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According to a report that Radio France Internationale published, Greenpeace East Asia and Custeel (a website that the China Iron and Steel Association, which 16 large-sized steel manufacturers and enterprises in China fund) conducted an investigation of China’s steel production. The findings showed that, despite the serious steel surplus that China faces, its 2016 steel production capacity actually increased by 36.5 million tons. The investigation report disclosed that even though China claimed that, in 2016, it shut down steel factories having 85 million tons of steel capacity, the number should only have been 23 million tons because the rest of the factories that were shut down had been idle, with no production capability. Meanwhile, according to the report, new projects launched in 2016 added 12 million tons of production capacity with most of it located in Hubei Province.

The report stated that China Steel production accounts for 50 percent of the production volume in the world. Competitors criticized (China’s steel industry) for using the destructive competition approach and selling below cost. As a result, in 2016, they faced anti-dumping treatment from the EU and the U.S. The Chinese authorities promised that, by 2020, China would reduce steel production by 100-150 million tons. In 2016, China’s steel production was around 1.1 trillion tons, which means it is sitting on 300 million tons of excess steel.

Source: Radio France Internationale, February 13, 2017                                                                                    cn.rfi.fr/%E4%B8%AD%E5%9B%BD/20170213-%E6%89%BF%E8%AF%BA%E6%9C%AA%E8%A7%81%E6%95%88-%E5%8E%BB%E5%B9%B4%E4%B8%AD%E5%9B%BD%E9%92%A2%E9%93%81%E4%BA%A7%E8%83%BD%E5%AE%9E%E9%99%85%E5%87%80%E5%A2%9E3650%E4%B8%87%E5%90%A8

For the first time since February 2011, China’s foreign exchange reserve level dropped below US$3 trillion.
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Reuters Chinese recently reported that the Institute of International Finance (IIF) released its recent report on China’s capital outflow. According to numbers that the IIF provided, China’s 2016 outflow reached a record high of US$725 billion, which was a US$50 billion increase over 2015. The same number in 2014 was only US$160 billion. In the past two years, both Chinese businesses and individuals accelerated their process of sending money overseas, partially due to the expectation of the Chinese currency’s depreciation. High capital outflow caused a US$320 billion decrease in China’s foreign exchange reserve. In 2016, the Chinese currency RMB saw a record depreciation of 6.5 percent against the U.S. dollar. The IIF also suggested that China may see a higher capital outflow in 2017 if U.S. companies move their money back to the States, which they may do if the Trump administration delivers on its promise of tax relief on the flow-back dollars. The IIF estimated a US$206 billion capital outflow from developing economies, with most of this amount coming from China.

Source: Reuters Chinese, February 2, 2017
http://cn.reuters.com/article/china-capital-outflow-2016-iif-idCNKBS15I01H

Well-known Chinese news site Sina recently reported that SWIFT (Society for Worldwide Interbank Financial Telecommunication) released its official 2016 report which showed global settlements in the Chinese currency RMB declined by 29.5 percent. In 2015, the RMB held a 2.31 percent share in the global settlement volume. In 2016, the Chinese currency saw only a 1.67 percentage share in global settlements. SWIFT especially mentioned that the RMB suffered a sharp decline of 15.08 percent from November 2016 to December 2016, while all other currencies saw a growth of 0.67 percent at the same time. SWIFT Asia Pacific Regional Director Michael Moon suggested that the main cause of the sharp year-end decline was the decline in the Chinese economy, RMB exchange rate fluctuations, and China’s restrictions on capital outflow. In 2016, China just became one of the official currencies that form the IMF (International Monetary Fund) SDR (Special Drawing Rights), which was expected to improve the internationalization of the Chinese currency.

Source: Sina, January 26, 2017
http://finance.sina.com.cn/stock/usstock/c/2017-01-26/doc-ifxzyxmu8075501.shtml

Well-known Chinese news site Sina recently reported that China has relinquished the title of the largest U.S. bond owner to Japan for two consecutive months now. China just revealed the official numbers showing that the total capital outflow in 2016 reached US$305.3 billion, which was a record high. Chinese held U.S. bonds are on the decline. As of the end of November 2016, China’s U.S. bond level was US$1.0493 trillion, which was US$66.4 billion less than the end of October. This was the lowest level in six years. Analysts expressed the belief that the cause of China selling U.S. bonds was to defend the Chinese currency, the RMB, which has been suffering rapid depreciation. Since the Chinese government was worried about the potential market disorder resulting from capital outflow as well as currency depreciation, the Chinese authorities have been applying capital outflow controls on the investment level.

Source: Sina, January 20, 2017
http://finance.sina.com/gb/economy/chinanews/20170120/10561552000.html