China monetary policy enters difficult adolescence 24 Nov 2014 Cutting rates, as the central bank just did, is far less simple than when China’s economy was in its pliant infancy. New ways to save, borrow and arbitrage have sprouted, and don’t all respond predictably to orders. It will take more to alleviate private sector growing pains.
China’s rate cut shows depth of growth concern 21 Nov 2014 The first cut to lending rates since 2012 shows the limits of Beijing’s tolerance of slowdown. It should save some riskier loans from going bad, and breathe some life into a zombified property market. But huge adjustments remain, and long-suffering savers will still be left worse off.
Alibaba’s huge finance arm is a mystery to most 21 Nov 2014 It’s one of the Chinese e-commerce group’s crown jewels. Yet public investors don’t control it, and can’t reliably estimate its worth. Only select Alibaba executives see the affiliate’s inner workings. Since they own most of its shares, there is room for interests to diverge.
China great wall of content could be more than fad 20 Nov 2014 Smartphone maker Xiaomi and e-commerce giant Alibaba are stretching their business models by investing in online TV programming. If viewers pay up content might turn fickle ad revenues and one-off sales of hardware into predictable revenue streams.
China gives pointers in West’s war on bank culture 20 Nov 2014 Chinese bankers who allegedly helped a rogue CEO siphon off $102 mln have some things in common with London’s abusive FX traders. Institutions are sprawling, regulators weak and loyalties mainly local. At least China’s willingness to micromanage ought to help curb bad behaviour.
Better returns a bonus from China’s FDI tune-up 19 Nov 2014 The country has $5.9 trillion of foreign assets. But almost two-thirds are currency reserves held by the central bank. The result is that China earns less on these assets than it pays to overseas investors. Rising outbound investment suggests that may slowly change.
Investors carried away with HK Exchange’s options 18 Nov 2014 Expectations for the link-up with Shanghai have boosted shares of the Hong Kong stock market’s owner by 33 pct this year. The tightly-controlled scheme alone doesn’t justify the rally. Investors are betting the connection will get bigger and broader. They will need to be patient.
China downturn points to a wage dilemma 17 Nov 2014 Slowing lending, investment and output don’t seem to have created mass layoffs. On the contrary, the country has added 10.8 million jobs this year. But it’s hard to see wages rising the way workers have come to expect. Making the job market bigger is easier than making it better.
China’s stock connection: a guide for the perplexed 14 Nov 2014 Hong Kong and Shanghai are about to activate a long-awaited link between their exchanges. The hook-up could have big implications for investors. But it’s also restrained by China’s determination to limit cross-border capital flows. Breakingviews explains what’s at stake.
Tencent’s mobile boom is more than just games 13 Nov 2014 A drop in revenue from mobile games dented the Chinese internet giant’s third quarter. That looks like a blip. But slowing growth in mobile chat app WeChat puts pressure on Tencent to find new sources of income. The jump in ad revenue suggests it has more tricks up its sleeve.
Obama uses China as Republican climate control 12 Nov 2014 The president has struck a deal with counterpart Xi to limit carbon emissions. It’s not perfect, but could be a fillip to renewables investing and more global action against pollution. Preventing the GOP from derailing Obama’s environmental agenda may be its biggest advantage.
Chinese flirt app seeks undiscerning IPO investors 12 Nov 2014 Social network Momo adds a new twist to mobile chat by helping strangers connect. But swelling losses and peculiar governance, even by Chinese tech company standards, are troubling. Investors have accepted similar risks with companies like Alibaba and JD.com, but based on Momo’s early filing, its IPO will be a date to forget.
Safety scare shows Chinese dairy’s fragile premium 12 Nov 2014 An official probe into China Modern Dairy’s sale of infected cows has knocked 6 pct off shares in the country’s largest milk maker. In a scandal-tainted industry, the company’s quality reputation allows it to charge higher prices. But customers and investors are easily spooked.
Russia tries Chinese path out of European impasse 11 Nov 2014 Moscow has signed another mega gas deal with its southern neighbour. Vladimir Putin may have to accept bad terms, but the point is to show Europe that he can turn to China if the standoff over Ukraine persists. And that in the short term, Russia can bear the economic pressure.
China embraces troublesome cult of consumption 11 Nov 2014 E-commerce giant Alibaba shifted $2 billion of goods in the first hour of its “Singles’ Day” shopping festival. It looks like consumers are doing their bit to rebalance China’s economy. But like investment, consumption is a poor target. It can be wasteful as well as productive.
China oil groups juggle profit and patriotism 11 Nov 2014 Having PetroChina source fuel, and Sinopec refine it, made political sense, especially when oil was cheap. Now with investors as well as the government to please, both are duelling in upstream, where returns are better. Of the two, PetroChina’s prospects look more compelling.
Obama and Xi compete to put the "I" in "APEC" 10 Nov 2014 Both the U.S. and Chinese leaders are using the Beijing summit to push their own rival trade and investment deals. Sift through the alphabet soup and domestic politics is clearly foremost. There’s room for these big personalities to compromise, but also for dangerous mistakes.
Qatar SWF displays new prudence in pivot to Asia 10 Nov 2014 The Gulf country’s sovereign fund has joined forces with China’s top state-owned company to invest $10 bln over five years. The tie-up reflects the challenges of deploying large sums on the mainland. It also underscores the emirate’s less brash approach to investing overseas.
Chip deal slots into China’s tech dominance plan 7 Nov 2014 Semiconductors have long been rival Taiwan’s forte, but the People’s Republic is muscling in. A $1.8 billion Chinese offer for a Singaporean chip-packager is the latest attempt to bring tech know-how to the mainland. More buys are likely to follow.
China’s next GDP goal: trash the target 6 Nov 2014 The old model – pick a number, mould the economy to fit – is no longer helpful. But China doesn’t seem ready to abandon numerical goals. One way forward would be to set a range instead, say 6 to 7 pct. That could provide direction, with wiggle room for things China can’t control.