Doom and Gloom of China's Economy

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
Hot Chinese online game market not looking so hot



Chinajoy expo: Investors hold back their bets on Chinese online games

Online gaming companies in China raised a meager total of US$25 million in new funds during the second quarter of 2012 for a steep slide from US$86 million in the same period of last year as investors, including venture capital firms, have turned cooler.

Companies that had boasted about launching initial public offerings several months earlier generally quieted down at the Chinajoy 2012, the international online games exposition that recently concluded in Shanghai.

Investors in the online gaming industry have become more cautious and believe the current time is not right for IPOs, reported the 21st Century Business Herald in Guangzhou. One investor said his company has started gradually pulling out its stakes from many gaming companies.

Venture capital firms always want to cash in for profit-taking when IPOs are offered. But many firms are now adopting a new approach: suggesting gaming companies in which they have already hold stakes to make investments in new gaming firms instead of pouring in fresh investment from their own pockets.

An executive of an online gaming firm said that companies like to talk a lot about plans to list on the stock exchange so that they can attract greater attention from venture capital firms and at the same time boost the morale of their staff. At present, about 85% of such companies have put IPO ambitions on hold, mainly because of the bad market conditions and decreased interest from investors.

http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20120802000074&cid=1202
 

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
Banks Jointly Sue 20 Troubled Shanghai Steel Companies


Banks in Shanghai are pressing steel traders, who have barely been able to keep above water, to repay their enormous and ever mounting loans. (File photo/Xinhua)

Banks in Shanghai have jointly filed a lawsuit against the default of about 20 steel trade companies in the municipality.

Plaintiffs, such as China Minsheng Banking Corporation, said they have to do it together because the banks jointly guaranteed the loans.

Loan taken by steel traders in China reached 1.89 trillion yuan (US$296.6 billion) in 2011, accounting for 3.5% of all bank loans in the country. Shanghai steel traders owned a significant portion of those loans, estimated at 160 billion yuan (US$25 billion).

Since last year, long term weak demand in the steel industry has forced steel traders into deficits. The financial reports this year only continued to show red numbers, according to Shanghai Securities News.

Since the beginning of the year, banks in Shanghai have become proactive in reclaiming loans, pushing the steel traders to face their diminishing capital, said Zhouning Bussiness Association in Shanghai, largest association of steel traders in the city.

The banks in the early of July just promised the traders full support and a looser policy for their loans. The sudden move towards a joint lawsuit reflects the uncertainty of default in China's steel trade industry, said sources in the industry.

Banks jointly sue 20 Shanghai steel traders|Markets|Business|WantChinaTimes.com
 

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
Sohu shuts down 2 offices


Sohu's tv website business, tv.sohu.com. (File photo/CFP)

Sohu, China's largest portal website, has shut down its offices at Shanghai and Guangdong and promised to compensate its employees affected, reported the country's Tech.163.com.

Employees serving at the two offices will be laid off within two weeks after a sudden notice from the human resource department. The company will give them a severance package of a month's salary for each year they worked, plus one month.

Chen Zhing, former chief editor of Sohu, said that every employee will be cut.

Sohu shuts down 2 offices|Companies|Business|WantChinaTimes.com
 

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
Another Ghost City... it isn't Ordos

 
Last edited by a moderator:

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
Letter explaining why...

Mr. Xie,

I am a follower of your Tencent microblogging account. I trust you, so I am going to expose the shady deals in Shenyang this way.

I am a small business owner who came from a southern city to Shenyang to open my store in 2011. All my procedures were in accordance with law. I am a law-abiding citizen.

Recently, in many cities in Liaoning province, especially in Shenyang, a host of businesses in multiple industry, including grocery store, restaurants, apparel sellers, home appliances sellers and beauty salons, have closed doors overnight. Some businesses have been closed for more than half a month. Owners have suffered a great loss from it. Consumers have also been adversely affected. The public anger is simmering. Grumblings of he people fill the streets.

Business owners' general impression is: there is a unified police force made up with public security, industrial and commercial authorities, sanitation inspectors, fire department, chengguan (city management). They are not gangsters, and yet worse than gangsters. They use underworld tricks, under the pretense of restructuring and management, to accumulate wealth by unfair and illicit means. They take the liberty of arresting people and levying fines. Each and every business, with or without a license, has been fined, which has sparked great controversy in places like Shenyang, Fushun and Xinmin. They are very experienced and shrewd. Usually, a few plainclothes members of them first drive an ordinary-looking car around, searching for weak businesses that have a considerable size, and yet have no influence or connection, particularly those run by owners from out of town. It doesn't matter if the business is legal. The moment it is targeted, they will invent all types of reasons and allegations, for example, ill sanitation, inadequate fire prevention, and take the person and the goods away without giving them time to dispute. They will not release the person until he is forced pay a fine, which can be anywhere between 10,000 (US$1,580) and 500,000 (US$79,300) yuan.



A businessman, who came form the south, has opened a few auto body shop, which has a lot of trade. Then he became a target of theirs. They took away a few shop assistants into custody and still haven't released them yet. This owner is forced to close down its shops and hide away. A granny, who peddled tofu on the street, was fined 2,000 yuan for not wearing a mouth mask. There are many similar examples.

Why do they have to do this? About the reason, there is one version that has been widely rumored among business owners in Shenyang and not confirmed yet: The 2013 National Games that Shenyang will host has a 500-million-yuan hole in the budget. But with the economy in the mess, the central government has taken austerity measures and thus does not allot any fund, leaving Liaoning province to be fully responsible for fundraising. So they came up with this sinister idea of taking it out on small businesses.



In a normal country, taxpayers are free to start an enterprise and operate it. The function of the government is to offer them protection and conveniences, not the opposite!

But today, in August 2012, in Shenyang, China, a large number of taxpayers have to run about to dodge the government-sponsored exploitation and capture, as if they were drug traffickers!

What is stranger is, mainstream media turn a blind eye to so big an incident and give little coverage of it. The only mention of it was about how businesses are overreacting, and the reply from the government is, "These are nothing but regular inspections."
 

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
Corporate debts sound alarm bells for China's economy
Staff Reporter 2012-08-07


"Debt" could pull China's economy off the cliff. (Photo/Xinhua)

The accumulated debts of Chinese businesses have reached dangerous levels, sounding alarm bells for the country's economy, reports the Chinese-language Beijing Business Today.

The newspaper quoted Li Yang, vice president of the Chinese Academy of Social Sciences, as saying corporate debts had grown to 107% of the country's GDP, well above the 90% level considered the danger line by the Organization of Economic Cooperation and Development.

Tan Yaling, a researcher with the People's Bank of China, agreed, saying many businesses have received loans easily but didn't know how to use them effectively.

Although debt is dangerous high, many small and medium businesses are facing difficulties in borrowing from banks, causing the private lending market to spin out of government control.

Tan said the banking sector should not solely pursue profits but should contribute to the development of the physical economy. If its lending remains focused on state-owned companies, this would disrupt the balanced development of various industries and would not help overall economic growth.

Wang Yuanjing, a researcher with the National Development and Reform Commission, China's economic planner, said debts had grown to dangerous levels because the channels of borrowing available to Chinese businesses were limited, driving home the importance of new funding channels for enterprises.

Corporate debts sound alarm bells for China's economy|Markets|Business|WantChinaTimes.com
 

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
EU new toy safety rules hurt China export

Staff Reporter 2012-08-08

A promotional video by the European Commission to promote the new toy safety guidelines.

The EU said many toys made in China are fakes and contain toxic or carcinogenic substances as it issued the most stringent regulations yet on toys in July. The European Commission also spent US$87,000 to produce a promotional video to promote its new safety guidelines.

Goods made in China such as ducks containing small detachable parts, buoys and shoes are dangerous to children, said the commission. Since July 20 this year, it has implemented stricter regulations, which require all toys entering the EU to be labeled with an official CE mark. Their manufacturers are also required to evaluate their products' safety and suitability for children before obtaining the mark, according to the Hong Kong-based newspaper Ming Pao.

The regulation also places restrictions on the materials that can be used in toys. Nineteen heavy metals and 66 allergens are banned and the use of plasticizer phthalates is also monitored, according to Shangbao, a Chinese-language financial news website.

The video, which features a dancing robot, demonstrates what kind of toys should not be given to children under the age of three and how parents can identify hazards such as detachable eyes on a stuffed bear.

The commission said the aim of the new regulations and video are designed to protect children and the environment, but analysts say the EU may use them as technological and green barriers to reduce the competitiveness of toymakers from other countries, according to Shangbao.

The impact of the regulations imposed on China's toy industry will be much heavier than for other countries. Two-third of the toys on sale in the EU were imported from China, while much of the rest come from the United States. Toys made in China account for more than 70% of the world's toy market, according to Shangbao.

The EU's accusations leveled against China-made toys are unfair, said Bai Ming, the assistant director of the department of international market research under the country's Ministry of Commerce. European clients have continued to push Chinese toymakers to lower costs, but European governments have tried whatever they can to limit the imports of China-made products, said the news site.

EU accused of protectionism with new toy safety rules|Markets|Business|WantChinaTimes.com
 
Last edited by a moderator:

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
IMF: China's capacity utilization falls to 60%

With investment increasing by 5 percent of GDP over the past three years, staff estimates show that capacity utilization has declined from just under 80 percent before the crisis to around 60 percent today. This low rate of capacity utilization, together with continued low core inflation, suggests that there is large excess capacity in the economy.



The estimates also show that China has had excess capacity for most of the past decade. The gap was closing in the run-up to the financial crisis, but did so based on an unsustainable level of external demand. Even in 2007, when growth exceeded 14 percent, nonfood inflation was low and stable, suggesting the economy was still operating below capacity. Then, in 2008, the government put in place a large investment stimulus that propped up growth and built out capacity in a range of areas. Filtering techniques which impose a cycle on the data would point to a negative output gap since 2007 even while price pressures were virtually nonexistent and excess capacity was growing.

http://www.imf.org/external/pubs/ft/scr/2012/cr12195.pdf
 

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
Traffic accidents put Chinese insurers in the red
Xinhua and Staff Reporter 2012-08-11

Chinese insurance companies were in the red last year due to insurance related to road accidents, as they had to compensate a large number of victims of traffic accidents, data from the industry association showed Friday.

Insurance companies posted a combined loss of 9.2 billion yuan (US$1.45 billion) in managing the compulsory auto traffic accident liability insurance, according to the Insurance Association of China.

2 billion yuan (US$315 million) in investment revenue from traffic accident liability insurance premiums failed to cover 11.2 billion yuan (US$1.75 billion) in claims that insurers had to pay out last year, leading to the fifth straight year of losses for the insurance product since it was introduced in 2006, said the association.

The country's insurance companies have lost 17.3 billion yuan (US$2.72 billion) in compulsory insurance over the past five years, according to the association.

According to the insurance association, about 114 million vehicles were covered by the compulsory traffic accident liability insurance at the end of 2011.

Last year, 210,812 road accidents were reported in China, resulting in the deaths of 62,387 people, according to data from the Ministry of Public Security.

Traffic accidents put Chinese insurers in the red|Economy|News|WantChinaTimes.com
 

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
Steel prices in China tumble 17% to 3yr Low

Domestic steel prices in China have dropped 17 percent from April to the lowest level since Nov. 2009, overwhelmed by rising capacity and sluggish demand from builders and makers of machinery and appliances. Major Chinese steelmakers, including Baoshan Iron & Steel Co. (600019), posted a combined 96 percent drop in first-half earnings, the China Iron and Steel Association said July 31.

China Daily Steel Output Falls in July as Prices at 33-Month Low - Bloomberg
 

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
Adidas to cancel contracts with six Chinese factories

Staff Reporter 2012-08-14



Contract manufacturers which used to rely entirely on orders from international sports brand Adidas face closure if they are unable to find new customers and large orders soon.

Adidas' global integration strategy has begun impacting its downstream industries after it terminated its contracts with several Chinese firms.

Jiang Liuhong, assistant general manager at Shanghai Donglong Feather Manufacture, told the Shanghai-based First Financial Daily that four factories, including Donglong, had received notifications of termination of contract in October from Adidas. Two other contract manufacturers will see their contracts end in March 2013.

Donglong has worked with Adidas for more than 10 years. About 70% of capacity at its factory in Anhui province was used serving demand from the sportswear firm.

The capacity of two other of the six contract manufacturers was fully taken up by Adidas. If they are unable to obtain new orders soon, they would be forced to close, Jiang said.

One of the two manufacturers is Shanghai Minheng Industry, Adidas' first supplier in Shanghai. The owner of a factory affiliated with Minheng, surnamed Chen, said the soaring costs of labor and processing had prevented the factory from earning profits over the past two years. Before 2010, the factory earned about 8%-10% in profits.

Adidas China revealed that as its brand is optimizing its global structure, 10 of its suppliers had received notifications of contract termination.

The brand began cutting back on orders to Chinese contractors several years ago. In 2006 and 2007, Adidas placed orders for about 2 million items a year with Donglong, dropping to 1.5 million items in 2008 and 700,000 in 2011, according to Jiang.

There have been many signs that Adidas was relocating production to Southeast Asian countries due to the lower labor costs there, Chen said, adding that 600 workers at his factory could lose their jobs.

For some contract manufacturers, serving as suppliers to sports equipment giants such as Adidas and Nike is a mark of superior quality, given the high standards demanded by these international brands.

Adidas to cancel contracts with six Chinese factories|Companies|Business|WantChinaTimes.com
 

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
Motorola Mobility cuts 30% of China workforce

Staff Reporter 2012-08-14

Three months following the US$12.5 billion acquisition, American search engine giant Google announced on Monday its plans to slash 20% of Motorola Mobility's workforce.

One-third of 4,000 layoffs will be from the United States and the remainder will be mostly in China, reports Chinese-language news outlet Phoenix New Media.

The official announcement by Motorola Mobility also included a statement that one-third of Motorola's 94 worldwide offices will be closed. R&D centers in Chicago, Sunnyvale and Beijing will be downsized.

Insiders at Motorola Mobility China said China is going to be affected most in this job slash.

Motorola Mobility currently has about 5,000 employees in China, including a factory manufacturing mobile phones in Tianjin, a set top box factory in Hangzhou, and software research and development centers in Nanjing and Beijing. About 30% of them will lose their jobs due to the layoff, a percentage which is higher than other areas, according to the inside sources.

Given Google said it plans to simplify its lineup of mobile products, moving to make more smartphones and fewer simple mobile devices, employees in research and software system departments are likely to be most affected by the changes.

Insiders told Shanghai's First Financial Daily that the job cut has quietly begun in China. Some employees have voluntarily quit because of changes in the company culture.

Motorola Mobility cuts 20% of workforce|Companies|Business|WantChinaTimes.com
 

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
Wave of business closures sweeping China's rare earth producers

Staff Reporter 2012-08-14


A rare earth mine in Xinfeng county, Jiangxi province. (File photo/Xinhua)

A wave of business closures is sweeping the rare earth industry in China, especially in regions such as Jiangxi, Inner Mongolia and Guangdong. One reason is high prices for the minerals, which have prompted the United States and other countries to resume their own rare earth production and downstream enterprises to seek substitute materials or switch their orders to other nations.

Statistics from China Rare Earth Industry Association show that in the first half of the year, rare earth exports from China reached only 5,000 tons and the volume of shipments for the whole year will be much lower than last year's 16,000 tons.

A boss of a rare earth enterprise in Ganzhou in Jiangxi province reports that his company suspended operations in early July due to a lack of overseas orders. He expects his company will resume production in September, when orders will return following the end of the summer vacation season in July and August in Europe.

An executive from a magnetic material enterprise in Inner Mongolia is more pessimistic. "Our factory has also suspended production. Moreover, my peers are not optimistic about the market outlook in the second half," he said.

An industry insider hopes that the government can stimulate domestic demand to offset the weak demand for rare earth minerals from overseas markets.

Decreased demand hits China's rare earth producers|Economy|News|WantChinaTimes.com
 

Armand2REP

CHINI EXPERT
Senior Member
Joined
Dec 17, 2009
Messages
13,811
Likes
6,734
Country flag
FDI in China Fell 35.7% YoY in July

Aug. 17 (Bloomberg) -- Foreign direct investment in China fell for a tenth straight month in July as companies stalled expansion plans amid the global financial crisis.

Investment declined 35.7 percent from a year earlier to $5.36 billion, the Commerce Ministry said at a briefing in Beijing today. That compared with a 6.76 percent drop in June.

The situation for foreign direct investment in China remains "severe" even as "positive signs" have emerged in the past two months, Vice Commerce Minister Fu Ziying said last week. Japan emerged from its worst postwar recession in the second quarter, the Cabinet Office said today in Tokyo, and a Bloomberg survey of users shows confidence in the world economy surged to a 22-month high in August.

"This is a reflection of global overcapacity and the earlier credit squeeze," said Ben Simpfendorfer, an economist with Royal Bank of Scotland in Hong Kong. "The monthly data is very volatile."

The detention of four Rio Tinto Group staff since July 5 may weigh on business investments in the country, U.S. State Department spokesman Philip J. Crowley said Aug. 13.

The four were formally arrested on charges of trade secrets infringement and bribery, China's Supreme People's Procuratorate said Aug. 11, according to a Xinhua report. Australia's Prime Minister Kevin Rudd said July 15 that the world was "watching closely" how China handles the case.

Foreign Direct Investment in China Fell 35.7% in July (Update1) - Bloomberg
 

Ray

The Chairman
Professional
Joined
Apr 17, 2009
Messages
43,132
Likes
23,834
China Can Meet Growth Target On Positive Signs, Wen Says

Chinese Premier Wen Jiabao said easing inflation allows more room to adjust monetary policy and positive signs are emerging in the economy, expressing confidence after July data showed a further slowdown in growth.

"We have the conditions and capabilities, and will be sure to fulfill this year's economic and social development targets," Wen said during a two-day inspection tour to the eastern province of Zhejiang, the official Xinhua News Agency reported yesterday. He said downward pressure on the economy remained "relatively large," according to state radio, and state television reported him as saying there's "growing room for monetary policy operation."
The comments may bolster speculation China will cut banks' reserve requirements or benchmark interest rates again after inflation slowed to a 30-month low in July, export growth collapsed and new yuan loans trailed estimates. Zhejiang, an export base, is among the hardest-hit regions by the economic slowdown.

"Policy makers have made clear in recent weeks that supporting economic growth is their central concern," Qinwei Wang, an economist at Capital Economics Ltd. in London, said in an e-mail. "We continue to think that more policy support will be announced soon, including a further cut to the required reserve ratio, and that more infrastructure projects proposed by local governments will be given the go-ahead."

Wang is a former employee People's Bank of China, according to his profile on Capital Economics' website.

Growth Targets

The reports yesterday didn't specify which targets China will meet, including the 7.5 percent goal for gross domestic product growth set in March. Expansion was 7.8 percent in the first half, and Deutsche Bank AG last week lowered its third- quarter forecast to 7.5 percent from 7.9 percent.
"In the recent months, especially since July, there are some positive changes in the economy," said Wen, 69, as cited by state television. Domestic demand is showing greater effect in supporting economic growth, industrial output in eastern Chinese regions is picking up and China's job market remains stable, he said.

Another of the so-called BRIC countries, Brazil, yesterday announced measures to aid growth. The government of Latin America's largest economy will sell licenses to build and operate roads and railways requiring as much as 133 billion reais ($66 billion) in investments over 30 years.

State Financing

Brazil will sell licenses for private companies to operate 7,500 kilometers (4,660 miles) of roads and 10,000 kilometers of railways, Transport Minister Paulo Sergio Passos said during a ceremony in Brasilia. The country's BNDES state development bank will provide as much as 80 percent financing for the projects.

In China, consumer prices rose 1.8 percent in July from a year earlier, the government said last week. Exports increased 1 percent, after an 11.3 percent rise in June. New local-currency lending was 540.1 billion yuan ($85 billion), lower than all 30 estimates in a Bloomberg News survey, compared with 919.8 billion yuan the previous month.

China has cut the reserve-requirement ratio for banks three times starting in November and lowered interest rates in June and July while accelerating approvals of investment projects.

Wen said his trip was intended to "enhance confidence." China's existing policies, including the two rate cuts, "have, and will continue to, play an important role in promoting economic development" and people's livelihoods.

China Can Meet Growth Target on Positive Signs, Wen Says - Bloomberg
That is what Wen said and the way things will be positive for China's growth.

If that is what will happen, would it not be positive signs for China's growth?
 

Ray

The Chairman
Professional
Joined
Apr 17, 2009
Messages
43,132
Likes
23,834
China's FDI inflow falls 8.7% in July


BEIJING -- The foreign direct investment China received in July fell 8.7 percent from a year earlier to $7.58 billion, the Ministry of Commerce said on Thursday.

This added the country's FDI inflow in the first seven months to $66.67 billion, down 3.6 percent year-on-year, the ministry said.

China's FDI inflow falls 8.7% in July |Economy |chinadaily.com.cn
 

Latest Replies

Global Defence

New threads

Articles

Top