China trade surplus reaches $137bn (for 2nd Quarter of 2015)

[Shotgunner51]

Money is money and Im just a dumbass ape. If the central government cannot turn that much trade surplus into tangible benefits by shuffling money around then something is seriously flawed. The forex reserve should be more than just defending the currency and cheap borrowing.

I remember Zhu Rongi making some comment about something as simple as providing kids with a boiled egg and a glass of milk. Fcukers cant even do that.

Makes me go apeshit.

LOL you are right bro!

Is time for the central government to review some seriously outdated policies e.g. compulsory purchase of forex (强制结汇), and export tax rebate (出口退税).

 

[21 Dec 2012]

It should be a top national priority to stop hoarding foreign debt and start spending on socialist programs. Free food for school children, no school fees and even start giving free school stationary, uniforms, shoes and even a little discretionary cash vouchers for children only.

FCUK holding foreign paper.

You can't spend forex in domestic economy. Its merely a medium for exchanging goods with other countries. For domestic spending, the government will either utilize one of the various revenues streams or take up debt. Social spending is generally a zero-return expense i.e it won't generate a definable revenue stream against the expenditure. A developing country must carefully weigh where it spends its money. The kind of welfare schemes you are suggesting seem rather superfluous.

 

[Shotgunner51]

Bulging forex reserves！

Yes it will either bulge Forex reserves and/or external assets, resulting in higher credit, and NIIP (Net International Investment Positions).

As per latest available data, China is the second largest creditor nation in the world after Japan.

List of creditor nations by net international investment position per capita - Wikipedia, the free encyclopedia
List of debtor nations by net international investment position per capita - Wikipedia, the free encyclopedia

 

[Bussard Ramjet]

Yes it will either bulge Forex reserves and/or external assets, resulting in higher credit, and NIIP (Net International Investment Positions).

As per latest available data, China is the second largest creditor nation in the world after Japan.

View attachment 241236

List of creditor nations by net international investment position per capita - Wikipedia, the free encyclopedia
List of debtor nations by net international investment position per capita - Wikipedia, the free encyclopedia

As far as I know, there is a net reduction of forex accumulation because China is right now facing a huge capital outflow from the economy.

Please do correct me if you disagree.

 

[tore]

Long live Pakistan-China friendship

Development and advancement of China is only postive.

 

[Shotgunner51]

As far as I know, there is a net reduction of forex accumulation because China is right now facing a huge capital outflow from the economy.

Please do correct me if you disagree.

Yes seems like China is adjusting portfolio on the balance sheet, less Forex reserves (cash, T-bills), more gold, a lot more outbound investment (asset).

For NIIP, major creditors like Japan, Germany, Taiwan, Switzerland and Hong Kong have accumulated their positions over decades of trade surplus and efficient spendings. China being a developing country is still at the stage picking up.

 

[Bussard Ramjet]

Yes seems like the portfolio is adjusting, less Forex (cash, T-bills), more gold, more outbound investment (asset).

For NIIP, major creditors like Japan, Germany, Taiwan, Switzerland and Hong Kong have accumulated their positions over decades of trade surplus and efficient spendings. China being a developing country is still at the stage picking up.

So you are telling me that 500 billion dollar or the like of capital outflow from Chinese economy is all investments?

I don't think China is legitimately investing that much.

I would only consider the investments that are ultimately used to advance a country's interest by acquiring technology, building market access, and getting returns back to the country as Investments. For a corrupt official transferring all his wealth abroad, and buying real estate etc. in US can also be considered Investment technically, but it only boosts US GDP, and the official may some day even vanish. Or simply get his family to settle abroad.

These days a lot of wealthy in China are buying property abroad, either for diversification of assets, or simply to finally move abroad, or perhaps even to hide their illicit wealth from the ongoing anti-corruption campaign.

 

[Shotgunner51]

So you are telling me that 500 billion dollar or the like of capital outflow from Chinese economy is all investments?
I don't think China is legitimately investing that much.

If you are interested on China's portfolio of investments please check information from PBOC, China Treasury Department, CIC and other sources, would be useful, thanks!

Long live Pakistan-China friendship

Development and advancement of China is only postive.

Thanks bro, hope Chinese investment in Pakistan like CPEC, industrial parks, soft loans, etc., will be a boost to your prosperity!

 

[Jlaw]

It should be a top national priority to stop hoarding foreign debt and start spending on socialist programs. Free food for school children, no school fees and even start giving free school stationary, uniforms, shoes and even a little discretionary cash vouchers for children only.

FCUK holding foreign paper.

Or an extra $250b for the military

 

[Shotgunner51]

$260 billion half year，$500 billion whole year？

July ($43.04B) and August ($60.24B) surplus data are released earlier, now we are waiting for September number. Though not released yet, analyst forecast is around ~$46.79B, hence the Q3 forecast is around ~$150B.

And that will make surplus for first three quarters combined at ~$410B, already much higher than full-year of 2014. My personal estimate for full-year of 2015 is still $~600B.

I will update once the actual results are obtained.

 

[AndrewJin]

July ($43.04B) and August ($60.24B) surplus data are released earlier, now we are waiting for September number. Though not released yet, analyst forecast is around ~$46.79B, hence the Q3 forecast is around ~$150B.

And that will make surplus for first three quarters combined at ~$410B, already much higher than full-year of 2014. My personal estimate for full-year of 2015 is still $~600B.

I will update once the actual results are obtained.

Thanks for the update!

 

[Shotgunner51]

Thanks for the update!

Welcome bro! Since last update, we have July & August now, September coming soon. Based on these data, the estimate for 2015 would be somewhere around $600B, that's big increase over last year of $384B. Uncertainties include:

• How the Syrian War will affect global trade.
• China is joining OPEC as a member, how will oil price and volume go in the coming months. China has increased substantially imports of oil, now around 7 million b/d (assuming oil price $46/b, monthly imports is $10B). Will China continue to increase oil reserves (i.e. capping growth of FX reserves) will also affect trade surplus data.

 

[AndrewJin]

Welcome bro! Since last update, we have July & August now, September coming soon. Based on these data, the estimate for 2015 would be somewhere around $600B, that's big increase over last year of $384B. Uncertainties include:

• How the Syrian War will affect global trade.
• China is joining OPEC as a member, how will oil price and volume go in the coming months. China has increased substantially imports of oil, now around 7 million b/d (assuming oil price $46/b, monthly imports is $10B). Will China continue to increase oil reserves (i.e. capping growth of FX reserves) will also affect trade surplus data.

Could you introduce for me a little on sovereign wealth fund, what's the relation of sovereign fund and foreign exchange reserve?

 

[Rangila]

Could you introduce for me a little on sovereign wealth fund, what's the relation of sovereign fund and foreign exchange reserve?

Norway & UAE rule!!

 

[Shotgunner51]

Could you introduce for me a little on sovereign wealth fund, what's the relation of sovereign fund and foreign exchange reserve?

I have written a thread however it was merged into "Chinese Economy & News" (@waz @Oscar can you reinstate the thread?). Sure let's introduce the subject again.

Countries rich in Trade Surpluses (e.g. strong in oil export, or strong in merchandise export) with low External Debt, may accumulate large amount of Forex. There are several methods to manage the Forex, (1) In form of FX Reserves on balance sheet of central Banks, or (2) In form of Sovereign Welfare Funds, or (3) Other forms e.g. oil reserves, commodity reserves.

Forex Reserves By Country

• China has been experiencing record level trade surpluses over the years, however the Forex Reserves is currently maintained at the level of US$ 3.77 trillion (Mainland only; Excluding that of Hong Kong, Taiwan, Macau). The governance of Forex Reserves are more defensive in general.

Sovereign Welfare Funds By Country

• Relative to a steady level of Forex Reserves, China has been building SWF's progressively. It's believed much studies have been done on Singaporean model i.e. GIC, Temasek. By now there are a few Chinese SWF's at the moment e.g. CIC, SAFE, total assets exceeds US$ 1.53 trillion.

• Hong Kong SAR has its own SWF, asset value now at around US$ 400 billion.

• Relative to the experienced economies like Singapore, Norway & UAE, China is new to SWF. For details of individual SWF in China and across the world, please check the following link:

Sovereign Wealth Fund Rankings | Sovereign Wealth Fund Institute

Notes

• As mentioned above, Singapore's model is very successful in managing a huge asset (FX $250 billion + SWF $538 billion = $788 billion), something China has studied for years. Their professionals like Miss Ho Ching (CEO of Temasek), Mr. Lim Siong Guan (Chairman of GIC) as well as many senior executives of GIC have given valuable advices to China government in constructing SWF's.

• Other than Singapore, other financial powers like Hong Kong SAR, Norway, UAE, etc., their SWFs are larger than FX Reserves. In Singapore's case the ratio is more than 2 times ($537 billion vs $250 billion). For Norway, UAE, almost entire assets are on SWF, practically don't keep any FX Reserves.

• Now China just mainland alone has a tremendous asset (FX $3,771 billion + SWF $1,535 billion = $5,306 billion) to manage, let alone Greater China (Hong Kong, Taiwan & Macau) combined (over $6,480 billion). China's SWF are expected to be fast growing while FX Reserves will maintain at current level, and become one primary vehicle for international investment.