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China to explode/implode....

Discussion in 'Coffee Shack (Daily News/Economy)' started by REO 54, Dec 18, 2011.



  1. REO 54

    REO 54 Midas Member Midas Member

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    China Debts on Local Projects Dwarf Official Data.....
    "Debt accumulated by companies financing local governments such as Tianjin, home to the New York lookalike project, is rising, a survey of Chinese-language bond prospectuses issued this year indicates. It also suggests the total owed by all such entities likely dwarfs the count by China’s national auditor and figures disclosed by banks.

    Bloomberg News tallied the debt disclosed by all 231 local government financing companies that sold bonds, notes or commercial paper through Dec. 10 this year. The total amounted to 3.96 trillion yuan ($622 billion), mostly in bank loans, more than the current size of the European bailout fund."
    http://www.bloomberg.com/news/2011-...ial-data-with-too-big-to-complete-alarms.html


    China’s Stocks Slide, Extend Losses to 7th Week on Home Price Slump, Fitch......
    "China’s stocks fell, extending the benchmark index’s drop to a seventh week, after home prices posted their worst performance this year and Fitch Ratings warned it may cut the credit ratings of European nations"
    http://www.bloomberg.com/news/2011-...es-to-7th-week-on-home-price-slump-fitch.html

    China November Home Prices Are Worst of Year...
    China’s home prices posted their worst performance this year with more than half of the 70 biggest cities monitored in November recording declines after the government reiterated plans to maintain property curbs.

    http://www.bloomberg.com/news/2011-...t-worse-performance-this-year-amid-curbs.html
     
  2. number six

    number six New Member

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    If USA thinks they can just print money forever and get away with it, ?!?!?!!!!:bird:


    THen I don't see why the Chinese shouldn't have a crack at the same scam?!? Let them - the Freakin Politbeureau (of the Ultra-Capitalist/Communist Party of Chinaaaaaaah!) JUUST *wish!!!!!* Multi-$Trillions$ into existence.

    ...after all, Bernanke just does it.

    Annoint Sir Michael Jordan of Nike the next fed governor..."Printing??? Just Do It."
     
    shades likes this.
  3. REO 54

    REO 54 Midas Member Midas Member

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    Mongolia Spending Risks Commodities Bust: IMF
    QBy Yuriy Humber - Dec 22, 2011 7:01 AM PT ....

    Mongolia’s economy, which grew 20.8 percent last quarter, risks contraction along with a global downturn in commodity prices partly due to a surge in state spending, according to the International Monetary Fund.

    Government spending jumped 50 percent in real terms to 6.3 trillion tugrik ($4.6 billion) this year, pushing inflation in the $8.4-billion-economy to 14 percent, Steven Bennett, IMF’s head of Mongolia coverage, said in an interview in Tokyo. That may drive up borrowing costs and cut the profitability of mining projects, Mongolia’s biggest industry, he said.

    “The global economy is in a dangerous phase and what that means for Mongolia is a higher-than-normal chance that commodity prices fall,” Bennett said. “Their spending plans could not be realistically financed if there was a repeat of the 2008 shock. They’d have to cut spending. This is ‘boom-bust’ policy- making.”

    Mongolia, which needs to invest as much as $68 billion within four years in new mines, roads, and housing, contracted by 1.3 percent in 2009 due to the global economic crisis. As the country’s development bank begins the sale of Mongolia’s first state-guaranteed foreign bonds this month, investors are cutting their bets on commodities to a 31-month low.

    A struggling U.S. economy and a slowdown in China will join a looming recession in Europe to reduce commodity demand, “creating significant risks for emerging market investors,” Bank of America Corp. said this month in its 2012 outlook.

    Country Risk
    China’s top coking coal supplier in July, Mongolia turned to the IMF for a $224 million loan to help survive the 2008 global economic crisis. Mongolia expanded 6.4 percent last year and is on course for 16.9 percent growth this year, according to the IMF.

    “It’s looking a lot like what happened in 2008, when there were several years of rapid increases in government spending at a time when mineral prices were high,” Bennett said. With the global economy also starting to resemble the 2008 downturn, the country risks seeing its resource revenue shrink, he said.

    The rise in state spending, which now accounts for two- thirds of Mongolia’s economy outside of mining, compared with 53 percent in 2007, comes ahead of parliamentary elections in June. It also anticipates a 2013 startup of the Oyu Tolgoi mine, which operator Rio Tinto Group (RIO) has said is one of the world’s biggest untapped copper and gold finds and potentially a source of 30 percent of Mongolia’s gross domestic product by 2020.

    Inflation Concern
    Government spending is on course to accelerate inflation to an average 18.7 percent in 2012 from 10.2 percent this year, IMF said in a Nov. 29 report. Wages are estimated to rise 80 percent over three years through 2012, Bennett said. IMF strips out food and administered prices from inflation metrics to focus on “aggregate demand,” he said.

    Mongolia’s proposed budget for 2012 “would set an all time record for expenditure growth,” World Bank’s lead Mongolia economist Rogier van den Brink said in a Dec. 16 blog posting on the bank’s website. A continued boom in foreign investment in Mongolia is not guaranteed next year, while the risks to the global and especially China’s economy continue to grow as commodity prices stumble, he said.

    Investor enthusiasm for Mongolia has waned since the summer as Europe’s sovereign debt crisis deepened and concerns about resource nationalism grew. In September, a group of Mongolian lawmakers called for a revision of the Oyu Tolgoi mine accord with Rio Tinto and partner Ivanhoe Mines Ltd., which had taken six years to conclude.

    Losing Ground
    From being the world’s best performer in the 12-months to April, the MSE Top 20 Index of Mongolia has since plunged 18 percent, more than the benchmarks in the U.K. and the U.S. The tugrik, the second-biggest gainer against the dollar in the year to April 1, has lost 13.6 percent since then, ranking at 158 in terms of global currency returns.

    Standard & Poor’s credit-rating company on Dec. 19 revised its outlook on Mongolia to positive, saying it may raise the BB- long-term sovereign rating should the country’s fiscal, monetary and banking rules reduce “vulnerabilities in these areas.”

    The credit company also praised Mongolia for introducing a fiscal responsibility law, which is supposed to limit budget deficits to 2 percent of gross domestic product from 2013.

    That’s one goal Mongolia will struggle to meet under current spending plans, IMF’s Bennett said. After next year’s spending increase, which may be around 15 percent, Mongolia will need to cut expenditure by the same percentage in 2013 to comply with the law, he said.

    “You’re really putting the economy on a roller coaster,” Bennett said.

    To contact the reporter on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net

    To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

    http://www.bloomberg.com/news/2011-...risks-bust-on-commodity-outlook-imf-says.html
     
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  4. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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  5. shades

    shades Gold Member Gold Chaser

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    That could be embarrassing to discuss with your business-minded friends.

    How you took a massive loss, and lost your shirt in the 2012 Mongolian Banking Crisis. ;)
     
  6. Kaiser

    Kaiser Gold Member Gold Chaser

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    REO 54 likes this.
  7. REO 54

    REO 54 Midas Member Midas Member

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    China Debts Dwarf Official Data With Too-Big-To-Complete Alarms....


    Dec. 19 (Bloomberg) -- A copy of Manhattan, complete with Rockefeller and Lincoln centers and what passes for the Hudson River, is under construction an hour’s train ride from Beijing. And like New York City in the 1970s, it may need a bailout.

    Debt accumulated by companies financing local governments such as Tianjin, home to the New York lookalike project, is rising, a survey of Chinese-language bond prospectuses issued this year indicates. It also suggests the total owed by all such entities likely dwarfs the count by China’s national auditor and figures disclosed by banks.

    Bloomberg News tallied the debt disclosed by all 231 local government financing companies that sold bonds, notes or commercial paper through Dec. 10 this year. The total amounted to 3.96 trillion yuan ($622 billion), mostly in bank loans, more than the current size of the European bailout fund.

    There are 6,576 of such entities across China, according to a June count by the National Audit Office, which put their total debt at 4.97 billion yuan. That means the 231 borrowers studied by Bloomberg have alone amassed more than three-quarters of the overall debt.

    The fact so few of the companies have accumulated that much debt suggests a bigger problem, says Fraser Howie, the Singapore-based managing director of CLSA Asia-Pacific Markets who has written two books on China’s financial system.

    “You should be more worried than you think,” he said of Bloomberg’s findings. “Certainly more worried than the banks will tell you.

    “You know how this story ends -- badly,” he said.

    Repayment Doubts

    The findings suggest China is failing to curb borrowing that one central bank official has said will slow growth in the world’s second-largest economy if not controlled. With prices dropping in China’s real estate market, economists warn that local authorities won’t be able to repay their debt because of poor cash flow and falling revenue from land sales they rely on for much of their income.

    Provinces and cities are going deeper into the red to finish projects, from the Manhattan on the east coast, to highways in northwestern Gansu and a stadium fronted by Olympic rings in Hunan, central China. Many were started as part of China’s stimulus program to beat the 2009 world recession. The financing companies accounted for almost half of the 10.7 trillion yuan in all local government debt tallied by the official audit.

    The 231 borrowers whose public filings were reviewed by Bloomberg raised a combined 354.1 billion yuan by selling securities this year. They have credit lines from banks of at least 2.3 trillion yuan that have yet to be drawn down, the documents show.

    Rising Lending

    Bank lending continues to rise, Bloomberg found, even after China’s banking regulator repeatedly warned banks to control risks associated with it and speed up repayment.

    Forty-seven of the 56 local financing companies that issued prospectuses from Oct. 1 through Dec. 10 said their debt load had increased this year. The combined debt of those issuers rose 10 percent from the end of 2010.

    What’s more, adding up lending by bank also raises the question as to whether China’s lenders are understating their exposure to local government debt. Only 113 of the local government borrowers disclosed such a breakdown; and yet this small group appears to account for an outsized portion of what the banks have said is their overall lending.

    Data Disparities

    For example, China Construction Bank Corp., the world’s second-biggest bank by market value, has lending to those 113 local government borrowers of 250 billion yuan. That’s 43 percent of the 580 billion yuan the bank said it had extended in loans to all such borrowers at the end of June.

    The bank has untapped lines of credit to the vehicles of a further 341 billion yuan.

    Disparities like this suggest lenders may have bigger risks than they’ve disclosed publicly, says Charlene Chu, a banking analyst at Fitch Ratings Ltd. in Beijing.

    China Construction Bank said it stood by its total for loans to local governments and that cash flow from them was “good.” Nonperforming loans to such companies amounted to 6.5 billion yuan, or 1.11 percent of the total, and the lender had set aside provisions of more than three times that, it added in an e-mailed response to questions.

    The prospectuses offer a rare window into borrowing by the local government financing vehicles. The issuers disclose total debt and often details of their loans and lines of credit from banks and trust companies. The data are not consistent, with some reporting total debt as of the end of 2009 and some as recently as Sept. 30 this year.

    (For an explanation of Bloomberg’s methodology click here.)

    ‘Too Big to Complete’

    Local authorities, who shoulder most of the infrastructure spending in China, have to keep borrowing to complete projects so they can generate cash flow needed to start paying debt back, said Vincent Chan, head of China research at Credit Suisse Group AG in Hong Kong.

    Yao Wei, an economist at Societe Generale SA in Hong Kong, says another 7 trillion yuan of debt will be needed to finish projects in the government’s five-year plan through 2015.

    “At some point the central government will realize this is too big to complete,” said Yao. Banks will need to be recapitalized as bad loan rates rise, she said. At least 1.4 trillion yuan of soured debt was taken off banks’ books after China’s last lending crisis which began in 1998.

    Senior Chinese banking officials themselves have been raising alarm bells. Xie Duo, director general of financial markets at the People’s Bank of China, told a Nov. 23 Beijing conference that local governments depend too heavily on bank borrowing and failure to solve the problem will hurt economic growth. China’s banking regulator in November asked lenders to control the risks associated with the vehicles and said that slumping land sales mean some projects may run out of funding.

    Loans Invested

    Loans to local government companies aren’t a problem because the projects will generate returns, even if not immediately, said Huang Jifa, deputy general manager for investment banking at Industrial & Commercial Bank of China Ltd., the country’s biggest lender.

    “The money that Chinese local governments have borrowed is not like the money people borrowed in Europe or Greece,” Huang said in a Nov. 24 interview. “The Chinese government’s borrowed money is all invested. Many projects will have returns.”

    The bank says it had extended 931 billion yuan of such loans as of June 30. Outstanding local government financing vehicle-loans at the end of the third quarter declined from the first half, an ICBC spokesman said. He wouldn’t comment further.

    Construction Boom

    A building boom by thousands of local governments became the backbone of the country’s stimulus program started in November 2008 -- on borrowed money. The financing companies were created starting in the 1990s and enabled provinces, cities, counties and townships to bypass rules barring most of them from directly selling bonds.

    Projects undertaken include a stadium, which resembles Beijing’s iconic Bird’s Nest Olympic venue, in Jinan, the capital of eastern China’s Shandong province; and a superhighway in the country’s second-poorest province of Yunnan that stretches into the foothills of the Himalayas, where there are no cities of more than 1 million people.

    In Tianjin, about 160 kilometers (99 miles) southeast of Beijing, a sea of hundreds of construction cranes stretches along both sides of the river at an oxbow that gives the Yujiapu financial district its Manhattan-like shape, testimony to the scale of China’s ambitions. Downriver are the ruins of centuries-old forts stormed by British and French troops during the Second Opium War in 1860.

    Thousands Evicted

    To build Yujiapu, Tianjin officials are piling onto borrowing that is already at least almost half a trillion yuan - -equivalent to half the annual per capita income of the city’s 13 million people. More than 5,000 people were moved out of the area starting in 2008 to make way for the project, among the millions nationwide evicted from homes to make way for China’s urbanization projects.

    The planned 15.2 million square meters (164 million square feet) of office space by 2020 in Yujiapu and across the Hai River in Xiangluo Wan, or Conch Bay, is more than one-third of the 450 million square feet in Manhattan.

    One of the companies building Yujiapu -- Tianjin Binhai New Area Construction & Investment Group Co. -- sold 10 billion yuan in bonds in November. It earmarked 1 billion yuan from the sale to fund the construction of the district’s transport hub, which includes a high-speed rail line that will cut the time to Beijing to 45 minutes. In the first half of the year its debt, mostly from banks, rose 11.9 percent from the end of 2010 to 71 billion yuan, according to the prospectus.

    More Loans Needed

    More borrowing is needed, Tianjin Vice Mayor Cui Jindu said Sept. 16. New loans to the city’s financing vehicles may slump by as much as 140 billion yuan in 2011 from last year’s level as lenders curb risks and boost support to small and medium-sized businesses, he said.

    “If the banks don’t give us any new loans, there will be problems,” Cui said, saying some projects in the city may not get completed. Tianjin had “no problem” repaying loans this year, having to that date paid off 33 billion yuan of the 39.5 billion yuan in principal due this year, he said. Another 60 billion yuan is due in 2012, Cui added.

    Some 14 of 122 planned buildings are under construction in Yujiapu, as are all 48 skyscrapers in Conch Bay, said Xu Fei, vice-chairwoman of the office of the Tianjin Binhai New Area CBD Commission, as she stood in front of a brightly lit model of the future city.

    Rockefeller Center

    They include a 588 meter-high tower, taller than the 541 meter-high 1 World Trade Center currently under construction in the real Manhattan, being built with the help of the Rockefeller family’s Rose Rock Group. Steven Rockefeller Jr. attended a Dec. 16 groundbreaking event for the project, which includes the skyscraper inspired by the Rockefeller Center in New York, Zhao Jia, an outside spokeswoman for Rose Rock, said. The Lincoln Center is advising on the construction of a performing arts center.

    Yujiapu’s resemblance to the Big Apple extends to its rising debt that analysts like Howie say is unsustainable. New York was near bankruptcy in 1975 after a succession of overspending administrations, before then-President Gerald Ford agreed to lend it $2.3 billion.

    “In many of these projects, like the mini-Manhattan, it’s never going to make money,” Howie said. “Maybe the government can write a check from somewhere else. But that means education gets affected, health gets affected. There’s a cost somewhere else, because they’re wasting all these resources.”

    Bond Sale

    Tianjin Infrastructure Construction and Investment Group Co., another state-owned builder working on Yujiapu, is the most heavily indebted local government financing vehicle in China to disclose its finances in bond prospectuses this year with 291 billion yuan in debt. It sold 3 billion yuan of bonds in April.

    An official with Tianjin’s foreign affairs office said no one was available to answer questions about whether the city’s financing vehicles had sufficient cash flow to service their debts.

    The true level of local government debt nationwide is hard to ascertain because the borrowing vehicles are mostly opaque. There’s even disagreement over how many exist. The People’s Bank of China, the country’s central bank, said in a June 1 report there were more than 10,000. In a separate study, China’s banking regulator tallied 9,828 as of the end of Nov. 2010, according to an unpublished report cited by the 21st Century Business Herald in March.

    ‘Lending Binge’

    “It’s very likely that senior government leaders have no way of knowing which numbers provide the best picture of the evolving lending binge China’s banks seem to be on,” said Carl Walter, who retired as chief operating officer in China for JPMorgan Chase & Co. earlier this year and is co-author with Howie of “Red Capitalism,” an analysis of China’s banking system.

    The audit office said in an e-mailed response to questions that it counted debt that local governments have responsibility to repay, that they have guaranteed, or other debts that they may be liable for. People’s Bank of China didn’t answer faxed questions. An official with the China Banking Regulatory Commission said to use the audit office’s figures.

    The number of loans going bad will rise because of the borrowers’ poor cash flow, according to a November report from London-based HSBC Plc. Around 68 percent of 184 local financing companies that have sold bonds analyzed by HSBC had a return on capital lower than 5 percent, the benchmark lending rate last year, compared with 37 percent for all 499 corporate issuers it studied, the report said.

    Loan Mismatch

    “One of the problems with the local government financing vehicle loans issued in 2009 was there was a mismatch between the duration of the assets and the duration of the liabilities,” said Michael Werner, a banking analyst at Sanford C. Bernstein & Co. in Hong Kong. “If you’re building a railroad or a highway, it takes several years and you’re not going to get direct revenues.”

    Take Gansu Provincial Highway Aviation Tourism Investment Group Co. The company builds roads across the arid province, including a 3.4 billion-yuan, 235-kilomter stretch of high-speed expressway along the ancient Silk Road to Jiayuguan, at the westernmost pass of the Great Wall of China.

    Its total debt surged 29 percent in the first nine months to 15 percent of the province’s gross domestic product last year. The company’s entire 2010 operational cash flow was 3.04 billion yuan, while it had 55.9 billion yuan in bank borrowing reported at the end of September. The revenue wouldn’t cover interest payments at China’s standard lending rate of 6.56 percent, let alone paying down principal.

    Interest Rolled Over

    Fortunately for Gansu Highway, it doesn’t have to. Almost half of its outstanding loan principal and interest due this year -- 24.1 billion yuan -- is being rolled over into its outstanding bank debt, and the company plans to repeat that exercise every year until at least 2019 when it is forecast to owe lenders 148.9 billion yuan, according to a chart in the prospectus it issued for a 2 billion-yuan bond sale last month.

    Gansu Highway’s situation encapsulates the problem of local government borrowers, which often have minimal or no plans to repay debt aside from borrowing more money, says Fitch’s Chu.

    “In the past, Chinese banks could carry borrowers like this indefinitely,” she said. “But today they don’t have the large cash reserves they used to to do this. I don’t see how all of this doesn’t turn into a major problem at some point.”

    Lei Wanming, the deputy Communist Party secretary for the Lanzhou-based company, said Gansu Highway had no problem covering interest and principal payments.

    “You can’t look at look at Gansu roads just from an economic perspective,” he said, citing the benefits they will bring to poorer regions.

    Municipal Bond Trial

    China’s government has taken steps in the past four months to help local governments as their debt comes due. It has urged them to sell assets and allowed a pilot program for cities including Shanghai and Shenzhen to issue bonds directly for the first time under Communist rule, reducing their borrowing costs.

    Standard & Poor’s upgraded Bank of China Ltd. and China Construction Bank on Nov. 30, saying there was a “very high” likelihood of lenders getting government help in the event of financial distress. The new ratings are higher than most of their largest U.S. rivals including Bank of America Corp. and Goldman Sachs Group Inc.

    Slumping Bank Shares

    Even so, shares in the four biggest commercial banks in China -- China Construction, ICBC, Bank of China and Agricultural Bank of China Ltd. -- have tumbled an average 23 percent this year in Hong Kong. The banks have loans to the 113 local government borrowers that disclosed such information of 832 billion yuan, Bloomberg found. That’s almost one third of the combined 2.57 trillion yuan in loans extended to all such financing vehicles that they declared as of June 30.

    The banks had another 1.19 trillion yuan in unused lines of credit to those companies.

    Bank of China President Xiao Gang, speaking at the Asia Pacific Economic Cooperation summit on Nov. 12 in Honolulu, said that most of his bank’s lines of credit to local government financing vehicles were conditional, and only a minority of them were irrevocable. Agricultural Bank said in an e-mailed response to questions that its loans were mainly to cash-producing infrastructure and qualified port and highway companies.

    Property Price Risk

    Local governments’ reliance on land sales for revenue means a drop in property prices may expose weaknesses in the borrowing, Huang of ICBC said.

    “The real problem is the real estate market cannot fall, the price can’t go down,” he said. “If the property market really falls, the local government financing vehicle problems will really come out. Not only will they have problems, but the banks will have problems.”

    There are signs the market is already declining, with residential property prices falling in November from the previous month in 49 cities of the 70 measured, the worst performance this year. The cities of Guangzhou in the south and Wuhan in central China canceled land sales in the last three months.

    Tianjin, which isn’t among the cities piloting municipal bonds, was reliant on land sales for 41 percent of its income in 2009, according to China Index Academy, a Beijing real-estate research firm.

    That doesn’t bother Xu Hongzhi, the chief accountant for Tianjin Binhai Construction, which is building Yujiapu’s transport hub. He said that the company can pay its debts because the area’s economy is growing at 10 percent a year.

    “There is no risk,” he said.

    --Michael Forsythe, Henry Sanderson. With assistance from Stephanie Tong in Hong Kong, Zhang Dingmin, Ying Tian and Kevin Hamlin in Beijing. Editors: Neil Western, Melissa Pozsgay

    To contact Bloomberg News staff for this story: Michael Forsythe in Beijing at mforsythe@bloomberg.net Henry Sanderson in Beijing at hsanderson@bloomberg.net.

    To contact the editors responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.net. Peter Hirschberg at phirschberg@bloomberg.net Shelley Smith at ssmith118@bloomberg.net


    http://www.businessweek.com/news/20...ial-data-with-too-big-to-complete-alarms.html
     
  8. REO 54

    REO 54 Midas Member Midas Member

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  9. REO 54

    REO 54 Midas Member Midas Member

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    China Manufacturing Contracts for 2nd Month....

    "China’s manufacturing (EC11CHPM) contracted for a second month in December as global growth faltered and Premier Wen Jiabao prolonged a crackdown on speculation in the housing market, a purchasing managers' index indicated.

    The index was at 48.7 in December, HSBC Holdings Plc and Markit Economics said today. That compared with a preliminary result of 49 reported on Dec. 15 and a final reading of 47.7 for November. A reading above 50 indicates expansion."

    http://www.bloomberg.com/news/2011-12-30/china-manufacturing-contracts-for-2nd-month.html
     
  10. Aurumag

    Aurumag Dimly lit. Highly reflective Midas Member Site Supporter

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    The Chinese have historically tended toward the long view, but I am curious as to how they didn't see the U.S. and European housing bubble bursting, and so much so, that they started their own real estate mega-bubble.

    Has the entire world been blinded to economic fundamentals, or are we all being led into an epic war?

    IMO, the fiat, economic warfare is escalating towards that end.
     
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  11. REO 54

    REO 54 Midas Member Midas Member

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    Wang Fuchuan lies in bed wearing a quilted black jacket, with two comforters pulled up to his chin to keep out the chilly November air. The heating at Beijing Songtang Caring Hospice is broken and the 90-year-old’s nostrils are stuffed with toilet paper to stop them dripping.

    Cockroaches scurry across the floor of his room, which has no running water or toilet. His possessions, a few articles of clothing, are in a plastic bag under his bed next to a pink wash bowl with a sliver of soap. His only entertainment is a transistor radio.

    Wang counts himself lucky. While he has no family or savings, he fought against the Japanese and Kuomintang in the 1940s, so the government pays the clinic’s monthly fee of 2,000 yuan ($318). His 200-yuan pension buys food.

    “A lot of people my age can’t afford to be here,” Wang says. “The food isn’t too good, but I have nothing else to complain about.”

    Wang is in the vanguard of a looming demographic shift for China, Bloomberg Businessweek reports in its Jan. 9 issue. The latest government census shows 178 million Chinese were over 60 in 2009. That figure could reach 437 million -- one third of the population -- by 2050, the United Nations forecasts. While the elderly were looked after in the past by their children, urbanization and the nation’s one-child policy have eroded the tradition of family care.

    “It’s a demographic tsunami,” says Joseph J. Christian, a fellow at the Asia Center at the Harvard Kennedy School, and former DLA Piper partner in Hong Kong, who specializes in senior housing issues in China. “The whole multi*generational housing model has disappeared.”

    Japan’s Shadow
    China’s challenge is similar to that faced by Japan in the 1990s, with one essential difference: China will grow old before it gets rich. With tens of millions of parents left to fend for themselves, the government set up a National Committee on Aging to try to devise a comprehensive strategy (CHGE7) to ensure their health and comfort.

    The latest five-year plan still gives families primary responsibility for elderly care. Even so, the government is looking to the private sector, nongovernmental organizations, and local communities for a more sustainable solution. So far only a handful of companies provide service comparable to the West, and even care like the kind offered by the clinic where Wang Fuchuan lives is relatively rare.

    “Elderly health care is in its infancy” in China, says Ninie Wang, founder of Beijing-based Pinetree Senior Care Services, which employs 500 nurses providing in-home support to 20,000 seniors in Beijing.

    Too Few Beds
    China has about 38,000 institutions serving the elderly with 2.7 million beds, enough for about 1.6 percent of the population over 60, according to the World Bank. That compares with about 8 percent in developed countries, the bank says.

    Some homes are fully staffed government clinics for senior officials or private hospitals catering to the new urban elite. Most are boarding houses with few medical facilities, mainly in large cities. In towns and villages, the situation is far worse.

    “If we can’t help people in Beijing, you can forget about any opportunities for helping the rural old people,” says Jing Jun, a professor of anthropology at Tsinghua University.

    A 2009 survey of 140 nursing homes in the eastern city of Nanjing by a group of Chinese academics found that fewer than a third employed a doctor or a nurse. Most of the staff were unskilled rural migrant workers with minimal training.

    “The goal at these homes is subsistence for residents whose children can’t take care of them,” says Zhanlian Feng, a gerontologist at Brown University who wrote a paper based on the survey in the Journal of the American Geriatrics Society. Many clinics refuse people who require full-time nursing. Others may force out residents once they become too needy, he says.

    Open to Abuse
    There are no industry standards and little government oversight, much like the U.S. decades ago when the system was open to abuse, Feng says. In August, the state-run China Daily newspaper carried a report about a man in Anhui province who discovered that staff at a local nursing home tied his father’s hands to his bed for 11 hours a night.

    At the other end of the spectrum, the facilities and care rival many establishments in the West.

    On a recent Friday at Cherish-Yearn, a complex on the outskirts of Shanghai with apartments for 1,600 seniors, silver- haired couples shuffled to the strains of “Never on Sunday” in the dance hall. In activity rooms nearby, others tried calligraphy, computer games, and traditional ink painting. Outside, there’s a miniature putting green.

    Medical Facilities
    It wasn’t dance classes, golf, or even the on-site financial advice that prompted Luo Zhong Bao, 78, and his wife to sell their apartment and move to Cherish-Yearn three years ago. It was the medical facilities that offered peace of mind to their four children.

    “They work and have no time,” Luo says. “The hospital here is good, and they don’t have to worry about anything.”

    A handful of foreign companies are jumping into the business. China Senior Care, a venture with U.S. backers, is building a 64-bed assisted-living center in Hangzhou aimed at Chinese who can afford to pay more than 30,000 yuan per month. Right at Home, an Omaha company that introduced home-care franchises to China in June, aims to open dozens of affiliates by 2017. The company charges about 100 yuan per hour of service from caregivers trained in everything from vacuuming to CPR.

    No Time
    “I don’t want to be a burden,” says Du Li, an 85-year-old former government accountant in Beijing with a daughter and son living in the city. While she’s fit enough to climb four flights of stairs twice a day to her three-bedroom apartment in the leafy Sanlitun district, she’s grateful for the massages and help with chores that her Right at Home caregiver offers.

    “I don’t think my children have enough time,” Du says. With her caregiver, “Life is more colorful. I have a companion.”

    Few of China’s growing ranks of elderly can afford those services. “International players are looking for high-net-worth clients,” says Mark Spitalnik, founder of China Senior Care. “The true problem for the government is people who don’t have money.”

    China’s economic growth has given it the financial muscle to provide for the growing number of elderly and the government has been rapidly introducing pensions and health-care plans for farmers and city-dwellers, said Li Zhihong, research department director at the National Committee on Aging.

    Wealth Care
    “The aging of the population will be an issue in China that runs through the 21st century,” said Li in an e-mailed response to questions. “The Chinese government has all the financial capabilities and capacity to protect the basic needs of the elderly.”

    Not everyone is convinced the government’s efforts will succeed. In a 20 square meter (215 square feet) apartment without heating or an indoor toilet in one of Shanghai’s few remaining old neighborhoods, 81-year-old Luo Jinxiang says his pension barely covers food and medication for his diabetes and the occasional visit to a local clinic.

    “Do you really believe that the government cares for us?” he asks with a wry smile. “Don’t think about it too much. That is the way the country runs.”

    --Frederik Balfour and Alfred Cang. With assistance by Natasha Khan in Hong Kong. Editors: David Rocks, Chris Power, Adam Majendie.

    To contact the writer on the story: Frederik Balfour in Hong Kong at fbalfour@bloomberg.net.

    To contact the editor responsible for this story: Ellen Pollock at epollock@bloomberg.net
     
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  12. REO 54

    REO 54 Midas Member Midas Member

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    China Gold Hoarding Turns Traders Most Bullish in Two Months: Commodities.....

    "Eighteen of 23 surveyed by Bloomberg expect the metal to gain next week, the highest proportion since Nov. 11. Mainland China imported almost 102.8 metric tons in November, valued at about $5.4 billion, trade data on Jan. 11 showed. The U.S. Mint said it sold 85,500 ounces of American Eagle gold coins in the first 12 days of January. Full-month sales would reach 213,750 ounces at that pace, the most since December 2009."

    http://www.bloomberg.com/news/2012-...s-most-bullish-in-two-months-commodities.html



    China Foreign Reserves Have First Quarterly Decline Since Asian ’98 Crisis......

    "The holdings, the world’s biggest, fell to $3.18 trillion on Dec. 31 from $3.2 trillion Sept. 30, People’s Bank of China data released in Beijing showed today. The quarterly drop was the first since the midst of the Asian financial crisis in the second quarter of 1998, according to data compiled by Bloomberg"

    http://www.bloomberg.com/news/2012-...op-for-first-quarter-in-more-than-decade.html



    China’s Stocks Decline Most in a Week as Hopes for Monetary Easing Wane.......

    "China Vanke Co. (000002) and Poly Real Estate Group Co. paced losses by developers after the China Daily said Beijing will restrict home purchases. CSR Corp. (601766) and China CNR Corp., the nation’s biggest train makers, declined more than 1 percent as the China Business News said the railway ministry may spend less on new locomotives. Changjiang Securities Co. and Huatai Securities Co. fell after net income slumped last year."

    http://www.bloomberg.com/news/2012-...-day-on-earnings-economic-growth-concern.html
     
  13. REO 54

    REO 54 Midas Member Midas Member

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    China Pledges to Stabilize Imports, Exports as Global Trade Growth Slows..............


    China will take measure to stabilize its exports and imports as slowing global growth creates a “grim situation” for trade, said Zhang Xiaoqiang, a vice chairman at the nation’s top economic planning agency.

    “Downward risks for the global economy are increasing,” the National Development and Reform Commission’s Zhang said at a forum in Beijing today. “The difficult situation will make competition for product exports among countries fiercer.” China will take steps to stabilize and improve trade policy, including the lowering of import taxes for some consumer goods, helping smaller businesses get financing and keeping its currency “basically stable,” he said.

    Premier Wen Jiabao pledged earlier this month to preserve growth and said the nation wouldn’t “stand still” in the face of difficult conditions. China, which reported the slowest export growth in two years for December as the European debt crisis eroded overseas demand, introduced a 4 trillion yuan ($633 billion) stimulus and froze gains by the yuan to counter the effects of the 2008 financial crisis.

    “Looking into 2012, the global economy will remain sluggish,” Zeng Peiyan, a former vice premier, said at the same forum today. “Western developed economies are encountering hardships never seen since World War II and the unstable elements and uncertainty that will be faced by developing nations and emerging economies is also increasing,” said Zeng, now chairman of the China Center for International Economic Exchanges, which hosted the event.

    Export Difficulties
    China’s exports will face a “grim situation” this year, particularly in the first half, the NDRC’s Zhang said. In addition to slowing global demand, the rising cost of energy, raw materials, labor and land are other challenges for Chinese exporters, he said.

    Appreciation of the yuan is also adding pressure, Zhang said. China’s currency has risen more than 8 percent against the dollar since regulators allowed gains to continue in June 2010. Those gains will continue for “a certain period,” Zhang said without giving more detail.

    The nation’s exports expanded 13.4 percent in December, the smallest increase since gains resumed in 2009 after the financial crisis, excluding holiday distortions. Import (CNFRIMPY) growth moderated to 11.8 percent, also the slowest pace in two years.

    China will actively expand imports, Zhang said. The government will lower import taxes for some consumer goods and also for some raw materials, energy and imports of advanced equipment, he said, without giving details.

    Company Financing
    China will also help the nation’s small- and medium-sized companies obtain financing, Zhang said.

    Obtaining bank loans became more difficult this year for smaller companies, many of which are exporters, after the government instituted lending limits in a campaign to rein in inflation and property prices.

    Zhang said that loan rates for smaller companies able to secure funds were 30 percent to 50 percent higher than the benchmark rate set by the central bank. The People’s Bank of China one-year benchmark lending rate is 6.56 percent. Smaller companies also have to pay additional charges such as guarantee fees, thereby boosting their borrowing costs to more than 12 percent, Zhang said, without giving a time period.

    --Zheng Lifei, Feifei Shen. Editors: John Liu, Jim McDonald

    To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net Feifei Shen in Beijing at Fshen11@bloomberg.net

    To contact the editor responsible for this story: John Liu in Beijing at jliu42@bloomberg.net

    http://www.bloomberg.com/news/2012-...rts-exports-as-global-trade-growth-slows.html
     
  14. Zed

    Zed Size doesn't count! Midas Member

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    Yet they set records for importing iron ore during this price down turn and they are running around here buying resources.

    I'd pay closer attention to what they are doing than what they are saying.

    2c

    PS> They have been tightening monetary policy and look to be ready to stop and maybe loosen. This looks like your typical rhetoric to support that.
     
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  15. shades

    shades Gold Member Gold Chaser

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    Unfortunately many wars start due to economic/resource conditions, or help provide an environment for unrest.

    With more and more people appearing every day in the world, the struggle for resources could get really nasty, and not just the usual suspects like oil, coal, metals, but arable land and food...
     
  16. Zed

    Zed Size doesn't count! Midas Member

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  17. andial

    andial Sir Midas Member Site Supporter ++

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    It has been reported that China is seriously ill--it was another country; dying--it was another country; dead--the other country again...As far as I can see.:D
     
    Last edited: Jan 17, 2012
  18. REO 54

    REO 54 Midas Member Midas Member

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    China’s Urban Population Exceeds Rural for First Time in Nation’s History...........

    China’s urban population surpassed that of rural areas for the first time in the country’s history after three decades of economic development encouraged farmers to seek better living standards in towns and cities.

    The world’s most-populous nation had 690.79 million people living in urban areas at the end of 2011, compared with 656.56 million in the countryside, the National Bureau of Statistics said today in Beijing. That puts the number of people residing in China’s towns and cities at double the total U.S. population.

    China’s urbanization has accelerated since Deng Xiaoping introduced capitalist reforms in the late 1970s, lifting more than 200 million people out of poverty and transforming the nation into the world’s second-largest economy and its biggest consumer of steel, copper and coal. That migration may have decades more to run, diluting an agrarian economy that was once the ruling Communist Party’s power base.

    “Urbanization has been a fundamental driver behind China’s economic growth,” said Chang Jian, an economist at Barclays Capital in Hong Kong who formerly worked for the Hong Kong Monetary Authority and the World Bank. “Urbanization in China still has a long way to go, maybe for another 20 years.”

    China’s rural population fell as a proportion of the nation’s total to 50.05 percent in 2010 from 81 percent in 1979, as reform fueled a more than 90-fold increase in the economy during that time. During the first three decades of Communist Party rule, that proportion declined by less than 9 percentage points from 89.36 percent in 1949.

    21st Century
    Nobel economics laureate Joseph E. Stiglitz has cited urbanization in China, along with technology developments in the U.S., as the two most important issues that will shape the world’s development during the 21st century.

    With more urbanization and industrialization ahead of it, China still needs investment to upgrade its industries and infrastructure, Ma Jiantang, commissioner of the National Bureau of Statistics, said today in a briefing in Beijing.

    Urbanization will also provide “fundamental support” for investment growth and housing demand, Barclays’s Chang said.

    China’s urbanization has already benefited companies such as excavators makers Caterpillar Inc. (CAT) and Komatsu Ltd. (6301), and iron ore miners BHP Billiton Ltd. (BHP) and Rio Tinto Plc. (RIO) Changing consumer tastes and growing wealth have also fueled demand for products sold by Apple Inc. (AAPL), General Motors Co. (GM) and Yum! Brands Inc. (YUM)

    Income Gap
    Income for the nation’s city dwellers is more than triple that of its rural residents. Per capita urban disposable income increased 8.4 percent in real terms last year to 21,810 yuan, according to the statistics bureau. By the same measure, per capita rural cash income increased 11.4 percent to 6,977 yuan, according to the agency.

    The statistics bureau doesn’t provide disposable income statistics for rural residents because much of their annual earnings aren’t in cash, such as food they grow themselves.

    Income growth for rural residents outpaced that for people in towns and cities in 2011 for a second consecutive year. Rural income grew faster in 2010 for the first time since 1997.

    China’s rural poor have been the source of revolution throughout the nation’s history. Mao Zedong’s Communist Party took power in 1949 after winning the support of hundreds of millions of peasants living in the nation’s countryside. After the Communists’ victory, Mao redistributed land from rich landlords to penniless peasants.

    As the nation’s urban population surges, China now faces the challenge of providing jobs, welfare and other social services to its city dwellers, Zheng Zhenzhen, a professor at the Institute of Population and Labor Economics at the Chinese Academy of Social Science, said by telephone today.

    “One of the government’s top priorities now is to look after the lowest rungs of the urban population,” Zheng said.

    To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at frong2@bloomberg.net; Zheng Lifei in Beijing at lzheng32@bloomberg.net

    To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

    http://www.bloomberg.com/news/2012-01-17/china-urban-population-exceeds-rural.html
     
  19. Argentium

    Argentium Midas Member Midas Member

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    China's agricultural system/rural population are going to kill the "Chinese Miracle" soon.
     
  20. Zed

    Zed Size doesn't count! Midas Member

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    They hit a demographic wall soon, population could even take a dive.
     
  21. andial

    andial Sir Midas Member Site Supporter ++

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    Yes I read that a couple of years ago I forget what news source. Sometime around 2020 from what I remember.
     
  22. REO 54

    REO 54 Midas Member Midas Member

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    China’s Treasury Holdings Fell in November......

    So who's buying them?Which "foreign" invester is it?


    China, the largest foreign lender to the U.S., reduced its holdings of Treasuries in November for a second month as yields on the debt approached lows of the year and total foreign demand accelerated.

    China’s U.S. government securities ownership shrank by 0.1 percent, or $1.5 billion, in November to $1.13 trillion, according to Treasury data released yesterday. The Communist nation’s bill holdings fell 12 percent to $2.3 billion.

    Holdings of Treasuries by U.K. buyers, who are often seen as a proxy for Chinese investors operating away from the mainland, rose to a record after declining in October for the first time since June 2010. The Treasury’s initial reports on international purchases are based on the location where the transaction occurs. Revisions are based on location of the beneficial owner.

    “The monthly TIC data flows likely mask net purchases” by Chinese investors, said Michael Pond, co-head of interest-rate strategy in New York at Barclays Plc, one of 21 primary dealers that trade with the Federal Reserve. “The bottom line is they have dollars to invest.”

    Holdings in the U.K. jumped 4.4 percent to $429.4 billion, Treasury data show. Investors in the U.K. have increased their holdings 59 percent this year.

    Japan boosted its holdings by $59.9 billion to a record $1.04 trillion as finance officials sold yen to arrest the appreciation of the currency and bought dollars.

    Foreign Ownership Rises
    Total foreign holdings rose 1.7 percent in November to $4.75 trillion, U.S. government data show. Foreigners held 48 percent of the $9.88 trillion of outstanding public Treasury debt, up from 47.8 percent the month before.

    Foreign holdings of U.S. Treasuries have risen 7.1 percent this year through November, the smallest increase since 2006. International ownership of U.S. government debt rose 20 percent annually in the prior two years, and at a compound rate of 17 percent since 2001, or as far back as the data are available.

    Treasuries returned 0.73 percent in November after losing 0.76 percent in October, according to the Bank of America Merrill Lynch Treasury Master Index. Yields on benchmark 10- year notes were 1.9 percent, down from 2.07 percent on Nov. 30.

    Holdings Revisions
    China’s holdings of U.S. debt have fallen 2.4 percent this year through November to $1.13 trillion, the least since July 2010, when they totaled $1.12 trillion, from $1.16 trillion at the end of 2010, Treasury data show.

    The data are expected to be revised in 2012. On Feb. 28, 2011, the U.S. updated earlier estimates, showing China’s Treasury investments in October 2010 were a record $1.18 trillion, 30 percent more than the initial estimate of $906.8 billion.

    When the data is revised in February “all of a sudden you see this big revision and China shows up with all these purchases nobody knew about,” said Scott Sherman, an interest- rate strategist at primary dealer Credit Suisse Group AG in New York. “Similarly the U.K. purchases that tend to be pretty steady and strong get knocked back down.”

    A decline in China’s currency reserves may be a sign that China’s economy isn’t going to be as reliant on buying U.S. debt to make its exports more attractive, said Michael Cheah, who oversees $2 billion in bonds at SunAmerica Asset Management in Jersey City, New Jersey.

    China’s reserves totaled $3.18 trillion as of Jan. 13, or 2.5 percent below the Aug. 31 high of $3.26 trillion, according to China’s National Bureau of Statistics.

    Currency Controls
    China’s currency, the yuan, rose 5 percent against the dollar last year, the biggest yearly increase since a 7 percent gain in 2008.

    The growth in China’s Treasury holdings has historically been the result of efforts “to prevent the renminbi from strengthening, that is, to protect the exporters,” Cheah said. “The drop in Treasury holdings reflects a drop in China’s total reserves. They’re not intervening as aggressively as before.”

    China’s economy expanded at the slowest pace in 10 quarters as Europe’s debt crisis curbed export demand and the property market weakened. Gross domestic product rose 8.9 percent in the fourth quarter from a year earlier, the statistics bureau said in Beijing Jan. 17.

    China is prepared for a slowdown in economic growth and a mild moderation is “desirable,” Ma Jiantang, head of the statistics bureau, said at a briefing Jan. 17. The government has set a target of 7 percent annual expansion for the current five-year plan that runs through 2015 and will focus more on the quality of growth, he said.

    ‘Manage Their Absence’
    A slackening of demand from China doesn’t now pose a threat to the U.S. in the form of higher rates, as the domestic demand based has broadened, said Cheah, who worked at the Singapore Monetary Authority from 1982 through 1999, and now teaches finance classes at New York University and at Chinese universities. “We are able to manage their absence with bigger than otherwise domestic demand that helps underpin our economy.”

    The Fed holds $2.67 trillion of Treasuries in custodial accounts, the fewest since April 20. They have declined 3.2 percent since Aug. 24 when they reached a high of $2.76 trillion.

    “If you look at the Fed’s custody holdings, you do see weakness,” Credit Suisse’s Sherman said. At the same time, he said the European debt crisis has also helped support prices for Treasuries by broadening demand among international investors.

    “There are a lot of private investors who are buying Treasuries because Europe is not a safe asset anymore,” Sherman said. “The population of risk-free assets is smaller and that’s making Treasuries in higher demand.”

    To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net

    To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

    http://www.bloomberg.com/news/2012-...for-second-straight-month-as-yields-fell.html
     
  23. Zed

    Zed Size doesn't count! Midas Member

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  24. KnowNothing

    KnowNothing Seeker Seeker

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    Well even if China does rise to it's glory, it'll tumble pretty fast considering the gap that will arise from the whole "only one kid per family" thing.

    Can't imagine how a society would function if for every one middle-aged man there were fifteen "senior citizens" so to say.
     
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  25. <===Foolsgold

    <===Foolsgold Gold Chaser Site Supporter ++ Platinum Bling

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    Japan is the real powder keg, according to Kyle Bass.
     
  26. Zed

    Zed Size doesn't count! Midas Member

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    Yup, would think that any disaster is more likely to come from left field as far a most are concerned. Way too many looking at China and blabbing on about collapse, truth is that the US set off down that same path in the 60's and is still going! (just) There is a lot that can be done to kick the can down the road in a big economy! Japan is facing a demographic hit and a 20 year + pot hole that they have dug. They are the ones more likely to hit a BIG air pocket IMO! Too much complacency going on around their numbers... then lets not mention the US.
     
    Last edited: Jan 25, 2012
  27. REO 54

    REO 54 Midas Member Midas Member

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    H.K. Homes Face 25% Drop in Year of the Dragon.......


    The Year of the Dragon, representing wealth and power in China, is shaping up to be the opposite for the world’s costliest housing market, Hong Kong.

    Mortgages (HKMGLEND) that need to be insured by the government because of risk experienced the steepest plunge in six years in 2011, a sign the biggest home price decline since the global credit crisis is accelerating. Property prices that have slid 6 percent since June may fall as much as 25 percent by 2013, estimates Andrew Lawrence of Barclays Capital, who predicted the initial slide in April.

    Asian real estate markets from Singapore to Beijing to Mumbai are stalling or have started declining as governments seek to curb the type of housing bubble that brought down the U.S. economy. In Hong Kong, rising borrowing costs, extra transaction taxes and higher down-payment requirements imposed by the government have fueled the slump.

    “We’re in for a very challenging first half,” said Wong Leung-sing, associate director of research at Centaline Property Agency Ltd., the city’s biggest closely held realtor. “The drop in secondary mortgages means buyers are having trouble borrowing from the banks the full amounts they need. The ones that are taking the biggest hits right now are the middle- to lower- priced housing segment.”

    Prices had surged 70 percent from 2009 to their 14-year high in June. Home deals in December fell for a sixth straight month to the lowest since November 2008, according to the Land Registry.

    36 Percent Drop
    Loans covered by the Hong Kong Mortgage Corp.’s insurance program decreased 36 percent in 2011 from a year earlier to HK$26 billion ($3.4 billion), according to figures released Jan. 11. It was the biggest drop since 2006, said the body, which was set up in 1999 to provide government insurance for mortgages exceeding 70 percent of a property’s value -- also known as secondary mortgages -- in a bid to revive slumping home prices at that time.

    The HKMC in June 2011 reduced the maximum value of property that can be covered by its insurance program to HK$6 million from HK$6.8 million, the second reduction since late 2010.

    Hong Kong’s median home price of HK$3.15 million is a record 12.6 times the annual median household income of HK$249,000, according to a Jan. 23 report by Belleville, Illinois-based Demographia. Second-place Vancouver had a 10.6 multiple, followed by Sydney with 9.2.

    The number of property transactions with a value of below HK$2 million will probably fall to less than 900 this month, the lowest since record-keeping began in 1996, according to Midland Holdings Ltd. (1200), Hong Kong’s biggest publicly traded realtor.

    Price Cuts
    The Hang Seng Property Index (HSP), which tracks the city’s seven biggest developers including Sun Hung Kai Properties Ltd. (16) and billionaire Li Ka-shing’s Cheung Kong Holdings Ltd. (1), fell 24 percent in 2011, after gaining more than 75 percent over the previous two years. It has risen 13 percent this year.

    Chinese New Year began on Jan. 23. Dragon years in the 12- year zodiac are associated with wealth and power because the creature is the icon of China’s emperors.

    A three-room, 880-square-foot apartment in Tai Koo Shing, one of Hong Kong’s biggest middle-class private housing projects, was sold for HK$7 million this month, HK$1.5 million lower than the original asking price, according to Kenneth Chiu, a district sales manager at Centaline.

    Last year’s decline in prices and transactions coincided with the rise in borrowing costs. Hong Kong banks, led by HSBC Holdings Plc (HSBC) and BOC Hong Kong Holdings Ltd. (2388), increased mortgage rates at least six times since April as liquidity dried up.

    Rising Lending Rates
    Despite the Jan. 25 announcement by U.S. Federal Reserve officials that benchmark interest rates would probably remain below 1 percent through 2014, average mortgage rates in Hong Kong are forecast to rise.

    They could reach as high as 4 percent by the end of 2012 from the current 2.38 percent, said Sharmaine Lau, chief economist at mReferral Mortgage Brokerage Services. Borrowing costs were 0.9 percent in early 2011, almost the lowest in 20 years, the company’s data shows.

    The increase “should weigh on transaction volume and suggests we will see a slightly faster fall in prices,” said Lawrence, the Hong Kong-based analyst at Barclays. “It’s incremental that each time mortgage rates go up, there are less people in the market.”

    Liquidity is falling as tightening measures in China have driven companies to borrow in Hong Kong, while capital outflows from the city continue as foreign banks repatriate funds from Asia because of the European sovereign debt crisis.

    More Reserves
    The Hong Kong Monetary Authority, the city’s de-facto central bank, has asked lenders to keep more reserves as part of their counter-cyclical measures, Chief Executive Norman Chan said in November.

    “Hong Kong banks are very reluctant about raising mortgage rates further because of what it may do to transactions,” said Lau. “But at the same time they’re facing a steep increase in funding costs.”

    For a HK$2 million, 20-year mortgage, the increased interest rate of 4 percent from 2.38 percent means an extra HK$19,656, or 16 percent, in annual repayments, Bloomberg calculations show.

    “The last couple years mortgage rates have been irrationally low,” said Lau. “Bringing them back to the 3 to 4 percent range would bring things to a more reasonable level from a historical perspective.”

    Record Low
    The HKMA, which doesn’t have an independent interest-rate policy because of the local currency’s peg to the U.S. dollar, has kept its base rate at a record-low 0.5 percent since December 2008.

    Hong Kong’s property prices halved between 1997 and 2003 as the city fell into recession brought on by the Asian financial crisis, the Sept. 11 terrorist attacks and the SARS epidemic. Since 2004, prices have recovered while loans drawn down from the HKMC rose for four straight years from 2007 to a record HK$41 billion in 2010.

    The government’s mortgage insurance program has been “the way many first-time buyers managed to get into what is an extremely expensive market,” said Lawrence. The next group to be affected will be “the equity-rich, first-time buyers who are going to get priced out of the market.”

    Lawrence forecast in April that home prices might drop because of rising mortgage rates.

    Buyers Sidelined
    To temper surging housing demand, the government has imposed extra stamp duties since 2010 on all homes sold within two years of the date of purchase, while raising minimum down- payment requirements on some property transactions. It has also increased land supply for private housing, and pledged to build more subsidized homes and ensure the supply of land for private housing.

    “At a time like this, most buyers are staying on the sideline,” said Simon Lo, head of Asia research and advisory for property broker Colliers International. “The general expectation is that home prices will drop further so they are all postponing their homebuyer plans.”

    Home prices are also stalling because of the threat of a slowdown in wage increases, Lo said. About 13 percent of Hong Kong firms plan staff cuts in the first quarter, exceeding the previous quarter’s 8 percent, according to a report by New York- based headhunter Hudson Highland Group Inc.

    Home prices may need to fall at least 10 percent in 2012 before buyers are lured back, Benjamin Hung, chief executive officer of Standard Chartered Plc (STAN)’s local unit, Hong Kong’s fourth-biggest mortgage lender, said in an interview on Dec. 13.

    To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

    To contact the editors responsible for this story: Andreea Papuc at apapuc1@bloomberg.net; Rob Urban in New York at robprag@bloomberg.net.

    http://www.bloomberg.com/news/2012-...s-loans-fall-in-year-of-dragon-mortgages.html
     
  28. REO 54

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    China 2012 – The Fall of The Chinese Miracle
    Jaroslaw Suplacz

    "The prognosis of the copper market brought us to where it should have – to the prognosis of the overall situation in China. In both cases a crash is imminent but the crash in the copper market does not even need a recession or a crash of the Chinese economy – it is enough to get a weak market of 5 per cent and a lower growth of GDP."

    http://www.silverbearcafe.com/private/02.12/chinesemiracle.html


    Realted......Chilean Peso Falls Fifth Day on Copper Drop, Moody’s Bank Move...

    Chile’s peso weakened for a fifth day versus the U.S. dollar, the longest losing streak in two months, as copper prices fell, Europe’s leaders remained divided over a Greek rescue and Moody’s Investors Service said it may downgrade global banks.

    The peso weakened 0.5 percent to 488.05 per dollar at 9:57 a.m. in Santiago, from 485.5 yesterday. It earlier weakened as much as 1 percent.

    “Its all copper,” said Ronald Volpi, head of spot currency trading at brokerage firm Euroamerica Corredores de Bolsa SA. “The fear of the downgrade of financial institutions is rocking the market.”

    Moody’s said it may cut ratings on Morgan Stanley, UBS AG and Credit Suisse AG by as much as three levels as part of a review of 17 financial institutions, which may force them to increase collateral and increase their financing costs. European leaders delayed yesterday a decision until Feb. 20 over a 130 billion euro ($169 billion) rescue of Greece.

    The price of copper, Chile’s main export, fell as much as 2 percent in New York, the euro shed as much as 0.7 percent and S&P 500 futures retreated as much as 0.6 percent.

    To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

    http://www.bloomberg.com/news/2012-...fth-day-on-copper-drop-moody-s-bank-move.html
     
  29. REO 54

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    China Cuts Bank Reserve Reqs; Exports ’Grim’........

    China cut the amount of cash that banks must set aside as reserves for the second time in three months to spur lending as Europe’s debt crisis curbs exports and the housing market cools.

    Reserve ratios will fall 50 basis points, effective Feb. 24, the People’s Bank of China said on its website yesterday evening. The level for the nation’s largest lenders will decline to 20.5 percent, based on previous statements.

    China follows Japan in expanding monetary easing even as global equity markets are buoyed by signs of strength in the U.S. economy and optimism that Europe’s fiscal crisis will be contained. Governor Zhou Xiaochuan’s officials moved on the same day that a report showed home prices slid in most of the nation’s biggest cities in January.

    “Chinese policy makers are very much concerned about a possible deeper slowdown in domestic growth,” said Yao Wei, a Hong Kong-based economist with Societe Generale SA.

    A 50 basis-point cut may add 400 billion yuan ($63 billion) to the financial system, Australia & New Zealand Banking Group Ltd. (ANZ) estimates. UBS AG says 350 billion yuan. The previous reduction was the first since the global financial crisis.

    Tight interbank liquidity may have triggered the latest move, according to UBS economist Wang Tao in Hong Kong.

    In the U.S., the Standard & Poor’s 500 Index has climbed to near the highest level since 2008 after America’s jobless rate fell and Greece moved closer to securing another bailout. The Shanghai Composite Index rose for a fifth week last week on speculation that China would ease monetary policy.

    No ‘Hard Landing’
    While China’s commerce ministry describes the trade outlook as “grim,” Vice President Xi Jinping said there will be no “hard landing” for the world’s second-biggest economy.

    Home prices in 47 of 70 cities fell in January, while the remaining 23 were unchanged from December. Volkswagen AG (VOW), Europe’s largest carmaker, says sales in China, the company’s biggest market, fell 4.5 percent last month.

    China’s gross domestic product grew 8.9 percent in the fourth quarter from a year earlier, the slowest pace since the first half of 2009. Exports and imports fell for the first time in two years in January and new lending was the lowest for that month in five years.

    In a Feb. 16 interview in Beijing, Fan Jianping, chief economist at the government-run State Information Center, said that the nation may set a 7 percent or 7.5 percent target for growth this year, the least since 2004.

    IMF Caution
    The International Monetary Fund said this month that China’s expansion may be cut almost in half if Europe’s debt crisis worsens, demanding “significant” fiscal stimulus.

    Lu Zhengwei, a Shanghai-based economist at Industrial Bank, said yesterday there’s “no possibility” that China will cut interest rates soon, partly because of inflation concerns. Consumer-price gains unexpectedly rebounded to 4.5 percent in January, accelerating for the first time in six months, as a week-long lunar festival boosted spending.

    Japan unexpectedly added to monetary easing last week by expanding an asset-purchase program, while the U.S. Federal Reserve said last month that it would keep interest rates low through at least late 2014 and indicated that it may make asset purchases.

    Before yesterday’s announcement, Ken Peng, a Beijing-based economist at BNP Paribas SA, said the Chinese government needs to be “careful not to overshoot monetary loosening, as it did in the financial crisis.”

    Credit Boom
    Lingering effects of record lending in 2009 and 2010 include the risk for banks that local government financing vehicles will default, saddling lenders with bad loans.

    The central bank said Feb. 15 that it will improve the use of differentiated reserve ratios, where requirements are calculated according to individual banks’ capital adequacy levels and lending growth.

    The bank also said that M2, the broadest measure of money supply, will probably grow 14 percent this year, a target that Zhu Haibin, a Hong Kong-based economist for JPMorgan Chase & Co. (JPM), says may imply three to four cuts in reserve ratios this year.

    Home prices have declined in cities from Beijing to Wenzhou as the government cracks down on speculation and implements a program to build low-cost housing.

    Jim O’Neill, the economist who coined the term BRIC for developing nations Brazil, Russia, India and China, said Jan. 17 that Chinese officials had moved to avoid the “wild housing bubbles” that many Western nations had experienced. O’Neill, chairman of Goldman Sachs Asset Management, said he doesn’t see a “hard landing” for China.

    To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net

    http://www.bloomberg.com/news/2012-...a-second-time-as-europe-threatens-growth.html
     
  30. REO 54

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    China’s Holdings of Treasuries Decline for First Time.......

    China, the largest foreign U.S. creditor, reduced its holdings of U.S. government securities last year for the first time since the Treasury Department began compiling the data in 2001.

    The world’s second-largest economy held $1.15 trillion Treasuries as of Dec. 31, down from $1.16 trillion at the end of 2010, according to Treasury data released yesterday. The U.S. revised the figures to show that China held about $51 billion more than reported earlier last month. The revision shows nation’s holdings peaked at $1.3149 trillion in July.

    Enlarge image
    China Trims Holdings of Treasuries to Lowest Level Nelson Ching/Bloomberg
    China is the largest foreign lender to the U.S.

    China is the largest foreign lender to the U.S. Photographer: Nelson Ching/Bloomberg
    China’s policy makers have advocated diversification of the nation’s foreign-exchange reserves away from U.S. assets after more than doubling its holdings of Treasuries since 2007 in the wake of the global financial crisis. Yields on benchmark 10-year Treasury notes dropped to a record low of 1.67 percent in September as investors sought a haven from Europe’s sovereign- debt crisis and the Federal Reserve pledged to keep borrowing costs close to zero to sustain economic growth.

    “What we may be seeing from China is similar behavior to many domestic investors,” said William O’Donnell, head U.S. government bond strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut, one of 21 primary dealers that trade with the Fed. “With 10-year notes sub 2 percent they don’t have a lot of interest or appetite for Treasuries.”

    The 10-year note yield rose one basis points, or 0.01 percentage point, to 1.98 percent at 11:04 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2 percent security due February 2022 fell 1/8, or $1.25 per $1,000 face amount, to 100 1/8.

    European Purchases
    Japan maintained its place as America’s second-largest lender, with $1.06 trillion of Treasuries in December, while Brazil held $226.9 billion, the Treasury Department said. Hong Kong held $121.7 billion at the end of last year, according to the data. Total foreign holdings amounted to $5 trillion, up from $4.44 trillion in December 2010.

    As China’s demand for Treasuries has waned, buyers in Europe have taken up the slack as the region’s debt crisis worsened. Luxembourg increased its holdings by 74 percent to $150.6 billion last year, Switzerland boosted its stake 33 percent to $142.5 billion and Belgium’s position in the debt more-than-quadrupled to $135.2 billion.

    The Treasury data is inconsistent month-to-month as a new methodology has been phased in from a mainly transaction-based survey to a custodian survey.

    As of January 2012, the new data on foreign holdings of Treasury securities is being collected monthly instead of quarterly.

    Largest Owner
    The Fed remains the top holder of U.S. debt with $1.66 trillion on its balance sheet. The central bank said in September it would sell $400 billion of short-term debt in its holdings and buy an equal amount of longer-maturity Treasuries. Traders call the program Operation Twist after a similar effort in 1961 to contain borrowing costs for companies and consumers.

    “It makes sense that China would sell into the Fed’s twist, but while they are cutting their holdings they are still far and away one of the largest holders of U.S. debt, and that isn’t changing anytime soon,” said Thomas Simons, a government debt economist in New York at Jefferies Group Inc., another primary. “While there has been speculation that there would be potential alternative for Treasuries as a reserve asset, we’ve seen over the last year that that just isn’t true, and the U.S. is where it’s at.”

    To contact the reporters on this story: Cordell Eddings in New York at ceddings@bloomberg.net; Daniel Kruger in New York at dkruger1@bloomberg.net

    To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

    http://www.bloomberg.com/news/2012-...treasuries-in-december-revised-data-show.html
     
  31. REO 54

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    China Targets 7.5% Growth in 2012 as Exports Slow......

    China lowered the nation's economic growth target to 7.5 percent, the least since 2004, suggesting leaders will tolerate slower expansion as they try to reduce reliance on exports.

    Officials will also aim for inflation of about 4 percent this year, unchanged from the goal in 2011, according to a state-of-the-nation speech that Premier Wen Jiabao delivered to about 3,000 lawmakers at the annual meeting of the National People’s Congress in Beijing today.

    more here...http://www.bloomberg.com/news/2012-...ar-as-european-debt-crisis-slows-exports.html



    Asia Stocks Decline on China Economy Concern......

    Asian stocks fell, retreating after a record 11-week rally, as China announced its lowest economic growth target since 2004 and the nation’s service industries shrank. The yen rose against its major peers, while oil climbed.

    The MSCI Asia Pacific Index (MXAP) dropped 0.8 percent as of 12:17 p.m. in Tokyo. The Hang Seng China Enterprises Index slid 1.6 percent, led by insurers after American International Group Inc. said it’s selling AIA Group Ltd. (1299) shares. Standard & Poor’s 500 Index futures slipped 0.2 percent. The yen added 0.1 percent versus the dollar, while China’s yuan slid to a four-week low. Oil advanced 0.3 percent after a U.S. pipeline was shut.

    more here......http://www.bloomberg.com/news/2012-...gets-slower-economic-growth-yen-oil-gain.html
     
    shades likes this.
  32. REO 54

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    Chinese Economy Already in ‘Hard Landing,’ JPMorgan’s Mowat Says.....


    China’s economy is already in a so- called “hard landing,” according to Adrian Mowat, JPMorgan Chase & Co.’s chief Asian and emerging-market strategist.

    “If you look at the Chinese data, you should stop debating about a hard landing,” Mowat, who is based in Hong Kong, said at a conference in Singapore yesterday. “China is in a hard landing. Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact.” His team was a runner-up for best Asian equity strategists in a 2011 Institutional Investor magazine poll.

    The Shanghai Composite Index fell 2.6 percent yesterday, the most since Nov. 30, after Premier Wen Jiabao said home prices are still “far from a reasonable level.” His comments fueled concern the government will maintain restrictions on the property market for an extended period even as the curbs threaten to slow economic growth.

    Wen announced at the beginning of a national lawmakers’ congress on March 5 an economic growth target of 7.5 percent for this year, down from 8 percent over the past seven years. Data last week showed China’s factory output in the first two months of the year rose the least since 2009, while retail sales increased less than economists predicted and inflation eased to the slowest pace in 20 months.

    Mowat said in May the risk of a hard landing was building in China as fixed-asset investment in real estate had increased even as property demand remained weak. That meant residential inventories will increase and lead to a contraction in construction activity, the strategist said in a May 17 interview.

    Excessive Decline
    “One should be concerned about what’s happening in the China property market,” Mowat said at yesterday’s conference. “People are too complacent that the government can turn what’s going on in this market.”

    The slump in Chinese stocks to Wen’s speech yesterday was “overdone” as his comments on property were only a reiteration and don’t reflect consensus in the government, Jason Todd, global head of equity strategy at Religare Capital Markets Ltd., wrote in a report. The Shanghai Composite (SHCOMP) gained 0.2 percent as of 9:32 a.m. local time today.

    Wen, set to leave office next year after a decade in power, also said yesterday his nation must adopt political change to support an economic transformation that has produced rapid development at the cost of a widening wealth gap.

    ‘Vastly Overblown’
    Gary Shilling, president of A. Gary Shilling & Co., a Springfield, New Jersey-based consultancy firm, said on Feb. 2 that China’s economy is headed for a “hard landing” this year as weaker demand overseas chokes off exports. Shilling, who correctly forecast the U.S. recession that began in December 2007, defines a hard landing as a growth rate below 6 percent.

    Shilling and Mowat’s views are in contrast with Yale University Professor Stephen Roach, a former non-executive chairman for Morgan Stanley in Asia, who said on March 8 that concerns China will enter a hard landing are “vastly overblown.”

    “I don’t think the banking system will collapse and the property bubble will burst,” Roach said at a conference in Shanghai. “These are all exaggerations.”

    China is easing restrictions on lending capacity at three of the nation’s four biggest banks after new loans dropped to a four-year low, officials at the banks with knowledge of the matter said. The government’s two-year effort to control the property market helped spur a 25 percent drop in home sales in the first two months of the year after surging 26 percent in January and February of 2011.

    “What you can look forward to is to see a pickup in property demand that will clear up the inventory; that doesn’t appear likely,” Mowat said in an interview after the conference yesterday. “I don’t see any evidence of a policy move that will cause the economy to reaccelerate.”

    To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

    http://www.bloomberg.com/news/2012-03-14/chinese-economy-already-in-hard-landing-jpmorgan-says.html
     
    Last edited: Mar 14, 2012
  33. REO 54

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    Record China Bank Profits to Be Overshadowed by Bad Loans.......

    Where have we seen this before??


    China’s biggest banks, set to post record profits for a fifth year, may report 2011 results marred by an increase in bad loans as an economic slowdown and faltering property market trigger defaults by borrowers.

    Industrial & Commercial Bank of China Ltd., the world’s most profitable lender, and its four biggest local rivals may post a 15 percent increase in combined fourth-quarter net income when they report this month, according to analyst estimates compiled by Bloomberg. Their non-performing loans rose for the first time since the third quarter of 2008, the banking regulator said last month.

    China’s efforts to bolster banks’ risk buffers and curb inflation following a two-year, $2.7 trillion credit boom have pushed up funding costs, slowed the economy and triggered defaults, prompting Standard & Poor’s to warn March 12 that a jump in bad loans may curb profitability. Fresh evidence of mounting defaults may clip the average 42 percent rally in shares of the banks in Hong Kong over the past five months.

    “It’s time to take profits off the table,” said May Yan, a Hong Kong-based analyst at Barclays Capital Inc., who cut her rating on the industry to “neutral” last month, citing weakness in the economy and banking sector. “The rebound of NPLs is not temporary. It’s the beginning of a worrisome trend.”

    Rising Bad Loans
    Non-performing loans at Hong Kong-listed Chinese banks, which include Beijing-based ICBC, China Construction Bank Corp. and Agricultural Bank of China Ltd. (1288), may rise an average 40 percent in 2012, Yan forecast. The bad-loan ratio at the five biggest banks could climb to about 1.9 percent in 2013 from 1.1 percent in 2011, she said.

    The economy expanded 8.9 percent last quarter, or at the slowest pace in 2 1/2 years, as Europe’s debt crisis curbed export demand and the property market weakened. The slowdown has extended into this year, with factory output in the first two months rising the least since 2009, while home prices posted the worst performance in a year, data showed this month.

    Still, China’s 3,800 banks had fourth-quarter net income of $35.4 billion, a third more than the total earnings of 7,357 U.S. lenders including Bank of America Corp. and JPMorgan (JPM) Chase & Co., data from the China Banking Regulatory Commission and the Federal Deposit Insurance Corp. showed. The five largest Chinese banks accounted for 139.5 billion yuan ($22 billion) of profit, according to the analysts’ estimates.

    Roads, Bridges
    The earnings have been driven by accelerated loan growth after China’s government unveiled a 4 trillion-yuan stimulus package to bolster the economy following a slump in global equity and credit markets in 2008. That triggered an explosion in credit to local governments and property developers, and a surge in investments in infrastructure such as roads and bridges.

    A year after the boom ended in 2010, defaults began to climb. Bad loans at China’s five largest banks rose to 299.6 billion yuan as of Dec. 31, from 287.9 billion yuan at the end of September, according to data from the regulator in February. The non-performing loan ratio remained at 1.1 percent, it said.

    The actual increase in defaults is probably higher than the official data because lenders write off the worst assets at the end of the year, China International Capital Corp. analysts Mao Junhua and Luo Jing wrote in a note last month.

    Missed Repayments
    Mountain China Resorts Holdings Ltd., a partner of Club Mediterranee SA in China, said last week that it failed to repay 30 million yuan of bank loans on time. Shandong Helon Co., the fiber maker that in December became China’s first company to lose its investment-grade credit rating, missed 397 million yuan in loan payments in January.

    Publicly traded Chinese banks’ bad loans may jump 26 percent this year as the economy slows, while profit growth will be cut by almost half, to 15 percent, and the average net interest margin may shrink 4 basis points from last year’s 2.7 percent, CICC forecast. A basis point is 0.01 percentage point.

    “We are monitoring the NPL trend very, very closely, but it’s far from the stage of sending everybody into a panic,” said Yang Jianxun, a Shenzhen-based fund manager at Dacheng Fund Management Co., which oversees the equivalent of $12.7 billion. “The problem will be contained and banks’ valuations are still attractive from a long-term perspective.”

    Shenzhen Development Bank Co. (000001), the first Chinese lender to report full-year earnings, posted a 26 percent increase in fourth-quarter non-performing loans following increased lending to smaller businesses, which have higher default rates, President Richard Jackson said on March 8.

    Bankruptcies, Suicides
    Among its branches, the ratio is the highest in Wenzhou, reflecting the difficulties faced by entrepreneurs in the coastal city, the bank said. More than 80 indebted businessmen in the small exporters’ hub disappeared, committed suicide or declared bankruptcy from April through September because of loans due to informal lenders, the official Xinhua News Agency said in October.

    Property companies listed in China and Hong Kong face a worse cash shortage this year than in 2008, when China’s house prices fell for the first time since people were allowed to own homes, CEBM Group Ltd., a Shanghai-based investment advisory firm, said in January.

    Residential prices will need to see a “meaningful correction” by falling 20 percent to 30 percent from last year’s peak before the government relaxes property rules, Qu Hongbin, an economist at HSBC Holdings Plc, said on March 19.

    May Avert Crash
    Prices may post a “single-digit” decline this year, billionaire developer Vincent Lo, chairman of Shui On Land Ltd., said in an interview in Beijing on March 8. The market won’t see a crash, he said.

    Premier Wen Jiabao, who this month pared the 2012 economic growth target to 7.5 percent, said home prices remain far from a reasonable level and relaxing restrictions on sales could cause market “chaos.”

    While Chinese banks’ bad debt have increased, total lending is growing faster. The ratio of non-performing loans to total credit should be “stable” after lending grew 15.8 percent last year, Morgan Stanley predicted in a March 7 note.

    Agricultural Bank, the nation’s third-largest lender, may report tomorrow that fourth-quarter profit rose 16.6 percent to 28.84 billion yuan, according to a Bloomberg survey of analysts.

    Construction Bank, the second-largest, is set to report a 29 percent gain on March 25. ICBC may say on March 29 that earnings rose 14 percent while Bank of China Ltd. (3988), ranked No. 4, will probably post a 2 percent increase in profit. The four banks are all based in Beijing.

    Lower Valuations
    Shanghai-based Bank of Communications Co., the fifth- largest lender, may post a 6.9 percent increase in net income on March 28.

    The five banks are trading at an average 6.1 times their estimated earnings in 2012, compared with 9.5 times at New York- based JPMorgan and 13.8 times at Charlotte, North Carolina-based Bank of America, according to data compiled by Bloomberg.

    Standard & Poor’s warned last week that China’s banks could face a slump in earnings growth in 2012 due to a slowing economy, falling property prices and the challenges of refinancing “sizable” local government debt.

    The banks’ reported bad-debt ratio tied to local government financing vehicles is “not possible” unless they’re rolling over debt, said Liao Qiang, a Beijing-based S&P analyst. He estimated last year that as much as 30 percent of loans to such entities may sour without central-government support, and will probably be the biggest source of non-performing assets for the industry.

    Local Governments
    Yunnan Highway Development & Investment Co., a financing vehicle of the southwestern province, in April told creditors including Construction Bank (939) and ICBC that it wouldn’t be able to make principal payments on about 100 billion yuan of loans, Caixin Online reported in June. The provincial government later promised to assume payment.

    In northern Liaoning province, about 85 percent of local government financial vehicles didn’t have sufficient income to pay principal and interest payments on debt due in 2010, Caixin said in September, citing a speech by the head of the provincial audit office.

    China’s first audit of local-government borrowing showed 80 percent of their 10.7 trillion yuan of debt at the end of 2010 was bank loans and more than half will mature in 2011- 2013. More than 35 billion yuan of money borrowed for local development went into the stock and property markets or prohibited projects, the audit showed.

    The credit boom also sapped lenders’ finances. BoCom said last week it plans to raise 56.6 billion yuan in a private placement to boost its core capital adequacy ratio above the 9.5 percent minimum required under the new capital rules. Agricultural Bank’s core capital ratio at 9.36 percent as of Sept. 30 was also below the mandatory minimum.

    To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net

    http://www.bloomberg.com/news/2012-...-profits-to-be-overshadowed-by-bad-loans.html
     
    Last edited: Mar 21, 2012
  34. REO 54

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    China’s Stock Futures Fall on Profit Concerns, Lower Growth....

    China’s stock futures fell on concern about the effect of slowing economic growth and tight monetary policies are having on profits after the nation’s biggest copper and airline companies reported slumping earnings.

    Futures on the CSI 300 Index (SHSZ300) expiring in April, the most active contract, fell 0.3 percent to 2,558.6 as of 9:15 a.m. local time. Jiangxi Copper Co. (600362), the nation’s biggest producer of the metal, may decline after reporting an 18 percent slide in net income. Air China Ltd., the world’s biggest airline by market value, may retreat after reporting a worse-than-estimated decline in 2011 profit and predicting that passenger growth may slow to 4.4 percent this year.

    The Shanghai Composite Index (SHCOMP) fell 3.42 points, or 0.2 percent, to 2,347.18 yesterday, while the CSI 300 Index declined 0.3 percent to 2,547.14. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, lost 0.3 percent to 105.42 yesterday.

    About 6.5 billion shares changed hands in the Shanghai Composite yesterday, or 18 percent lower than the daily average this year, while 30-day volatility in the gauge was at 15, comnpared with this year’s low of 14.8 on March 12, according to data compiled by Bloomberg.

    The Shanghai Composite has advanced 6.7 percent this quarter, the biggest three-month gain since the third quarter of 2010, on speculation the government will take measures to boost economic growth. Stocks in the measure trade at 9.8 times estimated profit, compared with a record low of 8.9 times on Jan. 6, weekly data compiled by Bloomberg showed.


    more here.....http://www.bloomberg.com/news/2012-...res-fall-on-profit-concerns-lower-growth.html



    Air China Passenger Growth May Slow to 4.4% After Profit Slump.......

    Air China Ltd. (753), the world’s biggest airline by market value, predicted that passenger growth may slow to 4.4 percent this year after reporting a worse-than- expected decline in 2011 profit.

    The carrier, including units, may fly 72.8 million travelers this year, compared with 69.7 million last year, it said in a Shanghai stock exchange filling late yesterday. Net income declined 41 percent last year to 7.08 billion yuan ($1.1 billion) under international accounting standards.

    more here...http://www.bloomberg.com/news/2012-...rowth-may-slow-to-4-4-after-profit-slump.html
     
  35. REO 54

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    Asian Stocks Drop on Europe Debt Crisis Concern; Oil Advances......


    Asian stocks fell to a one-month low after weaker demand at a Spanish debt auction reignited concern over Europe’s debt crisis. Oil advanced from its lowest level in seven weeks.

    The MSCI Asia Pacific Index (MXAP) retreated 0.5 percent as of 9:46 a.m. in Tokyo. The Nikkei 225 Stock Average lost 0.8 percent. Standard & Poor’s 500 Index futures were little changed after the gauge sank 1 percent yesterday. Oil increased 0.5 percent to $102 a barrel in New York following yesterday’s 2.4 percent tumble.

    Spain’s situation is one of “extreme difficulty,” Prime Minister Mariano Rajoy said yesterday. He raised the threat of an international bailout for the second time this week as he sought to defend the deepest austerity moves in at least three decades. Asian equities extended a global selloff that dragged down the MSCI All-Country World Index by the most in a month yesterday as U.S. Federal Reserve minutes indicated the central bank may refrain from increasing monetary stimulus.

    “Most of Europe is going through a contraction,” said Andrew Salter, a foreign-exchange strategist in Sydney at Australia & New Zealand Banking Group Ltd. “If the peripheral governments cannot make the necessary reforms, in the long term that’s a negative for the euro.”

    The euro traded near a three-week low versus the yen. The 17-nation currency was little changed at $1.3145, after dropping to $1.3107 yesterday, the weakest level since March 16.

    Claims for U.S. unemployment benefits probably fell to a four-year low, while German industrial production declined, according to estimates compiled by Bloomberg ahead of reports today. The U.S. Commerce Department is scheduled to release a March jobs report tomorrow that may show payrolls increased by more than 200,000 workers for a fourth consecutive month.

    To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net
     
  36. REO 54

    REO 54 Midas Member Midas Member

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    Second IPO Below Target as Economy Slows: China Overnight.........


    Acquity Group Ltd. (AQ) became the second Chinese company in 2012 to raise less than planned in a U.S. share sale as a slowing economy and accounting concerns sent New York-traded stocks lower in the past year.

    Acquity, a Hong Kong-based online advertising company, slipped 0.7 percent to $5.96 by 1:02 p.m. on its first day of trading in New York, after raising 40 percent less that targeted in its initial public offering. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese stocks listed in the U.S., gained 0.5 percent to 103.84 and is headed for a fourth weekly jump, paring its 13 percent tumble in the past 12 months.

    “The IPO market is quite choppy particularly because the IPO ahead of us was priced below the range and dropped at the get-go, which cast some shadow on us,” George Lu, the executive chairman and group chief executive of Acquity, said in a phone interview. Concerns over “governance and accounting” of Chinese companies also affected the stock valuation, he said.

    Vipshop Holdings Ltd. (VIPS), a Guangzhou-based online retailer, has slumped 19 percent since raising 39 percent less than it intended last month in the first Chinese IPO in the U.S. since August. China’s economy expanded at the slowest pace in two years last quarter as the European debt crisis and sluggish U.S. recovery cut global demand for exported goods. Shortsellers such as Muddy Waters LLC have accused companies including Sino-Forest Corp. of misstating assets or earnings in reports to investors.

    Below Target
    Acquity sold 5.56 million American depositary receipts for $6 each for a total of $33.3 million, according to data compiled by Bloomberg. The company initially sought as much as $55.6 million by offering the ADRs for $8 to $10, according to an April 23 filing.

    In March, Vipshop raised $71.5 million by selling 11 million ADRs for $6.50 each, below the target range of $8.50 and $10.50. China Auto Rental Holdings Inc. (CARH), a Beijing-based car- rental provider, postponed its IPO on April 24, citing adverse “market conditions.”

    The IShares FTSE China 25 Index Fund (FXI), the biggest Chinese exchange-traded fund in the U.S., was little changed at $37.79 yesterday. The ETF is down 0.6 percent in the week, the first decline this month. The Standard & Poor’s 500 Index (SPX) rose 0.3 percent, extending its advance this week to 1.8 percent.

    China’s Shanghai Composite Index (SHCOMP) lost 0.4 percent this week after China Cosco Holdings Co., the nation’s biggest publicly traded shipping company, reported worse-than-expected losses in the first quarter and China Petroleum & Chemical Corp., Asia’s biggest refiner, posted a slump in net income.

    ‘Goldilocks Predicament’
    “It’s tough to get conviction about Chinese equities right now,” Kevin Shacknofsky, who helps manage about $5 billion for Alpine Mutual Funds, said by phone yesterday in New York. “China is in a Goldilocks predicament in which it’s not strong enough for stable growth and it’s not weak enough for stimulus.”

    China has cut reserve requirements for banks twice since November in a bid to stoke lending. The nation has kept benchmark rates on hold at the highest level since 2008 since July.

    Aluminum Corp. of China Ltd., China’s biggest producer of the lightweight metal, gained 3.5 percent to $12.58 in the U.S. yesterday, pushing its weekly advance to 1 percent.

    Plans by Xiong Weiping, chief executive officer of the company known as Chalco, to diversify into rare earths, coal and iron ore overshadowed the company’s 1.09 billion-yuan loss ($173 million) in the first quarter, compared with a profit of 331.2 million yuan a year earlier.

    Asia-Info Jumps
    Chalco has been the most acquisitive of any aluminum company in the past year with four deals worth $1.26 billion, according to data compiled by Bloomberg.

    AsiaInfo-Linkage Inc. (ASIA), a telecommunications software developer, rose 1.5 percent to $11.80 yesterday in New York, trimming a weekly drop of 1.3 percent.

    The company reported adjusted earnings of 27 cents per share after U.S. markets closed on April 26, compared with an estimate of 26 cents by analysts surveyed by Bloomberg. AsiaInfo was raised to buy from neutral by Kun Tao, an analyst at Roth Capital Partners.

    The Shanghai Composite is closed April 30 and May 1 for holidays and the Hong Kong exchange shuts May 1.

    To contact the reporters on this story: Xie in New York at yxie6@bloomberg.net; Leon Lazaroff in New York at llazaroff@bloomberg.net

    To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


    http://www.bloomberg.com/news/2012-...-target-as-economy-slows-china-overnight.html
     
  37. REO 54

    REO 54 Midas Member Midas Member

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    China Foreign Investment Falls 0.7% in Sixth Monthly Drop (Update 3).....

    "Cumulative Decline
    Foreign direct investment in the first four months fell 2.4 percent from a year earlier to $37.9 billion after a previously reported 2.8 percent decline in the first quarter and a 26 percent jump a year ago. FDI rose 9.7 percent in 2011 to $116 billion, according to Commerce Ministry data.

    Commerce Ministry spokesman Shen Danyang said last month that the outlook for foreign investment is still “grim” as Europe’s debt crisis persists and competition increases from other developing countries vying for foreign money. "

    more at link....http://www.bloomberg.com/news/2012-...lls-0-7-from-year-earlier-to-8-4-billion.html


    China Growth Seen at 13-Year Low by Pimco (Update 1)........

    Pimco, which oversees the world’s largest bond fund, sees Chinese growth this year in the “mid-7 percent range,” a pace unseen since 1999. Its call is still lower than that of banks from Citigroup Inc. and JPMorgan Chase & Co. to Bank of America Corp. and UBS AG, which all pared their forecasts after April economic data were released last week.

    more here....http://www.bloomberg.com/news/2012-05-14/china-growth-seen-at-13-year-low-by-pimco.html
     
  38. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Just wanted to say thanks REO for keeping this thread going,

    gives us a great capsule of some china information

    S
     
    REO 54 likes this.
  39. REO 54

    REO 54 Midas Member Midas Member

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    China Adds Treasuries for Second Month on Reserve Growth.......

    China remained the largest foreign U.S. creditor, adding to its holdings in March as the Treasury 10-year note yield reached the highest level since October.

    China’s holdings rose by 1.3 percent to $1.17 trillion, U.S. Treasury Department data released yesterday show. Those of Japan, America’s second-largest lender, slipped 0.2 percent to $1.08 trillion. Net foreign purchases of Treasuries increased $17.8 billion, or 0.4 percent, to a record $5.12 trillion, the data show.

    The 10-year Treasury yield touched 2.40 percent on March 20, after ending 2011 at 1.88 percent, as investors speculated gains in the U.S. labor market were a sign of sustainable economic growth. China’s currency reserves rose 3.9 percent during the three months ended March 31, reversing the first quarterly decline since 1998, according to the People’s Bank of China.

    “The price level made more sense at that point,” said Larry Dyer, a U.S. interest-rate strategist at HSBC Holdings Plc in New York, one of 21 primary dealers that trade with the Federal Reserve. “All investors are looking for yield but also a little bit worried about the rate levels. It may be consistent with buying dips. Everyone who’s called for an end of Chinese purchases has found themselves on the wrong side of the facts.”

    The data showed China held $1.1552 trillion of Treasuries in February, a decrease from the $1.1789 trillion reported for the period on April 16. The Treasury is now revising holdings data on a monthly basis rather than annually based on the nationality of the beneficial holder of the debt, while the initial data will still count the location of the purchase.

    Longer-Term Securities
    China increased its holdings of longer-term notes and bonds by $14.6 billion, or 1.3 percent, to $1.166 trillion. Its stake in short-term bills rose by $100 million to $3.9 billion, Treasury data show.

    China’s holdings of U.S. government securities rose 1.6 percent in the first three months of 2012, reversing a 9.3 percent decline in the final three months of the previous year. The world’s second-largest economy held $1.15 trillion Treasuries as of Dec. 31, down from $1.16 trillion in December 2010 and from a peak of $1.31 trillion in July 2011.

    For the first three months of 2012 Japan increased its holdings of U.S. government debt by 2.4 percent, its slowest pace of accumulation since the period from April through June 2011 following last year’s earthquake and tsunami.

    Hong Kong’s Treasury holdings dipped $3 billion in March, or 2.1 percent, to $138.8 billion, while the U.K., which is often seen as a proxy for Chinese demand, declined $4.1 billion, or 3.5 percent, to $112 billion.

    The Fed remains the top holder of U.S. debt with $1.665 trillion on its balance sheet.
    http://www.bloomberg.com/news/2012-...uries-for-second-month-on-reserve-growth.html

    from the comment section.......


    Julio 2 hours ago 2 comments collapsed Collapse Expand
    welcome to the united states of China.

    A Like Reply 0 Like F
    astrophysics in reply to Julio 1 hour ago 1 comment collapsed Collapse Expand
    Exactly incorrect. China is in very very serious trouble, and they have resumed buying treasuries in a flight to safety. Capital has fled China for the past 6 months, as detailed here on Bloomberg. Even with resumed buying, they hold only 15% of US debt. If China dumped it all tomorrow, on the same day, the Fed could simply repatriate its holdings and there wouldn't even be a rate blip.
     
  40. REO 54

    REO 54 Midas Member Midas Member

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    China’s Car Dealerships Struggle as Stockpiles Increase....


    Chinese dealers are struggling with the rising number of unsold cars that’s threatening to deepen price cuts, according to the nation’s biggest automobile dealers’ association.

    Dealerships for Honda Motor Co. (7267), Chery Automobile Co., BYD Co. (002594) and Geely (175) Automobile Holdings Ltd. carried more than 45 days of inventory as of the end of April, exceeding the threshold that foreshadows debilitating price cuts, Su Hui, vice president of the auto market division at the state-backed China Automobile Dealers Association, said in an interview yesterday.

    “Unsold cars are crowding dealer lots in cities from Guangzhou in the south to Xi’an to the west,” Su said in a phone interview yesterday from Beijing. “It’s like a contagious disease that will spread.”

    The warning signals that vehicle deliveries reported by companies, which have risen more than analysts’ estimates for the past two months, aren’t fully translating to consumer sales. Demand was the slowest in the first four months since 1998, weighing on automakers from General Motors Co. (GM) to Volkswagen AG (VOW), which are counting on the world’s largest auto market to offset slumping sales in Europe.

    Intensifying Competition
    “Competition will get fiercer,” said Huang Wenlong, a Hong Kong-based analyst with BOC International Holdings Ltd. “China’s auto demand will definitely slow down with the decline of the economic growth rate.”

    BYD (1211) fell 4 percent to HK$15.22 at the midday trading break in Hong Kong, poised for its lowest close since Oct. 24, after earlier dropping as much as 5.4 percent. Geely dropped as much as 3.4 percent and Guangzhou Automobile Group Co. (2238), which makes cars with Honda, fell as much as 2.7 percent.

    An increasing number of small-scale dealers are suffering losses after discounting cars to boost sales, according to Feng Jian, deputy general manager of Pang Da Automobile Trade Co. (601258), China’s second-largest auto dealer by market value. Competition is also leading to consolidation among dealers, Feng said.

    China Yongda Automobiles Services Holdings Ltd., a Shanghai-based car retailer, plans to raise as much as HK$3.4 billion ($433 million) from an initial public offering in Hong Kong and plans to use 35 percent of the proceeds on potential acquisitions.

    Recommendation Cut
    Honda’s joint venture factory in China shut down for more than two weeks for the Labor Day public holiday and line maintenance, according to the Tokyo-based automaker. The stoppage prompted CLSA Asia Pacific Markets to cut its recommendation on Honda’s partner, Guangzhou Automobile, citing worsening demand.

    “While we had expected a poor first half, we did not expect to see the market deteriorate so fast that the Honda JV needed to close the factory for 16 days,” Scott Laprise, Beijing-based analyst at CLSA, said in a May 11 report.

    Honda President Takanobu Ito said yesterday in Tokyo that he wasn’t too concerned about China because the market still has room to expand. Executive Vice President Tetsuo Iwamura said at the same event the automaker’s inventory levels in China are appropriate and “aren’t too big of an issue yet.”

    CLSA this month also lowered its recommendations on Dongfeng Motor Group Co. and Great Wall Motor Co. (2333), citing worsening prospects for sedan makers.

    China ZhengTong Auto Services Holdings Ltd. (1728) and Baoxin Auto Group Ltd., Chinese luxury auto dealers, canceled plans to sell dollar-denominated bonds on May 16 as yields on Chinese debt in the U.S. currency surged the most since September.

    Vehicle Sales
    China’s total vehicle sales declined 1.3 percent in the January-to-April period, the worst showing since 1998 when deliveries fell 1.6 percent, according to data compiled by the China Association of Automobile Manufacturers, as slowing economic growth and rising fuel prices dented consumer demand.

    GM, the world’s largest automaker, reported sales growth accelerated last month as demand for its Wuling minivans offset a drop in Chevrolet deliveries. While Wuling helped total growth quicken to 12 percent from 11 percent in March, Buick sales growth slowed to 1.7 percent from a year earlier and demand for Chevrolet vehicles shrank 6.2 percent.

    Inventory levels at automakers rose 3.3 percent to 757,400 units as of the end of April, the highest in at least 16 months, CAAM data show. Dealerships are holding at least the equivalent in stock, according to Cheng Xiaodong, who oversees auto price monitoring at the National Development and Reform Commission, the nation’s top economic planner.

    The monthly NDRC survey of 36 major Chinese cities showed average car prices fell 1.9 percent in April from a year earlier, a fourth straight decline this year.

    ‘Big Pressure’
    “There’s pretty big pressure on auto dealers and automakers to cut prices,” said NDRC’s Cheng. “Car demand is not rigid and is easily undermined by macroeconomic conditions and the cost of owning cars.”

    Pacific Investment Management Co., which oversees the world’s largest bond fund, said this month that China’s economic growth may slow to the “mid-7 percent range,” a pace unseen since 1999. Economists at Citigroup Inc. and JPMorgan Chase & Co. cut their estimates for China’s economic expansion after April industrial production and trade grew less than estimated and renewed European debt turmoil roiled markets, prompting authorities on May 12 to cut the reserve ratio for the third time in six months.

    Steeper discounts bode well for consumers shopping for their next drive.

    “The auto consumer is becoming very price sensitive and appears to be buying only if there is a good deal,” said Ole Hui, a Hong Kong-based analyst at Mizuho Securities Asia Ltd. “Pricing is definitely on a structural downtrend.”

    To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

    http://www.bloomberg.com/news/2012-05-17/china-car-dealerships-struggle-as-stockpiles-increase.html

    comment section...

    Brian Konash 7 hours ago 1 comment collapsed Collapse Expand
    I wish the article had looked at whether restrictions local governments place on car ownership is playing a role in the slowdown. Some cities in China are auctioning off limited numbers of license plates, and that could easily kill sales if the practice has expanded.

    A Like Reply 0 Like F
    nirvonna7 7 hours ago 1 comment collapsed Collapse Expand
    Signs are everywhere, China can't even sell its cars now. GM about to open hundreds of dealerships, looks about as well timed as facebook's ipo friday.
     

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