Doom and Gloom of China's Economy

Armand2REP

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Lagging sales in China are killing many companies, especially Chinese since they prefer Western brands.
 

tony4562

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Lagging sales in China are killing many companies, especially Chinese since they prefer Western brands.
Apples sales in China account for 20% of the global total from practically nothing 3 years ago, and are still gowing. You can not call it lagging. The same goes for countless other companies, both foreign and domestic. Audi's biggest market is in China, and in tt first quater this year BMW sold more cars in China than they did in theUS, for the first time ever.

China is slowing down, but is still the leadinjg factor in the growth of world economy.
 

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China's downturn affecting coal

BEIJING, July 19 (UPI) -- China's coal stocks are increasing amid the country's economic slowdown.

By the end of June, China's coal stocks were estimated at about 300 million tons, equivalent to the country's coal consumption in one month, says the China Coal Transportation and Distribution Association in a report from state-run news agency Xinhua.

Last month coal prices fell $3 per metric ton, forcing many coal producers to halt or reduce production.


At Qinhuangdao in north Hebei province, said to be the world's largest coal-trading port, traders have experienced 11 successive weeks of falling prices.

"I stayed at Qinhuangdao port for two months and I sold nothing," an unnamed trader told China Daily newspaper. "No one is buying," he said.

Liu Feng, head of Baotou Zhengxing Material Co Ltd, a trading company specializing in steel and coal, said many coal mines in Inner Mongolia had stopped production because of the weak market. As a result, he said, the coal sector in Inner Mongolia was taking measures to reorganize and consolidate, thus affecting private investors' confidence.

"Coal prices are falling dramatically. Private coal companies are suffering. But the State-owned ones are strong enough to cope," Liu said.

Industry experts attribute the oversupply in inventory and falling prices to the country's slowed domestic economic growth, which prompted reduced demand from the steel, cement and electricity sectors.

China relies on coal for more than 70 percent of its energy needs.

Speaking at an economic forum in Australia last week, economist Ross Garnaut, a former Australian ambassador to China, said that China's hunger for Australian coal is likely to wane as it moves to a more energy-efficient economy.

The Lawrence Berkeley National Laboratory in California estimates China's coal demand will peak around 2030 due to replacement by other energy sources and that overall energy demand will plateau around 2040.

As part of China's 12th 5-year economic plan, covering 2011-15, China aims to cut fossil fuel dependence to 87 percent of energy supply and boost natural gas consumption to 8 per cent of energy supply.

Figures from China's National Energy Administration show that China's power consumption in the first five months of this year was 1.96 trillion kilowatt hours, up 5.8 percent year-on-year, yet the growth rate fell 6.2 percentage points from the same period of last year.

The Financial Times newspaper quoted an unnamed trader for a state-owned coal company as saying, "The glory days of big coal are already behind us. Now we are in a sunset period."
 

Armand2REP

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Chart: China's coal inventory level at power plants have surpassed 2008/09 crisis peak

We have mentioned a couple of times that coal inventory in China has reached historical high both in ports and at power plants as demand for electricity (and hence coal) slows amid slowing economic growth.

The chart below is from Goldman Sachs, which shows the coal inventory days at major power plants. As you can see, coal inventory level at major power plants have already surpassed level that was reached during the 2008/09 crisis.



Chart: China’s coal inventory level at power plants have surpassed 2008/09 peak
 

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China's Stocks Fall to Lowest Since 2009 on Slowdown Concerns

China's stocks fell, dragging the benchmark index down to the lowest level since March 2009, after a central bank adviser said economic growth will slow this quarter and as Europe's crisis worsened the outlook for exports.

Jiangxi Copper Co. (600362) and China Shenhua Energy Co. led a decline among commodity producers on concern weaker growth will sap demand for raw materials. China Pacific Insurance (Group) Co. (601601), the nation's fourth-largest insurer, dropped 2.2 percent after funds controlled by Carlyle Group LP offered to sell its Hong Kong-listed shares. Weichai Power Co., a maker of high- speed heavy-duty diesel engines, slumped the most since November 2010 after estimating a drop in second-quarter profit.

"The economy is still on a downtrend and that means corporate earnings could be worse than expected," said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. "The government is slow to respond to the economic slowdown and the market is disappointed at the magnitude of pro-growth measures."

The Shanghai Composite Index (SHCOMP) dropped 1.3 percent to 2,141.40 at the close, the lowest level since March 13, 2009. The CSI 300 Index (SHSZ300) slumped 1.4 percent to 2,365.43. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, retreated 0.6 percent in New York on July 20.

Thirty-day volatility in the Shanghai index was at 15.1 today, compared with this year's average of 17.9. About 6.4 billion shares changed hands in the gauge on July 20, 23 percent lower than the daily average this year.

Slower 3Q Growth
The Shanghai Composite fell 0.8 percent last week on concern earnings will deteriorate and as the government said it won't ease property curbs. The measure has fallen 13 percent from this year's high on March 2 amid concern an economic slowdown is deepening. It's valued at 9.5 times estimated profit, compared with the average of 17.5 since Bloomberg began compiling the data in 2006.

Jiangxi Copper, China's biggest producer of the metal, lost 3.2 percent to 21.89 yuan. Shenhua, the nation's largest coal producer, slid 1.3 percent to 21.96 yuan. Aluminum Corp. of China Ltd., the listed unit of nation's biggest maker of the lightweight metal, retreated 1.5 percent to 6.04 yuan.

China's economic growth may cool to 7.4 percent this quarter, Song Guoqing, a member of the People's Bank of China monetary policy committee, said at a forum in Beijing over the weekend. He also warned that a decline in producer prices in tandem with consumer inflation may hurt investment returns of industrial companies, damping their desire to expand.

'More Pessimistic'
"The consensus is that China's economic growth rate will be close to 8 percent in coming months, but I personally am more pessimistic because there are problems on the export side," Song said. With Europe's debt crisis still unfolding, "there is a risk of insufficient government measures if Chinese exports fall more sharply than expected in coming months," he said.

The world's second-largest economy grew 7.6 percent in the second quarter, the least in three years. Import and export growth both slowed last month.

HSBC Holdings Plc and Markit Economics are scheduled to release their preliminary manufacturing index for this month tomorrow. The reading was at 48.2 in June, below the 50 dividing line for expansion and contraction.

In Europe, German Vice Chancellor Philipp Roesler said he's "very skeptical" that European leaders will be able to rescue Greece. Roesler, who is Germany's economy minister, told broadcaster ARD that Greece was unlikely to be able to meet its obligations under a euro-area bailout program as its international creditors hold talks this week in Athens. Should that be the case, the country won't receive more bailout payments, Roesler said.

Carlyle Sale
Europe is China's largest export market, making up 18 percent of the nation's overseas sales, according to Shenyin & Wanguo Securities Co.

China Pacific dropped 2.2 percent to 22.81 yuan. Carlyle Holdings Mauritius Ltd. and Parallel Investors Holdings Ltd. are selling 220 million shares in the insurer for HK$25.5 to HK$26 ($3.35) each, according to terms for the sale obtained by Bloomberg News. The selling price represents a discount of as much as 5.2 percent to the stock's closing price in Hong Kong on July 20. The Hong Kong shares plunged as much as 12 percent.

Weichai Power slumped 7.9 percent to 23.69 yuan. First-half profit may have declined by about the same rate in the first quarter because of China's macro-economic policy and the slowdown, the company said in a statement on July 20 after the market closed. Net income fell 45 percent in the first quarter.
 

Armand2REP

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Giga Solar follows LDK Solar into financial trouble



While LDK Solar, the leading polysilicon supplier in Asia, is facing a financial crisis, Giga Solar Holdings, a leader in the production of solar cells, modules and photovoltaic power plants, which like LDK is also based in Xinyu in southeastern China's Jiangxi province, has found itself at a critical financial juncture due to its 30 billion yuan (US$4.7 billion) investment plan, Guangzhou's 21st Century Economic Report says.

LDK Solar cuts 5,554 Workers

The newspaper reported that several employees at Giga Solar's headquarters confirmed on July 23 that the company had only paid half of April's salaries on July 18. The company's employees said they didn't know when the other half would be paid. They have launched a massive protest against the company and have asked the labor arbitration department in Xinyu to intervene.

Giga Solar's online data shows that the company has eight production bases with total capacity of 4GW of solar photovoltaic cells and 2GW of components.

The company's employees said the eight production bases were managed by its Beijing headquarters. "Except for its Xinyu headquarters, the production lines in other bases have basically suspended operations," a middle level executive said.

However, Giga Solar is continuing to expand its capacity. It not only added assembly lines in its old bases in Guilin in Guangxi and Qingliu in Fujian, but also set up new bases in Dushan in Guizhou and Guangxi's Fangchenggang.

Its holding company said it had 22 crystalline silicon solar-cell production lines with a total capacity of 880MW.

An employee of Giga Solar said that while the company claimed that its production capacity was 880MW, only four of its production lines were actually producing about 160MW, with only two lines being relatively stable.

China United Cleaning Technology Co (CUC) is a subsidiary of Giga Solar and the first Chinese company with crystalline silicon solar-cell research, development and manufacturing capabilities. It was ranked the first among 2010's top 50 hi-tech and high-growth companies in China and grew 7,744% in three years.

CUC has also not paid salaries to its staff for several months.

Excluding the employees of CUC, the employee headcount at Giga Solar's headquarters in Xinyu once hit a high of more than 600 before dropping to the current 314. Many of its employees quit because they were not paid their salary arrears for several months. A Xinyu government official said the local labor arbitration department had sent officials to the company to negotiate a resolution to the salary arrears issue between the company and its employees.

A financial expert said several Chinese enterprises had used their photovoltaic production facilities as collateral to raise funds.

Giga Solar follows LDK Solar into financial trouble|Companies|Business|WantChinaTimes.com

China's solar industry expanded too far too fast = bankrupt
 

Armand2REP

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China's migrant workers return to farming as unemployment rises


Construction workers in Wuhan. (Photo/Xinhua)

Migrant workers in China normally pack up and head for home at traditional times of family reunion such as the long Chinese New Year and Spring Festival holidays. But laborers working at manufacturing plants or construction sites in many coastal areas and major cities are now making an early exit, returning to their rural homes because of the sudden disappearance of jobs in urban areas.

The situation may be considered the first massive exodus of laborers since the 2008 international financial crisis that undermined the US economy and undercut export orders placed with Chinese manufacturers.

The current situation is similar to late 2008 when many workers working away from home headed back earlier than the traditional peak travel period in early spring each year. It is now a common scene for groups of workers from the same region gather at major train or bus stations to jointly plan their next moves. Some plan to travel to other cities to try their luck there. But many decide to go straight back home after failing to find construction work in several major cities, including Beijing and Tianjin.

Many will go home to resume farming work, holding the view that they can at least feed themselves by growing crops. This is also better than living on their savings without a new source of income in the city, some say.

An extensive market survey by the China Securities Journal shows that the situation faced by Chinese workers today is more serious than in 2008 because export shipments to the European market are now suffering a greater impact. Garment manufacturers in Wenzhou and other cities in the eastern province of Zhejiang said the export orders they received this year were down by more than 30% from last year while the value of each order is down by 70%.

Administrators in some rural townships in the central province of Henan, a major source of migrant labor, said about 40% of the people previously working outside the province have returned because of the fewer jobs available, while some employers were forced to shut down their business operations. It is no less difficult for the returnees to find suitable construction or manufacturing jobs at home, however. Most of them have no choice but to return to their previous agricultural work.

China's migrant workers return to farming as employment declines|Markets|Business|WantChinaTimes.com
 

Armand2REP

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Steelmaker's default highlights overcapacity and impact of slowing economy

Chongqing Iron and Steel Company is said to have defaulted on some of its debt in the past few years, totalling to some RMB3.6 billion, once again highlighting the difficulties steelmakers are facing amid slowing demand and over-capacity.

The company is said to have defaulted on loans and financing leases from HSBC, China Development Bank and CCB Financial Leasing Corp, totalling to RMB3.6 billion according to 21st Century Business Herald. Of the RMB3.6 billion of loans, RMB887 million of which was a syndicated loans led by HSBC. Curiously enough, the company has breached the debt covenant already, thus the company has technically defaulted on this loan. Breaches in debt covenants have happened too with a long-term loan of RMB1.323 billion from the China Development Bank. The report has not specified exactly which parts of the covenants in these two cases have been violated. The company is said to be negotiating with banks regarding these obligations.

Meanwhile, a financing lease contract with CCB Financial Leasing has been breached in 2010 as the company's debt/asset ratio reached 74.65% by the end of 2010. The contract stated that debt/asset ratio should not be above 70%, thus the company has technically defaulted on this RMB1.4 billion obligation. CCB subsequently relax the contract terms so as to avoid the termination of the leasing.

The debt situation, of course, did not improve from there as the economy slows more noticeably after the company has breached the contracts. Debt/asset ratio has risen further to 84.32% by the end of 2011 according to the report.

This is quite remarkable, especially if one considers that the Chinese economy only started to slow more significantly last year, while this particular steelmaker was already having difficulties in not breaching the debt covenants. Individual company's operation aside, we know that the steel industry has enormous over-capacity, and the matter is likely to be made worse as the economy slows.

Steelmaker’s default highlights overcapacity and impact of slowing economy
 

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U.S. Factories Leaving China

U.S. Factories Leaving China - Forbes

U.S. companies are leaving China and heading to other parts of the world, including back home. One of the reasons, of course, is rising wage costs in mainland China compared to other nations in the region, and declining wages in the U.S.

Highlighted in a feature report in China Daily on Wednesday, a California LED light company called Seesmart said it was building factories in California and Illinois, instead of expanding their presence in China.

"When we do the numbers we're actually ahead manufacturing here instead of paying for air freight and dealing with the logistical issues that we're having in China," Raymond Sjolseth, the company's president and co-founder, was quoted as saying in the paper on Wednesday.

Wage costs are only part of the picture. Moving closer to home markets, and the price of logistics has taken away some of China's competitive edge. China's wages are still around one-tenth of that in the U.S. and while that has risen over the last several years, wages alone are not the only reason for relocation.

Caterpillar, for example, said early this year that it was bringing some manufacturing of certain types of machinery to southern U.S. because that particular equipment was no longer a big seller in markets like Japan, but was seeing an uptick in demand in the U.S.

Caterpillar announced 9 new plants or expansion projects in the U.S. over the past 12 months.

A survey by the Hackett Group consultancy found that 46 percent of executives at European and North American manufacturing companies said they were considering returning some production to the United States from China, while another 27 percent said they were actively planning for or are in the midst of such a shift, the paper reported.

In the face of continued high unemployment, outsourcing and offshoring have become potent issues with U.S. voters. In the race for the White House, President Barack Obama, a Democrat, has called attention to job cuts made by private equity firm Bain Capital, formerly run by Republican challenger Mitt Romney. Yet, despite the rhetoric, there has been a turnaround in American factory employment lately. Around 11.95 million Americans worked in production jobs as of May, up 4 percent from the sector's recessionary low in January 2010.

Americans are more concerned than ever about the role manufacturing can play in the job market. Unemployment in the U.S. has been stuck at 8.2 percent all year.

According to a poll commissioned by the American Alliance for Manufacturing, Voters say that creating jobs, specifically in manufacturing, and strengthening manufacturing in the U.S., was a top economic priority.

By a sizeable margin, voters rate manufacturing as the industry "most important to the overall strength of the American economy" and support a national strategy to restore America's global leadership in manufacturing.

Significantly, 56 percent of those polled no longer see the U.S. as having the world's strongest economy, and fewer than 25 percent think anyone in Washington is doing a great deal to help enforce a level playing field for U.S. manufacturers. However, 88 percent of voters said that they believed it was possible for America to have the strongest economy, and 92 percent believe that it is important for the U.S. to regain that position.
 

Armand2REP

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Nokia's layoff involves R&D staff

Finnish telecommunication equipment manufacturer Nokia Corp's employee-reduction in China now expanded to research and development posts, no longer restrained to sales staff members.

Nokia (China) Investment Co Ltd said employees at the research center are among the laid off employees, reported Beijing Times on Thursday.

Apart from sales and R&D departments, information and several other departments have also been affected.

The job-cut details are not disclosed at this moment, the report said according to a Nokia China official.

Nokia's layoff involves R&D staff |Companies |chinadaily.com.cn
 

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Huawei to cut 10,000 jobs



Facing circulating rumors on China's most popular microblogging site Sina Weibo that Huawei Technologies Co. Ltd was cutting 10,000 jobs, and that the list of names of employees to be laid off had been delivered to each department, several company insiders confirmed on Thursday that Huawei had been planning the layoffs for a long time. However, the sources said neither the layoff notice nor the list of names had been delivered.

One insider said that the reason for the layoffs was the shrinking overseas market. In 2011, Huawei started to use the rotating CEO system. According to the same 2011 annual report revealing the management change, the company that year also hired 30,000 new employees – accounting for 21 percent of the company's total (140,000) – in order to meet its developmental needs in network services for both corporate clients and individual customers.

Another insider said that the layoff will begin with overseas employees and then move on to domestic ones. Departments such as the ones managing the company's network of business partners will have fewer cuts. This source also pointed out that the Huawei's normal business operations are not looking too well: In 2011, the company's international business revenue increased only 3 percent, lowest over the years according to the annual report; so restructuring was inevitable.

The insider said there are five main reasons for this round of layoffs: "First, the company has invested a lot for two new business groups: network services for corporate and personal clients. It has direct impact on cash flow and net profit; second, the company's core business revenue has shrunk; third, the company hired more people than its actual needs; fourth, it failed to break into the U.S. market, which continues to be controlled by Ericsson and Alcatel-Lucent; finally, the its management services had not been marketable."

Huawei to cut 10,000 jobs - China.org.cn
 

Armand2REP

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China's shipbuilders firmly in the doldrums
Staff Reporter 2012-07-27


Empty shipyard in Nantong, Jiangsu province. (File photo/Xinhua)

Shipbuilders in China only secured 182 orders in the first six months of 2012, compared to 561 orders last year. The figure is a far cry from the peak period of 2,036 orders in 2007, according to a report by Clarkson Research Group of the UK quoted by the Chinese-language National Business Daily.

The research group added that 46 of total 180 shipbuilding companies have not had any orders so far this year.

The total of new ship orders and ships under construction dropped together in the first five months of the year, according to the national industry body. The total displacement of new ship orders came to 9.54 million tons, down 47.3% from a year earlier.

Business for the country's shipbuilders is thus set to be worse than it has been for the last ten years. Rongsheng, China's largest private shipbuilder, is still awaiting its first order in six months and the country's No.1 rank in global shipbuilding will slip away if the situation continues, according to the industry sources.

China's shipbuilders firmly in the doldrums|Manufacturing|Business|WantChinaTimes.com
 

Armand2REP

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Something Fishy about China's tax reciepts

Business and corporate taxes accounted were up 9.6% and 17.3%, respectively, of growth rates, 14.7 and 21 percentage points lower than the growth rates a year earlier. Revenue from personal income taxes declined 8% year-on-year.

Strained local governments in China look to tax probes for revenue|Economy|News|WantChinaTimes.com

So rich get richer and working men gets screwed? What happened to rising wages or is unemployment is so high to kill taxes revenue.
 

Armand2REP

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China's PC market experiences first drop in 15 years

China's PC market experienced its first decline in nearly 15 years in the second quarter of this year, according to a report published by International Data Corp, a market research and analysis firm specializing in IT, telecommunications and consumer technology.

While IDC did not publish the latest figures, market data showed that China's Q2 PC shipments decreased 2.5% to 18.3 million units on a year-on-year basis.

China's PC market experiences first drop in 15 years|Markets|Business|WantChinaTimes.com
 

Armand2REP

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Property companies go bankrupt in private lending crisis


Mercedes Benz & BMWs used to be common fixtures on the streets of Xinyi in Xuzhou city of Jiangsu province. But now that four major local property-development companies have recently gone bankrupt, the economic bubble in the area has collapsed.

The entire property market is in jeapordy of collapsing as China continues to tighten its housing policies, reports the Shanghai-based First Financial Daily.

The owners of the four major property firms in Xinyi — Jin Xunhua, the legal representative of Xinyi Ordos Real Estate Development Co; Liu Wenzhong, the owner of Zhongtong Real Estate Development Co; Zhang Yijiang, the owner of Forever Property Development Co; and Lu Zifei, the owner of Scenic Property Development Co — are all exiting the market.

The report said that after China introduced tightening measures for the property sector, the capital supply chains of property firms became strained and were eventually disrupted. Currently, Jin is out on bail and his assets have been used to pay debts; Lu and Liu are under investigation, while Zhang continues to work as usual and is trying to use houses to pay off debtsand undergo debt restructuring.

Since the second half of last year, frequent reports began being circulated of property-firm owners in Xinyi fleeing due to the inability to repay debts.

In recent years, it has become common for Xinyi's property development firms to borrow from private lenders. Liu bought land in 2009 with loans that carried monthly interest rates as high as 6%. He was expecting total sales to touch 300-400 million yuan (US$47.03 million-$62.7 million), and development costs to be less than 200 million yuan (US$31.35 million).

Liu had not expected the government to introduce its stringent property policy in 2010, after his construction projects began in the autumn of 2009. Pressured by weak sales and insufficient revenues, Liu began a vicious cycle of borrowing anew to pay old debts at very high interest rates. Liu is said to be burdened with debts exceeding 600 million yuan (US$94.05 million).

Property companies go bankrupt in private lending crisis|Markets|Business|WantChinaTimes.com
 

Armand2REP

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China's rail cargo volume growth just turned negative in June

China's vice premier Li Keqiang was widely reported to have said that China's GDP figures are not reliable. According to Reuters, he is said to be relying on electricity consumption, rail cargo volume, and banking lending.

In case you have not been watching, the rail cargo volume growth on a year-on-year basis has just turned negative in June. Total volume of freight handled by railways amounted to 315 million tonnes, fell by 3.1% compared to a year ago. The year-on-year change has turned negative for the first time since September 2009.

The chart below shows the cargo volume by transportation mode. With the exception of rail cargo volume growth, the data points seem rather random with compared with GDP growth. If Li Keqiang is correct about the usefulness of rail cargo volume, this suggests that the economy has probably not bottomed in the second quarter.



Source: National Bureau of Statistics

China’s rail cargo volume growth just turned negative in June
 

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Sino-Forest says several companies that owe it millions no longer exist

Embattled timber company Sino-Forest Corp., which is in bankruptcy protection, says it is owed half a billion dollars from companies that have been deregistered in China.

Sino-Forest, which filed for bankruptcy protection under the Companies' Creditors Arrangement Act in March, said in a new release Tuesday that it intends "to take all steps necessary" to collect receivables owing to it.

It added that it believes the deregistrations, which have the effect of terminating the existence of the entities, were improper under Chinese law.

Because of rules in China, Sino-Forest used two different models for its business including using subsidiaries and "authorized intermediaries" acting as sales agents, as well as subsidiaries that directly carried on the forestry business in China.

According to its records, Sino-Forest says it is owed $887.4 million from authorized intermediaries, of which $504.8 million is owed from intermediaries that have been deregistered.

Of another $126.2 million owed from other corporate customers, $63.8 million is owed by six Chinese companies, including one of the three main deregistered companies.

Sino-Forest, which was once a stock market darling, has been mired in accusations of fraud, after Carson Block and his research firm Muddy Waters accused the company last summer of being a giant Ponzi scheme.

Sino-Forest says several companies that owe it millions no longer exist - thestar.com

When Chinis owe you money what do they do? Disappear! :taunt:
 

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CNPC pulls out of Iranian natural gas project: report

Staff Reporter 2012-08-01


China has pulled out of the deal it signed with the Iranian government in 2009. (File photo/Xinhua)

The state-owned China National Petroleum Group has pulled out of a project to develop phase 11 of Iran's South Pars natural gas field, reports the Chinese-language National Business Daily.

News of the withdrawal was reported by the Tehran-based newspaper Shargh on Sunday, although an Iranian official and officials from the Chinese petroleum group were said to have refuted the report in a Wall Street Journal article published on Tuesday.

On Wednesday, however, the National Business Daily claimed a source related to CNPC has confirmed that the company is indeed withdrawing from the project and has begun sending workers and experts back to China.

Iranian reports blamed the Chinese company for the split, saying that they had delayed the project for more more than three years and had not even begun preliminary work such as leveling land and putting up fencing. They were warned last year by Iran's national oil company that the project would be given to domestic companies if there were further delays. Last month, Iranian oil minister Rostam Qasemi set a deadline of March 2013 for CNPC to begin development of the project.

CNPC signed the US$4.7 billion deal with the Iranian government to develop phase 11 of South Pars in 2009, replacing France's Total, which had also been accused of lengthy delays. A spokesperson for the company admitted earlier that the company was struggling to finance the project.

South Pars is located in the Persian Gulf and is shared by Iran and Qatar. The Iranian section of the gas field holds 18 billion barrels of condensate, of which some 9 billion barrels are believed to be recoverable. The gas field accounts for half of Iran's and 8% of the world's proven natural gas reserves.

The CNPC source told the National Business Daily that pulling out of the project means foregoing a small deposit but will not cause any significant financial losses to the company. The situation regarding Iran's nuclear program and political environment, which has made investment unstable and risky, and the high degree of difficulty in developing the gas field, are the primary reasons for abandoning the project, the source said.

CNPC pulls out of Iranian natural gas project: report|Companies|Business|WantChinaTimes.com
 

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