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,
The CSI finished down -8.6% for the week at 3,817 and experienced a 14.67% drop
for the month, its worst monthly drop since 2009.
The Rothschilds were said to be the wealthiest and most mysterious
banking families in Europe during the 19th century. German poet
Heinrich Heine once said of the family: “Money is the god of our
times, and Rothschild is his prophet.”
The Rothschilds are well known in China, as they featured in Song Hongbing’s
antisemitic and nationalistic bestseller Currency Wars (Huobi Zhanzheng),
published in 2007, which portrays the Rothschilds as being at the center of
a global conspiracy to control the international financial industry. Among
other assertions, the book suggests the US Federal Reserve is a not controlled
by the US government but is rather a group of private entities loyal to the
Rothschilds. The book is said to have been popular among top Chinese officials
and financial industry leaders.
Despite Song’s claims, it is believed that the wealth and influence of the
Rothschild family has declined due to the sheer amount of descendents among
which it has been divided.
The founder of the banking dynasty, Mayer Amschel Rothschild was a court Jew,
or Jewish banker for royalty and nobility, for the German Landgraves of Hesse-
Kassel in Frankfurt, established a banking business in the 1760s. He passed
his wealth on to his five sons, sending them to establish banking businesses
in the five prominent business centers of Europe, Frankfurt, London, Paris,
Vienna and Naples. The family later diversified into a wide range of industries,
including mining, real estate, financial services, energy, farming, wine and
Song’s book estimated the Rothschild family’s wealth stood at US$5 trillion.
David Rene de Rothschild, a member of the French branch of the family who
currently controls the business interests of the French and English branches
of the family, denied many of the assertions in Song’s book in an interview
with state broadcaster Chinese Central Television in 2010, while on a business
trip to China, according to the paper. Rothschild is also reported to have
refused to take part in the program if Song was invited as a guest.
At the Boao Forum for Asia 2014, Lady Lynn Forester de Rothschild, who is married
to Sir Evelyn Robert de Rothschild, another member of the English branch of the
Rothschild family, reportedly called the assertions made in Song’s book absurd,
but stated that it had boosted the reputation of the Rothschild banking businesses
in China. David Rene de Rothschild told CCTV in the interview that much of Song’s
book had been fabricated. He also said that Song had focused only on the successes
of the family and had ignored the price they paid for their success.
Song’s book portrays the family as profiting from wars via supplying loans to fund
the militaries of the countries involved beforehand and giving loans to fund
reparations paid by countries defeated in the wars afterwards. Song’s book states
that at the beginning of the 20th century, the family controlled around half of
the world’s wealth.
The Rothschilds forayed into China long before the publication of Currency Wars
made them a household name in the country.The Rothschilds had their first contact
with ChinaAt the beginning of the Reform and Opening Up era under Deng Xiaoping in
1979. At that time, UK firms British Coal and Northern Engineering Industries planned
to build electricity plants in Beijing and Jiangsu. The Rothschilds were consultants
on the two projects. NM Rothschild & Sons was also reportedly involved in an
investigative draft of China’s railway network in the 1980s. The Rothschilds hold
a 4.98% stake in the Bank of Qingdao and have set up joint venture Domaines Barons
de Rothschild-Citic Wine Estate in Penglai in Shandong along with CITIC East China.
They were also involved in China National Offshore Oil Corporation’sattempted
acquisition of US oil company Unocal as well as the merger between Nanjing Automobile
and Shanghai’s SAIC Motor. The company lists an array of Chinese clients, including
state-owned China Mobile and China Unicom, as well as private firms, including hot
pot chain and meat and condiment processing firm Little Sheep, owned by US firm Yum!
Brands and internet giant Alibaba. Rothschild also stated that the company was a
consultant in China Unicom’s US$24 billion acquisition of China Netcom Group.
The Rothschilds also facilitated Chinese carmaker Geely’s acquisition of Volvo from
Ford in 2010, the largest acquisition of a foreign automaker by a Chinese company.
On his visit to China, David Rene de Rothschild also stated that he hopes that he
hopes that the Chinese market can help the family firm expand its share of the
global financial management business from 3% to 10%.
Corporate debt investors face the prospect of rising debt defaults from China and the US junk bond market, according to Standard & Poor’s, a twin threat representing an “inflexion point” in the current credit cycle.
China ranks as the world’s largest corporate debt market and continues to grow, with its current debt pile representing 160 per cent of the country’s economy. S&P estimates companies will need to sell $57tn of debt between now and 2019, with 40 per cent representing China and 21 per cent of sales coming from the US.
The People’s Liberation Army has taken a major step forward in its laser weapons program after achieving breakthroughs that could lead to safer and wider applications.
According to Duowei News, a US-based Chinese political news outlet, China’s so-called “Eye” series of large-sized weapons systems have been plagued by criticisms of instability and corrosiveness, with claims that the technology could cause blindness under high-speed conditions. In Western countries, this form of technology is prohibited from being exported to China, meaning Chinese scientists are left to explore this field on their own.
A recent report from the state-owned China News Service, however, said that researchers have finally broken through a bottleneck. Initially, scientists suggested testing laser deposition of diamond-like carbon (DLC) films to expand the application of laser technology. Though some problems were resolved after four years of research, the technology still failed to pass specified sonic-speed tests, meaning that it is still not ready to be applied to weaponry.
The researchers did not give up and began trying other methods, and have now finally created the country’s first dual-beam pulsed laser deposition system, which has already passed hypersonic wind tunnel tests, the report said.
China has been conducting large-scale testing of laser platforms in recent years, and scientists believe that they are now catching up to leading international standards.
Using “non-linear thinking,” China has also built a dual-wavelength free-switching solid-state laser which has been successfully applied to a takeoff and landing monitoring system for a specific model of fighter jet. This breakthrough is regarded as another step forward in producing a laser weapon with wide applications that is safe to the human eye.
Lasers are encompassed by a wider term known as directed energy, which is at the cutting edge of military technology around the world. Laser weapons are touted for being high-precision, fast, capable of hitting targets from long distances and being resistant to electromagnetic interference. However, the technology also faces significant obstacles, such as the requirement of a large energy source and having to overcome adverse weather conditions such as heavy fog, snow and rain.
On Tuesday, US Navy secretary Ray Mabus said at a directed energy conference in Washington that directed energy is one technology that could help the US maintain an edge over its rivals, adding that the US Navy has been testing directed energy systems such as a ship -based laser and an electromagnetic rail-gun.
Frank Kendall, the US undersecretary of defense for acquisitions, technology and logistics, said at the same conference that the US must not get complacent in its technology innovation.
“We are so used, however, to the assumption of US technological superiority that often when I bring this up with people they dismiss it,” he said. “They don’t think of China as a formidable opponent.”
BEIJING – Credit cards are gaining increasing popularity among Chinese, with payments totaling 15.2 trillion yuan ($2.49 trillion) last year, a report by China Banking Association showed on Tuesday.
The volume was up 16 percent from the previous year. In 2014, around 64 million new credit cards were issued, bringing the total to 460 million.
The report also highlighted rising risks in the industry. In 2014, credit card repayments delayed by more than half a year were up 42 percent year on year to 35.76 billion yuan in 2014, according to the report.
China’s multi-trillion bank card clearing market has been monopolized by China UnionPay Co, the national bank card association founded in 2002. It was the sole company approved by the central bank to provide clearing services for bank card transactions in the country.
To gradually open up the market to bring in competition, China’s State Council announced detailed regulations in April to widen the market for bank card clearing services.
Starting from June 1, companies with a standard bank card clearing system and a registered capital of no less than one billion yuan are qualified to apply to conduct bank card clearing services in China.
COPENHAGEN – Shipping freight rates for transporting containers from ports in Asia to Northern Europe dropped 22.8 percent to $400 per 20-foot container (TEU) in the week ended last Friday, data from the Shanghai Containerized Freight Index showed.
The renminbi could overtake the leadership of the US dollar as an international trade currency with China’s creation of the Asian Infrastructure Investment Bank (AIIB) and its energy alliance with Russia, writes the Beijing-based Reference News.
Led by China to compete with the World Bank and International Monetary Fund (IMF), the AIIB includes 57 founding countries and US$100 billion in capital. The US did not sign up.
In addition to the AIIB, China has signed a 30-year, US$400 billion deal with Russia and another US$284 billion contract for natural gas. The two countries agreed to pay each other with their respective currencies.
The US dollar, the main currency in international trade, has been slipping in its lead position as the world’s reserve currency. The composition of the greenback in global official foreign exchange reserves, once peaking at 71%, dropped to 63% in 2014, the report said.
After WWII, The US GDP accounted for 45% of the world’s total; now, it is only 20%. The renminbi, on the other hand, is slated to take the top spot within the next decade as the IMF is very likely to include the currency in its special drawing rights (SDR) this fall as an official reserve currency in addition to the US dollar, the Japanese yen, the euro and the British pound, said Mikhail Portnoi, director of the Economic Research Center of the Institute for US and Canadian Studies, a think tank under the Russian Academy of Sciences.
The Chinese Academy of Social Sciences (CASS) published a balance sheet for the country July 24 that has led to calls for an improved bond market for the growing number of municipal bonds, according to Shanghai’s China Business News.
Local government debt was the issue that drew most attention when the CASS published the government’s balance sheet, which showed that local governments possessed total assets of 108.2 trillion yuan (US$17.4 trillion) and owed 30.28 trillion yuan (US$4.87 trillion) as of the end of 2014.
The report highlighted possible risks concerning local government debt, including the rapid rate of its growth as well as the increasingly complicated sources of fundraising and repayment dates that fall close to each other. In its conclusion, the CASS said current debt repayment plans are unsustainable as the country continues to see risk associated with hidden debt.
CASS economist Chang Xin cited reports from the National Audit Office and said local governments have been borrowing new money to repay old debts after the authorities backed such practices. It remains to be seen whether the practices will reduce the risk, while the local governments face growing refinancing pressure, Chang said.
Since the central government’s leverage ratio of 15.1% is far lower than local governments’ 42.7%, the paper said the debt burden has been gradually moved from the local to central government level through a program of replacing existing borrowing with municipal bonds at lower interest rates. This is also done by transferring loans to policy banks, the report added.
Meanwhile, the CASS said local governments should rely more on municipal bonds for their capital expenditure and move away from borrowing through loans that are intended only for the short term.
Bonds and notes only accounted for 10.5% of the local government debts as of June 2013, much lower than the 57.7% in the United States in September 2014, the article noted.
CASS member Li Yang, a former deputy director of the research institute, said the government’s balance sheet will look very different once debt accumulated through financing vehicles are moved to state-owned enterprises or the government.
Citic Securities managing director Gao Zhanjun, a co-author of the CASS report, said China needs to develop its bond market if municipal bonds are to cover the majority of local government debt. The bond market will be the venue for local governments to replace existing borrowing with municipal bonds and to raise new funds for several years in the future, Gao said.
Dalian Wanda Group Co Ltd, the Chinese property giant, will buy at least three more sports companies this year as it continues on its quest to become a leader in the global sports industry.
Wang Jianlin, its chairman, told Xinhua News Agency that he expects to announce a major acquisition very soon that would be “good news” for Chinese soccer, without giving further details.
In February, Wanda fought off 11 other international bidders to take over Infront Sports & Media AG, the world’s most respected sports marketing company based in Zug, Switzerland, from the European private equity firm Bridgepoint in a deal worth around $1.2 billion.
The Swiss company owns copyrights and marketing sales rights for seven international sports associations that govern the Winter Olympic Games.
With control of Infront’s resources, its sports event broadcast rights and marketing rights, Wang said Wanda now stands in the upstream of the sports industry.
Wanda also took a 20 percent stake in Spanish La Liga giant Atletico Madrid in April.
“One of our major concerns is that the companies involved in the acquisitions should have a dominating role in sports marketing,” he said, adding they should also be prepared to bring something from the sports they specialize in to China.
“After buying the Swiss company, we are able to launch a series of sports activities in China,” Wang said.
Wanda signed a three-year agreement with the Chinese Football Association in 2011 to invest 500 million yuan ($80.53 million) into promoting Chinese soccer, which included funding 30 young Chinese players each year to train in Spain.
“Everything we have done in the past and will do in the future is aimed at boosting Chinese soccer, which is really in need of more talented young players,” Wang said.
In recent weeks, the Italian media have been speculating that Wanda is also interested in buying a 30 percent stake in Series A giant AC Milan at a cost of $170 million, and that it might also build the club’s new stadium in the Portello district of the city.
Xie Liang, a veteran soccer commentator with Radio Guangdong, said Wanda’s growing involvement in soccer is seen by many as a mirror of the country’s strategic plans to upgrade industries at home.
“Getting involved in sport worldwide will help build a better image of Chinese companies, and help Chinese companies diversify into other businesses,” said Xie.
In recent years, a growing number of traditional Chinese companies, especially in the real estate sector, have become involved in developing the soccer industry, either in cooperation with or by buying into overseas soccer clubs.
Evergrande Real Estate Group Ltd, the property developer based in Guangzhou, the capital of Guangdong province, has already formed an alliance with the Spanish giant Real Madrid to develop a soccer school in China and three overseas branch schools.
A sharp sell-off in China within the final hour of trade saw the Shanghai Composite close 8.5 per cent lower at 3,725.6 points, and register its biggest one-day fall since February 27, 2007. Moreover, it ranks as the second-biggest one-day fall since 2000
A publicity stunt by a Beijing salad store went horribly wrong after the semi-naked Western men it hired to promote its products were detained by police for “causing a public disturbance,” according to a report from the Beijing Youth Daily.
On Wednesday afternoon, Sweetie Salad, a start-up business in Beijing’s Chaoyang district, hired around 100 white males — mostly from Russia but not all of whom were in the best of shape — to parade around the city disguised as “Spartan warriors” made popular by the 2006 fantasy action film 300.
Dressed in nothing but leather shorts, shin pads and sandles, with a cape on their backs, the men marched through the streets handing out salad samples, passing through shopping malls and subway stations.
They eventually stopped to line up in a pyramid formation and held up boxes Sweetie Salad before chanting an advertising slogan.
The marketing campaign drew a lot of attention from passersby and picture-takers, but also the police, who arrived shortly after in an apparent response to a “mass complaint” about the crowd, according to a statement issued by Beijing police on their official Sina Weibo microblog account.
Several models were reportedly detained after they refused to disperse and leave the area, with photos posted online showing two of them being wrestled to the ground by police on a pedestrian overpass.
Sweetie Salad, which had not secured a permit to organize the event, apologized on its microblog page on Thursday: “After yesterday’s incident, we have come to realise that we lack experience in co-ordinating major events as a start-up company. We have worked out all misunderstandings with the police.”
News and photos of the incident quickly went viral in China, with one of the most widely forwarded posts being: “300 Spartans were no match for the Beijing police!”
Some netizens thought the stunt was a failure because people only paid attention to the Spartans as opposed to the product or company they were promoting, though others have pointed out that all the subsequent media publicity it has received will no doubt put Sweetie Salad on the map.
The incident comes just a week after a sex tape filmed in a fitting room of Japanese apparel giant Uniqlo in the same district went viral online, leading to at least five arrests in relation to spreading the video. Uniqlo rejected allegations that the tape was a publicity stunt.
While Chinese authorities have been cracking down on marketing campaigns using female models dressed in skimpy outfits, the use of semi-naked male models generally appears to be less frowned upon. However, Abercrombie & Fitch, the American company best known for its topless advertising, has pledged to stop using half-naked male models in China and around the world starting from August as part of its efforts to curb “sexualized marketing.”
Tsinghua’s interest in Micron evokes memories of Japanese chip onslaught of
US Memories Inc may sound like a greeting-card company. In fact, it was the
name for a proposed industry-wide joint venture to keep the US in the memory
chip business at the end of the 1980s, as the sector reeled from a Japanese
US Memories is a forgotten footnote in the technology history books. The attempt
at collective action failed when some of the backers got cold feet. Instead, the
fight back, when it came, took a far more American form: an entrepreneurial
start-up from the unlikely location of Boise, Idaho, called Micron Technology.
Now the US faces another challenge from Asia in the chips that act as one of the
most basic components of the digital world. News this month that Tsinghua Unicom,
an offshoot of Beijing’s Tsinghua University, has been weighing up an offer for
Micron has provoked a predictable ripple of nationalist angst. When kites like
this are flown in public, it is often to find out what the reaction to a formal
offer would be. On cue, Republican senator John McCain worried publicly about
the “potential national security implications” if the US lost a significant
position in memory chips. That Tsinghua is a Chinese state-owned company was
among the factors weighing on the his mind.
Two B-52 strategic bombers from Barksdale Air Force Base located in Louisiana were ordered by the Pentagon to carry out “bomber assurance and deterrence” in the beginning of this month to bloster regional allies in the Asia-Pacific against Chinese maritime expansion, reports Bill Gertz, an American security analyst, in a commentary recently written for the Washington Times.
With the support of Royal Australian Air Force ground forces, the two B-52s flew directly to Delamere bombing range in northern Australia to conduct a bombing run. After unloading their conventional bombs on the range, the two craft headed back to Barksdale Air Force Base in the US. It took 44 hours for the US Air Force to complete its “bomber assurance and deterrence” on July 1, according to Gertz.
Admiral Cecil D. Haney, the commander of the US Strategic Command which is in charge of the US strategic bombers told Gertz that the “bomber assurance and deterrence” mission is one of many ways for the US to demonstrates its commitment to a stable and peaceful Indo-Asia Pacific region. While pointing out that the operation was intended to send a strategic message, Haney declined to identify the recipient of the message.
An insider at the Pentagon told Gertz that the message was intended for China due to its increasingly threatening activities in the South China Sea. “As the nation’s focus turns to the Pacific, it’s important to show the B-52’s presence, not only on Andersen Air Force Base, but throughout the entire region,” said Captain Jared Patterson, chief of weapons and tactics for the 96th Bomb Squadron based in Barksdale Air Force Base.
China and Russia are aligning their strategies to team up against the United States, according to a commentary by the Global Times, a tabloid under the auspices of the Communist Party mouthpiece People’s Daily.
Following more than two decades of development, bilateral relations between China and Russia have reached a new phase, the July 18 commentary said, adding that China now considers Russia an irreplaceable partner for all its key strategies.
These include the Silk Road Economic Belt, the land-based component of Beijing’s amibitious “Belt and Road” initiative to boost cooperation and connectivity in Eurasia; the Shanghai Cooperation Organisation, the political, economic and military organisation the two countries founded along with Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan; and the BRICS association comprising Brazil, Russia, India, China and South Africa, as well as the group’s New Development Bank.
During Chinese president Xi Jinping’s visit to Moscow in May, the two sides also signed off on a joint declaration detailing cooperation between the Silk Road Economic Belt and the Eurasian Economic Union, which comprises the Eurasian states of Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan.
Beijing appears to be working hard to eliminate Moscow’s wariness and concerns to form a China-Russia “dual engine,” Global Times said, noting that there is still some tension stemming from the perceived competition between the Trans-Asian Railway supported by China and the Trans-Siberian Railway pushed by Russia, as well as the Central Asia–China gas pipeline from Central Asia to the northwest Chinese region of Xinjiang and the Altai gas pipeline from Russia’s Western Siberia to North-Western China.
China therefore needs to find ways to synergize the Trans-Asian Railway and Silk Road Economic Belt, which will offer alternatives and develop infrastructure that is mutually beneficial to both sides, the commentary added.
A key to China’s strategies is the Beijing-led Asian Infrastructure Investment Bank, a pivotal platform for broadening cooperation and increasing the scale of development. Also important is the BRICS’ New Development Bank and its reserve currency pool of US$100 billion, which will contribute to the fight against the liquidity crunch and global deflation by helping emerging markets better deal with the risks.
Global Times warns, however, that the China-Russia relationship will not always be smooth sailing, and that the strength of the alliance will ultimately depend on Moscow’s attitude towards Beijing’s various ventures.
The commentary notes that there are four ways in which Xi and his Russian counterpart Vladimir Putin are joining hands to combat the United States.
The first is economic cooperation through mutually beneficial deals such as the recent 30-year, US$400 billion natural gas agreement signed in Beijing in May. It was a deal in the interests of both sides, as Russia needed an export partner for its energy resources, while China needed a supplier for its significant energy needs. China even forwarded part of the funds to Russia in advance to help Moscow better cope with the economic sanctions from the West after its annexation of the Ukranian territory of Crimea last year.
The second strategy is to jointly develop the Silk Road Economic Belt. Coupled with the Trans-Asian Railway, it is China and Russia’s hope of forming a China-Eurasia economic zone to the exclusion of the US, as both Beijing and Moscow know that an inability to exert its influence is what Washington fears the most.
Thirdly, China and Russia are aiming for the New Development Bank to put pressure on US dollar by competing with the US-controlled World Bank and International Monetary Fund. Given that the five BRICS nations account for half of the world’s GDP, it is possible that they could soon threaten the status of the US dollar as the dominant global reserve currency.
Lastly, China and Russia are also looking to penetrate the US “backyard” of Latin American markets. Xi and Putin both attended the BRICS summit in Brazil last July, after which Xi embarked on a tour of Argentina, Venezuela and Cuba. According to the Global Times, it was Xi’s way of telling Washington that if it meddles with Chinese business in Asia, China will interfere in US affairs in South America.
The rise of gold as part of China’s international reserves and the central bank recently publishing yuan-denominated external debts are conducive to a stable yuan, analysts said on Monday.
Official data showed the country’s gold reserves hit 1,658 tonnes at the end of June, jumping nearly 60% compared to the figure last released by China’s central bank at the end of April 2009.
Although countries have long abandoned the gold standard as the basis of monetary systems, gold reserve volume remains an important factor in market assessment of a country’s currency value due to its price stability, according to analysts.
The central bank said the gold reserve increase was in line with the nation’s needs to keep adjusting the structure of its international reserves assets in order to ensure the assets’ security, liquidity, and value increase.
“China’s increasing gold reserves will strengthen yuan holders’ confidence, which will help stabilize the exchange rate and facilitate the internationalization of the yuan,” said Xu Mingqi, a researcher with the Shanghai Academy of Social Sciences.
“A more important role of gold reserves lies in risk prevention. It helps boost confidence in a country’s currency, and reflect the country’s economic and financial strength,” said Ding Zhijie, a professor at the University of International Business and Economics.
China is the world’s largest gold producer and a major gold consumer. The updated figure also revealed China surpassed Russia to become the fifth largest holder of gold reserves around the world, behind the US, Germany, Italy and France.
Gold reserves account for a small part of China’s foreign exchange reserves, which hit US$3.69 trillion as of the end of June. The central bank said it would flexibly adjust its gold holdings according to its reserves and investment needs in the future.
The Renminbi’s Rising Influence
The data came as China looks to advance its currency’s status as a key international reserve currency, which is now a prime candidate for the International Monetary Fund’s (IMF) special drawing rights (SDR).
The international reserves data was released by using the special data dissemination standard (SDDS) established by the IMF in 1996 to enhance the availability of timely and comprehensive statistics, according to the People’s Bank of China, China’s central bank.
By using the standard, the central bank has widened its external debt calculations by introducing yuan-denominated external debt for the first time, which stood at 4.94 trillion yuan (US$795 billion), about 48.1% of China’s total foreign debt, central bank data showed.
“Improvement of the nation’s financial data disclosure would better meet the IMF’s requirements on information disclosure, and have a positive impact on yuan’s inclusion into the SDR,” said Xiao Lisheng, a research associate at the Chinese Academy of Social Sciences.
The SDR is an international foreign exchange reserve asset comprised of a weighted basket of four currencies, including the US dollar, euro, British pound and Japanese yen. The value of a country’s total exports and imports, as well as whether a currency is fully convertible under the capital account, are taken as two key criteria for SDR entry.
At the last SDR review in 2010, the yuan met the first criterion, but was assessed as not meeting the “freely usable” criterion. The IMF is expected to vote on the yuan’s inclusion late this year.
“Overseas markets are showing greater demand to hold yuan-denominated assets as yuan’s global status keeps rising. This has also reflected their confidence in China’s economic development and achievements in reforms,” the central bank said in a statement.
Since July 2009, China has taken a raft of measures to push for the yuan’s globalization, such as currency swaps with more than 30 countries and regions, setting up yuan clearing banks in foreign cities and allowing direct trading between yuan with other major currencies including euros and pounds in the inter-bank foreign exchange market.
With these measures and China’s efforts to promote greater convertibility of yuan under the capital account, the Chinese currency, also known as RMB, became the world’s No. 2 currency for trade finance globally in 2013, and overtook the Canadian and Australian dollars to enter the top five world payment currencies last year, according to global transaction services organization SWIFT.
Cheng Yulu, president of Renmin University of China, said China’s Belt and Road Initiative is also poised to offer strategic opportunities for yuan’s globalization.
Chinese media: “We are the Gold Consumption Super-Power.” Chinese citizens now holding over 6,000 tons
Chinese media: “We are the Gold Consumption Super-Power.”
Chinese citizens now holding over 6,000 tons
October 30, 2014
– China officially imported over 1,500 tons in 2013 with some estimates
as high as 2,200 tons. This is in addition to the 400 tons they produce
annually which is never leaving the Mainland.
– China has now declared that its citizens are privately holding more
than 6,000 tons of Gold turning China into the “Gold Consumption Super-Power”
– China will not release their Gold holdings as they want gold prices
to stay low. Acquiring gold is all part of China’s master plan which the
Chinese press refer to as “Secret Gold Holding Logic” to make Shanghai
the world’s financial centre with the RMB as its central currency.
As most informed individuals know, Gold has been dropping like a rock from
its previous highs of over $1900 an ounce. This has only encouraged more
buying from China, in paticular the fictional character called “Auntie Want”
which represents all of those middle-aged Chinese women with money to burn
that love buying real assets like houses and are gold are now being blamed
for buying over 200 tons in only a few months during the summer when prices
hit lows around $1,250.
Last year, in 2013, China took advantage of falling prices to import more
than 1,500 tons of Gold. This is in addition to the 400 tons they produce
annually which is never leaving the Mainland.
What has people really talking in China is why the government will not
release their holdings in the People’s Bank of China (PBoC).The last time
China released their official holdings was 2009 when they shocked the markets
by showing a massive increase in reserves to 1,054 tons. They have always
promised to release their official holdings numbers every five years. Those
of us that watch China and Gold closely have seen the PBoC’s Gold release
data dates come and go with no release of the banks holdings.
Chinese financial commentators are saying that this is because the PBoC would
spook markets showing that their holdings are now up near 5,000 tons.
This is the last thing the PBoC wants to do as they plan to buy more and
they want to buy as low as possible.
The Shanghai Gold Exchange is now the world’s largest physical bullion
market in the world and all part of the plan. They are set up in Shanghai’s
free trade zone and are opening up gold holdings to foreign investors who
want to keep bullion in China. The Gold contracts are of course priced in
Chinese Yuan. Shanghai has also recently opened a new vault with a
2,000 tons capacity to back up Shanghai’s bid to hold and control global
pricing of the commodity.
While traders in Chicago on the COMEX sit and trade each other paper
contracts all day with neither one actually owning any of the commodity
they are training, the traders in Shanghai will be well-at-ease to know
the physical bullion is actually there.
China’s continuing grip on the global gold market is all part of the plan
according to analysts in the Chinese media. Literally translated it is called
the “Secret Gold Holding Logic”. China needs Shanghai to become a global
financial center. It will surly become one as the RMB goes global, and China
will have the gold reserves to partially back the RMB with a hard asset.
This is the long term plan according to some state media sources in China.
There are some Gold holdings in China which are not secret. Recent numbers have
been released estimating that the Chinese population themselves are now holding
over 6,000 tons of Gold. China has long been trying to get its citizens to invest
in Gold. In fact going back to 2004, the PBoC governor, Zhou Xiaochuan, was nicknamed
“Golds best salesman in the media. The result is today, in China’s Big 5 banks you
can hold gold accounts both paper and physical as well as visiting their “GOLD VIP”
centres to purchase physical bars.
With China now importing more than 1,500 tons annually and the consumers holding
more than 6,0000 tons one commentator in the financial press refereed to China has
the “New Gold Consumption Super-Power”
China has rolled out a raft of policies and measures to support innovation and minimize risk to ensure healthy development of Internet finance.
To promote the sound and steady progress of the online finance industry, the country will regulate market order and further clear regulatory responsibilities, according to the guidelines jointly released on Saturday by ten central government ministries and industry regulators, including the People’s Bank of China, the Ministry of Industry and Information Technology, the Ministry of Finance and China Securities Regulatory Commission.
The guidelines highlight overall requirements for authorities in supporting Internet finance.
Governments at all levels should actively encourage innovation in e-finance platforms, products and services, according to the guidelines, and cooperation between financial actors in the industry should be protected and encouraged.
They state that governments should help expand access to capital for market players, government red tape should be cut, and related fiscal and taxation policies should be improved to avoid risks for the industry’s development.
China’s gold reserves stood at 1,658 tonnes at the end of June, the central bank said on Friday, up 57 percent from the last time it adjusted its reserve figures more than six years ago. The country was scheduled to release these numbers last year but declined to follow its previously scheduled commitment.
China considers its gold holdings a state secret and does not report its holdings on a monthly basis to the International Monetary Fund as most other countries do.
It last adjusted its reserve figures in April 2009, when the level was lifted to 1,054.1 tonnes from 600 tonnes.
A WikiLeaks cable in 2011 cited a Chinese newspaper as saying that the country’s large gold reserves would be “beneficial in promoting the internationalization of the RMB.” (http://wikileaks.org/cable/2009/04/09BEIJING1134.html)
China is pumping out 400 tons annually of Gold, none of it which leaves China. It is also the largest importer of Gold. So How is it possible Chinese gold holdings are only up to 1,658 tons since 2009? Since 2009, Chinese domestic production of Gold has been over 2,400 tons alone and that does count what the country has imported.
The answer lies in where the Chinese keep their Gold. Firstly, China has been ordered their large national banks to buy and hoard the precious metals for at least ten years now. They have also instructed the citizens to keep Gold privately as a good investment and all of the large national banks offer Gold and Silver programs. This is in addition to the Shanghai Gold exchange which is soon to be the price setter globally for the precious metal.