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Business Tianjin Magazine - Business English Magazine in China
Chinese mainland and Taiwan sign banking supervision, management memorandum
Tuesday, 17 November 2009 16:08
BEIJING, Nov. 16 (Xinhua) -- Chinese mainland and Taiwan signed a memorandum on banking supervision and management on Monday.
According to the memorandum, banking regulatory institutions of both sides will cooperate to swap and share information, establish institutions, and deal with emergency, to ensure stable development of the banking sectors both in the mainland and Taiwan.
Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), was the representative of the mainland to sign the memorandum.
The CBRC signed memorandum or cooperative contracts with banking regulatory institutions in 36 countries and regions worldwide up until now.
China to let banks invest in listed bonds
Thursday, 12 November 2009 16:52
SHANGHAI—China's banking regulator is ending a 12-year ban for banks to invest in bonds listed on the local stock exchanges, said a person familiar with the situation, offering a major boost to this semi-dormant segment of the country's fixed-income market.
The re-entry of cash-rich banks into the market for exchange-traded bonds, which are typically sold by listed companies, including blue chips such as property heavyweight Vanke Co., will improve liquidity in the market and lower companies' financing cost, analysts said. The move will also help Chinese companies reduce their reliance on bank loans at a time when soaring credit growth has stoked concerns over inflation and asset bubbles.
The China Banking Regulatory Commission has approved Bank of Communications Co., Industrial & Commercial Bank of China Ltd., and China Construction Bank Corp. to trade government and corporate bonds listed on both the Shanghai and Shenzhen stock exchanges, the person said Wednesday.
Beijing banned banks from trading exchange-listed bonds in 1997 after it said it found irregularities in the market. Since then, fixed-income trading by lenders has been restricted to the interbank debt market, which is dominated by bonds issued by state-owned enterprises and government agencies.
In addition to regulatory approval, the banks have to be cleared for trading by the exchanges themselves. Bank of Communications and China Construction Bank have received approval from the Shanghai Stock Exchange, while ICBC has yet to apply for the necessary trading qualification to the bourse, said the person.
The China Securities Regulatory Commission and the CBRC in January said they will allow China's 14 domestically listed banks to invest in such exchange-traded bonds on a trial basis.
The three banks are likely to start trading bonds on the exchanges by the end of this year, the person said.
Officials from the three banks declined to comment on receiving approval from CBRC, and officials from the regulator weren't immediately available for comment.
Zhang Lei, a bond analyst at Shanghai Securities, said the exchange-traded bond market has been marginalized in recent years because of its relatively small size. "The return of the banks could improve the market's liquidity and attract more companies to issue bonds on the exchanges," he said.
Banks are the most active participants in China's broader bond market. Without the presence of banks in the exchange-traded bond market, the volume of bonds traded on the Shanghai and Shenzhen exchanges has been negligible. While bond-trading volume on China's interbank market totaled 40.8 trillion yuan ($5.98 trillion) in the January-October period, the volume on the two stock exchanges was just 393 billion yuan.
Yields on exchange-traded corporate bonds are on average 0.2 to 0.3 percentage point higher than those traded on the interbank market, a premium demanded by investors concerned with the poor liquidity and higher price volatility on the stock exchanges.
"The policy change will also boost exchanged-traded corporate-bond demand and gradually close the yield gap between bonds traded on the bourses and those in the interbank market," said Xu Hong, a bond analyst at Datong Securities.
Industrial output,retail sales up in October
Wednesday, 11 November 2009 16:09
BEIJING -- The slump in China's exports eased last month as industrial output and retail sales rose sharply, the government said Wednesday, showing that recovery in the world's third-largest economy was firmly on track.
Exports fell 13.8 percent in October to $110.8 billion from the same month last year, the smallest decrease in 10 months, according to government figures. Imports dropped by 6.4 percent to $86.8 billion over the same period, a slightly faster pace than in September.
Meanwhile, the key inflation rate, known as the consumer price index, was down 0.5 percent in October from the same month last year, according to the National Bureau of Statistics.
Together, the monthly figures provide the latest evidence that China's economy will meet or surpass the government's goal of 8 percent economic growth for the full year.
Statistics Bureau spokesman Sheng Laiyun said retail sales were up a robust 16.2 percent in October from the same month last year, while industrial output rose 16.1 percent.
"The October data show that we have more reasons to believe the economy will achieve the goal of 8 percent growth," Sheng told a news conference. He added there were no inflation worries at the moment.
Fixed asset investment for the first 10 months of the year surged 33.1 percent compared to the year-ago period, Sheng said.
China has rebounded faster and stronger than other major economies from the world economic crisis, with flowing government spending and bank lending pushing up economic expansion by 8.9 percent in the third quarter.
"October's figures came as no surprise. The momentum for an economic recovery carries on despite the fall of imports," said Feng Yuming, a macroeconomic analyst for Oriental Securities in Shanghai.
Feng said the further decline in imports was due to lower commodity prices.
The gush of lending has inflated China's stock and real estate markets massively this year. However, Chinese banks curtailed new loans sharply in October, by more than 50 percent to 253 billion yuan ($37 billion) compared to September, amid growing concerns the easy lending would create asset bubbles.
Companies, central bankers and political leaders around the world are increasingly counting on growing demand from Chinese producers and consumers to offset sluggish home markets. Much of China's growth is coming from government-backed spending on construction and other projects, but demand from China's traditionally frugal, still relatively poor consumers is also rising.
"The new good change in October is that the trend in the contribution of consumption to economic growth is increasing and we believe that in the fourth quarter it will increase," Sheng said.
China's economy began to falter in late 2008 as exports plunged and thousands of factories shut down, throwing millions out of jobs. China fought back with a 4 trillion yuan ($586 billion) stimulus plan involving massive spending and bank lending for construction of infrastructure such as railways and roads to pump up the domestic economy.
Growth fell to a low of 6.1 percent in the first quarter, but rebounded to 7.9 percent in the second quarter, hitting 8.9 percent in the third compared with a year earlier.
China Oct steel edges up to near record
Tuesday, 10 November 2009 16:09
SHANGHAI, Nov 10 (Reuters) - China's crude steel output edged up to 1.663 million tonnes a day in October, just short of the August record, consultancy Custeel said on Tuesday, citing industry figures.
The 0.85 percent rise in daily steel output brought the figure for the month to an estimated 51.55 million tonnes, and was just shy of the record 1.666 million tonnes in August, Custeel said, citing estimates from the China Iron and Steel Association (CISA).
The output, totalling 607 million tonnes on an annualised basis, didn't come as surprise to analysts, despite a slip in prices.
'We talked to steel companies to ask whether they cut production in October, but none of them have. Demand from their own customers is still stable and strong,' said Helen Lau, senior analyst with OSK Securities in Hong Kong.
China's mills produced 50.71 million tonnes of crude steel in September, and 420 million tonnes over the first nine months of the year, up 7.5 percent compared with last year.
China pledges 10b USD to Africa
Monday, 09 November 2009 15:59
BEIJING — China offered African governments a multibillion-dollar package of financial and technical assistance on Sunday, stepping up a courtship that already has gained Beijing wide access to oil and minerals across perhaps the most resource-rich continent in the world.
Prime Minister Wen Jiabao pledged to grant African countries $10 billion in low-interest development loans over the next three years, to establish a $1 billion loan program for small and medium-size businesses, and to forgive the remaining debt on certain interest-free loans that China previously granted less-developed African nations.
Mr. Wen made the pledge in an address to the Forum on China-Africa Cooperation, held in the Egyptian city of Sharm el Sheik. The $10 billion in new loans is double the amount China pledged at the last meeting in 2006. The debt forgiveness continues a series of annual loan cancellations that extends to 2006.
Mr. Wen told officials of the 49 African nations in attendance that this year’s session “represents a new stage of development in relations with Africa.”
Besides the financial assistance, Mr. Wen also promised to form a partnership to address climate change in Africa, including the building of 100 clean-energy projects across the continent. Beijing will also remove tariffs on most exports to China from the least-developed African nations that do not have diplomatic relations with Taiwan, and sponsor an array of other programs in health, education, culture and agriculture.
The gestures are likely to further cement China’s good relations with many African nations, and may help address rising concern in some quarters that China is merely replacing Europe as a colonial power.
China’s focus on extracting oil and minerals from Africa has drawn some criticism from African scholars, and labor and safety conditions at some Chinese-run mines and smelters have set off outcries by African workers. Some critics say that the flood of low-cost Chinese goods into African cities has displaced products once made by local workers.
China has long offered low-interest loans to African nations, usually on the condition that governments spend the money on Chinese-made goods or on projects built by Chinese companies. African governments have eagerly accepted the loans, in part because they are free of conditions that international and Western lenders often attach to loans, like improvements in governance.
One result is that China has become a major builder of Africa’s infrastructure, including railroads, highways and canals.
The loans and other overtures have turned China into one of Africa’s largest trading partners. Trade has soared to $106.8 billion last year from about $10 billion in 2000; Chinese direct investment in Africa leaped 81 percent in the first six months of this year, to $552 million, according to the Commerce Ministry.
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