"Sinocism is the Presidential Daily Brief for China hands"- Evan Osnos, New Yorker Correspondent and National Book Award Winner
Thanks for reading. The best way to see this daily post is to subscribe by email, especially if you are in China, as Sinocism is blocked by the GFW. You can also follow me on Twitter @niubi or Sina Weibo @billbishop.
China’s latest batch of economic data was unsurprisingly bad. Xinhua reports that China’s industrial output and investment continue to slow, Bloomberg writes that China’s inflation accelerates in blow to easing prospects and Reuters discusses the impact of a global slowdown in China’s economic dilemma: data shows woes lie beyond its borders.
The Financial Times reports that the downturn in China is spreading to key sectors:
Financial Times analysis shows that a third of publicly listed Chinese companies suffered cash outflows in the quarter to the end of June as the combined effect of the slowdown in exports, a build-up in stocks and tightening local government finances begins to bite…Increasing numbers of hedge funds and analysts are looking closely at cash flow data as sustained poor cash flows would have a big impact on companies’ ability to service their debt and hence on the health of China’s banking sector.
But is the news all bad? In China’s economy to see mild pickup: expert Xinhua writes that:
China’s economic growth is expected to see a mild pickup at the end of this year that will provide room for structural adjustments, Ba Shusong, a researcher with the State Council Development Research Center, said Sunday at the ongoing 16th International Fair for Investment and Trade being held in southeast China’s city of Xiamen.Ba said that with China’s pro-growth policies gradually taking effect, the economy has bottomed out and will see mild expansion this year and next year.
Nomura’s Zhang Zhiwei also sees the possibility for an upturn, according to Reuters:
Those data points, together with statistics showing that annual inflation was 2 percent in August – well below the government’s 4 percent target for the year – suggest to Zhang Zhiwei, chief China economist at Nomura in Hong Kong, that Beijing will take more policy steps to boost growth.
“Leading indicators suggest both property and infrastructure investment will likely pick up in coming months. This reinforces our view that total investment growth will pick up soon and GDP growth will rebound above 8 percent in Q4,” Zhang said.
A surge in new project investment in August back his view. Zhang says the annual rate growth was 33 percent in August versus 25 percent in July and he expects it to top 40 percent in coming months as China approves more infrastructure spending.
News of a new stimulus drove China’s stocks to their biggest gain in eight months on Friday. We also learned Friday that China’s securities regulators are taking measures to stabilize the stock market (证监系统下达维稳令_投资头条_财经国家新闻网):
The China Securities Regulatory Commission is taking steps to stabilize the country’s stock market, including holding a videoconference with the representatives of local securities regulators to identify the risks in the capital market, Shanghai’s Oriental Morning Post reports… On each of the two previous occasions in 2008 and 2009, when similar market stability videoconferences were held, the stock market reportedly staged rebounds.
Talking up A shares may be official policy now–罕见的价值，罕见的上涨！_21世纪网. A researcher at Zhejiang Securities appears to have gotten the message, arguing that China shares are on the verge of a new bull market and that China’s economy is on the cusp of a recovery– 浙商证券研究所所长邓宏光： 目前很可能是新一轮牛市的起点一财网.
So are there “green shoots” in China, other than in my dinner last night?
Putting an end to political uncertainty would help the economy. Rumors are swirling about Xi Jinping after he cancelled several meetings last week and has not appeared in official media since September 1. I am very skeptical of the accuracy and sources of the worst rumor, given security in Beijing, the current travels of top leaders Hu Jintao, Wu Bangguo and Wen Jiabao as well as the strong stock market performance Friday. The more likely story is the one about an injury while swimming, though of course anything is possible. But in Beijing’s current supercharged political environment, the sooner Xi reappears the better.
Readers in China should expect long lines at gas stations today as the Chinese press is reporting the government is likely to raise the price of gasoline after midnight tonight.
On to today’s links:
BUSINESS AND ECONOMY
Chinese Banks Make It Easy to Extend Loans – WSJ.com – of course. not sure how anyone could have expected that important firms would have a problem extending// Greentown China Holdings Ltd. has a problem. The property developer has to repay nearly $3 billion in debt in the next 12 months, but it had only $1.2 billion in cash and bank deposits as of the end of June, according to its latest regulatory filing. To stay afloat, Greentown, based in the wealthy eastern province of Zhejiang, is counting on its banks rolling over loans. There is no problem for us to get the loan extensions,” said Simon Fung, Greentown’s chief financial officer
浙江诸暨互保危机升级：多名企业家被官方治罪|浙江|诸暨|危机_21世纪网 – 21st century business herald on loan guarantee mess in zhuji, zhejiang, expect this to show up in bearish commentary somewhere as a scary example of problems in the shadow banking system. but first, how many of you have heard of zhuji?
信托危险：行业泡沫却越吹越大_管理滚动新闻_新浪财经_新浪网 – First Finance Weekly warning of risks of growing bubble in trust products
MPAA getting involved in Hollywood’s dispute with China – latimes.com –did US/Hollywood not negotiate the implementation details? this is sadly predictable. if the negotiators did not see this coming they should be polishing their resumes// Now for the first time, Hollywood’s trade organization in Washington is speaking out about the growing tensions from China Film Group’s recent moves to limit the box- office revenue of U.S. movies. The state-owned company has blocked imported movies from the country for most of the summer in an attempt to drive down ticket sales for imported films, opened the animated movies “The Lorax” and “Ice Age: Continental Drift” and the superhero pictures “The Dark Knight Rises” and “The Amazing Spider-Man” on the same dates.
Population and the challenge of Chinese growth | East Asia Forum – Beneath the surface of increase in labour costs, a decrease in investment profitability and slow-down in the improvement of productivity, lies the problem of a reduction of China’s potential growth rate. The potential annual GDP growth rate has fallen from 9.8 per cent in 1995–2009, to 7.2 per cent in 2011–15 (under the Twelfth Five-Year Plan), and is expected to be 6.1 per cent in 2016–20 (under the Thirteenth Five-Year Plan). There are reasons to be optimistic about China’s future growth: the potential growth rate can be lifted by creating a better environment for supply of the production factors and a lift in productivity. For example, hukou reform aiming at accepting migrant workers as urban residents with full access to public services will expand and stabilise labour supply; education deepening will enlarge the contribution of human capital to economic growth; eliminating obstacles preventing factors of production from moving among regions, sectors and enterprises will bring increased efficiency in resources reallocation.
US logistics firms Fedex and UPS gain broader access – Globaltimes.cn – The State Postal Bureau (SPB) announced Friday that two US-based multinational logistics companies, Federal Express Corp (FedEx) and United Parcel Service of America Inc (UPS), have been granted access to China’s domestic express delivery market, in a move to fulfill the country’s WTO obligations…”However, the entry of foreign firms into the sector will not pose a threat to the domestic logistics companies in a short term, as FedEx and UPS mainly operate medium- and high-end express delivery, but the market is likely to continue to be dominated by low-end firms, which have price advantages, for at least five to 10 years,” Xu told the Global Times.
土地“权变”•农村土地“空心化”之痛 深度报道——经济参考网 – special report from economic reference news on the “emptification” of villages as a result of urbanization and industrialization…lots of upside for china if it can figure out and enact seneible rural land reform//
开征房产税的前提是更多公开透明-中国金融新闻网 – a must read on what needs to happen before local government can start imposing a property tax. fairness, citizen buy in before launch, transparency in official assets and use of the proceeds//From Chinese Financial News. . property rights complicate things in a single party state…
China’s jet set grounded by lack of pilots, paperwork | Reuters – Bombardier Inc (BBDb.TO), the world’s No. 3 aircraft maker, thinks Chinese executive jet buyers will take delivery of 2,400 new planes in the next 20 years. All China needs now is pilots to fly them, mechanics to fix them, and airports to land them.
About – Tripod Advisors – David Schlesinger brings three decades of media and risk analysis skills to bear on strategic and business issues.
POLITICS
人民日报-深入推进行政体制改革（前沿关注） ——我国行政体制改革近10年的回顾与前瞻 – People’s Daily looks at 10 years of administrative reform, lists 5 areas for future reform
Fei Chang Dao: The March 2012 Ferrari Crash: Chronicling the Censorship –
AIDS activism: Bad blood | The Economist– The man who is preparing to take over as China’s prime minister, Li Keqiang, has particular reason to prefer that Henan’s AIDS crisis is dealt with quietly. Mr Li was the province’s governor and then party chief between 1998 and 2004. Although the blood-selling infections mostly occurred before he arrived, Mr Li, who is now deputy prime minister, is widely blamed by activists in Henan for maintaining tight controls on media coverage of the calamity and for the harassment of whistle-blowers by police…Mr Li is generally viewed as one of China’s more reform-minded leaders (including in health care, which he oversees). But protests such as the one in Zhengzhou are likely to prove a recurring embarrassment to him after he takes over as prime minister next March
FOREIGN AFFAIRS
Senkaku owner cuts Ishihara out of deal | The Japan Times Online – The owner of three of the Senkaku Islands has informed Tokyo Gov. Shintaro Ishihara that he has agreed to sell them to the central government, sources said.
Tokyo ‘must realize this is serious’ |Politics |chinadaily.com.cn – President Hu Jintao urged the Japanese government on Sunday to realize the seriousness of the tension over the Diaoyu Islands and stop plans for “nationalization”, saying Beijing will not recognize the “purchase” of the islands by the Japanese under any circumstances.
China’s top legislator starts visit to Iran for closer ties – Xinhua | English.news.cn – Wu Bangguo (C, front), chairman of the Standing Committee of China’s National People’s Congress, arrives in Tehran, Iran, on Sept. 9, 2012 for a four-day official goodwill visit to Iran
China’s rise isn’t squeezing Europe as much as you’d think – a new IMF study suggests that industries in Europe are, if anything, more vulnerable than those in the United States…The most dramatic results for GDP and prices are in Germany, a country whose manufacturing industry has been praised as a model for the United States. But if these results are correct, then a more productive China could put at least the machinery manufacturing sector in Germany in serious trouble, with 4 percent of workers leaving the industry
Mural draws fire from China – Citing “strong resentment from the local Chinese community,” the Chinese government has asked the city of Corvallis to force a Taiwanese-American businessman to remove a mural advocating independence for Taiwan and Tibet from his downtown building. But city leaders say the mural violates no laws and its political message is protected under the U.S. Constitution.
Some Ga. Schools Make Mandarin Mandatory : NPR – Bibb County’s Haitian-born superintendent Romain Dallemand came into the job last year with a bag of changes he calls “The Macon Miracle.” There are now longer schools days, year-round instruction, and one mandate nobody saw coming: Mandarin Chinese for every student, pre-K through 12th grade.
TECH AND MEDIA
Carlyle-Focus Media Buyout Doubted as Puts Jump: China Overnight – Bloomberg – A growing number of overseas listed Chinese companies are seeking to withdraw from the U.S. market as their valuation shrinks after Block and other short sellers alleged financial irregularities at companies including Sino-Forest Corp. and China MediaExpress Holdings Inc. Since 2011, 33 Chinese companies have announced buyout and privatization deals, and 15 completed the transaction, according to Roth Capital. Three deals were terminated
Jack Ma Explains 3 Key Things in Alibaba’s Future – Ma says that banks should support small- and medium-sized businesses (SMEs). But the banks can’t, for whatever reasons, Ma joked. So Alibaba will fit into this role, acting as a micro-financing platform to support budding e-commerce entrepreneurs. The company is doing it already. For merchants on its platforms and virtual malls, there’s no need for early revenue, no need for a contract, or preferential contacts (a common Chinese biz issue). They’re kickstarter loans
ENERGY AND ENVIRONMENT
China pushes wind power, but no quick payoff for producers | Reuters – China will order its dominant electricity distributors to source up to 15 percent of their power from renewable energy including wind, but slow compliance means it may be years before the country’s struggling wind power developers benefit, industry executives say.
China to subsidize energy-saving desktops, air conditioners – Xinhua | English.news.cn – how will steps to improve efficiency affect the “electricity as proxy for GDP” indicator?// The country will earmark 14 billion yuan (2.22 billion U.S. dollars) in subsidies to encourage the purchases of six types of energy-saving products, including desktop computers, air-conditioners, fans, water pumps, compressors and transformers…In 2011, the power consumption of fans, pumps, compressors and transformers accounted for 40 percent of the country’s total, but they were only 80 percent as efficient as those in developed countries.
Seagull Reference: The Other Side of the Coin in the Golden Rice Scandal – still waiting for western press to pick up the genetically modified rice experiment scandal// The experiment violated Chinese laws and regulations. China requires all gene-related human research approved by provincial-level Department of Agriculture. In this case, Department of Agriculture of Hunan Province flatly denied it ever received an application for the experiment, nor did they approve any other experiment in its nature.
FOOD AND TRAVEL
蔬菜之乡：八成财政收入来自污染工业_中国经营网_中国经营报 – shouguang, shandong is known as China’s “vegetable county” but industrial pollution and massive fertilizer use may spark another round of food worries
A New View of the Great Wall: Through a Scuba Mask – WSJ.com – Exploring the Great Wall in the Panjiakou reservoir requires perseverance, good eyesight and a diving mask. After a deadly earthquake in 1976, China built the reservoir by flooding battered villages and a half-mile section of the Great Wall. These days, speed boats and rickety cruise ships ply the reservoir, which has become a haunt for Chinese who want to learn to dive and for foreign divers looking for a fresh adventure.
BOOKS
什么改变中国:中国改革的全景和路径/张维迎-图书-亚马逊 – Zhang Weiying’s latest book, published in July by CITIC Press// 《什么改变中国:中国改革的全景和路径》内容简介：全球经济前景不明，中国改革受挫，我们该何去何从？谁能指点迷津？《什么改变中国:中国改革的全景和路径》聚焦于中国的市场经济改革和企业改革，如何从强盗逻辑走向市场逻辑，应对中国面临的挑战与困境。《什么改变中国:中国改革的全景和路径》作者张维迎教授从三个方面叙述了这个主题，一是回顾了中国获得成功的路径和方法，二是阐述为什么要搞市场经济改革以及怎么改革，三是对于未来改革方向的预测和判断。
第一访谈之张维迎：理念改变中国-搜狐财经 – august sohu interview with zhang weiying, getting lots of play. recent western media reports that zhang muzzled/censored overdone//
Thanks for reading. The best way to see this daily post is to subscribe by email, especially if you are in China, as Sinocism is blocked by the GFW. You can also follow me on Twitter @niubi or Sina Weibo @billbishop.