China - Economic Data & News 01 (May 08 - Oct 08)

[winston]

Relief for SMEs as PBOC eases credit restrictions
KatherineNg
Wednesday, August 06, 2008

The People's Bank of China is to allow banks to increase lending this year by 5 percent to 10 percent in excess of their combined initial quota of 3.7 trillion yuan (HK$4.22 trillion) to help troubled sectors, sources said.

The extra loans, amounting to about 18.2 billion yuan, will be available only to agricultural businesses, small and medium-sized enterprises, and quake- affected firms, The Standard was told.

Banks were told of the long-awaited easing of credit controls last Thursday. No formal announcement of the move will be made.

National banks can lend 5 percent on top of their quotas and regional banks 10 percent because of their proximity to SMEs.

High inflation, slow external demand and rising raw material costs have been eating into the profits of SMEs, posing severe challenges during the first half of the year.

About 67,000 SME businesses have already closed down.

The textile sector has been most severely affected with more than 10,000 textile companies shutting down, according to National Development and Reform Commission data.

Regional financial institutions had asked to increase their lending quota to help beleaguered small corporations, the state-run Shanghai Securities News reported yesterday.

Analysts said the higher lending quotas will not affect the Chinese banks' outlook but could help ease the liquidity problems of SMEs.

Such a conditional credit-easing policy is essential, but confidence on banks' asset quality outlook in the second half can be slightly discounted, said Dorris Chen, banking analyst at BNP Paribas.

"Banks will take measures to limit the impact of such new policy loans, including implementing stringent customer screening and limiting lending to sizeable SMEs," she said.

JPMorgan's Sam Chen said the benefits of the new policy to Chinese banks will be limited - their 2008 earnings will only rise by between 0.4 percent and 0.6 percent.

"The new policy loan amount is small compared with the total loan portfolio of those mainland banks and 18.2 billion yuan represents only about 0.5 percent to 0.8 percent growth in new loans," he said.

Mainland banks have not commented on the loans move.

[winston]

SECURITIES TIMES

-- Equity investment accounts actually holding stocks rose for a sixth straight week in the July 28-Aug 1 period, climbing by 117,000 accounts from the previous week to 47.93 million, or 40.85 percent of total

[winston]

China raises foreign banks' lending quotas: state media

China has raised lending quotas for foreign banks operating in the country, another move by the government to support economic growth amid slowing demand for exports, state media reported.

Locally incorporated foreign banks are allowed to apply for higher lending quotas for this year, but the size of increase has not been finalised, the Shanghai Securities News reported, citing unnamed sources.

They were told to direct the extra loans towards small and medium-sized enterprises, the agricultural sector and firms involved in reconstruction efforts in Sichuan province, which was hit by a devastating earthquake in May, the report said.

AGENCE FRANCE-PRESSE

[winston]

After the Olympics, they can use this to increase fuel prices, increase electricity prices, remove the cap on coal prices, put a windfall tax on coal companies and increase the threshold for the windfall tax on Oil companies...

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China inflation seen easing

Third quarter inflation will ease to 6.6 percent, from the first half's 7.9 percent, a government think-tank said.

State Information Center, a National Development and Reform Commission affiliate, estimated the third quarter economy expansion is likely at 10.2 percent, according to a report published on the state-run China Securities Journal.

The slowing international economy and natural disasters during the first half have not change China's economic fundamental, however, inflation remains worrisome, the center said.

"Curbing inflation and keeping economic growth steady would still be the keys of tightening measures," according to the report.

[winston]

Central government income jumps 33pc
KathyWang
Monday, August 11, 2008

China's central government income in the first six months increased 33.27 percent over the same period last year to 3.48 trillion yuan (HK$3.96 trillion), according to data released by the Ministry of Finance.

Fiscal income from value-added tax, consumption tax and business tax totaled 1.49 trillion yuan - from increases of 22.4 percent, 18.5 percent and 25.7 percent, respectively - the state-run People's Daily reported.

Custom duties rose 34.9 percent to 395 billion yuan, enterprise income tax grew 17 percent to 261.5 billion yuan, and individual income tax increased 27.3 percent to 213.5 billion yuan in the first half.

Non-taxation income also surged 30.9 percent to 338 billion yuan.

Meanwhile, government spending on environmental protection jumped 99.8 percent to 323 billion yuan in the first six months, the biggest increase among all sectors.

The central government spent 277 billion yuan on social welfare, 41.8 percent more year- on-year.

[winston]

China's trade surplus fell 9.6pc in Jan-July

China's trade surplus fell 9.6 percent in the first seven months of 2008 compared with a year ago to 123.7 billion dollars, the official Xinhua news agency said, citing the customs bureau.

Xinhua quoted unnamed analysts as saying the decline in the surplus was due partly to deliberate policies aimed at shrinking it, but added rising prices of imported energy and resources had also had an impact.

The agency did not immediately report figures for the month of July alone. In the first six months of 2008, the surplus fell nearly 12 percent to US$99.04 billion (HK$772.51 billion).

AGENCE FRANCE-PRESSE

[winston]

DATAWATCH - China authorities likely concerned by high July PPI - Moody'sEconomy

BEIJING (XFN-ASIA) - Chinese policymakers will be concerned about today's stronger-than-expected producer price index growth figure, which will likely encourage them to further tighten monetary policy and impose price controls to deal with inflation risks, Moody's Economy.com said.

The National Bureau of Statistics announced that PPI in July rose 10.0 pct year-on-year, its highest since 1996.

"The sharp acceleration in producer price inflation seen in recent months is a concern to policymakers, as this poses a strong upside risk to CPI (consumer price index) growth," said Sherman Chan, an economist with Moody's Economy.com.

Chan noted that June's energy price hikes were chiefly responsible for the sharp increase in July's PPI.

Although global oil prices have eased recently, Chinese producers and consumers will not enjoy any direct benefit because prices on the mainland are already below international levels due to price controls, she added.

Still, this means there will be less pressure to hike energy prices in the coming months, she said.

Producers also face pressure from rising labor costs. Wage growth in China expected to remain strong in the near-term, meaning that it may take some time before PPI growth slows to a more reasonable pace, Chan said.

"Despite hitting a double-digit rate already, it is perhaps still too early to conclude that PPI growth has peaked," she said.

[kennynah]

China's July PPI +10.0% on Year
8/11/2008 12:31 AM ET



(RTTNews) - China's producer prices jumped 10 percent on year, the National Bureau of Statistics said on Monday, climbing to their highest level since 1996.

That was well above analyst expectations of a 9.1 percent annual increase, and it was also far higher than the 8.8 percent rise on year in June. Overall, it marked the 12th consecutive month of annual acceleration.

Prices paid by producers for raw materials, fuel and power rose 15.4 percent in July over the same month last year, up from June's 13.5 percent rate, the data showed. Purchasing prices are up 11.7 percent in the year to date.

China's July PPI consumer goods component increased 4.6 percent on year.

For the period of January through July, PPI is up 8.0 percent on year.

Among the individual components, crude oil was up 41.2 percent, while gasoline jumped 32.6 percent, crude coal added 32.2 percent, ferrous metals gained 31.0 percent, kerosene was up 29.4 percent, diesel added 21.5 percent, raw materials jumped 15.4 percent, food gained 9.1 percent and consumer goods were up 4.6 percent. Non-ferrous metals eased by 2.1 percent.

China is scheduled to release July numbers for its consumer price index on Tuesday. Analysts are looking for an increase of between 6.4 and 6.7 percent on year, easing from the 7.1 percent annual expansion in June.

[millionairemind]

http://www.marketwatch.com/news/story/c ... F84F656%7D

China CPI increase falls to 10-month low in July

By Chris Oliver, MarketWatch
Last update: 12:06 a.m. EDT Aug. 12, 2008Comments: 4HONG KONG (MarketWatch) -- Increases in China's consumer price index slowed for a third straight month in July, marking its weakest pace of gains in 10 months, and bolstering the case for an easing of monetary policy conditions before year end.
Consumer prices rose 6.3% in July from a year earlier, after rising 7.1% in June, according to a National Bureau of Statistics report on Tuesday.
Economists had expected CPI of 6.6% in July.
An analyst said the softer inflation figure was enough to swing monetary policy in favor of an easing bias, in spite of data released Monday showing the producer price index rose 10% in July, its fastest pace of gains in 12 years.

[winston]

China may ease requirements for QDII participants
Tue Aug 12, 2008 8:08pm EDT

SHANGHAI, Aug 13 (Reuters) - China is considering lowering the minimum asset management requirement for domestic fund companies applying to invest in overseas markets, the official China Securities Journal said on Wednesday, citing sources familiar with the situation.

The move is expected to spur more asset management firms to participate in China's Qualified Domestic Institutional Investor (QDII) scheme, the newspaper said.

The government may lower the asset management requirement, as of the end of the latest quarter, to 10 billion yuan ($1.46 billion) from the current 20 billion yuan, the newspaper said.

To participate in the QDII scheme, Chinese fund management companies must have net assets of no less than 200 million yuan, have been managing securities investment funds for at least two years, and have assets under management of no less than 20 billion yuan, or the equivalent in foreign currency assets, as of the end of the latest quarter.

Senior industry executives said it was relatively easy for fund companies to reach the net asset threshold but difficult to increase the amount of assets under management, especially given current weakness in the financial markets, the newspaper said.