China

Temasek’s smart CCB trade may have strategic costs

30 Aug 2011

Singapore’s state investment fund is buying shares in China Construction Bank from Bank of America - at a valuation 21 pct below where it dumped the stock last month. That has financial logic. But it may look too clever for Beijing, and hurt Temasek’s access to deals in China.

Take Chinese bank earnings with a pinch of salt

26 Aug 2011

Bad loans are falling, capital buffers look healthy and earnings are shooting ahead - so why have China’s bank valuations fallen so far? Look deeper and there are signs that a slowing economy is hurting, potential problems lurk off the books, and small banks are struggling.

China’s bank rules promise safety, not stability

19 Aug 2011

Lenders will end up well padded against bad debts under new plans - a good job, since lots are coming. But the distortions that promote risky lending remain. With capital scarce, banks may also push more loans through China’s worryingly large “shadow” banking system.

Baidu smear campaign can’t be brushed aside

18 Aug 2011

Critical reports by Chinese state TV have knocked 9 percent off the dotcom giant’s shares. It may be professional envy rather than political conspiracy. Still, the Communist Party’s relationship with the web is fractious. And Baidu’s ownership structure may be an Achilles’ heel.

Solar firm’s demise signals gray industry forecast

16 Aug 2011

Onetime investor darling Evergreen Solar, among the first U.S. green energy companies to go public, just went bankrupt, victimized by a global supply glut. Growing Chinese competition and waning European subsidies mean the solar sector will probably get darker before the dawn.

China’s super-railways on track for debt troubles

15 Aug 2011

New super-fast railways would struggle to repay their colossal borrowings even before new safety fears, which will push costs up and demand down. The country benefits, since the perks of fast trains aren’t all financial. Not so investors in banks who fund these trophy projects.

Fed policy creates crunch moment for Chinese yuan

11 Aug 2011

A weaker U.S. dollar raises the cost to China of suppressing its currency - and will further swell its reserves. Pricier commodities could prompt inflation to return. China has resisted a much stronger yuan, but the Fed’s low interest rate pledge may give it little choice.

China’s collectible bubble shows Beijing’s challenge

10 Aug 2011

Investors are bidding up arts and jewellery because they are worried about inflation and a weak dollar. It may not be too damaging if this kind of bubble bursts. But the mania shows how tighter credit rules have only partly worked, and too much money is still sloshing around.

China’s diatribe on U.S. debt could backfire

8 Aug 2011

Official media’s sharp criticism may help shift domestic focus to U.S. economic woes and away from China’s train crash. But using the situation to attack Washington’s military policy in Asia won’t work. If anything, the tirade risks inviting U.S. pressure on trade and currency.

China’s train crash sets new tests for freedoms

3 Aug 2011

Authorities’ attempt to censor coverage of China’s rail tragedy has backfired. Even official media defied orders or found ways to circumvent the ban. If Beijing now clamps down harder, the impact will be economic as much as social.

Foreign borrowing undermines China’s tightening

1 Aug 2011

Better-than-expected factories data shows China hasn’t over-tightened. Beijing has curbed domestic loans, but Hong Kong banks are lending and offshore bond issuance also surged. The practice adds risk for foreign investors, and hinders China’s efforts to squash inflation.