China Developer’s 20% Loan After Bank Rebuff Signals Risk

China Developer’s 20% Loan After Bank Rebuff Signals Risk

China property developer Zhang Fuguo was rejected by banks for a loan to help keep building two office towers in the central city of Zhengzhou. So he turned to a manufacturer of water and gas meters. The 50 million yuan ($8.2 million) loan last month at a 20 percent interest rate will help Zhang pay workers and buy materials and was like “delivering coal on a snowy day,” he said. It was less so for one board member at lender Henan Suntront Technology Co. (300259), who abstained from approval on concern that Zhang’s company would fail to repay the debt. So-called entrusted loans, in which banks are “entrusted” with funds as middlemen between companies, increasingly grease the wheels of China’s economy, withstanding a crackdown on shadow banking this year and rising to a record 293.8 billion yuan in August. The increase was part of a surge in non-bank credit that may add to default risks threatening Premier Li Keqiang’s efforts to sustain 7 percent expansion this decade. Read more of this post

Researcher Puts China’s Local Government Debt at $3.3 Trillion

September 17, 2013, 6:46 a.m. ET

Researcher Puts China’s Local Government Debt at $3.3 Trillion

BEIJING—A Chinese government researcher estimates that China’s practices of borrowing heavily to fuel investment-driven growth have as much as doubled local government debt in just two years to around 20 trillion yuan ($3.3 trillion). The researcher, Liu Yuhui of the Chinese Academy of Social Sciences, said the current dependence on heavy borrowings to drive rapid economic growth is unsustainable. Read more of this post

Property Prices Keep the Locks on Myanmar; Office Space in Yangon the Most Expensive in Southeast Asian Region at $78 psm Vs Jakarta $24 psm Vs Manhattan $50 psm

Updated September 17, 2013, 7:57 p.m. ET

Property Prices Keep the Locks on Myanmar

Office Space in Yangon the Most Expensive in Region

SHIBANI MAHTANI

For years, international companies wanting to set up in Myanmar were stifled by Western sanctions or rebuffed by the country’s military government. Now, as the country opens up, global corporations are finding a new hurdle: real-estate prices. Top-quality office space in prime locations in Yangon, the commercial capital of the poorest country in Southeast Asia, is now the most expensive in the region at $78 a square meter ($7.33 a square foot) per month, according to research from real-estate firm Colliers International. By comparison, office rentals in a booming market like Jakarta are $24 a square meter. Even in Manhattan, the average asking rent is lower, at $49.95. Read more of this post

Vending machine market in China poised for explosive growth

Vending machine market in China poised for explosive growth

Staff Reporter

2013-09-18

In early 2011, Huang Heng, a 24 year old from central China’s Hubei province, decided to leave his job as a migrant worker and profit from the summer heat by installing six automated vending machines inside the factory of Great Wall Motors in Baoding in northern Hebei province. The outcome of his venture far exceeded his wildest expectations as he sold 200 beverage cans on the first day, jumping to 300 the following day. Two and a half years later Huang now owns 120 vending machines, costing 30,000-35,000 yuan (US$4.900- US$5,700) each, while his total investment tops 4 million yuan (US$653,400). “I can recoup my investment for a machine in one and a half years on average,” Huang told the Chinese-language Global Entrepreneur magazine. Read more of this post

Shanghai Free Trade Zone details to be delayed

Shanghai Free Trade Zone details to be delayed

Updated: 2013-09-17 23:48

By WEI TIAN in Shanghai ( China Daily) Read more of this post

Preferred Shares for China Banks Supported, but Direction from Gov’t Lacking; There is divergence, for example, over whether preferred shares should be classified as equity or bond investment for accounting purposes

09.17.2013 18:06

Preferred Shares for Banks Supported, but Direction from Gov’t Lacking

Financial institutions already preparing for launch, sources say, but are waiting for regulators to clear up range of issues

By staff reporters Wen Xiu, Zhang Yuzhe and Zheng Fei

(Beijing) – Despite overwhelming support for preferred shares in the banking industry, there is no consensus yet over how the financing instrument should be designed and regulated. Many banks have been preparing to launch preferred shares, but they need regulators to clear away legal ambiguity, sources from banks said. Read more of this post

History and the rise of Shandong set challenge for Japan’s car makers in China

History and the rise of Shandong set challenge for Japan’s car makers in China

5:26pm EDT

By Norihiko Shirouzu and Kazunori Takada

BEIJING/SHANGHAI (Reuters) – A year after their China sales were battered by protests in a territorial dispute, Japan’s big automakers are finding it tough to bounce back in the world’s biggest market. Demand for cars is rising fastest in provinces where anti-Japan sentiment historically runs deepest – a legacy of Japanese occupation around World War Two. In relatively more Japan-friendly parts of southern China such as Guangdong, Toyota Motor Corp (7203.T: Quote,Profile, Research, Stock Buzz), Nissan Motor Co (7201.T:Quote, Profile, Research, Stock Buzz) and Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) are returning to sales levels near those seen before a diplomatic row last September over a group of rocky, uninhabited islets in the East China Sea. Read more of this post

Chinese Internet Riled Up Over Detention of Corruption-Busting Microblogger

September 17, 2013, 9:40 PM

Chinese Internet Riled Up Over Detention of Corruption-Busting Microblogger

An image posted to Sina Weibo in Sept. 22 shows identified luxury watches worn by disgraced former Chinese official Yang Dacai. A number of Mr. Yang’s watches were identified with the help of microblogger Wu Dong, known online as Boss Hua.

China’s top social media site lit up Tuesday night following reports that one of its most celebrated corruption busters had been taken into police custody amid a renewed government effort to exert more control online. The official newspaper of China’s military, Liberation Daily, reported on its verified feed on Sina Corp.’s Weibo microblogging site that the microblogger known by the pen name “Boss Hua Has Lost His Golden Cudgel” was being interrogated by police in Beijing’s eastern Chaoyang district, though it did not say when or why he was taken away. A policeman answering phones in the Chaoyang district police station said he had no knowledge of the case. Calls to the station’s propaganda office rang unanswered Tuesday night. Read more of this post

China’s Bosses Size Up a Changing Labor Force

China’s Bosses Size Up a Changing Labor Force

By Christina Larson September 16, 2013

John Liu is the 31-year-old founder and owner of Harderson International, a small factory in southern China that applies paint and decals to ceramics and glass. His showroom includes samples of tinted perfume bottles made for Ralph Lauren and Kate Spade. A 2006 graduate of Wuhan University in central China, Liu is not much older than the 20-somethings and late teenagers who come to work on the assembly line. But generational cohorts in China are extremely compressed, and Liu sees a vast gap in expectations between himself and those a decade younger. “When I finished school, I felt I needed to find a good stable job quickly and earn money,” he says. “But living conditions in China have improved quickly. Young people now don’t have to work so hard to earn a living, and many have parents who will support them. … A lot of those born in the 1990s can’t stand this kind of repetitive work, so they choose to stay home or do very simple cashier work, even though it pays less.” The upshot is that, for a small factory, it’s “getting harder to find workers.” Read more of this post

China’s Shadow Bankers Seek Their Place in the Sun

September 17, 2013, 11:30 AM

China’s Shadow Bankers Seek Their Place in the Sun

China’s trust companies are feeling hurt and unloved. If you ask them, they’ll tell you their hard work has been a little misunderstood. “People say the trust firms are the ‘bad boys’ of the financial sector. I think it’s a misunderstanding,” said Li Zhenhua, secretary general of the China Wealth Management 50 Forum, a financial industry group. “There have been rarely any material defaults and we’ve been offering high returns with close-to-zero risk,” Mr. Li told a briefing on the trust sector’s track record this year. Read more of this post

‘Shanghai’ in Name Adds $45 Billion in Value Amid Bubble Concern

‘Shanghai’ in Name Adds $45 Billion in Value Amid Bubble Concern

Zhang Guangdi has watched the market value of his Shanghai International Port Group Co. (600018) shares jump 130 percent since Aug. 22, when China’s commerce ministry said the government approved a free-trade zone in Shanghai. The 67-year-old retiree says he’ll probably sell the 2,935 yuan ($480) stake when the zone, part of Premier Li Keqiang’s plan to liberalize yuan trading and relax government regulation, opens at the end of this month. The port operator is valued at 25 times profit, a 121 percent premium versus the Shanghai Composite Index (SHCOMP), according to data compiled by Bloomberg. Read more of this post

A Troubling Future for China’s Once-Raucous Internet

A Troubling Future for China’s Once-Raucous Internet

At some point after his Aug. 23 arrest for allegedly soliciting a prostitute, Chinese Internet celebrity Charles Xue began losing his 12 million followers on Sina Weibo, the country’s most popular microblogging site. The abandonment of Xue, a billionaire investor and online activist, has been subtle but unmistakable: At 12:36 p.m. on Monday in China, he had 12,054,441 followers; 10 seconds later, he had 12,054,435; after another 10 seconds, he was down to 12,054,430. In five minutes, 50 followers had cut their online ties. Read more of this post

China’s Choking Cities Means Job Cuts at Steel Town

China’s Choking Cities Means Job Cuts at Steel Town: Commodities

Zhang Fei sums up one of the headaches for China’s Premier Li Keqiang in his efforts to refocus the country’s economy. The 40 year-old contractor, who’d just earned 160 yuan ($26) for four hours work at a local steel mill, is leaning on his red motorcycle in grimy army fatigues and battered running shoes on Galaxy Street. That’s a 10-mile strip lined with forges, welders, tire repair and auto-painting shops, as well as restaurants, a school and a hospital. Read more of this post

China will strictly control the construction of new photovoltaic manufacturing projects to curb excess capacity in the world’s biggest maker of solar panels

China to Strictly Limit Building of More Photovoltaic Capacity

China will strictly control the construction of new photovoltaic manufacturing projects to curb excess capacity in the world’s biggest maker of solar panels. New solar manufacturing that “purely” expands capacity will be strictly banned, the Ministry of Industry and Information Technology said in a statement on its website today. Annual spending by companies for research and development and upgrading equipment combined must be no less than 3 percent of revenue and no less than 10 million yuan ($1.6 million), according to the statement. Chinese authorities have pledged to cut overcapacity in industries from steel to paper as policy makers seek to reduce the economy’s reliance on investments and exports. A global oversupply of solar panels led to a 20 percent plunge in average prices last year, according to data compiled by Bloomberg. The government’s previous backing for the solar industry has left at least one factory producing photovoltaic products in half of China’s 600 cities, according to the China Renewable Energy Society in Beijing. China’s solar industry now accounts for seven out of every 10 solar panels produced worldwide, according to data compiled by Bloomberg.

To contact Bloomberg News staff for this story: Sarah Chen in Beijing at schen514@bloomberg.net