China has hiked its defence budget by $131bn, in the latest double digit spending increase.
National defence spending will grow 12.2 per cent to Rmb 808.23bn ($131bn) this year, according to a work report that Premier Li Keqiang will deliver to the annual meeting of the country’s largely ceremonial legislature later Wednesday.
This is a slightly larger budget increase than in 2013, when China’s defence spending rose 10.7 per cent.
27 February 2014 - 13:47 pm
China minted 41 new billionaires over the past year, driven largely by growth in the technology industry, according to a new rich list.
The mainland now boasts a total of 358 U.S. dollar billionaires who have amassed a total worth of $963 billion, the report compiled by the country’s Hurun research institute said.
That puts China second only to the U.S., which spawned 72 new billionaires, pushing its total to 481, based on a “snapshot” of data on January 17.
17 February 2014 - 18:27 pm
China’s policymakers have been making moves to cool off its debt-fueled economy.
Economists believe growth will slow to around 7.4% in 2014 from 7.7% in 2013.
Societe Generale’s Wei Yao sees 6.9% growth in her base case scenario. But she warns that there is a risk that China’s transition could prove disorderly, causing the economy to slow much more than anyone expects.
With China slowdown concerns making news lately, SocGen clients’ top question in the past week was “How likely is China hard-landing?”
Yao assigns a 20% probability of a hard-landing, which she considers to be growth of 5% or less. Here’s SocGen’s Michaela Marcussen telegraphing Yao’s commentary: >> Read More
17 February 2014 - 12:54 pm
John Kerry, US secretary of state, warned on Monday that the future stability of the Asia-Pacific region will depend on long-stalled efforts by China and southeast Asian nations to draw up a code of conduct to manage territorial disputes in the South China Sea.
“It’s not an exaggeration to say that the region’s future stability will depend in part on the success and timeliness of the effort to produce a code of conduct,” Mr Kerry said at a press conference with Marty Natalegawa, the Indonesia foreign minister, who has spearheaded efforts by the 10 member Association of Southeast Asian Nations to advance talks on the code with Beijing.
“The longer the process takes, the longer tensions will simmer and the greater the chance of a miscalculation by somebody that could trigger a conflict.”
Mr Kerry, who was in Jakarta on the final stop of a three-country Asian trip, had earlier called on Chinese leaders to pursue their claims in the East and South China Seas peacefully and abandon their more assertive approach. >> Read More
17 February 2014 - 7:09 am
1. China: Over the weekend, China reported a large than expected rise in yuan loans and aggregate financing. Yuan loans rose to CNY1.32 trillion, a 23% increase year-over-year. The consensus was for a CNY1.1 trillion increase after CNY482.5 bln in December. Aggregate financing rose a record CNY2.56 trillion ($425 bln). This news comes on the heels of the better than expected trade figures and unchanged CPI (2.5%). Together they could help ease concerns about the economic slowdown in the world’s second largest economy. On the other hand, the reliance of debt to fuel growth, which has reached a point of diminishing returns (an extra unit of capital/debt is generating less growth than in the past) underscores the lack of sustainability.
We also highlight the seasonality in this time series. Aggregate lending typically goes up in January and new quotas are provided. In fact over the past 10-years, it has only fallen in one January (2012). Reports suggest that lending for have risen even more, but officials encouraged restraint in late January. In terms of seasonality, aggregate lending typically falls in February. In the past nine Februaries, it has only increased once and that was last year. On February 19, HSBC will publish its flash manufacturing PMI. The risk is for another sub-50 reading (49.4 from 49.5). Recall that its flash January reading appeared to help intensify the pressure on emerging markets.
2. Emerging Markets: If flows follow performance, we should expect the liquidation of emerging market funds to slow if not reverse. The MSCI Emerging Equity Index rose a little more than 2% last week and closed at its highest level in three week and technical indicators suggest scope for additional recovery gains in the days ahead. A downtrend line off the late October ’13 highs, catching the mid-November high and early January ’14 high comes in near 973 at the end of the week ahead and represents a good near-term target. EPFR report that last week another $4.5 bln left emerging market funds to bring the year-to-date liquidation to $29.7 bln, and surpassing last year’s total.
We note that the equity markets are bearing the brunt of the liquidation, accounting for almost three quarters of the outflows. Markit reports that short interest in emerging market stocks has increased by around 7% and now accounts for a little more than 2.1% of the total free float. Shorts are reportedly the largest in China and South Africa, accounting for 4.5% and 4.3% of the free float respectively. In the fixed income space, institutional investors have helped developing countries and companies raise around $67 bln though debt sales.
Three emerging market central banks meet in the days ahead. While Chile is expected to cut rates 25 bp, there is some risk that it stands pat. Hungary is widely expected to shave another 10 bp off the base rate and after the recent large move and rate simplification, the central bank of Turkey is likely to stand pat. >> Read More 03 February 2014 - 7:11 am
Well it’s a perhaps a good thing that China markets are closed, as we just got more evidence that its economy slowed just ahead of the lunar new year.
China’s official non-manufacturing index slipped from from 54.6 in December to a multi-year low of 53.4 last month (see chart). Any score above 50 indicates growth.
The data is in line with other data showing the economy cooled leading up to Chinese New Year. On Saturday, the official manufacturing index slipped to 50.5.
24 January 2014 - 15:45 pm
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
China and India are both powder kegs awaiting a spark for the same reason: systemic corruption.
The conventional view of China and India sports not one but two pair of rose-colored glasses: Chindia (even the portmanteau word is chirpy) is the world’s engine of growth, and this rapid economic growth is chipping away at structural political and social problems.
Nice, especially from a distance. But on the ground, China and India (not Chindia–there is no such entity) are both powder kegs awaiting a spark for the same reason: systemic corruption in every nook and cranny of both nations. The conventional rose-colored view is that corruption will inevitably decline with modernization and economic growth.
This is simply wrong on multiple levels: as the opportunities for crony/neofeudal skimming increase, so does corruption. As the scale of the economy increases, so does the scale of corruption. >> Read More
10 January 2014 - 10:20 am
Though China’s trade figures indicate it has overtaken the US as the world’s largest trade partner, this is the second straight year China has missed its growth target.
The trade surplus over the last 12 months was $260bn, China’s highest since the global financial crisis. But total trade gained only 7.6 per cent in the year, missing the growth target of 8 per cent.
ANZ blames a 3 per cent rise in the renminbi against the dollar, which has hurt trade competitiveness.
Further appreciation in the renminbi this year could have a similar impact. ANZ predicts the currency will rise 1.16 per cent this year to 5,98 per dollar.
Bank of America Merrill Lynch economists also point out that over-invoicing from companies – a way of channelling cash into the country – buoyed early 2013 exports, which will make this year’s figures appear low by contrast.
“We should be prepared for a period of low headline year-on-year export growth due largely to the faked exports data between December 2012 and April 2013,” said Lu Ting, China economist at Bank of America Merrill Lynch. >> Read More
08 January 2014 - 6:02 am
Japanese, Chinese and South Korean corporate leaders hold strikingly different views on cooperating amid political tensions, a three-country survey finds.
Just 13% of Chinese executives said they can separate business from politics to work with Japanese companies, while around 60% said they cannot.
About 60% of South Korean business leaders said they keep cooperation with Japanese firms to a minimum out of political considerations. Nearly 8% said they cannot work together.
By contrast, around 80% of Japanese executives said they can cooperate with companies from the other two countries.
Japan’s Nikkei, South Korea’s Maeil Business Newspaper and China’s Global Times collaborated on the poll, which was taken before Japanese Prime Minister Shinzo Abe visited a controversial Tokyo shrine last month, stirring wartime resentments in Seoul and Beijing.
Opinion also differed on priorities for cooperation. For the Japanese, fostering global talent was the top response, cited by 45%. On the other hand, 47% of Chinese respondents and 49% of South Korean executives cited improving technology. >> Read More