China Economy Forum

[ChineseTiger1986]

LoL WTD? China is sane enough to embrace politics, but if worse comes to worse, Japan won't benefit from such war.

Japan was first jealous of China's success, she wants to team up with USA to bring China back to the old days of being weak and poor.

The Diaoyu island was just an excuse to provoke China.

China knows that US and Japan has only one intention, which is to destroy China. Now, instead of playing the defensive role, China will act more aggressively to provoke the enemies first.

 

[Yzd Khalifa]

Japan was first jealous of China's success

No body in the hood liked it, China as of what she is right now is a great threat to them.

she wants to team up with USA to bring China back to the old days of being weak and poor.

They can't China is the only country in the world with 5 trillion dollars floating in the bank. Thus, the US will always need China to buy her debit - next to Germany, Japan, and Saudi -

The price China had paid and the blood they shed shall never be forgotten.

The Diaoyu island was just an excuse to provoke China.

Probably, all I wish is not to drag China into a war over these two empty tiny island - even if they contain lots of natural resources -

China knows that US and Japan has only one intention, which is to destroy China. Now, instead of playing the defensive role, China will act more aggressively to provoke the enemies first.

I would like highlight the developments in China's military machine in these videos:

Interesting videos to watch

Japan was first jealous of China's success, she wants to team up with USA to bring China back to the old days of being weak and poor.

The Diaoyu island was just an excuse to provoke China.

China knows that US and Japan has only one intention, which is to destroy China. Now, instead of playing the defensive role, China will act more aggressively to provoke the enemies first.

 

[ChineseTiger1986]

Probably, all I wish is not to drag China into a war over these two empty tiny island - even if they contain lots of natural resources -

These tiny two islands are just a tip of iceberg, they are using these two islands as the bait to drag China down, but they will never archive this goal.

BTW, there will be no war between China and US, at least before the end of this decade.

But a war between China and Japan will result Japan getting badly beaten, while USA totally losing its credibility before her allies. USA cannot afford to allow this to happen.

Thus as i said before, with China's tough gesture, it will be Japan (with USA at her back) to back down at the end.

 

[Fattyacids]

In reply to "Fattyacid"

India imports only $20 to $30 billion of dollar store items. India can live without these.

Rest of the world, mostly the West, imports about a trillion dollar of consumer and dollar store items.

India's status would not be compromised. Imagine the impact on poor Chinese peasants and their children who are working in mass producing factories, when the west smartens up and turns down these cheap items for more durable consumer items.

No, you can't. The numbers don't lie.
The country that India imports most goods from is China. We are the largest goods provider for Indian consumers. ($55 bn, not $20 bn)
List of the largest trading partners of India - Wikipedia, the free encyclopedia

Your consumer market stands at 11th largest in the world. But India GDP per capita is the lowest among the top 11 country at US$1500. Which means, without China, the size of your consumer market will shrink, simply ave indians with a meager $1500 can never afford any consumer goods.

Do you realize the impact is not just on the status of Indian market? The everyday lives of indians would be made more miserable. The children would have no toys and adult couldn't afford basic appliances like TV and shaver. Their lives would be in total destitute.

China exports to EU and the US made up abt 40% plus of its total. Out these 40%, about half are high value exports. Don't forgetting, Chinese GDP per capita is 5 times higher than Indians, the chinese peasants and workers are 5 times better off than Indian's peers. Numbers don't lie, the impact is exponentially greater on the world's largest poorest consumer market, India.

 

[Rainmaker]

No, you can't. The numbers don't lie.
The country that India imports most goods from is China. We are the largest goods provider for Indian consumers. ($55 bn, not $20 bn)
List of the largest trading partners of India - Wikipedia, the free encyclopedia

Your consumer market stands at 11th largest in the world. But India GDP per capita is the lowest among the top 11 country at US$1500. Which means, without China, the size of your consumer market will shrink, simply ave indians with a meager $1500 can never afford any consumer goods.

Do you realize the impact is not just on the status of Indian market? The everyday lives of indians would be made more miserable. The children would've no toys and adult couldn't afford basic appliances like shaver, TV and computer. Their lives would be in total destitute.

China exports to EU and the US made up abt 40% plus of its total. Out these 40%, about half are high value exports. And Chinese GDP per capita is 5 times higher than Indians. Numbers don't lie, the impact is exponentially greater on the world's largest poorest consumer market, India.

Without us the entire Indian economy would collapse.

The cheap Indians need our cheap goods.
They can't afford anything else. They run trade deficit and don't invest, so domestic consumption is only thing left and for that they need our low cost goods.

We also lend money to Indian companies.

India is totally dependent on our economy.

 

[Rainmaker]

SINGAPORE, Nov 20 (Reuters) - China, set to pass India this year as the world's top gold consumer, has imported nearly a fifth more bullion than data from its traditional conduit Hong Kong shows as it brings in the metal via other routes.

Gold shipped from Hong Kong to the mainland, used as a proxy for Chinese demand as bullion imports are a state secret, nearly tripled to 855 tonnes in the year to September.

But a surge in China's gold purchases as prices slumped by a quarter this year has also seen at least 133 tonnes shipped directly, according to Reuters calculations based on data from Global Trade Information Services (GTIS).

That figure could be even higher as it does not include central bank purchases.

"This year, we have seen quite considerable flows coming directly to Shanghai. More gold will come into Shanghai over the next two years," said Cameron Alexander, manager of Asian precious metals demand with metals consultancy GFMS, which is owned by Thomson Reuters.

Alexander said relying on the Hong Kong numbers could be misleading now, given rising direct flows to the mainland.

The estimate of 133 tonnes is based on data from the top 20 gold exporters in the world that publicly disclose such information and probably understates the total since Britain and Switzerland do not provide complete details.

"In the last few months we have seen a significant rise in gold travelling into both Hong Kong and China from all over the world," said a source at a top logistics firm that has shipped into Shanghai.

Exports from Switzerland - home to the world's biggest gold refineries - are also being shipped directly to Shanghai, he said.

The 133 tonnes does not include gold bought by China's central bank. China said in 2009 that its official reserves of gold stood at 1,054 tonnes but it does not publish regular updates. Industry watchers estimate Chinese reserves may range from 4,000 to 5,000 tonnes by next year.

Hong Kong-based consultancy Precious Metals Insight estimates the central bank bought 300 tonnes of gold in the first half of 2013. That pace may have been maintained as China looks to diversify away from U.S. Treasury holdings, managing director Philip Klapwijk said.

Increasing flows through Shanghai - which are legal but only a fraction of the total because gold is mostly shipped from trading hub Hong Kong - underscore a government push to make it easier for its citizens to buy and trade gold.

WEST TO EAST

After a surge in demand for gold jewellery, bars and coins, the World Gold Council forecasts Chinese gold purchases will top 1,000 tonnes in 2013. That is well ahead of India where government restrictions aimed at supporting the currency and reducing a current account deficit have curbed bullion imports.

Redemptions from gold-backed exchange-traded funds (ETFs) have jumped as the price of bullion has fallen - 650 tonnes from the top eight funds so far this year - and much of that may have headed to China from Europe.

Refiners say they have been converting 400 ounce bars typically bought by ETFs into 1 kg bars (kilobars) to be shipped to China. Kilobars are used for making jewellery and are also popular as an investment product.

"We see huge flows of gold in and out of Switzerland, an inflow of large bars, which we convert to smaller bars," Scott Morrison, chairman of gold refiner Metalor, said from Neuchatel.

"From April to August, we saw very large volumes from all our refineries headed to Asia," he said, adding that the bulk of the company's production in Hong Kong went to China.

Gold suffered its biggest drop in 30 years in April, spurring demand. Chinese buying has cooled from peak levels around then but remains high.

"We have to realise that there is now a very important player in the market," said Bernhard Schnellmann, director of Swiss-based Argor-Heraeus, one of the biggest gold refineries, which has also been converting ETF bars for the Chinese market.

About 70 percent of Argor-Heraeus's kilobar production was being shipped to China, he said.

"If you look a few years back, there was no China. Now they are the new kid on the block and they are a big kid already."

 

[Okemos]

Without us the entire Indian economy would collapse.

The cheap Indians need our cheap goods.
They can't afford anything else. They run trade deficit and don't invest, so domestic consumption is only thing left and for that they need our low cost goods.

We also lend money to Indian companies.

India is totally dependent on our economy.

I watched a video where one Indian economist/journalist was saying that Indian economy is more healthy because Indian economy was "consumption" led economy and demand first, supply second. That made me lol. Indian is like a poor little squanderer that spends every penny before he is even rich. They need to learn how to invest and build up wealth before they can emulate more developed countries as "consumption-led" economy.

 

[rcrmj]

I watched a video where one Indian economist/journalist was saying that Indian economy is more healthy because Indian economy was "consumption" led economy and demand first, supply second. That made me lol. Indian is like a poor little squanderer that spends every penny before he is even rich. They need to learn how to invest and build up wealth before they can emulate more developed countries as "consumption-led" economy.

this 'india economy is more healthy' is more of self pleasing pretext than even a shred of reality.
a healthy economy is driven by modern consumption (not primitive consumption India has) and innovation, India has no parts to play whatsoever in these fields at the world stage, a 'call-center' is what can be the best tag on India's world 'importance'

 

[cirr]

China's November factory growth clings to 18-month high

BEIJING Sun Dec 1, 2013 9:26am IST

An employee works inside a textile factory in Linhai, Zhejiang province, May 30, 2013.
CREDIT: REUTERS/WILLIAM HONG

(Reuters) - China's factory growth held at an 18-month high in November on firm domestic and foreign demand, defying expectations the economy faces a modest slowdown as 2013 draws to a close.

The official Purchasing Managers' Index (PMI) stood at 51.4 in November, the National Bureau of Statistics said, unchanged from October and ahead of market expectations for a reading of 51.1.

Investors had expected the PMI, one of the earliest pieces of Chinese data released each month, to show China's economy decelerated in the fourth quarter on slacker credit growth, fragile global demand, and slower restocking of inventories by firms.

"Growth momentum held up in November," said Louis Kuijs, an economist at RBS in Hong Kong. "The export order data suggests that global demand - key to the outlook for China's manufacturing - improved a bit."

A sub-index for export orders nudged higher to 50.6 in November from 50.4 in October, hovering above the 50-point threshold separating growth from contraction.

Experts will welcome the unexpected PMI strength as a sign that China can press on with sprawling plans outlined last month to cut back central economic planning without fear of endangering growth.

After three decades of double-digit growth, analysts say China's economy has reached a turning point where traditional growth drivers of heavy investment and brisk export sales must make way for a more sustainable expansion in consumption.

In the near-term, China's attempt to remake its economy should foster market confidence and perhaps even offset investor jitters over tighter monetary policy, said Kuijs.

"After a mild slowdown in the fourth quarter of 2013, we expect China to benefit from improved global growth late this year and in 2014," he said.

China's November factory growth clings to 18-month high| Reuters

 

[shuttler]

China Manufacturing Beats Estimates as Output Rises
By Bloomberg News - Dec 2, 2013 10:02 AM GMT+0800

China Manufacturing Beats Estimates as Output Rises - Bloomberg

Chinese manufacturing growth beat analyst estimates in November, indicating the nation’s economic recovery is sustaining momentum amid government efforts to rein in credit growth.

The Purchasing Managers’ Index was 51.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday, exceeding 24 out of 26 estimates in a Bloomberg News survey. A separate gauge from HSBC Holdings Plc and Markit Economics today was 50.8, topping all 13 analysts’ projections. Numbers above 50 signal expansion.

Stability in manufacturing in the world’s second-biggest economy may give Premier Li Keqiang more room to implement policy changes laid out after a Communist Party meeting last month. While industrial investment is picking up and retail sales have increased 13 percent so far this year, China faces headwinds that include factory overcapacity, excessive corporate debt and slower export demand.

“Momentum seems to be quite stable at the moment so policy makers can be quite relaxed,” said Wang Tao, chief China economist at UBS AG in Hong Kong. “If anything, growth in the fourth quarter is not going to weaken as much as many people had expected,” Wang said, with “robust” production momentum and expanding domestic and export orders “pointing to pretty stable growth ahead.”

China’s benchmark Shanghai Composite Index of stocks pared losses after the HSBC figure and was little changed as of 10 a.m. local time. The gauge rose 3.7 percent in November, the biggest monthly gain since August, on optimism that the reform package outlined by Communist Party leaders on Nov. 15 will bolster the economy and corporate earnings.

‘Bottom Line’

Economists estimate growth in gross domestic product will slow to 7.5 percent next year from 7.6 percent this year, according to the median projection in Bloomberg News surveys last month. The government set a target for 7.5 percent expansion in 2013.

Premier Li said in October that China needs annual growth of 7.2 percent to keep unemployment stable after indicating in July his “bottom line” for expansion was 7 percent.

“If at some stage next year there is some kind of negative shock -- exports collapse for some reason or there’s an unexpected credit freeze, they may relax policy a bit” because the government will defend its 7 percent lower limit, said Wang.

Yesterday’s PMI was the same reading as October, which was an 18-month high. The median estimate was 51.1, with projections ranging from 50.8 to 51.5.

Size Matters
The PMI for large companies in yesterday’s report rose to 52.4 from 52.3 in October, the highest level in 19 months, while the gauge for small companies slid to 48.3 from 48.5, the statistics bureau said.

“It’s clear that the improvements are coming from the big enterprises and there’s little improvement in the structure” of demand, said Hu Yifan, chief economist at Haitong International Securities Group Ltd. in Hong Kong. “Small companies will only recover when the overall macroeconomic situation recovers, once the economy starts to push from the bottom.”

The PMI survey from the statistics bureau is based on responses from purchasing managers in 3,000 manufacturing companies. The HSBC survey is based on responses from managers at more than 420 businesses, and is weighted toward smaller private companies.

A more forceful government crackdown in China on industrial overcapacity, weaker external demand and central bank measures to rein in credit growth and shadow banking, may limit a stronger rebound in manufacturing.

Cut Overcapacity
Data yesterday showed South Korea’s exports rose 0.2 percent in November from a year earlier, down from a revised 7.2 percent increase the previous month, as demand from Southeast Asian nations fell and gains in the won weighed on exporters’ competitiveness.

China in July ordered more than 1,400 companies in 19 industries to cut excess production capacity and the Communist Party’s reform document said local officials will be evaluated on controlling overcapacity.

The Hebei provincial government said last month it demolished iron and steel furnaces and Xingtai Longhai Iron & Steel Group Co., a unit of China’s biggest producer, Hebei Iron & Steel Group Co., has halted production because of operational difficulties, according to Shenzhen stock exchange filings from customer Hangzhou Boiler Group Co.

Companies’ borrowing costs are rising as money-market interest rates increase amid the central bank’s efforts to rein in credit growth. The seven-day repurchase rate, a gauge of funding availability in the banking system, averaged 4.54 percent in November, up from an average 3.57 percent in May.

“The rising funding costs will eventually be passed on to the corporates, discouraging further investment expansion,” Liu Li-Gang and Zhou Hao, China economists at Australia & New Zealand Banking Group Ltd., wrote in a report yesterday.

To contact Bloomberg News staff for this story: Nerys Avery in Beijing atnavery2@bloomberg.net

 

[Raphael]

Yuan Passes Euro as Second-Most Used Trade-Finance Currency - Bloomberg

China’s yuan overtook the euro to become the second-most used currency in global trade finance in 2013, according to the Society for Worldwide Interbank Financial Telecommunication.

The currency had an 8.66 percent share of letters of credit and collections in October, compared with 6.64 percent for the euro, Swift said in a statement today. China, Hong Kong, Singapore, Germany and Australia were the top users of yuan in trade finance, according to the Belgium-based financial-messaging platform. The yuan’s share of global trade finance was 1.89 percent in January 2012, while the euro’s was 7.87 percent, Swift said.

“It’s true that overseas exporters are using the renminbi more as the contract currency to increase the attractiveness and competitiveness of goods or services sold to China,” said Cynthia Wong, the Hong Kong-based head of emerging-market trading for Singapore and Hong Kong at Societe Generale SA.

China is seeking a greater role for its currency in global trade and investment as the state loosens controls on the exchange rate and borrowing costs in the world’s second-largest economy. People’s Bank of China Deputy Governor Yi Gang said Nov. 20 it is no longer in the nation’s interest to keep building up its foreign-exchange reserves, which totaled a record $3.66 trillion at the end of September.

Yuan deposits in Hong Kong, the largest pool outside China, rose the most since April 2011 to a record 782 billion yuan ($128 billion) in October. Agreements were announced this quarter to start direct currency trading between the yuan and both the British pound and Singapore dollar.

Global Payments
“The renminbi is clearly a top currency for trade finance globally and even more so in Asia,” Franck de Praetere, Swift’s Singapore-based head of payments and trade markets for Asia Pacific, said in the statement.

The Chinese currency ranked No. 12 for transactions in the global payments system in October, unchanged from the previous month, according to Swift figures. Payment value for the currency rose 1.5 percent that month, less than the 4.6 percent growth for all currencies, the Swift data showed. That saw the yuan’s market share drop to 0.84 percent from 0.86 percent in September.

Daily yuan transactions surged to $120 billion in April from $34 billion in 2010, making it the ninth most-traded currency in the world, according to a September report by the Bank for International Settlements in Basel, Switzerland.

Yuan Appeal
The yuan has appreciated 2.3 percent against the greenback this year, the best performance in Asia, according to data compiled by Bloomberg. The currency closed at 6.0924 per dollar today in Shanghai, little changed from yesterday.

China accounted for 59 percent of the trade finance denominated in yuan in October and Hong Kong’s share was 21 percent, Swift data showed. Singapore had 12 percent with Germany and Australia having 2 percent each.

“I’m not surprised as cross-border trades between China and Hong Kong have been quite dominantly denominated in yuan,” Raymond Yeung, a Hong Kong-based senior economist at Australia & New Zealand Banking Group Ltd., said by phone today. “Yuan trades usually increase when there are strong expectations for yuan appreciation.”

Wider Usage
International use of the yuan is increasing as China opens up its capital markets. In the first nine months of this year, about 17 percent of China’s global trade was settled in the currency, compared with less than 1 percent in 2009, according to Deutsche Bank AG.

China and the U.K. will begin direct trading between the yuan and the British pound, Chancellor of the Exchequer George Osborne said on Oct. 15. China also approved an 80 billion yuan quota allowing investors in London to buy onshore assets. Singapore inked a similar agreement with China a week later. Direct trading between the currencies of Japan and Australia started in the past two years.

The European Central Bank and the People’s Bank of China agreed to establish a bilateral currency swap line of as much as 350 billion yuan, the Frankfurt-based central bank said in October.

The Chinese central bank limits the yuan spot rate’s daily moves to 1 percent on either side of a fixing it sets every day. The trading band was widened in April 2012, after being expanded from 0.3 percent in May 2007. The yuan in Shanghai has traded 0.7 percent stronger than the fixing on average this quarter, down from 0.8 percent in the first nine months of the year, according to data compiled by Bloomberg.

The People’s Bank of China will “basically” end normal intervention in the foreign-exchange market and broaden the yuan’s daily trading limit, Governor Zhou Xiaochuan wrote in an article in a guidebook explaining reforms outlined following a Communist Party meeting that ended Nov. 12.

And all this while being nominally non-convertible

 

[SrNair]

Congratulations

 

[Star Wars]

Yeah congrats..... Its time for the Asians to Rise !!

 

[Raphael]

Yuan Passes Euro as 2nd-Most Used Trade-Finance Currency - Bloomberg

this is a more in-depth article.

 

[Beidou2020]

lol and some believe the renminbi will never be a reserve currency. Renminbi usage in trade, investment and financing is a pre-requisite to being a reserve currency.