A worker checks the production in the packaging section of the newly opened Lego factory in Jiaxing, Zhejiang Province, 中国, on Nov. 24, 2016. (ヨハンズ・アイスル / AFP /ゲッティイメージズ)A worker checks the production in the packaging section of the newly opened Lego factory in Jiaxing, Zhejiang Province, 中国, on Nov. 24, 2016. (ヨハンズ・アイスル / AFP /ゲッティイメージズ)

The Chinese economy is strange in many ways. Not only is it a hybrid between private capital and state control, but very few people directly invest in the mainland — and yet everybody is interested in how the second largest economy in the world is going to develop.

That’s because Chinese demand determines the prices of world commodities, and the operations of multinational companies in China impact earnings. When the yuan falls, markets across the world get jittery.

China watchers accept the fact that official Chinese data is severely flawed, and often simply fabricated, yet they still use it to analyze the Chinese economy and markets because there are few alternatives.

One alternative, しかしながら, is the China Beige Book International (CBB), a research service that interviews thousands of companies and hundreds of bankers on the ground in China each quarter. They collect data and perform in-depth interviews with Chinese executives.

Leland Miller, president of China Beige Book International.

Leland Miller, president of China Beige Book International.

Leland Miller, the founder of CBB, spoke with 大紀元 about which investors and companies are interested in China, the latest developments in the currency, U.S.-China relations, overcapacity problems, and the One Belt One Road Initiative.

大紀元: Who are the investors and companies interested in China and your services?

Leland Miller: There’s people who play the share roulette or people who have a specific company in mind. We see a lot of this in the retail space and they want to get more information from us. They invest in something where they think there is this untapped market either in China or as China goes abroad.

You’ve got macro firms who may not care about the day-to-day in China but want to make sure they understand the dynamics of China demand, of China credit, of China currency, so that they don’t get caught out.

Commodities are in incredibly high demand. We spend a lot of our time dealing with commodities firms now because we have all this data that’s not typically available. Things like net capacity, and a lot of firms have said, “Well, we have no way of checking government numbers…. If they say they’re cutting capacity, we have to believe them.” Well, we don’t believe them, we do it ourselves and what we found is that the opposite is happening across commodities, across time.

So you have all these different types of firms, but I think there is one uniting factor: whether they’re doing China micro, they’re doing China macro, or some niche element of the economy. If they don’t get China right, there are going to be repercussions in their portfolio.

So even people now who have absolutely nothing to do with China are clients of ours because as they keep abreast of what’s going on, they need to understand this and not get knocked from the side off their feet when they weren’t expecting it.

An increasing share of our clients are people who just want to understand China at the 30,000-feet level. Our early clients are people who want to understand at the 30-feet level. And we have everything in between, but also the corporates. The corporates have a very different mind-set: they need to know different things than, say, a hedge fund or other asset manager, who is simply trying to find a good trade.

大紀元: How do you see the Chinese currency developing?

氏. Miller: They took a very risky strategy on the currency dating back to last fall, and it worked. But it didn’t have to work and it may not have worked, and I think it’s worth looking back at this chronology because this could have been a very different year had some of this not worked out. Back in September 2016, the Chinese started to understand that there was a very real chance that the Federal Reserve (連邦) was going to hike in December, and they needed to prepare the currency and prepare themselves for a rate hike.

They started doing that and they weakened the currency. And then when President Trump was elected, they said, “Okay, well, we got to do this even more. We have to weaken right up until he gets elected so that we can come back and say we’re going to strengthen it once he gets elected.” Now it’s a very cynical strategy that happened to work, but what’s interesting is that there was an enormous amount of commentary late in 2016, early 2017, about how — and we see this all the time — now that China is pegged to a basket, it’s not pegged to the dollar, and that the Chinese have made this move.

That is just not correct. They had not switched, there has not been this back-and-forth. The yuan is essentially pegged to the dollar. The seven handle on this, the seven yuan to the dollar is extremely important for a lot of reasons, most importantly the politics around this, the politics with Congress, the politics with Trump, the politics with the Chinese leadership.

And the idea of them creeping closer and closer to 7 was a real major problem. They understood that this was a politically charged number and they got real close to it and they timed it well and they backed off it, and it had been strengthening ever since which has been supported by the fact that the dollar has been in a weakening trend.

But the interesting thing here is they figured out, “We’re going to give Trump little rationale for letting him say we are a currency manipulator. But right up until that point, we’re going to keep weakening, and we’re going to hope that nothing bad happens.”

Shockingly, they got up to 6.9 — it was approaching a danger point where I think markets would have started caring, and they backed off at the right time. So they have had the 2017 best case scenario, they haven’t had these interruptions, they haven’t had a super strong dollar that a lot of people thought was going to happen six months ago.

So the yuan is not on the top of people’s worry list right now but it’s just a matter of time before they have to deal with these dynamics again, unless the dollar is in a long term weakening trend.

大紀元: How do you see U.S.-China relations in the future?

氏. Miller: The administration understood that China’s a radioactive word if you use it politically, so we’re going to fight back on China, we’re going to save American workers from the tyranny of Chinese goods. That was the calling card for a while. And then of course President Xi and President Trump met at Mar-a-Lago and had this beautiful chat and everything turned around.

President Trump was convinced to give the Chinese some amount of time to fix the trade problem and fix North Korea and a whole bunch of other things. A lot of really smart China watchers have been saying recently that the President is angry that the Chinese have not done what he wanted them to do on the trade side of North Korea and he’s flipped and you’re about to see the repercussions.

I would actually push back against that. I think that what you’re seeing right now is a gradual dissatisfaction with this. But the real tea leaf here will be the South China Sea. アメリカ. position in the South China Sea has just been invisible for the most part. I mean, they talk about a few spy ops but they have been mostly invisible for the past six, seven months.

And when the President, the White House, the administration makes this turn and decides: “Alright, China is not going to help us out, we now need a stick and we need a big stick,” you’re going to start seeing developments in the South China Sea. The fact that there has been some push back on trade, the fact that we’re talking a little bit about steel, it’s totally misunderstood.

The steel measures being talked about are not anti-China, although they’ll be sold as that. So I think we need to stop jumping the gun on the idea that the president has turned hostile on China. This hasn’t happened. Do we think it will happen? はい. I think it’s a 2018 thing. But I don’t think that there has been a major shift in policy.

Chinese blacksmiths at a steel furnace in Nuanquan, 中国, 2月に. 23, 2015. A booming property sector and monetary stimulus provided support for battered steel companies in 2017. (PHOTO BY GETTY IMAGES)

Chinese blacksmiths at a steel furnace in Nuanquan, 中国, 2月に. 23, 2015. A booming property sector and monetary stimulus provided support for battered steel companies in 2017. (PHOTO BY GETTY IMAGES)

大紀元: Are the Chinese really tackling the overcapacity problem?

氏. Miller: There are two stories here. The first is what our data is saying and the second is the mistake I think a lot of investors make in seeing commodities as monolithic in China.

People usually think that they’re either going to cut capacity across the board or they’re not going to cut capacity at all. So what we have been seeing is not cutting capacity. When prices have gone up, a lot of investors said, “Look, the Chinese government is making good on their pledges to cut capacity. Look at prices are going up, imports are going up.” Anecdotally, that suggests they’re cutting capacity.

Now, they are cutting gross capacity, but total capacity added has gone up every quarter and it’s gone up in almost every sub-sector every quarter. They are adding capacity, and this is very intuitive if you think about it. There are all these industries who used to laugh about the economic reports we used to get from these firms quarter after quarter after quarter of higher inventories, worse revenue, no profits, more capacity — it was just a joke.

Now all of a sudden they’re getting this good economic scenario and they are not about to cut back. It makes sense that they’re not cutting back, but the narrative on this is that the Chinese government is hard at work cutting capacity, and it’s totally a mistaken narrative. Now, we tracked this very closely across coal, aluminium, 鋼, and copper, and there is a very clear dynamic there and it’s been clear for the last year plus. They are not cutting net capacity.

Now the other issue here is the differences between sub-sectors. When you look at coal and when you look at steel, there’s a different long term concern about the two of them. With all these Chinese commodities, there’s potential overcapacity issues, but coal kills people and coal turns people’s lungs black.

China Beige Book International (CBB) is an independent research firm that collects data from thousands of Chinese firms every quarter, including in-depth interviews with local executives. CBBは決定的な成長番号を与えるものではありませんが、, it logs how many companies increased their revenues, how many laid off workers, and many more datapoints.

China Beige Book International (CBB) is an independent research firm that collects data from thousands of Chinese firms every quarter, including in-depth interviews with local executives. CBBは決定的な成長番号を与えるものではありませんが、, it logs how many companies increased their revenues, how many laid off workers, and many more datapoints.

And so the idea that the Chinese can continue to crank out coal the same way they can crank out steel, with the same repercussions, it’s not there. So over time I think we will see a pullback on the coal side. It’s an open question as to whether we’ll see it in steel and aluminum; a lot of this might be affected by the trade actions coming out of the United States, but right now the major story here is that investors are guessing.

They’re guessing based on prices and they’re getting this wrong more often than not. They don’t understand the degree to which these sub-sectors are cutting back. 実際には, they increasing capacity, they’re bringing more capacity online. They take the old ones and take them offline or the ones that aren’t being used, but they’ll activate others or they’ll build others or they’ll upgrade others. So the overall dynamic is that more capacity is being brought online but then make a very big show of what they take offline or what they blow up.

They used to put TNT into giant iron plants and blow them up to show that the government was doing something. This is the equivalent of this in 2017. But net net, they’re not cutting back right now. They’re trying to take advantage of a good market for their goods and so this is going to shock people. It’s already surprised people; that’s why you see these enormous 5 パーセント, 8 percent moves in a day on these commodity markets. But it’s going to shock people more going forward when they understand the totality of what has happened over the past year.

大紀元: What are your thoughts on the One Belt One Road (STUDY) initiative?

氏. Miller: What is the real goal for this? The goal is to exert Chinese influence abroad, it’s to recycle surpluses in goods and services abroad to some degree because of oversupply. It will accomplish certain things but is it a worthwhile project? Is it going to do what everyone thinks it’s going to do? ノー, of course not.

But there are things being done. It is a project large in scope, it will attract headlines for many years, but at the end of the day is this a game changer for China? ノー. Have the Chinese ever in any context found a sustainable ability to get returns, to get an actual return on their investment? ノー. And they’re going into a situation where they’re irritating a lot of these states who think that they were going to be able to use their own labor, but the Chinese are using Chinese firms who are doing quite well so far, and having them do the labor.

There are political problems that brings up. They also have a different situation right now than they did three years ago when you talk about the Forex reserves in the capital accounts. So the idea that they had too much and had to figure out ways of dumping Chinese capital in other places, that problem has reversed itself. Now we are not at any kind of problematic point at around $3 兆, people have the opposite concerns. I think that if this were not a President Xi initiative that he has attached his name to, this would have been deescalated far more dramatically.

They’re going to have to build it up, it still plays a role, it’s still worth watching, but the idea that this is a real game changer similar to the Asian Infrastructure and Investment Bank which was a political upheaval about a year ago, two years ago, whenever it was, these are not game changers. These are Chinese inefficiencies at work abroad.

Interview edited for brevity and clarity

さえずり: @vxschmid

六月 27, 2017

A customer selects vegetables at a supermarket in Hangzhou, in eastern China's Zhejiang province on March 10, 2016. (STR / AFP /ゲッティイメージズ)A customer selects vegetables at a supermarket in Hangzhou, in eastern China's Zhejiang province on March 10, 2016. (STR / AFP /ゲッティイメージズ)

After severe jitters in 2015 そして 2016, the Chinese economy and its foreign exchange rate have been mostly stable in 2017. Except for volatility in interest rates and the stock market, everything seems fine ahead of the important Party Congress to be held this fall. At the congress, the regime will confirm the next Party leadership.

Of course, official figures, like the 6.9 percent annualized GDP growth rate released for the first quarter of 2017, are unreliable and merely a rough indicator of where the journey is going.

To provide a more accurate read on China’s economy, Leland Miller and his team at China Beige Book International (CBB) interview thousands of companies and hundreds of bankers on the ground in China each quarter. They collect data and perform in-depth interviews with Chinese executives.

The CBB’s recent report confirms the eerie stability of the Chinese economy.

“So far, 2017 has played out as a best-case scenario. … The remarkable absence of both domestic and foreign shocks has created the stable environment corporates need to outperform most expectations, including ours,” states a preview to the full Q2 2017 報告する.

The retail, サービス, and manufacturing sectors all showed an increase in activity. Hiring was also better than in an already good first quarter. This is important for the Chinese regime, as unemployed workers are unhappy workers who often express their unhappiness in mass protests.

According to the official unemployment rate, this is hardly ever a concern, as it has been hovering between 3.97 percent and 4.3 percent for the last decade. しかしながら, when the real economy dipped in 2016, the China Labour Bulletin logged a total of 1,378 strikes and protests in the second half of last year.

Extend and Pretend

しかしながら, despite the overall positive response from the firms surveyed by CBB, there are a few traditionally Chinese “extend and pretend” caveats to the rosy picture.

例えば, every sector reported record inventories, which is positive for production and jobs, but not for sales. If the stocked products aren’t sold shortly, it will hit the companies’ bottom line.

“The same companies who report solid results on most indicators also continue to show cash flow in the red—corporate health has not yet responded to better growth,” states the CBB preview.

Then there is the credit market, a source of worry for China watchers since the end of last year. China’s bank borrowing rates have been creeping up from 3 percent to almost 4.5 percent since late 2016, and CBB notes that this is now affecting the bank’s corporate customers.

“In Q1 … credit tightening was limited to interbank markets. In Q2, it hit firms: Bond yields and rates at shadow banks touched the highest levels in the history of our survey, and bank rates their highest since 2014,” states the report.

According to CBB, しかしながら, overall borrowing was relatively stable, despite higher costs and the fact that corporate bond issuance collapsed に 2017. Why? Because firms believe in the ability of the regime to keep things stable beyond 2017.

As the report puts it, “while borrowing did see a mild drop for the third straight quarter, companies’ six-month revenue expectations remain robust in every sector save property. Companies assume deleveraging is transient, likely because they are skeptical the Party will allow economic pain in 2017.”


11月に上海で住宅超高層ビルの建設現場の労働者. 29, 2016. (ヨハンズ・アイスル / AFP /ゲッティイメージズ)11月に上海で住宅超高層ビルの建設現場の労働者. 29, 2016. (ヨハンズ・アイスル / AFP /ゲッティイメージズ)

公式の中国の経済データの悪名高い信頼性の欠如を考えます, アナリストは、政府が出し数字だけに依存するとき、それは間違って取得リスク. 中国の成長物語であります, ・消費への製造業からのリバランス, 実際に起こって? または巨大な債務の問題です, 半破産国有企業および広範な設備過剰と, まだオーバーライド懸念?

これらの暗い問題に光を当てるために、, 中国ベージュブックでのリーランド・ミラーと彼のチーム (CBB) 経済がやっているかを正確にゲージを取得するために、中国で地面に四半期ごとに企業や銀行の何百何千ものインタビュー.

CBBは、定量的なデータを収集し、地元の幹部との綿密なインタビューを実施します. それは多くの場合、公式の物語、常にではないとは全く逆になっているデータを思い付きます, 第1四半期のその調査として、 2017 ショー.

「中国ベージュブックの新たな第一四半期の業績は、前年同期よりも経済は確かに強く示し、最後の四半期と同等に実行します. しかし、コアの問題が残っています, そのうちのいくつかは、悪化しています,」CBBは、早期ブリーフの状態を見て.

最初, 良いニュース. 社会の安定を維持するために, 中国共産党は、すべてのコストで高い雇用を維持する必要があります. そして、それは第一四半期に行きました.

「全国的に, 雇用と賃金の伸びは前四半期から変わらずでした, しかし、当事者は所望の安定性について簡単に休憩することはできません,」簡単な状態.

どのような夜に中央プランナーを保つのは、唯一の国営企業を所有しているという事実であります (SOE) 雇っています, 政府の指示で, 民間企業が雇用を削減している間、, CBBに従って.

「仕事の成長は民間企業で鈍化しました, 雇用を駆動するために国営企業を残します. 又, 労働力の拡大は、古い経済部門で濃縮しました。」


これは別の問題です, 中国当局は、過去10年間で用語「リバランス」をアップ宣伝しているどのように与えられました. 用語は、消費に重工業と輸出からの経済的なフォーカスをシフトすることを意図したポリシーやサービスの範囲をカバー.

「これは、電源を切るについてです, それは自主革命です,」 プレミアリ・ケキアンに任命された後の彼の最初の演説で語りました 2013. 「これは非常に痛みを伴うこと、さらには自分の手首を切るように感じるでしょう。」

写真は中国人民銀行の本部を示し (PBCまたはPBOC), 中国の中央銀行, 8月に北京で 7, 2011. 標準 & プアーズ米国債の格下げは、世界のためのウェイクアップコールでした, トップ中国国家新聞の論評は、8月にしました 7, アジアの輸出業者は、特別なリスクに直面していると付け加え. 中国は米国債の最大の外国ホルダーです. AFP PHOTO / マーク・ラルストン (写真のクレジットはマーク・ラルストン / AFP /ゲッティイメージズお読みください)

中国人民銀行の本部, 中国の中央銀行, このファイル写真の北京で. (マーク・ラルストン/ AFP /ゲッティイメージズ)

CBBカバレッジの年の最後のカップル以上, このリバランスは地面に実体化に失敗しました, 当局はそれについて話し続けるが、.

最新の四半期も例外ではなかったです. 中国の消費者の上昇のための一つの重要なプロキシ, 例えば, 小売売上高で.

に 2017, さえ 公式の小売売上高の伸び 以下浸し 10 年ぶりのパーセント. これが唯一の夢でした市場を開発した数ですが、, それは減少傾向にされています, ないアップ, リバランスのシナリオの下でそれが必要として、.

そして、CBBデータは、小売業が有効でさえ弱いことも示唆しています. 簡単に言うように: 「我々のより広範な結果は、売上高の緩和よりもはるかに多くを表示します. 利益, 投資, 現金流動, と比較して、すべての弱体化雇います [の最後の四半期 2016]. 価格や賃金の伸びも遅かったです. 小売業者は鋭く低いレートにもかかわらず、以下の借用しました, 自信の欠如を示しています。」

別の指標は、サービス業であります. 中国は、ウィジェットを作り、財務およびソフトウェアベースのソリューションのような高レベルの国内サービスを提供するために、鋼を溶融から離れて移動したいです. このアプローチは、あまりにも工業中毒中国の環境のために良いだろう.

このような希望は「時期尚早まま,」CBBを述べて. 製造業は、すべての点でのサービスよりも優れていました, 利益への販売から, だけでなく、投資および借入.


リバランスの別の主要な要素は、過剰生産能力の切断であります, 特に石炭と鉄鋼で. これらはすべて、市場ベースの改革だろう, 半倒産企業が生産停止場所, 資源を無駄に, そして憂鬱な価格.

公式, 中国は、それが満たされたその 2015 切断の標的 45 万メートル鉄鋼容量のトンだけでなく、 250 石炭容量の万トン.

そのCBB報告書によりません. 「中国ベージュブックデータは、正味容量は過去4つの四半期のそれぞれについて、すべてのサブセクターに上昇している示しています。」これは、中国は、いくつかの植物をシャットダウンしなかったことを意味します, それより新しいものが同時に建設されました.

調査会社キャピタル・エコノミクスによると、, 会計は加算されません. 「企業は、実際に彼らの生産能力を削減している場合, その後、一つは彼らの労働力の一部が不要になったと解雇されることを期待するべきではありません,」彼らは最近の報告書に書きます. しかしながら, それは「設備過剰分野」ラベル何で総雇用はわずかで下落しています 5 パーセント, 公式の数字をサポートするよりも大幅に少ないです.

地面にCBBデータも公式の金融引き締めの物語と矛盾します. 中国人民銀行 (PBOC) 異なる金利を引き上げたことが今年わずか銀行を充電します, 銀行間貸出金利の急上昇につながります. 中国ウォッチャーはその後、流動性はどこにでもタイトだったと結論しました.

CBBによると、, しかしながら, 締め付けは不動産セクターに介して供給しています, それがピークに達した可能性が考えていました. 他のみんなのために, 借入条件がそろえたまま: 「それはまだ起きていません, ない通りに. 資本金の価格が軒並みこの四半期に落ちました, 銀行で, 影の財務の, そして、債券市場インチ」


In a file photo, miners push carts containing coal at a mine in Qianwei county, Sichuan. (Liu Jin/AFP/Getty Images)In a file photo, miners push carts containing coal at a mine in Qianwei county, Sichuan. (Liu Jin/AFP/Getty Images)

A rebound in global coal prices became one of the biggest stories in commodities during the second half of 2016. A more than 90 percent increase since mid-year in the benchmark Australian thermal coal prices has lifted stocks of international coal producers.

But don’t tell that to Chinese coal producers. The recent rally in coal prices hasn’t reversed the fortunes of many Chinese coal producers still wallowing in overleveraged balance sheets, high debt burden, and weak demand.

Recent bond market travails of these companies signal more defaults may lie ahead for Chinese onshore issuers as trillions of yuan in bonds become due in 2017.

Sichuan Coal Default

State-owned Sichuan Coal Industry Group missed a bond payment on Dec. 25. A total of 1 億元 ($150 百万) in principal plus interest were due.

It was the second default for the coal company this year. Sichuan Coal also missed an interest payment in June but that default was ultimately resolved after the Sichuan government stepped in. Bond investors were paid at the end of July with loans from state-owned Sichuan Provincial Investment Group and a consortium of local and national banks.


Australian thermal coal prices during last twelve months (Indexmundi.com)

Other Chinese state-owned enterprises (国有企業) are experiencing similar liquidity issues. China’s biggest lender—the Industrial and Commercial Bank of China—on Dec. 30 agreed to invest in Taiyuan Iron & Steel Group, Datong Coal Mine Group, and Yangquan Coal Industry Group via debt-to-equity swaps. Such swaps have been a key tool of Beijing to reduce leverage amongst SOEs by exchanging debt for equity. The swaps instantly eliminate debt and reduce leverage ratios at the cash-strapped firms.

Steel, 石炭, and other heavy industries have languished on weak global and domestic demand. Beijing also launched a program to shut underperforming mines and plants and reduce its coal producing capacity. China’s Shanxi Province in the northeast is its biggest coal-producing area, accounting for more than 25 percent of the country’s coal production last year.

Trillions of Yuan Becoming Due

Historically, bond defaults have been unheard of in China. But in 2016, 55 corporate defaults were recorded, more than double the number for 2015. そして 2017 will likely see even more defaults.

より多い 5.5 trillion yuan ($800 10億) in bonds will mature in 2017, 若しくは 1.8 trillion yuan more than 2016, according to China Chengxin International Credit Rating Group. That’s a significant amount of cash Chinese companies must come up with during the next year.

Sichuan Coal’s default—assuming the local government declines to extend another bailout—could signal that Chinese Communist authorities are willing to allow more bond defaults going forward. In truth, analysts have expected massive bond defaults for years, while Beijing has been selective in choosing which SOEs to bail out. Regardless, the number of such bailouts has decreased, underscoring authorities’ increasing comfort level with letting companies fail. With the significant amount of bonds due in 2017, a spike in bond defaults will likely result.

Furthering the challenge facing Chinese companies is the economic backdrop, which doesn’t look friendly for the Chinese bond market.

China’s rickety financial system is built entirely on overleveraging with cheap debt.

Like the rest of the global bond market, Chinese bonds have already been under pressure from the U.S. Federal Reserve’s plans of raising short-term interest rates. This has raised yields across the globe. China’s 10-year government bond yield settled at 3.07 percent on Dec. 30, slightly lower than mid-month but far higher than the 2.8 percent range at the beginning of 2016 (bond yields and prices move in opposite directions).

Faced with increased risk of capital flight, China may elect to guide its own rates higher. But in such a scenario, raising new debt would become prohibitively more expensive during a time when many Chinese companies are facing liquidity problems amidst slowing economic growth. The central bank’s actions would further squeeze Chinese borrowers in need of new debt to roll over existing debt.

China’s rickety financial system is built entirely on overleveraging with cheap debt. It is especially susceptible to rate hikes and without the type of economic growth required to withstand such rate increases.

With so much debt becoming due and armed with few options to raise new capital, 2017 could spell disaster for cash-strapped Chinese companies.


Workers sort parts at an electronics company in Tengzhou, in China’s eastern Shandong province on Feb 1, 2016.  While revenues and profits have grown, companies are squeezed for cash. (STR / AFP /ゲッティイメージズ)Workers sort parts at an electronics company in Tengzhou, in China’s eastern Shandong province on Feb 1, 2016.  While revenues and profits have grown, companies are squeezed for cash. (STR / AFP /ゲッティイメージズ)

Chinese regime leader Xi Jinping is rocking so many boats on the political front that he wants to make sure the economy and financial markets remain stable in 2017. He even said he prefers stability over meeting the regime’s GDP growth target.

The past year was a partial victory, as the regime managed to contain massive capital outflows, labor market stress, and stock market crashes by using the usual tactic of pushing hundreds of billions of dollars into the economy through the state banking system. But underneath the surface, risk in financial markets keeps building.

Xi recently admitted at a secret meeting that China may not meet its target for GDP growth if doing so creates too much risk, によります Bloomberg report. As long as the economy and employment remain stable, growth can slip below the 6.5 percent target.

“Investors may obsess over GDP, but the Party can demand any GDP figures it wants. What matters to Beijing is joblessness. If net hiring looks good, the government has little reason to act, even if other indicators show results which disturb markets,” states a report by research firm China Beige Book (CBB).

CBB has made a name for itself by providing accurate on-the-ground data for China’s economy, as official figures are often unreliable. The researchers interview thousands of companies and hundreds of bankers in China each quarter to get an accurate gauge of the themes in the Chinese economy.

The latest report reflects the narrative of the Chinese regime as well as Western analysts: The economy has stabilized thanks to stimulus, and the labor market is also stable.

Revenues in retail, the service sector, manufacturing, 交通, 不動産, and the commodity sector increased at more than 50 percent of the companies surveyed in the fourth quarter of 2016, a good indicator of solid GDP growth. Overall profits increased as witnessed by 47 percent of companies and 43 percent of firms hiring more workers.

Keeping workers happy is the most important objective for policymakers, as an article by regime mouthpiece Xinhua in August stated: “China did not fabricate its unemployment data, and it can keep it stable despite redundancy pressures … Unemployment reflects the performance of an economy and influences policy.”

しかしながら, stability in China is a double-edged sword for Western investors. If things are good, more stimulus is probably not forthcoming. “If net hiring looks good, the government has little reason to act, even if other indicators show results which disturb markets. In the fourth quarter, net hiring looked very good, leaving no reason for stimulus in early 2017,” states the CBB report.

Financial Pressure

This gain in growth and hiring came at a price, しかしながら. Profits and revenues at firms are rising, but the cash doesn’t show up at the firms—a potential signal of financial stress. “Cash flow pain persisted, with the year-on-year results rather eye-catching,」レポートを述べて.

Much of the cash flow from a company’s operations is determined not only by how much the company sells but also, much more importantly, by how much of that money it receives and when. If a company is still waiting for payment, the money is booked under a category called “receivables.” This category got bigger in 22 percent of the companies CBB surveyed and decreased in only 15 percent of the firms in the survey.

Likewise, if some businesses have to wait for money, they are going to delay payments to their suppliers (“payables”). The payable category got bigger in 26 percent of companies and decreased in only 17 percent—some of the worst readings in CBB’s history.

A survey by Bloomberg earlier this year showed that it takes 83 days for the average Chinese firm to get paid, almost double the time it takes in other emerging markets. As for paying out, Chinese companies are even slower. Euler Hermes, a company that specializes in trade credit insurance, shows that Chinese companies took 88 days on average to pay their obligations in 2015.

Another drain on cash is a rise in inventory. The companies spend money to produce goods but don’t sell them for the time being. Inventories got bigger at 39 percent of the firms in the fourth quarter, the largest increase on record for the CBB survey.

The long delays in settling bills could be a sign that payments for interest and debt—another negative for cash flow—are overwhelming companies. If these payments become too large, the companies have to squeeze operational cash flow to keep on going or borrow even more to make their immediate payments.

“Cash flow could explain why firm borrowing in the third and fourth quarters hit the highest levels CBB has reported since mid-2013. Firms may not be borrowing to fund expansion, but rather to cover shortfalls,」レポートを述べて.

If firms can’t borrow more or squeeze their suppliers, they will go bankrupt. According to research by Goldman Sachs surveying companies in China, four have defaulted on $3 billion worth of bonds since the middle of November. These defaults are a break with the record in the previous five months from June to October, when only three of the companies surveyed didn’t meet their payments. Given that China’s companies are drowning in debt, this squeeze on cash flow does not bode well for stability in 2017.


Pedestrians walk past the People's Bank of China, the central bank of China, in Beijing July 8, 2015. (グレッグ・ベイカー/ AFP /ゲッティイメージズ)Pedestrians walk past the People's Bank of China, the central bank of China, in Beijing July 8, 2015. (グレッグ・ベイカー/ AFP /ゲッティイメージズ)

アメリカ. Federal Reserve is poised to raise benchmark interest rates as soon as this week, which may bring wide-ranging impacts to China’s own economy and monetary policy.

The Chinese economy serving as backdrop has shown signs of slight improvement in recent weeks. October trade data was positive, according to state statistics, with both imports and exports increasing in dollar terms compared to a year ago.

Exports were flat (に 0.1 パーセント) but up considering recent strengthening of the dollar. Imports surged—up 6.7 percent—on higher inflows of commodities such as oil, copper, and coal.

Deflationary pressures also eased somewhat. China’s producer’s price index (PPI)—a measure of price of factory inputs—rose in November as prices of coal, 鋼, and crude oil all jumped. Consumer inflation also picked up more than forecast, and should continue to rise given the increase in PPI.

An expected series of U.S. rate hikes—December’s 25 basis points should only be the beginning—will continue to boost the dollar and exacerbate existing capital outflows which Beijing is trying hard to restrict. And with continued positive inflation figures domestically, People’s Bank of China (中国人民銀行) could be pressured to tighten its own rates policy in the near future.

No End to Capital Outflows

A stronger dollar makes U.S. investments more attractive to the Chinese, considering recent depreciation of the yuan.

This could prompt Chinese investors and companies to continue searching for loopholes around capital controls put in place by Beijing to limit cash outflows. China has already spent a big portion of its foreign exchange reserves to manage a depreciating yuan. Any continued strengthening of the dollar will put even more burden on Beijing to burn through its remaining reserves.

PBoC’s reported foreign exchange reserves dropped $69 billion in November, a decline of 2 percent from October and the biggest monthly slide since January. China’s foreign reserves have largely been declining since August 2015 as the PBoC has sold dollars, and as the dollar’s relatively strength versus basket of other currencies increased.

Along with selling the dollar, Beijing is aggressively cracking down on cash leaving the country from companies and individuals. Consumers already face a $50,000 annual conversion limit. For companies, authorities recently barred foreign acquisitions of $10 billion or more, and instituted a new program where each transfer of greater than $5 million must be reviewed and approved by regulators.


(ソース: ブルームバーグ)

A widening gap between onshore and offshore yuan prices points to further yuan depreciation—and possible outflows—ahead. Hong Kong-traded CNH (offshore) yuan fell 0.84 percent versus the dollar in the last week (ending Dec. 8) while CNY (onshore) dropped 0.41 パーセント. Analysts generally view the CNH to be an accurate predictor of future dollar to yuan direction as it is not restricted by Chinese regulators.

Tightening Rates and Chinese Corporates

With cash expected to continue to flow out of China, Beijing may have little choice but to tighten its own monetary policy.

If authorities choose to go down this route, corporate loan defaults could accelerate and some companies may find it difficult to service their debts and stay solvent.

To put it in context, China’s total debts stand at over 250 percent of the country’s GDP. Fitch Ratings sounded the alarm last week after it estimated that some 15 に 21 percent of all loans in China’s banking system are non-performing. Those figures have been widely suspected, but regardless it’s a staggering amount compared to official average statistics of less than 2 percent at the nation’s biggest lenders.


(ソース: Shibor.org)

After an initial flurry of corporate defaults early this year, few companies have been allowed to falter since. Instead of a massive wave of defaults like some analysts predicted, Beijing avoided such action by turning to more creative measures. Facing a slew of redemptions at maturity this year, state-owned companies employed other avenues to assuage the problem by using debt-to-equity swaps, and if the companies are still viable, issuing new bonds or using shorter-term financing to roll over long-term debt.

Until now, easy credit has made issuing new bonds cheap and easy. China financial data firm Wind Info estimates domestic bond offerings are up 44 percent year-to-date compared to 2015. But outside of the largest issuers, small to medium sized companies are increasing turning to short-term financing such as issuing commercial papers wealth-management products.

But these solutions are the most susceptible to interest rate fluctuations. If Chinese interest rates continue to rise, these strategies will no longer be viable.

The 3-month SHIBOR (Shanghai Interbank Offered Rate) has increased 12 percent in the last 60-day period to 313 basis points. Such increases in short-term interest rates may squeeze corporate financing activities and cause defaults at already cash-strapped companies.


Chinese retirees walk on the street in Beijing Oct. 16, 2014. (ケビン・フレイヤー/ゲッティイメージズ)Chinese retirees walk on the street in Beijing Oct. 16, 2014. (ケビン・フレイヤー/ゲッティイメージズ)

To boost returns and support a growing population of aging pensioners, China is embarking on a plan to centralize management of pension funds and divert more money into riskier asset classes.

The blueprint calls for transferring portions of local and regional pension funds to the centrally managed National Social Security Fund (NSSF), which is based in Beijing and has broader mandates to invest in riskier assets such as stocks, stock funds, and private equity.

The expansion of the NSSF and deployment of money into the stock market serves a dual purpose for the Chinese communist regime. In theory, investing in the stock market should generate greater returns and boost the size of the fund to cover growing pension commitments. This is something the local and regional funds couldn’t previously accomplish due to their investment restrictions and the low interest rate environment.

In addition, funneling more institutional money into China’s equity markets could reduce stock market volatility by decreasing influence of fickle retail investors. The more stable fund flow from pension funds should stabilize markets which has suffered from sudden retail investor inflow and outflows in the last two years.

Beijing began outlining a transfer of assets to the NSSF since last June, in the midst of Shanghai’s stock market bubble and subsequent crash. Guangdong Province was the first to transfer assets to the NSSF, and other provinces are following suit. As of December 2015, the NSSF managed 1.9 trillion yuan ($276 10億) of assets.

High Reward, Higher Risk

Currently, local and provincial pension funds are restricted to investing in safer asset classes such as bank debt and government bonds to preserve capital. But due to low interest rates, such investments have generated such meager returns that many pension funds find themselves unable to cover retirement payouts at a time when more state employees are approaching retirement.

The NSSF has no such restrictions and can invest up to 40 percent in stocks. At the end of 2015, 46 percent of NSSF’s assets were direct investments into companies, while the remainder were managed assets and investments, including stocks. According to the National Council for Social Security Fund which administers the NSSF, its assets appreciated 15.2 パーセントで 2015 そして 8.8 percent inception-to-date.

Those are good returns, assume the figures are believable. But investment returns and monetary policy are often fleeting. Within a different set of circumstances—a higher interest rate environment, for example—the fixed-income heavy local and provincial pension funds could beat the returns of the riskier NSSF.

What this asset transfer from provincial funds to the NSSF means is that going forward, the fortunes of all Chinese state retirees now rest upon investment managers in Beijing.

The problem isn’t the disparate investment strategies between funds—competent investment managers can disagree on asset allocation philosophy. Pensioners should be concerned that the interests of NSSF investment managers in Beijing may not always align with those of the retirees.

Exposure to Non-Performing Loans

The NSSF already appears to be doubling down on its risky bets by dipping into increasingly more toxic asset classes that could partially be motivated by political pressures.

The four massive state-owned asset management companies—set up to buy piles of non-performing loans (NPLs) from Chinese banks—are in the midst of raising new capital from a combination of IPOs and strategic investments from insurance companies and pension funds.

The NSSF will invest in at least two of these “bank banks,” as they’re commonly referred to—China Great Wall Asset Management and China Orient Asset Management. Both are also seeking IPOs early next year.

The bad banks were set up by China in 1999 to resolve the nation’s NPL problems resulting from years of bank loans to mismanaged state-owned enterprises (国有企業). The bad banks bought NPLs from state banks, freeing the latter’s balance sheets so they could keep lending to SOEs.

These bad banks essentially act as clearinghouses for China’s bad-debt problem. Beijing is able to shift such devalued—and sometimes worthless—assets away from the banks’ balance sheets, swapped out for either cash or bonds issued by the bad banks. That’s how the country’s big banks can claim sub-2 percent bad-loan ratios.

当初は, bad banks were given ten-year loans to finance the asset purchases and were supposed to go away after winding down the NPLs in ten years. But China’s debt-fueled economy has been generating so many NPLs that these bad banks are here to stay and need capital infusions to keep buying more NPLs.

And that’s where Beijing wants the NSSF and other retail investors to step in. Need more evidence that the interests of Beijing are going to increasingly influence management of pension assets? China’s recently deposed Finance Minister Lou Jiwei was appointed as the new chairman of NSSF, according to financial magazine Caixin.

Early Retirement and Social Unrest

同時に, some Chinese provinces are instituting early retirement plans to push workers off active state payrolls. At least seven provinces—mostly in the Northeast—announced the plans, in part to comply with Beijing’s directive last year to reduce steel and mining capacity.

Similar to the 1990s policy enacted by then-Prime Minister Zhu Rongji, these early retirees don’t count toward official unemployment statistics and their pension benefits are deferred. China’s official retirement age for state employees is 60 for men and either 55 若しくは 50 for women depending on position. Early retirement plans generally accelerate those rules by five years. They get a reduced monthly stipend during the five years, but must wait until the formal retirement age to enjoy pension benefits.

This alone has generated a spate of small but growing protests in the nation’s rust belt. If NSSF’s returns falter and the fund has trouble meeting its liability payments in the future, Beijing’s problems could quickly exacerbate.


A Bank of China branch in the City of London May 13, 2016. Bank of China is one of a number of Chinese banks looking to expand their presence abroad. (Dan Kitwood/Getty Images)A Bank of China branch in the City of London May 13, 2016. Bank of China is one of a number of Chinese banks looking to expand their presence abroad. (Dan Kitwood/Getty Images)

In an effort to curb runaway real estate prices, major banks in Australia—a popular destination for Chinese real estate investors—have stopped lending to foreign property buyers without domestic income.

Enter Bank of China, China Construction Bank, and the Industrial and Commercial Bank of China. Chinese purchases of Australian real estate barely skipped a beat, as local branches of Chinese banks have stepped in to fill the gap.

Chinese banks are following their corporate and retail clients by expanding abroad, bucking a global banking industry trend of retrenching.

しかしながら, compliance and regulatory obstacles could slow their ambitions. And despite recent gains, their overall global footprint is unlikely to challenge current market leaders in the near future.

According to data from China’s Ministry of Commerce, China’s outward direct investment (ODI) rose to $103 billion between January and July 2016, A 61.8 percent increase from the same period last year.

The United States and Germany were the most popular destinations for Chinese foreign investment, driven by major corporate mergers and acquisitions.

Chinese domestic banks are attempting to ride this wave. At the end of 2015, more than 20 Chinese banking organizations had set up 1,300 locations across 59 countries and territories, according to data from Bank of China.

“Chinese banks’ overseas loans increased by more than $600 billion since 2010 to reach near $1 trillion at the end of 2015, and are likely to grow further with the government’s support for companies’ ‘go global’ policies,” wrote the IMF in an August report “China’s Growing Influence on Asian Financial Markets.”


China outward direct investment (ODI). (ソース: 国際通貨基金)

China Construction Bank, its second-largest bank by assets, is looking to expand its footprint from 24 に 40 countries and increase foreign contribution of pretax profit from 1.7 percent as of 2015 に 5 percent by 2020, according to its Chairman in a recent speech in Hong Kong.

Among its peers, Bank of China has the biggest foreign operation, contributing to 23 percent of its pretax profit last year.

Bucking a Trend

Chinese banks are pivoting abroad while established global banks are scaling back.

Ten years ago, New York-based Citigroup Inc. had a retail presence spanning 50 countries from Tokyo to Madrid serving almost 270 million people globally. But profit and regulatory pressures have caused the bank to close or divest operations in more than half of those locations, including Turkey, Guatemala, and Japan.

The retrenching at Citi, HSBC, and other global banks has been quick and dramatic. The goal is to get leaner by focusing on the most profitable customers such as high-net-worth individuals and multinational corporations.

That has also been a goal of Chinese banks—as wealthy consumers and both private and state-owned companies look for foreign assets, the banks have been there to lend.

There’s also a political component to the expansion. China’s state-directed “One Belt, One Road” initiative have forced Chinese banks to enter emerging markets in the Middle East and West Asia where the banks otherwise wouldn’t venture. That’s a major reason the “big five” Chinese banks have been ahead of smaller banks in expanding abroad.

Regulatory Push Back

Chinese banks’ activities are coming under increasing scrutiny, especially in Australia where they’ve exported the hyper lending that fueled China’s real estate bubble.

Chinese banks have financed the majority of recent Chinese purchases of property and corporations in Australia. Loans originated by Australian branches of Chinese banks increased at four times the rate of growth for loans originated nationally during the first quarter of 2016, according to Australian government data. This has prompted regulators to warn that such rapid expansion by foreign lenders could become a systemic threat to the Australia’s financial system.

“One is duty bound to observe that there is a history of foreign players expanding aggressively in the upswing only to have to retreat quickly when more difficult times come,” Reserve Bank of Australia Governor Glenn Stevens said in a speech in Sydney in March. Stevens did not single out China specifically.

Lack of controls adhering to the more stringent foreign regulatory framework is another common risk facing Chinese banks with overseas aspirations. アメリカ. Federal Reserve last month ordered the New York branch of the Agricultural Bank of China to improve its anti-money-laundering (AML) infrastructure after examiners found “significant deficiencies” in its AML controls.

While the Fed did not specify what the violations were, the regulator said on Sept. 29 that it had found major flaws in risk management — monitoring and combating illicit banking transactions — at the bank’s local branch.

Agricultural Bank of China is the latest example of Chinese bank having difficulties with U.S. AML and know-your-client rules. The Fed gave similar warnings last year to Bank of China and China Construction Bank regarding AML procedures.

And there’s reason for the heightened scrutiny. Global Financial Integrity, a Washington-based financial industry watchdog, estimated that between 2004 そして 2013 China was the world’s biggest source of illicit monetary outflows, according to Reuters. China accounted for about 28 percent of the $4.9 trillion in illicit funds moving from the world’s ten biggest economies.

China’s “Big Five” banks are approaching 10 trillion yuan in combined overseas assets.

Minding the Gap

Despite the challenges, China’s “Big Five” banks are approaching 10 trillion yuan ($1.5 兆) in combined overseas assets for the first time.

But they still lag behind their global peers in many respects and have inadequate business models. “The over reliance on interest income [at Chinese banks] as a profit model most definitely requires change,” according to a joint PwC-Renmin University study on internationalization of banks.

Currently, Chinese banks provide a financial support network for Chinese businesses and nationals in overseas markets, especially as Chinese companies need to transfer cash to make acquisitions abroad or invest in local R&D.

The banks generally focus on commercial and merchant banking, and do not offer a full product suite including asset management or investment banking like their international peers. As more countries and organizations use the yuan to settle payments, Chinese banks’ overseas influence and product portfolio could grow.

That’s the easy part. But Chinese banks lack the single most important element for any bank’s success: trust.

Major Chinese banks answer to the Chinese Communist Party, not its customers. Their systems and processes are often archaic. For political reasons, state-owned lenders eschew global industry-leading software for homegrown systems. Risk management and corporate governance is often lax.

For Chinese banks, the business framework for global expansion is in place. The trust? Not so much.


人々は青島のオフショア石油エンジニアリング・プラットフォームで動作します, 中国, 7月 1, 2016.  独立した中国ベージュブックの調査によると、, 経済が安定しています, しかし、この改善は価格で来ます.
(STR / AFP /ゲッティイメージズ)人々は青島のオフショア石油エンジニアリング・プラットフォームで動作します, 中国, 7月 1, 2016.  独立した中国ベージュブックの調査によると、, 経済が安定しています, しかし、この改善は価格で来ます.
(STR / AFP /ゲッティイメージズ)

誰も公式の中国の経済データを信じていません, しかし、人々はまだ多くの良い代替手段がないので、彼らの分析でそれを使用する必要があります.

以下のための公式データ 2016 中国の不動産は快活で教えてくれる, クレジットは飛躍的に成長しています, 生産活動は、バックバウンスされます, そして、国有企業 (国有企業) 明日がないように投資しています, 自分の秘密取引相手が自分の財布を非難している間シャット.

その間, ほとんどの企業で利益が傷つけています. 彼らの巨大な借金を返済するために苦労, それらのいくつかはあっても折り畳まれて廃業しています.

だから、公式データの信頼性が低い場合, 実際に何が起こっています? 幸いにも, 我々は中国ベージュブックを持っています (CBB) 公式の物語主にバックグラウンドと、この四半期の調査結果で何が起こっているかを私たちに伝えるために.


CBBは地元の幹部や銀行といくつかの詳細なインタビューを含む中国企業四半期ごとの数千からデータを収集します. CBBは決定的な成長番号を与えるものではありませんが、, それは多くの企業が彼らの収入を増加またはどのように多くの労働者を解雇された方法を記録します, 例えば.

最も重要なこと, 第3四半期のCBBレポート 2016 中国の政権は、古い学校の刺激に頼っ主張をバックアップします 崩壊からの雇用を維持します, このように、消費者やサービス経済へのリバランスの希望の上に冷たい水を注ぎます.

「成長エンジンは、この四半期には、もっぱら「古いeconomy'、製造しました, プロパティ, そして、コモディティ. 「新しいeconomy'-サービス, 交通, 特に小売・ソー弱い結果,「レポートの状態.



公式の製造業指標と同期して, 中国ベージュブックは、収益の増加を報告します 53 製造業の割合, いっぱい 9 前四半期よりも高いパーセンテージ・ポイント.

不動産部門は二桁の価格と販売増加に公式データによると、赤、暑いです. それに応じて, CBBレポート 52 企業の割合は、彼らの収入を増加させました, 4 最後の4分の1以上%ポイント.


製造およびプロパティの両方があるため、債務の増加やインフラ投資の反発しました, 主に住宅ローンだけでなく、国有企業の投資のために.


公式データによると、, 銀行融資が増加しました 13 前年に比べて8月のパーセントとCBBレポート 27 企業の割合は、それらの借入を増加させました, いっぱい 10 前四半期に比べ%ポイント以上.

"販売と価格は第4四半期に上昇し続ける場合, それはまだそれ以上のレバレッジによるものであろう,「CBBは、不動産について語ります. 中国人民銀行によると、 (PBOC) データ, 家計融資は作ら 71 8月中に新たな銀行融資の割合.



報告書はまた、国有企業が最も投資していることを確認し、 60 彼らの資本支出を増加させ、それらの割合, アップ 16 第二四半期からパーセントポイント.

より強力な成長のための「せっかち, 中国の政策立案者は、彼らを棚上げする可能性が高かったです
リバランスの目標, 投資主導の成長にと「ダブルダウン」,「尋コンサルティングは、中国の最近の報告書に記載しました. 地面の数字はこの評価を確認します.

逆に, 小さい民間企業がすべてで多くを投資していませんでした. への投資を増加し、最小の企業 34 例パーセント, に比べ 44 パーセント四半期の前に.

「我々はまだ銀行借り入れを参照しながら...中期の近くのインフラのための最も重要なドライバーとして, 私たちは、その持続的な成長は、より多くの民間資本の参加時にヒンジを期待します,「投資銀行ゴールドマン・サックスは、報告書に書いて.


この中央計画戦略は価格で来ます, しかしながら. 「CBBデータショーの利益とキャッシュフローが悪化します, 借入及び投資の記録増加の上に暗い影をキャスト,「報告書は、のみと述べて 45 利益の増加を報告する企業の割合, に比べ 47 パーセント前四半期. CBBはまた、キャッシュフローが軒並み悪化していることを指摘します, 説明 今年の会社のデフォルトの上昇.

この新たな刺激のための主な理由, CBBに従って, 失業の中国の政権の恐れがあります, 表示するために開始しました 第二四半期のCBBデータで. それはに滞在されているので、公式の失業率は、悪名高い信頼性が低いです 4 最後の10年間のパーセント.

だから、投資のこの四半期の攻撃の後に, 38 企業の割合は、彼らが第3四半期に、より多くの人を雇ったと述べました. 「雇用は再び強く、中央政府のための単一の最も重要な課題であると言うこと公正です,「CBB状態.

しかし、信用のビットで成長と雇用のビットを購入すると、古いトリックです? 大いにもてはやさリバランスと改革について何?

「より多くのサービス指向の経済はGDPにおける労働所得の高いシェアを生じさせます, しかし、より再分配財政政策は、所得の不平等をダウンさせることが必要です, そして、都市部と農村部の家庭の両方に、より均等な機会を提供,「国際通貨基金 (国際通貨基金) 最近の報告で書きました.

悲しいかな, これを確認しない地面にCBBデータは全く起こっています. どちらかといえば, 第三四半期はバックステップでした.

"サービス, 輸送, 特に小売鋸利益は上の四半期のハードヒット,「CBB状態. のみ 53 企業の割合は、利益の増加を報告しました, に比べ 57 最後の四半期のパーセント.


歩行者は、7月に中国人民銀行を過ぎて歩きます 8, 2015. 9月に中央銀行. 23 クレジット・デフォルト・スワップの承認銀行間取引. (グレッグ・ベイカー/ AFP /ゲッティイメージズ)歩行者は、7月に中国人民銀行を過ぎて歩きます 8, 2015. 9月に中央銀行. 23 クレジット・デフォルト・スワップの承認銀行間取引. (グレッグ・ベイカー/ AFP /ゲッティイメージズ)

中国は債務問題を持っています, そして、それはそれに対抗抜本的な-と危険なための手段を、採用するのに十分な絶望的です.

9月に中国の規制当局. 23 クレジット・デフォルト・スワップと呼ばれる複雑な金融デリバティブの承認取引 (CDS) それは、デフォルトに対する投資家の保険を提供します. 北京は最終的にそれ以上の延滞と国有企業のさえ倒産を可能にすることができる移動信号.

しかし、そのようなスワップは危険な両刃の剣であります. CDS市場は、世界的な金融危機の前に、米国で展開しました. 投機におけるそれらの広範な使用, 透明性と規制の欠如, そして、複雑さは、危機の影響を悪化させたとにおける保険会社のAIGの崩壊と救済に直接貢献しました 2008.

PBOCは中国全土の銀行や証券会社と相談の週間後にCDSの使用のための交戦規則を概説しました. レギュレータはでスワップを承認すると考えられていました 2010, しかし、債券のデフォルトの通りでした。 前の比較的前代未聞 2014, 市場は、取引CDSに少し食欲を持っていました.

デフォルト・スワップは、J.Pによって創設以来、欧米で存在しています. 1990年代半ばにモーガン. その中核に, CDSは、当事者が購入または売却することができます (書きます) 同社は利息や元本を返済するために失敗した場合に支払う保険. 保険契約と同様に, スワップの購入者は保険料を支払います, スワップを販売する者は保険料を受け取りながら、. デフォルトまたは他のクレジットイベントが発生した場合、売り手はCDS契約で指定された量によって買い手を補償しなければなりません, 通常、契約時の価格との差額と終了価格.

北京は可能企業に快適ではありませんでした, 特に国有企業 (国有企業), その債券にデフォルトに. これは、それ自体、投資家を保護することではありません; 債務不履行どのような企業は、効果的に新たな借金を上げることを禁じれます, 多くの国有企業は、そうでなければ効果的に支払い不能であるとして、このように重要な運転資金へのアクセスを防止します.

地方政府、国有企業に頼って仕事を提供するために, 税収, そして、地元経済成長の数字は、多くの場合、企業が社債を返済苦労を助けるためにでステップ. しかし、昨年から, 助けるために地方政府の能力が原因で、経済成長の減速と不動産価格を弱めるに減少されました.


それでは、どのように中国は債務問題を支援するためのCDSのを使用する予定ん? 最初, スワップは債券のデフォルト値に初期バックストップとして作用する中国当局のための圧力を低下させます, その債券をヘッジするためにCDSを使用して、投資家と同じように、, 理論的には, 保護されます.

第二に, CDS年代の引当金は、貸出金と不良債権のポートフォリオをヘッジする方法を銀行を与え、証券会社. 「CDSを持ってすることは非常に良いことのためであります, これまでのところ, 国内市場での有意なヘッジツールはありません. 市場では、このような機器のための高い需要があります,"劉Dongliang, 中国招商銀行のアナリスト, 先週ブルームバーグに語りました.



アナリストはまた、決定は中国共産党政権は、複数のボンドデフォルトを可能にすることができるというサインであると考えています. それが主な理由です. 結局, 当局は債券のデフォルト率は増加するだろうと信じていない場合, このような保険契約を導入する必要がないだろう.

そして、その結論を支持する証拠が増えてます. 広西チワン族自治非鉄金属グループは、その社債不履行ナインヶ月後, 9月に州裁判所. 12 金属会社が倒産し、清算することを許可. 重大な決定-同社は最初の中国SOEは、社債不履行後に清算させてそれになっています.

これまでのところ, 国内市場での有意なヘッジツールはありません.

- 劉Dongliang, 中国招商銀行

より多くの企業広西非鉄に似た金属-下段の遠隔地域の企業や地元でサポートされている政府は、されているデフォルトに期待します. 「ないすべての国有企業の支援を受けての彼らの可能性に等しいことを認識することは非常に重要です,「イワンチョンは言いました, ムーディーズアソシエイトマネージングディレクター.

「あなたが楽しみにしている場合三から五年, それは、地元の政府機関は、ますます自分自身の上に立つ必要があることをより多くの有望なようで、実質的な政府支援の可能性は徐々に彼らの唯一または主要な目的として、国家の優先事項にリンクされている公共財やサービスを提供していない人のために後退します,「チョンは言いました.


中国の金融セクターは、液体CDS市場を称賛する理由を持っています. しかし、未回答のままに大きな問題があります: 誰スワップを書いて、順番になります, デフォルトのリスクを負います?

彼らは銀行になります, 状態指向の資産管理会社, 中国人労働者の何百万人の年金を保護するために気の進まない任務を持っているか、おそらく保険会社? 北京のリスク」の共有」について多くのそれは単に、銀行、保険セクターに政府のさまざまなレベルからデフォルトのリスクをシフトするために探しデフォルトは-さ話します?

介して動作する他の課題のホストがあります。. スワップ周りの法的枠組みは、中国のためにどのようなものになります? 国際スワップデリバティブ協会 (FISH) 欧米市場では「プレーン・バニラ」CDS契約の周り言語や用語のほとんどを簡素化しました. 中国では欧米の投資家は、おそらくスワップの執行と決済の詳細説明を要求するだろう.

Pricing volatility could be another landmine for CDS investors and regulators. The spread, or price the protection buyer must pay over the notional value of the referenced bond, will be extremely hard to determine for Chinese swaps. The likelihood of local or regional governments to step in and prevent defaults is unpredictable, and such possibilities could result in wild price swings.

Creation of a New Problem?

Credit default swaps also introduce undesirable consequences, which led Warren Buffett to describe such instruments as “financial weapons of mass destruction.” Many of these effects exacerbated the 2007-2008 global financial crisis.

Swaps can easily be used by speculators to bet on defaults, due to the relatively small outlay necessary to make a wager. A party who does not own a particular bond can bet on its default by entering into a naked CDS, as long as there’s a taker on the other side of the contract. Buying a naked CDS is akin to taking out life insurance on one’s ailing neighbor—it creates unnecessary moral hazard to inflict further damage on an already tenuous SOE bond market.

China must think about how to regulate its CDS market. If left unchecked, naked swaps would compound shocks to the financial market in the event of mass defaults. A naked CDS holder need not own the referenced bond. So if a bond defaults, the losses are not just limited to the holders of the bond itself, but potentially thousands of other banks, insurance companies, and other investors who may have written swaps on the same bond.

CDS’s can also distort the market and hide true concentrations of risk from regulators. Leading up to the financial crisis, AIG’s Financial Products unit underwrote default swaps on more than $440 billion worth of asset-backed securities. When such securities defaulted en masse, the insurance giant was suddenly saddled with liabilities it could not pay, ultimately bringing about its collapse and $180 billion in government bailouts.

On top of managing credit risk, investors also must monitor counterparty risk to determine whether the seller of the CDS (counterparty) is able to pay up in the event of a default. In AIG’s case, it was not, and thousands of investors who previously thought their risks were completely hedged suffered a rude awakening when AIG collapsed.

Swaps can spread around the risk of default, but they add another layer of complexity for investors and a mountain of problems for regulators.

As Beijing readies a new way to deal with its debt crisis, it may have inadvertently sowed the seeds of a future crisis.


世界の指導者たちは、ブリスベンに集まってきました, オーストラリア, 毎年恒例のG20サミットのために. (ゲッティイメージズ経由アンドリュー・テイラー/ G20オーストラリア)世界の指導者たちは、ブリスベンに集まってきました, オーストラリア, 毎年恒例のG20サミットのために. (ゲッティイメージズ経由アンドリュー・テイラー/ G20オーストラリア)


インクルーシブな成長, グリーンエネルギー, より多くの貿易, そして長期的な計画-ものに離れて、金融危機管理からの移動は、公式の目標であります 2016 杭州のG-20会議, 中国.

彼らは9月を満たしたときに世界最大の経済国の指導者たちは、ちょうどスイッチを入れることができれば、それは素晴らしいことではないでしょう. 4-5, 巨大な経済問題を忘れます, そして、豊かな未来に焦点を当てます?

「中国の指導者は、長期的な開発パースペクティブに短期的な金融危機管理から移動するにはG-20を容易にするための議論を操縦しました,」U.N. 事務総長潘基文は、8月にニューヨークで中国記者団に語りました. 26, 国営報道機関新華に従って.

しかし、現実はそのように動作しない、巨大な摩擦はすでに表面の下にあります, 特にホストについて. 別に南シナ海では非常に厄介な地政学的な状況から、, 中王国は、家庭での経済危機に直面しています.

西でも中国でもないが、完全に世界貿易とグローバル化を台無しにすることなく、中国の過剰生産能力と債務問題に対処する方法を知っています, ましてや包括的な成長とグリーンエネルギーの推進.

「中国は、現時点ではほとんどの人と怒っています,」北京ベースの西洋外交官 年度タイムズ紙に語りました. 「これは、中国のために地雷原です。」


中国の比較的閉じられた金融システムにもかかわらず、, 多くの国の経済成長, ブラジルやオーストラリアなどの, 商品の中国の巨大な消費に依存します. 他の国々, 米国のような, 資本の中国流入に極めて依存していないが、安価な中国製品の取引国債とニューヨークの不動産に慣れてきました.

理想的には, 西は改革への公式のクエストで中国を奨励し、より多くのサービスに製造輸​​出やインフラへの投資から経済をリバランスするでしょう- 消費主導型経済.

米国と中国とヨーロッパの貿易赤字の大部分は減少するであろう. 中国の消費者は家庭で消費するより多くの収入を持っているでしょう, 西洋商品やサービスの代わりに、商品を輸入.

何の世界は中国がで切り下げ明後日はありません 20 パーセント.

- ヒュー・ヘンドリー, 主要なポートフォリオマネジャー, Eclecticaアセットマネジメント

「必要な構造改革は、世界最大の消費市場になるだろう. 他のすべての経済は恩恵を受ける,」独立した経済学者アンディー・キシーに書きました サウスチャイナ・モーニング・ポスト.

中国の指導者と国営メディアは、彼らがこの目標の背後にある繰り返し強調してきました. 「何のために呼ばれることは、一時的な修正ではありません: 私の政府が量的緩和と競争力の通貨切り下げの誘惑に抵抗しました. その代わり, 我々は、構造改革を選択してください,」 新華プレミアリ・ケキアン引用しました, 誰国が何のプランBを持っていないと述べました.

政権の指導者クシー・ジンピング再び全体の改革を深化するために、中央指導グループの会議で改革の重要性を強調しました. 「国は経済システムの改革に集中し、これらのオーバーホールをサポートする基本的なメカニズムを改善しなければなりません,」 新華社が書きました グループが発表した声明について.

しかしながら, 中国は全面的改革を通じ続いていません, これは短期的な混乱を引き起こします, そして地方政府は労働者の不安に対処するために準備されていません. 以下 6 万人が理由政権のリバランスプログラムの職を失うことになります, 公式 失業率は達する可能性があります 12.9 パーセント, 調査会社尋コンサルティングの報告によると.

例えば, 河北省は閉鎖することになりました。 18.4 鉄鋼生産能力の万トンで 2016. 7月の終わりまでに, それだけで閉鎖していました 1.9 万トン, ゴールドマン・サックスによると.


河北省は閉鎖することになりました。 18.4 百万の年間鉄鋼生産能力のトンとだけ閉鎖するために管理 1.9 7月の終わりまでに万トン. (ゴールドマン・サックス)

オーストラリアの経済, ブラジル, ロシア, 中国からの輸入が崩壊したため、南アフリカ、すべての主要なコモディティ輸出国は、されている減速します, 落下 14.2 パーセントで 2015 一人で, 世界貿易機関(WTO)によります. に 2015, 世界の商品輸入がクラッシュしました 12.4 パーセント, 世界の商品輸出がクラッシュしながら、 13.5 パーセント.

オーストラリアの輸出と輸入 (世界貿易機関)

オーストラリアの輸出と輸入. (世界貿易機関)

中国でも生産能力過剰を削減する目標を実現するために開始する前に、世界貿易のこの崩壊が起こりました, 資本勘定の自由化, そして、その通貨を浮動.

その代わり, それが経済に信用を押して時間を購入し、国有企業や地方政府によるインフラ投資にそれを費やしてきました, 同時に 民間企業はタオルで投げてきました.




中国はデフォルトに滞納企業をプッシュする代わりに行うことではない銀行も語っています 彼らのローン 株式のための常緑またはスワップ債務.


「中国と世界のために悪いだろうな金融危機を回避するために、, 政府は、予算の制約を厳しくする必要があります, いくつかの企業が倒産することができます, 金融システムの損失を認識, 必要に応じて、銀行の資本増強. ...歴史は、それが影響を受けた労働者や地域社会を支援するのではなく、後続の見込みがない生きている企業を維持しようとする方が理にかなって示し,」ブルッキングス研究所 主題の論文に記載されています.

しかしながら, 提案の救済, これは長期的には中国と世界のために良いでしょう, 短期的には世界的な金融システムを動揺せずに起こることはできません.

億万長者の投資家ジム・ロジャース実ビジョンテレビとのインタビューでの主な問題を突き止め: 「私は確かにどこでも、より市場の力を見たいのですが, 中国を含みます. それが発生した場合, あなたはおそらく、通貨の価値のより多くの変動が表示されます。」

どのような無実の音, しかしながら, さらに、有害な世界貿易と世界の金融システムになります. 中国はを通じて蓄積した損失を実現したい場合 15 資本不適切な配分の年, それはの曲に、銀行の資本増強する必要があります $3 兆.

それはリ・ケキアン避けたかった種類の中央銀行からの重い介入なしにこれを行うことは不可能です. 他の側では, 中国の預金者は彼らの通貨の購買力を保護するために、海外にも多くのお金を移動しようとします.

に 2015 一人で, 中国が失われました $676 資本流出で億, 住民や企業が貯蓄を多様化したかった主な理由, 大部分は中国の銀行システムに縛られています.

中国では、企業の債務を再編し、大規模に銀行の資本増強した場合, 通貨は少なくともによって切り下げるだろう 20 パーセント, ほとんどの専門家によると.


中国はこのような大規模なプレーヤーであるので, エクスポートとインポート $4 商品やサービスの兆で 2015, A 20 %の切り下げ 中国の通貨の世界的相互確証破壊のシナリオ全体で輸入業者および輸出業者のための現在の価格決定メカニズムを破壊します.

「世界は終わりました. ユーロは壊します; そのシナリオにはユーロがちょうどありません. すべては壁に当たります. 何の世界は中国がで切り下げ明後日はありません 20 パーセント. 世界貿易のシェアは高くありませんでした. ...あなたは、グローバルな製造を破壊するであろう,」ヒュー・ヘンドリー, Eclecticaアセット・マネジメントの主任ポートフォリオマネジャー, リアルタイムビジョンテレビに語りました.

先進国のための世界貿易は、不況に既にあります (世界貿易機関)

先進国のための世界貿易は、不況に既にあります. (世界貿易機関)

中国自身のために, 食料の純輸入国, 切り下げは、人口の大多数のための必需品がさらに高価になるだろう, 失業の圧力の上に社会不安の層を追加します.

そうでないのであれば、中国は、彼らがしなければのろわとのろわれます. でも、西は迅速かつ痛みを伴う切り下げシナリオを支持しないと多くの選択肢を提供するための最良の形ではないだろう.

その他のオプション, おそらくG-20で密室議論, 日本のシナリオであります. 中国は不良債権を実現しないであろう, 生きているゾンビ企業を維持します, そして、海外の移動からお金を防ぐことができます, その野心的な改革アジェンダ不履行.

「クイック調整の代わりに, 「緩やかな調整方法は、」過剰生産能力の長期間の結果を私たちに残して, ディスインフレ圧力, そして経済の名目成長と収益を減少,」投資銀行モルガン・スタンレーは、ノートに記載されました.

中国, 西, そして日本は過剰債務の同じ問題とそれを取り除くための無好都合な方法を共有します. 手元にある本当の問題を命名し、代わりにフィールグッドトピックを選択しないことにより, G-20はすでに問題の解決策を見つけることに敗北を認めています.


中国工商銀行の支店で人民元ノート (ICBC), 行進に 14, 2011 淮北市で, 中国. 中国政府は今までに費やしています 15 財政刺激策のGDPの割合. (ChinaFotoPress /ゲッティイメージズ)中国工商銀行の支店で人民元ノート (ICBC), 行進に 14, 2011 淮北市で, 中国. 中国政府は今までに費やしています 15 財政刺激策のGDPの割合. (ChinaFotoPress /ゲッティイメージズ)

年間、世界は中国に驚嘆しました 外貨準備 ($4 で彼らのピーク時兆 2014) 低政府債務, 21 の終わりのGDPの割合 2015.

これが変わろうとしています, しかしながら, 財政支出は、最大でした 15.1 上半期のパーセント 2016 景気減速に対抗して、公式を達成するために GDP成長率目標.


中国の債務分布 (マッコーリー)

中国の債務分布 (マッコーリー)

政府は、今年の予算で赤字が唯一うとしていると言います 3 GDPの割合. いくつかの中央銀行がそれを後押ししたいです 5 パーセント彼らだけでは金融政策が一緒に経済を保持することはできませんと思いますので、.

彼らはより多くの債務とし、中央政府のバランスシート上の部屋を無駄にすることにより、債務誘発性の鈍化に抵抗しようとしている場合, 私は恐れて、中国は日本よりも悪い運命に向かっています.

- フォートワースレイ, STAのウェルス・マネジメント

さらに, 人々が見始めています 中国政府債務 異なっ. ゴールドマン・サックスの推計によると、, 中国の総財政赤字が近づいています 15 パーセントではなく、 3 若しくは 5 パーセント.

「我々は中国の財政当局のスタンスの全体像を得るために、予算外準財政政策を組み込むことによって 『オーグメント』に公式の財政政策措置を試してみてください,」ゴールドマン・サックスは、書き込み.

ゴールドマン・サックスの計算によると、中国の総財政赤字 (ゴールドマン・サックス)

ゴールドマン・サックスの計算によると、中国の総財政赤字 (ゴールドマン・サックス)

に取得するには 15 パーセント, ゴールドマンは見 インフラ支出 合計で, 中央政府によって駆動されます, 国有企業 (SOE), または地方公共団体. 国有企業は、の曲に借金しています 101 彼らのオフバランスシート・ファイナンス車によるGDPや自治体の割合は、約 40 GDPの割合.

「具体的に, 私たちは、このような運輸などの分野における固定資産投資をまとめます, ストレージ, 郵便サービス, そして、水利, 環境やユーティリティ管理. 私たちは、これらの分野での支出のほとんどは重く状態駆動型であると仮定します,」銀行は書いて, 分析が完了していないが、良いプロキシを提供していることを指摘.

投資の最近のバーストは、中国の国有企業によって行われました (キャピタルエコノミクス)

投資の最近のバーストは、中国の国有企業によって行われました (キャピタルエコノミクス)

状態部門の固定資産投資のチャートを見たときの理論は、最大保持しています, これは、今年の初めに先にズーム, 最近引き戻さました.


なぜなら 民間企業による投資 マイナスに転じました, 政権は財政刺激策を継続しようとしていると、民間部門は、いわゆる官民パートナーシップを通じて巻き込まれる (PPP).

新華社によると、, 中国が資金を供給するために望んでいます 9,285 価値のプロジェクト $1.6 このようなスポーツ競技場などの交通機関や公共施設などのインフラプロジェクトへの兆. 国家発展改革委員会によると、 (NDRC), $151 これらのプロジェクトの億は、7月の終わりに署名されています 2016.


- ゴールドマン・サックス

投資銀行モルガン・スタンレーは、取り組みが成功するとは思いません。, しかしながら.

「私たちは、PPPは、中国の投資の伸びに限定された影響を与えることを期待します, 実行中のPPPプロジェクトの小さなサイズを考慮, まだ低い民間参入, そして、弱いです [クレジット] 成長,」モルガン・スタンレーは、ノートに書いて.

だから、国有企業が再び重い物を持ち上げるを行う必要がありますように見えます, にもかかわらず 取り付け倒産 投資に対するリターンとひどいです.

「国有企業はまた、オーバーキャパシティの問題の中心であります. 公式の調査によると、, 製造業の平均稼働率でした 66.6 パーセントで 2015, で減少 4.4 に比べ%ポイント 2014. オーバーキャパシティの問題に直面してセクタのほとんどは国有企業によって支配されています, そのような鋼や石炭など,」ゴールドマンは書いて.

レイ・ワース, STAウェルス・マネジメントのチーフストラテジストは、短期的な動機は、今年の支出にバーストの後ろかもしれないと考えて.

「これは時間の購入をある場合, 9月のG20会合後まで, で元の算入後 国際通貨基金 (国際通貨基金) 10月中に準備通貨バスケット, そして後の米. 11月の大統領選挙. それから私はなぜに大規模な財政・信用刺激を理解することができます 2016 感覚を作ることができます。」

長期, しかしながら, この戦略は、持続可能ではありません, レイに応じて: 「彼らはより多くの債務と債務誘発性の鈍化に抵抗しようとすると、中央政府のバランスシート上の部屋を無駄にすることによってしている場合, 私は中国が日本よりも悪い運命に向かっているんです。」

だから、支出まくるが継続されます? ゴールドマンがyes-政府がために、その公式のGDPの目標を達成したいと言います 2016.


Workers distribute packs at S.F. Express in Shenzhen, 中国, on Nov. 11, 2013. Private companies in China have stopped to invest in further expansion in 2016. (ChinaFotoPress/ChinaFotoPress via Getty Images)Workers distribute packs at S.F. Express in Shenzhen, 中国, on Nov. 11, 2013. Private companies in China have stopped to invest in further expansion in 2016. (ChinaFotoPress/ChinaFotoPress via Getty Images)

Previously the engine of relatively efficient growth, it looks like the private sector has given up in China. Investment by private companies went negative in June and decreased another 0.6 percent in July. That’s right, negative growth month over month, something completely unfathomable during the boom years of above 20 percent growth just a few years ago.

“We believe private [投資] slowdown is more structural this time, dragged by weaker investment return and falling business confidence amid limited reforms and deregulation. Strong State Owned Enterprise (SOE) investment is unlikely to fully offset the weakness, instead, it could create more excess capacity and deteriorate capital returns,” the investment bank Morgan Stanley writes in a note.

For the first half of 2016, private investment is only up 2.4 percent over the year. This is worrying because the private sector is responsible for most of China’s real economic development and relatively efficient capital allocation.

The government will try to coopt the private sector into spending through monetary and fiscal policies.

— Viktor Shvets, global strategist, Macquarie Securities

To balance the decline in private investment, the state used SOEs as countercylical fiscal policy instruments. SOE’s share of investment in fixed assets rose 23.5 percent compared to the first half of 2015. Because of inefficient investments from years prior, 過剰生産能力, and mounting defaults, Morgan Stanley thinks this is ill advised.



Morgan Stanley notes that private companies are avoiding sectors such as mining and steel, which are plagued by overcapacity. But they also cannot invest in the service sector as they please because of high entry barriers and too much regulation.

Private investment outside of manufacturing—read services—declined 1.1 上半期のパーセント 2016 over the year, に比べ 15 percent growth in 2015. 国有企業, on the other hand, boosted investment in services 39.6 パーセント.

So much for a successful rebalancing to services, which has been considered a linchpin of the effort to reform the Chinese economy. It’s happening, but at the behest of the state.



Overall, there just aren’t enough good investment opportunities around and the borrowing costs for private firms are as high as 15 パーセント, much higher than the return on assets. Unlike their state-owned counterparts, private companies actually try to be profitable—and they don’t see profits in China’s slowing economy.

In addition, the lack of progress in the much-touted reform agenda hurts business confidence and financial visibility. Zhang Qiurong, who owns a specialty paper business told the Wall Street Journal: “The economic outlook is really grim. You have to survive, that comes first.”

氏. Zhang’s feelings are reflected in the China Economic Policy Uncertainty Index, which has been increasing steadily in 2016, almost reaching the record levels of uncertainty seen during the last handover of Communist Party leadership in 2012.

The economic outlook is really grim. You have to survive, that comes first.

— Zhang Qiurong

The result of the uncertainty? Companies are stashing money at the bank and just won’t spend and invest it.

“Despite loads of liquidity pumped into the market, enterprises would rather bank the money in current accounts in the absence of good investment options, which is in line with record low private investment data,” Sheng Songcheng, head of statistics and analysis at the People’s Bank of China said earlier this year. Cash and short-term deposits at banks grew 25.4 percent in July.

To counter concerns of crashing private investment in China, the regime promptly announced private-public partnership (PPP) investment programs worth $1.6 trillion and spanning 9,285 projects, first reported by Xinhua on Aug. 15.

“The government will try to coopt the private sector into spending through monetary and fiscal policies,” says Viktor Shvets, global strategist at Macquarie securities.

The problem is that this strategy is unlikely to work.

“The impact of PPP on China’s investment growth is likely to be limited, considering the small share of PPP projects in execution (less than 0.5% of total [投資]), the still low participation ratio by private investors … International experience shows that private financing of public investment entails large fiscal risks in the absence of a good legal and institutional setup,” writes Morgan Stanley. And a good legal and institutional set-up is not what China is known for.

If the PPP and short-term monetary and fiscal stimulus won’t work, China actually has to deliver on reforms to get the private sector to spend again.


A worker of an Industrial and Commercial Bank of China Ltd (ICBC) branch counts money as she serves a customer on  September 24, 2014. (ヨハンズ・アイスル / AFP /ゲッティイメージズ)A worker of an Industrial and Commercial Bank of China Ltd (ICBC) branch counts money as she serves a customer on  September 24, 2014. (ヨハンズ・アイスル / AFP /ゲッティイメージズ)

On the surface, China is talking the reform talk. But is it also walking the walk? There are many examples to demonstrate it isn’t. The most recent one is a directive from the China Banking Regulatory Commission (CBRC) to not cut off lending to troubled companies and evergreening bad loans. This first reported by The Chinese National Business Daily on Aug. 4.

“A Notice About How the Creditor Committees at Banks and Financial Institutes Should Do Their Jobs” tells banks to “act together and not ‘randomly stop giving or pulling loans.’ These institutes should either provide new loans after taking back the old ones or provide a loan extension, 「完全に彼らの問題を解決するために企業を支援します,「」 国立ビジネスデイリー書き込み.

“It’s big news. A couple of weeks ago they were threatening Liaoning Province to cut off all lending to them if they didn’t tighten loan standards,” said Christopher Balding, a professor of economics at Peking University in Shenzen. “This is a pretty significant turn-around for them to do and it indicates how significant the problem is.”

To say it so publicly or bluntly is amazing

— Christopher Balding, professor, Peking University

The official reform narrative is espoused in this Xinhua piece which claims China has to reform because there is no Plan B. “Supply-side structural reform is also advancing as the country moves to address issues like industrial overcapacity, a large inventory of unsold homes and unprofitable ‘zombie companies.’” Clearly resolving the bad debt of zombie companies is not high on the priority list.

Goldman Sachs complained in a recent note to clients that companies can default on payments and often nothing happens. The investment bank notes that companies like Sichuan Coal default on payments of interest and principal for weeks or months and then maybe pay creditors later. The company in question defaulted on 1 億元 ($150 百万) worth of commercial paper in June but made full payments later during the summer, a somewhat arbitrary process.

Another case is Dongbei Special Steel, which missed at least five payments on $6 billion of debt since the beginning of the year, but has done nothing to resolve the problem. This is why creditors wrote an angry letter to the local government to help resolve the issue.

Going forward, we do expect this trend to continue.

- ゴールドマン・サックス

According to Goldman Sachs, Dongbei was the reason Liaoning Province came under pressure:

“A bondholders meeting took place … with bondholders requesting that the [regulators] halt fundraising by the Liaoning provincial government and the enterprises in Liaoning province, and that institutional investors should stop purchasing bonds issued by the Liaoning government and the enterprises in Liaoning province. According to news reports, this demand stems from disappointment in progress by the provincial government in resolving Dongbei Special Steel’s debt problems, with a lack of information and no clear resolution plan.”

“Going forward, we do expect this trend to continue, with more defaults given our expectation of slower growth in the second half, and continued uncertainties on how these defaults are resolved.”

With the blessing of the regulator, Goldman’s prediction is probably correct. The investment bank notes that 11 から 18 high-profile defaults have not been resolved since the first official default of a Chinese company by Chaori Solar in 2014.


(Click to enlarge. ソース: ゴールドマン・サックス)

Christopher Balding thinks the directive shows how serious the debt situation has gotten. “This does indicate that there is a relatively significant pressure on the system and people aren’t making their payments. ‘Look, don’t rock the boat and push people into default.’ To say it so publicly or bluntly is amazing.”

The notice did include a modifier stating that the companies to be supported “must have a good outlook in terms of either their products or services and have restructuring values,” and that the “the development of the companies should be in line with the macro-economic policy, industrial policy and financial supporting policy of the country.” How serious banks will take this modifier is open to debate.

Overall bankruptcies in China have surged 52.5 percent in the first quarter of 2016 compared to a year earlier with 1028 cases being reported by the Supreme People’s Court. Most cases that are resolved involve small companies with few employees. The small firms are liquidated rather than restructured, による the Financial Times. As we have seen there is another measure applied to larger companies, much to the dismay of Goldman Sachs:

“A clearer debt resolution process … would help to pave the way for more defaults, which in our view are needed if policymakers are to deliver on structural reforms.” If they want to deliver.

Twitterでバレンティンに従ってください: @vxschmid


国際通貨基金常務理事クリスティン・ラガルドワシントンのIMF本部でIMFC会議の40周年で講演します, 四月 20, 2013. (ゲッティイメージズ経由スティーブン・ヤッフェ/ IMF)国際通貨基金常務理事クリスティン・ラガルドワシントンのIMF本部でIMFC会議の40周年で講演します, 四月 20, 2013. (ゲッティイメージズ経由スティーブン・ヤッフェ/ IMF)

ブルームバーグは、昨年末のことを報告したとき 中国は、作業を設立しました 超国家の使用を探求するグループ 特別引出権 (SDR) 通貨, 誰も注意を取っていません.

今の8月で 2016, 私たちは、1980年代以降、民間部門の最初のSDR発行に非常に近いです.

消息筋によるオピニオンメディアでの作品と投機 打ち上げのために私達を準備 ほとんどの人が、以前では知らない楽器の 2016. そうして 国際通貨基金 (国際通貨基金) それ自体は7月に民間のSDRの使用を議論する論文を発表し、中国の中央銀行の関係者は、国際開発組織はすぐに中国でのSDR債券を発行し確認しました, 中国メディアによるとCaixin.

Caixinは今まさに債券を発行しますどの組織確認したときに: 世界銀行と中国開発銀行 8月に民間企業や「M」SDRを発行します。.

所謂 SDR 実際の通貨のIMFの構造です, 今ユーロ, 円, ドル, そして、ポンド. 中国の人民元も認められたとき、それは去年のニュースを作りました, それが正式に今年の10月1日まで、バスケットの一部ではありませんが、.

いくら? 日経アジアのレビューレポート ボリュームは間になります $300 そして $800 万のと一部の日本の銀行は、株式を取ってに興味があります. 日経によると、いくつかの他の中国の銀行はまた、SDR債券を発行することを計画しています. そのうちの一つは、中国工商銀行かもしれません (ICBC) 中国のウェブサイトによるとYicai.com.

銀行はSDRを持っていたときIMFは、1970年代と1980年代にこれらのM-のSDRを試し 5-7 預金や企業で億SDRを発行していました 563 債券万人. 微々たる量, しかし、コンセプトは、実際に働いていました.

G20財務相は、彼らがこの問題をプッシュします確認しました, これらの機器を使用するには、民間部門の不本意にもかかわらず、. 彼らのコミュニケでは7月に中国での会議の後にリリース 24:

「私たちは、SDRのより広範な利用の検討を支援します, このようSDR内のアカウントと統計のより広範な出版とSDR建て債券の発行可能性として、, 回復力を高めるための方法として、 [金融システムの].」

彼らは、中国人民銀行の知事の助言に従ってい (PBOC), ズハウ・ザイアオッホアン, 少し遅れたが. すでに 2009 彼は、新しい世界の準備通貨未満何のために呼ばれます.

「特別な配慮は、SDRに大きな役割を与えることに与えられるべきです. SDRは、スーパーソブリン準備通貨として機能する機能や可能性を秘めています,」周を書きました.

7年後, 彼は冗談を言っていなかったように見えます.

Twitterでバレンティンに従ってください: @vxschmid