China Economy Forum

[Jlaw]

The graphic effects and fight choreography of hk historic dramas from 80s-90s are ALL terrible and comical if you watch it again. But the enjoyment of watching them cannot be matched by the more modern PRC historic dramas.

The best is comedy drama from the 90s.

You are referring to the tvb series from the 90s. 90s was rubbish. The 80s ones I mentioned from my previous posts were good.

It was the 無厘頭 comedy of the 90s that turned me away from HK movies for one decade.

 

[eazzy]

Good.

Good.

 

[Edison Chen]

First half year of 2014, the GDP and its nominal growth rate for each province of China. Shanxi, 1.35%,

 

[Edison Chen]

China to contribute to new global trade system

Chinese Premier Li Keqiang (2nd L) meets with a delegation of US business leaders and former senior officials, who are here for the sixth round of dialogues between China-US business leaders and former senior officials, in Beijing, capital of China, July 22, 2014. [Photo/Xinhua]

BEIJING - China will join in and contribute to the construction of a new global trade system, said Premier Li Keqiang on Tuesday.

Li also called on the United States to be more open and to create more favorable conditions for the two countries' deeper cooperation, while meeting a delegation of US business leaders and former senior officials.

The delegation, headed by President of the US Chamber of Commerce Thomas Donohue, included former National Security Advisor Sandy Berger,former US Trade Representative Charlene Barshefsky, and a group of senior business executives.

Li said a good China-US relationship is conducive to both countries, and will help them to realize more global interests. The two countries should respect each other, strengthen mutual trust, deepen cooperation and control disputes.

He called on business circles and think tanks of the two countries to have closer communication to promote a stable and sound development of the China-US cooperation.

Donohue and several delegation members said deeper cooperation between the United States and China will benefit the two countries and the global economic growth. The US business circles will continue to promote bilateral trade and investment cooperation and the development of US-China ties.

Li also pledged that China will be more open and improve the market environment to give fair competition for companies from both home and abroad.

Li also answered questions from US business leaders about China's reform and opening up, and China-US trade and financial cooperation.

China to contribute to new global trade system|Center|chinadaily.com.cn

 

[Edison Chen]

Yang Huiyan only 6th? I thought she is 1st.

 

[Informant]

Nothing is more hotter than a powerful woman. OMG so emasculating and so so so HOTT!

Bees knees man, bees knees.

 

[Edison Chen]

Asian Stocks Climb for Fourth Day on China Manufacturing
By Jonathan BurgosJul 23, 2014 9:08 PM CT

Asian stocks rose for a fourth day, with the regional benchmark index extending a six-year high, after a Chinese manufacturing gauge rose to its strongest reading in 18 months.

LG Display Co. (034220) climbed 2.5 percent in Seoul after the supplier of panels for Apple Inc. devices posted second-quarter profit that beat analyst estimates. Fujifilm Holdings Corp. rose 2.1 percent in Tokyo after a report that sales of high-end cameras boosted the company’s first-quarter operating profit. Newcrest Mining Ltd. sank 4 percent as Australia’s biggest gold producer said it may write down the value of its assets by as much as A$2.5 billion ($2.4 billion).

The MSCI Asia Pacific Index added 0.2 percent to 148.76 as of 10:03 a.m. in Hong Kong as seven of its 10 industry groups rose. The gauge yesterday closed at the highest level since June 2008. Companies from PepsiCo Inc. to Dow Chemical Co. helped drive the Standard & Poor’s 500 Index to a record close yesterday, with about 77 percent of index members posting results this season that exceeded analysts’ estimates.

“Against the backdrop of improving earnings and benign U.S. inflation, the market can continue to grind higher,” Tim Schroeders, a portfolio manager who helps oversee $1 billion on in equities at Pengana Capital Ltd. in Melbourne, said by phone. “Investors are a bit more positive on China as some of the doomsday scenario previously feared have dissipated.”

China PMI
A Chinese manufacturing gauge rose to an 18-month high in July, adding to signs that the government will meet its 2014 economic-growth target of about 7.5 percent. A preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 52, compared with the 51 median estimate of analysts surveyed by Bloomberg News and a final reading of 50.7 in June. Numbers above 50 indicate expansion.

China’s Shanghai Composite Index climbed 0.6 percent. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong advanced 0.7 percent, while the city’s benchmark Hang Seng Index added 0.4 percent. Taiwan’s Taiex index and Singapore’s Straits Times Index both rose 0.2 percent.

Australia’s S&P/ASX 200 Index advanced 0.1 percent. New Zealand’s NZX 50 Index climbed 0.5 percent after the central bank raised its benchmark interest rate and signaled it will now pause increases amid benign inflation.

Japan Trade
Japan’s Topix index gained 0.2 percent, after falling 0.1 percent earlier. The country’s trade deficit was larger than economists forecast after exports unexpectedly fell. The shortfall in June was 822.2 billion yen ($8.1 billion), the finance ministry reported in Tokyo today, surpassing the 643 billion yen median estimate in a Bloomberg News survey of 32 economists. Exports shrank 2 percent from a year earlier, while imports rose 8.4 percent.

South Korea’s Kospi index rose 0.2 percent. The nation’s economic growth slowed to 0.6 percent in the second quarter from 0.9 percent in the previous three months, according to Bank of Koreapreliminary data today. Economists forecast a 0.7 percent expansion.

The MSCI Asia Pacific Index (MXAP) traded at 13.6 times estimated earnings yesterday compared with 16.7 for the S&P 500 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 were little changed today. The U.S. equity benchmark index gained 0.2 percent yesterday to an all-time high as as Apple Inc. boosted technology companies and health-care shares rallied amid earnings. Facebook Inc. surged in extended trading past its all-time high after posting second-quarter revenue and profit that beat analyst estimates.

U.S. Rates
The S&P 500 headed for a second week of advance as inflation data signaled the Federal Reserve won’t be compelled to raise interest rates in the near future and earnings reports boosted optimism about the economy. Fed Chair Janet Yellen has said rates will stay low for a “considerable time” after the central bank stops its monthly bond purchases. It is on track to end them in October.

The Fed may have scope to keep interest rates at zero for longer than investors anticipate as inflation stays muted and a 2014 slowdown prolongs the labor-market recovery, the International Monetary Fund said yesterday.

Asian Stocks Climb for Fourth Day on China Manufacturing - Bloomberg

 

[Edison Chen]

China Manufacturing Gauge Rises to 18-Month High on Stimulus

By Bloomberg NewsJul 23, 2014 9:31 PM CT

A Chinese manufacturing gauge rose to an 18-month high in July, bolstering the government’s chances of meeting its 2014 economic-growth target of about 7.5 percent.

A preliminary Purchasing Managers’Index (SHCOMP) from HSBC Holdings Plc and Markit Economics was at 52.0, topping the 51.0 median estimate of analysts surveyed by Bloomberg News and June’s final reading of 50.7. Numbers above 50 indicate expansion.

Asian stocks rallied and the yuan rose to a three-month high, as the report suggested stimulus implemented this year including expedited infrastructure spending is supporting growth. Analysts at banks including Citigroup Inc. and JPMorgan Chase & Co. raised their 2014 expansion forecasts after China said last week that its economy expanded 7.5 percent in the second quarter from a year earlier.

“The cumulative impact of mini-stimulus measures introduced earlier is still filtering through,” Qu Hongbin, HSBC’s chief China economist in Hong Kong, said in a statement today. “We expect policy makers to maintain their accommodative stance over the next few months to consolidate the recovery.”

The benchmark Shanghai Composite Index of stocks rose 0.7 percent at 9:58 a.m. local time, while the MSCI Asia Pacific Index was up 0.2 percent. The Australian dollar reversed losses and the yuan strengthened to as much as 6.1912 per dollar, the highest level since April 9.

Survey Sample
The report, known as the Flash PMI, is typically based on 85 percent to 90 percent of responses to surveys sent to purchasing managers at more than 420 companies. The final reading is due Aug. 1. Estimates of today’s number from 21 analysts ranged from 50.5 to 51.5.

A separate manufacturing PMI from the National Bureau of Statistics and China Federation of Logistics and Purchasing will also be published Aug. 1. That gauge rose to 51.0 in June, the highest reading this year, from 50.8 in May.

The statistics bureau said last week that gross domestic product rose 7.5 percent in the April-June period from a year earlier, compared with the 7.4 percent median estimate in a Bloomberg News survey of analysts. June industrial production and first-half fixed-asset investment exceeded projections.

Policy makers are trying to fuel growth with looser credit and faster spending. Aggregate financing, China’s broadest measure of new credit, was the highest for June since the lending spree of 2009, central bank data showed last week. China’s fiscal spending in June rose 26.1 percent from a year ago while fiscal revenue rose 8.8 percent, according to the Ministry of Finance.

The government has limited the support to areas including infrastructure construction and affordable housing. It has maintained nationwide curbs on the property market while some cities have loosened restrictions this year.

Bayerische Motoren Werke AG, the German luxury car and motorcycle maker, said last week it plans to double its China-produced models to six and boost manufacturing capacity in the country to 400,000 vehicles a year from 300,000.

China Manufacturing Gauge Rises to 18-Month High on Stimulus  - Bloomberg

 

[LeveragedBuyout]

Policy makers are trying to fuel growth with looser credit and faster spending. Aggregate financing, China’s broadest measure of new credit, was the highest for June since the lending spree of 2009, central bank data showed last week. China’s fiscal spending in June rose 26.1 percent from a year ago while fiscal revenue rose 8.8 percent, according to the Ministry of Finance.

The government has limited the support to areas including infrastructure construction and affordable housing. It has maintained nationwide curbs on the property market while some cities have loosened restrictions this year.

This news is disconcerting. The whole point of Xi's rebalance was to move away from this kind of credit-fueled growth. Fiscal spending up by 26.1%, but GDP only up by 7.5%? If that's not a sign of inefficiency and mal-investment, I don't know what is. I hope China doesn't fall into the same debt trap that the US did.

 

[cirr]

China, US reach agreement Infrastructure key to the future

Updated: 2014-07-24 11:15

By Li Jiabao and Mu Chen in Beijing (China Daily USA)

China and the United States agreed Wednesday to strengthen cooperation on infrastructure while calling for an acceleration of talks on a bilateral investment treaty.

"This year's dialogue led to new consensus on infrastructure investment between China and the US," Chen Wenling, chief economist at the China Center for International Economic Exchanges, said at the closing of the Sixth Annual US-China CEO and Former Senior Officials' Dialogue, held in Beijing this week.

"Both sides agreed there are tremendous investment opportunities and huge potential, and urged the governments to conclude the bilateral investment treaty negotiations as soon as possible," Chen said.

A report, Promoting Bilateral Investment in Infrastructure in China and the US, released by the CCIEE on Wednesday, said the economies of China and the US will "remain complementary for a long period of time".

The two countries' commitment to adjusting their economic structures contains "huge opportunity for bilateral investment, particularly that for infrastructure investment", according to the report.

The report estimated that by 2020, upgrading infrastructure in the US will require $3.6 trillion, and the shortage of funds will total $1.6 trillion. China and the US, it said, have great potential to cooperate in science and technology investment, energy, environmental protection investment, manufacturing and agriculture.

The need for infrastructure investment in the US in energy, transportation and water is estimated at $8 trillion and could reach $30 trillion, said Jeremie Waterman, executive director for greater China of the US Chamber of Commerce, citing the chamber's report, From International to Interstates: Assessing the Opportunity for Chinese Participation in US Infrastructure, which was released in October 2013.

"Investment in water here is a significant need for China and also a potential significant opportunity for foreign investors, including US investors in China. ... The needs are enormous; there is certainly potential for significant mutual benefits like water investment, and I think we are going to see a lot more investment tied to China's urbanization in the energy and environmental areas," Waterman said.

But challenges to cooperation between the world's two largest economies remain: for example, the slow progress of the Sino-US BIT talks, insufficient strategic mutual trust, language barriers and cultural gaps, and a lack of understanding on each side of the other's investment environment, the CCIEE report said.

"The BIT negotiations must speed up, and we expect them to be concluded by the end of 2015," said Wei Jianguo, vice-chairman of the CCIEE. "Meanwhile, we should introduce innovations and use the gains from China's accession into the World Trade Organization to accelerate the BIT talk process."

Myron A. Brilliant, executive vice-president and head of international affairs of the USCC, said the business community sees the BIT as "steppingstones to even bigger things in the relationship".

"We talked about ultimately hoping to have a US-China Free Trade Agreement, not something that can be accomplished in the short term, but longer term, it should be the aspirations not only of the business communities but of the two governments," he said.

"We even talked about having a step, in between the BIT and FTA, to promote a BIT-plus-trade element. All this reflects that there is a lot of ongoing negotiations between China and the US," Brilliant added.

The two sides also agreed to consolidate the WTO system, including expanding and concluding the Information Technology Agreement, according to a joint statement on the dialogue.

Contact the writers at lijiabao@chinadaily.com.cn and muchen@chinadaily.com.cn

Chinese Premier Li Keqiang (right) listens to US Chamber of Commerce President and CEO Thomas Donohue (center) with chairman of the US Chamber of Commerce Board of Directors Tamara Lundgren (left) before their meeting in Beijing on Tuesday. AP

 

[Hypersonicmissiles]

Any agreement with the US means giving up a bit of national sovereignty to US and US corporations.

 

[Edison Chen]

This news is disconcerting. The whole point of Xi's rebalance was to move away from this kind of credit-fueled growth. Fiscal spending up by 26.1%, but GDP only up by 7.5%? If that's not a sign of inefficiency and mal-investment, I don't know what is. I hope China doesn't fall into the same debt trap that the US did.

I guess the credit expansion is due to China's bank regulation. Usually in June, all the managers of banks in China are required to meet the deposit and loan task, because there is a loan-to-deposit ratio requirement for banks. I don't know what items are really on the numerator and denominator,only know this formula is like loan divide by deposits. On June 30th, China Banking Regulatory Commission will investigate each bank, to see if they maintain 75% loan to deposit ratio. But on June 30th this year, CBRC modified this ratio, eased banks' burden to comply with this ratio. But this 75% is not changed, just maybe some types of loan are not included in this formula. This is a good policy for the banks, so they expand credit, I guess it's the reason. In fact, many banks in China has very high loan to deposit ratio to maintain profitability. I just heard this from my parents and friends, they work in many banks, but they face the same requirement. Now, many people are urging to cancel this ratio. Banks have their own way to operate.

Usually in June, all the bank managers are crazy as hell, they compete for deposit everywhere, they provide high rate of return, or they get fired. On June 30 this year, on this single day, the deposit of the four major banks in China increased $182.2 billion.

But of course there is other reasons, Xi and Li's policy seems promising, so the market has more confidence. Or maybe the credit doesn't go to the real economy. Anything could happen. About the 7.5% growth rate, all I know is China still lacks new growth engine with the exception of infrastructure. I hope US can transfer more high tech to China, help to build more industries other than fixed asset investment.

 

[LeveragedBuyout]

I guess the credit expansion is due to China's bank regulation. Usually in June, all the managers of banks in China are required to meet the deposit and loan task, because there is a loan-to-deposit ratio requirement for banks. I don't know what items are really on the numerator and denominator,only know this formula is like loan divide by deposits. On June 30th, China Banking Regulatory Commission will investigate each bank, to see if they maintain 75% loan to deposit ratio. But on June 30th this year, CBRC modified this ratio, eased banks' burden to comply with this ratio. But this 75% is not changed, just maybe some types of loan are not included in this formula. This is a good policy for the banks, so they expand credit, I guess it's the reason. In fact, many banks in China has very high loan to deposit ratio to maintain profitability. I just heard this from my parents and friends, they work in many banks, but they face the same requirement. Now, many people are urging to cancel this ratio. Banks have their own way to operate.

Usually in June, all the bank managers are crazy as hell, they compete for deposit everywhere, they provide high rate of return, or they get fired. On June 30 this year, on this single day, the deposit of the four major banks in China increased $182.2 billion.

But of course there is other reasons, Xi and Li's policy seems promising, so the market has more confidence. Or maybe the credit doesn't go to the real economy. Anything could happen. About the 7.5% growth rate, all I know is China still lacks new growth engine with the exception of infrastructure. I hope US can transfer more high tech to China, help to build more industries other than fixed asset investment.

That's a fascinating look inside the way banks manage the regulators in China. Thanks for the information. I hope you don't take this the wrong way, but the way the loan to deposit ratio is managed makes me nervous about the effectiveness of the regulators, and whether banks are managing their risk properly. Do you know how often the regulator examines the banks for compliance with its minimum standards?

That takes care of the bank credit aspect of the article, but the part that concerned me was the "aggregate financing" and "fiscal spending" portion of the article. I am not quite sure what these refer to, but I assume fiscal spending refers to government spending. I was unable to find up-to-date data on China's budget deficit, but in searching, I found the following (http://online.wsj.com/news/articles/SB10001424052702304585004579419823159168590 ):

The budget deficit, which will rise 12.5% to 1.35 trillion yuan ($221 billion), will also reflect efforts to overhaul the economy and deal with the effect of slower growth. While the deficit total is up, the finance ministry said the shortfall will still be about the same percentage of the nation's inflation-adjusted gross domestic product at around 2.1%.

"We will take an active fiscal policy, appropriately expand the deficit and maintain a certain level of stimulus for the economy," the finance ministry said in its report on the budget at the opening of the annual session of parliament on Wednesday.

It also said that it would use fiscal policy to push ahead with a rebalancing of the economy, though it tempered this by saying it had a "serious imbalance between government revenue and expenditure."

Spending is set to rise 9.5% this year to 15.30 trillion yuan, while revenue will increase 8% to 13.95 trillion yuan, according to the budget plan.

---

In the article you posted above, if I understand it correctly, fiscal revenues increased 8.8%, which is more or less in line with the projection of 8% trend-line growth according to the plan, but fiscal spending rose 26.1% year over year, in contrast to the 9.5% trend-line growth that the budget plan called for. That's what concerns me--it may be an indication that the economy is far weaker than expected, so stimulus spending had to be amplified to support the GDP growth that the government has been trying to achieve. I hope I'm wrong on this, but if I'm not, that's a bad sign for the world economy. China's already implemented stimulus spending in 2013, so if additional stimulus spending is necessary in 2014, that indicates the manufacturing strength is artificial, and will fall when the stimulus is withdrawn. This is supported by recent inflation figures that have been significantly below the government target of 3.5%.

I hope we're not seeing the beginning of a deflationary period. Europe, the US, and Japan have already used up all of their fiscal and monetary weapons, so there will not be a way to use Keynsian tactics to combat deflation should it appaer.

 

[Edison Chen]

That's a fascinating look inside the way banks manage the regulators in China. Thanks for the information. I hope you don't take this the wrong way, but the way the loan to deposit ratio is managed makes me nervous about the effectiveness of the regulators, and whether banks are managing their risk properly. Do you know how often the regulator examines the banks for compliance with its minimum standards?

That takes care of the bank credit aspect of the article, but the part that concerned me was the "aggregate financing" and "fiscal spending" portion of the article. I am not quite sure what these refer to, but I assume fiscal spending refers to government spending. I was unable to find up-to-date data on China's budget deficit, but in searching, I found the following (http://online.wsj.com/news/articles/SB10001424052702304585004579419823159168590 ):

The budget deficit, which will rise 12.5% to 1.35 trillion yuan ($221 billion), will also reflect efforts to overhaul the economy and deal with the effect of slower growth. While the deficit total is up, the finance ministry said the shortfall will still be about the same percentage of the nation's inflation-adjusted gross domestic product at around 2.1%.

"We will take an active fiscal policy, appropriately expand the deficit and maintain a certain level of stimulus for the economy," the finance ministry said in its report on the budget at the opening of the annual session of parliament on Wednesday.

It also said that it would use fiscal policy to push ahead with a rebalancing of the economy, though it tempered this by saying it had a "serious imbalance between government revenue and expenditure."

Spending is set to rise 9.5% this year to 15.30 trillion yuan, while revenue will increase 8% to 13.95 trillion yuan, according to the budget plan.

---

In the article you posted above, if I understand it correctly, fiscal revenues increased 8.8%, which is more or less in line with the projection of 8% trend-line growth according to the plan, but fiscal spending rose 26.1% year over year, in contrast to the 9.5% trend-line growth that the budget plan called for. That's what concerns me--it may be an indication that the economy is far weaker than expected, so stimulus spending had to be amplified to support the GDP growth that the government has been trying to achieve. I hope I'm wrong on this, but if I'm not, that's a bad sign for the world economy. China's already implemented stimulus spending in 2013, so if additional stimulus spending is necessary in 2014, that indicates the manufacturing strength is artificial, and will fall when the stimulus is withdrawn. This is supported by recent inflation figures that have been significantly below the government target of 3.5%.

I hope we're not seeing the beginning of a deflationary period. Europe, the US, and Japan have already used up all of their fiscal and monetary weapons, so there will not be a way to use Keynsian tactics to combat deflation should it appaer.

Central government spending increased by 12.3%, local government spending increased by 24.6%. In May, ministry of finance require each level of government to increase spending. I think the slow growth of fiscal revenue it's due to VAT reform, the increase of tax reimbursement for export and the decreasing of land transaction fees. China has been relying on "land fiscal revenue" years ago, it's a very bad policy. In June, the land transaction fees collection only grows 7.3%, but in June 2013, this number is 26.3%. I think, in short-term, from the data, it looks not good, but it's promising in the long run.

China has been reforming VAT since Xi & Li take charge, you can google it.

 

[Hypersonicmissiles]

This news is disconcerting. The whole point of Xi's rebalance was to move away from this kind of credit-fueled growth. Fiscal spending up by 26.1%, but GDP only up by 7.5%? If that's not a sign of inefficiency and mal-investment, I don't know what is. I hope China doesn't fall into the same debt trap that the US did.

How do you grow without getting financing?