Must Read
USCBC in the News
9. Politico Pro: Business groups fear backlash over China cyber measure
Chinese News Sources
Notables
13. WSJ: Apple CEO signals company plans to broaden alliance with China Mobile
14. WSJ: Tesla plans to add charging network in China
15. Bloomberg Businessweek: More Chinese luxury shoppers prefer to buy overseas
16. WSJ - Randall Stephenson Oped: A business short list for growth
17. WP - Harold Myerson: Free trade and the loss of U.S. jobs
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Must Read
1. Reuters: China grants gold import licenses to foreign banks for first time
China has granted licenses to import gold to two foreign banks for the first time, sources said, as moves to open the world's biggest physical bullion market gather pace. Allowing more banks to import gold could increase the supply of the metal into the country, easing local prices that are higher than in most Asian nations. China's gold imports more than doubled last year to over 1,000 tonnes - ousting India as the biggest buyer - as demand soared to unprecedented levels due to the first drop in international prices in 12 years. ANZ and HSBC were awarded import licenses late last year, two sources with direct knowledge of the matter told Reuters. Other trading sources said China Everbright Bank has also received approval to join the nine local banks already allowed to ship gold
into China. Beijing strictly controls how much the
banks import through a quota system.
Reuters Back to Top
2. Bloomberg: China’s credit growth slows as foreign reserves jump
China’s broadest measure of new credit fell in December while money-supply growth and new yuan loans trailed estimates amid a cash crunch and government efforts to curb speculative lending. Aggregate financing was 1.23 trillion yuan ($204 billion), the People’s Bank of China said today in Beijing. That compared with 1.63 trillion
yuan a year earlier. China’s foreign-exchange reserves, the world’s largest, rose to a record $3.82 trillion at the end of December from September’s $3.66 trillion.
Bloomberg Back to Top
3. Reuters: China December bank lending, money supply growth miss forecasts
China's new bank lending slowed more than expected in December while
growth of broad money supply also eased, suggesting the central bank's efforts to tap the brakes on credit expansion to contain debt levels is gaining traction. Chinese banks made 482.5 billion yuan ($79.9 billion) worth of new yuan loans in December, lower than a forecast of 600 billion yuan and lower than the previous month's 624.6 billion yuan, central bank data showed on Wednesday. The broad M2 money supply rose 13.6 percent last month from a year earlier, the People's Bank of China said, missing the forecast in a Reuters poll of a 13.8 percent rise and was below a 14.2 percent rise in November. Outstanding yuan loans rose 14.1 percent from a year earlier versus forecasts for growth of 14.3 percent. "The slowing M2 growth in December showed central bank's tightening measures had started to bite," said Jiang Chao, economist at Haitong Securities in Shanghai.
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4. WSJ: Regulators at odds on reining in China's shadow lending
China's effort to rein in runaway credit is being hampered by infighting between the central bank and the nation's banking regulator, say officials at both institutions, with the two agencies sparring especially over how hard to press so-called shadow bankers. The officials say that the People's Bank of China, concerned about banks finding ways to move loans off their books, has been frustrated at what it sees as the unwillingness of the China Banking Regulatory Commission to toughen regulation of banks' dealings with shadow lenders, an array of formal and informal institutions creating credit outside the formal bank channels.
WSJ Back to Top
5. Bloomberg: China industrial plants breach emissions standards, study finds
Steel factories and thermal power plants in eastern China that provide real-time emissions data frequently exceed national standards, a study led by an environmental group in Beijing said yesterday. Companies from those industries based in the provinces of Shandong and Hebei were in “serious breach” of discharge standards even during periods of severe air pollution, the report by the Beijing-based Institute of Public & Environmental Affairs said. The IPE studied data from industrial facilities in three eastern provinces that have begun releasing real-time information since July as part of a project initiated by China’s environment ministry. More than 600 million people were affected by a “globally unprecedented” outbreak of smog in China that started last January and spread across dozens of provinces, lasting several months, Ma Jun, the Beijing-based founder and director of IPE, told reporters in the Chinese capital.
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6. WSJ: Republicans block shift in IMF power to emerging market nations
Obama sought greater influence
for China, Brazil and India in emergency lender's operations.
WSJ Back to Top
7. FT: World Bank warns of capital flow risk to emerging markets
An abrupt unwinding of central bank support for advanced world economies could cause capital flows to emerging markets to contract by as much as 80 per cent, inflicting significant economic damage and throwing some countries into crises, the World Bank has warned. Capital flows into emerging markets are influenced more by global than domestic forces, leaving them vulnerable to disorderly changes in policy by the US Federal Reserve, concludes a study by World Bank economists. It highlights the risk of a repeat on a larger scale of last year’s turmoil in emerging markets after Ben Bernanke, Federal Reserve chairman, first hinted in May at plans to “taper” the central bank’s asset purchase
programme. The effects “are likely to be concentrated among middle-income countries with deeper financial markets and domestic imbalances”, it says. Although the World Bank’s “baseline” scenario is for a smooth adjustment that would lead only to a “modest retrenchment” in emerging market capital inflows, it warns that last year’s experience and the unprecedented nature of central banks’ policies mean long-term interest rates in the world’s biggest economies are prone to a sudden rise – by as much as 200 basis points
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8. Reuters: Communist Party expels former executive at China Mobile parent
A former senior executive at China Mobile Ltd's state-owned parent has been expelled from the Communist Party amid a company-wide probe into suspected corruption. China's new leadership has made fighting graft a priority to assuage rising public anger over the scale of corruption in the world's second-biggest economy
.Xu Long, who was general manager of China Mobile Communications Corp's Guangdong office, was expelled from the party due to "severe discipline violations," according to a statement posted on Wednesday on the website of Guangdong province's disciplinary committee. "During Xu Long's posting at China Mobile Communications Corp's Guangdong office, he took advantage of his senior position to seek profits for others," the statement said. Xu "took multiple bribes that involved an enormous amount of money," it said. He
will sent to court and his illegal income would be seized, the statement added. China Mobile, the world's biggest mobile operator by subscribers, said in May its parent was beefing up its internal supervision after a government audit highlighted problems in accounting practices and internal management.
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USCBC in the News
9. Politico Pro: Business groups fear backlash over China cyber measure
U.S.
business groups on Tuesday said a measure to reduce the risk of
cyberattacks from China is an improvement over a similar provision passed last year, but they remain worried it could backfire on U.S.
companies doing business in the world’s second-largest economy. The measure is part of a $1.1 trillion spending bill that House and Senate negotiators rolled out on Monday and is the work of Rep. Frank Wolf (R-
Va.), a longtime critic of
China who also is the chairman of the House Appropriations subcommittee that oversees the Commerce Department, Justice Department and other agencies, including NASA.“It’s a compromise I think all sides can live with. It really should be adopted quite frankly by all the federal agencies. It’s a
common-sense solution,” Wolf said in an interview, brushing off concerns the modified measure could still cause problems for U.S.
companies. “We’ve got to stop being a wimp.” The U
.S
.-China Business Council, which represents U.S.
companies doing business in China, strongly objected to
Wolf’s provision in the 2013 spending bill. While acknowledging
cybersecurity was a serious concern, the group said it was inappropriate for Congress to single out any country and expressed concern, which they say has since been borne out, that China could retaliate against U.S.
firms. The White House also criticized the measure, which National Security Council spokeswoman Caitlin Hayden told The Hill “could prove highly disruptive without significantly advancing the affected agencies’ cybersecurity.” The latest version of the measure addresses some of that criticism by clarifying that Commerce, Justice, NASA and NSF only have to do a risk assessment for high-impact or moderate-impact information systems, as defined by the National Institute of Standards and Technology. It still mentions China by name, but softens the focus somewhat by saying the agencies should examine all high- and moderate-impact information systems, “including but not limited to” those that may be owned, directed or subsidized by the People’s Republic of China. The new language “goes partway” toward addressing the U
.S
.-China Business Council’s concerns and “
certainly seems to confirm our view that the security of U.S.
government IT systems is not simply a ‘China-specific’ or ‘China-only’ issue,” John Frisbie, president of the U
.S
.-China Business Council, said in a statement. But Frisbie added: “We think the modification should go further and simply remove the now gratuitous references to product from China; if the provision applies to the defined products regardless of origin, just leave it at that. Why specify China, when it is unnecessary, yet invites China to pass rules singling out U.S.
companies?” A second U.S.
business official, who asked not to be identified, agreed the new provision is better than the old. “But it still makes clear that China is a focus and
… will continue to be used by China as an excuse to restrict procurement opportunities for American ICT [information and computer technology] companies in China,” he said. But Frank, who is retiring this year after more than three decades in Congress, said members of the U
.S
.-China Business Council should be more worried about the potential threat they face
from China. “My committee funds the FBI. I have seen what the Chinese are doing,” Wolf said. “Now, I can’t say, but almost every member of the U
.S
.-China Business Council, probably every member, but almost every member has been the subject of a
cyberattack by the Chinese. So the very people they are defending are spying against them.”
Politico Pro Back to Top
Chinese News Sources
10. Xinhua: Drastic medicine needed in graft fight, Xi says
President Xi Jinping said yesterday that the fight against corruption was grim and
complicated but, nevertheless, it had to be solved quickly with “drastic medicine.” Xi, in remarks to the Party’s anti-graft watchdog, stressed the importance he has placed on tackling official abuse, which is a major source of public discontent. Xi has made fighting pervasive graft a central theme since becoming president last March and has warned that corruption threatens the Party’s survival. Xi said: “While we affirm our achievements, we must also see that the fertile ground for corruption still exists. “The anti-corruption situation remains grim and complicated, the unhealthy influence of the corruption problem is malignant and needs to be solved quickly.”
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11. SD: Foreign banks gloomy about profitability
Foreign banks on China’s mainland do not expect to post a significant improvement in their profitability last year as a liquidity squeeze raised funding costs and the country’s economic
rebalancing deteriorated asset quality, PricewaterhouseCoopers said yesterday. “
Macro-economic changes in 2013 increased pressure on profitability of foreign banks on China’s mainland,” Michael Hu, financial services assurance partner of PwC for China, told Shanghai Daily. “The credit squeeze last year increased banks’ funding costs. In addition, China’s economic
rebalance that phases out obsolete capacity will deteriorate banks’ asset quality,” Hu said. The foreign banks were optimistic about the development of China-related business in a global or regional perspective, such as cross-border yuan business which is growing faster for them than their Chinese peers, Hu added.
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12. Caixin: Breaking new ground
Legend Holdings co-founder Liu Chuanzhi explains his company's surprising decision to go into agriculture and controversial comments he made about businessmen and politics.
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Notables
13. WSJ: Apple CEO signals company plans to broaden alliance with China Mobile
Tim Cook expects deal with China Mobile will boost sales in
world's largest smartphone market.
WSJ Back to Top
14. WSJ: Tesla plans to add charging network in China
Electric car maker sold nearly 7,000 cars
world-wide in
final months of 2013.
WSJ Back to Top
15. Bloomberg Businessweek: More Chinese luxury shoppers prefer to buy overseas
Not all luxury brands have fared equally under Chinese President Xi Jinping’s
crackdown on graft and conspicuous flaunting of cadre wealth. While fancy watch sales dipped 11 percent in the year since a Rolex-wearing Chinese official nicknamed “Brother Watch” was ousted from his job in September 2012, sales of luxury apparel and cosmetics both jumped 10 percent in 2013, according to consulting firm Bain & Co. Among fashion labels prominent in China, Burberry (BRBY
:LN) was most popular last year with mainland consumers, according to a new survey, “Luxury Purchase Power,” by Chinese news site IFeng. The next most popular brands, in order, were Chanel, Gucci (KER
:FP), Louis Vuitton (MC
:FP), Prada (1913:HK), and Dior (CDI
:FP). (In November, Burberry appealed a Chinese regulators’ decision to limit its trademark on the company’s iconic plaid pattern in China.) Last year overall luxury spending in mainland China rose just 2 percent, down from 7 percent in 2012, according to Bain. However, that slowdown doesn’t fully reflect all purchases by Chinese buyers, who increasingly shop for luxury items overseas.
Bloomberg Businessweek Back to Top
16. WSJ - Randall Stephenson Oped: A business short list for growth
First, fiscal stability. Then tax reform, expanded trade and immigration reform.
WSJ Back to Top
17. WP - Harold Myerson: Free trade and the loss of U.S. jobs
When President Obama delivers his State of the Union address this month, he will surely highlight the issue of growing economic inequality and argue for such remedies as raising the minimum wage. He may also put in a plug for the proposed Trans-Pacific Partnership (TPP) trade agreement his administration is negotiating with 11 Pacific Rim nations and for fast-track legislation that would limit congressional input in the accord to facilitate its ratification. If he does both — bemoan rising inequality and promote yet another free-trade agreement — his speech will rate a chapter in the annals of self-negation. By avoiding discussion of the consequences that trade deals with developing nations have on U.S.
workers, not to mention our trade balance, defenders of free trade are indulging in the worst kind of
imperviousness to facts. But when the case for free trade is coupled with the case for raising U.S.
workers’ incomes, it enters a zone where real numbers, and real Americans’ lives, matter. In that zone, the argument for the kind of free-trade deal embodied by NAFTA, permanent normal trade relations with China and the Trans-Pacific Partnership completely blows up. Such deals increase the incomes of Americans investing
abroad even as they diminish the incomes of Americans working at home. They worsen the very inequality against which the president rightly campaigns. There are ways that a developed nation can trade with the developing world without gutting its own economy. Germany has been able to protect its workers not only through the advantage of having the euro as its currency, but also by requiring its corporations to give their employees a major say in their companies’ investment decisions and by embracing a form of capitalism in which shareholders don’t play a major role. Were the United States to adopt this form of stakeholder capitalism, then its trade accords wouldn’t necessarily come at the expense of its workers. Absent such reforms, however, trade deals will only negate our attempts to diminish inequality.
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