China Economy: News & Discussion

[IndiaRising]

trump ran on protesting chinese market manipulation. it feeds his biggest voter base, middle class and poor whites who were impacted the most by manufacturing jobs going overseas. he knows that he cannot make hollow threats on this front.

 

[john70]

China's economic presence on world markets is actually much smaller than that of the United States of America and smaller than our key three Asia-Pacific allies combined.
http://www.abc.net.au/news/2018-01-...actually-a-lot-smaller-than-you-think/9291700


In recent years, reports by financial institutions like the World Bank have claimed China is the world's largest economy. China's annual gross domestic product (GDP), when converted to United States dollars using purchasing power parity exchange rates is estimated to be worth around $US19 trillion, surpassing the USA's GDP of $US17 trillion.

China's size is a good indicator of potential economic opportunities for Australia. But China's rise is also creating a growing discomfort in how China will use its economic power.

In both Washington and Canberra questions are being asked about how to our balance economic interests with these growing political and security concerns.

As a large country China may insist on a greater acceptance of its own ideals and priorities as a condition of economic engagement.

As a dictatorship, however, its ambitions are unclear and may not align well with Australia and other democratic countries in the region.

Likewise, China's assertiveness in the South China Sea has rekindled interest in security cooperation between the region's largest democracies, Japan, India and Australia, as well as the United States through the Quadrilateral Security Dialogue.

China big, US (much) bigger
The concerns raised are real, but are in some ways exaggerated. Specifically, the figure of $US19 trillion is an estimate based on a purchasing power parity exchange rate, which overstates China's impact on world markets.

This is because the purchasing power parity exchange rate tells us how much money you need in China to be as well off as you are in the US. It is a measure of how big China's GDP would be if costs of living were the same as the US.

This can be useful, but it is not an indicator of China's footprint in the world economy.

A reasonable measure of a country's economic footprint on the world economy is how much it could potentially change demand or supply on world markets.

PHOTO: China's GDP measured at market exchange rates is only US$9 trillion — almost half that of the US. (Reuters: Jonathan Ernst)


When countries export they have to accept payment based on market exchange rates. Likewise when countries import they must pay in foreign currency based on market exchange rates.

This means that to compare China's market size with the US, we need to convert China's GDP, measured through China's currency renminbi, to US dollars, using market exchange rates.

China's GDP measured at market exchange rates, however, is only $US9 trillion — almost half that of the US.

This means that the impact China's economy can potentially have on the world economy is really only about half as much as the US.

The difference in values arises for the same reason that tourists find that their money often goes much further in developing countries. That is, if you convert your US dollars to renminbi, you will find that you can purchase a lot more in China than the US, especially in non-traded goods and services, such as haircuts or street food.

The purchasing power parity exchange rate is the rate that tells you how much you need in China to be just as well off — for example to buy the same basket of goods. It's very useful rate for tourists and is great way to compare standards of living across countries.

Think purchasing power parity
But it's not a measure of how much you can actually buy. In order to measure the potential influence of China's economy, it is buying and selling power that matters.

The same line of reasoning also effects how we should think about the Asia-Pacific partnership of regional democracies.

The combined GDP of India, Japan and Australia, measured at purchasing power parity rates, is smaller than China.

But at market exchange rates their combined market size exceeds that of China. This is because just as purchasing power parity exchange rates make China seem too big, they make Japan seem small relative to its real buying and selling power on world markets.

The collective GDP of Japan, Australia, India and the United States represents a market that is around three times larger than China.

These differences are quite significant and they are important because they affect the way we think about the value of economic opportunities and our security alliances.

When interpreted appropriately, China is a large country. But it still has a long way to go before it can match the sheer economic weight of the US.

So while China is very important, the market size of regional democracies should not be underestimated.

Peter Robertson is a professor at the University of Western Australia. This article first ran in The Conversation.

 

[nongaddarliberal]

China's economic presence on world markets is actually much smaller than that of the United States of America and smaller than our key three Asia-Pacific allies combined.
http://www.abc.net.au/news/2018-01-...actually-a-lot-smaller-than-you-think/9291700


In recent years, reports by financial institutions like the World Bank have claimed China is the world's largest economy. China's annual gross domestic product (GDP), when converted to United States dollars using purchasing power parity exchange rates is estimated to be worth around $US19 trillion, surpassing the USA's GDP of $US17 trillion.

China's size is a good indicator of potential economic opportunities for Australia. But China's rise is also creating a growing discomfort in how China will use its economic power.

In both Washington and Canberra questions are being asked about how to our balance economic interests with these growing political and security concerns.

As a large country China may insist on a greater acceptance of its own ideals and priorities as a condition of economic engagement.

As a dictatorship, however, its ambitions are unclear and may not align well with Australia and other democratic countries in the region.

Likewise, China's assertiveness in the South China Sea has rekindled interest in security cooperation between the region's largest democracies, Japan, India and Australia, as well as the United States through the Quadrilateral Security Dialogue.

China big, US (much) bigger
The concerns raised are real, but are in some ways exaggerated. Specifically, the figure of $US19 trillion is an estimate based on a purchasing power parity exchange rate, which overstates China's impact on world markets.

This is because the purchasing power parity exchange rate tells us how much money you need in China to be as well off as you are in the US. It is a measure of how big China's GDP would be if costs of living were the same as the US.

This can be useful, but it is not an indicator of China's footprint in the world economy.

A reasonable measure of a country's economic footprint on the world economy is how much it could potentially change demand or supply on world markets.

PHOTO: China's GDP measured at market exchange rates is only US$9 trillion — almost half that of the US. (Reuters: Jonathan Ernst)


When countries export they have to accept payment based on market exchange rates. Likewise when countries import they must pay in foreign currency based on market exchange rates.

This means that to compare China's market size with the US, we need to convert China's GDP, measured through China's currency renminbi, to US dollars, using market exchange rates.

China's GDP measured at market exchange rates, however, is only $US9 trillion — almost half that of the US.

This means that the impact China's economy can potentially have on the world economy is really only about half as much as the US.

The difference in values arises for the same reason that tourists find that their money often goes much further in developing countries. That is, if you convert your US dollars to renminbi, you will find that you can purchase a lot more in China than the US, especially in non-traded goods and services, such as haircuts or street food.

The purchasing power parity exchange rate is the rate that tells you how much you need in China to be just as well off — for example to buy the same basket of goods. It's very useful rate for tourists and is great way to compare standards of living across countries.

Think purchasing power parity
But it's not a measure of how much you can actually buy. In order to measure the potential influence of China's economy, it is buying and selling power that matters.

The same line of reasoning also effects how we should think about the Asia-Pacific partnership of regional democracies.

The combined GDP of India, Japan and Australia, measured at purchasing power parity rates, is smaller than China.

But at market exchange rates their combined market size exceeds that of China. This is because just as purchasing power parity exchange rates make China seem too big, they make Japan seem small relative to its real buying and selling power on world markets.

The collective GDP of Japan, Australia, India and the United States represents a market that is around three times larger than China.

These differences are quite significant and they are important because they affect the way we think about the value of economic opportunities and our security alliances.

When interpreted appropriately, China is a large country. But it still has a long way to go before it can match the sheer economic weight of the US.

So while China is very important, the market size of regional democracies should not be underestimated.

Peter Robertson is a professor at the University of Western Australia. This article first ran in The Conversation.

But still much bigger than ours. China may not be too much of a concern for the US when you look at it realistically, but as far as India is concerned, it's a problem. Additionally, the article states that's China's nominal GDP is only 9 trillion, but the latest figure is actually 12 trillion. And still growing at around 4-5 % a year. (No one believed their official 6.8% growth rate). To bridge the gap we should hit 10%, which we can, but it requires massive cuts in less useful government departments and channelling it into skill development and infrastructure.

 

[Armand2REP]

But still much bigger than ours. China may not be too much of a concern for the US when you look at it realistically, but as far as India is concerned, it's a problem. Additionally, the article states that's China's nominal GDP is only 9 trillion, but the latest figure is actually 12 trillion. And still growing at around 4-5 % a year. (No one believed their official 6.8% growth rate). To bridge the gap we should hit 10%, which we can, but it requires massive cuts in less useful government departments and channelling it into skill development and infrastructure.

China hasn't reckoned with its economic losses from bad debt as every other nominal GDP has figured. When it does $9 trillion will be rosy.

 

[indus]

Could not find an apt thread to post this news but its worth sharing.

China blows up ‘illegal’ mega-church
AFPUpdated January 14, 2018

LINFEN: This undated screen grab shows the remains of the church after its demolition.—AFP


BEIJING: Authorities in northern China have demolished a Christian megachurch in a move denounced by a religious rights group as “Taliban-style persecution”.

China’s officially atheist Communist authorities are wary of any organised movements outside their control, including religious ones.

The huge evangelical Jindengtai (Golden Lampstand) Church, painted grey and surmounted by turrets and a large red cross, was located in Linfen, Shanxi province.

Its demolition began on Tuesday under “a city-wide campaign to remove illegal buildings”, the Global Times newspaper reported, quoting a local government official who wished to remain anonymous.

“A Christian offered his farmland to a local Christian association and they secretly built a church using the cover of building a warehouse,” the official said.

The local housing department had stopped construction of the church in 2009 when it was almost complete, he added. Several members of the Christian group were then jailed, according to the official.

A “multitude of military police were mobilised and engaged (in) the destruction by burying a large amount of explosives under the church,” Bob Fu, president of the US-based religious rights group ChinaAid Association, said on Saturday.

“It is like Taliban/ISIS style of persecution against a peaceful church,” he said, adding that it had around 50,000 members.

The house of worship was “primarily destroyed because it refused to register” with the Communist authorities, Fu said.

Linfen police and city officials did not answer telephone calls.

Demolition of the church comes as authorities prepare to implement new, stricter regulations on religion which come into force on February 1 as part of a broader effort to put religious practice under the direct supervision of the state.

Beijing has stepped up its crackdown on civil society since President Xi Jinping took power in 2012, tightening restrictions on freedom of speech and jailing hundreds of activists and lawyers.

Chinese citizens officially have freedom of belief under the constitution but the authorities tightly control religious groups and churches, which have to swear allegiance to state-controlled “patriotic” associations to avoid any foreign influence through religion.

In an annual report last year, the US State Department said that in 2016, China “physically abused, detained, arrested, tortured, sentenced to prison, or harassed adherents of both registered and unregistered religious groups”.

Published in Dawn, January 14th, 2018

 

[nongaddarliberal]

◢
WED JAN 17, 2018 / 12:43 AM EST
Another Chinese city admits 'fake' economic data
Yawen Chen and Ryan Woo

(Reuters) - A northern industrial city in China said its 2017 fiscal revenue was significantly less than it had earlier estimated partly due to "fake" additions, making a revision just days after reports of similar incidents fueled scepticism over official data.

Baotou in China's Inner Mongolia Autonomous Region revised its estimated fiscal revenue in 2017 lower by nearly 50 percent in an annual work report, a copy of which was published on the Baotou government's website on Jan. 13.

The Baotou city government said in the report that the revision was due to factors including "fake additions". It did not say how the additions came about or who was responsible.

Days earlier, the governments of Inner Mongolia and Tianjin, a large port city in northern China, said their fiscal and economic numbers for 2016 had been overstated.

ADVERTISEMENT
"We have been trying to change our mindset and change the course of our development model," the Baotou government said, while pledging to tame government borrowings in part by halting debt-burdened public projects.

Baotou was forced to halt an ambitious subway construction project earlier last year as the central government questioned its ability to finance the debt.

Inner Mongolia cut its industrial output figure for 2016 by 40 percent, according to the official Xinhua news agency on Jan. 3. It also said fiscal revenue for that year ought to be 26 percent less than initially stated. It did not give details.

The 2016 gross domestic product of Tianjin's Binhai New Area - an economic zone once touted to become China's Manhattan - was actually about a third smaller than previously announced, according to a commentary in the official People's Daily on Jan. 15.

The incidents of data fraud coincided with a campaign led by Beijing to crackdown on risky lending, aimed partly at curbing runaway local government debt.

The People's Daily said that while inflated data may look good on paper, it would lead to more stress in the less developed hinterland as it would cause the central government to reduce funding.

In January last year, the northeastern province of Liaoning said it had faked fiscal data from 2011 to 2014, becoming the first province to make such an admission.

Chinese provinces and cities have long been suspected of cooking up numbers, with the focus on local government officials, whose performance are often assessed based on how well their respective economies have performed.

ADVERTISEMENT
China's top leaders signaled a shift in priority as the country strives to be more quality driven. In an agenda-setting Communist Party congress in October, President Xi Jinping said China has now entered a "new era" where the country will prize quality growth over quantity.

China is set to release its 2017 GDP data on Thursday. Premier Li Keqiang has signaled that GDP growth should be around 6.9 percent, accelerating from a 26-year low of 6.7 percent in 2016.


Their time is up guys. All we need to do is play catch up.

@Armand2REP
@aditya10r
@Haldiram

 

[aditya10r]

◢
WED JAN 17, 2018 / 12:43 AM EST
Another Chinese city admits 'fake' economic data
Yawen Chen and Ryan Woo

(Reuters) - A northern industrial city in China said its 2017 fiscal revenue was significantly less than it had earlier estimated partly due to "fake" additions, making a revision just days after reports of similar incidents fueled scepticism over official data.

Baotou in China's Inner Mongolia Autonomous Region revised its estimated fiscal revenue in 2017 lower by nearly 50 percent in an annual work report, a copy of which was published on the Baotou government's website on Jan. 13.

The Baotou city government said in the report that the revision was due to factors including "fake additions". It did not say how the additions came about or who was responsible.

Days earlier, the governments of Inner Mongolia and Tianjin, a large port city in northern China, said their fiscal and economic numbers for 2016 had been overstated.

ADVERTISEMENT
"We have been trying to change our mindset and change the course of our development model," the Baotou government said, while pledging to tame government borrowings in part by halting debt-burdened public projects.

Baotou was forced to halt an ambitious subway construction project earlier last year as the central government questioned its ability to finance the debt.

Inner Mongolia cut its industrial output figure for 2016 by 40 percent, according to the official Xinhua news agency on Jan. 3. It also said fiscal revenue for that year ought to be 26 percent less than initially stated. It did not give details.

The 2016 gross domestic product of Tianjin's Binhai New Area - an economic zone once touted to become China's Manhattan - was actually about a third smaller than previously announced, according to a commentary in the official People's Daily on Jan. 15.

The incidents of data fraud coincided with a campaign led by Beijing to crackdown on risky lending, aimed partly at curbing runaway local government debt.

The People's Daily said that while inflated data may look good on paper, it would lead to more stress in the less developed hinterland as it would cause the central government to reduce funding.

In January last year, the northeastern province of Liaoning said it had faked fiscal data from 2011 to 2014, becoming the first province to make such an admission.

Chinese provinces and cities have long been suspected of cooking up numbers, with the focus on local government officials, whose performance are often assessed based on how well their respective economies have performed.

ADVERTISEMENT
China's top leaders signaled a shift in priority as the country strives to be more quality driven. In an agenda-setting Communist Party congress in October, President Xi Jinping said China has now entered a "new era" where the country will prize quality growth over quantity.

China is set to release its 2017 GDP data on Thursday. Premier Li Keqiang has signaled that GDP growth should be around 6.9 percent, accelerating from a 26-year low of 6.7 percent in 2016.


Their time is up guys. All we need to do is play catch up.

@Armand2REP
@aditya10r
@Haldiram

I have said this again and again,I don't trust any of the data that is coming from CCP.

Big part of Chinese economy is non performing.

 

[nongaddarliberal]

TOM SIMONITE
01.23.18 5:46 PM
TENCENT SOFTWARE BEATS GO CHAMP, SHOWING CHINA'S AI GAINS

Ma Huateng, chairman and CEO of Tencent Holdings Ltd.
LINTAO ZHANG/GETTY IMAGES
In March 2016, Alphabet’s DeepMind research group set a milestone in artificial intelligence when its AlphaGo program defeated professional Go player Lee Sedol, then fifth-ranked in the world, at the complex board game Go.

Now China’s Tencent is claiming a milestone of its own in Go—and China’s ambitions in artificial intelligence. Last week, the company’s Fine Art program defeated China’s top professional Ke Jie, despite giving him a significant head start. Ke recently slipped to number two in the world, after holding the top spot for three years.

Fine Art’s victory won notice in the world of Go because it helps illustrate the gulf that has opened between human and machine players of the complex boardgame.


But it also highlights a shrinking gulf---between AI capabilities in the US and China. In a detailed national strategy for AI released last summer, China set a goal of drawing level with America by 2020, and pulling ahead by 2030. Central, state, and municipal governments are directing money towards AI research and companies.

Tencent, whose offerings span from messaging to payments and music, was named to a “national team” for AI by China’s Ministry of Science and Technology in November, alongside four other tech giants. Greg Allen, an adjunct fellow at the Center for a New American Security, says the company’s Go program shows the US should take China’s technological ambitions seriously. “Fine Art is yet more proof of the stunning progress China has made in AI technology,” he says.

China’s big AI push was partly spurred by AlphaGo’s victory in 2016. Professors who advised the Chinese government on the AI plan told the New York Times that Alphabet’s achievement was a “Sputnik moment” in which officials realized they lagged the US in a technology with broad commercial and military applications.

Go was invented in China more than 3,000 years ago, and is still viewed as an important part of Chinese cultural heritage. Players take turns placing stones on a 19-by-19 grid in a battle for territory that is many times more complex than chess.

Handicaps are used to level the playing field between people of different skill levels. Tencent’s Fine Art defeated Ke Jie despite giving the one-time world champion a two-stone head start. That suggests the program is in a different league than the best humans, not just slightly better.


Ingo Althöfer, a math professor and Go expert at Friedrich Schiller University of Jena in Germany, says that it has generally been held that a perfect “Go God” could beat the best human with a three-stone handicap. “Fine Art is trying to reach this limit of perfect play,” he says. Althöfer calls Ke Jie “likely the best human player currently.” DeepMind has so far ignored calls for AlphaGo to play handicapped games in public, Althöfer says.

Alphabet’s use of the game to demonstrate the might of its AI muscle rankled some Chinese officials. Google took AlphaGo to China for a “Future of Go Summit” last summer, with the main event a match in which the software defeated Ke Jie. Chinese state television reversed plans to cover the match shortly before it began, and local internet providers blocked Chinese-language broadcasts half an hour after the match started.

Tencent created Fine Art in 2016, and has previously said the software has beaten several professionals, including Ke Jie. The company says the latest, upgraded version played a series of handicapped games against professionals starting on Jan. 9. The match against the 20-year-old Ke Jie on Jan. 17 was the capstone. Fine Art still isn’t perfect, though. The International Go Federation reports that Fine Art played 34 games against professionals given a two-stone handicap, and won 30.

Those results, like China’s rapid advance in AI, came with an assist from Alphabet and other US companies. Tencent says the latest version of Fine Art drew inspiration from a paper by DeepMind last year about an improved version of AlphaGo called AlphaGo Zero. Alphabet, Microsoft, Facebook, and many other US companies have helped stoke the worldwide uptick of interest in AI by publishing research papers and releasing software packages.


Althöfer is now hoping Tencent and Alphabet will agree to the ultimate Go showdown: Fine Art versus AlphaGo.

 

[nongaddarliberal]

Any progress in AI from India?

 

[Armand2REP]

Chinese workers getting paid back wages in bricks...

http://www.bbc.com/news/blogs-news-from-elsewhere-42779898

 

[lcafanboy]

Chinese workers getting paid back wages in bricks...

http://www.bbc.com/news/blogs-news-from-elsewhere-42779898

New Chinese currency...........BRICKYUAN.....

 

[lcafanboy]

Financial risk facing China worse than in US before global crash, former finance minister says

Systems have become distorted and messy, National Social Security Fund Council chairman Lou Jiwei says


PUBLISHED : Tuesday, 30 January, 2018, 4:43pm
UPDATED : Tuesday, 30 January, 2018, 11:27pm

COMMENTS: 121

Frank Tang

325SHARE
121

PrintEmail

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The level of risk facing China’s financial system could be higher than was seen in the United States before the global crash, according to a former Chinese finance minister.

SCMP TODAY: INTL EDITION
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Speaking at a forum in Beijing over the weekend, Lou Jiwei, now chairman of the National Social Security Fund Council, also described the state of China’s financial sector as “messy”.

“Compared to the US financial market 10 years ago, [when] the risk and return on derivatives … were defined and the products were registered [with regulators] … China’s [financial market] is more messy,” he said.

“The real risks and returns can only be determined after looking into the underlying assets.”

A transcript of Lou’s speech was published by Chinese business magazine Caixin, while his comments were also widely reported by other Chinese media, including Economic Information Daily.

China’s banking regulator steps up fight against financial risk amid threat of ‘chaos’ in sector

The 68-year-old, who helped to shape China’s economic reforms that began in the 1980s and served as finance minister from 2013-16, has been an outspoken figure since leaving the main policymaking arena and is generally regarded as a reformist.

The country’s financial system had become “severely distorted”, he said, adding that the “likelihood of China generating systematic financial risks is pretty big”.

The distortion was exemplified by the high cost of financing in China despite the loose monetary environment, Lou said.

“China’s ratio of M2 [a broad measure of money supply] to gross domestic product has surpassed 200 per cent, which is more than twice that of the United States, yet the average Shanghai interbank offered rate is 4.09 per cent, far higher than the 1.1 per cent in the US.”

Financial risk the ‘critical battle’ for Xi Jinping in next three years

According to official figures, the M2 money supply at the end of December was 167.68 trillion yuan (US$26.5 trillion), or 203 per cent of China’s nominal GDP in 2017.

Lou said also that the slowdown in growth seen in recent years suggested that the effect of monetary expansion on the economy was weakening.

“Further stimulus will worsen monetisation and encourage financial speculation, but have only a limited effect in driving growth,” he said.

Meanwhile, the “dazzling” array of financing channels and organisations – from Ponzi schemes to peer-to-peer lending platforms, insurance products and capital pools – had resulted in a complex fundraising environment, Lou said, adding that unique to China were the “many financial or quasi-financial institutions that try their best to bypass financial regulation”.

“The overlapping of derivatives results in much higher fundraising costs, worsens the operation of Chinese businesses and disguises the risks,” he said.

Chinese media told to tone down coverage of giant firms’ debt, finance woes

Lou said also that the country’s regional debt burden would limit any room the government had for fiscal or monetary stimulus in the future.

“The local government debt risk has shown up after years of heavy infrastructure construction and it is inappropriate to increase debt in these areas,” he said.



Chinese President Xi Jinping has made tackling financial risk a priority over the next three years, vowing to clamp down on irregularities. In July, the government set up the Financial Stability and Development Commission to coordinate such efforts.

Regulators have already begun cracking the whip. Since the start of the year, the China Banking Regulatory Commission has fined dozens of financial institutions a combined 2 billion yuan (US$315.7 million), or about two-thirds of the total value of fines issued in the whole of 2017.

Meanwhile, the People’s Bank of China was considering how to accommodate internet finance and other shadow banking businesses into its macro-prudential framework, deputy governor Yi Gang said in an article published on Monday.

http://www.scmp.com/news/china/econ...ng-china-worse-us-global-crash-former-finance

 

[aditya10r]

Financial risk facing China worse than in US before global crash, former finance minister says

Systems have become distorted and messy, National Social Security Fund Council chairman Lou Jiwei says


PUBLISHED : Tuesday, 30 January, 2018, 4:43pm
UPDATED : Tuesday, 30 January, 2018, 11:27pm

COMMENTS: 121

Frank Tang

325SHARE
121

PrintEmail

RELATED TOPICS
China EconomyGlobal Financial CrisisUnited States

OPINION
Here’s how to beat fake data about the Chinese economy
28 Jan 2018

OPINION
Why a cooling in China’s economy would be a good thing
27 Jan 2018

ECONOMY
China on lookout for black swans, grey rhinos as 2018 growth to slow
29 Jan 2018

INSIGHT & OPINION
No reason to believe China falsifies its national economic data
28 Jan 2018

ECONOMY
China provinces lower targets after Xi says go for quality growth
25 Jan 2018


Related Articles

COMPANIES
US$125.5m in fines suggest China to continue financial risk curbs
31 Jan 2018

ECONOMY
China factory growth dips to 8-month low as pollution war bites
31 Jan 2018

COMPANIES
S&P predicts first bond default by local Chinese government financing vehicle
30 Jan 2018
The level of risk facing China’s financial system could be higher than was seen in the United States before the global crash, according to a former Chinese finance minister.

SCMP TODAY: INTL EDITION
Get updates direct to your inbox
E-mail *

By registering you agree to our T&Cs & Privacy Policy

Speaking at a forum in Beijing over the weekend, Lou Jiwei, now chairman of the National Social Security Fund Council, also described the state of China’s financial sector as “messy”.

“Compared to the US financial market 10 years ago, [when] the risk and return on derivatives … were defined and the products were registered [with regulators] … China’s [financial market] is more messy,” he said.

“The real risks and returns can only be determined after looking into the underlying assets.”

A transcript of Lou’s speech was published by Chinese business magazine Caixin, while his comments were also widely reported by other Chinese media, including Economic Information Daily.

China’s banking regulator steps up fight against financial risk amid threat of ‘chaos’ in sector

The 68-year-old, who helped to shape China’s economic reforms that began in the 1980s and served as finance minister from 2013-16, has been an outspoken figure since leaving the main policymaking arena and is generally regarded as a reformist.

The country’s financial system had become “severely distorted”, he said, adding that the “likelihood of China generating systematic financial risks is pretty big”.

The distortion was exemplified by the high cost of financing in China despite the loose monetary environment, Lou said.

“China’s ratio of M2 [a broad measure of money supply] to gross domestic product has surpassed 200 per cent, which is more than twice that of the United States, yet the average Shanghai interbank offered rate is 4.09 per cent, far higher than the 1.1 per cent in the US.”

Financial risk the ‘critical battle’ for Xi Jinping in next three years

According to official figures, the M2 money supply at the end of December was 167.68 trillion yuan (US$26.5 trillion), or 203 per cent of China’s nominal GDP in 2017.

Lou said also that the slowdown in growth seen in recent years suggested that the effect of monetary expansion on the economy was weakening.

“Further stimulus will worsen monetisation and encourage financial speculation, but have only a limited effect in driving growth,” he said.

Meanwhile, the “dazzling” array of financing channels and organisations – from Ponzi schemes to peer-to-peer lending platforms, insurance products and capital pools – had resulted in a complex fundraising environment, Lou said, adding that unique to China were the “many financial or quasi-financial institutions that try their best to bypass financial regulation”.

“The overlapping of derivatives results in much higher fundraising costs, worsens the operation of Chinese businesses and disguises the risks,” he said.

Chinese media told to tone down coverage of giant firms’ debt, finance woes

Lou said also that the country’s regional debt burden would limit any room the government had for fiscal or monetary stimulus in the future.

“The local government debt risk has shown up after years of heavy infrastructure construction and it is inappropriate to increase debt in these areas,” he said.



Chinese President Xi Jinping has made tackling financial risk a priority over the next three years, vowing to clamp down on irregularities. In July, the government set up the Financial Stability and Development Commission to coordinate such efforts.

Regulators have already begun cracking the whip. Since the start of the year, the China Banking Regulatory Commission has fined dozens of financial institutions a combined 2 billion yuan (US$315.7 million), or about two-thirds of the total value of fines issued in the whole of 2017.

Meanwhile, the People’s Bank of China was considering how to accommodate internet finance and other shadow banking businesses into its macro-prudential framework, deputy governor Yi Gang said in an article published on Monday.

http://www.scmp.com/news/china/econ...ng-china-worse-us-global-crash-former-finance

Yeah when you go on to fund some of the largest non profitable businesses and infrastructure projects,you are gonna end up with some of the largest debts that one can never imagine.

Chinese growth in this decade is more debt fueled artificial than one can ever imagine.

===================================================================================

Would be fun to see how chinese make up for it.

 

[asianobserve]

China's Next Debt Bomb Is an Aging Population

China’s pension shortfall is emerging as the next big challenge for policy makers as they intensify their years-long campaign to keep rising debt from derailing the economy.

Aging in the world’s most populous country means pension contributions by workers no longer cover retiree benefits, forcing the government to fill that gap since at least 2014. Pension expenses rose 11.6 percent to 2.58 trillion yuan ($410 billion) in 2016, leaving the government a 429.1 billion yuan tab to cover the shortfall, according to the latest available data from the Finance Ministry.

That shortfall will reach 600 billion yuan this year and 890 billion yuan in 2020 if the system isn’t reformed, according to Wang Dehua, a researcher at the National Academy of Economic Strategy in Beijing. Enodo Economics in London, which has advised policy makers on the matter, forecast last year that it could soar to 1.2 trillion yuan by 2019. The finance ministry doesn’t release estimates.

"China’s biggest
Premier Li Keqiang pledged in his report to last year’s congress to increase the allowances. "We will weave a strong safety net to ensure people’s well-being," Li said. "We will continue raising basic pension payments and see they are paid on time and in full."

The population is graying quickly. The State Council said last year that about a quarter of China’s population will be 60 or older by 2030, up from 13.3 percent in the 2010 census. Meanwhile, scrapping the one-child policy hasn’t raised birth rates as high living costs deter larger families. Births fell to 17.2 million last year from 18.5 million in 2016.

Still, unbalanced demographic and employment trends may help the economy as they support further rebalancing and consumer spending, Enodo’s Chief Economist Diana Choyleva says.

"China’s graying population is often analyzed in the context of a rising old-age dependency ratio and the strain it implies for the public finances," she wrote in a report this month. "But it’s worth pointing out that a higher proportion of pensioners, who consume but do not produce, should lead to a structural increase in the share of consumer spending in GDP."

Those benefits aside, signs of strain are already visible in the pension system, and the deficit is poised to "quickly increase" after 2020, according to Liu Shangxi, director of Chinese Academy of Fiscal Sciences, a think tank affiliated with the Finance Ministry.

The central government said in November that a handful of larger state-owned enterprises and financial institutions would transfer 10 percent of their state-owned equity to social security funds to help ease pension payment pressure. New details haven’t been released.

The Finance Ministry and Ministry of Human Resources and Social Security didn’t respond to requests for comment faxed Monday morning. The MOHRSS has delayed the release of annual social insurance reports, offering a less-timely glimpse into the nation’s pension burdens.

China has been paying retirees with contributions made by the working population since it set up the current pension system in early 1990s. The gap between money coming in and payments going out has been widening as more retire and fewer join the workforce.

"China should encourage individuals to invest more for their retirement to reduce the burden on the government, which can’t shoulder the responsibility all on its own," said Zhang Bin, a senior researcher at the China Finance 40 Forum, a Beijing-based think tank.

https://www.bloomberg.com/news/articles/2018-02-05/china-s-next-debt-bomb-is-an-aging-population

 

[asianobserve]

China’s 2015 GDP Was Exaggerated By Fake Data, Analysis Shows

China’s growth rate in 2015 was probably overstated by “a couple of percentage points,” according to new data analysis by Bloomberg Economics.

Gross domestic product at the provincial level was consistently overstated between 2011 and 2015, calculations that cross-referenced energy consumption with output data show. But the exaggeration appears to have shrunk in 2016 as a method of inflating fiscal revenues was closed off. The national GDP number was probably overstated in 2015 as well, according to the research by Bloomberg economists Tom Orlik and Qian Wan.

Data faking also raises questions about the country’s debt picture, according to the economists, because if revenue and output growth is lower than people thought, there is less money to for local governments to make repayments.

https://www.bloomberg.com/news/arti...uffed-up-by-fake-economic-data-analysis-shows

 

[Armand2REP]

Shanghai Stock Exchange full of zombie companies

 

[asianobserve]

Cash-Strapped Chinese Giant Taps a New Money Source: Its Workers

HONG KONG — Just before payday, an email went out to employees from top executives: Give us your money, and we’ll make it worth your while.

It was one of many pitches by HNA Group, a Chinese conglomerate struggling under an estimated $90 billion in debt accumulated during a global shopping spree that included buying stakes in multinationals like Hilton Hotels and Deutsche Bank.

The company, in an email, advertised an “employee treasure” product with an 8.5 percent return if workers handed over $1,500. A similar one dangled 9 percent. A third mentioned a return as high as 40 percent if employees ponied up $15,000.

These pitches, more than a dozen of which were reviewed by The New York Times, were not part of an employee stock program. Instead, they appear to be high interest loans, with the company as borrower and its workers as lenders.

https://www.nytimes.com/2018/02/01/business/dealbook/hna-china-employees.html

 

[asianobserve]

China's Leshi says $890 million of debts due this year, shares drop 10 percent

HONG KONG (Reuters) - China’s Leshi Internet said about 5.62 billion yuan ($890 million) of its debts would be due by the end of this year, or almost two-thirds of the company’s total loans and liabilities, sending its shares down for a ninth day.

This is the first time the video-streaming firm - which is battling the fallout from a severe cash crunch at its founder Jia Yueting’s embattled technology conglomerate LeEco - has provided an estimate for its debt in 2018.

https://www.reuters.com/article/us-...his-year-shares-drop-10-percent-idUSKBN1FP06E

 

[asianobserve]

HNA-Like Debt Pileups Raise Risk of Forced Asset Sales in China

China’s biggest dealmakers are in a new race to shed assets, and ballooning debt levels may force other firms to follow.

Meanwhile, Dalian Wanda Group Co. has agreed to sell two Australian real-estate projects and is said to be seeking buyers for properties in Chicago and Beverly Hills. And China’s government is said to be seeking to orchestrate the sale of a stake in Anbang Insurance Group, a conglomerate that agreed to pay $1.95 billion for the Waldorf Astoria hotel in 2014.

Mounting difficulties with financing aren’t unique to these big, private-sector companies. Behind the high-profile groups that command the headlines are many other Chinese companies that are feeling squeezed as the government intensifies its campaign against excessive debt. That could set the stage for fire sales of Chinese assets.

Corporate debt, which was 100 percent of GDP a decade ago, hit 159 percent in 2016, according to the most recent data compiled by Bloomberg.

Interest rates in China are rising, making it more likely that investors will do just that -- using the funds to buy recently issued bonds with higher returns. There’s a record 1.25 trillion yuan of notes that could be put in 2018, more than three times last year, according to data compiled by Tianfeng Securities Co.

“How many guys are there like HNA? I think there are many others,” said Kevin Lai, chief economist for Asia ex-Japan at Daiwa Capital Markets Hong Kong Ltd.

Even state-owned enterprises are unlikely to be immune, although attacking debt in this particularly powerful sector is more difficult than pressuring private companies like HNA.

Government entities and state-backed firms have at least 20 trillion yuan of outstanding bonds alone, according to data compiled by Bloomberg.

https://www.bloomberg.com/news/arti...ups-raise-risk-of-forced-asset-sales-in-china




Chinese corporate debt: 18 Trillion US Dollar
Chinese government debt: 4.3 Trillion US Dollar

All to be shouldered by the Chinese government!

Meanwhile, Chinese are getting older fast! Holy crap!

While Chine is spending tons of money militarizing and buying prestige and influence all over the World! Something has to give...

 

[asianobserve]

China's total debt projected to reach 327% of GDP by 2022!

China’s total debt equaled 162 percent of gross domestic product in 2008. By 2016 it had climbed to 259 percent, an increase of more than $22 trillion, in large part because of massive corporate borrowing. And even with the current push to deleverage, it could reach 327 percent by 2022, according to Bloomberg Economics.

https://www.bloomberg.com/news/articles/2018-02-06/china-takes-a-hard-look-at-corporate-borrowers


Holy smoke! The figures I quoted above were actually only the increase in debt from 2008 until 2016! A growth fueled by MASSIVE debt!

Meanwhile, high government officials and their cronies are scrambling to hide their stash of massive corrupt wealth in foreign countries. The ordinary Chinese are in for a mighty disappointment...