China Economy Forum

[Shotgunner51]

@Saif al-Arab This is the thread I am talking about bro.

GCC has good experience in building/operating SWF, welcome to share. In East Asia, only Singapore has such experience and successful track record. Hong Kong has a fund under HKMA, while other financial powerhouses (China Mainland, Japan, SK, Taiwan) mostly just sit on FX reserves, heavily loaded with US T-bills.

China Mainland began exploring SWF since 1997, progressively, but in small steps with great care. Total SWF is only $1.53 trillion as of now, still small compared to FX reserves. Constructing SWF is not just a technical issue but it may have geopolitical complications on a global scale. Note, the GCC has been instrumental in shaping the existing world order, i.e. Petro-Dollar. So as Japan, the #1 creditor nation, has been top holder of US T-Bills until recent years.

By now China still carries US$3.77 trillion in FX reserves, heavy up on US T-Bills, directly and through Belgium, the direction to go is yet to be determined. Building oil reserves, US T-Bills, SWF, RMB internationalisation, are all uncertainties. Whatever the direction is, KSA + China, or GCC + East Asia, would be meaningful force in shaping future world order, let's explore together my friend!

 

[Götterdämmerung]

I suspect that much of China's gold reserve is being parked in these SWF. So, technically it's not part of the central bank reserve, but practically it still belongs to the state, thus the Chinese people.

BTW, did China check thoroughly all the managers in the Chinese finance and banking sector who has link with Goldman Sachs? If not, I recommend them to do so pronto. Many of the high finance people in the EU including Draghi were former GS employees. They are agents of money cabal. Watch out!

 

[TaiShang]

By now China still carries US$3.77 trillion in FX reserves, the direction to go is yet to be determined. Building oil reserves, US T-Bills, SWF, RMB internationalisation, are all uncertainties.

As far as strategic petroleum reserves are concerned, Chin has been working on it since the 2000s, aiming a 90-day SPR capability.

China Retakes Top Oil-Buyer Spot From U.S. Amid Stockpiling - Bloomberg Business

 

[AndrewJin]

As far as strategic petroleum reserves are concerned, Chin has been working on it since the 2000s, aiming a 90-day SPR capability.

China Retakes Top Oil-Buyer Spot From U.S. Amid Stockpiling - Bloomberg Business

What is SPR?

 

[TaiShang]

What is SPR?

Strategic petroleum reserves, that is, emergency fuel storage. The aim for China is to have 90-day SPR, meaning, 90-day of extra fuel in times of crisis or emergency.

***

China is stockpiling its own Strategic Petroleum Reserve - Fuel Fix

In the first seven months of the year, China purchased about half a million barrels of crude in excess of its daily needs, the most for the period since 2012, according to data compiled by Bloomberg. As the country gathers bargain barrels for its strategic petroleum reserve, the demand is cushioning an oversupplied market from a further crash, according to Columbia University’s Center on Global Energy Policy.

“It throws a lifeline to the market” that safeguards against the risk of crude touching $20 a barrel, Jeff Currie, head of commodities research at Goldman Sachs Group Inc. in New York, said by phone. “That lifeline lasts through late 2016.”

Other countries have emergency oil-supply buffers, and while the U.S. Strategic Petroleum Reserve has been stable at about 700 million barrels for years, China is expanding its stockpiles rapidly.

The Asian nation has accumulated about 200 million barrels of crude in its reserve so far and aims to have 500 million by the end of the decade, according to the International Energy Agency. It’s currently filling a 19-million-barrel facility at Huangdao and will add oil at six sites with a combined capacity of about 132 million barrels over the next 18 months, the Paris-based adviser on energy policy estimates.

“The fact that China is stockpiling crude for public strategic storage certainly offsets the weaker sentiment on China’s oil-product demand,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.

China’s demand growth is set to slow to an annual rate of 2.3 percent by the fourth quarter compared with 5.6 percent in the second quarter, a reflection of “weak car sales data, declines in industrial activity, plummeting property prices and fragile electricity output,” the IEA said in a report on Sept. 11.

 

[Shotgunner51]

As far as strategic petroleum reserves are concerned, Chin has been working on it since the 2000s, aiming a 90-day SPR capability.

China Retakes Top Oil-Buyer Spot From U.S. Amid Stockpiling - Bloomberg Business

Exactly that's one area that I found suspicious. Some FX reserves are leaving the hands of PBOC, and change into oil reserves of the Department of Energy.

I posted this thread earlier, raising concern on China's unusual large buying orders of crude oil:
China's Outsize Crude Imports Throw Traders For Loop

Seems like something is happening, and as you said, SPR is likely constructed.

Also an important footnote, the external environment is also favorable, i.e. oil price. The price level now may impact oil-exporting countries, however it's a good time for countries sitting on excessive FX reserves to adjust their portfolio of holdings i.e. less FX reserves, more SPR.

 

[TaiShang]

What Is China’s Potential Growth Rate?

Chinese government set its annual economic growth rate at 7% at the beginning of 2015 and half a year later the target was fulfilled. Is this coincidence too perfect? Some international media have voiced their suspicions.

However, those critics seem to ignore a fact: The method that Chinese government uses to set the GDP growth target has become more and more reasonable. In the Report on the Work of the Government (2013), it first indicated that “economic growth should be coordinated with potential growth rate, adapted to the supply capacity of production factors and capacity of resources and environment.” That means the factors used to set the economic growth rate target are mainly based on the potential growth rate, which is determined by production factors, productivity growth and the capacity of resources and the environment.

What is the Chinese economic growth rate? Although estimates from policy-making departments and economists showed little divergence, a majority prediction is about 7% with the trend leaning towards a gradual decrease year on year.

China’s economic growth declined from 10% to 7%, which is in line with the inherent fluctuations of development.

In terms of element structure system, the amount people of working age has decreased, the saving rate has declined and the total factor productivity in the short term is slowing.

From the industrial structure aspect, the proportion of service industries exceeded that of secondary industry in GDP in 2012, but now the labor productivity of the service industry is lower than that of secondary industries.

In terms of the economic aggregates, China’s GDP reached S10.4 trillion in 2014. Generally speaking, after a country’s economic aggregate reaches a certain degree, marginal growth will decrease while economic scale will increase.

If the growth rate is coordinated with growth potential, production factors will be fully tackled. Inflation and cyclical unemployment can be avoided. In recent years, the registered unemployment rate in urban area stays around 4.1% and the surveyed unemployment rate has been around 5.1%, indicating China’s growth rate is reliable and acceptable.

http://en.people.cn/n/2015/0929/c90000-8956570.html

 

[Beidou2020]

Singapore's SWF is very successful.
We must learn from Singaporean Chinese how it works.


I have a question, how do they maintain their economy with such huge trade deficit?
@Bussard Ramjet @Echo_419

Hot money inflows. It's temporarily propping up their Ponzi scheme which they refer to as their so-called 'economy'.

 

[Shotgunner51]

I suspect that much of China's gold reserve is being parked in these SWF. So, technically it's not part of the central bank reserve, but practically it still belongs to the state, thus the Chinese people.

Your suspicion is very valid. Now within the $3.77 trillion of FX reserves, 1677 tonnes of gold are included and that represent only less than 2% of the pool.

In terms of gold production, China has been became the top since a few years back:

If imports are taken into the picture, then where are the missing bullions in China?

Gold prices rise amid China's missing bullion mystery - Telegraph
THE CASE OF CHINA’S MISSING GOLD - The Daily Coin​

Probably you are right, some gold are in the hands of the SWF, however given the aggressive nature of SWF, defensive portfolio like gold looks less attractive, well this is to be confirmed. I suspect that the "missing" gold are neither with PBOC (FX reserves) nor SWF (sovereign welfare funds), instead they (particularly those produced in China) are classified as commodity reserves under Department of Natural Resources (国土资源部) or institutions related to SGX (Shanghai Gold Exchange), valuation without using US$ or any currency. That would be similar to SPR (and uranium reserves) under Department of Energy (能源部), inventory measured in tonnes, not currency.

China Establishes World's Largest Physical Gold Fund
China remains as the world's largest gold trading market
Shanghai-Hong Kong Gold Connect launched
Away From Dollar: Russia, China to Create Entirely Different Gold Market​

BTW, did China check thoroughly all the managers in the Chinese finance and banking sector who has link with Goldman Sachs? If not, I recommend them to do so pronto. Many of the high finance people in the EU including Draghi were former GS employees. They are agents of money cabal. Watch out!

Thanks for the reminder bro, trojans are terrible for national security aren't they? Germany should get rid of these bugs!

I suppose here in China the national security system always keep a close eye on guys sitting on these critical posts. We must watch out!

 

[JSCh]

Construction of Laos segment of China-Singapore railway set for Nov. start
English.news.cn | 2015-09-29 18:20:55 | Editor: huaxia


VIENTIANE, Sept. 29 (Xinhua) -- A multi-billion dollar transnational railway linking China and Singapore is a step closer to reality with the start of construction of the section traversing Laos set for November.

Connecting the Lao capital of Vientiane with the Chinese border at a distance of 417 km, the joint-venture is expected to take 5 years to complete and come at an estimated cost of 6.8 billion U.S. dollars.

The announcement was made following a bi-annual three-day meeting of the Laos cabinet with provincial and capital office holders that concluded recently and confirmed to media by Minister of Public Works and Transport Dr Bounchanh Sinthavong.

The planned 1.435-meter standard-gauge single track is expected to boast five main stations and 31 smaller stations.

A maximum speed of 160 km per hour for passenger locomotives and 120 km per hour for goods trains has also been mooted.

Addressing the challenges of presented by Laos' mountainous terrain will require construction of some 76 tunnels with a total length of 195.78 km and 154 bridges spanning some 67.15 km.

The Laos section will eventually form part of a single rail network connecting China's Kunming to Singapore via Laos, Thailand and Malaysia designed to boost regional trade in goods and services as part of the "One Belt, One Road" development initiative.

 

[TaiShang]

Factbox: Facts and figures on China 2011-2015
Published: 2015-9-30 13:07:25


China's leadership and policymakers will convene in October to set the development course for the world's second largest economy over the next five years (2016-2020).

Following are some facts and figures about how the country has delivered on its goals for the 2011-2015 period.

-- GROWTH

Target: GDP growth of 7 percent annually on average

Delivery: Growth came in at 9.3 percent in 2011, 7.7 percent in 2012, 7.7 percent in 2013 and 7.3 percent in 2014. For the first half of the year, China's economy expanded 7 percent, and authorities have repeatedly voiced confidence in achieving the annual target of around 7 percent for 2015.

-- INFLATION

Target: Prices to be kept generally stable

Delivery: Annual consumer inflation came in at 5.4 percent in 2011, 2.6 percent in 2012, 2.6 percent in 2013 and 2 percent in 2014. Economists forecast mild inflation for 2015.

-- JOB MARKET

Target: More than 45 million jobs to be created in urban areas; Urban registered unemployment to be kept no higher than 5 percent.

Delivery: China created a total of 50.79 million jobs in urban areas for the 2011-2014 period. A total of 7.18 million new jobs were added in the first half of 2015.

The urban registered jobless rate held steady at 4.1 percent through 2011-2014. The rate stood at 4.04 percent at the end of June 2015.

-- ECONOMIC RESTRUCTURING

Target: Rise in domestic consumption; Service sector value-added output to account for 47 percent of GDP; Urbanization rate to reach 51.5 percent, up 4 percentage points.

Delivery: Consumption accounted for 60 percent of GDP growth in the first half of 2015, 13.1 percentage points higher than the share in 2010.

The service industry accounted for 49.5 percent of GDP in the first half of 2015. In 2010, the share was 39.2 percent.

China's current urbanization rate in China stands at about 55 percent.

-- ENVIRONMENT

Target: Non-fossil fuel to account for 11.4 percent of primary energy consumption; Energy consumption per unit of GDP to be cut by 16 percent; Carbon dioxide emissions per unit of GDP to be cut by 17 percent; Forest coverage rate to rise to 21.66 percent and forest stock to increase by 600 million cubic meters.

Delivery: Non-fossil fuel accounted for 11.2 percent of primary energy consumption by 2014.

According to calculations by Xinhua based on official statistics, energy consumption per unit of GDP dropped 13.4 percent by 2014 from the 2010 level. If China is to meet the target, consumption needs to fall 3 percent year on year in 2015. In the first half of the year, energy consumption per unit of GDP went down 5.9 percent.

-- SOCIAL WELFARE

Target: Construction and renovation of 36 million apartments for low-income families.

Delivery: A total of 39.7 million affordable housing units will begin construction by the end of 2015, topping the 36 million target set for the 2011-2015 period.

--- REFORM

Target: In-depth reform in monopoly industries for easier market entry and more competition;

Delivery: China's top oil refiner Sinopec in 2014 said that it would bring in social and private capital to jointly market and sell its oil products, making it the first largely monopolized sector to open up.

China's Industry and Information Technology Ministry in 2014 licensed six more private enterprises to pilot resale of certain mobile services, allowing them to partner and compete with China's "backbone" telecom operators through the resale of mobile services.

Target: Improved government efficiency and credibility.

Delivery: Since 2013, China's State Council has been streamlining government administration to reduce government control and unleash market vitality.

In two years, more than 700 approval items controlled by central government departments have been canceled or delegated to lower agencies, and more than a third of all approval items handled by the State Council were cut or decentralized.

 

[Götterdämmerung]

Your suspicion is very valid. Now within the $3.77 trillion of FX reserves, 1677 tonnes of gold are included and that represent only less than 2% of the pool.

In terms of gold production, China has been became the top since a few years back:
View attachment 261320

If imports are taken into the picture, then where are the missing bullions in China?

Gold prices rise amid China's missing bullion mystery - Telegraph
THE CASE OF CHINA’S MISSING GOLD - The Daily Coin​

Probably you are right, some gold are in the hands of the SWF, however given the aggressive nature of SWF, defensive portfolio like gold looks less attractive, well this is to be confirmed. I suspect that the "missing" gold are neither with PBOC (FX reserves) nor SWF (sovereign welfare funds), instead they (particularly those produced in China) are classified as commodity reserves under Department of Natural Resources (国土资源部) or institutions related to SGX (Shanghai Gold Exchange), valuation without using US$ or any currency. That would be similar to SPR (and uranium reserves) under Department of Energy (能源部), inventory measured in tonnes, not currency.

China Establishes World's Largest Physical Gold Fund
China remains as the world's largest gold trading market
Shanghai-Hong Kong Gold Connect launched
Away From Dollar: Russia, China to Create Entirely Different Gold Market​

Thanks for the reminder bro, trojans are terrible for national security aren't they? Germany should get rid of these bugs!

I suppose here in China the national security system always keep a close eye on guys sitting on these critical posts. We must watch out!

Thanks for the info about the gold reserve.

Unless there is a revolution, we won't be able to get rid of them. Even the revolution could be managed by the cabal behind the scene. Such is the situation.

I can't believe that the Shanghai stock crash was possible without the GS moles within the Chinese banking and finance system. Impossible!

It wouldn't surprise me that GS has also implanted agents even within the Chinese banking and finance supervision system.

 

[jkroo]

Thanks for the info about the gold reserve.

Unless there is a revolution, we won't be able to get rid of them. Even the revolution could be managed by the cabal behind the scene. Such is the situation.

I can't believe that the Shanghai stock crash was possible without the GS moles within the Chinese banking and finance system. Impossible!

It wouldn't surprise me that GS has also implanted agents even within the Chinese banking and finance supervision system.

You are right. Last time 8 senior leaders of CITIC Security which is supposed to be China's own GS were investigated.

Corruptions and illegal behaviors involved.

 

[TaiShang]

Amid the doom & gloom coming out of the Western world on the Chinese economy ...

"The Westpac MNI China Consumer Sentiment Indicator increased 1.7pts from 116.5 in August to 118.2 in September. The Indicator is now 4.4% higher than a year ago and just 1.7% below its long run average.

"The rally in Chinese consumer sentiment has come despite more equity market volatility, continued concerns about China’s growth prospects and more signs of weak conditions across China’s manufacturing sector. Notably, whereas the survey detail shows consumers have become much less pessimistic about business conditions and are nudging into positive territory in their views on real estate, their expectations for employment have shown far less improvement ...

"That the Westpac MNI China CSI has managed to sustain a steady rise throughout this period is strong confirmation that these developments have had little bearing on ‘ordinary’ Chinese consumers. Their confidence may instead be responding to policy moves – a 50bp cut in interest rates and a further easing in investor housing policy – and shifting conditions on the ground. The survey has a solid track record picking turning points in activity. The firming in sentiment clearly demands close attention."

https://wibiq.westpac.com.au/NZPublications.aspx…

 

[Götterdämmerung]

You are right. Last time 8 senior leaders of CITIC Security which is supposed to be China's own GS were investigated.

Corruptions and illegal behaviors involved.

The most important thing is to check their backgrounds and their possible links to US banks and organisations.