Chinese Economics Thread

[Martian]

RMB Hits 17-Year High vs. USD on Tuesday

Proposed new 500 yuan note depicting Deng Xiaoping, the architect of China's modernization. If you love China's booming economy with 10% annual growth for the last 30 years, much of the credit belongs to Deng's reforms.

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"RMB Hits 17-Year High vs. USD on Tuesday
27 Dec 2011

December 27, The Chinese currency renminbi strengthened 15 basis points to 6.3152 against the U.S. dollar on Tuesday, the highest since 1994, according to the China Foreign Exchange Trading System.

Based on a weighted average of prices, the People’s Bank of China, or central bank, sets the central parity rate of the renminbi against the U.S. dollar before the opening of the market each business day.

“The central parity price is the intention of the central bank. And a higher price shows the central bank’s determination to maintain the appreciation of the Chinese currency. The market has fully received the signal,” a trader told the National Business Daily.

“In view of market trade, profit taking and settlement has pushed up the renminbi. Banks are selling U.S. dollar positions and enterprises are increasing settlements due to accounting needs,” the trader said.

UBS Securities expects the renminbi to stabilize at around 6.35 against the green back at the end of this year and rise by 3% to 6.15 at of the end of 2012.

JP Morgan Chase reckoned China’s real GDP growth would rise 8.2% at an annualized rate in 2012 and the current account surplus would account for 2.8% of GDP next year. The Chinese currency would continue to appreciate by about 4% against the U.S. dollar in 2012.

edited by Tony ZHU"

 

[Martian]

China canceled $30 billion in debts by 35 African countries

"Trade and aid are expected to top discussions during the China-Africa Summit ..."

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"China’s EXIM Lends More to Sub-Sahara Africa Than World Bank, Fitch Says
By Mike Cohen - Dec 28, 2011 10:31 AM ET

Export-Import Bank of China extended $12.5 billion more in loans to sub-Saharan Africa in the past decade than the World Bank, Fitch Ratings said.

State-owned EXIM lent about $67.2 billion to the world’s poorest region between 2001 and 2010 compared with the World Bank’s $54.7 billion, the ratings company said in a report e-mailed from London today.

“It is estimated that 20 percent of EXIM bank’s total business volume is conducted with Africa,” Fitch said. “Angola, Ethiopia, Nigeria and Sudan have been traditional recipients of EXIM loans since the bank’s founding in 1994. However, more recent projects suggest an even distribution across the African continent.”

China has been boosting ties with Africa, as it seeks to secure access to the continent’s raw materials and new markets for its manufactured goods. In return it has provided African governments with financing to help develop their economies, attaching less stringent loan conditions than institutions such as the World Bank and International Monetary Fund.

“Absence of political strings, competitive interest rates and flexible repayment schedules compared with Western counterparts, makes China’s loans highly attractive,” Fitch said. “For countries dependent on foreign aid, such as Ghana and Mozambique, Chinese loans offer an alternative source of capital against more traditional donor demands, particularly given growing infrastructure needs.”

Foreign Direct Investment

Chinese loans to sub-Saharan Africa exceed the Asian nation’s foreign direct investment in the region, with cumulative investment reaching $11 billion as of 2010, according to the ratings company. Most EXIM loans have been used for infrastructure projects, Fitch said.

China Development Bank Corp., the state-owned policy lender, has its own special loan program with Africa to help small- and medium-sized companies secure financing and build local markets. Since the program’s inception last year, the bank has helped fund more than 1,000 projects that created 50,000 jobs in more than 25 African countries, Fitch said, citing data provided by the state lender.

“Long-term debt sustainability is a concern, given poor transparency regarding loan terms and the weak debt management capacity of borrowers,” Fitch said. By the end of 2009 “35 African countries had debts canceled by China, amounting to approximately $30 billion.”

To contact the reporter on this story: Mike Cohen in Cape Town at [email protected]

To contact the editor responsible for this story: Andrew J. Barden at [email protected]"

 

[Hendrik_2000]

Well Martian welcome back long time no see. What happened I hope you don't get pissed off by some of the forummer who criticizes you. Just ignored them

 

[Martian]

Taiwan remains world's biggest in LED-industry scale

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2011 LED Capacity by Region (Source: SEMI Opto/LED Fab Forecast May 2011)

"Taiwan Boasts World's Largest LED Capacity in 2011; 27 New LED Fabs Going Up In Asia This Year
June 8, 2011

Demand for Equipment Rising: Heavyweights Converge on LED Manufacturing Section at SEMICON Taiwan

LED application products -- tablet computers, LED TVs and smartphones -- are all the rage, fueling the rapid rise and proliferation of Taiwan-based LED businesses. Corporations such as AU Optronics (AUO), TSMC and CHIMEI have all crossed over into the LED industry, forging yet another trillion-[New Taiwan] dollar industry in Taiwan. SEMI Opto/LED Fab Forecast has projected 27 new LED fabs starting operation in the Asia region (excluding Japan) this year. Of these, 17 will be built in China and 7 in Taiwan."

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"Taiwan remains world's biggest in LED-industry scale
by Jeffrey Wu
2011/12/25 14:21:41

Taipei, Dec. 25 (CNA) The output value of Taiwan's LED industry remained the world's biggest in 2011, despite lower-than-expected market growth, according to a local industry association.

As the eurozone's debt problems dragged down demand, the output value of the global LED market grew by only 2.6 percent to US$16.6 billion (NT$502.48 billion) this year from US$16.1 billion in 2010, the Photonics Industry and Technology Development Association (PIDA) said in a recent report.

The PIDA is an organization jointly set up by the government and Taiwan's business and academic circles with the aim of promoting the local photonics industry.

In terms of regional performance, Taiwan still topped the market with a total output value of US$4.54 billion in 2011 -- including those of the upstream epitaxial wafers -- although the figure declined 0.4 percent from last year's US$4.56 billion, the PIDA said.

South Korea, which has run its LED sector aggressively in the past few years, ranked third behind Taiwan and Japan with output values of US$3.35 billion this year, representing an increase of nearly 5 percent from last year, the association said.

Some South Korean companies have launched low-priced products to tap into the lighting market but they still need to purchase LED components from Taiwan to save costs because of their limited scale of production, the PIDA said.

The association added that LED output value in Europe plunged 7.3 percent from US$1.74 billion in 2010 to US$1.61 in 2011 due to the impact of the European debt crisis and fierce competition.

On the contrary to Europe's decline, China's LED output value surged 26 percent year-on-year from 2010 thanks to local government support, the highest growth among all regions, the PIDA said."

 

[Hendrik_2000]

All those prediction of doom and gloom is completely false . The economy is slowing because of government measure to burst the bubble early and lower the inflation rate. In other word it is desirable. domestic demand is still strong and coupled with diversification of export to developing economy. It is more than sufficient to offset slower export to Europe

PMI rebound keynotes growth of new year, slow but steady

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BEIJING, Jan. 1 (Xinhua) -- China's December PMI data ceased its sliding trend for two consecutive months and ended 2011 with a slight rebound, delivering the hope of slow but steady growth in 2012, for the world's second-largest economy.

The Purchasing Managers' Index (PMI), a preliminary readout of the country's manufacturing activity, rebounded to 50.3 percent in December, indicating a stabler slowing trend for the country's economic growth.

The December Purchasing Managers' Index was up 1.3 percentage points from 49 percent in November, the China Federation of Logistics and Purchasing (CFLP) said Sunday.

A PMI reading of 50 percent demarcates expansion from contraction.

The CFLP's PMI is based on a survey of purchasing managers in more than 820 companies in 20 industries.

The preview of HSBC China's PMI for December rebounded slightly from November's 47.7 to 48.7 after adjusting for seasonal variation.

YEAR-ROUND GROWTH PERFORMS STEADY

The slight growth in the December PMI confirmed a stabler trend of cooling economic growth of which the impetus still appears weak. "The pace of the growth slowdown is unlikely to tumble in 2012," said Zhang Liqun, a researcher with the Development Research Center of the State Council, China's cabinet.

He said the fundamentals in the country's economic development remain unaltered, which creates chances of pulling back the growth trend.

Cai Jin, deputy director of CFLP, also said the sharply shrunk demand started climbing back, mirroring the slow but steady economic status.

"The fresh PMI data are beyond expectation," Cai explained, "New Year's Day and the Spring Festival boosted demand and the newly drawn central policy brought by the Central Economic Working Conference enhanced public confidence on macro control."

China's economic growth has been slowing throughout 2011, with its two largest trade partners, Europe and the United States, struggling for recovery from the global financial crisis and its aftermath.

The country's GDP rose 9.1 percent year-on-year in the third quarter of the year, slowing from 9.5 percent in the second quarter and 9.7 percent in the first quarter.

However, the slowdown seems to have contributed to the eased pressure on prices. The sub-index for purchase prices rose 2.7 percentage points from November to 47.1 percent in December.

The country's consumer price index (CPI), a main gauge of inflation, rose 5.5 percent year-on-year from Jan. to Nov. this year, peaking at 6.5 percent in July, a total well above the government's full-year inflation control target of 4 percent.

TWO FESTIVALS LURE FINAL REBOUND

Surging domestic and overseas consumption in December acted as the key to the rebound, thanks to the stimulation of New Year's Day and the Spring Festival, a golden period for consumption.

The CFLP's sub-index for new orders in December was 49.8 percent, up 2.0 percentage points from November.

In the meantime, exports performed better despite the lasting impact by the two disappointing trade partners.

The sub-index for export orders recovered 3 percentage points to 48.6 percent in December from November's sharp drop to 45.6 percent, suggesting that the impact of the spreading eurozone debt crisis eased, and the weakened demand gradually regained the former losses.

Cui Li, chief Chinese economist of Royal Bank of Scotland (RBS), said China's diversified trade partners are conducive to its exports.

For now, 40 percent of the country's total exports are to emerging markets, ensuring moderate export growth even when developed economies are mired in economic recovery, Cui said.

New export orders in the last five months, except September, performed lower than the demarcated 50 percent.

"Exports are unlikely to distinctly rebound in the short term considering the weary global economic situation," Cui said, "but impact on China's exports is weakening because of contraction in world trade."

In December, 12 industries, including petroleum refining and coking, apparel, shoes, fur and feather products manufacturing, agricultural food processing and food production, enjoyed a PMI over 50 percent, while sectors such as facility manufacturing, general equipment manufacturing, and industrial chemicals manufacturing registered under 50 percent.

GROWTH IN 2012 TO SPEED FROM SLOW

China's economic growth in 2012 is expected to start at a slow pace in the first quarter, but gradually move faster during the rest of the year. So, balancing the cooling economy and turbulent prices still is a priority.

The latest report of the Bank of China said the required reserve rate (RRR) is expected to be lowered, although the keynote of macro control in 2012 continues to maintain positive fiscal policy and prudent monetary policy.

Li Wei, economist of Standard Chartered, said the RRR maintained unchanged because the December PMI was beyond estimates, and the time to lower RRR is expected to approach after New Year's Day.

Cai suggested a moderate adjustment of monetary policy to increase citizens' income through tax cuts and adding subsidies. "Lower RRR does not mean loosen the monetary policy but an adjustment of the former tight monetary policy," he said.

 

[Equation]

RMB Hits 17-Year High vs. USD on Tuesday

Proposed new 500 yuan note depicting Deng Xiaoping, the architect of China's modernization. If you love China's booming economy with 10% annual growth for the last 30 years, much of the credit belongs to Deng's reforms.

Please, Log in or Register to view URLs content!

"RMB Hits 17-Year High vs. USD on Tuesday
27 Dec 2011

December 27, The Chinese currency renminbi strengthened 15 basis points to 6.3152 against the U.S. dollar on Tuesday, the highest since 1994, according to the China Foreign Exchange Trading System.

Based on a weighted average of prices, the People’s Bank of China, or central bank, sets the central parity rate of the renminbi against the U.S. dollar before the opening of the market each business day.

“The central parity price is the intention of the central bank. And a higher price shows the central bank’s determination to maintain the appreciation of the Chinese currency. The market has fully received the signal,” a trader told the National Business Daily.

“In view of market trade, profit taking and settlement has pushed up the renminbi. Banks are selling U.S. dollar positions and enterprises are increasing settlements due to accounting needs,” the trader said.

UBS Securities expects the renminbi to stabilize at around 6.35 against the green back at the end of this year and rise by 3% to 6.15 at of the end of 2012.

JP Morgan Chase reckoned China’s real GDP growth would rise 8.2% at an annualized rate in 2012 and the current account surplus would account for 2.8% of GDP next year. The Chinese currency would continue to appreciate by about 4% against the U.S. dollar in 2012.

edited by Tony ZHU"

I read rumors about the new 500 Yuan bank note with the picture of Deng Xiaoping on it, is it true? I say he deserved the credit for reforming China's economic outlook and the world. Funny how he never received the Nobel prize (either for Economic or Peace) or Time "Person of the Year" award for his efforts.

 

[bladerunner]

Funny how he never received the Nobel prize (either for Economic or Peace) or Time "Person of the Year" award for his efforts.

Im sure your'e intelligent enough to know the reason

 

[solarz]

Im sure your'e intelligent enough to know the reason

I'm pretty sure that was a rhetorical question.

 

[Martian]

China UnionPay overtakes Visa to become world’s largest card scheme

China UnionPay is the world's largest credit card issuer.

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"UnionPay overtakes Visa to become world’s largest card scheme
'8/17/11' - Dominic Hirsch

The results of RBR’s latest global payment cards research provide remarkable reading. Several findings stand out, including surpassing a phenomenal eight billion cards worldwide, a fall in the number of cards in North America and more than 10 percent growth in the debit and prepaid sectors. The most startling finding, however, is that UnionPay is now the largest payment card scheme in the world, issuing three in every ten cards worldwide.

Executives at Visa, the scheme that has been usurped at the top of the rankings, can console themselves with the news that cards with their branding are still well ahead in terms of usage and spending, and the fact that most UnionPay cards are found in its home market. The company’s hubris will nevertheless have been dented, and there will be concern that along with MasterCard, it now has two major competitors.

Not long ago, both Visa and MasterCard were avoiding working with China UnionPay. MasterCard, possibly because it feels it has less to lose, has recently changed tack however, and only last month announced an agreement to accept international e-commerce transactions on UnionPay cards through its international gateway.

Furthermore, it has signed a separate agreement “for the establishment of a mutually beneficial relationship to explore future business development”.

The new RBR research shows that there is still plenty to play for, with 20 percent of cards worldwide belonging to domestic bank card or private label schemes. This share is falling however, so competition for these cards plus efforts to persuade large issuers to change their scheme allegiances will only intensify.

It will be interesting to see how Visa responds – can it maintain its current hard-line stance without damaging its long-term prospects? It will be a little while before we will know for sure."

 

[Martian]

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"Yuan hits record, heads for 4.5 percent 2011 gain
By Lu Jianxin and Jason Subler
SHANGHAI | Fri Dec 30, 2011 8:35am IST

A resident pays a 10 yuan note for vegetables at a market in Beijing on February 28, 2011. (Credit: Reuters/Jason Lee)

(Reuters) - China's yuan headed for a strong close to 2011 on Friday, touching a record high in early trade after the central bank set the mid-point at a fresh high, putting it on course to gain 4.5 percent for the year.

The yuan's gains for the year are in line with the 4 to 5 percent traders in the onshore market had expected at the start of the year.

Traders still see the yuan appreciating for all of 2012 as China faces U.S. pressure to do more to rebalance bilateral and world trade, while it continues to record trade surpluses.

But the rate of appreciation is expected to slow to about 3 percent next year, with most of the rise happening in the second half, they said.

Many market players saw the strong mid-point as an attempt by the People's Bank of China to make the percent gain for the year look better.

"After the PBOC set a record high mid-point today, some major state-owned Chinese banks quoted the yuan at high levels to support the central bank's window-dressing move," said a dealer at a major European bank in Shanghai.

"But that does not represent a strong uptrend for the yuan. Instead, the yuan is most likely to move narrowly in the first few months of 2012 before resuming a slow appreciation process well into 2012."

NDFS IMPLY DEPRECIATION

Many dealers said the yuan would likely move in a narrow 6.3/6.4 range in the first few months of 2012 as China assesses the impact of global weakness, caused mainly by the euro zone debt crisis, on its economy and exports.

Spot yuan opened at an all-time high of 6.3070 versus the dollar, topping its previous record of 6.3160 touched on Monday. It then pulled back slightly to trade mainly around 6.31, still up 0.15 percent from Thursday's close of 6.3192.

Before trading began, the PBOC fixed the dollar/yuan mid-point at a record high of 6.3009, up 0.23 percent from Thursday's 6.3157. The central bank uses the fixing to express the government's intention for the yuan's movements in a day.

Offshore, benchmark one-year non-deliverable forwards (NDFs) fell to 6.3900 on Friday against 6.4000 at the close on Thursday, but still implied that the yuan would depreciate over the next year.

They now imply 1.39 percent depreciation over the next year, compared with a 1.55 percent fall implied on Thursday.

One-year NDFs began to mainly imply yuan depreciation in late September, reversing a general trend of forecasting yuan appreciation in place since the yuan's landmark revaluation in July 2005.

Some overseas investors have since September shorted the yuan amid signs that the world's second largest economy is slowing.

(Editing by Jonathan Hopfner)"