Chinese Economics Thread

ahojunk

Senior Member
This will augur well for the internationalisation of the RMB.

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China gives World Bank go-ahead for first renminbi-settled SDR bond
By Cecily Liu in London (chinadaily.com.cn)
Updated: 2016-08-12 23:12

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Foreign currencies are placed next to 100 yuan banknote. [Photo/IC]

The World Bank gained approval from China’s central bank to issue the first ever renminbi-settled special drawing right bonds on Friday, marking a milestone for the renminbi’s internationalization.

The bonds, to be traded on China’s interbank bond market, will be settled in renminbi, but will be backed by the International Monetary Fund’s special drawing rights (SDR).

China’s $7 trillion interbank bond market is the world’s third largest, but only about 2 percent of this is held by foreign investors. One key reason is the previous lack of access, but in recent months a significant opening up has been achieved, and the creation of more international products in this market, like the World Bank bonds, is expected to increase foreign inventors’ interest

The IMF’s SDR is an international reserve asset, in the form of a currency basket which the renminbi will join in October to sit alongside the dollar, euro, sterling and yen. It is the major alternative currency to the US dollar, which dominates international foreign exchange transactions.

World Bank group president Jim Yong Kim called the bond program a landmark development for China’s bond market and for the SDR as an international reserve asset.

“World Bank issuance of SDR bonds in China will support the G20’s objective of expanding the use of SDRs and help promote the development of China’s domestic capital market.”

World Bank representatives will travel to Beijing and Shanghai next week to meet potential investors. The exact timing of any deal depends on market conditions. The new issuance program size is 2 billion SDRs ($2.8billion).

Stuart Gulliver, group CEO of HSBC, said this program a new development in the market of renminbi financing. “The World Bank continues to show its ability to bring innovative bond issues to the market, attracting strong investor interest.”

HSBC is a joint-book runner and joint lead-manager for this bond issuance.

Miranda Carr, senior analyst at Haitong Securities in London, said this initiative marks a significant milestone in preparing for the RMB’s joining of the SDR, and expects to see more international organizations issuing and buying renminbi denominated bonds in the future to follow on from this initiative.

“Because the renminbi’s percentage share allocation in the basket of SDR currencies is 10.92 percent, we’d expect more and more international central banks and other financial institutions to increase their renminbi allocation in the longer term, so the issuance of products like the World Bank bond would help grow this market,” said Carr.

“But in the shorter term there are still challenges for foreign investment into China’s bond market, especially due to their unfamiliarity with this new asset class that has only recently opened up to international investors,” Carr said.

Recently China rapidly opened its bond market for foreign access. Late last year the People’s Bank of China made it possible for foreign central banks, sovereign wealth funds and supranational institutions to invest in China’s interbank bond market.

Similarly, in February the PBoC said it would allow all kinds of financial institutions registered outside China to buy bonds in the interbank market and would scrap quotas for medium- and long-term investors. A new policy was announced in May that institutions that have invested in China's interbank debt market will be allowed to remit their funds freely.

To contact the reporter: [email protected]
 

ahojunk

Senior Member
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18 August 2016

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Tencent has overtaken its rival Alibaba to become China's most valuable tech firm after strong results.

The operator of the WeChat messaging app is worth $249bn compared with $246bn for Alibaba.

Tencent shares jumped by over 6% to a record high in Hong Kong after reporting strong quarterly earnings on Wednesday.

The internet giant said profit rose by 47% to 10.9bn yuan ($1.6bn; £1.2bn) in the three months to June.

Revenues surged due to growth in its online gaming business and advertising.

Out of China's three internet giants, the online gaming and social media company Tencent is now the biggest, but still least known in the West.

Tencent has not attracted the same global attention as its rivals: Alibaba, with charismatic entrepreneur Jack Ma at the helm, and Baidu, the local equivalent of Google.

"Revenues jumped, platforms are booming and it runs the Twitter and Facebook of China," an IG analyst said. "Investors are hoping that, like Facebook, they can turn active users into revenues."
 

ahojunk

Senior Member
We are in for a tough ride. Tighten your financial seat-belts.

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Xinhua, August 23, 2016

Since the 2008 global financial crisis struck, policymakers in advanced economies have adopted various kinds of measures, ranging from fiscal, monetary to structural ones, to try to revive the economy, but to no avail.

The tools used to deal with the global financial crisis in its early stage, such as huge deficit and quantitative easing, proved to be insufficient in face of a sluggish global economic growth.

As a result, both the euro zone and Japan now have negative interest rates while waves of easing and huge "cheap money" failed to invigorate their economies.

As chief economist at ING Belgium Peter Vanden Houte recently put it, "the ECB's toolbox is getting emptier."

At the same time, the refugee crisis continues to drag down Europe, creating a profound influence on the European economy and society.

From the economic perspective, the refugees, most of whom are young people, are viewed as a complement to Europe's increasingly ageing labor market. However, integration problems have surfaced.

Europe is now divided on how to deal with the migrant crisis, which helped stimulate a rise of far-right political parties, fueled conservatism and populism across the continent and took a toll on the bloc's openness in trade and the economy.

The United States, the largest economy in the world, also has its own problems.The Economist, a highly regarded magazine, reported the split and polarization of the U.S. society.

The fact that Donald Trump has become a presidential candidate shows the anger and dismay of the people in the U.S. society, it said.

In Japan, Prime Minister Shinzo Abe presented the lofty stimulus plan and promised to use "three arrows" of monetary stimulus, fiscal stimulus and structural reform to boost economic growth. But the results showed clearly the "the three arrows" have largely failed or misfired.

The advanced economies are faced with a fast-aging society, a sluggish market demand and persistent debts, some economic experts said.

The difficult situation is the accumulated result of the debt crises in the long term, they said.

To put it another way, the debt crises of the advanced economies are far from over. But advanced economies are now trapped in a dilemma as to how to solve the problems: the market would lost confidence if the pace is too slow, while economic recovery would be damaged if it goes too fast.

In the crucial structural reforms, advanced economies struggle and advance slowly due to party strife, ambiguous reform aims, directions and steps as well as wavering policies.

With regard to the market, some main market bodies in the advanced economies are indifferent to the risks after the global financial crisis while financiers and enterprises are self-satisfied with a tendency to pursue short-term profits and take on too much risk, some experts said, warning of the danger of the outbreak of a new financial crisis.
 

ahojunk

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2016-08-20 20:29:37 CRIENGLISH.com Web Editor: Huang Yue

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A screenshot of the official website of Shanghai Administration of Foreign Experts Affairs [Photo: shafea.gov.cn]

When Ford Motor Company decided to move its Asia-Pacific headquarters from Singapore to east China's Shanghai, it was told that the company's president couldn't apply for his employment permit because he was over 60 years old.

This dilemma will no longer happen in Shanghai!

Shanghai is now sparing no effort to offer a variety of conveniences to overseas talents. Senior foreign executives in Shanghai who formerly were too old to apply can now apply for the "foreign expert certificates" to get legal residence. Moreover, the city is considering loosening the home-purchase restrictions and household registration requirements for foreign experts.

As the financial hub of China, Shanghai has long been the paradise where international talent and elites can distinguish themselves. However, due to the limitation and restriction of some policies, many foreigners have encountered difficulties when facing the residence issue.

Hu Zhangping, an official from the Shanghai municipal committee, says in the past, some transnational corporations' senior executives who were over 60 years old couldn't apply for the residence permits when they came to work in Shanghai, because in China the retirement age for men is 60.

"Shanghai is now trying to make some changes on the basis of the country's policies. For example, we can allow those over 60 foreign managers to apply for a foreign expert certificate. The age limitation can be broadened to 70." Hu said.

What's more, according to the current policy, foreign college students in China need to go back to their countries and work for two years before they can apply for jobs in China. But in Shanghai, foreign students with master's degrees can directly look for jobs in Zhangjiang High-tech Industrial Development Zone and the Pilot Free Trade Zone.

Statistics released by the Shanghai public security bureau in July of last year showed that China has issued over 7,000 permanent residence permits, or the "Chinese green cards", since reforming and opening-up, among which 2,000 have been issued for Shanghai residence. However, in reality only some 200 permits have really been issued to overseas expats.
 

ahojunk

Senior Member
The Chinese trend is towards having mega cities cluster.....
So far, there are four clusters.


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2016-08-23 11:17 | Ecns.cn |Editor: Mo Hong'e

(ECNS) -- Four major cities in Northeast China announced in a joint statement that they will work together to build a world-class city cluster in a bid to boost the region's economy.

Harbin of Heilongjiang Province, Shenyang and Dalian of Liaoning Province and Changchun of Jilin Province will consolidate their leading roles in Northeast China and build a large urban cluster of major cities in the region, according to the statement.

The cities aim to break a new path in revitalizing the old northeastern industrial bases and collaborate in accelerating regional economic integration.

According to the plans, they will carry out structural reforms and foster emerging industries and new engines for economic growth, enhance cooperation and exchange, and further promote opening up and innovation as well as coordinated development of industries.

They will also create innovative cooperation models, build an interconnected urban system, and improve the annual mayors meeting mechanism, as well as communication and coordination mechanisms, for revitalizing old industrial bases.

Moreover, efforts will be made to facilitate cross-region industrial and technological innovation alliances and applications of research findings. Regional public services and market integration are also on the agenda.

The four cities will deepen cooperation in major fields, including infrastructure interconnectivity and the establishment and sharing of public services, especially collaboration in finance, tourism, conventions, exhibitions, and customs, in order to boost the attractiveness of the region.

The northeastern cities will also take notes from the Yangtze River Delta and Pearl River Delta regions as well as Beijing, Tianjin and Hebei, which are pushing ahead with plans of regional coordinated development.
 

ahojunk

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2016-08-27 17:23:34 CRIENGLISH.com Web Editor: Zhang Xu

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Logo of State Grid. [Photo: Baidu]


A 2016 list of top 500 Chinese enterprises has been released by the China Association of Enterprises.

State Grid, China's dominant electrical utility service provider, tops the list for the first time, replacing Sinopec, which has held that position for the last ten years.

Total revenue of the service industry takes up 40.2 percent of the whole economy, exceeding the 39.3-percent of the manufacturing industry for the first time.

Vice president of the China Association of Enterprises, Li Jianming, explains the reasons, "One of the reasons for these new features and trends in Chinese economy, is that the government has made efforts to improve policies on promoting large enterprises and bring the relevant institutions and mechanisms to further perfection. The other reasons is that Chinese large enterprises are vigorously facing up to challenges, strengthening innovation-driven measures, deepening structural readjustment, improving efficiency upgrading, making full use of both overseas and domestic markets and their resources in an effort to thoroughly integrate with the global value chain."

The top 500 enterprises own some 50,000 subsidiaries and 12,600 branch companies in total, with their operations closely related to the everyday lives of almost all Chinese citizens.
 

Equation

Lieutenant General
Where are all my naysayers, doom mongers, doubters and haters at?!:D:p

China’s middle class is exploding

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Largely due to Asia, the world's middle-income population doubled in the past decade, from 399 million to 784 million.Reuters

The American consumer has been a central driver of the global economy for decades. Fortunately for the overburdened American consumer,
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middle class is going to be picking up more of the slack.

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middle class is on fire. According to a study by consulting firm McKinsey & Company, 76 percent of China’s urban population will be considered middle class by 2022. That’s defined as urban households that earn US$9,000 – US$34,000 a year. (That might not sound like a lot, but adjusted for prices, it delivers a roughly comparable “middle class” existence to other countries.) In 2000, just 4 percent of the urban population was considered middle class.

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truewealthpublishing

China had an urban population of 730 million people in 2015. So even if that figure doesn’t change (and it will only grow), by 2022 over 550 million people in
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will be considered middle class. That would make China’s middle class alone big enough to be the third-most populous country in the world.

China’s middle class will be making more money

According to McKinsey, in 2012 54 percent of China’s urban households were considered “massmiddle” class, meaning they earned between US$9,000 and US$16,000 per year. But by 2022, thanks to a growing number of higher-paying high-tech and service industry jobs, 54 percent will be classified as “uppermiddle” class – meaning they earn between US$16,000 and US$34,000 a year.

Meanwhile, Chinese consumption (the amount of stuff people buy) is expected to grow 9 percent a year through 2020, according to the Boston Consulting Group. Overall, the consumer economy is forecasted to grow by 55 percent, to US$6.5 trillion. That’s an increase of US$2.3 trillion – which is like adding a new consumer market 1.3 times larger than the current consumer markets of Germany or the U.K. And that’s assuming that China’s GDP will grow by 5.5 percent a year, which is lower than the projected growth of 6.5 to 7 percent a year.

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Economist Intelligent Unit, BCG Research

Chinese households have very little debt

Another factor that’s supporting China’s consumer spending growth is its low level of household debt. China’s household debt-to-GDP ratio of 40 percent is less than half the American household debt-to-GDP ratio, and is much lower than those of other developed countries, as shown below.

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Bank for International Settlements

This means that Chinese consumers will spend less on servicing their debt – and that they’ll be able to take out more debt. In theory – although there is some cultural bias against excessive debt – this will support further growth in consumption.

A new generation of spenders

In addition to having higher incomes and low debt, the younger Chinese generation is more consumption-oriented than its predecessors. Unlike generations that came of age before the 1980s, people in China have access to the stuff that consumers in the rest of the world do. And the younger generation is also not as frugal as their parents and grandparents. Their consumption spending is growing at a rate of 14 percent a year.

That’s twice as fast as consumption growth for the “last generation,” those aged 35 or older. The young generation is expected to account for 53 percent of total Chinese consumption by 2020, up from its current 45 percent share.

What this means for investors

Chinese consumer companies are one obvious beneficiary of China’s consumer boom. The easiest way to buy this trend is through an ETF that focuses on the Chinese consumer sector.

One example is the iShares CSI A-Shares Consumer Discretionary Index ETF (Hong Kong; code: 3001). It uses derivatives to track the performance of China’s CSI 300 Consumer Discretionary Index. Consumer discretionary companies provide goods and services that are considered non-essential but that people would like to buy if they have the money – which is an increasing focus of China’s middle class.

Another option is the Global X China Consumer ETF (New York Stock Exchange; ticker CHIQ). It tracks the Solactive China Consumer Index, which tracks the share prices of Chinese consumer sector companies.

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solarz

Brigadier
Quite a few commentators from the West have often postulated that China had tens of millions of unemployed made redundant by mondernised industries.Im wondering where are these unemployed.

Driving taxis, running small businesses, doing construction work, etc.

The thing with China is, there is no welfare. This means people are forced to seek out a livelihood any way they can. There are no unemployed people milling about being a drain on social resources.
 
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