October 01, 2010
China Moves Towards Credit Default Swaps
Two significant reforms underway this week in China: Beijing approved expanding Shanghai's interbank market to a "National Interbank Loan Trading System" with 21 big banks signed up for interbank lending and word in Lujiazui is that real Credit Default Swaps are coming. And Reuters reports today that short-term commercial paper will be traded in the interbank market creating a new vehicle for short term financing and away from dependence on bank lending.
Bank lending has expanded enormously in China in answer to the Panic of '08. Today over 45 trillion Yuan or $6.8 trillion US dollars in bank lending are outstanding a number not far off that in the USA....
Labels: banking, financial news, money, panic of 2008
November 24, 2009
Chinese to ReOpen African Mines
As the outlook for metals improves, Chinese companies plan to resume operations at locations in Africa by year's end or beginning of 2010. In Namibia, the East China Mineral Exploration and Development Bureau - a state-owned company founded in 1955 - acquired a controlling stake in Weatherly International's copper mines in Tsumeb. The mines had shut down in the Panic of '08 but the new Chinese operators will reopen existing mines and want to develop an open pit copper excavation. In Zambia, the Jinchuan Group will restart the Munali nickel mine in early 2010. Jinchuan has a 70% stake in the venture. An attempt a month ago by Jinchuan to take over a Candian titanium mining venture was unsuccessful....
Labels: africa, foreign investment, foreign trade, panic of 2008
November 12, 2009
US West Coast Ports Band Together for China Trade
The World Shipping Summit 2009 is underway in Qingdao, Shandong Province, and the big 5 port districts of the west coast of USA (LA-Long Beach, Oakland, Tacoma, Seattle, Portland - in that order) announced a US West Coast Collaboration Panel. The panel is joined by Warren Buffet's Burlington Northern & Sante Fe Railroad and Union Pacific Railroad. Analysts see this as an effort to maintain market share in Chinese trade.The ports are under pressure from the following forces - high costs associated with union labor wages, anti-pollution fees, and new ports closer to population centers in middle and eastern America that will be serviced by the widening of the Panama Canal. In the aftermath of the Panic of '08, port traffic has plummeted - LA-Long Beach for example is back to 2001 levels. But cooperation with competitors and better integration with railroads can help the ports maintain their lead in bringing containers from China and distributing them to logistics centers and factories across the USA.
Absent from the summit is representation from Mexico where the federal government continues to back a new container port at Punta Colonet in Baja peninsula. That development has been scaled back, however, to 1 million TEU (twenty-foot equivalent) containers capacity per year. Proposals for development are in but the Mexican government has not released any details yet....
Labels: chinese trade, foreign trade, panic of 2008, shipping
July 02, 2009
Second HK Bank to Issue Yuan Bonds
Hong Kong based Bank of East Asia will issue Y4 billion worth of Yuan denominated bonds (over half a billion US dollars) in an offering to be revealed next week. Last week HSBC was the first non-Chinese bank in the financial hub to issue Yuan bonds. Readers will recall the 'run' on the Bank of East Asia as the Panic of '08 began....
Labels: currencies, panic of 2008, yuan
June 10, 2009
US Congressman Says China Buying More Gold
US House of Representatives member Mark Kirk, Republican from Illinois, talked to FoxNews about his recent trip to China and said China plans to buy $80 billion (US dollars) of gold. In addition to this bit of news, Congressman Kirk claims mandarins in Beijing told him that they were losing confidence in the dollar....
Labels: credit crunch, gold, panic of 2008
June 01, 2009
In Beijing Geithner Offers "Mutual Respect"
Speaking at Peking University today US Treasury Secretary Geither said " the United States will fully support having China play a role in the principal cooperative arrangements that help shape the international system" in a "spirit of mutual respect." Geither had praise for Beijing's quick actions during the Panic of '08 but otherwise gave no specifics and no insight into how US demands for Renminbi currency reform will be addressed. Also today Treasury announced the appointment of two new point persons for China: David Loevinger as "Executive Secretary and Senior Coordinator for China Affairs" in Washington and the appropriately named David Dollar as "Economic and Financial Emissary to China" in Beijing....
Labels: foreign relations, geithner, panic of 2008, renminbi, treasury
May 21, 2009
Fitch Ratings to China: You're Black
Anglo-American credit rating agency Fitch Ratings says China could face a banking crisis (via BBC News video) as Chinese banks are lending agreessively in response to Beijing's huge stimulus investing. The risks to this writer seem wildely out of place. Analysts closer to China such as those at Morgan Stanley in Hong Kong believe economic recovery is underway in China and real.
15 years ago and more China's potential was belittled by agencies such as Fitch and Moody's due to the so-called "non-performing loan" problem.
Fact is today the Chinese banking sector is not impaired. But US banks are in meltdown and agencies such as Fitch Ratings played a large and perhaps direct part in bringing about the Panic of '08 and the current global crisis....
Labels: banking, panic of 2008
April 03, 2009
Chinese Manufacturing Up in March
The China Purchasing Managers' Index, a gauge of nationwide manufacturing activity, stood at 52.4 in March, up from 49.0 in February, and well above its lows of 38.8 in November.
The March data mark the first time the indicator has been above 50 since September, a threshold that indicates activity in the manufacturing sector is in an expansionary mode. Source: MarketWatch...
Labels: economy, panic of 2008
April 02, 2009
IMF Gold Sales May Give China Chance to Diversify
The G20 summit hopes to pump $1 trillion (US dollars) into the IMF and World Bank. Word is the IMF will be allowed to sell some of its gold reserves to fund initiatives to help the world's poorest over the short term. Speculation by some analysts are that IMF gold sales will be off-market and outside the West's Gold Agreement and give nations such as China burdened with excess dollar reserves a chance to diversify into gold...
Labels: currencies, gold, panic of 2008
March 17, 2009
China Bank Regulator to Allow M&A Financing
The China Banking Regulatory Commission will allow commercial banks to extend loans for mergers and acquistions in an important rule to facilitate the "reinvigoration" in major Chinese economic sectors. The policy of reinvigoration is a change to Beijing's huge $4 trillion Yuan stimulus effort and revealed in detail at the recently concluded National People's Congress.
The intent is to reduce the problem of excess production capacity in China and thus try to control supply versus demand. Infrastructure spending that could eventually accomodate greater demand will be avoided in favor of "soft" investment in social services (although high speed rail projects appear safe). One of the goals is to remake all major industrial sectors into oligarchies of big globally competitive corporations by shutting down or absorbing backward and smaller producers...
Labels: banking, panic of 2008
March 10, 2009
Savings Glut: Over $3 Trillion in Chinese Bank Deposits
According to this chart included with the NPC's 2008 statistical communique, total savings deposits in Chinese banks jumped dramatically last year - over 26% - to nearly 22 trillion Yuan or $3,184,800,000,000 (US Dollars) according to today's exchange rate. The propensity to save among Chinese is legendary. Given that the Panic of '08 didn't impact China severely until the 4th Quarter of 2008, savings will only grow further this year. When will spending return and where will it go...
Labels: national peoples congress, panic of 2008
March 06, 2009
China Central Bank Says Currency Policy "Needs No Changes"
In response to a reporter's question at a confab at the sidelines of this year's National People's Congress, Chinese Central Banker Zhou Xiaochuan said Beijing's policy on Renminbi "needs no changes". When pressed Zhou said:
"The question should be raised to some countries where the financial crisis originated from: what's going to happen eventually on your side?" We have to make multiple plans and analyze various scenarios since there is obviously great uncertainty on their side..."
Labels: banking, currencies, panic of 2008, renminbi, yuan
March 04, 2009
SOE Reform - More Consolidation Ahead
World media and trading floors are twittering about whether China may save the world from a global depression. Reports are Chinese manufacturing is trending up and commodities prices are moving in the same direction in the hopes that Chinese demand will save our future. Adding to the excitement is a flurry of news leaks in the run up to the opening of China's annual parliament, the National People's Congress, March 5 in Beijing.
The biggest tease is that the NPC will approve more stimulus even though 11 separate stimulus packages were announced by Beijing on a regular basis over the past few months.
Also of note, word that a new national asset management entity will force consolidation of small and medium size State Owned Enterprises (SOE). Beijing is using the current global "slowdown" and correction in trade to create an economic oligarchy of up to 50 global size giants largely independent but with substantial and in many cases majority central government control...
Labels: global economy, national peoples congress, panic of 2008
February 26, 2009
400,000 Empty Containers Sit at ShenZhen Port
A dramatic illustration of the collapse occurring in the great rebalance of global trade can be found at Yantai port, ShenZhen, China, one of the top 5 container ports in the world: 400,000 empty container boxes.
A similar story is heard from Hong Kong and Shanghai where the drop in activity is the worst on record...
Labels: foreign trade, panic of 2008, shipping
February 24, 2009
Taiwan-China Trade Slump Continues
January export orders from China (including Hong Kong, SAR) of Taiwan goods were down almost 55%, a sign that the big slump in Chinese manufacturing continues. Taiwan and South Korea are both dependent on China for export growth. Both are also open economies (by Asian standards). As such, they are hard hit by the global correction in trade...
Labels: free trade, panic of 2008, taiwan
February 16, 2009
Shipping Woes
The great global correction in trade continues to hit shipping companies hard. Barely a year old, Great Ocean Container Lines of Hong Kong will file for bankruptcy. And New Econ Line of Singapore is suspending operations. Also ceasing operation is Shandong Yantai International Marine Services. The China-Japan route has rates as low at $30 per TEU according to the SeaTrade Asia website...
Labels: foreign trade, panic of 2008, shipping
February 09, 2009
China Shipbuilders Want Bailout
The National Development and Reform Commission has readied a bailout for Chinese shipbuilders that is before the State Council in Beijing. According to varying reports from the China Association of National Shipbuilding Industry shipbuilding orders have plummeted since the second half of 2008 by some metrics down almost 100%. The industry saw tremendous expansion over the last few years and now - according to the bailout plan - plans consolidation. The bailouts of Chinese industrial sectors seem to have as their focus the creation of two to three solid 'brand' companies, part of Beijing's desire to have an American style economic oligarchy with Chinese characteristics...
Labels: panic of 2008, shipping
February 05, 2009
Deflation: McDonald's Cut Prices 1/3 in China to Boost Sales
McDonald's has cut prices up to 33% in its over 1,000 locations in China according to reports bringing its "best value meal ever" down to 1999 prices. Will thrifty urban Chinese bite before profits McPuff away..?
Labels: panic of 2008
January 28, 2009
WEF: Yuan Talk Misguided
At the World Economic Forum summit in Davos, Switzerland, money men big wigs including Stephen Roach, Morgan Stanley's man in Asia, World Bank Chief Economist Justin Lin, and former USA Treasury Secretary Robert Rubin, agree that demanding Beijing to appreciate the Yuan would be 'economic suicide' (in the words of Roach).
Meanwhile Chinese PM Wen Jiabao spoke today emphasizing the challenges ahead for Beijing to keep th economy growing.
An excellent opinion on wrongheading thinking about the Dollar-Yuan relationship by Bret Swanson of the Center for Global Innovation was in Monday's Wall Street Journal...
Labels: panic of 2008, world economic forum
January 27, 2009
Commodities Up on Chinese Demand
Is the commodities bust ending? The Baltic Dry Index (measures activity in commodities shipping) moved to 1,000 ending a 3 month snap and may signal a reverse of its cliff dive since last October. The shares of iron-ore heavyweight Vale do Rio Doce traded up in Brazil while USA steelmakers USX and Nucor are up on NYSE on profitability. Vale credits increased Chinese demand and a belief that China will continue to grow...
Labels: panic of 2008
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