Here are a bunch of news stories I found interesting, but which I didn't getting around to doing a full entry on:
AFP reports that China planning big support for energy and textile sectors.
(emphasis mine) [my comment]
China planning big support for energy, textile sectors
BEIJING (AFP) — China is planning multi-billion-dollar aid packages for its petrochemical and textile sectors, as part of efforts to help key sectors through the global economic crisis, Chinese press said Wednesday.
Under a plan awaiting Cabinet approval, China will spend 100 billion yuan (14.6 billion dollars) by the end of 2010 to upgrade refineries for cleaner fuels, the China Business News reported, citing unnamed sources.
China will pump in 60 billion yuan this year to upgrade 60 million tonnes of gasoline and another 40 billion yuan in 2010 to improve the quality of 60 million tonnes of diesel to reduce sulphur and other emissions, it said.
It will invest a further 400 billion yuan on 20 new projects related to the fuel upgrading initiative, as well as on the overseas acquisition of oil and some fertiliser assets, it added.
The government is also drafting a stimulus package for the textile industry, including preferential loans, to boost sales and create jobs, Wednesday's official Shanghai Securities News reported.
The government is expected to release supportive policies for more industries such as shipbuilding in the near future, Chinese media have reported.
The Chinese government unveiled a four-trillion-yuan spending programme in late 2008 to revive the economy. It was unclear if the packages for the specific industries were part of this or a new item. [this will be key to see]
China Daily reports that banks report big decline in non-performing loans.
Banks report big decline in non-performing loans
Author: Wang Lan
All Chinese commercial banks achieved a significant drop in non-performing loan ratio in 2008, according to data released on Friday by China Banking Regulatory Commission (CBRC).
The other major indicators commonly applied to test the strength of the Chinese banking system also exceeded all regulatory requirements, CBRC said.
Non-performing loans of the country's major commercial banks at the end of 2008 dropped by 706.5 billion yuan ($103.29 billion) from a year earlier to 494.4 billion yuan, bringing the average non-performing loan ratio down 4.24 percentage points to 2.49 percent, the CBRC figures showed.
The capital adequacy ratio of all Chinese commercial banks remained above the regulatory level, with the average provision coverage ratio reaching 115.3 percent, up 74.1 percentage points from the year before.
Shanghai Daily reports that economists expect China to further loosen monetary policy.
Economists expect China to further loosen monetary policy
January 15, 2009
Economists said China may loosen its monetary policy further to free up more cash in an effort to beat the economic slowdown.
Qu said he expects the one-year lending rate to drop to 3.42 percent this year from 5.31 percent now and that it will remain flat in 2010. [US One-Year Treasury Constant Maturity is 0.44 percent. This 5 percent difference between interest rates in China and the US is due to the effect of the dollar peg.]
The People's Bank of China has cut interest rates five times and relaxed reserve requirements for major financial institutions three times since a monetary easing cycle began in September. Zhou Xiaochuan, the People's Bank of China governor, has said that the central bank will provide financial support and take measures to boost the economy.
The easing monetary policy has already had an effect. [yet]
China's M2, the broadest measure of money supply, rose 17.8 percent in December, the fastest in seven months and much quicker than expectations. "With a one-year lending rate of 5.31 percent and reserve requirement ratio of 15.5 percent for big banks, there is still room for further monetary loosening," Sherman Chan, a Moody's economist at Economy.com, said.
"Inflation is not a concern now. [it should be] Inflation growth has slowed dramatically in recent months. Commodity prices are much lower compared to a year ago [a year ago, they were artificially high due to commodity bubble], and demand-driven inflationary pressures are rapidly evaporating [because of TEMPORARY deflation fears]," she added.
Chan said she expects the one-year loan rate to be trimmed to 4.5 percent by the end of the first quarter, while the proportion of deposits needed to be set aside by major banks will be dropped to 13.5 percent [if reserves requirements of major banks are reduced to 13.5 percent, money supply growth will go completely out of control].
Citic Securities Co said monetary credit is an early indicator of an improving economy, and the changing rate of monetary credit growth can indicate an economic trend.
"Increased credit usually precedes an increase in fixed asset growth by three months [With that in mind, I expect China's inflation rate to hit the double digits within two or three monts.]. If credit continues to increase, especially if credit in January 2009 continues to grow at a rapid rate, then this will cause fixed asset investments to rapidly grow after the second quarter," Citic Securities said.
China Daily reports that investor sentiment index for china rises in q4 of 2008.
Survey: Investor sentiment index for China rises in Q4 of 2008
Chinese investors are getting more optimistic in the domestic equity market, boosted by the 4-trillion-yuan ($584.8 billion) economic stimulus package, according to a survey released in Beijing on Tuesday.
The investor sentiment index for China rose to 103 in the fourth quarter of 2008, up from 88 in the third quarter, according to the survey by the ING, an international financial service provider based in the Netherlands. [China is getting more optimistic. Somehow, I doubt the same thing will happen in the US.]
This made China the second "optimistic" market in Asia after Indonesia, according to the report.
The survey, through online interviews, covered more than 1,300 Chinese investors above the age of 30 and with assets of at least $100,000.
About 50 percent of the investors surveyed believe the country's economy would go better in the first quarter this year, compared with 38 percent for the fourth quarter in 2008. [optimism encourages spending]
The ING survey considered the 4-trillion-yuan economic stimulus package announced in November as the key factor to boost up the investor sentiment.
China's key Shanghai index has gained 6.4 percent since the central government announced the package in November.
Seventy-eight percent of the investors surveyed hold that the package would have a positive influence on the economy, while 67 percent said they would make more investments in the first quarter of 2009 because of the package.
According to the survey, 29 percent of the Chinese investors planned to increase investment in the domestic equity market in the first quarter. In a previous survey, 13 percent of the investors said they would invest more in the fourth quarter stock market of 2008.
The Herald Tribune reports that Chinese retail sector faces consolidation.
Chinese retail sector faces consolidation
By Kirby Chien Reuters
Published: January 21, 2009
Chinese household consumption in 2007 made up just 35.3 percent of economic output, a record low for a major country in peacetime. In the 1980s, it was over 50 percent, versus 72 percent in the United States. [This is great evidence of Chinese underconsumption.]
The reluctance to buy is evident at Solana, one of Beijing's newest mega-malls, which has more than 200 stores and vendors but where spending customers are sparse on weekdays and many stalls are still waiting for tenants. [there are conflicting reports on how retail sales are doing in China. However, my overall feeling is that they are doing much better than people expect]
China Hospitality News reports that shopping tours to Hong Kong increased by 40%.
Shopping Tours To Hong Kong Increased By 40%
January 22, 2009
News from et-China.com is that shopping tours to Hong Kong are very popular at the end of the Chinese lunar year thanks to various promotions offered by Hong Kong.
The global financial crisis seems to have no effect on Hong Kong's shopping tourism. Statistics from et-China.com show that compared with January of 2008, the number of tourists going shopping in Hong Kong increased by about 40% and shopping tours are the most popular FIT products offered by Hong Kong.
Though some consumers have suspended their plan of going shopping in Hong Kong as a result of the global financial crisis, the unparalleled promotions offered by Hong Kong businesses' still have attracted many people to go there. According to tourists who've come back from shopping trips, they saw fewer European and American faces in Hong Kong, but more Chinese people were there purchasing the low-priced goods.
The Hong Kong Tourism Board launched Hong Kong Winter Fest during the New Year holiday to promote the region's tourism. In addition, businesses there also offered large discounts to attract consumers from the mainland. HKTB says that Causeway Bay, Tsim Sha Tsui and Mong Kok are the most popular shopping destinations for tourists; and cosmetics, clothes, clocks and jewelry are tourists' favorite purchases.
McClatchy Newspapers reports about the shortage of trains straining China's holiday rush.
All aboard? Shortage of trains strains China's holiday rush
By Tim Johnson McClatchy Newspapers
CHENGDU, China — Every year at this time, China's rail system groans under a huge surge of holiday traffic. Travelers endure waits of hours — even days — in the winter chill to buy tickets. Once aboard trains, they overcrowd seats. Some sit in aisles. Others are forced to stand for trips of a day or longer.
Veteran travelers such as Wang Ping plan ahead for the arduous trips, knowing that the trains are so crowded that even getting to the bathroom can be a heroic feat.
"You eat very little. You drink very little," she said. "There are too many people sitting in the aisle, so it's very difficult to go to the toilet."
The travails of travel around the week-long Lunar New Year festival, China's most important annual holiday, are more than a passing irritant to the 188 million Chinese who'll board trains during the 40-day peak period. They're also of concern to China's leaders, who worry that holiday emotions could turn ugly and trigger social unrest at railway stations.
Severe snowstorms a year ago stranded tens of millions of passengers.
So it was little surprise that even President Hu Jintao weighed in with some sharp words for railway authorities before the holiday, which is also known as the Spring Festival.
"The Ministry of Railways must use its brains to work out many measures to help the people," Hu said on Jan. 15. "They should make these measures known to the public in order to lessen social tension and ensure the Spring Festival mission is completed in a smooth manner."
As in past years during the holiday, complaints have mounted this year of under-the-table sales by rail employees to scalpers. One angry traveler took a video on his cell phone of a railway employee refusing to sell him a ticket. The video clip, which spread rapidly around Chinese Web sites, shows the stone-faced railway employee ignoring angry travelers outside the window as he prints out tickets. Postings with the video accused the employee of intending to sell tickets on the black market.
Sensitivities are so high that the Railway Ministry called a news conference and apologized for "hurting the feelings" of passengers. It vowed to probe illegal ticket sales.
Deputy Railways Minister Wang Zhiguo said 30,000 police officers were keeping order at railway stations, and that they had detained 2,390 scalpers and confiscated 78,200 tickets.
Wang said ticket vendors are barred from carrying mobile phones to their windows to prevent them from colluding with scalpers.
At root, though, the problem is a lack of rail capacity to handle the throngs who want to travel at this time of year. The railway ministry said 232 million Chinese want to travel during the Spring Festival period, but 44 million of them would not be able to buy tickets.
Experts on China's rail system said its development has not kept pace with the nation's runaway economic growth, even as the country now builds sleek high-speed bullet trains and plans new lines along heavily traveled urban corridors.
China's railways are the busiest in the world, handling a quarter of the world's cargo and passenger travel. Yet the system has only about 49,000 miles of track, a third of that in the U.S., a country of similar geographic size but with a fraction of the population. The U.S. rail network, however, almost exclusively carries freight.
China's economic output from 1978 to 2007 rose 67.5 times, Wang said, but the railway system's size has only increased about 50 percent in that span.
In the next five years, China plans to quadruple investment in railways, more than doubling the length of high-speed passenger and freight lines.
"China's rail system faces huge pressure during holidays, especially the Spring Festival," said Peng Qiyuan, dean of the college of transportation at Southwest Jiaotong University here. "In recent years, transportation has improved dramatically. But . . . there is still a big gap between demand and capacity."
In the meantime, railway shortcomings remain particularly acute at Lunar New Year, which arrives this year on Jan. 26 with a week-long mandated holiday. The travel surge, which tapers off by mid-February, is the largest mass movement of people in the world.
"The trains are at double capacity. There are two people for every seat," said Zhou Leishan, a rail expert at Beijing Jiaotong University. "At many places, just getting on the train is the goal."
Indeed, crowds of migrant workers enduring chilly winter air one recent day at a railway station in Hangzhou, a city in the Yangtze River Delta, were all waiting to purchase tickets.
"We've spent one day and one night trying to buy tickets," complained Yan Li, 31, who sought to travel to Sichuan province in China's southwest.
"There are five of us, so we take turns," added Zhao Zigui, a steel tube plant worker guarding the luggage of his travel companions, all hoping to go home to Sichuan province.
Police keep tight order outside big stations, where outdoor portable toilets serve the crowds. Their main concern seems to be controlling migrant workers, some of whom have lost their factory jobs in the global financial crisis, and dealing with foul weather that can snarl rail traffic.
Even the slightest hints of irregularity in ticket sales can trigger a cascade of complaints.
A Beijing-based magazine reporter, Hu Xiong, wrote in his personal blog last week that after waiting in line four hours at the Beijing West Station, he was happy when the clock tower showed that 9 a.m. had arrived, the time when ticket booths were to open.
Suddenly, the hands on the clock tower were turned back 15 minutes, which he interpreted as giving the ticket vendors a quarter-hour to churn out tickets for scalpers.
When he got to the window at 11:30 a.m., all tickets were already sold out.
Hu got so many queries on his blog posting he asked journalists to stop calling him.
"For the sake of ordinary people to whom you once belonged, please go and taste the hardship by queuing up," Hu wrote in a remark aimed at journalists.
(McClatchy special correspondent Hua Li contributed to this article.)
My reaction: Comments in articles.