Skip to content

Economy/Resources - 172. page

More Securitization of State-Owned Enterprises to Come

China Securities reported that local governments may securitize state-owned enterprises in amounts up to 20.7 trillion yuan in their efforts to raise funds for local expenditures. In the past, local governments resorted to borrowing and the sale of government land in order to raise funds. The central government has recently made the local government’s debts a focus of attention. 

According to a statement that China’s Ministry of Finance made last week, in 2013, the proceeds from government land sales reached 4.1 trillion yuan, a 44 percent increase over 2012. Statistics released by the National Audit Office last month showed that, in 11 provinces, 316 cities, and 1,396 counties, the debts guaranteed by the sale of government land accounted for 37 percent of outstanding local government debts. 
The stated goal of some local governments is to securitize 40 percent of the enterprises that they own by the end of 2015. More provinces, particularly those with a large number of state-owned enterprises, are expected to push beyond 40 percent. Based on a 40 percent securitization rate and a 10 percent asset increase of state-owned enterprises, it is estimated that such securitization of state-owned enterprises will reach 20.7 trillion yuan by the end of 2015. 

Source: China Securities reprinted by Xinhua, January 30, 2014 
http://news.xinhuanet.com/fortune/2014-01/30/c_126081679.htm

Briefings | | |   Economy/Resources

Netease Financial: ICBC Stock Fell below Net Asset Value

Netease Financial, a well-known Chinese online financial news site, recently reported that the stock value of the Industrial and Commercial Bank of China (ICBC) fell below the Bank’s net asset value on January 15. ICBC ranked number one in China’s banking industry in terms of corporate loans and corporate deposits and Euromoney named ICBC the “Best Bank in China.” Ninety percent of the publicly traded Chinese banks are now suffering below net asset market prices. At the same time, 143 companies listed on the Chinese stock market fell below net asset value. Based on the outcomes of the recent central government audit reports, local government debts are at all-time highs. Most of them were funded by state-owned commercial banks. It seems the landslide of the banking industry’s stocks has not ended yet. 
Source: Netease Financial, January 15, 2014
http://money.163.com/14/0115/15/9IL0MURF00251LJJ.html
Briefings | | |   Economy/Resources

Chinese Bank Deposits See Transfers

According to Xinhua, the China Banking Regulatory Commission is considering accelerating the introduction of bank insolvency regulations. Its official, Yan Jingmin, stated, “In the future, let capital speak. If a commercial bank cannot maintain solvency, it will exit.” 

“To allow banks to go bankrupt means the State will not cover the deposits of customers in commercial banks [when the bank goes bankrupt],” added Xinhua. The invisible guarantee by the credit of State will end. The depositors would be compensated by the insurance mechanism established in the bank insolvency regulations. 
It was further reported that under the proposed insurance mechanism, the maximum compensation to depositors would be 500,000 yuan. In a panic, Chinese depositors have started to transfer their money in excess of 500,000 to different banks. 
Sources:
Xinhua, January 15, 2014 
http://news.xinhuanet.com/fortune/2014-01/15/c_126006365.htm 
Jinghua Times reprinted by People’s Daily, January 16, 2014 http://finance.people.com.cn/bank/n/2014/0116/c202331-24133060.html
Briefings | | |   Economy/Resources

China Review News Agency: The End of the U.S. QE Measures Will Lead to Massive Capital Outflow

On January 6, 2014, China Review News published an article on China’s economy. According to the article, the slower growth of China’s economy in 2013 was the result of the government’s nationwide macro-control. While maintaining stable economic progress in 2014, the Chinese government will push forward economic reform. However, the approaching end of the U.S. quantitative easing (QE) measures will cause the withdrawal of hot money from China and even lead to a massive capital outflow. Therefore, China must get ready to deal with a shortage of money.

Source: China Review News, January 6, 2014
http://hk.crntt.com/doc/1029/6/2/6/102962683.html?coluid=53&kindid=0&docid=102962683&mdate=0106080210

Briefings | | |   Economy/Resources

Xinhua: China to Test Privately Owned Banks This Year

Xinhua recently reported that the China Banking Regulatory Commission (CBRC) announced on January 7 that China is set to start an experiment to allow banks to be fully privately owned. The CBRC is planning to take a very conservative approach and allow only three to five banks this year. Meanwhile private capital can now be part of the ownership of current banks. The fully private banks will only be able to do business under a “limited license,” which will impose restrictions on the scope of business, operating regions, and customer profiles. In addition to these “limited restrictions,” all private banks will be required to establish a “will,” which must explain what will happen if the bank were to file for bankruptcy in a circumstance where taxpayers provided no bailout. Over thirty publicly traded companies have filed their applications to enter the banking business.
Source: Xinhua, January 7, 2014
http://news.xinhuanet.com/2014-01/07/c_125965308.htm
Briefings | | |   Economy/Resources

People’s Daily: Land Resources Restricted in Cities with Population over Five Million

People’s Daily recently reported that Jiang Daming, Minister of Land and Resources, announced in a speech given at a conference that from now on cities with a population of over five million will not be granted new land resources for construction. However, this new rule does not apply to land that’s considered “living space,” which means the housing market will not immediately be impacted. Most of the capital cities of the provinces fall within the scope of the new rule. This is in line with the recently announced new policy of strict control of the scale of the population in large cities. The new rule focuses on managing the supply of industrial and business land. The Ministry of Land and Resources is encouraging cities to make better use of the land they have already been granted. Jiang also pointed out that, in addition to this new rule, more regulations are being planned to enable the clear identification of city boundaries. The up-coming policies will ensure the safety of permanent agricultural land.
Source: People’s Daily, January 10, 2014
http://politics.people.com.cn/n/2014/0110/c70731-24086306.html
Briefings | | |   Economy/Resources

CRN: China’s Economy Faces Four Major Challenges

China Review News (CRN) recently published an article discussing China’s macroeconomic trend, based on the goals set by the recent Third Plenary Session of the 18th Central Committee Conference of the Communist Party. The author expressed the belief that China’s rapid economic growth was largely based on demand that was not domestic. Over the past 35 years, China’s domestic consumer market has been playing less and less of an important role in its GDP numbers. The article identified four primary challenges China faces: 1) Taking advantage of the rapid developments in the science and technology space; 2) Reducing the dependency on pure government investments for economic growth; 3) Adjusting the economy gracefully to deal with the lack of younger workers due to an aging society; 4) Balancing the domestic economy and China’s role in the global economy. The author called for a significant change of the economic growth model and structure so as to focus more on domestic consumers. 
Source: China Review News, January 12, 2014
http://hk.crntt.com/doc/1029/7/4/5/102974525.html?coluid=53&kindid=0&docid=102974525&mdate=0112082909
Briefings | | |   Economy/Resources

State Oceanic Administration: Half of Ocean Waste Water Discharge Outlets Exceed Pollution Level

According to the State Oceanic Administration, the latest statistics show that, out of 156 ocean waste water discharge outlets in China, 78 of them, or 50 percent exceed the allowable level of pollution, especially in phosphorus, suspended solid waste, and the chemical oxygen demand level. In addition, seawater encroachment and soil salinization both worsened compared with 2012.

Source: Xinhua, January 10, 2014
http://news.xinhuanet.com/politics/2014-01/10/c_118922927.htm

Briefings | | |   Economy/Resources