1. MW: China manufacturing activity at 7-month low: HSBC
Chinese manufacturing is contracting as activity hits its weakest pace in seven months, according to HSBC's preliminary reading on the sector for February, released Thursday. The HSBC/Markit "flash" version of its monthly Purchasing Managers' Index dropped to 48.3 compared to a final reading of 49.5 in January. A reading below 50 suggests contraction, while one above 50 shows expansion. The
subindex for manufacturing output also hit a seven-month low, while the employment gauge showed a faster decrease than in the previous month. The new-orders component swung to a decrease as well, with new export orders also showing a decline, though at a slower pace than in January. HSBC chief China economist Hongbin Qu said the result reflected "renewed
destocking activities."
MW Back to Top
2. Bloomberg: Wall Street girds for China bribery probe as IPOs beckon
Wall Street hiring in Asia is coming under increasing scrutiny in the wake of a U.S.
criminal investigation into whether JPMorgan Chase & Co.
employed children of China’s elite in violation of anti-bribery laws. The Securities and Exchange Commission has asked several global investment banks for information about their hiring practices, according to four people familiar with the letters. The inquiry includes the leaders in international share sales by Chinese companies over the last five years: Goldman Sachs Group Inc.
and Morgan Stanley, according to two of those people, who asked not to be identified because the review is confidential. An examination of the banks’ hiring shows that Goldman Sachs and Morgan Stanley employ children of senior officials
at four of China’s biggest state-owned enterprises. These companies and their units also have given the investment banks significant business.
Bloomberg Back to Top
3. Bloomberg: PBOC plans to expand yuan band this year in ‘orderly’ manner
The People’s Bank of China plans to expand the yuan’s trading band this year in an “orderly” manner as it moves toward a more convertible currency. The PBOC will also continue to broaden cross-border usage of the yuan, it said in a statement on its website yesterday after a Feb. 17-18 conference. PBOC Governor Zhou Xiaochuan had said in November that the central bank would broaden the band, without giving a timeframe. The spot rate in Shanghai is currently allowed to fluctuate a maximum 1 percent on either side of a daily fixing set by the central bank. The trading band was last widened in April 2012 from 0.5 percent, and before that from 0.3 percent in May 2007. “Yuan band widening is imperative as the government is opening up its capital markets,” said Banny Lam, Hong Kong-based co-head of research at Agricultural Bank of China International Securities Ltd., a unit of the nation’s third-largest lender. “The band could be broadened as soon as this quarter to as much as 2 percent.”
Bloomberg Back to Top
4. Reuters: UK, China discuss setting up RMB clearing bank in London-Osborne
The British and Chinese governments are in active discussions about setting up a
renminbi clearing bank in London, British finance minister George Osborne said on Thursday. At present,
London mainly relies on Hong Kong's offshore yuan infrastructure. Standard Chartered Bank also cooperated with Agricultural Bank of China in December to provide yuan clearing services in the UK.
Reuters Back to Top
5. Reuters: China military to tighten building controls in anti-graft drive
China's military said on Thursday it would tighten controls over the construction and sale of buildings to ensure proper
accounting and transparency
for all financial transactions as part of a wider government anti-corruption drive. China launched a crackdown on rampant graft in the military in the late 1990s, banning the People's Liberation Army from engaging in business. Corruption has worsened in recent
years however, due to a lack of transparency and checks and balances. The latest
rules, printed on the front page of the official PLA Daily, mandate that money from the sale of military buildings must be handed over to the military fully and in a timely manner. New building work can only be carried out according to pre-approved plans and must not stray from them in scope or size, state the rules, which go into effect on March 1.
Reuters Back to Top
6. MW: IMF report warns on emerging-markets problems
The International Monetary Fund on Wednesday issued its most detailed warning about the financial problems arising in emerging markets this year, saying some countries need to tighten monetary policy and make structural economic changes. While the IMF noted a rise of harmful inflation in developing countries, it also said Europe is at risk for the opposite problem--deflation, in which prices fall in a spiral that can sap consumption and growth. The IMF’s overall forecasts for global economic growth this year remained broadly the same, it said in a report aimed at a meeting of the Group of 20 industrial and developing nations taking place later this week in Australia. The Washington-based global lending organization took aim directly at two developing economies in the G-20--India and Turkey.
MW Back to Top
7. Reuters: China investigating Qualcomm's pricing
China’s anti-monopoly regulator said on Wednesday that the American chip maker Qualcomm was suspected of overcharging and abusing its market position, allegations that could lead to record fines of more than $1 billion. The regulator, the National Development and Reform Commission, which is also the government’s main economic planning body, said it was in talks with another American technology company, InterDigital, which develops patent technologies for wireless devices and networks, about a possible settlement to a separate anti-monopoly investigation. Foreign companies, including Apple and GlaxoSmithKline, are facing tougher scrutiny as China targets key industries to protect consumers from bloated prices and second-rate products. In its first public statements about the Qualcomm investigation, the commission said it had begun making
enquiries after receiving complaints that the chip maker was charging higher prices in China than it did in other countries.
Reuters Back to Top
8. WSJ: China probes Qualcomm, InterDigital over monopoly concerns
Investigation comes amid efforts by Beijing to build up domestic chip industry.
WSJ Back to Top
9. CBS: American flags made in China now banned in U.S. military
Soldiers carry them into battle, fly them high over foreign bases, and triumphantly carry them in processions, but those stars and stripes, until now, have often been made in China. That irony spurred North Bay Congressman Mike Thompson to write legislation requiring flags purchased by the Department of Defense be 100 percent “Made in America,” reports CBS San Francisco. That legislation is now law, signed as part of the 2014 omnibus appropriations bill. “I thought it was appalling our Department of Defense would have flags made in other countries,” Thompson said. “But it’s also important because we need to be making more in America.” While the military flag rule passed, a similar bill requiring all government-purchased flags be made in the U.S.
has repeatedly failed. The change isn’t cheap. Chinese-made flags cost significantly less than all-American ones.
CBS Back to Top
10. CD: FTZ launches cross-border yuan payment
The China (Shanghai) Free Trade Pilot Zone launched cross-border yuan payment services on Tuesday under the guidance of the People's Bank of China, marking a milestone in the expansion of the international use of the yuan, said analysts. Five third-party payment service providers have received approval to handle
renminbi-denominated cross-border payments in the zone, the central bank's Shanghai head office said. To carry out cross-border yuan payments, each of the five payment service providers will open a cross-border
renminbi account at one of the Shanghai branches of five commercial banks. They are Industrial and Commercial Bank of China Ltd, Bank of China Ltd, China Construction Bank Corp, China Merchants Bank Co Ltd and China Minsheng Banking Corp Ltd. People's Bank of China Shanghai head office had previously issued guidance to direct financial institutions to carry out cross-border
renminbi payment services.
CD Back to Top
11. Xinhua: China vows tougher measures on overcapacity
China's Industry and Information Technology Ministry (MIIT) on Tuesday pledged tougher measures to cut
overcapacity in bloated sectors as the problem has become a severe drag on economic growth. China will ban new projects in steel, cement, electrolytic aluminum, flat glass and shipbuilding industries before 2017, while gradually eliminating existing projects that were found to be below standards, MIIT vice minister Mao Weiming revealed at a press conference. While placing stricter standards in environmental protection, energy efficiency and safety, China will also encourage mergers and acquisitions in industries to crowd out outdated capacities, Mao said. The government has been at pains to digest production gluts from an investment boom and generous subsidies in the past few years that
saw producers in "favored" sectors expand rapidly with little regard to real market demand. As China's economy is slowing down,
overcapacity is posing an increasing challenge for policymakers to balance growth and reforms. The country's economy grew 7.7 percent in 2013, overshooting the government target of 7.5 percent. The growth target for 2014 will be announced in March, which analysts largely expect to be kept at 7.5 percent.
Xinhua Back to Top
12. CD: Shanghai developer to build big in LA
After unveiling its $2 billion investment plan in London last month, Shanghai-based Greenland Group announced new details of its $1 billion Metropolis Los Angeles project on Feb 14. The proposed Metropolis Los Angeles project is expected to be one of the largest mixed-use developments on the West Coast and to reshape the Downtown Los Angeles urban landscape.
Metropolis is the Greenland Group’s first investment in the US. Phase one of Metropolis is expected to include the development of a four-star luxury hotel and a residential tower with units ranging from studios to two bedrooms. The hotel will have 19 floors with 350 rooms, and the residential tower will be 38 stories high. Construction is slated to start early this year and be completed by mid 2016. "Founded in Shanghai 22 years ago, Greenland Group has since expanded to more than 80 cities across China and is known as a leading developer of high-quality, high-rise residential and commercial buildings and urban complexes," said Zhang Yuliang, chairman and president of Greenland Group. "International expansion — particularly in the US market — is a strategic priority for us," Zhang added. "We are making significant investments in the US and as one of the iconic cities of the world, Los Angeles is an important place for us to be."
CD Back to Top
13. Project Syndicate - Ian Bremmer and David Gordon: China’s risky reforms
When it comes to economic reform, China’s leaders no longer believe that time is on their side. With a new sense of urgency, President Xi Jinping and his inner circle are attempting one of the most ambitious economic and social-policy reform plans in history. But in any authoritarian country, change creates risk. Consider the scale of the proposed plans. For China to reach the next stage of its development, a much larger share of Chinese-made products now destined for Europe, America, and Japan must be sold to consumers
inside China. This shift will require a big increase in local purchasing power – and, therefore, an enormous transfer of wealth from large domestic companies to Chinese households. In addition, China’s leaders appear to be on the verge of approving 12 new regional free-trade zones, which will drive competition and efficiency on a new scale in many economic sectors. They also recognize the need for further liberalization of the country’s financial system, a move that will require tolerance for outright defaults on bad loans – and the anxiety and anger that comes with them. In short, China is on the brink of large, necessary, and dangerous transformations that promise to change the country for the better – or make everything, including regional stability, much worse. The entire world has a large stake in what happens next.
Project Syndicate Back to Top
14. BI: Jim Rogers tells us what everyone keeps getting wrong about China
Concerns about a Chinese hard-landing set off by Beijing's efforts to deflate the credit bubble are making headlines again. GDP growth slowed to 7.7% in 2013, the lowest level in 14 years. And the slowdown has played a part in the emerging
markets rout we have seen recently. But recent trade and lending data, and Lunar New Year sales have come in better than expected. We reached out to Jim Rogers, chairman of Rogers Holdings
, to get his thoughts on the slowdown and on what everyone is getting wrong about China. Rogers told us that we shouldn't be very concerned about the slowdown in the Chinese economy. However, he does worry about China's debt at the local levels. He also took issue with the naysayers calling for a major crash.
BI Back to Top
15. FT - David Pilling: Washington regrets the Shinzo Abe it wished for
The US fears that Japan’s departure from postwar pacifism will provoke Beijing.
FT Back to Top
