03-07-2016, 02:09 PM
The outlook for China’s credit ratings was cut to negative by Moody’s Investor Service as reserves decline and government debt rises.
China Credit Outlook Cut to Negative From Stable by Moody's - Bloomberg Business
Lending in China has jumped massively, startling already rattled investors and intensifying fears that the country’s financial system could be close to collapse. While these concerns are understandable, we think they may be overdone and based on a too-simplistic assessment of the risks.
Spike in Chinese lending might not be problem - Business Insider
The worst is over for Chinese stocks, according to Franklin Templeton’s money-management unit in Shanghai. The $5.3 trillion market will rebound as much as 20 percent in the “short term” as economic growth picks up and yuan volatility decreases, said Lirong Xu, the chief investment officer at Franklin Templeton Sealand Fund Management Co., which oversees about 30 billion yuan ($4.6 billion). “People are overly panicky," Xu said in an interview in Hong Kong. “I am still quite bullish on the Chinese economy and the A-share markets on a one- to three-year horizon. The economy will bottom out in the first half and the yuan will stabilize."
Most China Stocks Rise After Reserve Ratio Cut, Factory Data - Bloomberg Business
Officials shovelled money indiscriminately at state firms in infrastructure and heavy industry. The resulting overcapacity creates even bigger headaches for China than for the rest of the world. The overhang is helping to push producer prices remorselessly downward: January saw their 47th consecutive month of declines. Falling output prices add to the pressure on debt-laden state firms.
The march of the zombies | The Economist
For starters, China’s reserves embed not just a stock problem, on which most analysts are focused, but also a flow problem.The stock of reserves, as widely discussed – also below – may or may not be satisfactory depending on the choices China makes about its exchange rate system and how far to open or close the capital account. The flow problem emanates from the fact that money and credit growth in China are generating far too much excess liquidity which can leak abroad, especially through porous restrictions. The money stock amounts to about $21tn, and growth has picked up in the last year from about 10 to about 15 per cent per annum. As a proportion of the money stock, reserves have fallen to to just 15.5 per cent, half of what it was in 2007-08, for example. As nominal GDP is growing at best by 6.5 per cent per year, excess money growth may running close to $2tn a year.
Guest post: How to think about the Capital of China | FT Alphaville
A shock devaluation of, say, 40 per cent or more, would be politically dangerous, and would be the exact antithesis of what economic rebalancing requires because it would represent a tax on the household sector as imports became more expensive, and a subsidy to producers and exporters.
Guest post: How to think about the Capital of China | FT Alphaville