Central Huijin is a wholy owned subsidiary of China Investment Corp. IT is estimated that Central Huijin manages about 50% of CIC’s total asset in 2007, which is about USD 100 Billion. Read the rest of this entry »
Archive for February, 2010
Since Oct 08 (the Financial Crisis), there has been some choppy developments of material prices in China. Notably some materials went through a severe correction of price (eg., Copper, Coal, and Aluminum). Since Q1 09, Read the rest of this entry »
It is estimated that there are three million college graduates in China who struggle to find a job (See Article from LA Times). Since 1999, China government has started to increase the enrollment of universities by 30% annually. A side effect of the enlarged enrollment is starting to be felt in the recent years. According to a latest estimate, there are about 20 million undergraduates enrolled into universities in 2008. However, whether the country can provide 20 million job vacancies by the time that they graduate is a big question mark. In fact, in some regions such as Canton province, a phenomenon surfaced that the employers are struggling to find any labor and are willing to pay a hefty premium for hard labors than college graduates. After all, maybe the country doesn’t need that many ‘educated’ professionals. Read the rest of this entry »
During the eighteen to nineteen century, UK is the world’s most powerful country from both economic and military perspectives. In the 21st century, however, Read the rest of this entry »
Which region is China’s biggest export market? You might guess USA or EU, and neither is the correct answer. In 2009, Asia excluding Japan and HK has become China’s top export destination. Read the rest of this entry »
China started to attract foreign interest and capital about 10 years ago. The recent financial crisis only widened the gap of attractiveness between China and Western World, and China continues to entice more and more attention, and money (See Article from Global Times). According to an interview with some foreign Brokerage firm and Fund manager, they inevitably see money making opportunities in the fast growing China. It seems that China is going to be flooded with money manager, institution and research analysts very soon as it is such a big spot so impossible to miss. Normally such situation leads to bubble and excessive competition.
中国快速的经济发展对海外基金和研究机构产生强大的吸引力，同时热钱也继续青睐中国市场。 Read the rest of this entry »
On Feb 2, Fitch has downgraded two Chinese banks – China Merchants Bank and Citic Bank to D, which means ‘weakness of internal or external origin’. Before the downgrade the two banks were ranked C/D, which means ‘adequate but with one or more trouble aspects’. Such a downgrade has invited strong reaction from a senior bank official of People’s Bank of China (See Article from WSJ). According to the official, Chinese banks have weathered financial storm well and came up in better shape than any other western banks (See Graph from Chinatells). Therefore Fitch’s rating is not objective. In addition the capital adequacy ratio of the two banks is good enough and their NPL ratio keeps going down. However the record amount of increase in loans in ’09 did post potential risks to the banks, albeit not that clear for the moment.
China’s Oversea Construction contracts have been increasing at an exponential pace since 2002. According to a latest estimate, the contract value of completed projects has gone up from about 11 Billion USD in 2002 to 77 Billion in 2009 (seven folds). Read the rest of this entry »
According to a latest estimate, the new home inventory in China’s first tier cities (Beijing, Shanghai, Shenzhen and Guangzhou) are at a lowest level since 2007. Read the rest of this entry »
Is China’s Property sector having a serious bubble after increasing 30% of price in 2009? The answer seems very obvious. In fact some observers already voiced concerns on China’s property sector, particularly as Jim Chanos and Andy Xie (See Article from Forbes). However, when there is a bear, there will be a bull. Notably Real Estate investment powerhouse Cohen & Steels (Click here for an Interview with Luke Sullivan, the senior president of C&S), and two research analysts from Credit Suiss (See Article from Forbes) voiced a super bullish call for China’s property sector and its equities. In the Credit Suiss report, the analysts opinioned that ‘Chinese real estate is the most undervalued among China, India, Singapore and Hong Kong’. I don’t know how they come to their conclusions ( Read the rest of this entry »
China joined World Trade Organization (WTO) in 2001. Between 2001 and 2008, China only filed two cases regarding trade disputes through WTO. However, since then, China has filed five more (See Article from Economist). Clearly China is learning the rule of WTO fast. In fact such a trend is consistent with the international environment change – USA and EU used to file at least 50% of the WTO arbitration cases in the past. During the last two years, however, the dominance of case filing has been replaced by emerging economies. I see it as a positive thing as the whole purpose of WTO is to solve trade dispute through a legitimate and reasonable way within a legal framework. We should always remember that it is better to resolve a dispute based on some ‘rules’ than getting it sort out naturally, which inevitably result in violence and power struggle. Read the rest of this entry »
China Investment Corp has hired three companies, including Goldman Sachs, Lexington Partners, and Pantheon Ventures to find good opportunities in private equity markets (See Article from WSJ). Each of the three firms will be given USD 500 Million to manage, creating a natural competition in between. This is a latest step of CIC to diversify its USD 300 Billion Asset after the recent investment in Apax, A British Private Equity Fund (See Article from Chinatells).
China’s Central Bank announced to increase the Bank’s reserve ratio by another 0.5% in Feb 2010 to 16.5% for big banks (See Article from Bloomberg). Such a rate increase is the second time in the month and has caused a lot of suspicion in the market (See Article from NYT). Read the rest of this entry »
The contribution of domestic investment has made an unprecedented contribution to the GDP growth of China in 2009, amounting to 92.3% of the GDP growth. Read the rest of this entry »
China’s monetary growth continues to slow down in January of 2010. According to the Bureau of Statistics, the M2 growth slows down to 26% y-o-y from 27.7% in Dec. Read the rest of this entry »
China’s PPI in January increased by 4.3% y-o-y, which for the first time crossed over the CPI increase in the same month (1.5%). China’s CPI and PPI have turned positive since Dec 09. Read the rest of this entry »
China is a phenomenon in 21 century. However, it is never clear whether one should long or short China as of today. Jim Chanos, a successful hedge fund manager, influenced by a recent Pivot Capital report, starts to get bearish on China and feels that China’s asset bubble is ’1000 times worse than that of Dubai’. Thomas Friedman, a New York Times columnist, argues back by stating that ‘I will never short a country with 2 Trillion Reserve in the central bank’. Michael Pettis is obviously furious about Friedman’s article and nail down the argument with a convincing piece (See Article from China Financial Market). Pettis argues that China’s 2 Trillion+ reserve is no doubt huge in terms of the percentage to Global GDP. However, in history the 30s US and 80s Japan had experienced similar numbers of reserve and both ended up in tears. In fact, the record reserve is more of a time bomb worth worrying as it is likely to result in over liquidity of domestic credit and excessive capacity. Read the rest of this entry »
Ha Jimin and Mao Yushi are two famous economists in China. Recently they expressed their respective views on China’s economy (See Article from Forbes). According to Ha Jimin, 2015 is the year when China’s baby boomer growth starts to slow down. Likely the asset price will stop to grow further or even fall, like what happened in Japan. According to Mao, RMB is severely undervalued and that causes problem for both China and the world. In addition, both Mao and Ha are concerned about the asset bubble in China. However, Ha is more optimistic on the potential growth of assets – he reckons that there is still a few years to go before the asset bubble reaches the bursting time.
哈继铭和茅于轼是中国两位比较知名的经济学家。日前他们接受采访发表对中国经济看法。 Read the rest of this entry »
China’s Import and Export both experienced double digit growth in January of 2010. The import went up a stunning 85.5% increase year on year, and the export went up by 21% y-o-y. Read the rest of this entry »
According to the president of Fed Reserve Bank of San Fransisco, Ms Janet Yellen, America’s monetary policy (base interest) might be too loose for China (See Article from WSJ). US Fed sets its interest rate virtually to zero to stimulate the domestic economy. Due to the reason that Chinese yuan is pegged to USD, the Fed Rate has a knock on effect on China’s economy. Given the fact that China recovers ahead of US, the current Fed Rate is likely to be excessively stimulative to China. Following such logic, either China will have to re-evaluate the FX policy, or run the risk of over heating given US’s super accommodating policy.
China’s Financial institutions are now world’s No.2 in terms of scale only after USA. In fact China is even bigger than USA in some aspects, such as the size of the bank (See Graph from Chinatells). However, the decision making system in China’s financial institutions are a complex mystery to outsiders (See Article from Economist). It seems that the heads of big 5 state owned banks are mostly government officials and have a political agenda. Some of them might be shifted between competitors due to political consideration. China’s bank lending mandate looks more like a government verdict rather than a market behavior. On top of the commercial banks, there are government entities such as China’s Bank Regulatory Committee, State Administration of Foreign Exchange and People’s Bank of China. To figure out who does what and who is the boss appears to be a mission impossible for western observers. Read the rest of this entry »
China’s Foreign Exchange Reserve has grown exponentially in the last decade from less than 500 Billion USD to more than 2 Trillion USD. At the same time, however, most of the FX Reserve is in the form of USD. Due to the fact that USD’s value has been destabilized in the recent years, Read the rest of this entry »
China is the strongest growth machine among BRIC (Brazil, Russia, India and China). However, China’s equity price (Shanghai A Share) is valued lowest among four. B Read the rest of this entry »
Lenovo is the leading brand of PC in China, taking about 1/3 of China’s market share. Such a market share makes Lenovo one of the world’s largest PC makers. Lenovo’s ambition is not only in China, especially after their acquisition of IBM: Lenovo always wants to replicate the success in China to oversea and foreign markets. However, such an effort does not always produce sweet fruits (See Article from Business Week). Since the acquisition of IBM, Lenovo’s market share in US has only decreased – not dropped out of top 5 after Dell, HP and Acer. In addition, there are niche market competitors showing solid growth and competitiveness such as Apple. How to make it a story of success in oversea markets still remains a big challenge for Lenovo.
联想在中国家喻户晓，是中国市场份额最大的电脑生产商。当年联想拿下个人电脑的老牌子IBM, Read the rest of this entry »