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China Says Local-Level Debt Soars, Stirring Fear

The total debt of local governments in China has soared to nearly $3 trillion as the country’s addiction to credit-fueled growth has deepened in recent years, according to the findings of a long-awaited report released on Monday by the central auditing agency. In the report, which is likely to further raise concerns about China’s debt problem, the National Audit Office found that local governments across the country had accumulated 17.89 trillion renminbi, or $2.95 trillion, worth of debt obligations as of the end of June. That was an increase of 12.7 percent from December 2012, when local government debt stood at 15.88 trillion renminbi, the report said. The June figure also represented a sharp increase of 67 percent from the end of 2010, when an earlier report by the Audit Office estimated local government debt at 10.71 trillion renminbi. Other reports have estimated local government debt […]

Posted On : Published By : Tom Whipple
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China’s growth may hit 7.6 percent

China’s economic growth is likely to stand at 7.6 percent this year, slightly down from 7.7 percent in 2012, said a State Council report on Wednesday. Economic growth has been higher than expected since 2011 despite a declining trend, said a mid-term evaluation report on the implementation of the 12th five-year development plan (2011 to 2015). The report was submitted by the State Council, China’s cabinet, to the bi-monthly session of the Standing Committee of the National People’s Congress (NPC). The five-year plan set an annual growth target of gross domestic product (GDP) at 7 percent between 2011 and 2015. GDP growth was 9.3 percent in 2011, 7.7 percent in 2012 and 7.6 percent in the first half of this year, according to the report. "We can not deny a downward pressure on economic growth," said Xu Shaoshi, minister in charge of the National […]

Posted On : Published By : Tom Whipple
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China's growth may hit 7.6 percent

China’s economic growth is likely to stand at 7.6 percent this year, slightly down from 7.7 percent in 2012, said a State Council report on Wednesday. Economic growth has been higher than expected since 2011 despite a declining trend, said a mid-term evaluation report on the implementation of the 12th five-year development plan (2011 to 2015). The report was submitted by the State Council, China’s cabinet, to the bi-monthly session of the Standing Committee of the National People’s Congress (NPC). The five-year plan set an annual growth target of gross domestic product (GDP) at 7 percent between 2011 and 2015. GDP growth was 9.3 percent in 2011, 7.7 percent in 2012 and 7.6 percent in the first half of this year, according to the report. "We can not deny a downward pressure on economic growth," said Xu Shaoshi, minister in charge of the National […]

Posted On : Published By : Tom Whipple
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China cash squeeze worsens despite central bank efforts

China’s cash squeeze worsened on Monday despite the central bank’s repeated attempts to calm financial markets with emergency money injections. The seven-day bond repurchase rate, an important gauge of short-term liquidity, climbed to 8.8 per cent in early trading, up about 60 basis points from its average on Friday, a signal that banks are still hoarding cash . The continued tightening of monetary conditions in the face of the central bank’s liquidity injections raises the spectre of a repeat of the Chinese cash crunch earlier this year that exposed fragility in the world’s second-biggest economy and spooked global investors. Traders and analysts have praised the central bank’s more aggressive response to the current liquidity squeeze, but concerns are mounting as its actions appear to have been largely ineffectual so far. Late on Friday the People’s Bank of China announced it had conducted Rmb300bn ($49bn) of “short-term liquidity operations” , […]

Posted On : Published By : Tom Whipple
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China Rates Approach Crisis Levels Despite Central Bank Measures

An exceptional bid by China’s central bank to curb soaring interest rates and relieve pressure on the financial system appeared to have come up short on Monday, as Chinese money market rates shrugged off the measure and continued to approach the crisis levels seen in June. The central bank, the People’s Bank of China, said late Friday that it had provided more than 300 billion renminbi, or about $50 billion, in short-term funds to selected banks over a three-day period that week. Rates continued to surge on Monday, however, in China’s money markets — a key source of short-term funding for commercial banks and also for financial institutions engaged in risky, off-balance-sheet shadow lending. One key rate, the seven-day repurchase rate, rose as high as 10 percent on Monday. That was double the rate of a week earlier and the highest level since June, when the […]

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Beijing to “resolutely control” population growth

Curbing the explosive growth of its population will be a top priority for the Beijing municipal government, Mayor of the Chinese capital Wang Anshun has said. "To resolutely control the population’s excessive growth is the key to solving multiple problems, such as traffic and environmental problems," said Wang on Sunday at a session of the Communist Party of China (CPC) Beijing committee. Beijing will give full play to the restructuring of industries and upgrading of service industries to slow down population growth, he added. Since 2000, Beijing’s permanent population has increased by an average of nearly 600,000 annually to reach 20.69 million at the end of 2012, far exceeding the previously planned target of keeping the population at 18 million by 2020. The population of Beijing is about 2.6 times that of London and 2.5 times that of New York. The metropolis faces traffic […]

Posted On : Published By : Tom Whipple
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Beijing to "resolutely control" population growth

Curbing the explosive growth of its population will be a top priority for the Beijing municipal government, Mayor of the Chinese capital Wang Anshun has said. "To resolutely control the population’s excessive growth is the key to solving multiple problems, such as traffic and environmental problems," said Wang on Sunday at a session of the Communist Party of China (CPC) Beijing committee. Beijing will give full play to the restructuring of industries and upgrading of service industries to slow down population growth, he added. Since 2000, Beijing’s permanent population has increased by an average of nearly 600,000 annually to reach 20.69 million at the end of 2012, far exceeding the previously planned target of keeping the population at 18 million by 2020. The population of Beijing is about 2.6 times that of London and 2.5 times that of New York. The metropolis faces traffic […]

Posted On : Published By : Tom Whipple
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China reveals Rmb300bn cash injection to calm lenders

China has made a fresh attempt to head off a cash squeeze by announcing the injection of Rmb300bn of emergency money into its financial system, in an uncomfortable echo of a crunch earlier this year which rattled global markets. China’s central bank said it had provided funds to cash-strapped lenders over three consecutive days, disclosing more detail than on Thursday when it first confirmed it had made the highly unusual move of “short term liquidity operations”. China’s interbank lending rates soared dangerously high on Friday. Fears of a Chinese “hard” economic landing are top of many international investors’ 2014 worry lists, but financial markets have so far seen little danger of the country’s growth prospects being seriously derailed. Global stocks have been buoyed instead this week by the smooth launch of US Federal Reserve plans to “taper” , or scale back its asset purchases. “This may put China back […]

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US growth of 4.1% validates Fed move

The US economy grew at its fastest rate in nearly two years in the third quarter of 2013 after revisions boosted the annualised rate of expansion from 3.6 to 4.1 per cent , days after the Federal Reserve said it would start scaling back its $85bn-a-month monetary stimulus. Critically, almost all of the upward revision was due to stronger consumption, which grew at an annualised rate of 2 per cent rather than 1.4 per cent. This suggests greater underlying momentum in the economy. US stocks reacted strongly to put the S&P 500 on pace for its biggest weekly gain in two months, while the dollar was stronger and Treasury yields hovered just below two-year peaks. The S&P was up 0.5 per cent to close at 1,818.31 in New York. The revision in growth adds to a series of recent data that suggests the US economy is accelerating and validates […]

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Fed Dials Back Bond Buying, Keeps a Wary Eye on Growth

Ben Bernanke gave the U.S. economy a nod of approval just a month before he leaves the Federal Reserve, moving the central bank to begin winding down a bond-buying program meant to boost growth with the recovery on firmer footing. The Fed has pulled back its stimulus efforts before, only to restart them when the economy disappointed, and new challenges loom, including a surprising slowdown in inflation. But Mr. Bernanke said in his final news conference as Fed chairman that the economy was getting to a point where it needs less help. "Today’s policy actions reflect the [Fed’s] assessment that the economy is continuing to make progress, but that it also has much farther to travel before conditions can be judged normal," Mr. Bernanke said. After months of wringing their hands about the implications of less Fed stimulus, investors resoundingly approved of the latest action to begin paring the […]

Posted On : Published By : Tom Whipple