HANGZHOU – Two brothers and their father were sentenced to death on Monday for cheating 15,000 investors out of over $1.1 billion in east China’s Zhejiang province. Ji Wenhua, president of the Yintai Real Estate and Investment Group, was sentenced to death for the crime
Dan Collins CMR “Gold going to $7,000″, an article today in the Chinese media is going viral and one of the most viewed articles in the financial press. The article references American Jim Rickards and his concept of comparing inflation-adjusted gold prices. Most Chinese economists
It’s not uncommon for the large Wall Street banks to combine in shorting an entire years supply of minded silver in a single day.The same goes for all commodities. Endless paper printing getting funneled to Wall Street has destroyed all real price discovery. Capitalism fails
Chanos is back! His short China thesis is very long in the tooth but as it goes with most ego maniacs he cannot accept failure or that fact that he might be wrong. Being wrong on an entire country where you have never visited and
Dan Collins CMR When I moved to China back in 1998 I was surprised to learn how highly the Chinese thought of America. Of course China was a much poorer place back then but coming from the Detroit area I couldn’t fathom where was all
You have to laugh at the whole “China will collapse crowd” on CNBC and even respected sites like Zero Hedge. Personally, I love the Zerohedge stuff. They understand the ponzi-financial fraud-money printing-welfare state economy that now envelops the West. But China is a real economy,
D.Collins CMR China’s cloud computing market is expected to be worth 37.2 billion yuan (US$6 billion) in 2017 as demand for the service grows, the Chinese-language China Securities Journal reported on Friday. Some American tech companies are watching the largest and fastest I.T. market in
Breaking News today that a Chinese vessel as rammed and sunk a Vietnamese fishing boat. All countries in the South China Sea and East China Sea are using fishing boats in a game of cat-and-mouse to challenge each other on their respective areas. This time
Scared of losing the Chinese tourist dollar, France has relented to China and will allow Chinese police on the streets of Paris. More signs of the benefits of third-world immigration into the West to the point where cultural breakdown has occurred and law and order
Gold has been flowing East for a decade. When the West wakes up to the fact that their gold is gone, they will no longer have sound money with which to back a currency. The world has only been off a gold standard since 1971
From the China Daily… BEIJING – China will lower banks’ reserve requirement ratio (RRR) by 0.5 percentage points starting May 18, the country’s central bank announced Saturday. The cut, the second of its kind this year, will drop the RRR for the country’s large financial
Is China tweaking its numbers on GDP? Probably. For twenty years Chinese GDP roughy came in right on the governments target. This would be an almost magical performance record considering economists in the West can predict absolutely nothing. For years, China most likely lowered GDP
Japan will learn the hard way that destroying your currency is not an viable economic strategy. Shanghai Daily JAPAN posted a record 1.63 trillion yen (US$17.4 billion) trade deficit in January as rising exports trailed surging imports of crude oil and gas due to rising
American GDP: The Fantastic Fiction of American Economic Strength By Dan Collins Is the U.S. economy still the most powerful in the world? That is what we are told as the United States does have by far the world’s largest Gross Domestic Product (GDP). In
Youtube, Facebook, and Twitter are all blocked in China. They have algorithms in place to disrupt Google service as well which makes it very annoying even using Google here. You get many dead links when the algo’s are working. Despite blocking American companies in China,
If Chinese submarines outnumber the U.S. fleet globally, imagine what the
power discrepancy is in the Asia-Pacific. The U.S has lost control of the Pacific
WASHINGTON (Reuters) – China is building some “fairly amazing submarines” and now has more diesel- and nuclear-powered vessels than the United States, a top U.S. Navy admiral told U.S. lawmakers on Wednesday, although he said their quality was inferior.
Vice Admiral Joseph Mulloy, deputy chief of naval operations for capabilities and resources, told the House Armed Services Committee’s seapower subcommittee that China was also expanding the geographic areas of operation for its submarines, and their length of deployment.
For instance, China had carried out three deployments in the Indian Ocean, and had kept vessels out at sea for 95 days, Mulloy said.
“We know they are out experimenting and looking at operating and clearly want to be in this world of advanced submarines,” Mulloy told the committee.
U.S. military officials in recent months have grown increasingly vocal about China’s military buildup and launched a major push to ensure that U.S. military technology stays ahead of rapid advances by China and Russia.
Mulloy said the quality of China’s submarines was lower than those built by the United States, but the size of its undersea fleet had now surpassed that of the U.S. fleet. A spokeswoman said the U.S. Navy had 71 commissioned U.S. submarines.
U.S. submarines are built by Huntington Ingalls Industries Inc. and General Dynamics Corp.
In its last annual report to Congress about China’s military and security developments, the Pentagon said China had 77 principal surface combatant ships, more than 60 submarines, 55 large and medium amphibious ships, and about 85 missile-equipped small combatants.
Mulloy did not provide details about the number of surface ships now operated by China.
He said the U.S. military did not believe China carried nuclear missiles on its submarines, but that it had been producing missiles and testing them.
The 21st century belongs to China: Why the new Silk Road threatens to end America’s economic dominance
- China holds more than $15 trillion in bank deposits, which are growing by a
whopping $2 trillion a year. Foreign exchange reserves are nearing $4 trillion.
- The country still produces 80% of the world’s air conditioners, 90% of its
personal computers, 75% of its solar panels, 70% of its cell phones, and 63% of
From 1980 to 2010, China’s urban population grew by 400 million, leaving the
country with at least 700 million urban dwellers. This figure is expected to
hit one billion by 2030
PEPE ESCOBAR, TOMDISPATCH.COM
Beijing is building a trans-Siberian railway system that rivals the Marshall
Plan in its ambition and global reach
BEIJING — Seen from the Chinese capital as the Year of the Sheep starts, the malaise affecting the West seems like a mirage in a galaxy far, far away. On the other hand, the China that surrounds you looks all too solid and nothing like the embattled nation you hear about in the Western media, with its falling industrial figures, its real estate bubble, and its looming environmental disasters. Prophecies of doom notwithstanding, as the dogs of austerity and war bark madly in the distance, the Chinese caravan passes by in what President Xi Jinping calls “new normal” mode.
“Slower” economic activity still means a staggeringly impressive annual growth rate of 7% in what is now the globe’s leading economy. Internally, an immensely complex economic restructuring is underway as consumption overtakes investment as the main driver of economic development. At 46.7% of the gross domestic product (GDP), the service economy has pulled ahead of manufacturing, which stands at 44%.
Geopolitically, Russia, India, and China have just sent a powerful message westward: they are busy fine-tuning a complex trilateral strategy for setting up a network of economic corridors the Chinese call “new silk roads” across Eurasia. Beijing is also organizing a maritime version of the same, modeled on the feats of Admiral Zheng He who, in the Ming dynasty, sailed the “western seas” seven times, commanding fleets of more than 200 vessels.
Meanwhile, Moscow and Beijing are at work planning a new high-speed rail remix of the fabled Trans-Siberian Railroad. And Beijing is committed to translating its growing strategic partnership with Russia into crucial financial and economic help, if a sanctions-besieged Moscow, facing a disastrous oil price war, asks for it.
To China’s south, Afghanistan, despite the 13-year American war still being fought there, is fast moving into its economic orbit, while a planned China-Myanmar oil pipeline is seen as a game-changing reconfiguration of the flow of Eurasian energy across what I’ve long called Pipelineistan.
And this is just part of the frenetic action shaping what the Beijing leadership defines as the New Silk Road Economic Belt and the Maritime Silk Road of the twenty-first century. We’re talking about a vision of creating a potentially mind-boggling infrastructure, much of it from scratch, that will connect China to Central Asia, the Middle East, and Western Europe. Such a development will include projects that range from upgrading the ancient silk road via Central Asia to developing a Bangladesh-China-India-Myanmar economic corridor; a China-Pakistan corridor through Kashmir; and a new maritime silk road that will extend from southern China all the way, in reverse Marco Polo fashion, to Venice.
Don’t think of this as the twenty-first-century Chinese equivalent of America’s post-World War II Marshall Plan for Europe, but as something far more ambitious and potentially with a far vaster reach.
China as a Mega-City
If you are following this frenzy of economic planning from Beijing, you end up with a perspective not available in Europe or the U.S. Here, red-and-gold billboards promote President Xi Jinping’s much ballyhooed new tagline for the country and the century, “the Chinese Dream” (which brings to mind “the American Dream” of another era). No subway station is without them. They are a reminder of why 40,000 miles of brand new high-speed rail is considered so essential to the country’s future. After all, no less than 300 million Chinese have, in the last three decades, made a paradigm-breaking migration from the countryside to exploding urban areas in search of that dream.
Another 350 million are expected to be on the way, according to a McKinsey Global Institute study. From 1980 to 2010, China’s urban population grew by 400 million, leaving the country with at least 700 million urban dwellers. This figure is expected to hit one billion by 2030, which means tremendous stress on cities, infrastructure, resources, and the economy as a whole, as well as near-apocalyptic air pollution levels in some major cities.
Already 160 Chinese cities boast populations of more than one million. (Europe has only 35.) No less than 250 Chinese cities have tripled their GDP per capita since 1990, while disposable income per capita is up by 300%.
These days, China should be thought of not in terms of individual cities but urban clusters — groupings of cities with more than 60 million people. The Beijing-Tianjin area, for example, is actually a cluster of 28 cities. Shenzhen, the ultimate migrant megacity in the southern province of Guangdong, is now a key hub in a cluster as well. China, in fact, has more than 20 such clusters, each the size of a European country. Pretty soon, the main clusters will account for 80% of China’s GDP and 60% of its population. So the country’s high-speed rail frenzy and its head-spinning infrastructure projects – part of a $1.1 trillion investment in 300 public works — are all about managing those clusters.
Not surprisingly, this process is intimately linked to what in the West is considered a notorious “housing bubble,” which in 1998 couldn’t have even existed. Until then all housing was still owned by the state. Once liberalized, that housing market sent a surging Chinese middle class into paroxysms of investment. Yet with rare exceptions, middle-class Chinese can still afford their mortgages because both rural and urban incomes have also surged.
The Chinese Communist Party (CCP) is, in fact, paying careful attention to this process, allowing farmers to lease or mortgage their land, among other things, and so finance their urban migration and new housing. Since we’re talking about hundreds of millions of people, however, there are bound to be distortions in the housing market, even the creation of whole disastrous ghost towns with associated eerie, empty malls.
The Chinese infrastructure frenzy is being financed by a pool of investments from central and local government sources, state-owned enterprises, and the private sector. The construction business, one of the country’s biggest employers, involves more than 100 million people, directly or indirectly. Real estate accounts for as much as 22% of total national investment in fixed assets and all of this is tied to the sale of consumer appliances, furnishings, and an annual turnover of 25% of China’s steel production, 70% of its cement, 70% of its plate glass, and 25% of its plastics.
So no wonder, on my recent stay in Beijing, businessmen kept assuring me that the ever-impending “popping” of the “housing bubble” is, in fact, a myth in a country where, for the average citizen, the ultimate investment is property. In addition, the vast urbanization drive ensures, as Premier Li Keqiang stressed at the recent World Economic Forum in Davos, a “long-term demand for housing.”
Markets, Markets, Markets
China is also modifying its manufacturing base, which increased by a multiple of 18 in the last three decades. The country still produces 80% of the world’s air conditioners, 90% of its personal computers, 75% of its solar panels, 70% of its cell phones, and 63% of its shoes. Manufacturing accounts for 44% of Chinese GDP, directly employing more than 130 million people. In addition, the country already accounts for 12.8% of global research and development, well ahead of England and most of Western Europe.
Yet the emphasis is now switching to a fast-growing domestic market, which will mean yet more major infrastructural investment, the need for an influx of further engineering talent, and a fast-developing supplier base. Globally, as China starts to face new challenges — rising labor costs, an increasingly complicated global supply chain, and market volatility — it is also making an aggressive push to move low-tech assembly to high-tech manufacturing. Already, the majority of Chinese exports are smartphones, engine systems, and cars (with planes on their way). In the process, a geographic shift in manufacturing is underway from the southern seaboard to Central and Western China. The city of Chengdu in the southwestern province of Sichuan, for instance, is now becoming a high-tech urban cluster as it expands around firms like Intel and HP.
So China is boldly attempting to upgrade in manufacturing terms, both internally and globally at the same time. In the past, Chinese companies have excelled in delivering the basics of life at cheap prices and acceptable quality levels. Now, many companies are fast upgrading their technology and moving up into second- and first-tier cities, while foreign firms, trying to lessen costs, are moving down to second- and third-tier cities. Meanwhile, globally, Chinese CEOs want their companies to become true multinationals in the next decade. The country already has 73 companies in the Fortune Global 500, leaving it in the number two spot behind the U.S.
In terms of Chinese advantages, keep in mind that the future of the global economy clearly lies in Asia with its record rise in middle-class incomes. In 2009, the Asia-Pacific region had just 18% of the world’s middle class; by 2030, according to the Development Center of the Organization for Economic Cooperation and Development, that figure will rise to an astounding 66%. North America and Europe had 54% of the global middle class in 2009; in 2030, it will only be 21%.
Follow the money, and the value you get for that money, too. For instance, no less than 200,000 Chinese workers were involved in the production of the first iPhone, overseen by 8,700 Chinese industrial engineers. They were recruited in only two weeks. In the U.S., that process might have taken more than nine months. The Chinese manufacturing ecosystem is indeed fast, flexible, and smart — and it’s backed by an ever more impressive education system. Since 1998, the percentage of GDP dedicated to education has almost tripled; the number of colleges has doubled; and in only a decade, China has built the largest higher education system in the world.
Strengths and Weaknesses
China holds more than $15 trillion in bank deposits, which are growing by a whopping $2 trillion a year. Foreign exchange reserves are nearing $4 trillion. A definitive study of how this torrent of funds circulates within China among projects, companies, financial institutions, and the state still does not exist. No one really knows, for instance, how many loans the Agricultural Bank of China actually makes. High finance, state capitalism, and one-party rule all mix and meld in the realm of Chinese financial services where realpolitik meets real big money.
The big four state-owned banks — the Bank of China, the Industrial and Commercial Bank of China, the China Construction Bank, and the Agricultural Bank of China — have all evolved from government organizations into semi-corporate state-owned entities. They benefit handsomely both from legacy assets and government connections, or guanxi, and operate with a mix of commercial and government objectives in mind. They are the drivers to watch when it comes to the formidable process of reshaping the Chinese economic model.
As for China’s debt-to-GDP ratio, it’s not yet a big deal. In a list of 17 countries, it lies well below those of Japan and the U.S., according to Standard Chartered Bank, and unlike in the West, consumer credit is only a small fraction of total debt. True, the West exhibits a particular fascination with China’s shadow banking industry: wealth management products, underground finance, off-the-balance-sheet lending. But such operations only add up to around 28% of GDP, whereas, according to the International Monetary Fund, it’s a much higher percentage in the U.S.
China’s problems may turn out to come from non-economic areas where the Beijing leadership has proven far more prone to false moves. It is, for instance, on the offensive on three fronts, each of which may prove to have its own form of blowback: tightening ideological control over the country under the rubric of sidelining “Western values”; tightening control overonline information and social media networks, including reinforcing “the Great Firewall of China” to police the Internet; and tightening further its control over restive ethnic minorities, especially over the Uighurs in the key western province of Xinjiang.
On two of these fronts — the “Western values” controversy and Internet control — the leadership in Beijing might reap far more benefits, especially among the vast numbers of younger, well educated, globally connected citizens, by promoting debate, but that’s not how the hyper-centralized Chinese Communist Party machinery works.
When it comes to those minorities in Xinjiang, the essential problem may not be with the new guiding principles of President Xi’s ethnic policy. According to Beijing-based analyst Gabriele Battaglia, Xi wants to manage ethnic conflict there by applying the “three Js”: jiaowang, jiaoliu, jiaorong (“inter-ethnic contact,” “exchange,” and “mixage”). Yet what adds up to a push from Beijing for Han/Uighur assimilation may mean little in practice when day-to-day policy in Xinjiang is conducted by unprepared Han cadres who tend to view most Uighurs as “terrorists.”
If Beijing botches the handling of its Far West, Xinjiang won’t, as expected, become the peaceful, stable, new hub of a crucial part of the silk-road strategy. Yet it is already considered an essential communication link in Xi’s vision of Eurasian integration, as well as a crucial conduit for the massive flow of energy supplies from Central Asia and Russia. The Central Asia-China pipeline, for instance, which brings natural gas from the Turkmen-Uzbek border through Uzbekistan and southern Kazakhstan, is already adding a fourth line to Xinjiang. And one of the two newly agreed upon Russia-China pipelines will also arrive in Xinjiang.
The Book of Xi
The extent and complexity of China’s myriad transformations barely filter into the American media. Stories in the U.S. tend to emphasize the country’s “shrinking” economy and nervousness about its future global role, the way it has “duped” the U.S. about its designs, and its nature as a military “threat” to Washington and the world.
The U.S. media has a China fever, which results in typically feverish reports that don’t take the pulse of the country or its leader. In the process, so much is missed. One prescription might be for them to read The Governance of China, a compilation of President Xi’s major speeches, talks, interviews, and correspondence. It’s already a three-million-copy bestseller in its Mandarin edition and offers a remarkably digestible vision of what Xi’s highly proclaimed “China Dream” will mean in the new Chinese century.
Xi Dada (“Xi Big Bang” as he’s nicknamed here) is no post-Mao deity. He’s more like a pop phenomenon and that’s hardly surprising. In this “to get rich is glorious” remix, you couldn’t launch the superhuman task of reshaping the Chinese model by being a cold-as-a-cucumber bureaucrat. Xi has instead struck a collective nerve by stressing that the country’s governance must be based on competence, not insider trading and Party corruption, and he’s cleverly packaged the transformation he has in mind as an American-style “dream.”
Behind the pop star clearly lies a man of substance that the Western media should come to grips with. You don’t, after all, manage such an economic success story by accident. It may be particularly important to take his measure since he’s taken the measure of Washington and the West and decided that China’s fate and fortune lie elsewhere.
As a result, last November he made official an earthshaking geopolitical shift. From now on, Beijing would stop treating the U.S. or the European Union as its main strategic priority and refocus instead on China’s Asian neighbors and fellow BRICS countries (Brazil, Russia, India, and South Africa, with a special focus on Russia), also known here as the “major developing powers” (kuoda fazhanzhong de guojia). And just for the record, China does not consider itself a “developing country” anymore.
No wonder there’s been such a blitz of Chinese mega-deals and mega-dealings across Pipelineistan recently. Under Xi, Beijing is fast closing the gap on Washington in terms of intellectual and economic firepower and yet its global investment offensive has barely begun, new silk roads included.
Singapore’s former foreign minister George Yeo sees the newly emerging world order as a solar system with two suns, the United States and China. The Obama administration’s new National Security Strategy affirms that “the United States has been and will remain a Pacific power” and states that “while there will be competition, we reject the inevitability of confrontation” with Beijing. The “major developing powers,” intrigued as they are by China’s extraordinary infrastructural push, both internally and across those New Silk Roads, wonder whether a solar system with two suns might not be a non-starter. The question then is: Which “sun” will shine on Planet Earth? Might this, in fact, be the century of the dragon?
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President Xi Jinping of China and his top graft-buster Wang Qishan may be targeted by assassination attempts from corrupt officials who have been allegedly buying high-powered sniper rifles from the United States, reports Boxun News, a US-based citizen journalism outlet with a reputation for releasing unsubstantiated “insider” reports on Chinese politics.
According to a Boxun reporter in Hong Kong, recent raids on the homes of more than one corrupt official unveiled evidence of a revenge plot to assassinate Xi and Wang with American sniper rifles.
Xi, who launched on ongoing campaign to take down all corrupt officials — regardless of whether they are lowly “flies” or high-flying “tigers” — back at the start of 2013, has reportedly been bolstering his security detail over the last six months after the conspiracy came to light, Boxun said. Safety measures at outdoor appearances have also been upgraded, with even vice-ministerial-level officials needing to pass security checks, Boxun said.
This is not the first time Xi’s life has been at risk, said Boxun, which previously published unconfirmed claims that fallen tiger Zhou Yongkang had twice tried to take Xi’s life back in 2013, shortly after the Communist Party chief ordered Wang, chief of the Central Commission for Discipline Inspection, to look into the rumors of corruption that have long plagued China’s former oil and security tsar.
The two assassination attempts were said to have taken place around the time of the annual Beidaihe leadership conference in north China’s Hebei province. The first involved a time bomb hidden in a meeting room, while the second was a poison needle during a health check at Beijing’s 301 Military Hospital, Boxun said.
Xi was able to evade death on both occasions, and as a result the 72-year-old Zhou, a former member of the Politburo Standing Committee, was expelled from the party in December and will become the highest-ranked Communist Party official since the Cultural Revolution to be prosecuted for corruption
As we enter “The second machine age” one dominated by smart devices,
big data, and bioinformatics the West is still stuck with a hopelessly
outdated 1900′s era financial system where a small group of men in a
room behind closed doors determine global interest rates for the
“market price” of capital. This capital then goes to banks with a license
whom then multiple it 9 times according to the fractional reserve banking
system. However, this system is breaking down as the capital is staying in
the banks and causing income inequality and massive Speculative Asset
Pricing Bubbles (SAP) across the world in different sectors.
And it has gotten worse, since the global economic crisis of 2008 the Central
Banks have completely taken over the world financial system by expanding
their balance sheet crowding out and mis-pricing risks in the
world’s capitalist economies. For proof of this , just look at the Bank of Japan
whose balance sheet is now half as large as the entire Japanese economy and has
enabled the Japanese government to reach 250% debt/GDP.
This system will collapse, to see the future of global finance you need to
look at what is happening in China with Ant Financial and Tencent. China’s
financial system has been locked up tight but they are now in the Vanguard of
creating a new 21st century financial system.
China’s overseas property investments have jumped 24 fold, from US$600 million in 2009 to US$15 billion in 2014, with insurance funds having been the most active, Beijing-based Securities Daily reports, citing global real estate consultancy Knight Frank.
China’s overseas property investments focused mainly on Australia, the UK and the US, with capital flows entering those three countries jumping five fold from 2012 to 2013, said Wang Jiaming, senior director at Knight Frank Australia.
Knight Frank believes China’s first round of overseas investment followed the active investments by sovereignty wealth funds in quality assets and banks’ purchasing their own properties. In the second round, large-sized property developers began developing overseas properties and sought diversified expansion. In the fourth round, domestic investment funds and insurance firms have been seeking investment opportunities in core and high-returns properties.
Now the fourth round of overseas investment is emerging, including investors such as ultra-high-net-worth individuals (UHNWIs), mid- to small-sized state-owned enterprises and private developers.
Wang attributed the high growth of the mainland’s overseas property investments over the past six years to slowing domestic market demand as well as the fact that overseas markets offered higher investment returns. The central government’s encouraging attitude is another reason why China’s institutional investors, banks and property developers have been active in overseas property investments, the report said.
Domestic property investments have seen lower returns with shrinking profit margins while financing costs have stayed at high levels. By comparison, overseas property investments have seen lower loan rates, thus helping upgrade profit returns.
Wang said, for example, Australia’s commercial loans can reach about 70% of the real estate project’s total worth, with loan costs at around 4%-5%, while investment returns in Australia have been able to stay at about 6%-7%. Thus, no matter how much cash Chinese businesses have, they typically will choose investments with mortgages.
Four out of the 15 insurance companies with premium income over US$1.1 billion have already conducted overseas property investments, with eight more saying they are interested in doing so. Of the four, Anbang Insurance Group plans to buy the Waldorf Astoria Hotel in New York for US$1.95 billion, China Life Insurance and Ping An Insurance have purchased London properties, while Sunshine Insurance has announced to buy Sydney’s Sheraton on the Park for A$463 million (US$362 million).
According to Knight Frank, 40% of China’s top 20 insurance firms are considering investments in overseas real estate, indicating insurance funds will stay active in overseas property investments in the future.
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A global currency war is looming after numerous central banks around the world introduced new rounds of quantitative easing (QE) monetary policies in light of the rising US dollar and the sharply falling euro, the 21st Century Business Herald reports.
Many experts have expressed optimism on the outlook of the Chinese renminbi despite the developments, and predicted that the central bank may cut the banks’ reserve requirement ratio and/or interest rates, according to the report.
The world’s central banks had mapped out long-term strategies to cope with fluctuations in the real economy and the capital market in anticipation of a stronger greenback after the United States began phasing out its QE monetary policy. These banks appear to have been required to change their plans to adopt more relaxed monetary policies due to declining crude oil prices since the second half of 2014. This resulted in sharp fluctuations in foreign exchange markets around the world.
Singapore’s central bank is the latest to engage in “competitive monetary easing.” The Monetary Authority of Singapore (MAS) announced on Jan. 28 that it will reduce the slope of its currency band–its main monetary policy tool–to slow the appreciation of the Singapore dollar.
The MAS also cut its 2015 all-items consumer price inflation forecast to -0.5 to +0.5 percent, which was recorded in October 2014 as ranging from +0.5 to 1.5 per cent.
Exchange rate management against a basket of currencies from Singapore’s main trading partners is the central bank’s primary policy tool. The MAS allows the rate to fluctuate within a certain band that it periodically reviews to promote price stability, according to the report.
Statistics showed that Singapore is the ninth economy to be forced to adopt an accommodative monetary policy in the first month of 2015.
Approximately a dozen central banks have launched varying accommodative monetary policies since last year to cope with the risks in the capital market and the economy.
Among the most remarkable developments is the recent move of the European Central Bank (ECB) to unleash a QE monetary policy in a bid to revitalize the eurozone economy and counter deflation with a €60billion-a-month (US$58 billion) bond-buying program that was far larger than the investors had expected.
The move caused a sharp drop in the euro while the main stock indexes in Europe surged sharply.
The effects of the European QE measures will notably determine whether the ECB will expand the scope of these measures and extend the period for implementing them.
Experts on Wall Street maintained a reserved attitude over the effects of Europe’s QE policy. Ethan Harris, the co-head of Global Economics Research at BofA Merrill Lynch Global Research, said it is unlikely to considerably stimulate the economy.
Feb 18 2015 | 1:27pm ET
By Katherine Burton and Margaret Collins (Bloomberg) — Soros Fund Management, the family office of billionaire hedge fund manager George Soros, cut holdings of U.S. stocks in the fourth quarter and shifted assets globally.
Soros, which manages almost $30 billion, moved about $2 billion into companies in Asia and Europe, according to a person familiar with the strategy. The New York-based firm returned about 8 percent in 2014 and is up 1.5 percent this year, said the person, who asked not to be identified because the firm is private.
Other big hedge fund managers made a similar call on U.S. equities as a slide in oil prices hammered energy holdings. Hedge funds held about $1.6 trillion of U.S. equities at the end of the year compared with $1.8 trillion in the prior quarter, according to data compiled by Bloomberg, based on 886 filings.
David Tepper’s Appaloosa Management had $2.74 billion less in U.S. stocks in the fourth quarter, a 40 percent drop from the previous quarter. Louis Bacon’s $14.8 billion Moore Capital Management had $2.3 billion in U.S. equities at the end of the year, about 25 percent less than the end of September, according to regulatory filings.
Some managers, such as Leon Cooperman, 71, remain bullish on the U.S., while predicting bigger gains elsewhere. “We expect the European and Japanese equity markets to outperform the U.S. in the coming year,” Cooperman, who runs Omega Advisors, wrote in an investor letter last month. Anticipation of more stimulus from the European Central Bank, along with a weaker euro and expectations of solid earnings, has had an affect on sending money overseas.
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The scale of China’s wealth management market is expected to increase from 46 trillion yuan (US$7.4 trillion) in 2014 to 227 trillion (US$36.3 trillion) in 2020, indicating strong growth potential, reports the China Business News.
According to a survey by CITIC Securities, private banks and wealth management companies will provide high-income clients with customized products, while middle-income clients with an annual income of US$100,000-$1 million will be offered standardized products.
Chen Xiaosheng, director and general manager of Shenyin & Wanguo Securities, said at an annual forum on Jan. 30 that the wealth management market in China is undergoing a rapid expansion, with its total value (deducting the overlapping assets) exceeding 25 trillion yuan (US$4 trillion) in 2014.
The rapid growth of the market signals a strong need for health management units to go international.
Ma Xutian, an executive at the Bank of Communications, agrees. The time has come for “the opening of the wealth management of local banks to the world,” he said. Although the scale of these wealth management units has increased 10-fold to 15 trillion yuan (US$2.4 trillion) over the past 10 years, the pace is still slower than that of global mega management companies,” he said.
Now is the time for Chinese wealth management firms to go international and expand their business scope, Ma said.
Wan Fang, president of Ping An Asset Management, said “assets worth 500 billion yuan (US$80 billion) are currently under the company’s management, over 90% of which is from institutional customers. We are keen to enter the private wealth management market…”
As the wealth management business continues to boom, there is a need to further explore products for retail customers, which means wealth management companies will have to adapt to customer needs, said the report.
Citing an insurance consultant, the newspaper said that with the increasing demand for diverse wealth management, attention must be paid to customer needs for comprehensive products that include education, immigration, healthcare, retirement and overseas investment.
Lin Jing, president of China Industrial International Trust Limited, said the “globalization of wealth management is an important trend. With a growing awareness of and need for overseas investment from high-income clients, wealth management companies have to provide them with more diverse investment products and channels.”
According to McKinsey & Company, some 60% of China’s high-income earners have assets abroad, and their overseas investments account for 10% of their total assets.
Hedge funds, securities and credit loans are the three investment channels most favored by high-income earners in other countries, statistics show. But stocks, private equity, real estate, and holding cash are the most popular areas of investment among high-income individuals in China, according to the report.
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Hong Kong-based Horizons Ventures, run by Solina Chau, the director of the Li Ka Shing Foundation, has invested in only one project in mainland China, Guangzhou’s Time Weekly reports.
The venture capital firm, which first gained prominence for its US$120 million investment in Facebook in 2007, currently has 63 projects, including 24 in Israel, a country favored by the company, the newspaper said.
Statistics from the Israeli research firm IVC showed that Horizons Ventures was the second most active venture capital company in the country in 2012, investing in a total of 10 startups in Israel that year.
Wave, a company working on brainwave-reading technology, was one of the Israeli startups Horizons Ventures invested in, and it proved to be a successful venture for the Hong Kong firm following Google’s eventual acquisition of the startup, the newspaper said.
Chau’s interview with Forbes’ Asia edition last year revealed that she established the firm in 2002 with her long-time business partner, Debbie Chang, while Li Ka-shing became an investor two years later.
“He (Li) loves disruptive innovations and sees it as kind of a predictive lens into the future,” Chau told the magazine in the 2014 interview.
The photo of Li and Josh Tetick, CEO of Hampton Creek, released last year, which featured the two frying synthetic eggs developed by the Silicon Valley startup, indicated the Hong Kong tycoon’s interest in meeting with innovative entrepreneurs.
Chau also earlier said that her firm would continue focusing on startups developing irreplaceable advanced technology to create benefits for businesses run by Li’s companies, including Cheung Kong Holding and Hutchison Whampoa.
Union Mobile Pay, set up jointly by China Mobile and China UnionPay in 2003, is the only Chinese company currently invested in by Horizon Ventures, the newspaper pointed out.
Union Mobile Pay is one of the companies in China that began operations in payment services, and its main businesses include payment processing, information services, and payment-related e-commerce, the newspaper said.
Imagine your one of the 17 people sitting in this meeting. Your thinking
this guy is nuts. Only 15 years later, he would be worth $25 billion.
East London is about to get redeveloped into a new Chinatown but in this
century the Chinatowns of the world will not be selling trinkets and Kung Pao
Chicken but instead will be the dispensers of global credit. China is the
Alpha Country of credit; a fact that will become all the more obvious when
money printing in the Western world has to stop. China now has over $4 trillion
in currency reserves and a savings rate over 50%. In addition, there is now
more than 50 trillion Yuan ($8t USD) in personal saving accounts in China.
This number has grown 5 times since 2003 and is continuing to grow.
At its root, capital comes from savings, and the Western world has none.
Feb 14 (Reuters) – China Minsheng Investment Co Ltd (CMI), the country’s largest private investment fund, said on Saturday it would invest 1 billion pounds ($1.5 billion) in a Chinese-led project to develop a new financial district in London.
The project is one of the largest Chinese investments in the United Kingdom in recent years and one of the most significant for Minsheng, which launched last August with registered capital of 50 billion yuan.
The private equity firm said it would become the majority investor in the project, which was unveiled in 2013 by Chinese developer Advanced Business Park (ABP) and Mayor Boris Johnson and touted as potentially London’s third financial centre after the City and Canary Wharf.
ABP, headed by little-known Beijing businessman Xu Weiping, wants to develop a 14-hectare sliver of land at the historic Royal Albert Dock in east London into 400,000 square metres of offices and shops.
Headed by Gong Wenbiao, the former chairman of state-owned Minsheng Bank Corp, Minsheng Investment claims no formal relationship with the bank or the Chinese government despite the name.
In January, the fund’s international advisory committee, a panel that includes former European prime ministers, Asian tycoons and a Nobel laureate, assembled at Diaoyutai State Guesthouse in Beijing for the first time to discuss its globalisation strategy.
The fund has said it would invest broadly in areas ranging from sustainable energy to real estate to business jet services.
The Chinese developers and London officials have envisioned attracting growing Asian companies to establish their European headquarters at their business park, which is close to the London City airport.
“After the project is completed, it will be the international platform and foundation for Chinese companies and capital to enter the European market,” Minsheng president Li Huaizhen told reporters in Shanghai on Saturday, hours after striking a deal with the UK finance ministry.
As China’s economy cools, its businesses are ploughing money into projects overseas at such a pace that China’s outbound investment will soon overtake inbound flows.
China’s outbound direct investment surged 14.1 percent to a new high of $102.9 billion last year, according to the commerce ministry.
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The development of an X-ray pulse generator by the Xi’an Institute of Optics and Precision Mechanics under the Chinese Academy of Sciences has attracted the attention of Vassily Kashin, a expert at Russia’s Center for Analysis of Strategies and Technologies, according to Moscow-based Sputinks News.
Kashin believes that China’s electromagnetic weapon system based on the X-ray pulse generator has the potential to create a huge challenge to the United States in the Asia-Pacific region. It could be used to paralyze the air defense and anti-ballistic missile systems of the United States and its security partners including Japan, Taiwan and South Korea in the region. After that, the People’s Liberation Army could easily wreak havoc on the opposing force’s military facilities and hardwares with its own aircraft and ballistic missiles.
With the electromagnetic weapon system, the US can no longer rely on smaller quick reaction forces to confront Chinese expansion, according to Kashin. He said that Washington must deploy more troops and invest more money to strengthen the defense capability of American military bases in the Western Pacific.
Yet, Kashin said, the US will not be able to defend its interests in Asia if it devotes too much attention to the Ukrainian crisis. Chinese nationalist tabloid, the Global Times, said that Kashin wrote the article with political motives in mind. As one Chinese expert told the Global Times, Russia is exaggerating the threat of the Chinese electromagnetic weapon system to try and divert the attention of American forces away from Europe, and more specifically Ukraine, and focus more on the Asia-Pacific region. He went on to say that Kashin has no knowledge regarding the development of the Chinese X-ray pulse generator at all.
Chinese brokers hungry for assets outside Asia by Rob Hartley Haitong adds to trend with BESI deal; further opportunistic moves on way. The trend for downsizing and cost-cutting across the western banking world presents a unique opportunity to Chinese financial services firms. Cash-rich and acquisitive brokerages have been picking off choice assets as they expand their presence outside Asia and cultivate a more global outlook. Haitong Securities’ agreement to acquire Portuguese investment bank Banco Espírito Santo de Investimento (BESI) for €379 million in December was the latest venture into the global market by a Chinese firm, and the first such acquisition in Europe. Haitong cited access to markets in Europe, the US, South America and Africa as key reasons for the deal. “In recent years, the economic ties between China and Portuguese-speaking countries, such as Brazil and Angola, have been increasingly reinforced, with the total amount of investment and trade growing rapidly,” the company said. Along with the international reach of BESI, the price was also attractive. “It was a troubled asset, so there was a view they could go in and get it on the cheap,” says the Asia head of one global investment bank. “They think it’s an attractive overseas asset at the price. BESI has a global footprint. I think you will see more acquisitions, especially if Asia continues with its sustained rally.” Looking abroad
Looking abroad There is no question Chinese brokerages are going to continue to internationalize b acquiring other brokerages and different parts of investment banking businesses Nick Ronalds Nick Ronalds, managing director and head of equities at the Asia Securities Industry and Financial Markets Association (Asifma), shares the view that Chinese firms will continue to focus on overseas assets. “There is no question Chinese brokerages are going to continue to internationalize by acquiring other brokerages and different parts of investment banking businesses,” he says. “It buys them global reach as well as global experience. A reasonable assumption is that they will be opportunistic when an attractively priced firm comes up.” Ronalds points to the strong year that Chinese brokers had in 2014, particularly in the fourth quarter. “If you are a Chinese broker and you think that kind of performance may not be repeated this year, diversification makes sense,” he says. In January, Chinese bank ICBC completed its move to acquire a 60% controlling interest in Standard Bank’s London-based global markets business. The business includes commodities, fixed income, currencies, credit and equities products, and has operations in New York, Dubai, Singapore, Shanghai, Hong Kong and Tokyo. Citic Securities is another large Chinese firm that has shown its intention to expand, completing the full purchase of Asian brokerage and investment group CLSA midway through 2013 for just over $1 billion. CLSA then went on to extend the non-Asia reach of Citic when it made a strategic investment in US firm BTIG in April, 2014. The terms of the deal were undisclosed. “Citic Securities’ acquisition of CLSA marked the first time a Chinese financial institution acquired a controlling share in a regional player with global reach,” Yin Ke, vice-chairman of Citic Securities and CEO of Citic Securities International tells Euromoney. “The global capital market is a dynamic one and in recent years many Chinese enterprises have expanded internationally, while global investors are also keen to participate in China. Leveraging strengths such as relationships with Chinese clients and an understanding of the Chinese market and regulatory framework, Chinese brokerages can play a vital role in capturing this market trend.” Different avenues Each Chinese house has its own niche and its own business strategy, he says, so each will pursue a different avenue in terms of expansion. “We believe that only a few market leaders in the sector will opt to expand internationally.” The launch of Hong Kong-Shanghai Stock Connect, which provides mutual market access between bourses in the two locations, was arguably the most important event in the Asian financial world in 2014. The introduction of Stock Connect and its gradual development is unlikely to have escaped the attention of China’s acquisitive brokers, and could well be behind some of the expansionist thinking on display. “Clearly for a smart Chinese brokerage firm, Stock Connect has got them thinking about inbound business,” says Asifma’s Ronalds. “Stock Connect has opened up China, so there is a lot of money that will want to find its way into the country over the medium and long term. Why let all the foreign brokers get that business?
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Political donations in foreign countries by Chinese citizens appear to be on the rise after a mysterious Chinese businessman was revealed to be the biggest political donor in Australia last year, reports Chinese web portal Sohu.
Wang Zichun, which may potentially be an alias, gave two donations to Australia’s opposition Labor party totaling A$850,000 (US$650,000) during the country’s last financial year between July 2013 and June 2014.
According to Australia’s Fairfax Media, Wang is a Chinese property developer who decided to make the large donations following the return of the Mandarin-speaking Kevin Rudd to the prime ministership after he successfully contested the party leadership from Julia Gillard in June 2013.
The donation returns list Wang’s address as in Shijiazhuang, the largest city of north China’s Hebei province.
Sohu links Wang to a major development in the Australian state of Victoria being undertaken by the state-owned China Everbright Group, though the company said it had nothing to do with the personal donation.
Apart from Wang, Labor also received a donation of A$635,000 (US$485,000) from Kingold Investments, the property development company owned by Australian-Chinese donor Chau Chak Wing, who has reportedly poured millions of dollars into the ruling Liberal party as well over the years. A new business faculty building at the University of Technology, Sydney will also be named after the philanthropist after he donated A$20 million (US$15.3 million) to the university.
In fact, four of the five biggest political donations in Australia in 2013-2014 have links to China, which Sohu to claims is aimed at improving their prospects of doing business in the country.
Yu Changsen, an Oceania expert at the Guangzhou-based Sun Yat-sen University, says that foreign political donations are more common in Western democracies as they are viewed as a “win-win” for both sides. On the one hand, the party receives funds to support its election campaigns, while on the other the donor, usually a businessman or commercial enterprise, can look forward to policies in their interests if the donee is elected, Yu said.
A month after Wang’s donation, the Labor party suffered a staggering defeat in the federal elections held in September 2013. Incidentally, on the day that Wang’s donation was revealed publicly earlier this month, the incumbent Australian prime minister announced stricter property acquisition measures in the country for foreign investors.
Last year, Chinese direct investment in foreign countries surpassed foreign direct investment in China for the very first time. China’s direct foreign investment is also expected to total as much as US$1.25 trillion over the next decade.
Enterprises from China are now taking the Chinese concept of “guanxi” — defined broadly as the basic dynamic in personalized networks of influence — to other countries, Sohu said, using donations, public relations and even bribery to open up doors and secure investment opportunities. In countries where foreign donations are not allowed, some Chinese enterprises may even use domestic intermediaries to form a chain of mutual interest, Sohu added.
As seen from the video, a man purposely drives his car into the consulate smashing
into the gate and sending one guard flying back like a rag doll. Reasons for the
incident have not been released.
With the U.S. taking reducing its nuculear weapon systems it will eventually
be reveled that China has become the #1 global thermonuclear power. What then?
Full Spectrum Dominance.com
Washington can’t be complacent about its relationship with an antagonistic nuclear power. We’ve known that for more than thirty years, since the Pentagon sponsored a highly classified war game called Proud Prophet.
Conducted in 1983, the game was designed to test the strategy Washington had honed for more than a decade. The United States had always relied on deterrence to prevent war between the superpowers. But, if deterrence failed, the West needed a Plan B—and they had one. If NATO and the Warsaw Pact actually started to trade shots, the alliance strategy would be to manage the conflict: demonstrate resolve, hold its ground and de-escalate the confrontation. It sounded plausible—in theory.
Proud Prophet put Plan B to the test. It used a put-up or shut-up scenario, pitting Moscow against Washington in a mock shooting war. The results were terrifying. Tit-for-tat ended in an all-out nuclear exchange obliterating mankind.
Now, Beijing is not Moscow. And that’s what makes the lesson of Proud Prophet so scary when contemplating modern-day, nuclear-armed China. Managing escalation with the Soviet Union was easy compared to managing potential escalation with China. One reason for that is because the competition between the United States and U.S.S.R. was relatively symmetrical. In many ways, the hard-power strengths of the two powers mirrored each other.
Additionally, East and West lived in separate camps. There was scant economic interaction between the two sides. We mostly talked among ourselves. They (mostly) talked to themselves. Yet, in Proud Prophet’s relatively simple two-player competition, once escalation started, it quickly spun out of control.
The U.S.-Chinese relationship is the polar opposite. The economies and public spheres overlap in a complex, foot-tripping web. Both sides have looked at mastering asymmetrical advantages to constrain and manage the other. If they ever started actually shooting at each other, managing that messy relationship would become nearly impossible. Just like Proud Prophet, it would lead to a horror show.
An easy answer to the conundrum would be to adopt the same policy as the great powers did during the Cold War. After all, Proud Prophet never became a reality show. In fact, Proud Prophet confirmed what both sides already suspected: there was no good Plan B once the shooting started. As the global confrontation dragged on, both superpowers accepted as conventional wisdom that a direct military conflict—much less any exchange of nuclear weapons—was unacceptable.
Still, the fact that the Cold War stayed cold is small assurance for those responsible for managing the fate of humanity thirty years later. If any leader had made a strategic misjudgment, it would not have been pretty. Historians still debate, for example, how seriously Moscow took another U.S. exercise: Able Archer. That 1983 NATO exercise took the alliance to the brink of nuclear exchange. According to some accounts, the Kremlin pretended to freak out hoping to send a message to President Reagan that he shouldn’t act too much like the cowboy he played in the movies. Others still hold that the Kremlin briefly feared the U.S. president was about to “go cowboy” and launch a preemptive nuclear attack.
Relying on deterrence alone, hoping everyone gets the memo that firing nuclear weapons is a no-no, is no way to run a planet. Conversely, we know that President Obama’s road to nuclear zero is going nowhere. There is no getting rid of nuclear weapons anytime soon. A credible, modernized nuclear arsenal paired with missile defenses will remain an essential part of protecting and defending the United States for many years to come. Still, in the end, all nuclear weapons are really good for is reminding others that fighting nuclear wars is a bad idea.
When the Reagan White House realized that, if deterrence failed, Plan B was no good either, the administration opted for a “cost-imposing strategy.” It moved from managed competition to outracing the Soviet Union—counting on the wheels coming off when the Soviets tried to keep up with the full-court pressure of U.S. military upgrades, hardline diplomacy and a resurgent American economy.
The Soviet Union collapsed, and the world lived another day. That was then. But there is no reason to think that strategy can stave off Armageddon a second time. Washington needs to wake up. To avoid a scenario where the United States faces the prospect of a managed military conflict with China, Washington will have come up with a game changer now.
A Chinese mining billionaire said to have links with disgraced former security tsar Zhou Yongkang and who once launched a bid for Australia’s Sundance Resources was executed for multiple murder on Monday, a court said.
Liu Han, his younger brother Liu Wei and three accomplices were condemned to death in May for “organising and leading a mafia-style group”, murder and other crimes.
Their appeals were unsuccessful and all five were put to death on Monday, the Xianning Intermediate court in the central province of Hubei said on its verified account on China’s Twitter-like Sina Weibo.
The five met with their “close relatives” before the execution, the court said in a separate posting.
“The executed criminals’ legal rights were fully protected,” it added.
Liu Han led private company Hanlong, which is based in the southwestern province of Sichuan and launched a takeover bid of more than $1 billion for Sundance, a listed Australian iron ore firm, in 2011.
But the deal collapsed in 2013 after the Chinese firm failed to follow through. Chinese media reports said at the time that Liu Han had been detained.
Sichuan is one of the power bases of Zhou, who once enjoyed vast power as China’s security chief but whose targeting in a corruption investigation was announced in July.
The influential business magazine Caixin has reported that Liu Han once had dealings with a businessman believed to be Zhou’s son. State media have also hinted that the gang had connections to central government officials.
Zhou was handed over to prosecutors in December.
The official announcement of the long-rumoured probe into Zhou made him the most senior member of the Communist Party to be investigated since the infamous Gang of Four — a faction that included the widow of founding leader Mao Zedong — were put on trial in 1980.
It no longer matters what the numbers say in U.S. Dollars as the currency
loses its reserve status and is quickly becoming just another currency.
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China’s National Bureau of Statistics (NBS) recently publicized a report containing statistics on the nation’s economic performance in 2014, including foreign-trade figures, which were only denominated in renminbi, without including, for the first time, US-dollar equivalents.
Tables of US dollar-denominated statistics on foreign trade, however, are still available on the NBS website, showing that China’s foreign trade topped US$4.3 trillion in 2014, including US$2.3 trillion in exports and US$2 trillion in imports.
The practice underscores efforts by the Chinese government to promote the internationalization of the renminbi, pushing for the use of the currency as a vehicle for international-trade settlement and cross-border financial investments, before its inclusion in the forex reserves of various countries.
Despite constant improvement of the renminbi’s international status, China’s currency still lags far behind the US dollar, in terms of the amount in circulation worldwide, as over half of international payments are still denominated in US dollars. Therefore, it is advisable to have China’s economic figures denominated in both renminbi and US dollars, to facilitate research by local people and foreigners.
(Li Mengzhou is president of Fortune China Information Network. Translated by Want China Times.)