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Eurozone economic recovery gains traction on back of improved GDP

The eurozone’s recovery gained a little traction in the final quarter of 2013, with the currency bloc’s economy expanding by 0.3 per cent on the back of stronger-than-expected growth in the region’s two largest economies. Eurostat, the commission’s statistics bureau, on Friday published figures showing growth had edged up from 0.1 per cent in the third quarter by slightly more than the 0.2 per cent expected by economists. The figures will boost hopes that economic conditions in the bloc are steadily improving after the region became engulfed by a sovereign debt and banking crisis. The Eurostat figures were published hours after it emerged that Germany, the bloc’s economic powerhouse, had expanded 0.4 per cent, beating forecasts of 0.3 per cent growth. The German data, published by the Federal Statistics Office, were up from 0.3 per cent in the previous quarter and ahead of its preliminary estimate published last month […]

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Iran's Economy Begins to Improve With New President, Nuclear Accord

Iran’s economy, though still crippled by sanctions, has begun to improve as a new president and a nuclear accord with the West stabilize its currency and raise confidence, say economists and merchants here and abroad. Residents of this ancient trade hub say they are encouraged by the new administration’s economic policies and the prospect of a lifting of international sanctions in the coming years. Such sentiments have helped stabilize the volatile Iranian rial, which in turn has eased rising prices and spurred an uptick in informal trade, economists say. Shiraz, the heartland of Iran’s Persian identity, has been particularly hard-hit by sanctions. Its once-plentiful international tourists, who came to visit the nearby archaeological ruins of Persepolis and tombs of Iran’s most famous poets Hafez and Saadi, have dwindled to a trickle. Many Iranians are optimistic things will gradually improve. At his animal-feed factory here on the outskirts of […]

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Iran’s Economy Begins to Improve With New President, Nuclear Accord

Iran’s economy, though still crippled by sanctions, has begun to improve as a new president and a nuclear accord with the West stabilize its currency and raise confidence, say economists and merchants here and abroad. Residents of this ancient trade hub say they are encouraged by the new administration’s economic policies and the prospect of a lifting of international sanctions in the coming years. Such sentiments have helped stabilize the volatile Iranian rial, which in turn has eased rising prices and spurred an uptick in informal trade, economists say. Shiraz, the heartland of Iran’s Persian identity, has been particularly hard-hit by sanctions. Its once-plentiful international tourists, who came to visit the nearby archaeological ruins of Persepolis and tombs of Iran’s most famous poets Hafez and Saadi, have dwindled to a trickle. Many Iranians are optimistic things will gradually improve. At his animal-feed factory here on the outskirts of […]

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Ford says January China auto sales up 53 percent year-on-year

Ford Motor Co ( F.N ) and its Chinese joint ventures sold 94,466 vehicles in China in January, an increase of 53 pct from a year earlier, the U.S. automaker said on Wednesday. That compares with a 35 percent increase in December and a 47 percent jump in November. In 2013, Ford sold a total of 935,813 vehicles in China, up 49 percent from the previous year. Ford operates joint ventures in China with Chongqing Changan Automobile Co Ltd ( 000625.SZ ) and Jiangling Motors Corp ( 000550.SZ ). (Reporting By Shanghai newsroom and Norihiko Shirouzu; Editing by Kazunori Takada)

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Strong China January trade data sparks cheers, doubts

China surprised markets with a thumping trade performance in January as import growth hit a six-month high, drawing some skepticism about the data but still allaying fears of a deepening economic malaise. Analysts who had expected the long Lunar New Year holiday to drag on January’s trade warned that the figures may be inflated by fake trade transactions, where traders forge deals to sneak cash into the country past capital controls. The value of China’s total exports climbed 10.6 percent in January from a year earlier, the Customs Administration said on Wednesday, more than five times market forecasts for a 2 percent rise. The value of imports also jumped 10 percent from a year ago as China bought record volumes of iron ore, crude oil and copper. That lifted import growth to its highest level since July, handily beating predictions for a 3 percent gain. The […]

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China land sales pull in record $672bn

Chinese land sales hit a record $672bn in 2013 following a lull the previous year, providing more evidence that the country’s property market is once again in full throttle. But although construction activity is likely to bolster the economy in 2014, there are signs that land sales could slow, weakening local governments’ ability to raise money. Land sales hit Rmb4.1tn, the Ministry of Land and Resources said, eclipsing the previous record of Rmb3.5tn in 2011. Land zoned for real estate use, which accounts for about one-quarter of zoned land sales, rose by nearly 27 per cent year-on-year. The land data follow earlier housing research that showed the value of new home prices accelerated to $1.1tn in […]

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Limits to Growth–At our doorstep, but not recognized

FHow long can economic growth continue in a finite world? This is the question the 1972 book The Limits to Growth by Donella Meadows and others sought to answer. The computer models that the team of researchers produced strongly suggested that the world economy would collapse sometime in the first half of the 21st century. I have been researching what the real situation is with respect to resource limits since 2005. The conclusion I am reaching is that the team of 1972 researchers were indeed correct. In fact, the promised collapse is practically right around the corner, beginning in the next year or two. In fact, many aspects of the collapse appear already to be taking place, such as the 2008-2009 Great Recession and the collapse of the economies of smaller countries such as Greece and […]

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China export growth seen slowing, loans surging in January

China’s export and import growth likely cooled in January, a Reuters poll showed, underlining a broader slowdown in the world’s second-largest economy, though the Lunar New Year holiday effect may overstate the soft momentum. Weakness in China’s imports could be bad news for the rest of the world, particularly for major commodity exporters such as Australia. HSBC estimates China will overtake the United States to become the world’s biggest importer this year. Bank loans in China are expected to see a typical seasonal surge in January as banks get fresh lending quotas at this time every year, underlining relatively stable credit demand from the real economy. Many economists expect a soft slowdown in China’s economy in 2014 as policymakers try to embrace slower but better-quality growth to cut reliance on investment and pursue sustainable development. "Given the stable economic situation last year and increasing expectations over […]

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US employment growth disappoints in January

The US economy added just 113,000 jobs in January, as the unemployment rate edged down to 6.6 per cent – dashing hopes of a steady acceleration in the recovery and posing a challenge to Janet Yellen in her first weeks as Federal Reserve chair. After job creation slumped in December, economists were very keen to assess whether that dip was an anomaly or a reflection of a deeper slowdown in the strength of the US economy . With payroll formation in January rebounding only slightly, and well below economists’ expectations of 180,000 new positions, fresh concerns are likely to mount about the US economy entering a new rough patch. But last month’s figures may also be a poor guide, in that bad weather across big portions of the country could have distorted the data . US equity futures were firmer, the dollar weakened and Treasury bond prices rose after […]

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Turnabout on Global Outlook Darkens Investor Mood

A series of sudden, unfavorable events has in just a matter of weeks changed bright optimism about the pace of growth in the global economy this year to a deepening sense of doubt. The warning signs are plentiful: Tumbling stock prices around the world, disappointing economic reports in the U.S. and China, hasty interest-rate increases in major developing countries including Turkey, India and South Africa, and whispers of disappointment in corporate earnings conference calls. They are combining to send a signal that the global economy might not be on the strong footing it appeared to be at the start of 2014. Another closely watched indicator will arrive Friday, when the Labor Department releases its estimate of U.S. job growth in January. Still, that report, like other recent U.S. releases, could offer murky guidance due to quirks related to bad winter weather, only adding to uncertainty about the outlook. Investors […]

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Currency crisis at Chinese banks ‘could trigger global meltdown’

Figures published by the Bank for International Settlements (BIS) in October showed foreign currency loans booked in China, as well as cross-border borrowing by Chinese companies, had reached $880bn (£535bn) as of March 2013, from $270bn in 2009. Analysts say this figure is now likely to exceed $1 trillion and is continuing to grow, raising the prospect of the potentially dangerous vulnerability of the Chinese financial system to a rising dollar. “It is very hard to work out the exposures of individual banks to the Chinese financial system, but it seems to us there are some very large numbers on some of the bank’s balance sheets,” said the analyst. “Without a doubt, that has been on the rise [foreign currency borrowing] and was really starting to grow fast in the latter half of last year and it’s only going to continue. For the time being, it is only a […]

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Currency crisis at Chinese banks 'could trigger global meltdown’

Figures published by the Bank for International Settlements (BIS) in October showed foreign currency loans booked in China, as well as cross-border borrowing by Chinese companies, had reached $880bn (£535bn) as of March 2013, from $270bn in 2009. Analysts say this figure is now likely to exceed $1 trillion and is continuing to grow, raising the prospect of the potentially dangerous vulnerability of the Chinese financial system to a rising dollar. “It is very hard to work out the exposures of individual banks to the Chinese financial system, but it seems to us there are some very large numbers on some of the bank’s balance sheets,” said the analyst. “Without a doubt, that has been on the rise [foreign currency borrowing] and was really starting to grow fast in the latter half of last year and it’s only going to continue. For the time being, it is only a […]

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World stocks fall as China manufacturing slows

Global stocks were mostly lower Monday as signs of weakness in another China manufacturing survey added to lingering jitters about developing economies. In early European trading, major benchmarks were lackluster. Britain’s FTSE 100 inched up 0.2 percent to 6,522.24 but France’s CAC-40 was down 0.1 percent to 4,163.23. Germany’s DAX fell 0.1 percent to 9,293.72. Futures augured modest gains on Wall Street, with Dow Jones and S&P 500 futures both up 0.1 percent. The Nikkei 225, the barometer for the Tokyo Stock Exchange, closed down 2 percent at 14,619.13 as the yen has reversed some of its weakness against the dollar in recent days, which is a negative for exporting stocks. Also negative for sentiment was an official Chinese manufacturing survey that showed factory output grew at a slower rate in January compared with December. The survey released on the weekend followed a HSBC […]

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China's non-manufacturing PMI drops in January

The purchasing managers’ index (PMI) for China’s non-manufacturing sector slipped for a third straight month in January due to a slowdown in the real estate sector, new data showed. The index dropped to 53.4 percent last month, the lowest since February 2012, from 54.6 percent in December, according to official figures released on Monday. The index tracks non-manufacturing sectors including construction, software, aviation, railway transport and real estate. A PMI reading above 50 percent indicates expansion, while a reading below 50 percent reflects contraction. The monthly indicator is released by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP). CFLP Vice Chairman Cai Jin attributed the drop mainly to a slowdown in the real estate sector in the past two months. The price index for real estate dropped to below 50 percent from December to January, while that […]

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China’s non-manufacturing PMI drops in January

The purchasing managers’ index (PMI) for China’s non-manufacturing sector slipped for a third straight month in January due to a slowdown in the real estate sector, new data showed. The index dropped to 53.4 percent last month, the lowest since February 2012, from 54.6 percent in December, according to official figures released on Monday. The index tracks non-manufacturing sectors including construction, software, aviation, railway transport and real estate. A PMI reading above 50 percent indicates expansion, while a reading below 50 percent reflects contraction. The monthly indicator is released by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP). CFLP Vice Chairman Cai Jin attributed the drop mainly to a slowdown in the real estate sector in the past two months. The price index for real estate dropped to below 50 percent from December to January, while that […]

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China factory output points to Q1 lull

Chinese manufacturing activity slipped to its lowest level in six months, with indications of slowing growth for the quarter to come in the world’s second-largest economy. The National Bureau of Statistics said its purchasing managers’ index (PMI) for January slipped to 50.5 , a reading just above the threshold for quickening growth. While output was still expanding, a sub-index for new export orders hovered for the second month below the midpoint, indicating slowing growth, and pointing to a lull in factory operations for the next few months. Concern over a slowdown in the Chinese economy contributed to the turmoil that has hit some emerging markets over the past 10 days. Saturday’s data are unlikely to ease those worries. The Chinese new year holiday, which began on Friday, normally corresponds with lower manufacturing activity as overseas orders dry […]

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China’s manufacturing PMI drops to 50.5 pct in January

China’s purchasing managers’ index (PMI) for the manufacturing sector dropped to five-month low to 50.5 percent in January, according to official data released on Saturday. January continued December’s decline and marked the lowest factory activity since August 2013, according to a statement jointly released by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP). In January, the sub-index for production stood at 53 percent, down 0.9 percentage points from December, while the sub-index for new orders lost 1.1 percentage points to 50.9 percent, said the statement. Major PMI compounds all declined in January, indicating downward pressure on the economy, said Zhang Liqun, an analyst with the Development Research Center of the State Council. […]

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China's manufacturing PMI drops to 50.5 pct in January

China’s purchasing managers’ index (PMI) for the manufacturing sector dropped to five-month low to 50.5 percent in January, according to official data released on Saturday. January continued December’s decline and marked the lowest factory activity since August 2013, according to a statement jointly released by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP). In January, the sub-index for production stood at 53 percent, down 0.9 percentage points from December, while the sub-index for new orders lost 1.1 percentage points to 50.9 percent, said the statement. Major PMI compounds all declined in January, indicating downward pressure on the economy, said Zhang Liqun, an analyst with the Development Research Center of the State Council. […]

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Selloff’s Spread to Europe Is Sign of Broad Fear

Until this week, European emerging markets had largely dodged the vicious selloff that has swept through their peers elsewhere. Now, they are showing cracks . The Hungarian forint took a heavy blow early Thursday, dropping as much as 1% against the dollar. The Polish zloty and the Czech koruna also stumbled. The currencies clawed back some ground late in the day, but analysts cited Thursday’s gyrations as a sign that the market’s fear of investments seen as risky is broad. Whether bouts of weakness in such countries persist will be a barometer of wider emerging-market strains. The turmoil in emerging markets also has spilled over to stock funds. Emerging-market stock exchange-traded funds saw their second-biggest withdrawal on record last week. The ETFs had $2.7 billion in net outflows in the week ended Jan. 29, according to Lipper, the largest one-week outflow since February 2011. Some $2.5 billion flowed out […]

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Selloff's Spread to Europe Is Sign of Broad Fear

Until this week, European emerging markets had largely dodged the vicious selloff that has swept through their peers elsewhere. Now, they are showing cracks . The Hungarian forint took a heavy blow early Thursday, dropping as much as 1% against the dollar. The Polish zloty and the Czech koruna also stumbled. The currencies clawed back some ground late in the day, but analysts cited Thursday’s gyrations as a sign that the market’s fear of investments seen as risky is broad. Whether bouts of weakness in such countries persist will be a barometer of wider emerging-market strains. The turmoil in emerging markets also has spilled over to stock funds. Emerging-market stock exchange-traded funds saw their second-biggest withdrawal on record last week. The ETFs had $2.7 billion in net outflows in the week ended Jan. 29, according to Lipper, the largest one-week outflow since February 2011. Some $2.5 billion flowed out […]

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Global stocks hit 2-1/2 month lows as EM selloff continues

Global equities hit 2-1/2 month lows on Thursday after the U.S. Federal Reserve pushed ahead with reducing stimulus, raising concern about more emerging markets weakness and pushing investors towards safe-haven bonds. The Fed trimmed its monthly bond-buying program by $10 billion and made no mention of the turbulence in emerging markets which some investors had thought might delay the widely-flagged policy move. The prospect of a steady withdrawal of stimulus coupled with improving economies in the developed world has attracted funds away from many emerging markets, particularly those with current account deficits or political troubles – or a combination of the two. "I think there is a lack of positive triggers right now, and there is a growing concern about what happens. It’s no 1998 … we have a very cautious stance on all emerging market equities and currencies at the moment," said Hans Peterson, global […]

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As China’s Economy Slows, the Pain Hits Home

Piles of unsold coal line rural roads in north-central China. Some iron ore mines near Beijing are operating at a fraction of capacity. Chinese farm products are even increasingly scorned by the Chinese consumer. While China remains nearly self-sufficient in all these categories, it is importing more from other emerging markets. Economists and investors around the world have been fretting in recent days about the effects on smaller emerging markets if China’s economic slowdown worsens. Those concerns have driven down share prices and currencies from Jakarta to Istanbul to Buenos Aires, although emerging markets staged a partial recovery on Wednesday. They helped to prod the central banks of Turkey and India to raise benchmark interest rates unexpectedly on Tuesday. Yet the most vulnerable producers these days may not […]

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‘Fragile Five’ Is the Latest Club of Emerging Nations in Turmoil

The long-running boom in emerging markets came to be identified, if not propped up, by wide acceptance of the term BRICs, shorthand for the fast-growing countries Brazil, Russia, India and China. Recent turmoil in these and similar markets has produced a rival expression: the Fragile Five. The new name, as coined by a little-known research analyst at Morgan Stanley last summer, identifies Turkey, Brazil, India, South Africa and Indonesia as economies that have become too dependent on skittish foreign investment to finance their growth ambitions. The term has caught on in large degree because it highlights the strains that occur when countries place too much emphasis on stoking fast rates of economic growth. The new catchphrase also raises pressing questions about not just the BRICs but about emerging markets in general. The Morgan Stanley report came out in August, when there were reports […]

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Xinhua Insight: China dodges major shadow banking default

Chinese investors avoided a high-profile trust default on Monday, easing worries that the economy may be about to tip the first domino of shadow banking defaults. China Credit Trust reached a last-minute deal with investors to repay their investment in the three-billion-yuan (about 500 million U.S. dollars)product, deflating concerns that default would pound investor confidence in shadow banking and trigger credit crunches. "This offer comes as a compromise given rising concerns over a full default, but it is likely that investors have become more cautious on trust products in general," said Zhang Zhiwei, chief China economist at Nomura. The trust product, launched in February 2011, attracted some 700 private bank clients of the Industrial and Commercial Bank of China to invest in a private coal miner in north China’s Shanxi Province. Shanxi Zhengfu Energy Group went bankrupt […]

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Japan’s fuel imports contribute to record trade deficit

TOKYO, Jan. 27 (UPI) — Soaring fuel imports in the aftermath of Japan’s 2011 Fukushima nuclear disaster, amid a weaker yen, have contributed to the country’s record annual trade deficit, a government official said. Japan Monday reported a trade deficit of $112.07 billion in 2013, up 65.3 percent from the previous year. “Energy imports have been rising significantly since the nuclear accident,” causing per capita costs of around $293 in Japan, Kyodo News quoted Yoshihide Suga, chief Cabinet secretary as telling reporters. “It is important for us to ease such a burden as much as possible.” All 50 of Japan’s working reactors currently remain offline, pending safety checks. Japan relies on imports for more than 90 percent of its energy needs. Imports of liquefied natural gas to Japan last year rose 17.5 percent and imports of crude oil rose 16.3 percent. With those import costs expected to grow, amid […]

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Japan's fuel imports contribute to record trade deficit

TOKYO, Jan. 27 (UPI) — Soaring fuel imports in the aftermath of Japan’s 2011 Fukushima nuclear disaster, amid a weaker yen, have contributed to the country’s record annual trade deficit, a government official said. Japan Monday reported a trade deficit of $112.07 billion in 2013, up 65.3 percent from the previous year. “Energy imports have been rising significantly since the nuclear accident,” causing per capita costs of around $293 in Japan, Kyodo News quoted Yoshihide Suga, chief Cabinet secretary as telling reporters. “It is important for us to ease such a burden as much as possible.” All 50 of Japan’s working reactors currently remain offline, pending safety checks. Japan relies on imports for more than 90 percent of its energy needs. Imports of liquefied natural gas to Japan last year rose 17.5 percent and imports of crude oil rose 16.3 percent. With those import costs expected to grow, amid […]

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Emerging markets turmoil intensifies

The emerging markets sell-off intensified on Monday with stocks heading for their worst day in almost half a year even before Latin American bourses opened, and currencies weakened further, including the Turkish lira hitting a new low against the dollar. Investors have become concerned about the prospects of emerging markets as growth slows in China, the world’s second-largest economy and the US Federal Reserve scales back its quantitative easing. The Fed’s asset purchases were a key feature in the rise of emerging market asset prices over the past five years. The FTSE Emerging Markets index slumped 1.9 per cent in early trading – its biggest one-day drop since August 27. Hong Kong’s market fell 2.1 per cent, Taiwan’s tumbled 1.6 per cent, and Indonesia’s dropped 2.6 per cent. “At the moment you can’t stop the rot,” said Christian Lawrence, strategist at Rabobank. “The momentum is with the continued sell-off […]

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Davos delegates warned of imminent oil crisis

Some of the planet’s richest nations are to hear a warning that a global oil crisis could happen as early as next year. A British businessman will tell world leaders meeting in Switzerland today that it is dangerous to argue that fracking for shale oil and gas can help to avert a global energy crisis. Jeremy Leggett, a former Greenpeace staff member who founded a successful solar energy company, has been invited to the annual World Economic Forum meeting in Davos from 22 to 25 January. The theme of the meeting is The Reshaping of the World: Consequences for Society, Politics and Business. Leggett told the Climate News Network: “The WEF likes to deal in big ideas, and last year one of its ideas was to argue that the world can frack its way to prosperity. […]

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China stocks dip over poor factory activity prediction

Chinese shares dipped over HSBC flash PMI figures released on Thursday indicating sluggish manufacturing activity in January. ( The benchmark Shanghai Composite Index fell 0.47 percent, or 9.57 points, to finish at 2,042.18. The Shenzhen Component Index dropped 0.41 percent, or 31.98 points, to close at 7,788.47. Combined turnover on the two bourses fell to 212 billion yuan (34.7 billion U.S. dollars) from 216 billion yuan on the previous trading day. The flash reading for the China manufacturing Purchasing Managers’ Index (PMI) fell to 49.6 in January, hitting a 6-month low, said HSBC on Thursday. A PMI reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction. The financial sector led the losing trend, with China Pingan, an insurance giant, dropping 1.94 percent and China Merchants Bank falling 1.68 percent. The furniture and media sectors made significant gains. Guangdong Guangzhou […]

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China’s 2013 economic growth dodges 14-year low but further slowing seen

China’s economy narrowly missed expectations for growth to hit 14-year lows in 2013, though some economists say a cooldown will be inevitable this year as officials and investors hunker down for difficult reforms. The chance that the world’s second-largest economy may decelerate in coming months was underscored on Monday by data that showed growth in investment and factory output flagged in the final months of last year. Waning momentum capped China’s annual economic growth at a six-month low of 7.7 percent in the October-December quarter, a slowdown some analysts say may deepen this year as China endures the short-term pain of revamping its growth model for the long-term good. Full-year growth in 2013 was 7.7 percent, steady from 2012 and just slightly above market expectations for a 7.6 percent expansion, which would have been the slowest since 1999. "It’s like a Chinese medicine," said Lu Zhengwei, […]

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China's 2013 economic growth dodges 14-year low but further slowing seen

China’s economy narrowly missed expectations for growth to hit 14-year lows in 2013, though some economists say a cooldown will be inevitable this year as officials and investors hunker down for difficult reforms. The chance that the world’s second-largest economy may decelerate in coming months was underscored on Monday by data that showed growth in investment and factory output flagged in the final months of last year. Waning momentum capped China’s annual economic growth at a six-month low of 7.7 percent in the October-December quarter, a slowdown some analysts say may deepen this year as China endures the short-term pain of revamping its growth model for the long-term good. Full-year growth in 2013 was 7.7 percent, steady from 2012 and just slightly above market expectations for a 7.6 percent expansion, which would have been the slowest since 1999. "It’s like a Chinese medicine," said Lu Zhengwei, […]

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China's Economic Growth Slows to 7.7%

China’s growth slowed slightly in the fourth quarter as Beijing eased back on efforts to rev up the economy, signaling a potential slow start for the new year as the country’s leaders seek to reshape the world’s second-largest economy. Many economists already expect the Chinese economy to slow further in the coming year as the country’s leaders prepare to introduce reform measures. These would be aimed at reducing the economy’s dependence on investment and trade and boosting its reliance on domestic spending and the expansion in the service industries. The nation’s economy grew 7.7% in the fourth quarter from a year ago, slower than the 7.8% it posted in the third quarter, according to data released Monday by China’s National Bureau of Statistics. For the year it also posted 7.7% growth, matching the revised pace it recorded in 2012. "There was steady economic progress [last year] and this was […]

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China’s Economic Growth Slows to 7.7%

China’s growth slowed slightly in the fourth quarter as Beijing eased back on efforts to rev up the economy, signaling a potential slow start for the new year as the country’s leaders seek to reshape the world’s second-largest economy. Many economists already expect the Chinese economy to slow further in the coming year as the country’s leaders prepare to introduce reform measures. These would be aimed at reducing the economy’s dependence on investment and trade and boosting its reliance on domestic spending and the expansion in the service industries. The nation’s economy grew 7.7% in the fourth quarter from a year ago, slower than the 7.8% it posted in the third quarter, according to data released Monday by China’s National Bureau of Statistics. For the year it also posted 7.7% growth, matching the revised pace it recorded in 2012. "There was steady economic progress [last year] and this was […]

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China economic growth continues to cool

China’s economy slowed in the fourth quarter of last year, highlighting the challenge facing Beijing as it attempts to implement painful reforms while maintaining the economic momentum needed to avoid defaults on its growing debt pile. Gross domestic product in the world’s second-largest economy expanded 7.7 per cent in the fourth quarter compared with the same period a year earlier – a slowing from 7.8 per cent growth in the third quarter, according to figures released by the government on Monday. Growth of 7.7 per cent for the whole of 2013 matched full-year growth in 2012, thanks in large part to an investment-heavy “mini-stimulus” in the third quarter last year that offered a temporary boost. Economists expect China’s full-year GDP growth in 2014 to come in at about 7.4 per cent, the slowest pace since 1990, when Beijing faced international sanctions as a result of the 1989 Tiananmen Square […]

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China’s dangerous credit addiction

Time for Beijing to prioritise stability over growth For the past two decades China’s turbocharged growth has been the envy of the rich world as well as an aspiration for other emerging markets. Surging exports and intensive state-driven investment have lifted millions out of poverty and propelled Beijing into the exclusive club of global economic superpowers. More recently, however, doubts have emerged over the sustainability of this development model. In particular, critics point to China’s increasing addiction to cheap credit , which began when Beijing unleashed its large-scale monetary stimulus at the height of the financial crisis. Between 2008 and 2012, China’s total debt as a proportion of gross domestic product nearly doubled, jumping from 125 per cent to 215 per cent. This rise would not have been so problematic if the cash had been used to fund profitable investment. However, the opposite is often true. The more vibrant […]

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China Dwarfs U.S. in Monetary Stimulus

Move over, Janet Yellen and Ben Bernanke. Step aside, Mario Draghi and Haruhiko Kuroda. Compared with Zhou Xiaochuan, the longtime governor of the People’s Bank of China, they are all lightweights when it comes to monetary stimulus. The latest data released by China on Wednesday shows that the country’s rapid growth in money supply has continued. Mr. Zhou and his colleagues have only begun the difficult and dangerous task of reining it in —– a task that still lies ahead of the United States Federal Reserve as it begins its own gradual taper this year. China’s money supply, broadly measured, has now tripled the money sloshing around its economy since the end of 2006. That dwarfs the indirect effects of quantitative easing in the United States, where the broadly measured money supply rose only 55 percent from 2006 through the end of November. China’s tidal wave […]

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US jobs data puncture recovery hopes

New year hopes for an accelerating recovery in the US in 2014 were punctured on Friday after December saw the slowest pace of growth in new jobs for three years. Jobs growth, at just 74,000, came in far below expectations of a 197,000 increase. The data highlight the ongoing vulnerability of the US labour market, although the most likely cause of the recent weakness was miserable winter weather . The news is unlikely to put the US Federal Reserve off a further slowing of its asset purchases this month, from a pace of $75bn to $65bn. But it all but rules out a faster taper for now. In one of the most perverse jobs reports for months, the unemployment rate plunged from 7 to 6.7 per cent, despite weak jobs growth, as more people dropped out of looking for work. “We suspect that the unexpectedly weak 74,000 increase in […]

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China's December exports slow, imports accelerate

China’s export growth slowed in December while imports accelerated, possibly helping to temper fears of a slowdown in the world’s second-largest economy. Exports rose 4.3 percent to $207.7 billion, slowing from November’s 12.7 percent expansion, trade data showed Friday. Imports rose 8.3 percent to $182.1 billion, up from the previous month’s 7.6 percent. Stronger exports might be a sign China’s domestic demand is relatively strong despite concerns a modest economic recovery is weakening. China’s economic growth tumbled to a two-decade low of 7.5 percent in the second quarter. It rebounded to 7.8 percent the following quarter but private sector analysts say that recovery is likely to fade. The Cabinet in late December said it expected 2013’s full-year growth to be 7.6 percent, which would be the weakest performance since 1999. "Our country’s economic development was stable overall," said a government spokesman, Zheng Yuesheng, at […]

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China’s December exports slow, imports accelerate

China’s export growth slowed in December while imports accelerated, possibly helping to temper fears of a slowdown in the world’s second-largest economy. Exports rose 4.3 percent to $207.7 billion, slowing from November’s 12.7 percent expansion, trade data showed Friday. Imports rose 8.3 percent to $182.1 billion, up from the previous month’s 7.6 percent. Stronger exports might be a sign China’s domestic demand is relatively strong despite concerns a modest economic recovery is weakening. China’s economic growth tumbled to a two-decade low of 7.5 percent in the second quarter. It rebounded to 7.8 percent the following quarter but private sector analysts say that recovery is likely to fade. The Cabinet in late December said it expected 2013’s full-year growth to be 7.6 percent, which would be the weakest performance since 1999. "Our country’s economic development was stable overall," said a government spokesman, Zheng Yuesheng, at […]

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Oil Tumble Sends U.S. Trade Gap to Four-Year Low: Economy

A plunge in oil imports pushed the trade deficit in November to the lowest level in four years, showing the U.S. economy is becoming more energy independent. The gap narrowed 12.9 percent to $34.3 billion, smaller than projected by any economist surveyed by Bloomberg and the least since October 2009, figures from the Commerce Department showed today in Washington . Petroleum imports were the weakest in three years as advances in domestic extraction put the U.S. on track to become the world’s largest oil producer by 2015. The fuel-driven drop in purchases from abroad overshadowed record demand for foreign autos, parts and capital goods that indicate spending by American consumers and businesses is strengthening. Exports also were the strongest ever as improving economies in Europe and Asia benefit companies like Boeing Co. (BA) , contributing to a pickup in manufacturing. Related: Republican Murkowski Urges End to […]

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China's economy projected to grow steadily, dynamically: economists

China would maintain steady and dynamic economic growth in 2014 on the back of its ongoing reforms, economists said at a forum here Monday. The forum was co-organized by the New York-based National Committee on U.S.-China Relations and China Center for Economic Research (CCER) with Peking University (PKU). CCEr economist Lu Feng said China was likely to maintain steady growth of 7.5 percent to 8 percent in real terms in 2014. He said three factors would affect China’s macro-economic performance during the year: the impacts of the external environment, its fight against pollution and its prudent macro-economic policy. "China’s exports are estimated to pick up modestly in 2014 from the preceding year, possibly reaching double-digit growth," Lu told Xinhua at a press conference, citing an expected improvement in the global economy, which would benefit Chinese export sectors. Lu also highlighted China’s macro-economic policy, […]

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China’s economy projected to grow steadily, dynamically: economists

China would maintain steady and dynamic economic growth in 2014 on the back of its ongoing reforms, economists said at a forum here Monday. The forum was co-organized by the New York-based National Committee on U.S.-China Relations and China Center for Economic Research (CCER) with Peking University (PKU). CCEr economist Lu Feng said China was likely to maintain steady growth of 7.5 percent to 8 percent in real terms in 2014. He said three factors would affect China’s macro-economic performance during the year: the impacts of the external environment, its fight against pollution and its prudent macro-economic policy. "China’s exports are estimated to pick up modestly in 2014 from the preceding year, possibly reaching double-digit growth," Lu told Xinhua at a press conference, citing an expected improvement in the global economy, which would benefit Chinese export sectors. Lu also highlighted China’s macro-economic policy, […]

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Fresh Signs of a Cooling Economy in China

Growth in China’s services industries slowed in December, separate surveys have found, echoing a slowdown in manufacturing and confirming views that the economy lost steam at the end of last year. HSBC on Monday released its purchasing managers’ index for services, compiled by Markit Economics, showing a drop to 50.9 in December, its lowest level since August 2011, from 52.5 in November. But the figure remained above the 50-point level that indicates expansion in activity. New business growth was the slowest in six months. A similar survey by China’s National Bureau of Statistics, released Friday, also showed a slowdown in service sector growth in December, to a four-month low of 54.6, from the previous month’s 56. Indexes from the government and HSBC last week showed that China’s factory activity slowed in December, suggesting the moderation in the country’s growth in the final quarter of 2013 was broad-based. […]

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China makes fresh bid to curb shadow banking, contain debt risk

China’s cabinet has published guidelines strengthening regulation of risky off-balance-sheet lending in a new effort to address growing financial risks from an explosion in debt. The State Council’s guidelines call for tighter regulation of banks’ off-balance-sheet lending and say that trust companies – the biggest non-bank players in what’s called "shadow banking" – should return to their original purpose as asset managers and not engage in "credit-type" business. A copy of the council’s Document 107, dated December 11, was obtained by Reuters. There’s been no official confirmation of the document, which was addressed to government agencies at the central and local level. An index of the biggest mainland stocks .CSI300 closed at its lowest level in five months on Monday, as concerns about the new regulations weighed down the market. .SS China’s policymakers are concerned that the country’s economy has become overly reliant on borrowing to […]

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China demands accuracy of economic census data

Chinese Vice Premier Zhang Gaoli on Friday said that accuracy is key for the data collected in the ongoing third national economic census. Zhang said that data collectors must stick to independent surveys to ensure that no false data are reported. "The third national economic census is a significant survey of the whole society and national economy," Zhang said, adding that the survey will be of practical use for the nation’s efforts to comprehensively push forward reforms, accelerate the transformation of the economic development pattern, improve people’s livelihoods, and boost sustainable development. Accuracy is being emphasized because the data will provide an important basis for policymakers in making scientific decisions for both the Party and the country, Zhang said during his inspection of census work in the capital city of Beijing. The census, launched on Wednesday, is designed to complete a database covering all […]

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PMI easing reflects reforms slowing GDP

China’s manufacturing activities in private and export-oriented companies grew in December at the slowest pace in three months, the latest evidence that structural reforms have slowed China’s economic growth, a survey showed yesterday. The HSBC Purchasing Managers’ Index, which measures operating conditions in largely private companies, fell slightly to 50.5 from November’s 50.8, according to HSBC Holdings Plc. The reading was flat from a flash reading released on December 16. A reading above 50 means expansion. Qu Hongbin, chief economist for China at HSBC, said the decline was mainly due to slower output growth, but a steady increase of new orders kept the PMI in the expansion territory for the fifth consecutive months. “The recovering momentum since August 2013 is continuing into 2014, in our view,” said Qu. “With inflation still benign, we expect the current monetary and fiscal policy to remain […]

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China gives local governments go-ahead to roll over debt

Faced with a mountain of maturing loans this year, China has given local governments the go-ahead to issue bonds as a way of rolling over their debt to avoid defaults. The announcement by the National Development and Reform Commission, a top central planning authority, is the most explicit official endorsement of a massive debt refinancing operation that has become unavoidable and is already under way, analysts said. The need for the rollover highlights the tricky balance that Beijing must strike as it tries to rein in debt without triggering a sharp downturn in growth. Local government debt levels have soared 70 per cent to almost $3tn in less than three years, according to an official audit published on Monday. Nearly 40 per cent of that overall amount will mature before the end of this year, placing huge pressure on local governments to come up with the cash to make […]

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China’s manufacturing growth slows as demand for exports weakens

Labourers work in a clothing factory in Huaibei, north China’s Anhui province on May 23, 2013. Manufacturing activity in China contracted in May for the first time in seven months, HSBC said on May 23, in another sign of the weakness of recovery in the world’s second-largest economy Growth in China’s manufacturing sector slowed for the first time in six months in December, dragged down by weak demand for Chinese exports, according to an official purchasing manager’s index. The state-sponsored PMI fell to 51 in December, down from 51.4 in November, marking a four-month low and highlighting the challenges facing the ruling Communist party as it tries to transform the growth model in the world’s second-largest economy. “From the overall situation we can predict that the future industrial growth rate will decline, the export growth rate may drop and economic growth is still under downward pressure,” said economist Zhang […]

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Transparency the crux in China’s struggle to deal with rising debt

China’s quest to solve its $3 trillion-and-growing public debt problem by starting a domestic municipal bond market hinges on the one thing its officials are most afraid of: transparency. As markets absorb the results of China’s latest audit of its state finances, Beijing’s long-standing vow to develop a municipal bond market to curtail rapid growth in other types of hidden public debt will take centerstage once more. By letting local governments sell bonds for cash, China wants to rely on nimble markets rather than inflexible regulations to keep spendthrift units in check. The stakes are high. A bond market is the centerpiece in China’s blueprint to mop up fiscal troubles and keep its economy growing at an even pace, giving it needed room to start other bold financial reforms. But analysts say China’s dreams of a municipal bond market are so far just that, as building […]

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Transparency the crux in China's struggle to deal with rising debt

China’s quest to solve its $3 trillion-and-growing public debt problem by starting a domestic municipal bond market hinges on the one thing its officials are most afraid of: transparency. As markets absorb the results of China’s latest audit of its state finances, Beijing’s long-standing vow to develop a municipal bond market to curtail rapid growth in other types of hidden public debt will take centerstage once more. By letting local governments sell bonds for cash, China wants to rely on nimble markets rather than inflexible regulations to keep spendthrift units in check. The stakes are high. A bond market is the centerpiece in China’s blueprint to mop up fiscal troubles and keep its economy growing at an even pace, giving it needed room to start other bold financial reforms. But analysts say China’s dreams of a municipal bond market are so far just that, as building […]

Posted On : Published By : Tom Whipple