Skip to content

Economy/Resources - 149. page

Real Estate Companies Face Lower Profits and Higher Inventory

Huanqiu reported that, in the first six months of 2014, half of the real estate companies saw their profits decline. 

Among the real estate companies listed on the stock exchanges of Shanghai, Shenzhen, and Hong Kong, as of August 31, 156 of them had released their reports for the first half of 2014. Although 135 of them reported gains, half of the 156 companies reported that their profits had declined. 
As their sales decreased, their inventories have been on the rise. As reported on August 31, the inventory levels for Beijing, Shanghai, Guangzhou and Shenzhen had risen by 30 percent, 25 percent, 42 percent and 25 percent respectively for the first half of 2014. It will take 18, 11, 13 and 20 months to deplete these inventories. 
Cash flow has also suffered. Of the 146 real estate companies listed with the Shanghai Stock Exchange, 107 had a negative operational cash flow. Poly Real Estate Group Company Limited, a large state-owned real estate company funded by the People’s Liberation Army, reported a negative cash flow of 14.28 billion yuan (US$2.33 billion), a decline of 250 percent. 
Source: Huanqiu, September 10, 2014 
http://mt.huanqiu.com/Html/ahtml/china/2014-09-10/5133116.html
Briefings | | |   Economy/Resources

21 CN: Profitability of the Large Companies in China is Worrisome

The TenCent website carried an article that was originally published by China Telecom on 21CN. The article stated that Chinese companies have been unable to make it to the list of the top brands in the world. They lag behind in their profitability and in their investment in research and development. According to the article, among the Forbes’ top 100 world’s most valuable brands list and the Interbrand’s Best Global Brands 2013, no Chinese brand made it to the list. Meanwhile the net profit that Chinese companies make lags far behind compared to those large companies in the U.S. and England. According to the China Enterprise Confederation, the profitability of the large companies in China is worrisome. Among the world’s top 500 companies, the average net profit for U.S. companies was 9.33 percent while Chinese companies were at 5.1 percent. Among the world’s top 500, of the 49 companies that had financial losses in 2014, one-third were Chinese companies. The article said that large companies in China lack the capacity for innovation and rely heavily on imports for their core technology. In 2014, among China’s top 500 companies, the average ratio of research and development spending to income from sales was 1.25 percent. This figure had declined over the last three consecutive years. At the same time, the technology commercialization ratio in China is only at 10 percent which is far below the 40 percent ratio in developed countries.

Source: TenCent, September 5, 2014
http://finance.qq.com/a/20140905/058701.htm

Briefings | | |   Economy/Resources

Economist: The Real Reason behind China’s High Housing Prices – Printing Too Much Money

On August 31, 2014, China Gate reprinted an article from a newspaper from Mainland China, Yangcheng Evening News (ycwb.com). The article explained the real reason behind the high prices of China’s real estate. The same news was then published in several other Chinese newspapers. According to Wu Jinglian, an economist and a researcher at the Development Research Center of the Chinese State Council, these high prices are the consequence of the fact that the government has been printing too much money. The amount of money that China has issued is at 200 percent of China’s GDP. Therefore, the fundamental strategy to solve the problem of high housing prices in China is to stop releasing so much money.

Source: China Gate, August 31, 2014
http://www.wenxuecity.com/news/2014/08/31/3560834.html  
http://blog.ifeng.com/article/33939860.html
http://house.ifeng.com/news/view/detail_2014_08/31/38580591_0.shtml

Briefings | | |   Economy/Resources

He Qinglian: Economic Slowdown Not Because of Anti-Corruption Campaigns

On Voice of America, He Qinglian, a Chinese economist based in the U.S., refuted the recent opinions, voiced by many oversees, that the strong anti-corruption campaign has led to 0.6 to 1.5 percentage points in slower economic growth in China.
According to He, "The talk that anti-corruption campaigns lead to an economic slowdown is a superficial opinion. Such opinions disguise the fact that two major structural deficiencies in the Chinese economy are related to government behavior."
"China’s anti-corruption campaign has led to two consequences: first, a decline in local government’s investments; second, a reduction in final domestic consumption. Such a correlation is less likely to occur in other countries, but has, unfortunately, become a reality in China. The reason is also simple enough. In the past five years, the main source of investments has been the government, including the famous 4 trillion yuan stimulus package from the central government and 20 trillion yuan in local debt. Additionally, in the national final consumption, government consumption accounted for an extremely high proportion. This structural deficiency is China’s largest economic risk. The anti-corruption campaign just let the pustule rupture in advance. Without anti-corruption campaigns, that risk does not disappear. Rather, with the support of local investment and government consumption, the pustule continues to grow."
"The real reason for China’s economic slowdown is as follows:
"About the slowdown in economic growth in China this year, it resulted from the National Development and Reform Commission (NDRC) notice as early as at the beginning of the year. There were two reasons. The first was the huge excess of capacity, while the economic structure needed adjustment and the growth of investment demand was inhibited. The second was the increase in the pressure of local government debt, which also restricted the expansion of government investment."
Source: Voice of America, August 28, 2014
http://http://www.voachinese.com/content/he-qinglian-20140828/2431754.html
Briefings | | |   Economy/Resources

Experts: 2015 Will See Further Decline in China’s Real Estate Industry

According to the Beijing-based media, Caixin, Wang Tao, the chief China economist at the UBS global management firm, predicted that 2015 would see a further decline in China’s real estate market. As a result of fundamental changes in supply and demand patterns that have occurred, even if Chinese decision-makers were to relax government policies, it would hardly change the downward trend.

Although the "Golden September and Silver October," representing the traditional sales season for real estate, are approaching, analysts are not optimistic and believe that sales and new starts will continue to drop sharply towards the end of this year and into 2015. For 2015, Wang Tao expects that real estate sales will likely decline by another five to 10 percent. New housing starts may fall another 10 percent. It is not a matter of another cyclical downturn but the result of fundamental changes in the patterns of supply and demand. Therefore, it is unlikely that any government measures to boost the market would be effective. 
Source: caixin.com, August 26, 2014 
http://economy.caixin.com/2014-08-26/100721225.html
Briefings | | |   Economy/Resources

MIIT: Chinese Industrial Economy Still Faces Downward Pressure

China News recently reported that the Ministry of Industry and Information Technology (MIIT) just released The 2014 First Half Year Report on China’s Industrial Economy. According the Report, the large scale industrial output growth rate is 0.5 percent lower year-over-year. The manufacturing investment growth rate slowed by 2.3 percent year-over-year, especially in the private sector. The electronic products export level growth rate is 3.7 percent slower year-over-year. Small and medium scale companies are finding it harder to obtain loans. Their financing costs have increased by 17.5 percent. In the meantime, the inventory of industrial finished goods grew 12.6 percent. The information industry is keeping the rapid growth rate at 11.6 percent. However, a quarter of the companies suffered a loss in the first half of the year. The Eastern provinces are seeing some signs of recovery, but the Midwestern and Northeastern provinces are still experiencing economic slow-downs.
Source: China News, August 22, 2014
http://finance.chinanews.com/cj/2014/08-22/6523273.shtml
MIIT Official Site, August 22, 2014
http://www.miit.gov.cn/n11293472/n11293832/n11293907/n11368223/16114936.html
Briefings | | |   Economy/Resources

Survey: Most Chinese Private Entrepreneurs Choose Not to Participate in Mixed Ownership Reforms

On August 13, China Review News reported that Central government owned enterprises, such as PetroChina, Sinopec, and the National Grid proposed launching a reform that will include a mixed form of ownership: state-owned and privately-owned mixed ownership. Following their lead, financial service companies such as the China Everbright Group and the Bank of Communications are also lining up to develop their own mixed ownership reforms. Moreover, regional governments are gearing up to join in the mixed ownership process as well. Chongqing City is going to transform two-thirds of state-owned enterprises into mixed-ownership enterprises. Guangdong Province has announced that, by 2017, more than 60 percent of enterprises will be mixed-ownership enterprises. Hebei Province has stated that more than 70 percent of the second level state owned enterprises will complete their task of ownership diversification within the next two to three years. However, a survey showed that over 60 percent of the private entrepreneurs have chosen not to join the state-owned enterprises; over 90 percent of the private entrepreneurs would rather “wait and see.”

Source: China Review News, August 13, 2014
http://hk.crntt.com/doc/1033/3/5/6/103335605.html?coluid=53&kindid=0&docid=103335605&mdate=0813081616

Briefings | | |   Economy/Resources

Central Bank: Significant Issues Related to July’s Loans and Nonperforming Loans

People’s Daily recently reported on some key financial data newly released by China’s central bank. In the month of July, RMB loans totaled 385.2 billion yuan (around US$62.7 billion), which represents a year-over-year decline of 45 percent, or month-over-month decline of 64 percent. This was the lowest level of RMB loans since 2010. Experts cited the lack of demand as the key cause of the sharp decline in loans. In the meantime, the balance of the nonperforming loans in all commercial banks reached RMB 694.4 billion yuan (around US$113 billion), which accounted for an increase of RMB 102.4 billion yuan (around US$16.7 billion) since the beginning of the year. This number has been on the rise for the past eleven consecutive quarters. Most of the nonperforming loans were seen in the eastern coastal region. Such industries as wholesaling, retailing, manufacturing, and credit cards suffered most. 
Source: People’s Daily, August 13, 2014
http://finance.people.com.cn/money/n/2014/0813/c218900-25460474.html
Briefings | | |   Economy/Resources