Chinese Economics Thread

Martian

Martian

Senior Member
China Construction Bank net profit jumps 31%

lORDG.jpg

China Construction Bank (中国建设银行) [Photo credit: Laozhou]

To put the net profit of China Construction Bank into perspective, let's compare the 2011 net profits of the two-most profitable Chinese and American companies from each country. As you can see, Chinese companies have achieved the same gargantuan profit levels as their American counterparts.

1. Exxon Mobil: $32.3 billion
2. Industrial and Commercial Bank of China (ICBC): $31 billion
3. China Construction Bank: $29 billion
4. Microsoft: $23.2 billion

References:

Exxon Mobil:
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ICBC:
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China Construction Bank: See article below and double the first-half profit
Microsoft:
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"China Construction Bank net profit jumps 31%
(AFP) – 12 hours ago

SHANGHAI — China Construction Bank said its first-half net profit jumped 31 percent thanks to higher interest rates and strong growth in fee-based businesses such as financial consulting and advisory services.

The bank, in which Bank of America owns a 10 percent stake, earned 92.8 billion yuan ($14.5 billion) in the six months to the end of June, compared with 70.7 billion yuan a year earlier, the company said in a statement filed to the Shanghai Stock Exchange late Sunday.

Net interest income, which accounts for more than 70 percent of its profit, grew 23.7 percent year-on-year in the first half to 145.7 billion yuan after the government hiked benchmark interest rates a number of times this year.

Fee and commission income also surged 41.7 percent from the same period last year to 47.7 billion yuan.

"The group was actively engaged in service and product innovation which boosted the growth in the fee-based businesses. As a result, net fee and commission income rose substantially," the bank said.

Shanghai-listed shares in China Construction Bank closed down 0.89 percent at 4.45 yuan in a weak market.

Lending growth of Chinese banks has slowed since China introduced a slew of measures to rein in liquidity to fight inflation, which hit the highest level in three years at 6.5 percent in July.

The central bank raised its benchmark interest rates twice in the first half of the year and the amount of money banks must keep in reserves with the central bank six times.

China Construction Bank said its outstanding loans stood at 5.99 trillion yuan as of the end of June, up 8.3 percent from the end of December. That growth was slower than the 11.1 percent recorded in the first half of 2010.

But net interest margin, a gauge of lending profitability, widened to 2.66 percent at the end of June from 2.41 percent the same time a year ago on the interest rates hikes, the bank said, offsetting the negative impact of slower growth in new loans.

The bank's non-performing loan ratio stood at 1.03 percent at the end of June, lower than 1.14 percent at the end of December."
 
Hendrik_2000

Hendrik_2000

Lieutenant General
China rise is unstoppable
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In his new book, “Eclipse: Living in the Shadow of China’s Economic Dominance,” scheduled to be published in September, Peterson Institute for International Economics scholar Arvind Subramanian starts with a nightmare scenario: It’s 2021 and the U.S. president heads across town to the International Monetary Fund to sign a rescue loan package negotiated by the IMF’s Chinese managing director. “The handover of world dominance is complete,” Mr. Subramanian, a former IMF researcher, writes. China is now the world’s leading economic power.

Parts of “Eclipse” read like a wonky version of “Rising Sun,” Michael Crichton’s 1992 novel of Japanese dominance over the U.S. when Tokyo was seen as speeding toward number one. But Mr. Subramanian is a first-class economist who uses his book to discuss provocatively U.S.-Chinese relations and the nature of economic power. He was interviewed in Washington by The Wall Street Journal’s Bob Davis. Below is an edited transcript.

Do you really think the U.S. eventually will have to turn, hat-in-hand to the IMF for aid?

I wrote it that way partly to shock and make people pay attention. But there is a real possibility of the U.S. being in such a dire economic situation that it might have to turn to the IMF.

How could it happen? The combination of a credible rising power in China, with which we have to cooperate and also be wary of. And broad economic weakness in the U.S., including slow growth, fiscal weakness, political paralysis and a middle class with diminishing prospects.

The probability of U.S. needing an IMF loan isn’t 80% but it’s not 2% or 5% either. It’s a 10% or 20% possibility.

By some of the measures you use, China already is a larger economy than the U.S. But haven’t you picked economic statistics that play to China’s advantage? For example relying on purchasing power parity to measure GDP. (Purchasing power parity, or PPP, is a statistical device that tries to take account of the different prices of goods and services in different countries.)

PPP is an important concept, but it has a small weight in my overall formula of economic power.

I believe that the resources a country brings to the power table includes resources that are internationally traded and resources that involve people. If the U.S. were to fight against China and 100 Chinese soldiers faced 100 US soldiers, would you say that because the 100 Chinese soldiers earn/20th of what an American soldier earns that the value of a Chinese soldier is 1/20th the value of American? I don’t think so. (PPP tries to account for such anomalies.)

You also say that China will be a far larger economic power than the U.S. by 2020 or certainly 2030, even if China’s growth rate falls significantly or the U.S’s rises significantly. Why is that?

The way economic convergence between the U.S. and China is evolving, the fact that China will catch up is inevitable. At end of 20 years, China will have a GDP per capita of only 40-50% of the U.S. But China has four times the population of the U.S., so the Chinese economy will be much larger overall. The arithmetic is undeniable.

China will have an economic crisis over the next 20 years, no doubt. But it will recover and return to some decent level of growth.

If China has a big economic shock, it has the policy space [including the ability to broadly stimulate the economy] to prevent one or two years of negative growth from translating into many years of slow growth.

What’s the significance of China as number one?

Potentially, China has the ability to exercise its power in slightly unbenign ways. Look at what’s happening today on exchange rate. [By keeping its currency undervalued] China is pursuing a beggar–they- neighbor policy and nobody can stop them. That’s sign of dominance.

The U.S. is totally powerless to stop China because U.S. companies have so much at stake in China that China can call the shots. Asia won’t do it because Asian economies are part of a value-added chain with China. Africa won’t do it because China has made so much investment there..

Imagine what happens when the numbers [denoting the size of the economy] diverge even more between China and the U.S.

Still, China would be a relatively poor country compared to the U.S. How can a poor country exercise power internationally?

Very poor countries can’t dominate. There’s now no way to project power abroad because the problems at home are so deep. But so-called middle income countries like China may be different.

There are different kinds of dominance. There is dominance of the U.S. – a leader that’s democratic and pursues international values and which inspires followship. Maybe China won’t have that. But it could exercise a negative form of dominance, either through its exchange rate policy or by buying up commodities [to corner markets].

What’s the biggest threat to China’s rise to economic dominance?

A political shock to system. Then all bets are off.

A political transition [to a more democratic system] hasn’t occurred. It’s a cloud that hangs over everything. There’s class divide, geographic divide, lack of political freedom. If they wind up in conflagration, things could go really bad.

In your book, you talk about the importance of tethering China to a multilateral system. Why should China be interested if it’s inevitably number one?

We need to bind China today to the multilateral system so a kind of habit and incentive builds up. Then repudiation of the system would be more difficult. We need to do this before China becomes a hegemon

Everyone has to come together to do this well. If every country tries to make its own deal with China, no one will have any leverage.

Think about exchange rates. If the world came together now and said let’s do a deal on exchange rates, China would be more likely to participate. It doesn’t want to be seen as deviant from international system. The opprobrium of the world is the biggest carrot and stick to use with China.

One of your main policy recommendations is to start a China round of trade negotiations. What could that accomplish?

When China joined World Trade Organization in 2001, people said we tied China to the global economic system (because of the commitments it made to open its markets and follow international rules). But through its exchange rate policy, China has unraveled parts of its commitments. What that signifies is that Chinese leaders at the time were overreaching in terms of domestic political support. Evidently, WTO accession wasn’t politically sustainable internally.

Over time, China will move away from mercantilism. They would then have an incentive to make a deal. A deal could involve government procurement – other countries opening their bidding for China—as well as commitments by China involving control of natural resources and the exchange rate.
 
bladerunner

bladerunner

Banned Idiot
GE Announces $100 Million Joint Venture in China to Grow Aeroderivative Gas Turbine Sector

wired by noodls on 24/08/2011 02:01
23 August 2011

GE Announces $100 Million Joint Venture in China to Grow Aeroderivative Gas Turbine Sector

• $100 Million Agreement with Majority Shareholder Huadian Corp. to Accelerate Growth in China

• Could Lead to Development of More Than 1,000 Distributed Energy CHP Plants in China

• Supports GE’s U.S.-China Strategy to Spur Growth in Both Countries

SHANGHAI, CHINA—August 23, 2011—GE (NYSE: GE) and China Huadian Corporation today announced a joint venture to develop distributed energy combined heat and power (DECHP) projects that will provide electricity for consumers in China located close to the plants. GE is a leader in DECHP and other innovative energy solutions. Today’s announcement will help ensure continued U.S. energy leadership by expanding markets for American technology and services.

The $100 million joint venture company will be called Huadian GE Aero Gas Turbine Equipment Co., Ltd, with China Huadian owning the majority share. It will create opportunities for growth and further investment in GE aeroderivative gas turbines and services, accelerating growth in China while expanding capacity and capabilities.

“The joint venture agreement is another example of GE’s continued commitment to global relationships to meet the energy needs of today and tomorrow,” said Darryl Wilson, president and CEO—aeroderivative gas turbines for GE Power & Water. “The goal of this joint venture is to support the people of China by helping the country meet its need for more than 1,000 distributed energy combined heat and power plants in the next 10 years, while also supporting the U.S. energy technology industry. The joint venture is part of GE’s larger U.S.-China strategic relationship that will be a powerful spur to economic growth in both countries, enhance market confidence and encourage the rest of the world to follow in next generation of energy deployment.”

GE’s aeroderivative business, headquartered in Houston, Texas, brings power to hard-to-reach places by modifying highly reliable GE aviation engines to burn natural gas or biofuels to create energy. These power generation units range from 18-100 megawatts and represent the future of efficient and cleaner power generation. The highly flexible jet engine-based technology helps energy companies take advantage of the growing trend to use abundant, cleaner-burning natural gas for power generation.

DECHP technologies produce both electricity and useful thermal energy from a single fuel at a facility located near the consumers. These efficient systems recover heat that normally would be wasted in the power generation process—saving fuel that would otherwise be used to produce additional heat or steam in a separate unit.

Dozens of American suppliers from locations including Cincinnati and Cleveland, Ohio, Fort Collins, Colo., Portland, Ore., and Houston and Lufkin, Texas, will support the projects in China.

Today’s joint venture announcement between China Huadian Corporation and GE is part of a larger-scale commitment GE has made to China. Most recently:

• On November 9, 2010, GE announced plans to invest more than $2 billion into its efforts in China through 2012 to help tackle the country’s pressing energy and infrastructure needs. GE Chairman and CEO Jeff Immelt announced that the company plans to commit $500 million to enhance China R&D capabilities and establish new Customer Innovation Centers to better serve west, north, central and south China.

• On that same day, as part of the $2 billion investment, GE and State Grid Corporation of China (SGCC), China’s top power distributor and one of the world’s largest utilities, announced plans for several joint ventures to address China’s growing energy needs and to electrify its vast transportation infrastructure. These joint ventures will play a vital role in supporting the country’s energy demand through the development of a smarter grid that will help achieve environmental and economic goals.

• On January 5, 2011, GE announced that it had signed a contract with Jiangsu Tianue Energy & Chemical Group Co. Ltd, which is building a high-efficiency gas turbine power plant to utilize industrial dismissed gas into power and steam to meet increasing energy needs in the region. The power plant will be equipped with three aeroderivative gas turbines, which are the first LM2500+G4 units sold in China. GE’s aeroderivative gas turbines will use coke oven gas as fuel and turn it into electricity for the region.

About GE

GE (NYSE: GE) is an advanced technology, services and finance company taking on the world’s toughest challenges. Dedicated to innovation in energy, health, transportation and infrastructure, GE operates in more than 100 countries and employs about 300,000 people worldwide. For more information, visit the company's Web site at
Please, Log in or Register to view URLs content!
.

GE also serves the energy sector by providing technology and service solutions that are based on a commitment to quality and innovation. The company continues to invest in new technology solutions and grow through strategic acquisitions to strengthen its local presence and better serve customers around the world. The businesses that comprise GE Energy—GE Power & Water, GE Energy Services and GE Oil & Gas—work together with more than 90,000 global employees and 2010 revenues of $38 billion, to provide integrated product and service solutions in all areas of the energy industry including coal, oil, natural gas and nuclear energy; renewable resources such as water, wind, solar and biogas; as well as other alternative fuels and new grid modernization technologies to meet 21st century energy needs.
 
bladerunner

bladerunner

Banned Idiot
GE Announces $100 Million Joint Venture in China to Grow Aeroderivative Gas Turbine Sector

wired by noodls on 24/08/2011 02:01
23 August 2011

GE Announces $100 Million Joint Venture in China to Grow Aeroderivative Gas Turbine Sector

• $100 Million Agreement with Majority Shareholder Huadian Corp. to Accelerate Growth in China

• Could Lead to Development of More Than 1,000 Distributed Energy CHP Plants in China

• Supports GE’s U.S.-China Strategy to Spur Growth in Both Countries

SHANGHAI, CHINA—August 23, 2011—GE (NYSE: GE) and China Huadian Corporation today announced a joint venture to develop distributed energy combined heat and power (DECHP) projects that will provide electricity for consumers in China located close to the plants. GE is a leader in DECHP and other innovative energy solutions. Today’s announcement will help ensure continued U.S. energy leadership by expanding markets for American technology and services.

The $100 million joint venture company will be called Huadian GE Aero Gas Turbine Equipment Co., Ltd, with China Huadian owning the majority share. It will create opportunities for growth and further investment in GE aeroderivative gas turbines and services, accelerating growth in China while expanding capacity and capabilities.

“The joint venture agreement is another example of GE’s continued commitment to global relationships to meet the energy needs of today and tomorrow,” said Darryl Wilson, president and CEO—aeroderivative gas turbines for GE Power & Water. “The goal of this joint venture is to support the people of China by helping the country meet its need for more than 1,000 distributed energy combined heat and power plants in the next 10 years, while also supporting the U.S. energy technology industry. The joint venture is part of GE’s larger U.S.-China strategic relationship that will be a powerful spur to economic growth in both countries, enhance market confidence and encourage the rest of the world to follow in next generation of energy deployment.”

GE’s aeroderivative business, headquartered in Houston, Texas, brings power to hard-to-reach places by modifying highly reliable GE aviation engines to burn natural gas or biofuels to create energy. These power generation units range from 18-100 megawatts and represent the future of efficient and cleaner power generation. The highly flexible jet engine-based technology helps energy companies take advantage of the growing trend to use abundant, cleaner-burning natural gas for power generation.

DECHP technologies produce both electricity and useful thermal energy from a single fuel at a facility located near the consumers. These efficient systems recover heat that normally would be wasted in the power generation process—saving fuel that would otherwise be used to produce additional heat or steam in a separate unit.

Dozens of American suppliers from locations including Cincinnati and Cleveland, Ohio, Fort Collins, Colo., Portland, Ore., and Houston and Lufkin, Texas, will support the projects in China.

Today’s joint venture announcement between China Huadian Corporation and GE is part of a larger-scale commitment GE has made to China. Most recently:

• On November 9, 2010, GE announced plans to invest more than $2 billion into its efforts in China through 2012 to help tackle the country’s pressing energy and infrastructure needs. GE Chairman and CEO Jeff Immelt announced that the company plans to commit $500 million to enhance China R&D capabilities and establish new Customer Innovation Centers to better serve west, north, central and south China.

• On that same day, as part of the $2 billion investment, GE and State Grid Corporation of China (SGCC), China’s top power distributor and one of the world’s largest utilities, announced plans for several joint ventures to address China’s growing energy needs and to electrify its vast transportation infrastructure. These joint ventures will play a vital role in supporting the country’s energy demand through the development of a smarter grid that will help achieve environmental and economic goals.

• On January 5, 2011, GE announced that it had signed a contract with Jiangsu Tianue Energy & Chemical Group Co. Ltd, which is building a high-efficiency gas turbine power plant to utilize industrial dismissed gas into power and steam to meet increasing energy needs in the region. The power plant will be equipped with three aeroderivative gas turbines, which are the first LM2500+G4 units sold in China. GE’s aeroderivative gas turbines will use coke oven gas as fuel and turn it into electricity for the region.

About GE

GE (NYSE: GE) is an advanced technology, services and finance company taking on the world’s toughest challenges. Dedicated to innovation in energy, health, transportation and infrastructure, GE operates in more than 100 countries and employs about 300,000 people worldwide. For more information, visit the company's Web site at
Please, Log in or Register to view URLs content!
.

GE also serves the energy sector by providing technology and service solutions that are based on a commitment to quality and innovation. The company continues to invest in new technology solutions and grow through strategic acquisitions to strengthen its local presence and better serve customers around the world. The businesses that comprise GE Energy—GE Power & Water, GE Energy Services and GE Oil & Gas—work together with more than 90,000 global employees and 2010 revenues of $38 billion, to provide integrated product and service solutions in all areas of the energy industry including coal, oil, natural gas and nuclear energy; renewable resources such as water, wind, solar and biogas; as well as other alternative fuels and new grid modernization technologies to meet 21st century energy needs.

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L

lostsoul

Junior Member
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From wikileaks
3. CHINA'S GOLD RESERVES

"China increases its gold reserves in order to kill two birds with one stone"


"The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): "According to China's National Foreign Exchanges Administration China 's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."
Click to expand...

Also note that alot of China's Gold is held in the US (New York) and other foreign countries.

This is one Very Stupid move by the PRC. If China doesn't repatriate her Gold asap then things could get very difficult. The US$ as we know it today is dying fast. When will the Leaders of the PRC wake up?.

Even Hugo Chavez wants his country's gold on home soil otherwise the US gov could freeze this asset at any time.
 
AssassinsMace

AssassinsMace

Lieutenant General
I love how Americans resent the idea that the US isn't seen as trustworthy by China. Yeah I agree that China risks itself by having other countries have the ability to hold it hostage. Remember how China trusted the US enough to have an American company refurbish the Chinese Air Force One only to have it scrapped because the whole airliner was laced with CIA surveillance devices?
 
petty officer1

petty officer1

Junior Member
[video=youtube;PqsQWYXa8xA]http://www.youtube.com/watch?v=PqsQWYXa8xA&feature=feedu[/video]

Synopsis:
Possible slowing down of Chinese CPI from June of +6.4% to possible +6.2% to +6.3% in August.

Increasing production. Lower fixed assets investment in infrastructures, but with continueing increase in private sectors investments and property investments (most in the 2nd and 3rd tier cities.)


More News and Analysis:
Chinese consumer prices should remain fairly steady through out rest of the 2011 year, helped with a flat international oil price, and fair weathers in America and Asia this spring and summer should yield decent food productions. fast rising fertilizer price in the beginning of the year should see an sharp decrease in the winter, farther decreases global commodity prices. 5 times 25 basis points (0.25%) inter-bank interest increases in this year by the Central Bank of China seems to have effectively tightened lending somewhat in the short term.

Recommendation:
1. Further tightening of Monetary policy (possible another two increase of reserve ratio 25 basis points each time).

2. Having a closer investigation of Chinese local debts make by municipal governments, most of those local government debt will mature in the beginning of next year. Any restructuring of debts should be done as soon as possible if needed.
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3. While tightening the Monetary policy to decrease lending to big state/private owned corporations, shift focus to middle to small companies that can't get any loans for growth form major state banks. (Private loans interest from non-bank sources can be high as 24%, 4X of State bank rate.)
" loans to small- and medium-sized enterprises still account for less than half of all new lending. The lending percentage to small business is even lower."
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Government's fight against inflation should also watch out for lack of liquidity for small companies to grow.

4. Continue the slow value increase of RMB, in doing so decrease uncertainty for investments and loans. Also buy more time for Chinese manufactures' transition from a low complexity to high complexity, value adding modern industry.

Petty officer1 Sept. 4th 2011
 
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