eseoulpost
WorldwideHospitality
China credit squeeze puts brakes on factory growthThe refusal of the new leadership in Beijing to ease the credit crunch and boost liquidity is translating into slower growth in the economy
kim  |  kih10kr@empas.com
폰트키우기 폰트줄이기 프린트하기 메일보내기 신고하기
승인 2013.07.02  
트위터 페이스북 미투데이 요즘 네이버 구글 msn


   
▲ China's official purchasing managers' index (PMI) slipped to 50.1 in June, which was slightly stronger than expected but still underlined fears that growth in the world's second biggest economy is weakening. Photo: AFP
Mainland factories ran at their slowest pace in nine months in June as the new leadership's caution in boosting liquidity dampened hopes that aggressive monetary easing would provide easier credit.

Premier Li Keqiang has diverged from the policy of his predecessor by refraining from injecting fresh liquidity into the mainland economy to ease a credit crunch on the interbank market.

In a sign that the top leadership has reached a consensus, President Xi Jinping told a high-level party meeting over the weekend that officials "shouldn't be judged solely on gross domestic product figures", but that their performance was also linked to people's livelihoods, social progress, and the environment.

Xi's remarks were confirmation that the new administration aims to slow credit expansion and focus on structural reforms to the economy, where the wealth gap has been widening and rapid industrial growth has come at the expense of overcapacity and pollution.

Patrick Chovanec, chief strategist at Silvercrest Asset Management and a former professor at Tsinghua University, said reining in credit expansion may help curb overcapacity and bad debt, although "it will translate to slower growth, at least in the short term".

Last week's freeze-up in China's interbank lending market was just a symptom of a more chronic disease. As the burden of bad debt grows, it takes more and more credit to generate less and less growth

"Last week's freeze-up in China's interbank lending market was just a symptom of a more chronic disease," he said. "As the burden of bad debt grows, it takes more and more credit to generate less and less growth."

Money supply in the mainland is expanding at roughly twice the rate of GDP growth and the government plans a bigger financial deficit this year than last. In 2012 the mainland delivered the slowest year of growth in 13 years as policymakers attempted to walk a fine line between structural reform and job creation.

Some analysts believe Beijing risks missing its annual growth target of 7.5 per cent for this year, though this may not necessarily be a bad thing for the economy.

Beijing appears more comfortable with slower growth, and in the current five-year plan only forecasts 7 per cent average annual growth for the period 2011-2015, against the 10 per cent average growth delivered over the past 30 years.

Former premier Wen Jiabao has been heavily criticised for flooding the economy with too much liquidity under a stimulus programme introduced to combat the global financial crisis.

As a legacy of the stimulus programme, 18 provincial and municipal governments tracked by the National Audit Office had 3.85 trillion yuan (HK$4.87 trillion) of outstanding debt at the end of last year, up 13 per cent from two years ago. Of the total, nearly half was new debt built up after 2011, the agency revealed last week.

Barclays Capital described Li's policy framework as "Li-konomics", under which Beijing has signalled it would endure short-term pain to favour more sustained development.

Stimulus measures introduced last year in the form of US$150 billion of accelerated infrastructure approval plans have not been repeated so far this year. Barclays estimated that the mainland may see 6 to 8 per cent annual growth for the next 10 years. But it warned of "an increasingly likely downside scenario" and a temporary "hard landing", with quarterly growth falling to 3 per cent over the next three years before bouncing back rapidly.

The HSBC China purchasing managers index, with a heavy weight in small businesses, showed operating conditions deteriorated at the quickest pace since September. The index fell to 48.2 in June, down from 49.2 in May, dragged by falling new export orders and the first contraction in output since October.

The official PMI data compiled by the National Bureau of Statistics, which cover a wider range of companies, was at 50.1 in June, down from 50.8 in May and only slightly above the threshold of 50 that indicates an expansion.

The seven-day repurchase rate, a gauge of interbank liquidity, has eased to just above 5 per cent from the record 12.45 per cent on June 20, after the central bank said it had pumped in fresh liquidity for selected lenders and added 12 billion yuan in rediscounted loans for banks to support small businesses.
.

 

This article appeared in the South China Morning Post print edition as Mainland squeeze slows factories

< 저작권자 © eseoulpost 무단전재 및 재배포금지 >
폰트키우기 폰트줄이기 프린트하기 메일보내기 신고하기
트위터 페이스북 미투데이 요즘 네이버 구글 msn 뒤로가기 위로가기
이 기사에 대한 댓글 이야기 (0)
자동등록방지용 코드를 입력하세요!   
확인
- 200자까지 쓰실 수 있습니다. (현재 0 byte / 최대 400byte)
- 욕설등 인신공격성 글은 삭제 합니다. [운영원칙]
이 기사에 대한 댓글 이야기 (0)
Most Read
1
Business Park at Dubai South witnesses 400% growth in number of companies
2
Leaders of S. Korea, India celebrate construction of Samsung smartphone factory in Noida
3
ADU architecture programme accredited by 'Royal Institute of British Architects'
4
NMC lauds Saudi efforts to fight piracy, protect IP rights
5
Spotlight on UAE's environmental efforts at Urban Sustainability Week
6
Reem Al Hashemy visits UAE Armed Forces task force in Aden
7
Leaders of S. Korea, India agree to boost bilateral trade to US$50 bln by 2030
8
DOT: Effort relentless in pursuing women-empowering tourism
9
Emirates Foundation organises event for children with autism
10
Black Sea Trade and Development Bank builds up cooperation with OFID
Photo News Green Biz
Sharjah Municipality, MOCCAE discuss cooperation to protect environment
Sharjah Municipality, MOCCAE discu...
min
Earth Hour 2018: Lights out across UAE as Earth Hour is marked
Earth Hour 2018: Lights out across...
min
Suqia plays key role in enhancing UAE's global efforts to address water challenges
Suqia plays key role in enhancing ...
min
UAE Innovation Month: Innovative Initiatives by Sharjah Development Forum to Serve UAE’s Technical Sector
UAE Innovation Month: Innovative I...
min
UAE environmentalists to travel to ends of the earth to inspire change
UAE environmentalists to travel to...
min
Photo News Sports
Al Majaz Amphitheatre to Host Special Tent for Media and Public to Enjoy Football World Cup
Al Majaz Amphitheatre to Host Spec...
min
S. Korea crack top 60 in latest FIFA rankings ahead of World Cup
S. Korea crack top 60 in latest FI...
min
(World Cup) S. Korea release squad numbers for Russia 2018
(World Cup) S. Korea release squad...
min
Emirates, Formula 1 renew global partnership
Emirates, Formula 1 renew global p...
min
Nahyan bin Zayed attends closing day of Abu Dhabi World Professional Jiu-Jitsu Championship 2018
Nahyan bin Zayed attends closing d...
min
UAE dominates the mat, winning 36 gold medals on day 2 of Abu Dhabi World Youth Jiu-Jitsu Championship
UAE dominates the mat, winning 36 ...
min
World Class Theme Park opens in Korea's central city of Chungju
World Class Theme Park opens in Ko...
min
Day Five of Abu Dhabi Jiu-Jitsu Festival kicks off with world’s leading professional athletes
Day Five of Abu Dhabi Jiu-Jitsu Fe...
min
Photo News World
Al Majaz Amphitheatre to Host Special Tent for Media and Public to Enjoy Football World Cup
Al Majaz Amphitheatre to Host Spec...
min
S. Korea crack top 60 in latest FIFA rankings ahead of World Cup
S. Korea crack top 60 in latest FI...
min
(World Cup) S. Korea release squad numbers for Russia 2018
(World Cup) S. Korea release squad...
min
Emirates, Formula 1 renew global partnership
Emirates, Formula 1 renew global p...
min
Nahyan bin Zayed attends closing day of Abu Dhabi World Professional Jiu-Jitsu Championship 2018
Nahyan bin Zayed attends closing d...
min
UAE dominates the mat, winning 36 gold medals on day 2 of Abu Dhabi World Youth Jiu-Jitsu Championship
UAE dominates the mat, winning 36 ...
min
World Class Theme Park opens in Korea's central city of Chungju
World Class Theme Park opens in Ko...
min
Day Five of Abu Dhabi Jiu-Jitsu Festival kicks off with world’s leading professional athletes
Day Five of Abu Dhabi Jiu-Jitsu Fe...
min
Photo News Opinion
N. Korea to compete at table tennis tournament in S. Korea
N. Korea to compete at table tenni...
min
Vatican's top diplomat voices optimism for ongoing peace efforts
Vatican's top diplomat voices opti...
min
Kumho Asiana chief apologizes for airline unit's no-meal fiasco
Kumho Asiana chief apologizes for ...
min
Defense chief vows to stamp out military's political interference, sexual abuse
Defense chief vows to stamp out mi...
min
Koreas holding working-level talks on forestry cooperation
Koreas holding working-level talks...
min
Koreas exchange lists of candidate families ahead of reunions
Koreas exchange lists of candidate...
min
President Moon calls for tougher punishment for hidden camera crimes
President Moon calls for tougher p...
min
Koreas to push in earnest for peace, prosperity in autumn summit: Seoul official
Koreas to push in earnest for peac...
min
Newspaper AboutNews ReportAdvertiseComplaintsPrivacy PolicyJuvenile protectionRejection of E-mail Collection
Gangnam-gu, Teheran 52 street in Tehran Bldg, 616(Yeoksam-dong)  |  Main Phone: 02) 563-0604  |  Fax: 02) 538-5665
Chairman : jeong-woo Lee  |  Advisor : byung-il Min  |  Publisher: jae-mo Kah  |  Editors: il-hong Kim
Registration Number 1928 Seoul ah  |  eseoulpost.com / eseoulpost.net / Global Korea.,Ltd
Copyright © 2011 eseoulpost. All rights reserved. mail to jaemokah@daum.com , kih10kr@empas.com/ www.globalkorea.info
arabafrica.net / UAE Interract / Emirtes News Agency(WAM)/ http://wam.org.ae / www.uaeinteract.com