How to cut the cord on China’s shadow banks 3 Jul 2013 The explosion in non-bank credit is helpful, so long as it doesn’t bounce back on regular lenders. Ringfencing the risks requires banks to stop using cheap funding to lend off balance sheet. Savers also need to learn that investing in high-return products is no free lunch.
China index: Weaker growth on weaker foundations 2 Jul 2013 China’s economy remains gloomier than this time last year as lower export growth and rail freight volumes make a grim follow-up to poor PMI readings. Sales of property, luxury liquor and posh cars prevent a steeper fall, but these are not the bright spots China needs or wants.
China’s corporate spying is three-cornered problem 28 Jun 2013 U.S. prosecutors could slap a $4.8 bln fine on a Chinese wind turbine maker accused of stealing code from a U.S. supplier. Such cases are on the rise. Corporate espionage often requires three factors: opportunity, pressure and rationalization. China has them all in spades.
Review: Tales from China’s wild lending frontier 28 Jun 2013 Former banker Joe Zhang spent a year running a microcredit firm, then wrote about it. “Inside China’s Shadow Banking” is part memoir, part advice for reining in the country’s credit boom. Despite the title, it’s the regular banks that are the ultimate source of the trouble.
Asia’s pain unevenly spread as China slows 25 Jun 2013 The country’s expanding share of regional trade is a concern as growth slows. But not all are equally exposed. Take Australia: China accounts for a third of total exports, but just 5 percent of GDP. China’s past reluctance to open its markets might be a blessing in disguise.
China’s bonfire of liquidities claims first victim 24 Jun 2013 Stocks tumbled after the central bank hinted it won’t help overstretched banks, and that they should make better use of what they’ve got. Lenders and speculators won’t like it, but for the economy it’s helpful. A bit more financial chaos is a fair price for better quality growth.
Novatek wins big in Russian energy deal-a-palooza 21 Jun 2013 A $270 bln oil supply deal between Rosneft and China has stolen the spotlight, but upstart gas producer Novatek’s smaller deal to ship natural gas to the mainland may have been the bigger news on Russian energy this week. Gazprom’s export monopoly looks truly over.
China credit squeeze challenges “age of ambiguity” 21 Jun 2013 Imprecision has been good policy for China. The belief that deposits are guaranteed, and that banks can’t fail, has underpinned the last decade of rapid growth. A financial crisis, though, calls for facts and plans - otherwise rumours and half-truths can wreak havoc.
Lending squeeze tests faith in China’s authorities 20 Jun 2013 A spike in interbank rates has raised fears of a 2008-style meltdown. China’s closed and state-controlled financial system has a better chance of averting a crisis. But policymakers can make mistakes. The lack of transparency means even a small slip could undermine confidence.
Enlisting China underscores the Petrobras crunch 19 Jun 2013 Brazil’s state-controlled oil company is being forced to sell fuel at a loss to restrain inflation. The government also wants Petrobras to pump $65 bln into the economy by investing in refineries. Involving China’s Sinopec as a partner may help but such aid can’t be coming cheap.
More geopolitics than shipping in Nicaraguan canal 19 Jun 2013 A controversial $40 bln project to rival Panama’s passage doesn’t seem to make financial sense. But if its Chinese sponsor is any kind of proxy for Beijing, the idea of one day balancing U.S. influence in Central America isn’t far-fetched. And for that, the price could be right.
Super-yachts: the new symbol of China’s excess 19 Jun 2013 The chairman of Dalian Wanda, a Chinese conglomerate, liked Sunseeker’s yachts so much he bought the company. Liquidity is ample and China’s super-rich are doing fine. But as the economy slows, showy displays of inequality and flashy deployment of capital are disconcerting.
China milk deal leaves small investors whey-faced 19 Jun 2013 Mengniu’s $1.6 billion bid for Yashili gives the target’s founding clan the chance to cozy up to a national champion, and buyout firm Carlyle a good return. Other investors are less fortunate - they will be selling for less than Yashili’s IPO price just three years ago.
Unchecked rate surge could threaten China’s growth 17 Jun 2013 Soaring interbank rates should be a fitting punishment for lenders which lent too freely and unwisely. But if allowed to persist, the pain could spread beyond banks to corporate and government borrowers - and the economy. It is unlikely China’s leaders have the stomach for that.
China’s spiking rates create winners and worriers 14 Jun 2013 Big banks thumbed their noses at an auction of Ministry of Finance bills. No wonder: they can do better lending to each other. Tight liquidity has pushed up rates in the $31 trillion interbank market, creating profit for some, pain for others, and disquiet for central bankers.
China IPO revamp chooses lesser of two evils 13 Jun 2013 New measures, such as barring insiders from selling shares below the issue price, will encourage companies to price IPOs low. The worry is investors may take it as a guarantee that new stocks will always go up. But only drastic action can restore faith in China’s equity markets.
Shale offers China exit from U.S. dependency curse 13 Jun 2013 The Middle Kingdom now imports over half its oil and a fifth of its gas. The U.S. – where shale output is curbing a longstanding reliance on foreign fuel – points to a solution. China needs to overcome water shortages and vague licensing rules to emulate America’s success.
Fugitive whistleblower puts China on the spot 10 Jun 2013 Beijing may enjoy U.S. discomfort over Edward Snowden’s move to seek refuge in Hong Kong. But allowing him to stay, if he tries, would strain Sino-U.S. relations. Meanwhile, sending him home might upset local activists. It sets up a test of China’s policy towards the city-state.
How Huawei can dial down the fear factor 10 Jun 2013 Forget links to the Party or fears of security breaches: the telecom supplier is under fire because China is mistrusted. The U.S. spying furore merely adds to concerns that networks are leaky. Huawei can’t change that, but it can upgrade governance, and get consumers on its side.
Wine tariffs won’t end China’s thirst for Bordeaux 7 Jun 2013 It might sound like restricting EU imports would cut Chinese demand for fine wines. But China mostly imports cheap plonk: top vintages tend to trade in offshore centres like Hong Kong. French chateaux have more to fear from China’s anti-corruption drive than from any trade war.