Skip to content

Economy/Resources - 153. page

Corporate Defaults on the Rise

On June 19, citing statistics published by UBS Securities, Security Times reported that defaults in China are likely to increase and occur on a large-scale. 

Since the first quarter of 2014, there have been signs of a credit crisis, including downgrades in credit ratings. On March 4, solar equipment producer Shanghai Chaori Solar Energy Science and Technology Co. Ltd. announced it would not be able to make the interest payments that were due on its bonds. This became China’s first-ever domestic bond default. On March 20, 2014, the Shanghai Stock Exchange ordered loss-making Chinese solar cell maker Baoding Tianwei Baobian Electric Co. Ltd. to temporarily delist its "11 Tianwei Bonds." Trading on the bonds had been suspended since March 10 when the company announced that it had posted a loss of 5.23 billion yuan (US$844.51 million) for 2013. That was its second straight year of losses. Increasing numbers of firms are in default. 
The amount involved in the defaults has reached 53.6 billion yuan (US$8.71 billion). The defaults are concentrated in medium to large businesses in real estate and machinery manufacturing and have spreading to over six major cities and provinces. These defaults will likely lead to bankruptcies in real estate and in financial institutions. 

Source: Securities Times, June 19, 2013 
http://kuaixun.stcn.com/2014/0619/11501515.shtml

Briefings | | |   Economy/Resources

Over 300 Cities Suffered Sharp Declines in Land Sales

National Business Daily, a Shanghai based business newspaper, recently reported that local government land sales suffered a major decline in the month of May. According to a report that the China Index Research Institute released, for over 300 cities across China, the number of government land transactions in May declined 45 percent compared to the same period last year. The total sales amount for these transactions fell 38 percent. The total land area accounted for in these transactions fell 49 percent. Experts said that they expect a further decline in the housing market in the coming months. Many government land auctions closed with no deals made or the sales made were at the opening prices. The sales decline occurred across all tiers of Chinese cities regardless of city sizes. In addition to losses in land sales, local governments’ housing related tax income is also seeing a sharp decline. Many local governments in China rely heavily on the housing market for funds for public spending and for providing guarantees to loans to the government. Many economists expressed their worries about government’ debts and called for adjustments to the local industrial structure to create more sources of income.
Source: National Business Daily, June 9, 2014
http://www.nbd.com.cn/articles/2014-06-09/839878.html
Briefings | | |   Economy/Resources

People’s Daily: China Construction Bank to be the First RMB Settlement Bank in Britain

People’s Daily recently reported that China’s second largest bank, the China Construction Bank (CCB), has been authorized to be the official settlement bank for the Chinese currency (RMB) in London. This move improved the competitiveness of Great Britain as one of the main offshore exchange centers for the RMB and fixed a financial infrastructure issue in Britain. It is unusual that CCB’s strongest competitor, the Bank of China, did not obtain this authorization. London has been working hard to defend its role as the primary RMB exchange center outside Asia. London is facing tough competition from Frankfurt and Luxembourg. This new settlement arrangement could reduce the risks for those who tend to use RMB as a payment method outside China. It may also ease the process for Chinese companies planning to invest in Europe. 
Source: People’s Daily, June 13, 2014
http://ccnews.people.com.cn/n/2014/0613/c141677-25144462.html
Briefings | | |   Economy/Resources

Farming Industry under Pressure with Climbing Labor Rates of Peasant Workers

Xinhua recently published an article on the pressure the farming industry in China faces. According to the article, the cost of labor for peasant workers on the outskirts of Beijing grew 89.7 percent over the last five years. The farming industry in the area is under pressure to save labor costs and to improve the efficiency of its farm equipment. The article said that even though more and more farmers are using agriculture machinery, there are still tasks that require a large number of peasant workers, especially skilled laborers. Farming experts also suggested that the government should provide the farmers and the peasant workers with more farm subsidies to help ease the pressure.

Source: Xinhua, June 15, 2014
http://news.xinhuanet.com/fortune/2014-06/15/c_1111149829.htm

Briefings | | |   Economy/Resources

It Will Take Five Years to Deplete China’s Housing Inventory

On June 13, 2014, China Business News (also called First Financial Daily or Yicai) reported that, as of the end of 2013, 4.863 billion square meters of residential housing were under construction. Based on the annual average sales between 2009 and 2012, it will take five years to deplete the 4.863 billion square meters, assuming there are no other new developments after 2014. Thirty five major cities have hit a record high in their housing inventories. Twenty nine of them have shown an increase over last month. Three of those hit the hardest are Nanchang with an increase of 77.4 percent; Ningbo with 60.9 percent, and Jiujiang with 56.9 percent. According to analysts, using five to ten months as the normal time to deplete the inventory, starting from March 2014 it will take 100 months in Tangshan, 57 in Wuxi, 39 in Tianjin, 36 in Ningbo, 33 in Shanghai, 33 in Hangzhou and 30 in Xian. 

Source: China Business News, June 13, 2014
http://www.yicai.com/news/2014/06/3924379.html
Briefings | | |   Economy/Resources

Study Finds China’s Homeownership Rates and Housing Vacancy Rates Are High

On June 10, China’s Southwestern University of Finance and Economics (西南财经大学) released a report showing the results of a study on the country’s housing market. The report showed that, in 2013, the rate for home ownership in China was as high as 90.8 percent. The rate was 95.8 percent for rural homes and 87.0 percent for urban homes. The rate measures the percentage of homes that were owner occupied. The statistics showed the rate was 65 percent in the U.S., 60 percent in Japan, and 63 percent for the entire world. The urban ownership rate for multiple homes, which gauges the percentage of urban families that own multiple homes, was 18.6 percent in 2013, an increase of 2.7 percent over the figure for 2011. In March of 2014, the urban multi-home ownership rate jumped to 21.0 percent.
In 2013, China’s urban housing vacancy rate, the proportion of the homeowner inventory that was vacant for sale, was 18.6 percent, 1.8 percent higher than the rate in 2011. The report estimated that there were 48.98 million vacant homes in urban China. Outside of China, the housing vacancy rate was between 1 percent and 3 percent in the U.S., below 5 percent in Hong Kong, around 9.5 percent in the EU countries, 13.1 percent in Japan, and 17.6 percent in Taiwan.
Interestingly, the vacancy rate for low-end housing, that is, government subsidized low price housing sold to low-income earners, was as high as 23.3 percent. The study also showed that the proportion of ownership of low-end housing is the highest among the top 25 percent of households in terms of income level, while 27.5 percent of the low-end housing owned by the top 25 percent of households is empty. The report concluded that "a serious waste of resources exists and there is a ‘mismatch’ in the allocation of low-end housing."
Source: Beijing Youth Daily, June 11, 2014
http://epaper.ynet.com/html/2014-06/11/content_64516.htm
Briefings | | |   Economy/Resources

People’s Daily: Ministry of Commerce Ruled against EU and U.S. Exporters

People’s Daily recently reported that the Chinese Ministry of Commerce announced the results of an anti-dumping investigation it had conducted. The Ministry of Commerce announced that the sale of tetrachloroethene exported to China and originally produced in the European Union and the United States is considered illegal dumping. The ruling was considered final. China’s domestic vendors suffered substantial damage as a result of the dumping. The EU and the U.S. companies named in the Ministry’s ruling will be charged anti-dumping duties based on the scale of their dumping activities. According to the announcement, the case was established on May 31, 2013. And it took a year to reach its conclusion. Tetrachloroethene is a colorless chlorocarbon liquid widely used for dry cleaning of fabrics.
Source: People’s Daily, June 30, 2014
http://finance.people.com.cn/n/2014/0603/c1004-25097799.html
Briefings | | |   Economy/Resources

Hurun and the Chinese HNWI Issued 2014 Emigration White Paper

The Hurun Report and the immigration agency’s Visas Consulting Group recently released the Chinese High Net Worth Individuals (HNWI) White Paper. According to the 2014 white paper, in 2013, 9.3 million Chinese emigrated, making China the fourth ranking country in the world next to India, Mexico, and Russia. The U.S. and Canada were their top choices for emigration. According to the white paper, the top three reasons for emigrating overseas were to provide a better education for their children, environmental pollution, and food safety. Other reasons included social warfare, medical care, and the safety of personal assets. Among the families interviewed by Hurun, the average preferred amount to spend on investment immigration is 5 million (US$830,000).

Source: China Economy, June 7, 2014                                                                                               http://www.ce.cn/xwzx/gnsz/gdxw/201406/07/t20140607_2937886.shtml

Briefings | | |   Economy/Resources