1. WSJ: China's central bank engineered yuan's decline
China's central bank engineered the recent decline in the country's currency to shake out speculators as it prepares to allow a wider trading range for the tightly tethered yuan, according to people familiar with the central bank's thinking
.In the past week, the People's Bank of China has been guiding the yuan lower against the dollar. It has done so by setting a weaker benchmark against which the yuan can trade. It has also intervened in the currency market by directing state-owned Chinese banks to buy dollars, according to traders. The moves brought the yuan, also known as the
renminbi, to its weakest level in seven months and represents a reversal of the practice for most of last year when the central bank kept pushing the yuan higher against the dollar, even as the currencies in other emerging countries tumbled. Money has been pouring into China—sometimes, analysts
have said, by circumventing currency controls—to take advantage of the seemingly unstoppable rise. By guiding the yuan weaker, the PBOC intends to thwart short-term speculators betting on a continued rise and to introduce greater two-way volatility into its trading. "The PBOC is testing the market as it prepares to widen the yuan's trading band," said one of the people familiar with the bank's thinking.
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2. FT: China dismisses concern over sudden renminbi fall
The
renminbi has suffered its steepest weekly fall against the US dollar since China reformed its exchange rate system in 2005 in a move that some economists have interpreted as a warning from the country’s central bank to currency speculators. The
renminbi posted its seventh straight daily decline on Wednesday, sliding 0.02 per cent against the US dollar to close at 6.1244 after hitting its lowest level since early August in
intraday trading. One popular theory among economists and investors is that the People’s Bank of China engineered the depreciation because it is concerned about huge inflows of capital in recent months and wanted to show
markets that trading the currency is not a one way bet. Analysts had been forecasting a continuation of the slow, steady appreciation seen since late 2012. However, the Chinese central bank used its first official statement on the sudden weakening of the country’s currency to say the sell-off in the
renminbi was a reflection of market forces and should not be over-interpreted.
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3. Bloomberg: China shows bulls with $500 billion yuan bets it’s in charge
Efforts by China to damp speculation in the yuan risks driving away investors just as the nation attempts to open up its capital markets in a once-in-a-generation economic overhaul. After allowing the currency to steadily rise in each of the past four years, China’s central bank let it tumble about 1 percent over the past week, the most since at least 2007. Volatility in the yuan has jumped the most this month among 31 major currencies tracked by Bloomberg. Policy makers are moving to drive away speculators as President Xi Jinping seeks to liberalize interest rates, allow more room for the yuan to fluctuate and set up currency trading hubs around the world. Further price swings may squeeze bullish yuan bets that Deutsche Bank AG estimates at $500 billion. “We are not used to volatility in the Chinese currency,” Jens Nordvig, the New York-based managing director of currency research at Nomura Holdings Inc., said yesterday in an interview on Bloomberg Radio’s “Surveillance” with Tom Keene and Michael McKee. “It’s very painful for market participants because, in a low-volatility environment, it’s possible to carry large positions.”
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4. WSJ - Money Beat: Why the yuan’s decline matters
China’s yuan has fallen steadily against the U.S.
dollar in the past week. On Wednesday, The Wall Street Journal reported that it wasn’t market forces or traders behind the move, but that the Chinese central bank was deliberately pushing the currency lower. That a central bank would do this on purpose has caught some off-guard, especially since the
yuan was long seen by investors as a currency that was only going up. Currently, the yuan trades within a tight range set by the central bank every day. But, short-term traders and increasing demand
is almost constantly pushing the currency higher within that range. By
denting the currency’s value on purpose, the central bank is trying to spook away these traders who will now have to worry about the possibility China does this again. With fewer “speculators”
trading the yuan, China hopes to have an easier path to widen the yuan’s trading range further and, in the much longer term, make the yuan a free-floating currency that’s driven only by economic and market forces
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5. NYT: As rest of economy weakens, Chinese exports surge
The vast steel mill here on the south bank of the Pearl River was supposed to have closed more than three years ago, its labyrinth of rusty chutes and sheds bulldozed and its huge cranes with gigantic steel claws dismantled for scrap. But the Guangzhou Steel mill continued churning out millions of tons of steel for construction projects across Southeast Asia all the way through last September, when the antiquated complex, built on Mao’s orders in the late 1950s, finally began shutting down. Even now, a fraction of the
previously 6,000-strong
work force continues to shape specialty products for export and the domestic market, while furnaces at a much newer mill to the south churn out higher-grade steel. The recent history of the old mill underlines two troubles in the Chinese economy: its dependence on construction in recent years and the return, at least temporarily, of a need for exports to help offset weakness in the domestic market. Chinese stocks continued their slide Tuesday on concerns that the country’s debt-fueled real estate boom is finally slowing — and with it, the sprawling construction industry that accounts for nearly a fifth of economic output.
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6. Bloomberg: China pollution tops hazardous levels ahead of Congress
Pollution in Beijing was stuck at unhealthy levels for the seventh straight day, prompting warnings for people to stay indoors as thick gray smog shrouded the capital a week before the annual meeting of China’s legislature. The concentration of PM2.5, the small particles that pose the greatest risk to human health, hit 512 at 10 a.m.
today, or “
beyond index,” according to a U.S. Embassy pollution monitor. The World Health Organization recommends day-long exposure levels of 25, and the last time PM2.5 dropped below 150 in Beijing was Feb. 19. The heavy smog in Beijing may draw new scrutiny to government pledges to ease pollution around the country as leaders gather for the meeting of the National People’s Congress that begins March 5. At the end of last year’s event, Premier Li Keqiang promised to clean up pollution and said smog gave him a “heavy heart.”
People wearing masks visit the Temple of Heaven in haze-covered Beijing on Feb. 24, 2014. Source: AFP/Getty Images
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7. NYT: In Beijing, complaints about smog grow louder and retaliation grows swifter
Nearly a week into northern China’s latest
airpocalypse, the skies over Beijing are murky and acrid with a heavy smog that shrouds the sun. On social media sites, the yellow, choking air has become something of a meme, as residents post depressing photos of their blackened air purifier filters and hazy urban vistas with comments like #nuclearwinter. Amid the latest round of smog, anger is rising over the Chinese government’s inability to protect the nation from a pollution crisis that has made places like Beijing “unsuitable for human habitation,” as a prominent state-backed think tank stated in a study released this month that was swiftly censored. Last week, the official Sina Weibo
microblog account of the state-run China Central Television Finance Channel posted two scathing indictments of the Chinese government’s environmental failures. “Does anyone still care about Beijing’s smog?” began one, noting that although the “pollution index is off the charts,” no measures had been taken to mitigate the environmental emergency. A few minutes later came the second post, “Beijing municipal government, don’t hide behind the thick smog,” which warned that “the people have grown numb,” but the channel was “issuing a wake-up call: the government can’t act blind.” It must “protect its territory and not act ignorant.” Both posts were quickly deleted.
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8. FT: New steel plants cast doubt on China’s emission control plans
Steel plant closures central to the Chinese government’s plan for cutting pollution are likely to be
outpaced by steel mills under construction, casting doubt on Beijing’s ability to make headway against air pollution enveloping northern China. On Wednesday, Beijing was again gripped by the thick
grey pall that has lingered over northern China for more than a week. Public anger over air pollution has spurred the government to speed up the release of air monitoring data, and could strengthen the hand of environmental regulators in shutting down powerful polluters. About 30m tonnes of new steel capacity across the country is still under construction, double the 15m tonnes of cuts pledged
for 2014 by Hebei province, the industrial heartland surrounding Beijing which accounts for about a quarter of Chinese steel capacity. Hebei agreed to the cuts as part of a national plan to reduce polluting emissions in the North China plain, where pollution regularly exceeds national standards. State media showed footage of steel mills and cement plants being destroyed to underline the government’s resolve. About 8m tonnes of capacity have been permanently closed down in Hebei since the plan was announced.
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9. WSJ: China's steel province not cutting capacity fast enough
China's largest steel-making province has been
adding twice as much new production capacity as it has shut down, underscoring a challenge for Beijing's campaign to reduce
overcapacity and air pollution. Official efforts to eliminate outmoded steel capacity in Hebei province
haven't been effective so far, a senior official with a unit of Hebei Iron and Steel Group Ltd., China's largest mill, said Wednesday. Until the end of last year, steel mills in Hebei have been adding new capacity at a pace of around 30 million tons a year, twice the average 15 million tons of outdated capacity that the government wants to shut each year until 2017, said Wang Jiguang, marketing director at Hebei Iron and Steel Group Sales Corp. The central government has identified eliminating industrial
overcapacity as a priority for this year, seeing the problem as a wasteful drag on growth. Hebei is a proving ground for the campaign. An industrial province the size of Oklahoma that surrounds the nation's capital, Hebei accounts for a quarter of China's steel and has been in the government's
crosshairs for contributing to an unruly steel market and filthy air. Steel-making capacity in Hebei was growing even as Beijing was urging steelmakers nationwide to restrain "the blind expansion of capacity." "This target of eliminating 15 million tons of outdated capacity a year, compared to our addition of new capacity of 30 million tons a year, indicates that the speed of elimination is not quite fast enough to digest the outdated capacity," Mr. Wang said.
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10. WSJ: Foreign investment banks gain ground in China IPOs
Foreign underwriters' share of China's IPO market hits five-year high.
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11. Bloomberg: Dimon says threats to JPMorgan span Google to China banks
Jamie Dimon, who built JPMorgan Chase & Co. (JPM) into the world’s biggest investment bank, said threats to its dominance may come from Beijing, Silicon Valley and a San Francisco-based rival with a stage-coach logo. “We know there are going to be
attacks everywhere,” Dimon told investors at an annual meeting yesterday at the firm’s New York headquarters. Asked about challengers, the chief executive officer cited companies from Industrial & Commercial Bank of China Ltd. (601398) to Google Inc. Wells Fargo & Co. (WFC), founded in 1852 to serve California’s Gold Rush pioneers, will be “a major investment bank” within five years, he said. ICBC (1398), based in Beijing, is seeking to triple earnings from outside its home country by 2016. China’s biggest financial firms are “ambitious” and have “strategic reason to win,” Dimon said. “They’re huge, their clients are huge,” he said. “I expect very large, tough Chinese competitors all around the world.”
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12. WP: Did Frank Underwood kill Obama’s trade agenda?
If President Obama's trade agenda crashes in a heap, or the Transpacific Partnership disintegrates, put the blame on Kevin Spacey's machinations in "House of Cards." "Chinese officials who watch "House of Cards" must be laughing," said Sen. Sherrod Brown (D-Ohio), on a telephone call (a real one) on Wednesday to discuss a new report arguing that unfair currency practices in China and elsewhere are costing the United States millions of jobs. "They are laughing at Frank Underwood and at us, at policymakers that continue to cave." "House of Cards" "is not exactly a documentary of the U.S. Congress. Just the fact that there is a white Democrat from South Carolina would tell you that," he continued. But "They (the Chinese) are astute
...The Chinese practice trade according to their national interest. We practice trade according to a twenty year old economics textbook."
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13. Bloomberg: Abe’s southeast Asia push adds to U.S. ties amid China rift
Prime Minister Shinzo Abe is making inroads in his push to build ties with Southeast Asian nations as he seeks a buffer against Chinese assertiveness while complementing Japan’s alliance with the U.S.In recent months Cambodia sealed a defense deal with Japan and secured $135 million in infrastructure loans, Singapore expressed understanding for Abe’s efforts to boost his military, and Vietnam, a traditionally China ally, has warmed to Japan. The moves reflect a flurry of diplomatic activity by Abe, who visited 30 countries in his first year in office, including all 10 Association of Southeast Asian Nations members. With the U.S.
planning to shrink its armed forces to pre-2001 levels and a pledged Asia pivot untested, Abe is looking
to a new suite of regional partners to help counter China’s growing economic and military reach. His push comes at a time when historic animosities have resurfaced over a territorial dispute and Asia’s two biggest economies are vying for natural resources, markets and influence. “There are concerns about whether the U.S.
is going to be there if there’s a confrontation with China,” said Alan Dupont, professor of international security at the University of New South Wales in Australia. “Even if the Obama administration is supportive politically, will a future United States government support Japan militarily and strategically? I think there are real doubts about that emerging in Japan.”
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LinkedIn Corp.
introducing a Chinese-language website that will restrict some content to adhere to state censorship rules, expanding in a country where U.S.
companies have clashed with the government. The Mountain View, California-based professional social-networking company is offering a new version to provide a more localized service after more than a decade of having an English-language site there, Derek Shen, LinkedIn’s China president, said in a blog post yesterday. LinkedIn is also creating a joint venture with Sequoia China and China Broadband Capital to connect more than 140 million Chinese professionals, he wrote. LinkedIn said it has more than four million members in China, which is one of the company’s fastest-growing user bases. There is so far no major professional networking site in China, leaving LinkedIn room for expansion, according to Erin Ennis, vice president of the U
-China Business Council. “They’ve got the beginnings of a client base for what their product does,” Ennis said. When it comes to censorship, “the realities of doing business in China are that you have to comply with the rules of doing business there.”
15. Xinhua: Xi underlines smog battle during Beijing tour
Chinese President Xi Jinping has called for
strengthened efforts to curb air pollution during a tour of Beijing through heavy smog. Accompanied by officials from both central authorities and the Chinese capital, Xi visited a trendy alley in downtown Beijing on Tuesday and walked along the banks of a nearby river. He also visited Beijing City
Planning Exhibition Hall and a water plant. Beijing and other areas in north China have been shrouded in heavy smog in recent days. On Tuesday, the city maintained an orange pollution alert, as the density of PM2.5, or particles smaller than 2.5 microns in diameter, measured over 400 in the city proper. The heavy air pollution eased on Wednesday evening as a cold front arrived. When visiting the water plant, Xi said environmental protection in the
megacity of Beijing is a job for systematic engineering, and much attention should be paid to it as air pollution is a major issue concerning people's livelihood. "We should treat both symptoms and root causes of environmental pollution, and we should also focus both on emergency and regular measures," said the president, adding that the issue should be addressed through coordination between different areas and with action by the whole society. At a symposium after the tour on Wednesday, Xi called for
strengthened efforts to control smog. He said the priority is to limit PM2.5 by reducing dependence on coal, strictly controlling vehicles, adjusting industry structures, and other measures. He also urged related departments to strictly implement an index system that evaluates authorities' and officials' performances, and to strengthen law enforcement on environmental issues.
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16. SD: President Xi springs a surprise
President Xi Jinping surprised residents of a
hutong in Beijing yesterday when he visited their courtyard homes and chatted with pedestrians near a popular shopping street, drawing praise for his unusual “public diplomacy.” A shaky video of Xi’s visit posted online shows residents applauding him as he nears. He then stops to ask residents how long they’ve lived in the neighborhood before ambling away. Photos posted online show Xi mobbed by people holding cameras and
cellphones as he stands in a narrow alley smiling. The central Beijing shopping street, frequented by young Chinese and tourists alike, is lined with stands selling popular street snacks such as octopus balls and red bean cakes, as well as clothing and souvenir stores. Xi’s few forays into ordinary public settings have attracted widespread praise from the Chinese public. Xi delighted patrons of a steamed bun eatery in the capital city in December when he paid for his own food, carried his own tray and happily chatted with customers. Choking smog has been at a high for the past few days in Beijing, and many Internet users expressed approval that the president was exposing himself to the same toxic air as everyone else without even donning a mask. “The Party must always join hands with the people,” one user wrote. “Breathe the same air and share the same fate.”
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17. Xinhua: China to enhance smog monitoring, research
China's health watchdog has vowed to expand the scope of air quality monitoring and invest more in researching the health impact of smog, as Beijing retains a pollution alert. "The commission will strive for more financial support from the central government to expand air monitoring coverage while continuing to research the impact of smog on human health," said a statement released on Tuesday by the National Health and Family Planning Commission. Heavy air pollution shrouded 58 of
161 cities monitored on Tuesday morning. Of the 58, 23 were "severely polluted," according to official figures. At 5 p.m.
on Tuesday, Beijing's average PM 2.5 index, which measures airborne particles smaller than 2.5 micrometers, hit 475 micrograms per cubic meter. That
is within the most severe level, and high readings are expected to last until Thursday, when a cold front should disperse the pollutants. Tuesday's statement cited key upcoming research projects coverings
fields including precautionary technology for smog, smog-related diseases, and health risks for vulnerable populations. According to the Ministry of Environmental Protection (MEP), Beijing, Tianjin and Shijiazhuang are required to publicize their analysis results on air pollution sources by the end of June, followed by more regions
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18. Caixin: Suing gov't over smog a positive step, environmental expert says
NGO head Ma Jun lauds Hebei man for seeking compensation from officials who he argues have failed to control air pollution.
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19. SD: New study: Mobile devices driving online luxury shopping in China
Mobile devices are playing a significant role in China’s online luxury shopping, driven by consumers’ desire for speed and the convenience of
any-time shopping, a new study has found. China’s Connected Consumers, a joint study published yesterday by audit, tax and advisory firm KPMG, online flash luxury retailer Glamour Sales and e-commerce platform Mogujie, is a result of a survey conducted in October. According to the survey, which covered more than 10,000 consumers who had purchased premium or luxury items in the past 12 months, up to 60 percent said they use
smartphones everyday to buy items or search for information on luxury products and about 30 percent do so on tablets. That compared with the desktop or
laptop usage rate of 70 percent. “China is steaming ahead because consumers have three to four devices more than the average global consumer,” Egidio Zarrella, clients & innovation partner of KPMG China said. “As China’s economy has rapidly expanded over the past few years, consumers have migrated straight to mobile platforms. They don’t have the legacy of traditional media channels and have leapfrogged straight to mobile.”
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20. Xinhua: China considers days to remember Nanjing Massacre, Japan’s defeat
China is considering designating formal days of remembrance to commemorate Japan’s defeat in World War II and the Nanjing Massacre. September 3 could become “Victory Day of the Chinese People’s War of Resistance Against Japanese Aggression,” while December 13 may be a national memorial day to commemorate those killed by Japanese aggressors during the Nanjing Massacre in the 1930s. Two draft decisions have been submitted for review at the bi-monthly three-day session of the National People’s Congress Standing Committee which began in Beijing yesterday. Li Shishi, director of the committee’s Legislative Affairs Commission, said lawmakers, political advisers and people from all walks of life had repeatedly proposed setting the two dates as national days and institutionalizing national ceremonies of commemoration.
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21. NYT - Sinosphere: A magazine cover for a famously humble ambassador
Even before he arrived in Beijing, Gary Locke, the United States ambassador, achieved a rare sort of national prominence in China. A 2011 photo of him with his daughter at a Starbucks in the Seattle airport, carrying his own backpack, was widely circulated on Chinese social media sites. Many praised Mr. Locke for his apparent humility — carrying his own bag and trying to pay for his drink with a coupon. Others, including some state media commentators, questioned whether Mr. Locke’s behavior was a carefully calculated display. Mr. Locke is scheduled to leave China on Saturday and is being succeeded by Max Baucus, a former United States senator from Montana who was sworn in as ambassador to China last week by Vice President Joseph R. Biden Jr. In advance of his departure, Mr. Locke gave an interview to the Chinese edition of Men’s Health magazine, which put him on the cover of its February edition. The interview was conducted by Lin Dan, one of the world’s best badminton players, who is known for his temperamental on-court antics. Mr. Locke avoided even mild controversy in the interview, declining to say whether he preferred Lady Gaga or the Chinese actress Fan Bingbing or whether he thought he or President Obama would win in a badminton duel.
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22. WSJ - Diana Choyleva Oped: China's dangerous overvaluation
Further yuan appreciation is much more likely to sink the economy than boost consumption.
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23. Bloomberg: China’s second-richest man doubles money on U.S. cinemas
Wang Jianlin, China’s second-richest man, has seen the value of his controlling stake in AMC Entertainment Holdings Inc. (AMC) more than double in 18 months, delivering a $900 million gain. Wang, whose Dalian Wanda Group Co.
operates the largest theater circuit in China, bought the No. 2 U.S.
chain in August 2012 for $2.6 billion, including debt. He invested about $800 million, according to Gerry Lopez, chief executive officer of the Leawood, Kansas-based chain. Wanda’s 80 percent stake is now worth $1.7 billion at the current price of $22.53. Lopez, 54, a former executive at Starbucks Corp., attributed the increase in AMC Entertainment’s market value since Wanda Group’s purchase to a record year for the U.S.
movie industry in 2013, improvements in customer service and a rising stock market. “When the grass is green, the baseball is played better,” Lopez said in a telephone interview after reporting fourth-quarter results, the first since AMC Entertainment became a public company again.
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24. FT: China property prices continue to rise
Chinese property prices soared again at the start of 2014 but their year-long run of accelerating increases showed signs of losing steam amid the government’s moderate policy tightening. New housing prices in China’s 70 biggest cities rose 9.6 per cent year on year in January, down from 9.9 per cent in December, according to a population-weighted average. Of the 70 cities monitored by the national bureau of statistics, six posted price declines from the previous month, up from just two in December. The Chinese government has long used on-again, off-again restrictions to try to tame the country’s frothy property market. It has encouraged developers to boost supply of new homes as millions move from the countryside to cities, but also has attempted to stop speculators from buying up homes and driving up prices. After clamping down on the property market for much of 2012, leading prices to edge down, the government held off from implementing new controls last year, and prices took off once more. Increases were especially steep in the country’s biggest, wealthiest cities, with prices up more than 20 per cent. New home prices in Shanghai and Beijing rose 20.9 and 18.8
per cent in January from a year earlier, respectively, slowing a touch from their 21.9 and 20.6
per cent increases in December.
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25. Economist: Renminbi rising
Onshore and offshore perspectives on Chinese financial
liberalisation.
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26. Politico - Magazine: America didn’t decline. It went global.
We’ve been obsessing over the decline or persistence of American power for more than three decades now. The latest example is a Gallup poll out Monday showing rising dissatisfaction with the United States’ standing in the world — but it all started with a wave of
declinism in the 1980s, set off by the rise of Japan. Then the doom and gloom suddenly vanished amid the
triumphalism of the 1990s, which transformed the United States into the world’s only superpower. After the Sept. 11 attacks and the invasion of Iraq, many thought “empire” was a better moniker, with the United States apparently able to reshape
world order virtually at will. And then just a few years later —
poof! —
declinism returned with a vengeance, with American power supposedly crashing like the latest Hollywood reality queen. China supplanted Japan as a
hegemon on the rise, and the biggest global financial crisis since 1929 — emanating from the United States itself — was allegedly the final nail in the coffin of the American century. But really? Is it really possible for American power in the world to flip-flop so wildly over the decades?
Surely, the economic underpinnings of national power run deeper than that? And throughout these waves of conventional wisdom over the decades, there have always been contrarians, including in the present. So how is it possible for commentators to look at the same data and come to completely opposite conclusions? The answer is that people are debating the wrong data, especially today. The traditional way of conceptualizing national power is to look at so-called national accounts — most of all gross domestic product, but also
balance of trade, national debt,
world share of manufacturing, etc. —
relative to other nations or the world.
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