Chinese Economic News

[The Virginian]

I don't buy Chinese Stocks as some on here do ( Mod comes to mind) but I believe it is important to keep an eye on them just as we are Europe. As I see it , the worlds economies are most heavily influenced by 4 regions : Emerging Asia, China, North America and Europe. The Chinese are the biggest Ape in the room.

[The Virginian]

Chinese shippers place order for 50 supertankers

By JOE McDONALDBy JOE McDONALD, AP Business Writer




BEIJING (AP) — A group of state-owned Chinese shipping companies have placed a $4.5 billion order for 50 supertankers, throwing a financial lifeline to China's struggling shipbuilders, a newspaper reported Friday.

The order adds to a multibillion-dollar flurry of investments by state companies in recent weeks — a key element in Beijing's carefully controlled effort to reverse a painful economic slump. The government has approved a wave of spending on new steel mills, subway lines and other corporate and public works projects.

The move also could help China, the world's biggest energy consumer, gain more control over its energy supply chain by owning the giant ships needed to import crude from the Middle East and elsewhere.

The supertankers were ordered by three of China's biggest shippers, China Shipping Group, Dalian Ocean Shipping Co. and China Merchants Group, the 21st Century Business Herald said. It cited the president of China Shipping and the general manager of Dalian Ocean Shipping.

Employees who answered the phone at the press offices of the three companies said they could not confirm the report or give other details such as where the tankers would be produced.

Chinese shipyards, which are the world's biggest shipbuilders by total tonnage, have been among the hardest-hit industries in the slowdown. Orders have fallen by more than half and shipyards are cutting jobs.

"Small and medium-size shipbuilding companies are either out of business or near bankruptcy," said Xia Xiaowen, an analyst for the China Shipbuilding Economy Research Center, a think tank in Beijing.

If the reports of new orders are accurate, "it will definitely be good news for those large manufacturers, and they don't need to worry about survival anymore," Xia said.

China's economic growth fell to a three-year low of 7.6 percent in the three months ending in June. That is healthy by the standards of the United States and Japan, where this year's growth is forecast in low single digits, but painful for companies that need higher growth to drive demand for new ships, factories and other assets.

Officials including President Hu Jintao have warned growth could decline further before rebounding later this year.

Some Chinese industries such as retailing and other services are relatively strong, helping to reduce politically dangerous job losses. But fields such as shipbuilding and production of steel, cement and solar panels have been hit hard by weak demand and excess production capacity. On Thursday, the country's biggest steelmaker, Baosteel Group, announced it was shutting down a mill in Shanghai due to weak demand.

Also Friday, a major shipbuilder, Guangzhou Shipyard International Co., issued a warning that its profit for the first three quarters would be down at least 50 percent from a year earlier. It blamed a decline in orders and ship prices.

The shipbuilding industry in Zhejiang province south of Shanghai lost more than half its jobs by late August, according to the newspaper Southern Weekly. Another paper, China Business News, said last month that shipbuilders in Jiangsu province northwest of Shanghai were carrying out "disguised layoffs" by giving employees extended vacations.

The supertankers in the latest order are known as very large crude carriers, or VLCCs, the second-largest class of oil tankers.

Government plans call for creating a vast fleet of 80 VLCCs by 2020 to gain more control over China's oil supply chain, according to a report by Credit Suisse analysts Gerald Wong and Louis Chua.

China is the world's biggest energy consumer and imports of oil and gas by sea are steadily rising even as economic growth slows, giving shippers and state-owned energy companies demand to fill additional vessels.

In a research note last week, Barclays said one major Chinese shipbuilder told its analysts orders for bulk cargo carriers had dried up and delivery of those under construction was delayed because customers hadn't paid for them.

"The oil- and gas-related vessels are providing some long-term hope to the beleaguered industry," the bank said.

___

[Driftr]

I think I read yesterday that the largest steel producing plant in China was shutting down due to a lack of orders. If I can dig that story up I'll edit and link it here.

Edit: Here is is. Just one plant from the largest listed steelbuilder in China. Odd thing is, given the tanker order above, the steel they make seems to be used mostly for ships. Go figure.

(Reuters) - Baoshan Iron & Steel Co (600019.SS) (Baosteel), China's biggest listed steelmaker, said it has suspended production at a loss-making plant in Shanghai, in a sign of the intense pressure on the sector as steel prices trade near three-year lows.

The steelmaker is one of the first major Chinese mills to publicly announce it is suspending production, but with the world's second-biggest economy cooling and banks restricting lending to an industry that built up $400 billion of debt during years of double-digit growth more suspensions are likely.

www.reuters.com/article/2012/09/27/us-china-baosteel-idUSBRE88Q03720120927

[The Virginian]

Yes, something fishy is going on with the Chinese economy. Have you seen the stories about the whole cities and malls they have built that are just standing empty? This is their way of pumping stimulus into their economy.

[Driftr]

Sept 28, 2012 8:31:43 GMT -5 The Virginian said:

Yes, something fishy is going on with the Chinese economy. Have you seen the stories about the whole cities and malls they have built that are just standing empty? This is their way of pumping stimulus into their economy.

Given the choice betwen building empty cities and building bank balance sheets, I'd choose the empty cities. At least the empty cities can be used some day down the road to film more post-apocolyptic movies.

[The Virginian]

Good News MOD for your Chinese Stocks !

The world's next big stock rallyPlace your bets now that China will push for a rally as a huge political shift takes place Nov. 8. Whether it can fix a struggling economy is another question.


money.msn.com/investing/the-worlds-next-big-stock-rally

[ModE98]

Mr. V ... unfortunately, the government favors nationalized businesses. Not many of the independent small business firms have such an advantage and must try to compete. Although things are slowly getting better. Party-controlled business will always have the edge in Communist China.

[ModE98]

Worth a view.... seekingalpha.com/article/911151-chinese-stocks-classic-value-trap

[ModE98]

blogs.wsj.com/chinarealtime/2012/10/01/chinese-owned-ralls-vows-to-fight-obama/

[ModE98]

Chinese export and inflation data for September came in better than expected, with exports jumping 9.9% on year to a record $186.4B vs. consensus of +5% and +2.7% in August. Imports of +2.4% also beat forecasts. CPI fell to +1.9%, the slowest pace in two years, from 2% in August, with a government statistics official saying that the easing will probably continue into Q4.

[The Virginian]

CPI fell to +1.9%, the slowest pace in two years, from 2%

Is this good or bad? Sounds like the Chinese are going through Quanatative Easing - Is this correct , or am I misreading?

[ModE98]

It's hard to get a solid understanding of their moves. May be good for China currently. With most economic activity strictly controlled by the government, they are seeking continued growth; but, the pace of it certainly will not keep up with the past years with the world in recession at this time.

[ModE98]

Hopes rise that China is turning the corner. Chinese Q3 GDP fell to an expected +7.4% on year from +7.6% in Q2, marking the seventh consecutive quarter of deceleration and the slowest pace of growth since Q1 2009. However, data for September showed growing retail sales, industrial production, and fixed-asset investment in urban areas, providing hope that China's deceleration may be bottoming out.

[ModE98]

China cabinet asks for radical reform ideas. China's State Council has asked policy think tanks for ideas for economic reforms and has received proposals that include limiting the power of state-owned enterprises, allowing the market to set the price of bank credit, land and natural resources, and giving more freedom to the yuan. However, some of the authors of the proposals fear that signs of a nascent economic rebound could stall their recommendations.

[ModE98]

seekingalpha.com/article/937531-the-global-economic-outlook-a-direct-path-to-chinese-equities

Well, at least got a nice mention for CGA (I know the company outlook is for continued growth), so I like that!

[ModE98]

China optimistic for industrial output. China's Ministry of Industry & Information Technology has given an upbeat forecast for Q4, saying industrial output should grow faster than in Q3. The ministry pointed to improving PMI, monthly increases in output growth and a rise in power generation to argue its case. However, the ministry is still well aware of overseas weakness, rising costs, financing strains and falling profit margins.

[The Virginian]

BEIJING (TheBlaze/AP) — Chinese investors evaded government controls to move more than $600 billion out of their country last year and the outflow is increasing, fueling economic and political risks as communist leaders prepare for a handover of power, a Washington-based monitoring group says.

The study by Global Financial Integrity gives backing to anecdotal signs of huge, unreported movements of Chinese money out of the country. Experts say the outflows are driven by public frustration with a banking system that subsidizes state companies at the expense of savers and by businesses profiting from loopholes in the government’s pervasive economic controls.

Chinese companies are widely believed to move money abroad both to invest and to “round trip” back into the country disguised as foreign investment to win tax breaks and other incentives. Chinese families move money abroad to gain a better return than they can from state banks that pay low deposit rates.

Last year’s outflow was part of a $3.8 trillion flood of capital that left China over 11 years, Global Financial Integrity said. It said the amount rose from $172.6 billion in 2000 to $602.9 billion in 2011.

The group said it was unclear how much of the money came from corruption or other crimes but it said the illicit outflow could aggravate economic and political strains by aiding tax evasion and widening China’s sensitive wealth gap.

The study “raises serious questions about the stability of the Chinese economy,” the group said in a statement.

“The social, political, and economic order is not sustainable in the long-run given such massive illicit outflows,” said Dev Kar, the group’s chief economist and a co-author of the report, in the statement.

Global Financial Integrity, a program of the Center for International Policy, studies illegal cross-border flows of money and promotes measures to stop them.

Some analysts have suggested the outflows reflect a loss of faith by China’s financial elite in the communist government but others say much of the money is sent back into the country disguised as foreign investment.
Study Finds Chinese Investors Quietly Moving Massive Amounts of Cash Out of Their Country

A Chinese man holds up a portrait of former Chinese leader Mao Zedong during protests outside the Japanese Embassy in Beijing, China (AP)

“While the funds could be earned through bribery, kickbacks, or other illicit activities, they may well be earned through legitimate means,” said Global Financial Integrity. “It is the transfer in contravention of capital controls or the nonpayment of applicable taxes that renders the funds illicit.”

Some of the outflow also might be the proceeds of bribe-taking and other government corruption. Stories of officials who move their families and ill-gotten assets abroad are so common that Chinese Internet users have coined a name for them – “naked officials.”

Public concern about chronic corruption and China’s slowing economy are political risks for the ruling Communist Party as it prepares for a once-a-decade handover of power to younger leaders.

A survey released last week by the Pew Global Attitudes Project found half of Chinese people who responded cited corrupt officials as a major problem, up from 39 percent four years ago. Forty-eight percent cited the wealth gap as a major problem, up from 41 percent in 2008.

Global Financial Integrity said 86 percent of the money moved abroad, or $3.2 trillion, was moved out of China through “trade mis-invoicing,” under which Chinese companies arrange with foreign suppliers to overcharge for imported goods and deposit the extra money abroad.

Chinese economists have said a large share of the country’s foreign direct investment from financial centers such as the Cayman Islands, Luxembourg or Hong Kong is money that was first sent abroad by Chinese companies.
Study Finds Chinese Investors Quietly Moving Massive Amounts of Cash Out of Their Country

(AP)

Global Financial Integrity said that one financial center, the British Virgin Islands in the Caribbean, has just 28,000 people but accounted for $213.7 billion in officially reported investment in China in 2010.

“Clearly, genuine recorded FDI into China is overstated to the extent that total foreign direct investment includes round-tripped funds coming from tax havens,” said Kar.

The financial flows reflect widespread frustration with China’s government-controlled financial system, which channels most bank lending and other benefits to state-owned companies at the expense of savers and entrepreneurs.

The government has eased some controls by allowing families to move more money abroad to buy real estate or make other investments and reducing the number of approvals required for companies to invest abroad.


www.theblaze.com/stories/study-flood-of-money-leaving-china-not-ready/

[Deleted]

I just wish, China does not have what we had. The housing bubble.
With our current economic condition and the Europe. Then, China.

We have to ready for hard landing.

[ModE98]

Data boosts confidence in China's economy. Net profit at Chinese industrial companies increased for the first time in six months in September, rising 7.8% on year to 464.3B yuan ($74.3B) vs a 6.2% fall in August. The figures follow data that shows accelerating industrial output and retail sales, as well as improving PMI, indicating that economic growth may be picking up once more.

[The Virginian]

Any body out there got some soap, cause we are getting one heck of a shower today ! ;D

[ModE98]

Hope you do not get too much and overflow the bathtub.

[ModE98]

Improving Chinese PMI brightens the mood. Two surveys of China's factory activity have provided further evidence that the country's economy may be picking up. The official PMI rose to 50.2 in October - its first foray into expansionary territory in three months - from 49.8 in the previous month. HSBC's reading increased to 49.5 from the flash PMI of 49.1 and 47.9 in September.

[ModE98]

Top Stories
China begins congress to change leadership. Outgoing Chinese President Hu Jintao has set his successor, who's expected to be Vice President Xi Jinping, a target of doubling per-capita income by 2020. Speaking at the 18th Communist Party Congress, which opened today and will herald a once-in-a-decade change of leadership, Hu also called for a deeper financial overhaul in which the private sector will have "equal access to the factors of production."

[ModE98]

Chinese economy enjoys October cheer. A number of economic reports out of China today showed further signs that the country's economy is recovering. Inflation rose a less-than-expected 1.9%, while industrial production increased 9.2% on year vs 9.2% in September. Nomura economist Zhang Zhiwei says the latest output data indicates that GDP growth could top 8% in Q4 vs 7.4% in Q3

[ModE98]

Profits at Chinese firms provide more evidence of economic recovery. Profits at Chinese industrial companies jumped 20.5% on year in October to 500B yuan ($80.4B), with growth accelerating from a 7.8% rise in September and providing further evidence that the economy is rebounding. "The profit number, together with other economic indicators, shows there is no need for the government to launch new easing policies," says Citigroup economist Ding Shuang.

Shadow finance poses further risk to Chinese banks. Chinese banks are increasingly at risk from their links to the "shadow-finance" industry, which encompasses credit outside of formal lending. The sector has grown to 20T yuan ($3.2T), or a third of bank lending, up from 5% in 2008. "Many activities in the two systems feed into each other, and could influence each other if things start to deteriorate," says Bank of China Chairman Xiao Gang.

[ModE98]

S&P affirms China's rating at "AA-." S&P has reiterated China's sovereign long-term rating at "AA-" and its outlook at stable, citing "strong economic growth potential, (a) robust external position, and the government's relatively healthy fiscal position." Despite the conservative nature of China's new Politburo Standing Committee, S&P reckons that "efforts toward deepening structural and fiscal reforms are likely to continue."

[ModE98]

ina PMI breaks year-long contraction streak... China's HSBC manufacturing PMI moved into expansion territory for the first time in 13 months in November, rising to 50.5 from 49.5 in October. The official PMI increased to 50.6 from 50.2, marking a seven-month high for the index. "We expect GDP growth to rebound modestly to around 8% in Q4 as the easing measures continue to filter through," says HSBC. Despite the improved numbers, Chinese and Hong Kong shares closed lower

[ModE98]

Chinese firms face uncertain futures on U.S. stock markets. Yesterday's SEC suit against the Chinese units of the Big Four accounting firms could mark the beginning of the end for the U.S.-listed shares of Chinese companies, including for giants like Sina (SINA) and Baidu (BIDU). The accounting firms face a Catch-22: The U.S. requires them to share information from their audits in foreign countries, while China bars them from doing so.

[ModE98]

China to settle for reduced growth. China is reportedly targeting GDP growth of 7.5% in 2013, the same as the goal for this year, and inflation of 3.5% vs the 2012 aim of 4% and November CPI of 2%. The GDP target is well below the 10% average growth that China has enjoyed over the past decade but reflects the new government's desire to seek a higher "quality" expansion.

[ModE98]

China may be at risk of severe credit crunch. China could face a severe credit crunch because of Wealth Management Products, which are mostly short-term securities that promise high yields and have become massively popular. The underlying assets are often undisclosed but can include speculative real-estate developments. The fear is that a recent default of a WMP could cause a run on the products and hence the credit crunch, or expose banks to massive liabilities.