Chinese Political, military, economic, weakness.

waltky · Feb 6, 2013

China clampin' down on gov't. extravagance...

China turns against official extravagance
5 February 2013 - Such was the extent of officials' spending on luxuries that the clampdown is said to have depressed share prices in high-end liquors

Shanghai's Hotel Industry Association is, you would think, naturally a conservative kind of organisation. It represents more than 50 five-star hotels, which cater for the city's rich and powerful elite. The association's president, Huang Tiemin, is himself a top hotelier and a card-carrying member of the Communist Party. He seems a very unlikely person to throw discretion to the wind and turn on some of his highest profile and highest spending clients - but listen to this. "It is astonishing. Unbelievable," he says of the dining habits of Shanghai's government officials. "It is very normal to have a banquet with over 10 courses. Some have 15 to 20. I've seen one where there were so many dishes they had to be stacked three-high."

And he disapproves not just of the large quantity of food consumed but its superior quality too. "Shark fin, abalone, bird's nest and other very expensive foods can very often be found in banquets funded with public money." Warming to the theme, he adds; "Sometimes the cost of the alcohol is even higher than the food." It is a picture of publicly-funded gluttony and extravagance that a few months ago would have been very hard to glean from one so well connected. But something has changed and in China it is suddenly the political fashion to denounce the high-spending habits of the country's public servants.

No whim

It was Xi Jinping, the new Communist Party chief, who started it. When the new leadership took over in November last year, one of the first acts was to issue a list of prohibitions. No more spending public money on banquets. No more official gift-giving. No more using official cars on public holidays. It has not been done on a whim. Such is the level of anger in China about corruption, privilege and abuse of power that the Communist Party openly admits that it threatens its hold on power.

It has been heard before, of course. Previous leader Hu Jintao - and Jiang Zemin before him - warned of the existential threat posed by corruption. But this time the thunder has been matched by the following rainstorm, to borrow a now oft-quoted Chinese saying. The prohibitions are clearly being enforced if you take economic activity as a measure. "It's had a big effect on high-end hotels like mine," Huang Tiemin tells me. "Since the date the new regulations were published, banquet bookings have fallen by at least 30%."

Share price fall
Click to expand...

waltky · Jan 19, 2016

Corruption crackdown continues in China...

China to prosecute two former senior officials for graft
Wed, Jan 20, 2016 - Chinese authorities are to prosecute two former senior officials for corruption, the Central Commission for Discipline Inspection said yesterday.

Former Shanghai Vice Mayor Ai Baojun took gifts, exchanged power for sex and sought benefits for relatives in business dealings, the Central Commission for Discipline Inspection said. He also frequented private clubs and golf courses, it said two activities party members are barred from due to the reputation both have as places for shady dealings.

Ai has been expelled from the party and his case handed over to legal authorities, the watchdog added, meaning he is to be prosecuted. Ai had headed the committee that runs the Shanghai Free Trade Zone since its launch in September 2013.

The second ex-official is Civil Aviation Administration of China former deputy head Zhou Laizhen. The watchdog accused him of taking gifts, exchanging power for sex and helping relatives in business dealings, but said he also used public funds for banquets and personal travel. He has been expelled from the party and is to face prosecution.

http://www.taipeitimes.com/News/world/archives/2016/01/20/2003637651
Click to expand...

waltky · Feb 8, 2016

Is the China bubble about to burst?...

China's currency reserves plunged in January
7 February 2016 - China's foreign currency reserves plunged by $99.5bn in January, the People's Bank of China reported.

China has been running down its vast foreign currency reserves in an attempt to boost the value of its own currency and stem a flow of funds overseas. At $3.23 trillion, China still has the world's biggest reserve of foreign currency holdings. But that has declined by $420bn over six months and stands at the lowest level since May 2012. "While the remaining reserves still represent a substantial war chest, the mathematics around this rapid pace of depletion in recent months is simply unsustainable for any length of time," said Rajiv Biswas, Asia Pacific Chief Economist, IHS Global Insight.

Investor fear

The Chinese authorities fear a rapid devaluation of their currency, as it could destabilise the economy. Many Chinese businesses hold debt in dollars and managing those debts with a severely weakened yuan could cause problems and some companies to fail. So China has been trying to engineer an ordered devaluation of the yuan, but that is proving hard to deliver. Investors have been trying to pull funds out of investments priced in yuan and speculators have been betting on further falls in the currency.

To stabilise the situation China has been selling dollars and buying yuan. And it has been using other tactics, including curbing currency speculation and ordering offshore banks to retain their reserves of yuan. Commenting on the decline, veteran economist, George Magnus noted that there is "confusion" over China's foreign currency policy. "Clearly this can't go on for long," he tweeted, referring to the fall in currency reserves.

http://www.bbc.com/news/business-35516054
Click to expand...

See also:

Toxic loans in China weigh on growth
Fri, Feb 05, 2016 - SOURCE OF CONCERN: While there is not enough data to calculate a precise figure for bad loans, some analysts estimate that Chinas troubled credit could exceed US$5 trillion

Beneath the surface of the global financial system lurks a multitrillion-dollar problem that could sap the strength of large economies for years to come. The problem is the giant, stagnant pool of loans that companies and people around the world are struggling to pay back. Bad debts have been a drag on economic activity ever since the financial crisis of 2008, but in recent months, the threat posed by an overhang of bad loans appears to be rising. China is the biggest source of worry. Some analysts estimate that Chinas troubled credit could exceed US$5 trillion, a staggering number that is equivalent to half the size of the countrys annual economic output.

Official figures show that Chinese banks pulled back on their lending in December last year. If such trends persist, Chinas economy, the second-largest in the world behind the US, might then slow even more than it has, further harming the many countries that have for years relied on China for their growth. However, it is not just China. Wherever governments and central banks unleashed aggressive stimulus policies in recent years, a toxic debt hangover has followed. In the US, it took many months for mortgage defaults to fall after the most recent housing bust and energy companies are struggling to pay off the cheap money that they borrowed to pile into the shale boom.

In Europe, analysts say bad loans total more than US$1 trillion. Many large European banks are still weighed down with defaulted loans, complicating policymakers efforts to revive the continents economy. Italy, for instance, announced a plan last week to clean out bad loans from its plodding banking industry. In theory, it makes sense for banks to swiftly recognize the losses embedded in bad loans and then make up for those losses by raising fresh capital. The cleaned-up banks are more likely to start lending again and thus play their part in fueling the recovery. In reality, this approach can be difficult to carry out.

Recognizing losses on bad loans can mean pushing corporate borrowers into bankruptcy and households into foreclosure. Such disruption can send a chill through the economy, require unpopular taxpayer bailouts and have painful social consequences. And in some cases, the banks might find it extremely difficult to raise fresh capital in the markets. Even so, the drawback of delaying the cleanup is that the banks remain wounded and reluctant to lend, damping any recovery that takes place. Japan, economists say, waited far too long after its credit boom of the 1980s to force its banks to recognize huge losses and the economy suffered for years after as a result. Now, many banking experts are beginning to worry about Chinas bad loans.

Fears that the countrys economy is slowing have weighed heavily on global markets in recent months because a weak China can drag down growth globally. Many of these concerns focus on Chinas banking industry. In recent years, banks and other financial companies in China issued a tidal wave of new loans and other credit products, many of which will not get paid back in full. Although there is not enough official data to come up with a precise figure for bad loans, some analysts have come up with estimates of around US$5 trillion.

MORE
Click to expand...

Related:

New breed investors embrace China's white-knuckle ride
Sun Feb 7, 2016 - A new breed of small investor is riding China's rollercoaster stock markets, looking for a quick buck and thriving on the volatility that has sent others scurrying to the exit clutching their stomachs.

Last summer's 40 percent crash and a 20 percent drop so far in 2016 have sent trading volumes tumbling on the Shanghai and Shenzhen bourses, where retail investors account for 85 percent of the business, unlike more developed markets, where institutions dominate. Many investors have not just been put off by the falls, but by the wild intraday swings, with sharp morning gains frequently swallowed by sharper afternoon losses. Not Zhao De. The 26-year-old Beijinger only has around 55,000 yuan ($8,400) to play with, and he wants to make it work hard and fast.

He's currently out of the stock market, not because it's too volatile, but because it stops him making the most of that volatility. He wants to take bigger positions for shorter periods, but the stock market makes him wait a day for trades to be settled, which prevents intraday trading. He's in commodity futures for now. "If I buy futures, I can directly short sell," he said.

Liu Jingde, Cinda Securities analyst, said this growing new cohort of investors is more open to the opportunities to make money and has a greater willingness to take risks, using futures and options products. "It could make the fluctuations of the market more extreme if these investors take more frequent short-term positions," he said. China's securities regulator did not immediately respond to requests for comment on the implications for the market.

Rao Xianjun is another of this new breed, who typically have trading apps on their phones and bone up on opportunities through investor communities on media platforms such as QQ, WeChat and Weibo. He's looking at stocks in the new energy, technology and medical sectors, but he doesn't want to tie up his money for long, and says he will be looking to make money by short selling, cashing in on the over-exuberant response of investors to government policies. "The nation's leaders will obviously focus on new initiatives, and after the buzz of it all quietens down ... that'll be my time to move in."

GUT INSTINCT
Click to expand...

waltky · Apr 16, 2016

Chinese economy walkin' the tightrope...

China's economic tightrope act
Fri, 15 Apr 2016 05:29:10 GMT (22 hours and 58 mins ago)
How will China manage the economic transition it has embarked on, asks Andrew Walker.

Are the storm clouds gathering over the global economy once again - and are they blowing in from the East, more specifically from China? There are certainly worries casting some gloom over the Spring Meetings of the International Monetary Fund and World Bank in Washington this week. China's latest figures show the economy in the first quarter of the year expanding 6.7% from a year earlier. The slowdown continues. But the data do not give us any definitive answers to questions about how China is going to influence the rest of the world.

The big issue is how will China manage the economic transition it has embarked on: a shift from a pattern of economic growth based on the rapid expansion of industrial output, exports and investment to one more driven by spending by Chinese consumers and growing service industries. China is also engaged in a shift to growth that is slower than the average 10% per year of the past three decades. That figure is almost universally reckoned to be no longer sustainable. But if the result is anything like the 6.5% minimum that the authorities are targeting for the next five years, it will still be pretty impressive by international standards.

Investment

It is also worth noting the extraordinary role played by investment - by the state and by business. Last year, according to data compiled by the IMF, investment was 43% of national income or GDP. Very few countries can, or would, want to match that. It is a problem because such high rates of investment are bound to involve many specific projects that are not viable, especially in an economy that is slowing down anyway. That in turn would mean losses for the businesses concerned and for the investors and lenders who provide the finance.

The share of investment in GDP has started to decline - it used to be even higher - but it has further to go. That process and the wider slowdown are already making a mark on the rest of the world and will continue to do so. A batch of IMF reports this week issued ahead of the Spring Meetings, on the general economic outlook, financial stability and government finances around the world, all show the impact of the Chinese slowdown. The IMF's World Economic Outlook painted a picture of persistently disappointing performance after the Western financial crisis, a world economy that has failed to gather sufficient momentum to produce a really strong recovery - and China was part of that story.

Risk
Click to expand...

Log in or Sign up

Chinese Political, military, economic, weakness.

waltky Well-Known Member

waltky Well-Known Member

waltky Well-Known Member

waltky Well-Known Member

Share This Page

Log in or Sign up

Chinese Political, military, economic, weakness.

waltky Well-Known Member

waltky Well-Known Member

waltky Well-Known Member

waltky Well-Known Member

Share This Page

Useful Searches