15/08/2019 Renminbi retreat set to revive capital outflows pressure | Financial Times Chinese capital controls (See my comments…) Renminbi retreat set to revive capital outflows pressure Breach of key threshold sees currency and its regulator face challenges on many fronts Don Weinland in Beijing 9 HOURS AGO The renminbi’s fall through the closely watched and […]
By Alexandra Stevenson Aug. 4, 201 BEIJING — China’s currency weakened past the psychologically important point of 7 to the American dollar for the first time in more than a decade, a move that reflects the growing severity of the trade war with the United States and that could indicate Beijing’s growing desire to find ways to retaliate […]
New York Times (See my quote below) July 15, 2019 A shopping mall in Beijing. Retail sales and spending on infrastructure offered bright spots in data that otherwise showed slumping growth.CreditLam Yik Fei for The New York Times A shopping mall in Beijing. Retail sales and spending on infrastructure offered bright spots in data that […]
The trade war – the Chinese response Andrew Collier | Jun 07, 2019 Executive Summary We analyze the response of China to the trade war in four buckets: politics, macro-economy, global supply chains, and technology. Of the four, China’s technological development and global supply chains are likely to suffer the most. Xi’s political power is […]
Microsoft Word – Ant’s Aggressive Strategy.docx “Ant Financial has got just enough bullets to cause a small–scale financial crisis.” Economist with a State Owned Bank. l Growing Market Share. Ant Financial has quickly taken market share from traditional banks, trust companies and other financial firms. Eventually, the regulators may reduce Ant’s consumer lending business to […]
February 19, 2019 Executive Summary There is a widespread expectation among western investors that China will enact quantitative easing to counter the effects of the trade war and the slowing economy. This is highly unlikely. Although there is substantial data indicating signiDcant pain in the economy, including defaulting SMEs, unemployment, and general declining economic activity, […]
Summary China has instituted several targeted stimulus measures designed to improve GDP growth and provide capital for small businesses, the country’s largest employment sector. These measures, however, are likely to be inadequate compared with the decline in capital due to the restrictions imposed on shadow lending. The results are likely to be: Difficulty maintaining land […]
http://video.cnbc.com/gallery/?video=3000567689&play=1
In August, the U.S. approved China National Chemical Corp.’s proposed $43 billion takeover of Swiss seed company Syngenta AG, overcoming domestic opposition on security grounds. Given the history of Chinese foreign acquisitions, one of the concerns remains the ability of ChemChina to raise the funds for the proposed purchase. In this note, we analyze several sources of capital and the political implications of the financing behind the deal.
China’s Rmb 2 trillion bond swap program is designed to lower interest costs for provincial governments by exchanging bank debt for lower cost bonds. Beijing has not clearly defined the debt, leaving much responsibility to provincial governments. This will lead to difficult negotiations among all levels of government and financial institutions.
In addition, given total local debt at Rmb 17 trillion – and probably closer to Rmb 24 trillion – the current program will need to be radically expanded. The initial Rmb 2 trillion program only covers bank loans. But these cover just 20% of the total estimated Rmb 10 trillion. In addition, there is additional debt from Trusts and other institutions. As a result, the state banks could be responsible for up to Rmb 16 trillion of debt. Assuming default rates of 50%, we estimate in the worst-case scenario this could cause a 70% decline in combined bank equity and profits.