Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘china’

Propping Up the Chinese Economy: Credit versus Fiscal Stimulus  

Posted by hkarner - 14. Dezember 2017

December 13, 2017

Credit booms are addictive. Credit supports growth and the perception of wealth. Yet credit booms are risky, and are often followed by financial busts and economic slowdowns. The challenge is taming credit without hurting growth.

Mainland China is experiencing a major credit boom. As of end-2016, total social financing—a broad measure of credit—exceeded 200 percent of GDP. The credit-to-GDP gap—a measure of financial vulnerability—is the second highest among 44 economies covered by BIS (after Hong Kong SAR).

How did credit growth contribute to output growth in China? Has credit allocation worsened as the economy became saturated with credit? Can output growth be supported by other means, such as fiscal stimulus? Den Rest des Beitrags lesen »


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The beast of Bentonville battles Amazon, the king of the e-commerce jungle

Posted by hkarner - 9. Dezember 2017

Date: 07-12-2017
Source: The Economist: Schumpeter

Amazon’s position today is eerily reminiscent of Walmart’s circa 1999

A BOA constrictor swallowing capitalism. A cyclone dragging the economy into its vortex. If you look back at how people described Walmart a decade ago, it is eerily similar to how Amazon is viewed now. The supermarket chain has “a scale of economic power we haven’t encountered before”, warned “The Walmart Effect”, a best selling book in 2006. But capitalism never stands still. The world’s largest company by sales is now the perceived underdog in an escalating grocery war with Amazon to fill 320m American bellies. The struggle will probably end in a messy stalemate. That will mean mediocre returns for investors—and happy days for consumers.

Just when Walmart’s aura was at its most intimidating, in 2006, stagnation beckoned. Its reputation for bullying its suppliers and staff became toxic. Over the next decade it hit saturation point. About 95% of Americans shop at Walmart at least once a year. It has three square feet of shop space for every adult in the country and has sunk $83bn into a fixed-asset base that is the fourth-largest owned by any American firm. Investors have worried for years that this empire of aisles and tills run from Bentonville, Arkansas, would become obsolete—what did Walmart’s executives, schooled in the arts of beating up baked-beans suppliers, know about the slick world of e-commerce being dreamed up in Silicon Valley and Seattle? Den Rest des Beitrags lesen »

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Improving Financial Stability in China

Posted by hkarner - 9. Dezember 2017

By Ratna Sahay and James P. Walsh, IMF Blog

December 6, 2017

 China’s leaders have made financial stability one of their top priorities 

China’s leaders have made financial stability one of their top priorities. Given the size and importance of the Chinese market, with the world’s largest banks and second-largest stock market, that is welcome news for China and the world. The financial system permeates virtually all aspects of economic activity, having played a key role in facilitating rapid economic growth and in sharply reducing poverty rates.

China is moving from the world’s factory floor toward a more a more modern, consumer-driven economy. During this transition, however, some tensions have emerged in the financial sector.

Three concerns

The IMF recently concluded its latest evaluation for China under the IMF’s Financial Sector Assessment Program (FSAP). The assessment identifies three important and interconnected concerns about the Chinese financial system:

  • Lending boom. A focus on maintaining growth and employment has resulted in sustained rapid credit growth despite the slowing economy. This debt is largely owed by companies—some of which may not have good prospects—and local governments, but an increasing share is owed by households. Credit growth is an important indicator of future financial distress, because lending standards often fall in the rush to make more loans.
  • Complexity. Rules on bank lending to traditional sectors, such as construction and real estate, have pushed risky borrowers away from banks and toward more lightly regulated financial products. At the same time, banks are offering increasingly complex wealth management products to savers looking for higher-yielding assets.
  • Guarantees. Banks often compensate investors for losses on financial products to preserve their reputations; the government has repeatedly intervened to stabilize financial markets; and investors have come to believe that state-owned enterprises will be bailed out if they get into trouble. But protecting investors and companies from losses encourages them to underestimate risk and can lead to a misallocation of investment to less productive economic activities.

Taken together, these factors have created a highly dynamic and fast-moving financial system that is very difficult to monitor. Removing implicit guarantees—allowing markets to fall, firms to fail, and investors to lose money—is particularly challenging. Better social safety nets, financial education, and improved bankruptcy procedures will help. But credit growth will not slow sustainably unless tolerance for job losses and slower economic growth rises, particularly at local level, and new sources of revenue are found for local governments.Key goal

China’s authorities recognize these risks and are seeking to contain them. President Xi in April cited financial stability as a key goal for China. And since the last assessment in 2011, the Chinese authorities have continuously improved supervision of banks, insurance companies, and securities firms.

The IMF’s main recommendations for further improvement are in five key areas: systemic risk monitoring, interagency coordination, bank capital, liquidity buffers, and crisis management. Let’s take a closer look at the recommendations in each area:

  • China’s authorities should create a body, focused solely on financial stability, to improve oversight of systemic risk. Such a body, by regularly discussing and assessing issues on a cross-agency basis, can help identify systemic risks and make recommendations to the implementing supervisors. Improving the quality of data will be important in this regard.
  • Financial supervisors need to have greater independence to pursue their mandates without concern about being overruled. They also need more resources to adequately supervise a large and complex system. Finally, better coordination – at all levels, not just at the top – is essential to identifying and managing risks.
  • The large size of the credit boom calls for gradually increasing capital at banks to cushion them against a sudden cyclical economic downturn. An increasingly complex and interlinked financial system also calls for higher buffers at several large banks to prevent shocks from spreading to other parts of the financial system. Finally, China’s unique risks – such as the dangers inherent in lifting widespread implicit guarantees and the presence of large off-balance sheet exposures that banks have historically guaranteed – call for higher levels of capital across the system during the transition.
  • Banks and other financial institutions are increasingly using very short-term borrowing to finance their investments. To contain risks if those flows reverse, banks should hold more liquid assets, and rules on lending among financial institutions should be amended to encourage safer, and longer-term, lending.
  • Several elements of an effective framework for crisis management are already in place. Further reforms are needed to reduce the reliance on public funds in managing weak financial institutions, while ensuring they can fail safely, for example by expanding administrative resolution powers in line with international standards.

Supervising one of the world’s largest and most complicated systems is a challenging task. The Chinese authorities have worked hard to keep pace with growth and innovation but, as in all countries, many gaps remain. They recently created a Financial Stability and Development Committee to monitor systemic risks and prevent financial disruptions and announced new rules to contain riskiness of asset management products. Addressing such concerns should help China continue to grow both rapidly and safely.

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Market failure: China takes on the EU at the WTO

Posted by hkarner - 9. Dezember 2017

Date: 08-12-2017
Source: The Economist

Both the EU and America are loth to weaken their defences against Chinese dumping

NOT all trade tension is made in America. China is suing the European Union at the World Trade Organisation (WTO). Hearings began this week. China thinks it deserves treatment as a “market economy”. The EU, supported by America, disagrees. As they lock horns, each side sees the other as breaking a promise.

China’s entry into the WTO in 2001 was part of a grand bargain. In return for market access, it promised economic reform. The deal laid out unusually strict terms. Any members’ exports can face anti-dumping duties if sold too cheap. But China’s accession agreement allowed others to erect stronger defences, and assume that it was a non-market economy when calculating the “fair” duty—using third-country prices for comparison. In practice this meant higher tariffs. Den Rest des Beitrags lesen »

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Alibaba’s Jack Ma Tells U.S. Companies to Stop Whining About China

Posted by hkarner - 7. Dezember 2017

Date: 06-12-2017
Source: The Wall Street Journal

Magnate tells firms to ‘follow the rules’ and plan for the long term

Alibaba Group Executive Chairman Jack Ma speaks during the World Internet Conference in Wuzhen, China, Dec. 3.

WUZHEN, China—Amid rumblings of a U.S.-China trade conflict, Alibaba Group Holding Ltd. founder Jack Ma defended China against complaints that it creates barriers against outside competitors.

Companies that struggle here may simply not be taking the right approach, Mr. Ma said Tuesday at a prominent internet forum.

“I gave advice to Jeff Bezos 10 years ago,” Mr. Ma said, referring to Amazon.com Inc.’s chief executive. “I said: ‘Please send people with entrepreneurial spirit, not professional management. Because wherever you go, doing business in another country is very difficult.’”

‘When you determine to come, prepare for it. Follow the rules and laws and spend 10 years.’ —Jack Ma, Alibaba

An Amazon spokesman had no immediate response to the comments from Mr. Ma, whose online shopping portals compete against the Seattle-based company. Amazon dominates e-commerce in the U.S., but is the underdog in China. Den Rest des Beitrags lesen »

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Digital China – Study from McKinsey Global Institute

Posted by hkarner - 5. Dezember 2017

China, already a global force in digital technologies, is set to experience huge shifts in revenue and profits as businesses digitize, boosting the economy’s international competitiveness.

China has become a force to be reckoned with in digital technologies at home and around the world. As a major worldwide investor in digital technologies and one of the world’s leading adopters of the technologies, it is already shaping the global digital landscape and supporting and inspiring entrepreneurship far beyond its own borders. Den Rest des Beitrags lesen »

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China investiert Milliarden in Mittel- und Osteuropa

Posted by hkarner - 28. November 2017

China kündigt Milliardenhilfen für Mittel- und Osteuropa an. Das erste chinesische Großprojekt in Serbien war 2014 eine Donau-Brücke in Belgrad. Nun folgt eine Autobahn zwischen Preljina und Pozega.

 27.11.2017 um 17:10, diepresse.com

Serbische Regierungsvertreter haben heute, Montag, die China Communications Construction Company Ltd. (CCCC) mit dem Bau einer knapp 31 Kilometer langen Autobahnstrecke im Korridor 11 beauftragt. Bei der Autobahnstrecke zwischen Preljina und Pozega ( Westserbien) geht es um ein Bauvorhaben im Wert von 450 Millionen Euro, teilte das serbische Bauministerium mit.

Die chinesische Firma wurde mit den Projekt- und Bauarbeiten beauftragt. Ein Drittel der Autobahnstrecke sind Tunnels und Brücken, hieß es in Belgrader Medienberichten. Über die Finanzierungsweise wurden keine Details mitgeteilt.

Das Abkommen wurde am Rande des heutigen Wirtschaftsgipfels in Budapest unterzeichnet, an dem neben dem chinesischen Regierungschef Li Keqiang auch Ministerpräsidenten aus 16 Ländern Mittel-Osteuropas teilnehmen. Den Rest des Beitrags lesen »

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The Next Billion-Dollar Boom in Chinese Tech

Posted by hkarner - 25. November 2017

Date: 24-11-2017
Source: The Wall Street Journal

China’s enterprise-applications market has huge potential and is devoid of a dominant player

More businesses are turning to cloud-based services, like Alibaba Cloud, for data storage and software applications.

As much as the world heralds the success of China tech, it’s confined largely to consumer business. Where the U.S. has Facebook, Amazon and Google, China has Tencent, Alibaba and Baidu. Chinese companies are good at developing applications that help hundreds of millions of consumers shop, pay, chat and play games.

In the enterprise-application market, it’s a different story. China has nothing comparable to Oracle Corp., SAP SE or Salesforce.com Inc.

In fact, the Chinese enterprise market looks like the consumer market 10 years ago. Customers—in this case, companies—are reluctant to pay for software and pirate when they can. They’d rather throw labor at problems because investing in technology is expensive and doesn’t always work. Den Rest des Beitrags lesen »

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The Next Battle in China’s War on Corruption

Posted by hkarner - 24. November 2017

Andrew Sheng, Distinguished Fellow of the Asia Global Institute at the University of Hong Kong and a member of the UNEP Advisory Council on Sustainable Finance, is a former chairman of the Hong Kong Securities and Futures Commission, and is currently an adjunct professor at Tsinghua University in Beijing. His latest book is From Asian to Global Financial Crisis.

Xiao Geng, President of the Hong Kong Institution for International Finance, is a professor at the University of Hong Kong.

Chinese President Xi Jinping knows well the threat that corruption poses to the authority of the Communist Party of China and the state it controls. But moving beyond Xi’s anti-corruption purge to build robust and lasting anti-graft institutions will not be easy, owing to enduring opportunities for bureaucratic capture.

HONG KONG – Corruption is a cancer to which no society is immune. It raised the death toll of Iran’s recent earthquake, owing to substandard housing construction ten years ago. It has afflicted the United States Navy, which is now investigating more than 60 admirals and hundreds more officers for fraud and bribery. It has brought down countless governments, from Brazilian President Dilma Rousseff’s administration last year to Chiang Kai-shek’s Nationalist government of the Republic of China. Den Rest des Beitrags lesen »

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The pendulum of power swings back towards the state

Posted by hkarner - 21. November 2017

A remarkable and brilliant analysis by the first female Editor-in-Chief of The Economist (hfk)

Date: 21-11-2017
Source: The Economist

Three reasons to expect a shift in the balance between governments and markets, predicts Zanny Minton Beddoes

If 2016 was the year of shock populist victories, 2017 brought a surprisingly placid response. There was plenty of anguished rhetoric. Commentators (including this one) fretted about the liberal world order. Mainstream politicians promised a reboot of globalisation that addressed the anger of left-behind voters. But in practice remarkably little changed.

The world economy accelerated to its strongest pace since the start of the decade; stockmarkets hit record highs and measures of financial risk were unusually low. In the two countries where populists had most dramatically upended the status quo, the immediate policy consequences were both modest and strikingly backward-looking. Britain’s Brexit vote was followed by an election that left the Conservative Party enfeebled, whereas the Labour opposition soared with a 1970s agenda of nationalisation, union power and higher taxes. In America President Donald Trump took potshots at globalisation (cancelling a trans-Pacific trade deal and promising that America would pull out of the Paris climate accord). But his main economic focus was on deregulation and tax cuts: the standard Republican fare since the 1980s.

Even Emmanuel Macron, who surged to power in France with the promise of a new kind of pro-globalisation social contract, began with reforms to the labour-market that most other European countries had enacted years ago. If populism is remaking capitalism, it seems so far to be a modest recalibration.

It is unlikely to stay that way. As 2017 draws to a close, the strong performance of insurgent parties in elections in Germany, Austria and the Czech Republic shows that the rich world’s populist wave has hardly dissipated. In Italy, the elections in 2018 might give the anti-establishment Five Star Movement the largest number of seats in Parliament. Some emerging markets will also see a populist surge, notably Mexico, where Andrés Manuel López Obrador, a seasoned firebrand, has gained from Mr Trump’s anti-Mexican rants. Den Rest des Beitrags lesen »

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