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Caixin PMI: Weak Demand for Manufacturing Continues

According to Caixin on September 23, the preliminary Caixin China manufacturing purchasing managers’ index (PMI) hit a six-and-a-half-year low of 47.0 in September. This was below the final PMI of 47.3 for August, which was the lowest since March 2009. The final PMI for September will be released on October 1, 2015. 

A PMI above 50 indicates an expansion in activity while one below 50 points to a contraction. 
It was mainly new orders and new export orders sub-indexes that led the decline in PMI in September, suggesting weak domestic and external demand. He Fan, the chief economist at the Caixin Think Tank, said, "The previous impact from external demand and prices is the main reason for the weakening of manufacturing.” 
Source: Caixin.com, September 23, 2015 
http://pmi.caixin.com/2015-09-23/100855332.html
Briefings | | |   Economy/Resources

China’s Fixed Asset Investment Experiences Its Weakest Growth

According to statistics released by the China National Bureau of Statistics, China’s fixed asset investment rose at the slowest pace since 2001. The slowdown was due to the weak growth in investment in real estate development and in manufacturing.

Fixed-asset investment (excluding rural households) rose 10.9 percent in the period from January through August compared to the same period last year. The increase was less than the 11.2 percent for the period of January through July. 
Wang Baobin, senior statistician at the China National Bureau of Statistics, stated that this growth was slow as a result of the low investment in real estate development and in manufacturing. Real estate developers lack a willingness to invest due to pressure from the destocking of the housing market and from sluggish land sales. There is not much interest in investment in manufacturing because of excess capacity and lower prices and profits. 
Source: Caixin, September 13, 2015 
http://pmi.caixin.com/2015-09-13/100849281.html
Briefings | | |   Economy/Resources

People’s Daily: China Saw Record Decline in Foreign Exchange Reserves

People’s Daily recently reported that, according to data that China’s central bank released, China saw a US$93.9 billion decline in foreign exchange reserves in August. This is the largest one month decline in history. As of the end of August, China’s official foreign exchange reserve level was at US$3.557 trillion. China’s reserves reached their peak in June 2014. Since then, the number has declined by US$435.8 billion. According to government experts in the field, the key reasons for the decline were the recent U.S. dollar appreciation and China’s capital outflows. The exchange rate between the Chinese currency and the U.S. dollar has seen significant fluctuation recently. However some observers expressed the belief that the Chinese economy will not see a disastrous capital outflow if the currency depreciation level is controlled to be below five percent. 
Source: People’s Daily, September 8, 2015
http://finance.people.com.cn/n/2015/0908/c1004-27553913.html
Briefings | | |   Economy/Resources

Registration for All of Li Ka-Shing’s Businesses Moved out of China

Well-known Chinese news site Sina recently reported that the Hong Kong company, Power Assets Holdings Limited (formally known as the Hong Kong Electric Company), merged into Cheung Kong Infrastructure Holdings and will be delisted from the Hong Kong Stock Exchange. Li Ka-Shing, the wealthiest man in Hong Kong and the eighth wealthiest in the world (Forbes 2012) controls both of these companies. Hong Kong Electric Company was founded in 1888 and is one of the oldest electric companies in the world. Mr. Li spent the past year moving his core business registrations to the Cayman Islands. This new merger concluded the operation that moves all assets that are under Li Ka-Shing out of Mainland China and Hong Kong. This latest merger also benefits the shareholders of Cheung Kong Infrastructure Holdings. Li Ka-Shing’s year-long re-organization triggered a large number of discussions on the future of the Chinese economy.
Source: Sina, September 9, 2015
http://finance.sina.com.cn/china/20150909/134623198914.shtml
Briefings | | |   Economy/Resources

China’s Automotive Industry to Experience Period of Slow to Medium Growth

Xinhua recently reported on the expected growth rate of the automotive industry as disclosed at the recent International Forum (TEDA) on Chinese Automotive Industry Development. According to information that the Ministry of Industry and Information Technology provided during the recent forum, China’s automotive industry will experience low to medium growth for a long period of time. The statistics suggested that the growth rate in the auto industry slowed down from 24 percent between 2000 and 2010 to seven percent from 2010 to 2014. The industry is expected to see more intense competition with lower profit margins compared to previous years.

Source: Xinhua, Sept 13, 2015
http://news.xinhuanet.com/fortune/2015-09/13/c_1116544468.html

Briefings | | |   Economy/Resources

Citic Securities, China’s National Stock Market Rescue Team, Turned out to Be a Real Troublemaker

Chinese police have been investigating Citic Securities. According to a report from Stock Times CN on August 28, 2015, it was Citic’s illegal securities trading and its “malicious short-selling” that caused China’s stock market slump. Citic Securities is China’s largest investment bank and was also China’s “national stock market rescue team.” Ironically, the so called “national team” that was supposed to be the main force to rescue China’s stock market from its slump turned out to be a real troublemaker.  

Eight people from Citic Securities have been investigated for possible involvement in illegal securities trades. A staff member surnamed Wang from Caijing magazine is also being probed for spreading false information on securities and transactions. Among the eight investigated officials, three of them are members of the Executive Committee of Citic Securities. Xu Gang, the former chairman of brokerage development and head of the research department at Citic Securities, is among the detainees.

Source: Stock Times CN, 证券时报网, August 28, 2015
http://company.stcn.com/2015/0828/12429493.shtml

Briefings | | |   Economy/Resources

China’s Forex Reserves Posted Biggest Fall

On September 7, the Bank of China announced that, in August, its foreign-exchange (forex) reserve dropped by $93.9 billion to about $3.6 trillion. It is the fourth consecutive monthly drop and the biggest ever monthly decline. 

China’s forex reserves hit a record high of nearly $4 trillion in June 2014. It has since fallen from the peak by a total of $435.8 billion, indicating the trend of money leaving China has continued steadily. 
Guan Tao, former Director at the Balance of Payments Department in the State Administration of Foreign Exchange, expressed that it will be the new norm that the reserves’ fluctuation is more volatile in the short term than in the long term.  
Source: Beijing Youth Daily, September 8, 2015 
http://epaper.ynet.com/html/2015-09/08/content_152558.htm?div=0
Briefings | | |   Economy/Resources

China Trade Sinks as Economy Weakens

On September 8, China’s General Administration of Customs released trade data which showed that, in August, total import/export trade shrank by 9.7 percent in yuan with exports down 6.1 percent and imports down 14.3 percent. The trade surplus grew by 20 percent. 

The released statistics also showed that in terms of the yuan, the total trade for the first eight months so far sank by 7.7 percent compared to same period last year. Exports were down 1.6 percent and imports were down 14.6 percent. The trade surplus increased by 80.8 percent. Reports indicated that exports were more competitive thanks to the depreciation of the yuan. However, exports continued to slide for six consecutive months, indicating exports in the fourth quarter will be under significant pressure. 
Source: Xinhua, September 9, 2015 
http://news.xinhuanet.com/fortune/2015-09/09/c_128209990.htm
Briefings | | |   Economy/Resources