china
bynumbers 1.08%
NEWSCHINA I November 2014
The ratio of badlyperforming loans held by commercial banks in Q2, 2014 - a three-year high.
1.0
Quarterly badly-performing loan ratio (%) Source: China Banking Regulatory Commission
0.8
Q1 2011
Q1 2012
175
Q1 2013
Q1 2014
28th
China’s ranking among 144 economies in the Global Competitiveness Index 2014. It was 29th in 2013. China’s best and worst scores 8
The number of top 500 Chinese-funded private enterprises that had overseas investment in 2013, compared with 159 in 2012. The fastest growing investment destinations were the US and Canada.
10nd
46nd
1 0
Institutions
2
47nd
32nd
Innovation
3
83nd
Technological readiness
4
Health and primary education
5
Macroeconomic environment
6
Source: All-China Federation of Industry and Commerce
Source: World Economic Forum
7.37m
12
Jobs created in Q1-Q2, 2014, a tenyear record.
10
8
Source : China Ministry of Human Resources and Social Security / China National Bureau of Statistics
6
4
2nd
7
Market size
remain experimental. In an article in the PBC’s China Finance journal, Ma Jun, former Deutsche Bank AG Greater China chief economist and current head of the central bank’s principal think tank asked whether and how State-owned companies, pensions, landholdings and even antiques collections and parks should appear on official balance sheets, given their impact on budgets. A fundamental lack of detailed, transparent accounting in government is one of the two main reasons that media and analysts have questioned the top credit ratings given to nine provinces which currently have approval to issue bonds. The other reason is that China’s ratings agencies, with fewer than 20 years’ business experience between them, are not well-established enough to have an adequate overview of the national picture. There is reasonable doubt that such rookie organizations can do their job independently, particularly when their clients are China’s powerful provincial governments. The new practice of allowing local government to issue bonds is also a test of the credibility of the central government and potential investors. There is a hidden rule in China’s bond market that junk bonds should be quietly cashed by third parties, or erased through a government bailout, in order to avoid scaring investors off. Local government debts are widely regarded as risk-free because investors believe they are underwritten by the central government – a simplistic misconception that could prove problematic should local governments begin to default en masse. As Pan Gongsheng has said, only when local governments are required by law to honor their own debts, rather than simply take central government backing for granted, and when investors realize the risks they are running, will discipline govern Chinese fiscal management. It remains to see whether the central government can deliver on its tough talk to put an end to instantaneous bailouts of failing spendthrift local authorities.
1.2
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
GDP growth in the first half year (%) New employment (m)
US$1.63tn June value of receivable accounts held by Chinese enterprises whose main business operations generate US$3.3m or more in annual sales revenue, US$179bn more than the end of June 2013. This indicates that companies are increasingly struggling to collect payments on time. Source: China Ministry of Industry and Information Technology
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