Chinese Economics Thread

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From an investor's point of view.

Oaktree Capital Group LLC’s Howard Marks said China is beginning to appeal to him as an investment proposition after the recent market swoons, likening the world’s second-largest economy to a “teenager” with the possibility of its best years ahead.

“All I know is that this is a better time because prices are way down and sentiment is very weak,” Marks, whose firm is the world’s biggest distressed-debt investor, said during an event hosted by Bloomberg LP in Singapore on Tuesday. “You know China is kind of friendless at the present time as an investment proposition. Those are the circumstances under which I like to invest.”

Marks, co-founder of Los Angeles-based Oaktree that dedicates more than a quarter of its $100 billion assets to distressed-debt investing, said the combination of an above-average future and falling market prices has made Asia’s largest economy more appealing. China’s surprise devaluation of the yuan on Aug. 11 sparked a global stock selloff and triggered a slide in emerging-market currencies, while junk and distressed debt in developing markets posted their biggest quarterly declines for 2015.

China’s economy is on track to grow at the slowest pace in 25 years in 2015. Non-performing loans surged past 1 trillion yuan ($157.4 billion), or 1.5 percent of total loans, in the second quarter as borrowers including Glorious Property Holdings Ltd. and some state-owned enterprises skipped obligations. Oaktree is a minority investor in China Cinda Asset Management Co., one of the nation’s four asset-management companies tasked with cleaning up bad debt from the system.

Oaktree completed a 1 billion yuan fundraising for its Shanghai Oaktree I Overseas Investment Fund LP from Noah Holdings, CreditEase Wealth Management and Harvest Capital Management, according to a statement released in Beijing on Wednesday. The capital, raised under China’s Qualified Domestic Limited Partner program, will be invested in an offshore fund managed by Oaktree in its distressed-debt strategy.

To date, Oaktree has invested more than $5 billion in Greater China, including its first investment in non-performing loans in May this year, the firm said.

Marks, 69, started Oaktree in 1995 with Bruce Karsh and other partners from another Los Angeles-based money manager, TCW Group Inc. The firm earlier this year had gathered almost

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for a new distressed-debt vehicle in anticipation of a coming crisis, amid stresses in countries such as China and Greece, as well as slumping commodity prices. In July, Marks had called Europe the most attractive region because of prices that were lower than for comparable assets in North America.


“Europe, for example, is a senior citizen, U.S., a mature adult and China, a teenager,” Marks said, using the analogy to reflect the growth phase of the three major economic regions. “If you have teenagers in your house, you know it can be chaotic and tumultuous, but a teenager has a great future with the best years ahead. In general, I believe in the proposition, but just like with any teenager, you can have some volatile spells.”

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Apple is more dependent on China than ever

China just keeps getting more important to Tim Cook's Apple (

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).

Last quarter, sales in the region not only doubled from a year earlier to $12.5 billion -- they also accounted for two-thirds of all of Apple's sales growth in the quarter.

Cook helped set off the China boom by focusing on building more Apple stores in the country over the past few years, but the addition of larger screen iPhones beginning in 2014 really sent sales into high gear. Over the past 12 months, Apple increased its total sales by $50.9 billion, which includes a $26.9 billion gain from China alone.

And the dependence has been growing -- the sales increase in China accounted for only 39% of Apple's total sales growth in the last quarter of 2014, 57% in the first quarter of 2015, 58% in the second quarter and 66% in the just completed third quarter.

The trend has some analysts worried, since China's economic growth has been slowing. Last week, China's central bank reduced interest rates for the sixth time as concerns continued to mount that the Asian titan wouldn't meet the government's 7% growth target for this year. And consumers were said to be frightened after the Shanghai Composite Index fell 40% from June through September.

Fears about a possible slowdown in Apple's sales in China have been a primary concern for investors, helping drag Apple's share price from over $130 in June to a low of $92 in August. The shares have rebounded a bit and were up 1.6% to $116.27 in premarket trading on Wednesday.

The pre-market bump came after Apple reported that its overall sales for the just-completed quarter increased 22% to $51.5 billion, slightly more than the $51 billion analysts expected. Earnings per share of $1.96 also beat expectation for $1.88. And Apple's revenue forecast for the all-important holiday quarter of $75.5 billion to $77.5 billion fit with analysts expectations of $77 billion of sales.

Sales to China increased 99% from a year earlier. Apple took the sales lead in China among all smartphone manufacturers last month, according to Counterpoint Research. The company's new rose gold colored models were the most popular color in China, the firm said. Apple "is becoming an embedded brand in China, standing for luxury and high quality," Counterpoint research director Peter Richardson said.

Cook has tried to reassure the market that Apple's Chinese sales remain unaffected. He was back at it on Tuesday's call with analysts.

“Frankly, if I were to shut off my web and shut off the TV and just look at how many customers are coming in our stores … and in addition looking at sales trends, I wouldn’t know there were any economic issues at all in China,” Cook told analysts. “I don't think it’s growing as fast as it was, but I also don't think that Apple's results are largely dependent on minor changes than growth.”

Experts on the Chinese economy

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. They note that the long-term trend in China of poor people moving up into the middle class remains intact. And even lower income people in China have shown a propensity to shop for Apple products.

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[A.Man]

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China plans to triple high speed rail network to over 31000 miles and boost speed from 240 mph to 310 mph by 2020

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China will add another 2,000 kilometers of high-speed railroad by the end of this year. This is part of the government's plan to put more than 8,000 kilometers of extra lines in both regular and fast-speed railway networks into operation. By the end of this year, all cities in China with a population of more than half a million will be connected by high- speed railways.

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China plans to build more high-speed railroads in the nation's western region during the 13th (and next) Five-Year Plan (2016-2020), as well as export more high-end railway equipment products to overseas markets.

China will continue to deploy more resources and manpower to further develop "smart trains", which apply intelligent technology that will allow trains 'speed control, condition determination and fault detection operations to be performed digitally.

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China has also set a target for carrying out research and making innovations in the permanent magnetic motor technology for the high-speed train power systems, as most of the existing units run on alternating current.

"Permanent magnetic motors will consume less energy and improve trains' reliability, which is a trend in the research on high-speed trains," said Wang.

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A permanent magnet synchronous traction system is basically a motor that uses permanent magnets rather than a magnetic field created by windings of the rotor to propel the train forward. That means the new 690-kilowatt traction system has significantly fewer parts and is lighter and more efficient, allowing China's already-speedy bullet trains to go 50 percent faster.

* new synchronous traction will allow high speed rail to go 50% faster
* new system boasts more power
* simpler configuration
* lower electrical consumption
* more reliable and efficient

 

[ahojunk]

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2015-10-30 08:52 | China Daily | Editor: Qian Ruisha


A farmer harvests grapes in Gelongshan village, Huaying, Sichuan province, where incomes have been rising because of a government-lead vineyard program.

China is determined to lift more than 70 million people and 592 impoverished counties in rural areas out of poverty by 2020, according to a statement released on Thursday following a four-day meeting of the Communist Party of China Central Committee.

The statement said that by 2020 the country will complete tackling regional poverty to build China into a moderately prosperous society in all aspects.

"It is a challenging goal," said Xiang Deping, director of Wuhan University's China Poverty Alleviation Development Academy.

"Because of historical, natural and environmental reasons, China has a large area of impoverished regions. It will not be easy to realize the commitment by 2020," Xiang said.

However, Xiang said China has faith in facing the challenge.

"China's anti-poverty achievements have been recognized by the world," he said. "International organizations are promoting China's experiences and are introducing some of China's ideas to other developing countries," Xiang said.

China has accumulated wealth in the past 30 years and now has the power to tackle poverty completely, the professor added.

President Xi Jinping reiterated the Chinese government's determination to lift 70 million people above the poverty line by 2020 at the Global Poverty Reduction and Development Forum in Beijing on Oct 16.

Xi said the Chinese government will enact more policies to fulfill the goal and also engage in the global poverty alleviation plan.

By the end of last year, China still had 70.17 million people in the countryside living below the country's poverty line of 2,300 yuan ($376) in annual income by 2010 price standards.

Hong Tianyun, deputy director of the State Council Leading Group Office of Poverty Alleviation and Development, said the government will carry out measures such as improving financial policies and services to enable more impoverished farmers to obtain loans for business startups. China was the first developing country to meet the target set by the UN's Millennium Development Goals program of halving the number of people living in poverty before 2015.

UN Secretary-General Ban Ki-moon said that the UN welcomed Xi's proposals and looked forward to further progress through partnership with China.

"It may be easier to eradicate poverty, but it is difficult to improve the education of people in a short time, which is at the root of reducing poverty," Xiang said.

Thursday's proposal also promoted gradually providing free vocational education to all students. The plan would first target students from low-income families.

 

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2015-10-30 08:52 | China Daily | Editor: Qian Ruisha

View attachment 20839
A farmer harvests grapes in Gelongshan village, Huaying, Sichuan province, where incomes have been rising because of a government-lead vineyard program.

China is determined to lift more than 70 million people and 592 impoverished counties in rural areas out of poverty by 2020, according to a statement released on Thursday following a four-day meeting of the Communist Party of China Central Committee.

The statement said that by 2020 the country will complete tackling regional poverty to build China into a moderately prosperous society in all aspects.

"It is a challenging goal," said Xiang Deping, director of Wuhan University's China Poverty Alleviation Development Academy.

"Because of historical, natural and environmental reasons, China has a large area of impoverished regions. It will not be easy to realize the commitment by 2020," Xiang said.

However, Xiang said China has faith in facing the challenge.

"China's anti-poverty achievements have been recognized by the world," he said. "International organizations are promoting China's experiences and are introducing some of China's ideas to other developing countries," Xiang said.

China has accumulated wealth in the past 30 years and now has the power to tackle poverty completely, the professor added.

President Xi Jinping reiterated the Chinese government's determination to lift 70 million people above the poverty line by 2020 at the Global Poverty Reduction and Development Forum in Beijing on Oct 16.

Xi said the Chinese government will enact more policies to fulfill the goal and also engage in the global poverty alleviation plan.

By the end of last year, China still had 70.17 million people in the countryside living below the country's poverty line of 2,300 yuan ($376) in annual income by 2010 price standards.

Hong Tianyun, deputy director of the State Council Leading Group Office of Poverty Alleviation and Development, said the government will carry out measures such as improving financial policies and services to enable more impoverished farmers to obtain loans for business startups. China was the first developing country to meet the target set by the UN's Millennium Development Goals program of halving the number of people living in poverty before 2015.

UN Secretary-General Ban Ki-moon said that the UN welcomed Xi's proposals and looked forward to further progress through partnership with China.

"It may be easier to eradicate poverty, but it is difficult to improve the education of people in a short time, which is at the root of reducing poverty," Xiang said.

Thursday's proposal also promoted gradually providing free vocational education to all students. The plan would first target students from low-income families.

This is by far any government in any country's goals should be as well as education and defense spending.

 

[kroko]

China needs urgent SOE reform:

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China's President Xi Jinping has said the country's economic growth rate will not be less than 6.5 percent in the five years to 2020, Reuters reported Tuesday, citing the state-run Xinhua news agency.

Beijing needs average growth of close to 7 percent over the next five years to hit a previously declared goal of doubling gross domestic product and per capita income by 2020 from 2010.

But its leaders have been tempering growth expectations in recent months. Premier Li Keqiang has noted last month that China had never set 7 percent growth in stone, while a top People's Bank of China (PBOC) official said that the country would be able to keep economic growth at around 6-7 percent this year.

Authorities have already taken steps to prop up the economy, with the PBOC cutting interest rates for the sixth time this year late last month.

The PBOC also freed up the interest rate market by scrapping a ceiling on deposit rates, and cut the reserve ratio requirement that dictates how much capital banks must hold.

China reported late last month gross domestic product (GDP) growth of 6.9 percent for the third quarter and the fourth quarter likely began on a soft note, with closely eyed gauges of manufacturing activity in China staying below in October the threshold that separates expansion from contraction.

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[broadsword]

Improvement in Made-in-China cars since 2012.

 

[B.I.B.]

I still cringe at the names Trumpchi ( which sounds more like a name for Donalds favourite Korean dish) and Roewe. Why can,t they be more creative with their names, although Mitsibushi did loose it it with "Pajero"
Over here in Nz Chinese car sales increased dramatically, only to fall away in the last year. or so.I Think this is because our importers pay for Chinese cars in US dollars and our exchange rate has since dropped away quite dramatically.Meanwhile the falling yen has allowed Japanese cars to narrow the value gap.

 

[broadsword]

In my country, Chinese cars are rarer than diamond. But not so with their buses. I think they make up more than 95% of newer private buses on the road. Oddly, there are no Chinese trucks yet. No idea why when the truck engines are generally similar to the buses'.