China

India ratchets up currency pressure on China

2 Nov 2011

Tired of a ballooning trade deficit, Indian trade negotiators are threatening duties on Chinese goods, starting with power equipment. Tit-for-tat tariffs are fruitless, but as a fellow emerging giant, Indian calls for China to revalue its currency would add weight to the debate.

China’s regulatory reshuffle avoids real change

31 Oct 2011

Three retiring top financial regulators have been swapped with former bank heads, trained for life in the system. Overlapping roles mean their powers will be constrained. It suggests China’s banks won’t get the sweeping reforms they need.

Pitching in on Europe is in China’s best interest

27 Oct 2011

China has suggested a contribution to Europe’s bailout would come with strings. But as a beneficiary of global trade, the world’s number two economy has good reason to do whatever it takes to secure a stable euro zone. That would also spare China a rapid and painful adjustment.

Chinese censorship runs on greed more than fear

27 Oct 2011

After a series of PR fumbles and web-inspired protests, the authorities are stepping up Internet controls. Rumour-mongers are even being arrested. Yet many of these curbs depend on companies and investors playing along. While growth is rapid, greed motivates more than fear.

China’s irate homebuyers foretell mess to come

26 Oct 2011

Property developer Longfor drew an angry mob after it seemed to cut prices on new Shanghai apartments by 25 percent. Though prices aren’t yet plunging across the country, it’s looking increasingly likely that they will. Angry scenes will become more common.

Pfizer milk bid could fortify China’s M&A hopes

25 Oct 2011

Mengniu Dairy’s bid for the U.S. pharma giant’s $10 bln nutrition unit would make strategic sense. China can gain from deals pegged on rising consumer demand rather than cheap labour. Buying foreign brands may also help address food safety problems, if bidders tread carefully.

China best to keep cool head over yuan bill

21 Oct 2011

Beijing has hit out over a mooted U.S. currency bill that could lead to tariffs. China is getting more assertive, and can no longer rely on U.S. firms to fight its corner. But starting a war of words may alienate its remaining supporters, and make the bill more likely to pass.

Slower Chinese GDP growth adds to financial risk

18 Oct 2011

In the past, strong growth has helped Beijing smooth over problems with bad loans. But 9.1 percent may not be fast enough to deal with excesses in non-bank lending and real estate. It sounds like U.S. subprime – the financing that supported growth now threatens to undermine it.

Shanda’s opportunistic MBO may start a trend

18 Oct 2011

Its founder looks to be exploiting the plunging share prices of China’s U.S.-listed dotcoms. Shanda’s cash pile will cut the amount he has to put in. Delisting from the United States paves the way for a relisting in China. Others frustrated by rising U.S. scrutiny may follow suit.

China’s biggest insider has poor market timing

14 Oct 2011

Huijin, the state fund that has been buying up bank stocks, isn’t a great role model for investors. It sold in the past when shares were cheap, and has made poor returns on previous dips into the market. No wonder investors don’t seem to be following its lead.

China joins ranks of the credibility-impaired

12 Oct 2011

Investors were unmoved by a pledge from Beijing to buy bank shares. In 2008, a similar statement pushed equities up 10 percent in a day. The long global crisis has shown the limited ability of governments to deal with financial tensions. China no longer looks like an exception.

Russia and China close but not yet allies

12 Oct 2011

Putin’s visit to Beijing highlights the deepening co-operation between the two giants. But they remain worlds apart on big issues, and trade between them is small. Apparent agreement on issues like U.S. policy and Syria shouldn’t worry the world just yet.

HK banks’ yuan strategy looks bad for earnings

11 Oct 2011

Taking deposits in the Chinese currency isn’t the opportunity it first seemed for Hong Kong’s lenders. The business is barely profitable, and migration of savings into yuan has exacerbated a HK dollar shortage, pushing up the cost of deposits and threatening to hurt margins.

China’s bank intervention is a Band-Aid at best

10 Oct 2011

Buying shares of ICBC and its peers in the market sends a signal the government will stand behind its lenders. Cracks in the property market and non-bank lending suggest it may be necessary. The move should reassure depositors, but won’t spare banks from the trouble that looms.

Sinopec shows quirks of Chinese resource M&A

10 Oct 2011

The Chinese energy group has offered a massive 120 pct premium for Canadian producer Daylight. Like similar Chinese deals, the $2.2 bln offer works because of strategic necessity, still-high commodity prices, cheap capital and a shareholder none too fussed about value creation.

China Mobile’s cash pile is a $50 bln dilemma

6 Oct 2011

The Chinese telecom has more cash than Apple, but few ways to spend it. There are no logical acquisition targets, and state ownership makes it tricky to buy back shares. The best bet may be to invest in growth. Future profits may suffer as competition from the Internet heats up.

Trade war remains a distant prospect

5 Oct 2011

The U.S. and China are once again raising the spectre of mutually destructive protectionism. But globalisation has gone so far that trade restrictions would have painful and immediate consequences in every country. That’s why the threats won’t go far beyond angry skirmishes.

U.S. currency slap looms as China least deserves it

3 Oct 2011

A bill enabling sanctions on Chinese goods may pass the Senate this week, even though the yuan has appreciated strongly on a trade-weighted basis. China’s central bank has been guiding the currency stronger despite falling markets. For the U.S. to lash out now looks a mistake.

China’s property market faces crisis of trust

27 Sep 2011

Hangzhou developer Greentown is under scrutiny for using trust structures to funnel debt into its projects. Trusts have spread rapidly to become a critical source of funding for property companies. But a crisis of cash flow, or confidence, could see a messy unravelling.

Rise of red capitalists need not be bad for China

27 Sep 2011

China’s richest man, Liang Wengen, may get a seat on the Communist Party’s elite central committee. It smells of crony capitalism, but there could be advantages to giving the private sector a bigger role in government. This may even help China nurture entrepreneurship.