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Closer regulatory scrutiny will boost financial stability

Although China’s financial risks are generally controllable at this stage, there is still the possibility of systemic financial crisis. As institutions with high leverage ratio, banks’ own funds always constitute less than 10 percent of their assets, which shows that the banks and the enterprises are totally different. The most important difference between banks and enterprises is that the proprietorship of the enterprises occupies the major proportion of their assets, while proprietorship is a very small part of the assets of banks. Therefore the essence of the banks is to carry and allocate the risk. In such circumstances, if we keep issuing excessive loans, attaching little importance to shadow banks and failing to establish an integrated supervision system covering different financial industries, the risks of the banks will increase drastically. These risks will also spread to various industries of the country, raising the possibility of a systematic financial crisis. Sadly, some people involved in the banking industry are ignoring this point.
Source: Global Times | 2017/7/24 19:58:40

Deflating ChiNext bubbles only way to reveal true state of corporate financial health

The price earnings ratio of the ChiNext, China’s NASDAQ-style board tailored for innovative and high-tech companies, is reportedly about to fall below that of the NASDAQ Composite Index for the first time ever. As China’s securities regulators are expected to strengthen oversight and reduce financial risk under new guidelines issued after a policy meeting that is only held every five years, squeezing the bubbles out of the ChiNext may still take some time.
Source: Global Times | 2017/7/24 19:58:40

China’s B&R initiative leading a resurgence of Asia

China’s first quarter data indicated it grew at 6.9 percent, beating analysts’ forecasts and surpassing its annual target. Other data supports a solid economy and a continuing growth trend. Two statistics from May relating to iron ore purchasing cross-check well: according to Thomson Reuters’ vessel-tracking and port data China’s seaborne imports came in at 85.8 million tons, and the General Administration of Customs said that imports of iron ore were 91.52 million tons, up from 86.75 million tons a year ago. Iron ore can be considered a “leading indicator” of economic well-being and reflects China’s new surge of domestic and international infrastructure programs, especially the Belt and Road initiative.
Source: Global Times | 2017/7/24 19:58:39

Puppy love keeps IPO investors on the leash, with the help of sensible valuation

A case of puppy love just swept over the stock market. After Snap, Blue Apron and YogaWorks appeared to spell doom for initial public offerings of trendy, fast-growing businesses, shares of PetIQ jumped by a third in their Friday debut after having priced at the top of the range. A more sensible valuation helped the maker of canine treats and medicine, but it also may have wagged the dog.
Source: Global Times | 2017/7/24 19:53:39

India’s attitude may hinder Tibet’s B&R involvement

A number of provinces and cities are eager to be involved in the “Belt and Road”(B&R) initiative, including Southwest China’s Tibet Autonomous Region. The opening-up of Tibet is in line with the general trend, but due to some historical and geopolitical factors, it has had to face some special challenges involving international strategy and security in the process of its development.
Source: Global Times | 2017/7/23 18:48:39

Tencent’s new data center points to future globalization approach of Chinese firms

Chinese companies’ global ambitions were in the headlines again last week when Tencent Cloud, a cloud service venture under Internet giant Tencent Holdings, opened a data center in Frankfurt, Germany. It’s the first time a Chinese cloud service provider has established a hub in Europe, which also points to the key approach for “Made in China” to go global in the future.
Source: Global Times | 2017/7/23 18:43:39

Japan-EU agreement may help save Abe’s credibility

Japanese Prime Minister Shinzo Abe, European Council President Donald Tusk and European Commission President Jean-Claude Juncker jointly announced in early July that they had reached agreement in principle on the Japan-EU Economic Partnership Agreement (EPA).
Source: Global Times | 2017/7/23 17:28:39

Alibaba rewrites its e-commerce playbook, trumpeting bricks-and-mortar push

China’s e-commerce giant is abandoning its unique selling point. Alibaba is trumpeting a push into bricks-and-mortar shopping. It’s not alone but the stakes are particularly high for the $392 billion giant led by Jack Ma Yun as it marks a reversal of the asset-light model which fueled its extraordinary profitability.
Source: Global Times | 2017/7/23 17:23:39

Opportunities arising to improve Sino-Japan relations

This year marks the 45th anniversary of the normalization of diplomatic relations between China and Japan. We should seize any opportunities to improve Sino-Japanese economic and trade relations and promote a new era of bilateral cooperation.
Source: Global Times | 2017/7/20 21:08:39

China, India must prevent border tensions from blocking progress toward RCEP

Hundreds of officials from 16 nations are set to address a gathering in Hyderabad, India next week where they will meet to negotiate an Asia-centered trade deal called the Regional Comprehensive Economic Partnership (RCEP).
Source: Global Times | 2017/7/20 20:58:39

Soaring household debt a dangerous, overlooked risk in China

While there is much concern among the public about China’s local government debt and corporate debt, which are considered key sources of risk, the rising household debt and the consequent liquidity constraint should not be underestimated. Based on our research, the household debt problem has already become a huge hidden danger to the economic health of China.
Source: Global Times | 2017/7/20 19:58:40

New rules increasing minimum capital requirements take shine off Australian banking sector

Australian banks should be able to absorb the latest regulatory uppercut. The local financial watchdog has aggressively hiked minimum capital requirements for top lenders, the latest step in a campaign to better protect the country from financial shocks. The caution is warranted given the finance sector’s concentration – and record household debt levels. A grace period will make it easier for banks to meet the new rules. But outsized returns could be a thing of the past.
Source: Global Times | 2017/7/20 19:58:39

China, Germany grow closer as free-trade backers

Editor’s Note: As leading world economies and advocates of free trade, China and Germany appear to have more common interests than ever, and they anticipate closer economic and trade ties. The German government is very actively involved in the “Belt and Road” (B&R) initiative, which it sees as a good proposal to support the world economic recovery. Last month, the European Central Bank (ECB) converted 500 million euros ($563.8 million) of its reserves into yuan for the first time. In an email, Global Times reporter Zhang Xin (GT) interviewed Andreas Dombret (Dombret), a member of the Executive Board of Germany’s central bank, the Deutsche Bundesbank, about China’s influence on the world economy from a German perspective.
Source: Global Times | 2017/7/19 21:23:39

Taming expansion of lending by shadow credit system is key to China’s economic reforms

While new estimates from Swiss bank UBS point to weakening shadow lending activities amid supervisory tightening in China, concerns over massive amounts of shadow credit are keeping market observers on edge as they fear a shadow banking implosion.
Source: Global Times | 2017/7/19 21:18:39

Philippines’ Duterte will keep close ties with China

After taking power in June 2016, Philippine President Rodrigo Duterte quickly adjusted his country’s strategy toward China, normalizing relations and warming up bilateral economic ties within a very short period of time. In just one year, the Philippines has reversed its marginalized position on the road map for China’s Belt and Road initiative. From past experience, many Chinese scholars worry that Duterte’s current China policy may change again and thus disapprove of spending too many strategic resources on the country.
Source: Global Times | 2017/7/19 21:13:39

After loss of chief executive, high-flying easyJet can cope with a period on autopilot

For easyJet, losing a chief executive is manageable. While Carolyn McCall, who has taken up the top spot at British broadcaster ITV, was the mastermind of the UK airline’s steep ascent over the past seven years, she leaves behind a financially and strategically sound company that can cope with a spell on autopilot.
Source: Global Times | 2017/7/19 21:08:39

Russia’s labor pool offers opportunity for China

A labor surplus means that 10 percent of college graduates in Russia may be unable to find jobs, Sputnik News recently reported, citing a study by the Analytical Center for the Government of the Russian Federation. Encouraging investment by Chinese manufacturers might help Russia solve this problem.
Source: Global Times | 2017/7/18 22:28:39

Pursuing financial, economic reform while preserving growth a tricky balancing act

In recent days, it seems that there has been a negative correlation between China’s economic indicators and the performance of stocks listed on the Chinese mainland. That divergence signals tricky challenges for policymakers who must pursue deeper reforms while ensuring steady economic growth.
Source: Global Times | 2017/7/18 22:23:39