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,
Ant Financial, Alibaba’s online payments affiliate, has completed a fundraising
that values the company at $45bn-$50bn, according to people close to the Chinese
ecommerce group. The valuation would place Ant Financial among the world’s most
valuable private technology companies, alongside smartphone maker Xiaomi and US
car hailing app Uber.
Xiaomi was valued at $45bn last year, while Uber is reportedly in the process of
raising funds that value it at $50bn. Ant Financial operates Alipay, the PayPal-
like online payments company that handled $778bn in the year to end-June 2014,
according to Alibaba.
That is three times the amount handled by US peer PayPal, and equivalent to one-
third of the $2.5tn in total global online payments last year, according to Juniper
Research.Last year, Ant Financial was among a handful of internet companies given
permission to open an internet bank, with the launch scheduled for next week.
Ant Financial’s main shareholder is Jack Ma, Alibaba’s chairman, while other
shareholders include David Yu, co-founder of Yunfeng Capital, Mr Ma’s private
equity fund. Mr Yu was among the investors in the latest Ant Financial private
share placement, according to a person with knowledge of the matter.
China Development Bank Capital, an investment arm of China Development Bank, was
another investor, according to a person familiar with the transaction. Ant Financial
has also revealed that investors include China’s National Social Security Fund.
Ant Financial refused to disclose the amount of funds raised, nor the number of shares
placed. Mr Ma has previously said that Ant Financial has plans for an initial public
offering in China but has declined to say when, although press reports have suggested
that the likely date would fall in 2017.
“We don’t deny we’re working towards an IPO, but we don’t have a timeline,” said Ant
Financial. Alipay was the subject of one of China’s most controversial corporate
governance scandals, when in 2011 Mr Ma took it out of Alibaba and placed it under the
direct control of himself and some associates. Yahoo, at the time a 40 per cent
shareholder in Alibaba, was among the main protesters.
Mr Ma claimed he needed to do this in order to satisfy new Chinese regulations on
online finance. Alibaba later settled with Yahoo and SoftBank, the Japanese technology
group that is its other major shareholder.
North Korea’s largest drought in a century- Could this finally cause the downfall of the Hermit Kingdom?
Want China Times
North Korea is suffering from the worst drought in a century, which has caused huge damage to its agricultural production, the country’s official news agency KCNA reported on Tuesday.
The state media said that rice growing was completed in more than 441,560 hectares across the country by June 8, but at least 136,200 hectares of them are “parching up.”
It said nearly 80% of rice seedlings in South Hwanghae province had dried up due to lack of rainfall as well as 58% in North Hwanghae province.
“Badly damaged” areas include North and South Hwanghae provinces, South Pyongan province and South Hamgyong province, which the KCNA said are “granaries,” indicating the drought is having a severe impact on crop production.
The KCNA said that the water levels of reservoirs are at their lowest and rivers are drying up, adding that corn production has also been affected by the drought.
Chinese are now by far the biggest foreign buyers of US real estate in terms of units, dollar volume and price paid, according to a report from the National Association of Realtors, which tracks property purchases across the country.
In the 12 months to the end of March, Chinese buyers spent $28.6bn on mostly residential property in the US, a 30 per cent increase from the previous year and more than two and a half times the amount spent by Canadians, the next biggest group of foreign buyers.
A Chinese bank will join the group of western banks that help set the price of gold in London, giving the world’s biggest consumer of the precious metal a greater say in the process.
State-owned Bank of China’s participation in the twice daily auction, which gold miners and consumers use as a benchmark, will allow the international price to better reflect supply and demand in China, the bank said.High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article.
“Although being the world’s largest gold producer and consumer, China has never played a major role in the global gold fixing,” Yu Sun, general manager of Bank of China’s London branch said.
While Bank of China has participated in the London gold market for decades, the fix has been run by western banks since it started in 1919, and used to take place on the premises of NM Rothschild.
Adding a Chinese bank reflects the shift in gold demand to Asia. It is jewellery demand from China and India that now influences the price direction of gold rather than money from financial investors, HSBC said in a report today.
Bank of China’s direct participation will also help the Chinese gold market become more international, Mr Yu said. The bank will develop new products based on the London gold auction, it said.
International access to China’s domestic gold market is limited by capital controls that do not allow for the free flow of money in and out of the country. Gold trades on the Shanghai Gold Exchange with gold futures listed on the Shanghai Futures Exchange.
Last year the Shanghai Gold Exchange set up an international board for foreign investors in the city’s free trade zone, as the country slowly opens up its capital account.
Bank of China ranked first in market share of proprietary gold trading on the Shanghai Gold Exchange last year, according to its annual report, and it also is a member of the exchange’s international board.
The gold price-setting takes place at 10:30am and 3pm UK time, and final prices are published in US dollars, pounds and euros.
The process was moved to an electronic platform run by US energy exchange operator ICE this year after accusations the old process was opaque and could be rigged. It is now a regulated benchmark under the UK Financial Conduct Authority.
While London remains the centre for global gold trading in recent years almost 75 per cent of the world’s physical gold has been sent to the Middle East and Asia, according to ANZ.
The other banks include: Barclays Bank, Goldman Sachs, HSBC, JPMorgan, Société Générale, the Bank of Nova Scotia and UBS.
By Matthew Lynn
Crunch talks in Athens. The IMF flying home in a huff. German ministers leaking that the eurozone can survive a Greek exit, and Greek ministers insisting that austerity can’t be tolerated any more.
If it is Wednesday, at least one of those factors must be threatening to dump Greece out of the euro EURUSD, +0.9245% by the weekend. Or Monday. Or the end of the month.
It is now five years since the Greek crisis started, and during that time it appears to have gone through as many reboots as Jurassic Park — and with a plotline that is about as familiar. The trouble is, the crisis has been so protracted, and has been through so many twists and turns, that it has become increasingly hard for even the most diligent investor to keep track of them all.
And yet, the fact remains that a sudden and calamitous Grexit remains the biggest risk to any portfolio.So how do you protect yourself from becoming exhausted by the whole saga — and work out whether this time around the talk of a Grexit might be for G-real? There will be three big clues. An acceleration of quantitative easing from the European Central Bank. An emergency-aid package being put together for Greece. And a freezing of the interbank lending market.
Until all those warning lights are flashing red all the talk of Greece coming out of the euro will be just that — talk.
The Greek debt crisis is already starting to make “Game of Thrones” look like a masterpiece of concise storytelling. It all started way back in 2009, when Greek bonds first started to spike upwards on fears that the country might not be able to pay back all the money it had borrowed in the good years.
A year after that, it already needed a bailout, and the European Union started the game of constant brinkmanship whereby Greece went to the edge of insolvency before being rescued yet again at a late-night summit. Deadlines have come and gone and crunch points have slipped by every few weeks ever since then, and yet somehow Greece still seems to be within the euro.
A succession of wise-sounding experts keep telling us it is five minutes to midnight, or even three or two minutes. But midnight never quite arrives. It is very easy for the average investor just to tune out the whole thing, and stop paying attention.
It is not about to end any time soon. Even if Greece does make it through this week, and manages to scratch together the cash to make its latest payment to the International Monetary Fund, there are still endless deadlines to be met stretching out for years. Greece will have to redeem 6.7 billion euros of bonds held by the ECB over July and August, and at the moment, if anyone has any idea where they will find that kind of cash they are keeping it to themselves.
Next year, Greece has to repay more than 9 billion euros of debt. In fact, there is already a payment of 6 billion euros penciled in for 2056. The country is no more likely to have the cash to hand then than it does now — and we could still be reading the same old headlines about the markets wobbling on the possibility of Greece crashing out of the euro.
So how can you tell when it is just noise, and when do you really have to start worrying about it actually happening? There will be three big warning signs that something more serious is going on than just another wrangle between the government in Athens and its creditors.
First, there will be a sudden increase in QE from the ECB, and one without any apparent explanation.
When a Grexit is close at hand, the ECB may well be the first to know about it, not least because it may well be the institution pulling the plug. The central bank may have put in place lots of firewalls to stop that causing a wider panic within the European financial system. But it will still be worrying about liquidity drying up, and losses that might turn up unexpectedly somewhere.
When it happens, it will want to make sure there is plenty of cash swilling around the system, and the easiest way to achieve that will be by stepping up QE.
Second, stories about an emergency-aid package for Greece will start to appear.
If Greece does come out of the single currency, it will face a very tough six months while it establishes a new currency and gets itself back on its feet. No one wants to see the country collapse into chaos, or fall into Russia’s sphere of influence. In the first few months, it will need financial assistance, simply to pay for fuel and medicines, and probably some technical help as well. Leaks will start to emerge about plans being put in place to help the country, with the lead probably being taken by the U.S. and the U.K., since they will be the two countries that have not been involved in creating the catastrophe in the first place.
Finally, the interbank market will freeze up.
Nothing that big can happen without someone somewhere getting wind of it. The first thing that will happen is the banks will stop lending to one another, because they’ll be nervous that the other guy might be sitting on huge losses. Libor — the rate at which banks lend to each other — will spike upwards just as it did in the financial crash of 2008. A hedge fund in London or Zurich may close as it finds it can’t get a price on some of its more exotic bonds anymore.
Some of those signs are already in place. There is talk of capital controls being prepared for Greece. The ECB has already started talking about stepping up QE. So it may be the case that a Grexit is alarmingly close. But it won’t really be imminent until all three warning signs are flashing — and until then, investors can dismiss all the speculation as just noise.
The US needs to befriend China or else all hell is going to break loose, argues George Soros in a new article for The New York Review of Books.
“Both the US and China have a vital interest in reaching an understanding because the alternative is so unpalatable. The benefits of an eventual agreement between China and the US could be equally far-reaching,” he writes.
“The US government has little to gain and much to lose by treating the relationship with China as a zero-sum game. In other words, it has little bargaining power,” he continues. “It could, of course, obstruct China’s progress, but that would be very dangerous.”
Soros writes that if Xi Jinping’s market-oriented reforms fail, “he may foster some external conflicts to keep the country united and maintain himself in power” — which could lead to a Sino-Russo military and political alliance (whereas right now they’re mostly just cooperating financially).
“In that case, should the external conflict escalate into a military confrontation with an ally of the United States such as Japan, it is not an exaggeration to say that we would be on the threshold of a third world war,” writes Soros.
Soros adds, however, that he believes it would take at least a decade for a Sino-Russo military alliance that’s ready to take on the US to come together.
“Rivalry between the US and China is inevitable but it needs to be kept within bounds that would preclude the use of military force,” he writes.
Soros acknowledges that a strategic partnership between China and the US won’t be easy and details various differences between the two countries, including:
The two powers have “fundamentally different” political systems. The US is founded on the principle of individual freedom, while China has a more hierarchical structure.
“In recent years the US has led the world in the innovative development of social media, while China has led the world in finding means to control it,” he writes.
China, like Russia, considers itself a victim of America’s aspirations to world domination.
Conflicts with the US — and others — in the South China Sea, as well as issues over cyberwarfare and human rights.
“The US would like China to adopt its values but the Chinese leadership considers them subversive.”
“Fully recognizing these difficulties, the US government should nevertheless make a bona fide attempt at forging a strategic partnership with China,” Soros writes.
“This would involve identifying areas of common interest as well as areas of rivalry. The former would invite cooperation, the latter tit-for-tat bargaining. The US needs to develop a two-pronged strategy that offers incentives for cooperation and deterrents that render tit-for-tat bargaining less attractive.”
As an note near the end, Soros adds that the US would only be justified in building a strong partnership with China’s neighbors that the growing Sino-Russo alliance “would not dare to challenge by military force,” if and only if a “bona fide” attempt at working with China fails.
“A partnership with China’s neighbors would return us to a cold war, but that would still be preferable to a third world war.”
China’s Ministry of Foreign Affairs held a press conference on June 16, the sole agenda of which was to answer questions on the country’s land reclamation on reefs and islands in the South China Sea, according to Duowei News, a media outlet run by overseas Chinese.
A 400-word press release published on the ministry’s website stated, “In line with the plan already in place, China will soon finish land reclamation on several reefs and islands in the Nansha [Spratly] islands.” It went on to say “After land reclamation is complete, the next stage will be construction to fulfill various functions.”
China has been producing over 100 square kilometers of land a year through land reclamation, according to Duowei.
The Spratlys are a disputed island group in the resource rich South China Sea, claimed in whole or in part by China, Taiwan, the Philippines, Vietnam, Brunei and Malaysia.
When China’s land reclamation activities in the South China Sea first came to the attention of the world’s media in 2014, the country had already expanded existing islands and reefs by 800 hectares, 75% of which was created in just five months, according to Duowei.
The announcement suggests a softening of the tough line China has taken on the land reclamation efforts previously, Duowei said.
From May, senior US officials have made statements censuring China for its activities in the South China Sea as well as comments by US secretary of state John Kerry on his visit to China and standoffs between US and Chinese aircraft over the region, which have ignited tensions between the two countries. Despite suggestions of the potential for hostilities between the two nations, analysts cited by Duowei predicted that ties were likely to warm up again during the US-China strategic and economic dialogue set to take place from June 23-24 and in preparation for President Xi Jinping’s US visit in September. Xi’s visit will involve a lot of back and forth between the two nations, so they are likely to push for consensus and make concessions.
After attending the Shangri-La Dialogue in Singapore in early June, the US secretary of defense, Ash Carter, went to Vietnam to convince the nation to be the first to halt its land reclamation activities in the region. This move suggests that the US is attempting to make it clear that it is not working against China only. Following this, President Barack Obama said in a speech, “China is going to be successful. It’s big, it’s powerful, its people are talented and they work hard, and it may be some of their claims are legitimate.” This suggests the increasing flexibility of the US on the issue, Duowei said.
In mid-June, the vice chair of China’s Central Military Commission (CMC) Fan Changlong visited the US. This visit was likely aimed at paving the way for Xi’s visit in September. Calling a halt to land reclamation activities in the South China Sea region seems to have been one of the concessions made by Fan on his US visit, according to Duowei, although they will not cease development of existing land.
Russian institutions, energy companies, and banks are increasingly switching over from the dollar to the Chinese yuan, according to The Moscow Times.
“Two state energy companies, gas producer Gazprom and its oil arm Gazprom Neft, said they would use more Chinese currency in trade, while Russia’s largest bank, Sberbank, has also promoted the use of the yuan,” The Moscow Times’ Peter Hobson writes.
“The Russian Central Bank said it was working to create a new funding instrument in yuan, and the Finance Ministry said it was considering issuing debt in the currency.”
Gazprom Neft announced that it began settling shipments of oil to China in yuan. And previously, the head of Gazprom, Alexey Miller, said in a TV interview that the company was negotiating with China to use yuan and rubles for gas deliveries via a planned pipeline in Western Siberia.
“Gazprom Neft’s swift embrace of the yuan was likely spurred by sanctions, not profits,” Alexei Devyatov, chief economist at UralSib Capital, told The Moscow Times.
Additionally, “Western banks work slower, with more restrictions, and it becomes simpler to move to the currency in which trade is being done,” Vladimir Pantyushin, senior strategist at the investment bank Sberbank CIB, told The Moscow Times.
In other words, Russia is looking to diversify away from the Western financial system after repeatedly being targeted by US sanctions.
The US-imposed sanctions are part of Washington’s larger strategic geopolitical plan called “the weaponization of finance,” which Ian Bremmer defined as the “systematic use of carrots (access to capital markets) and sticks (varied types of sanctions) as tools of coercive diplomacy.”
Basically, the US imposes sanctions (or other coercive economic measures) on “rogue states” (i.e., states that are acting contrary to US interests), which should then force that state to change its behavior if it wishes to have the sanctions lifted or to have access to US capital markets again.
The Asia-Pacific region has overtaken Europe in terms of global wealth management for the first time, becoming the world’s second wealthiest region with $47 trillion says a report released by BCG. It’s on the way to overtaking North America next year.
In 2019 private wealth in the countries in the Asia-Pacific area is expected to account for one-third of global wealth, according to the report published Monday.
North America, where private wealth amounted to $51 trillion in 2014, remained the richest region in the world. According to forecasts, private wealth in the Asia-Pacific region (excluding Japan) is expected to reach $57 trillion in 2016, whereas in North America the amount of private wealth in 2016 is projected at $56 trillion.
The average growth rate of private wealth is expected to be around 6 percent per year and reach $222 trillion in 2019.
Globally private financial wealth grew by nearly 12 percent in 2014 to $164 trillion. Nearly three-quarters (73 percent, or $13 trillion) of private wealth growth was achieved through the growth of existing assets, with the remainder (27 percent, or $5 trillion) generated by newly created wealth.
To construct a future supercarrier, China plans to establish a brand new industrial supercluster in a region between Dalian in Liaoning province and the municipality of Tianjin, Tristan Kenderdine, a PhD candidate at the Crawford School of Public Policy at Australian National University wrote in an article published on June 13 in the Diplomat, a current affairs magazine based in Tokyo.
Kenderdine said China’s future national strategies can be revealed by its current industrial policies. Beijing already has six superclusters located ainthe northeast industrial belt, the north China plain, the Yangtze river delta, the southwest, central Wuhan and the Pearl river delta. Each of these superclusters relies on its own industrial complementarities to fullfill the nation’s technological and military policy.
Kenderdine said the northeastern traditional heavy industry cluster is dedicated to advanced hardware. The advanced weaponry and communications systems are produced in southwestern cluster while the satellite communications systems are developed in Fujian. Meanwhile, the photoelectronic systems and future micro-optical-electro-mechanical integration in Wuhan will be able to provide mobile power solutions, communications hardware and systems development to the entire nation, he said.
In Xi’an, Chengdu and Chongqing, aviation companies design new aero engines, avionics, rocketry, military aircraft, helicopters and traditional weaponry for the People’s Liberation Army. This cluster also forms the test bed for future naval borne aircraft technologies, he said. Kenderdine said that the the large vessel shipbuilding in Dalian and military aviation development in Shenyang provide the intelligent equipment manufacturing and large-scale hardware for China’s future aircraft carrier development.
In the Bohai bay area, Dalian and Tianjin devoted their attentions and resources on the development of super large vessels. This region is likely to become China’s future supercluster for aircraft carrier development as well, he said. Kenderdine said he expects the government’s 13th five year plan for economic development will focus more on those technology clusters benefiting aircraft carriers, shipbuilding, aviation industries and mobile nuclear power systems.
China is looking to develop an “interstellar” weapon based on electric thruster technology to send a spacecraft to Mars in just 200 days, according to a report from the official Xinhua news agency.
Electric propulsion is still regarded as relatively weak but is still strong enough to propel humans into space at significantly lower costs than traditional propulsion systems, which is why the technology is regarded by the international aerospace community as the way of the future.
China has developed this technology by itself as other parties such as the United States, Russia, the European Union and Japan are all keeping their research confidential. The development has reached a stage where China believes it will be able to send its first electric propulsion satellite into orbit by around 2020.
First, China will launch a hybrid propulsion communication satellite at the end of 2016 and will also use electric propulsion in China’s space station in the future, according to Wang Min, a satellite designer at the China Academy of Space Technology (CAST).
Electric thrusters use only a tenth of the amount of propellant required by traditional chemical propulsion systems, which means the amount of propellant needed for a typical communication satellite could be slashed from 3 tonnes of fuel to just 300 kg, Wang said.
“The benefit is obvious. The weight of the satellite can be greatly decreased, so a rocket can send two satellites into orbit at the same time; or we can launch a cheap, small rocket to carry the satellite, which will greatly save on launch costs. We can also put more equipment on the satellite to improve its functions,” Wang said, adding that it would also extend the life of a communications satellite by five years.
Electric propulsion technology will play an important role especially in manned deep space exploration, Wang said.
The downside of electric propulsion is that it cannot be used on carrier rockets and spacecraft that need to quickly enter orbit due to its low thrust, though as long as it continues “blowing” it would be able to accelerate over time. Experts believe that, given the significant weight reduction offered by electric propulsion, an array of 40 electric thrusters of 50 kilowatts would be able to send a 300-ton spacecraft to Mars in just 200 days.
China has so far tested two experimental electric thrusters on the Shijian-9 satellite launched in 2012 and expects to be able to upgrade the power of electric thrusters from the current five kilowatts to 50 kilowatts by 2020.
China is near its goal of a fully convertible renminbi, after nearly a decade of effort, the Chinese central bank said on Thursday.
“China has been steadily pushing forward renminbi capital account convertibility since the currency became convertible under the current account in 1996,” the central bank said in a report released on its website.
Easier convertibility means both domestic and foreign investors will have more freedom in investment and currency exchanges.
Currently, China’s qualified domestic institutional investors and qualified foreign institutional investors have limited freedom of securities investment as a quota system is in effect.
The central bank report said China is also mulling qualified domestic individual investors, which will allow more freedom for Chinese individuals to make cross-border investments.
The report added that the Shanghai-Hong Kong Stock Connect Program that allows mainland and Hong Kong investors to trade easily on the other’s stock market, has been a major step toward renminbi convertibility under the capital account. A similar program linking Hong Kong and Shenzhen is in the pipeline.
The central bank’s push for the renminbi’s convertibility is in line with the nation’s broader efforts to internationalize the renminbi, which is now the second most used currency in global trade, one of the top five world payment currencies, and the world’s sixth foreign exchange currency.
Around 85% of the 40 subcategories in the capital account have become partially or fully convertible, according to data from the State Administration of Foreign Exchange.
China on Wednesday moved to regulate local government debt with the launch of another 1 trillion yuan (US$163.9 billion) debt swap deal, the second time it has done so this year.
The Ministry of Finance launched a 1 trillion yuan debt swap deal in March.
Two trillion yuan has been channeled into the deal.
The decision was based on results from the National Audit Office (NAO) in 2013 that found about 1.86 trillion yuan (US$299.7 billion) of local government debt would mature in 2015, according to a source with the ministry who declined to be named.
Qiao Baoyun, a professor with the Beijing-based Central University of Finance and Economics, said debt swaps can relieve local government burdens and balance the relationship between debt management and stable growth.
Bai Chong’en, a professor at Tsinghua University, said the swaps will not change the overall liquidity in the market.
China is struggling to rein in local government debt caused by unbridled borrowing during an investment and construction binge since the global financial crisis in 2009.
The NAO said that local government debt stood at around 10.9 trillion yuan (US$1.75 trillion) by the end of June 2013.
Xi’s project is about expanding and securing maritime routes to the Middle
East and Europe
Once in a while the question changes. Not so long ago western policy makers asked whether a rising China would sign up as a “responsible stakeholder” in the postwar global system. Now amid controversy over the Beijing-inspired Asian Infrastructure Investment Bank, they query whether a risen China’s plans to create a new international architecture can sit comfortably alongside the US-led order established in 1945.
Everyone in China is talking about President Xi Jinping’s “One Belt, One Road” initiative. No one seems to know precisely what it means. The experts and policy makers, who gathered this week in Guangzhou for the annual Stockholm China Forum hosted by the German Marshall Fund and Shanghai Institutes for International Studies, mulled half-a-dozen descriptions and interpretations. For all that, everyone seems to understand that the push westwards is Mr Xi’s big play — a Eurasian grand strategy that will put beyond doubt China’s status as a global power.
All remaining trace of the diffidence that once marked China’s rise has disappeared. To suggest that China might have become overly assertive in its neighbourhood is
to be guilty of “20th century thinking”. The 21st century mind, Beijing says, accepts Chinese power as a simple fact of geopolitics. As for stakeholding, well, great powers are not content with membership of other people’s clubs. They start their own.
Confusingly, the “road” part of Mr Xi’s project is not about retracing ancient silk roads, but expanding and securing maritime routes to the Middle East and Europe. Beijing has always seen the Strait of Malacca as a dangerous choke point. So it is reaching into the Indian Ocean. The blueprint includes a deepwater naval base in Pakistan and another way to the sea through Myanmar and Bangladesh. Beijing is opening northern shipping routes to Europe as the ice melts in the Arctic. The navy, China’s latest military strategy paper says, has moved beyond the defence of offshore waters to “open-seas defence”.
As for the “belt”, the ambition extends beyond mere roads and railways — though officials are noticeably proud of a new rail freight route carrying Chinese manufactures from Zhengzhou overland through Russia to Hamburg. A $42bn aid package for Pakistan announced by Mr Xi is one piece in the mosaic of agreements and deals taking China westwards. The former Soviet Republics of Central Asia are to get power stations, manufacturing plants and pipelines in return for gas supply contracts. A railway and highway will link China to the Arabian Sea. The new connections to the Horn of Africa and Europe will hasten the process of Eurasian economic integration.
There is a something-for-everybody quality about this. There were those at the Stockholm Forum who suspected that One Belt, One Road, was as much about presentation as grand strategy — a panoptic vision conjured up as the organising idea for a disparate set of objectives, motives and projects.
Yet for all the ragged edges, put these initiatives together and they add up to a lot more than the sum of the parts. If great powers like to start their own clubs, they also set about turning economic weight into geopolitical clout.
China insists the One Belt One Road enterprise has room for all, whether from the west or East Asia. It issued an open invitation to join the fledgling AIIB. Washington has since made itself look silly by trying, and failing, to organise a boycott of the new bank.
The important thing, though, about all the initiatives is that China intends to set the parameters. As the London-based consultancy Trusted Sources puts it, Beijing is harnessing all its economic, financial and diplomatic muscle to drive a process of Eurasian integration from its own border to the Middle East, Africa and Europe. That adds up to quite a sphere of influence.
It will not proceed smoothly, of course. Moscow is already uncomfortable in the role of junior partner in the Sino-Russian relationship. With good reason it is nervous about China’s move into the former Soviet Republics. Estrangement from the west has obliged Mr Putin to sell Russia cheaply.
China’s old rival India is expanding its own naval presence in the Indian Ocean. Large cheques from Beijing will not smooth away the rivalries and competition for resources that bedevil central Asia. And the US could have told Beijing that pouring money into Islamabad does not buy security guarantees.
China is not seeking to upend the existing global order. Not yet anyway. But the geostrategic message could scarcely be clearer. Beijing intends to be a rulemaker as much as a rule-taker. Even as it competes with the US in East Asia, it looks set on becoming pre-eminent in Eurasia. The west has to decide whether to become a stakeholder in someone else’s project.
China set to overtake the U.S. as Porsche’s largest market.
Porsche China is expecting sales of 60,000 units in 2015 compared
to 53,000 units in the U.S.
This is in spite of of buyers in China paying all cash and triple
the price. The Porsche Cayenne’s base price in China is equivalent
of $156,800 compared to U.S. starting price of $58,300.
Recently, Chinese enterprises have been making major investments in Europe, most notably for the purchase of brand names and technologies, as well as in the fields of agriculture, foods, and leisure activities, a marked difference from past investments which focused mainly on energy resources in developing nations, according to Sina’s finance news portal.
In addition, Chinese investors have also been major buyers on Europe’s realty market, as 1,909 of 2,378 foreigners up to April this year who spent €500,000 (US$560,775) or more purchasing houses in Portugal in exchange for immigration visas came from China.
Chinese investors have also figured prominently in Europe’s financial sector, such as Fosun International and Anbang Insurance which may jointly bid for Novo Banco, Portugal’s third largest bank, with an offer exceeding €40 billion (US$44.8 billion).
Chinese investments in Europe topped US$18 billion in 2014, with many cases exceeding US$1 billion in scale, boosting China’s share in foreign investments in Europe to 3%. The UK was the largest outlet last year, accounting for US$5.1 billion, mainly for property, followed by Italy with US$3.5 billion, Holland, Portugal, and Germany. Germany sees much investment for for cutting-edge technologies and machinery factories.
Chinese private investors are playing an increasingly prominent role, as they accounted for 30% of total acquisitions, in terms of value, by Chinese in Europe during 2011-2013, compared with only 4% during 2008-2011.
Chinese investors have set their sights on businesses capable of meeting the new lifestyle expectations for middle class and wealthy Chinese, including those sectors related to upgraded consumption, such as beauty treatments, health, and elderly care and experience-based consumption, such as high-end travel and dining, and personal finance, according to Sina’s finance news portal.
Chinese private investors began to step into Europe’s commercial-property market in 2013, sinking US$2.8 billion in the sector, in such properties as hotels and wineries, which increased to US$3 billion in 2014.
Andreas Scriven, managing director for international business Christie + Co’s, a hotel consulting firm, said many Chinese investors are interesting in buying medium-priced hotels, in order to accommodate growing numbers of Chinese travelers in Europe.
China’s domestically developed YJ-18 supersonic cruise missile may prove to be a nightmare for the US Navy, according to a piece in US-based National Interest magazine published on June 1.
The magazine cited a report issued by the US Office of Naval Intelligence, stating that the missile can be vertically launched and can be fired by submerged submarines. A report by the Pentagon on China’s military power said that the missiles maximum range is 290 nautical miles, double that of the Russian 3M-54 Klub anti-ship cruise missile.
The missiles will likely replace the YJ-82s currently in service to become the main weapon employed by China’s submarines.
The YJ-18 has a two-speed design where it travels for the majority of its trajectory at high subsonic speeds until its terminal stage, when it accelerates to 2.5-three times the speed of sound. This gives the YJ-18 the long range, light weight of a subsonic missile, and range of application while at the same time having supersonic capabilities, reducing the time the target has to react.