows, which force Chinas central bank to buy foreign currency if it wants to stop the yuan from appreciating.
A big chunk of these reserves China goes to some lengths to disguise its bond purchases, so we dont know exactly how much is locked up in low-yielding U.S. Treasury bonds, one reason China is so nervous about any possibility of a U.S. default.
To diversify and seek better returns on this vast cash pile, in 2007 China hived off $200 billion to create China Investment Corporation, a new sovereign wealth fund that invests in foreign equities, bonds and other assets. CIC had $575 billion under management at the end of 2012, according to its annual report, and held stakes in everything from Londons Heathrow Airport to the Moscow stock exchange.
The State Administration of Foreign Exchange, which still guards the lions share of the reserves, has also started to spread out into a wider range of asset classes. Zhu Changhong, chief investment officer at SAFE since 2009, has branched out into stocks, real estate and corporate debt, as well as non-U.S. bonds like those issued by the European Financial Stability Fund.
Chinas exports outran its imports by a total of $61.5 billion in the three months to September, while foreign direct investment in the period could be as much as $27 billion, according to an estimate by Bank of America Merrill Lynch economist Ting Lu.
Foreign direct investment totaled $8.4 billion in August and $9.4 billion in July. Septembers FDI data have yet to be released.
Mr. Lu argues China is facing renewed pressure from incoming money, unlike other emerging markets that have seen capital leaving since the U.S. Federal Reserve suggested in May it could soon begin tightening policy by reducing its massive bond-buying program.
Chinas stable currency, large current account surplus and robust financial conditions could make China a defensive place when some other emerging markets have been hit, Mr. Lu said.
In contrast to the runup in Chinas cash hoard, India saw its foreign exchange reserves decline to $276.3 billion in September from $282.4 billion in June. Indonesias reserves dropped to $95.68 billion in September from $98.1 billion in June.
By consistently selling more goods than it buys and accepting more inbound investment money than it sends abroad, China has avoided that fate.
Chinese imports have been strong, growing 7.4% on-year in September, and outbound direct investment has also been on the rise, reaching $56.5 billion in the first eight months of the year, but the country continues to run a surplus on both counts. Portfolio investment flows are limited by Chinas system of capital controls.
Taking into account foreign-currency deposits at Chinese banks, as well as changes in the dollar value of reserves held in other currencies, there remains an unexplained inflow of about $62 billion in the third quarter, according to BAML estimates. That could reflect both legitimate transactions not captured in the data and the illicit movement of cash.
Either way, the data suggest that any move to dismantle Chinas system of capital controls would lead to dramatic cross-border transfers of money. A recent International Monetary Fund study suggested that inflows in such a case could total 2%-10% of Chinas gross domestic product, while flows out of China could be even higher, as much as 15%-25% of GDP.
Theres been a lot of talk about opening the capital account, but the latest numbers show how far they are from being able to do that, said Mark Williams of London-based research firm Capital Economics. The Peoples Bank of China is still stashing away billions in foreign exchange every month. Theyre obviously not content with leaving the yuan in the hands of market forces.
The PBOC seems to have been increasingly active in the intra-day currency market in recent weeks, Mr. Williams said, rarely letting the yuan move to the edge of the narrow range in which its allowed to float.
Chinas central bank may be reluctant to allow the yuan to appreciate much further when the countrys export sector is struggling. Exports fell 0.3% on-year in September, though questions about last years data mean the reality may be slightly better.
Export orders at Chinas factories improved a bit in September, according to the official purchasing managers index, but still lagged behind the total growth in new orders. A weaker yuan at least makes life a little easier on the factory floor.
We expect the central bank to keep the exchange rate largely stable around the current level until the end of the year, in order to alleviate the pain inflicted on the export sector, said Wei Yao, an economist at Société Générale.
Edevelop
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BEIJING, Oct 15 (APP): In the first nine months, combined exports and imports to Chinas nine Free Trade Agreement (FTA) partners, including the Association of Southeast Asian Nations (ASEAN), Chile and Pakistan, rose by 17 percent year on year, faster than its overall foreign trade growth of 7.7 per cent, according to a spokesman for the General Administration of Customs (GAC). Trade with the nine FTA partners accounted for 13.9 per cent of the countrys total foreign trade volume, compared with 12.8 per cent in the same period last year, said GAC spokesman Zheng Yuesheng. China has diversified its trade relations and become less dependent on developed economies, he said.
From January to September, trade with the European Union, the United States and Japan accounted for 33.2 per cent of Chinas total foreign trade volume during the period, down 2.6 percentage points from the same period last year,
Saturdays customs data showed Chinas exports fell unexpectedly by 0.3 per cent in September from a year earlier, ending two consecutive months of gains, while imports increased 7.4 per cent year on year.
Although challenged by a complicated global economic situation, Zheng said the countrys foreign trade was stabilizing with an improved structure.
Chinas dependance on external demand has weakened, Zheng said, which showed the countrys economic development is transforming from being driven by external demand to domestic demand.
In the first half of the year, Chinas foreign trade dependence ratio, or the ratio of a given economys foreign trade volume to its GDP, fell 0.7 percentage points from a year ago to 50.4 per cent, reports Xinhua news agency.
Associated Press Of Pakistan ( Pakistan's Premier NEWS Agency )
From January to September, trade with the European Union, the United States and Japan accounted for 33.2 per cent of Chinas total foreign trade volume during the period, down 2.6 percentage points from the same period last year,
Saturdays customs data showed Chinas exports fell unexpectedly by 0.3 per cent in September from a year earlier, ending two consecutive months of gains, while imports increased 7.4 per cent year on year.
Although challenged by a complicated global economic situation, Zheng said the countrys foreign trade was stabilizing with an improved structure.
Chinas dependance on external demand has weakened, Zheng said, which showed the countrys economic development is transforming from being driven by external demand to domestic demand.
In the first half of the year, Chinas foreign trade dependence ratio, or the ratio of a given economys foreign trade volume to its GDP, fell 0.7 percentage points from a year ago to 50.4 per cent, reports Xinhua news agency.
Associated Press Of Pakistan ( Pakistan's Premier NEWS Agency )
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Israel Corp's Qoros sedan wins Euro NCAP safety standard
Qoros has become the first Chinese carmaker to win a five-star score from Euro NCAP.
29 September 13 14:13, Dubi Ben-Gedalyahu
Qoros Auto Company Ltd., the joint venture of Israel Corporation (TASE: ILCO) and China's Chery Automobile Co. Ltd. has become the first Chinese carmaker to win a five-star score from Euro NCAP for its Qoros Sedan 3. The car exceeded the minimum levels required for the safety of drivers, passengers, and pedestrians.
Qoros will begin sales of its first model, the Qoros 3 sedan, in China in a few months. The company's production line can produce 150,000 cars a year, and will grow to 450,000 cars a year, subject to further investment and regulatory approval by the Chinese authorities.
Few Chinese carmakers have submitted their cars for NCAP tests, and many have performed less well than Qoros. Euro NCAP is a Brussels-based association whose members include governments and motoring and consumer groups.
"It is important for us to show we are different," Qoros head of development Roger Malkusson told "The Wall Street Journal. "We want to show that we are a high-quality brand that we are really unique."
"The Wall Street Journal" quotes an NCAP official as saying, "The small family car showed good overall protection with high scores in all four areas of assessment and is a significant step up from previous Chinese exports."
Published by Globes [online], Israel business news - Globes - Israel business news - on September 29, 2013
Viet
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It looks to me that Li´s visit makes a huge wave... in China. Vietnam´s media is less enthusiastic.
China, Vietnam target $100b trade for 2017
English.news.cn 2013-10-16 10:00:40
XINHUA
at Vietnam National University
Chinese Premier Li Keqiang (R, front) meets with representatives of youth from both China and Vietnam at Vietnam National University in Hanoi, Vietnam, Oct. 15, 2013. (Xinhua/Liu Jiansheng)
BEIJING, Oct. 16 (Xinhuanet) -- China and Vietnam will achieve bilateral annual trade volume of $100 billion by 2017, Premier Li Keqiang said during a luncheon with business leaders in Hanoi on Tuesday.
China has been Vietnam's largest trading partner for nine years.
Trade volume between the two countries exceeded $40 billion in the first eight months of this year, putting the annual target of $60 billion for 2015 within reach.
"China and Vietnam have the ability and wisdom to overcome difficulties in bilateral relations, deal with differences and expand common interests," Li said in his speech.
In a joint statement issued during his visit, the two countries reiterated a policy of good-neighborliness and comprehensive cooperation. They vowed to be good neighbors, friends, comrades and partners in developing relations.
"Three work teams will be set up to push forward maritime, onshore and financial cooperation between the two countries," Li said.
He also said that China would increase imports from Vietnam to cut the trade surplus.
Currency swap and yuan settlement deals are being discussed to facilitate trade.
Vietnamese Prime Minister Nguyen Tan Dung said his country welcomes Chinese enterprises investing in Vietnam.
China ranks 12th among the 100 countries and regions making direct investments in the country.
Li said Vietnam is one of the major overseas destinations for Chinese investors, and cooperation opportunities abound in infrastructure construction including road, railway, port and energy projects.
Wang Yuzhu, a researcher at the National Institute of International Strategy at the Chinese Academy of Social Sciences, said more efforts should be made to expand investment into each other's economies.
Song Yuhua, a professor at Zhejiang University's College of Economics, said Li's visit signals a new era for China and Vietnam to focus on trade partnership and economic cooperation, which has set a good example for other members of the Association of Southeast Asian Nations.
China Premier Li speaks at luncheon of China-Vietnam business community
Many Chinese enterprises have already benefited from the countries' ever-closer economic links.
Li Shaoxing, chairman of Huaxia Machinery Plastics from Zhengzhou, Henan province, opened his first factory in Vietnam to produce plastic braided bags with an initial investment of $250,000 in 2003. The factory, located in Bac Giang province in the north of Vietnam, covers three hectares and has four production lines.
He said business has been good, with a 20 percent net profit margin each year, and he started to export his goods in 2008. He hopes more facilitating policies will be released to benefit Chinese enterprises in Vietnam.
Vietnam was the last stop of Premier Li's Southeast Asia tour after visiting Brunei and Thailand.
(Source: China Daily)
China, Vietnam target $100b trade for 2017 - Xinhua | English.news.cn
China, Vietnam target $100b trade for 2017
English.news.cn 2013-10-16 10:00:40
XINHUA
at Vietnam National University
Chinese Premier Li Keqiang (R, front) meets with representatives of youth from both China and Vietnam at Vietnam National University in Hanoi, Vietnam, Oct. 15, 2013. (Xinhua/Liu Jiansheng)
BEIJING, Oct. 16 (Xinhuanet) -- China and Vietnam will achieve bilateral annual trade volume of $100 billion by 2017, Premier Li Keqiang said during a luncheon with business leaders in Hanoi on Tuesday.
China has been Vietnam's largest trading partner for nine years.
Trade volume between the two countries exceeded $40 billion in the first eight months of this year, putting the annual target of $60 billion for 2015 within reach.
"China and Vietnam have the ability and wisdom to overcome difficulties in bilateral relations, deal with differences and expand common interests," Li said in his speech.
In a joint statement issued during his visit, the two countries reiterated a policy of good-neighborliness and comprehensive cooperation. They vowed to be good neighbors, friends, comrades and partners in developing relations.
"Three work teams will be set up to push forward maritime, onshore and financial cooperation between the two countries," Li said.
He also said that China would increase imports from Vietnam to cut the trade surplus.
Currency swap and yuan settlement deals are being discussed to facilitate trade.
Vietnamese Prime Minister Nguyen Tan Dung said his country welcomes Chinese enterprises investing in Vietnam.
China ranks 12th among the 100 countries and regions making direct investments in the country.
Li said Vietnam is one of the major overseas destinations for Chinese investors, and cooperation opportunities abound in infrastructure construction including road, railway, port and energy projects.
Wang Yuzhu, a researcher at the National Institute of International Strategy at the Chinese Academy of Social Sciences, said more efforts should be made to expand investment into each other's economies.
Song Yuhua, a professor at Zhejiang University's College of Economics, said Li's visit signals a new era for China and Vietnam to focus on trade partnership and economic cooperation, which has set a good example for other members of the Association of Southeast Asian Nations.
China Premier Li speaks at luncheon of China-Vietnam business community
Many Chinese enterprises have already benefited from the countries' ever-closer economic links.
Li Shaoxing, chairman of Huaxia Machinery Plastics from Zhengzhou, Henan province, opened his first factory in Vietnam to produce plastic braided bags with an initial investment of $250,000 in 2003. The factory, located in Bac Giang province in the north of Vietnam, covers three hectares and has four production lines.
He said business has been good, with a 20 percent net profit margin each year, and he started to export his goods in 2008. He hopes more facilitating policies will be released to benefit Chinese enterprises in Vietnam.
Vietnam was the last stop of Premier Li's Southeast Asia tour after visiting Brunei and Thailand.
(Source: China Daily)
China, Vietnam target $100b trade for 2017 - Xinhua | English.news.cn
Edison Chen
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It looks to me that Li´s visit makes a huge wave... in China. Vietnam´s media is less enthusiastic.
No, sohu, sina, tecent or 163, our most influence internet media did not report this, not even a little bit of mention, however, they are reporting president xi meets Myanmar commander in chief in frontpage first line news.
No, sohu, sina, tecent or 163, our most influence internet media did not report this, not even a little bit of mention, however, they are reporting president xi meets Myanmar commander in chief in frontpage first line news.
StarCraft_ZT
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tranquilium
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That's quite a large amount. The current Vietnam GDP is 141.7 billion USD. I think the size of Vietnam economy has to expend quite a bit for trade to reach 100 billion.
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