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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

World Gold Council: Second Quarter Gold Consumption in China Down 52 Percent

People’s Daily recently published an article on gold consumption. The World Gold Council released its gold consumption and demand report, indicating that gold consumption in China, including gold jewelry, gold bars, and coins, for the second quarter of 2014 was 192.5 tons. This represented a 52 percent decrease from the same period in 2013. Second quarter gold jewelry consumption was 144 tons, down 45 percent from the same period in 2013. The Council adjusted the second half of the gold demand in China downward by 10 percent. The article reported that in 2013, international gold prices had dropped 28 percent, the largest drop since 1981. China’s gold consumption soared in 2013. The article said that China had surpassed India and become the largest gold consumption country in the world.

Source: People’s Daily, August 15, 2014
http://finance.people.com.cn/money/n/2014/0815/c218900-25470245.html

Briefings | | |   Economy/Resources

Record Drought Worsens in Northeast China

Xinhua reported that, this year, the major grain producing areas in Liaoning Province and Jilin Province in northeast China have suffered the rarest drought in over half a century. Crops have withered away and rivers have dried up. Even drinking water is in short supply. 

On August 14, Vice Minister of Agriculture Yu Xinrong said that since August, the amount of precipitation in northeast China has significantly declined. In some areas the reduction is as much as 79 percent compared to last year. In Inner Mongolia, Jilin and Liaoning provinces, more than 34 million mu have been hit by drought, with more than 15 million suffering from severe drought. “The drought situation is very grim,” Yu said. 
Based on meteorological records, since July, Liaoning Province’s rainfall has been the lowest since 1951. Also starting in July, the drought-hit area has been growing by about 1 million mu per day. 
In Jilin Province, the average rainfall since late July has been 65 percent lower than the same period last year, the second driest in history. The drought-hit area is growing rapidly. In some heavily hit drought areas, the relative humidity in the soil is below 40 percent. Even in non-drought areas, it is declining daily by one to two percentage points. 
Precipitation in some areas of the Inner Mongolia Region has also hit the lowest on record since the same period in 1961. 
Source: Xinhua, August 14, 2014 
http://news.xinhuanet.com/local/2014-08/14/c_1112083359.htm
Briefings | | |   Economy/Resources

Xinhua: China’s Four Largest Banks Suffered a Big Decline in Savings Deposits

Xinhua recently reported that, during the month of July, the four largest Chinese commercial banks saw a significant decline in the amount of RMB 1.5 trillion (around US$244 billion) in savings deposits. Based on an analysis of the inter-bank market, the flow of money was found to be growing tighter during the month of July. Experts said they have noticed a trend. The general public’s savings rate has been dropping and banks have been facing tougher and tougher competition for customers. Since the central bank expressed the concern that the market already consumed the excessive credit volume from the second quarter, all financial organizations are expecting a tighter situation in the third quarter. 
Source: Xinhua, August 5, 2014
http://news.xinhuanet.com/fortune/2014-08/05/c_126832187.htm
Briefings | | |   Economy/Resources

Seventy Percent of Coal Mining Companies Are in the Red

The level of the inventory in China’s coal mining industry reached a record high in the first half of 2014 in spite of measures to reduce the price and to restructure production. Seventy percent of these companies are in the red.

Recently, the largest 14 coal mining companies agreed on four measures. They agreed that, for the second half of 2014, they would reduce the output of their production by 10 percent; they would reduce the June level of their inventory by 50 percent; they would regulate and standardize coal imports and they would establish a self-regulatory mechanism within the coal mining industry. 
According to the statistics that the China Coal Industry Association released on July 12, 2014, as of the end of June 2014, China’s coal inventory had reached 99 million metric tons. Nine provinces had experienced industry wide losses in coal mining. Twenty out of 36 of the largest coal mining companies are in the red. Nine of those are on the brink of bankruptcy. Seventy percent of the coal mining companies in China are in the red. 
Sources: 
Securities Daily reprinted by People’s Daily, July 29, 2014 http://energy.people.com.cn/n/2014/0729/c71661-25361362.html 
Economic Information Daily, July 28, 2014 
http://news.xinhuanet.com/fortune/2014-07/28/c_126803768.htm
Briefings | | |   Economy/Resources