China Banking Regulator Warns of Rising Risks

September 2, 2013, 4:24 PM

China Banking Regulator Warns of Rising Risks

China’s banks don’t properly serve the country’s real economy, and the financial system has become so complex that risks are falling through the gaps in the regulatory system. That is now a familiar message from the cohort of bearish analysts and hedge-fund managers counting the cracks in China’s economic model. It is less familiar coming from China’s banking regulator. In a question-and-answer interview in this week’s Seeking Truth magazine, the Communist Party’s theoretical journal, China Banking Regulatory Commission Chairman Shang Fulin says the financial system’s support of the real economy “needs to be vastly improved,” and he warns of the need to “prevent regulatory arbitrage” and “reduce the risks of financial contagion.” Read more of this post

Fallen SASAC chief Jiang Jiemin; Xi’s anti-graft sweep to turn focus to PLA

Fallen SASAC chief Jiang Jiemin

Staff Reporter

2013-09-02

Jiang Jiemin. (Photo/CFP)

China’s disciplinary authorities have announced a corruption probe into Jiang Jiemin, head of the commission overseeing the country’s biggest state-owned enterprises. Until March this year, the 57-year-old Jiang was the chief of state-owned China National Petroleum Corporation, the country’s largest integrated energy company. Born in eastern China’s Shandong province in 1955, Jiang graduated from the University of Shandong and also underwent an in-service postgraduate course for ministerial officials and provincial heads at the CPC Central Committee party school. Read more of this post

Why the Chinese government spent $33 billion on cotton that nobody wants

Why the Chinese government spent $33 billion on cotton that nobody wants

By Gwynn Guilford @sinoceros August 30, 2013

Texhong Textile Group, one of China’s biggest textile makers, has been shifting production to Vietnam, and the market loves it, reports Bloomberg—the stock is up 445% from a year ago. And that’s not because of the much-bemoaned rise of Chinese labor costs. It’s because the Chinese government is making cotton way more expensive than it should be.

Cotton stockpiling: a terrible idea

The Chinese government buys and stockpiles domestic cotton when prices fall below a set level, a policy designed to support the textile industry after the 2008 financial crisis swallowed export demand. The problem? Excess supply has made foreign cotton much cheaper than Chinese cotton. Ever conscious of dwindling profits, companies like Texhong have turned to cotton imports, which has forced the government to shell out $33 billion in the last two years to soak up the excess in domestic cotton, as Reuters reports. In 2012 alone, it stockpiled 89% of China-produced cotton (link in Chinese). The government’s price in blue, international cotton indices in red and green.Cottonchina.org

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In sweatshops, the ‘Brazilian dream’ goes awry

In sweatshops, the ‘Brazilian dream’ goes awry

Sun, Sep 1 2013

By Lucas Iberico-Lozada

SAO PAULO (Reuters) – When Margot Alarconciles woke up one morning last year and found her son sick with what appeared to be a cold, there was little she could do but wrap him in an extra blanket, walk down the hallway and start her workday: sewing clothes for up to 11 hours a day, six days a week. “I couldn’t leave my machine,” she said. “Without my job, we could not eat.” Her 5-year-old son’s condition deteriorated, and without proper care he soon died. Still grieving, Alarconciles now questions her decision to leave her native Bolivia for Brazil, where salaries can be many times higher but poor immigrants often must settle for work in sweatshops. Read more of this post

Insolvent town exposes gulf between EU dreams and reality

Insolvent town exposes gulf between EU dreams and reality

Sun, Sep 1 2013

By Luiza Ilie

ANINOASA, Romania (Reuters) – On an abandoned storefront, an old poster advertises one of the few career opportunities available in this Romanian town: naked webcam models wanted for Internet chatrooms. If joining the European Union was supposed to lift Romania out of poverty, it has yet to work in Aninoasa, a town of 4,800 people in the mountainous central region of Jiu Valley. Six years after Romania’s accession to the EU, not only is Aninoasa still poor – it has also become the first town in Romania to file for insolvency. Read more of this post

Asian Bonds Tumble Below Par in Capital Flight

Asian Bonds Tumble Below Par in Capital Flight: Credit Markets

Asia dollar-denominated bonds have dropped below par for the first time since 2011 as investors pull money out of the region amid concerns that growth is slowing and as currencies from the rupee to rupiah plunge. Average prices of company debentures in the region fell to 98.61 cents on the dollar on Aug. 22, the least since October 2011, Bank of America Merrill Lynch indexes show. Dollar bonds globally have held above 100 cents since September 2009. Both investment- and non-investment-grade debt in Asia were below par on Aug. 22. The last time that happened was in September 2008, when Lehman Brothers Holdings Inc. collapsed. Read more of this post

Plunging Currencies Plague Asian Firms; Weak Currencies Make it More Costly to Pay Foreign Debt

September 2, 2013, 12:15 a.m. ET

Plunging Currencies Plague Asian Firms

Weak Currencies Make it More Costly to Pay Foreign Debt

SEAN MCLAIN IN NEW DELHI And I MADE SENTANA IN JAKARTA

Companies across Asia are facing a debt-repayment crunch as plunging local currencies make it more costly to repay foreign loans, a situation that is exacerbating stresses on the region’s economies. Asian companies took out sizable foreign loans in recent years as the U.S. Federal Reserve kept interest rates low and printed money. For firms in nations like India and Indonesia, rates on U.S.-denominated debt were more attractive than local borrowing costs. Read more of this post

Ditch the stats: China retailers don’t buy signs of recovery

Ditch the stats: China retailers don’t buy signs of recovery

6:05pm EDT

By Anne Marie Roantree and Donny Kwok

HONG KONG (Reuters) – If things are really starting to look up for China’s economy, as a recent spate of better-than-expected government data seems to suggest, nobody appears to have told its biggest retailers. A Reuters review of first-half earnings showed that more than 20 Chinese companies selling everything from footwear to food were not convinced the economic slowdown had bottomed out, and neither were their traditionally thrifty customers. Read more of this post

‘Creative destruction inevitable for Thai growth’

‘Creative destruction inevitable for Thai growth’

THE NATION September 2, 2013 1:00 am

THAILAND HAS to face another era of creative destruction if has to maintain its competitiveness, Bank of Thailand economists said last week. Creative destruction – the shift of labour to high-growth industries and the death of some non-competitive businesses – is going on, but not at the same level in each industry and not in all industries. Their paper entitled “Thailand’s Quest for Economic Growth: From Factor Accumulation to Creative Destruction”, aims to show the economic environments that are supportive of the change or hinder the process. Read more of this post

TV confessions in China an unsettling new trend for executives

TV confessions in China an unsettling new trend for executives

Megha Rajagopalan 5 hours ago

By Megha Rajagopalan

BEIJING (Reuters) – A series of confessions by foreign and local executives on China’s state-controlled television has spurred anxiety among the business community about a trend that some lawyers say makes a mockery of due process. Confessions have long been part of China’s legal landscape, with petty criminals routinely admitting their guilt on television. But rarely have senior business figures been put on television in orange prison jumpsuits to confess. Read more of this post

Silver Lining in China’s Smog as It Puts Focus on Emissions?

August 31, 2013

Silver Lining in China’s Smog as It Puts Focus on Emissions

By CHRIS BUCKLEY

HONG KONG — Jiang Kejun may be one of the few Beijing residents who see a ray of hope in the smog engulfing the city. A researcher in a state energy institute, he is an outspoken advocate of swiftly cutting China’s greenhouse gas output, and he sayspublic anger about noxious air has jolted the government, which long dismissed pollution as the necessary price of prosperity. Read more of this post