China Foreign Direct Investment y/y for November +22.2% y/y
prior was +1.3%
More (via Reuters):
China’s foreign direct investment (FDI) rose on a cumulative basis in November, breaking four months of consecutive declines
Foreign investors moved money into China’s services sector at the expense of manufacturing
Chinese services sector attracted $58.6 billion of FDI in the first 11 months of the year, up 7.9 percent from the same period a year ago and significantly outperforming manufacturing which saw a 13.3 percent decline
China drew $106.2 billion in foreign direct investment (FDI) in the first 11 months of 2014, the Ministry of Commerce said on Tuesday, up just 0.7 percent from a year earlier
In November alone, China attracted $10.4 billion in FDI, up 22.2 percent from a year earlier
China’s non-financial direct outbound investment has continued to approach equivalency with inbound flows, rising l1.9 percent from the same period last year to $89.8 billion but declining on a monthly basis by 26.1 percent to $7.9 billion
FDI is still a small contributor to China’s overall capital flows compared to exports, which were worth about $2 trillion in 2013.
China’s stock market boom has reached outright mania, with equities galloping higher at a parabolic rate, despite threats of a crackdown by regulators and the continued slowdown of the national economy.
The Shanghai Composite Index has risen 32pc in the past six weeks, blowing through 3,000 to a three-and-a-half-year high even though corporate earnings are declining steeply.
The China Securities Regulatory Commission said late last week that it would “increase market supervision, resolutely crack down and earnestly safeguard normal market order”. It warned that stock manipulators had been “raising their head” and would be dealt with.
The cautionary words have been ignored by retail investors as they throng brokerage offices, lured by momentum trades. The government itself is partly responsible for letting the genie out by talking up “cheap stocks” in the official media two months ago, but now appears alarmed by what it has done.
Many families are taking out brokerage loans to buy stocks, increasing leverage and risk. Margin debt has risen to more than $130bn from nothing three years ago. This is now 1.2pc of GDP. “Turnover, leverage and account openings have all soared and there is a sense of mania taking hold,” said Mark Williams, from Capital Economics.
China exported more steel in the first 10 months of this year than in all of 2007 as producers sought higher prices beyond the country’s saturated market.
Through October, Chinese exports of steel products totaled 73.8 million tons, rising 42.2% from the same period last year, according to the General Administration of Customs. That surpasses a full-year high set in 2007.
In September alone, exports jumped by 73.2% to a single-month record of 8.52 million tons that was broken the very next month, when volume reached 8.55 million tons. At the current pace, China could export more than 90 million tons of steel this year.
Chinese industrial policy has promoted production of steel for domestic use while holding back exports of the metal. In the past, China exported only about 7% of its crude steel output, compared with around 40% for Japan, but that ratio is likely to top 10% this year.
Falling domestic prices of steel have widened a price gap between China and foreign markets, says an industry watcher, explaining the growth in exports. On average, Chinese steel for export commands an estimated premium of 1,500 yuan ($244) per ton over steel sold on the domestic market, which is suffering from overproduction.
The Chinese government this week dissolved its salt monopoly, ending the state’s control over a sector that has been in place since the 7th century BC as it pursues market reforms and a streamlined bureaucracy.
The importance of the salt revenues for ancient Chinese states gave rise to a number of philosophical debates over the utility and morality of indirect taxes. The most famous of these adumbrated modern Communist China: that a strong state, rather than private merchants, underpins a strong economy.
Similar debates may persist but the role of salt itself has diminished hugely: indeed China National Salt Industry Corp, which functions as both salt regulator and marketer, is now a recipient of state largesse, pocketing Rmb720m ($118m) in subsidies in 2012.
“It’s only a small portion of national revenues. There’s no reason to have so many people involved up and down the bureaucratic chain,” says Ma Wanfeng, of Beijing Orient Agribusiness Consultant.>> Read More
The Dow and S&P 500 hit new closing highs Friday, registering a fifth straight week of stock gains.
The Dow Jones industrial average climbed 91 points, or 0.5% to a new all-time finishing high of 17,810.06.
Up 11 points, or 0.5%, was the Standard & Poor’s 500. The index settled at its new closing high of 2063.50.
The Nasdaq composite index added 0.2%.
Global markets rallied sharply as central bankers from China and Europe reiterated their support for markets and struggling economies abroad.
The global rally was sparked after China announced a surprise interest rate cut and the European Central Bank chief Mario Draghi said the ECB is ready to take additional steps to stimulate the weak Eurozone economy.>> Read More
Deflation is becoming lodged in all the economic strongholds of East Asia. It is happening faster and going deeper than almost anybody expected just months ago, and is likely to find its way to Europe through currency warfare in short order.
Factory gate prices are falling in China, Korea, Thailand, the Philippines, Taiwan and Singapore. Some 82pc of the items in the producer price basket are deflating in China. The figures is 90pc in Thailand, and 97pc in Singapore. These include machinery, telecommunications, and electrical equipment, as well as commodities.
Chetan Ahya from Morgan Stanley says deflationary forces are “getting entrenched” across much of Asia. This risks a “rapid worsening of the debt dynamic” for a string of countries that allowed their debt ratios to reach record highs during the era of Fed largesse. Debt levels for the region as a whole (ex-Japan) have jumped from 147pc to 207pc of GDP in six years.
These countries face a Sisyphean Task. They are trying to deleverage, but the slowdown in nominal GDP caused by falling inflation is always one step ahead of them. “Debt to GDP has risen despite these efforts,” he said. If this sounds familiar, it should be. It is exactly what is happening in Italy, France, the Netherlands, and much of the eurozone.
Japanese Foreign Minister Fumio Kishida said Saturday he agreed with his Chinese counterpart Wang Yi to boost bilateral cooperation by working toward the early resumption of “various” high-level talks.
“I believe this meeting served as an important opportunity to change gears to put back Japan-China on the path of normal relations,” Kishida told reporters after holding official talks with Wang in Beijing.
Amid some signs of a thaw in relations strained over territorial and historical disagreements, the meeting was the first official one between foreign ministers of the two countries since September 2012.
Kishida said he proposed restarting a high-level economic dialogue, involving numerous ministers of the two countries, which has been suspended since 2010, and other consultation frameworks of senior officials in the areas of foreign policy, security and energy-saving.>> Read More
Trade between China and Russia’s Far East is thriving as more people cross the border for shopping.
Crossing the border is relatively easy for Russians as they do not need a visa for short stays and regular buses ferry passengers from one country to the other.
Decorte, a furniture distributor and retailer in the port city of Vladivostok near the Chinese border, teamed up with Chinese furniture producers about a year ago to organize shopping tours there. Decorte imports the furniture the shoppers buy on the tour and provide a guarantee for the products.
Decorte hopes the business will make 360 million rubles ($8.23 million) in annual sales in two years.
Historians may record that Brics mania reached its height during the 2014 football World Cup in Brazil. President Dilma Rousseff used the occasion to host a summit of the leaders of the five Brics: Brazil itself, Russia, India, China and South Africa. The formation of a new Brics development bank was announced, with its headquarters in Shanghai.
The only thing that spoiled Ms Rousseff’s Brics party was that it took place against the backdrop of the spectacular defeat of the Brazilian national team in the tournament – 7-1 to Germany. A few months later, it is beginning to feel as if the Brics may ultimately prove as much of a disappointment as the host side.
There are three big emerging problems with the Brics story. The first is economic. Three of the five nations involved – Brazil, Russia and South Africa – are floundering economically. This year’s Indian election was also fought against a backdrop of several years of disappointing economic growth. Of the Brics, China alone is still growing at more than 7 per cent a year – but it is in the midst of difficult reforms. Shared dynamism was meant to be the basis of the Brics story – but it has been lost, at least for the moment.
The second difficulty is political. When the Brics were booming, it was natural to argue that their political systems were also functioning well. Now that several are in trouble, political weaknesses such as corruption are more apparent.
The third problem is to do with the incoherence of the group. Although the Brics clearly do aspire to be a voice for the non-western world, they are a very disparate group. Developments in Brazil or South Africa shed no light on the future of China – a country that is so large and powerful that it is really in a category of its own. Meanwhile Russia is mired in a deep and unique crisis in its relations with the west.>> Read More
Growth in China’s auto market, the world’s biggest, will halve to 7 percent this year weighed down by a slowing economy, the head of an industry body said on Saturday.
“Personally, I think growth this year can reach 7 percent,” Dong Yang, secretary general of the China Association of Automobile Manufacturers (CAAM), told reporters on the sidelines of an industry conference in Shanghai.
“The economy is slowing. The auto industry would reflect that but typically lags the economic cycle by a bit.”
CAAM had forecast China’s auto market, which grew by 13.9 percent last year, to expand at 8.3 percent in 2014. Dong said CAAM will not make any official revisions to its forecast.
Carlos Ghosn, head of Japanese carmaker Nissan Motor Co Ltd (7201.T) and its French alliance partner Renault SA (RENA.PA), told the same conference he was still optimistic about China’s outlook.>> Read More