China Economic Scan - Your daily update on the Chinese economy.
In this edition: China bank loans likely fell in April, China passes US as top trading partner with Brazil, China to let foreign-registered companies open accounts at local banks, China stocks 'bubble' ready to burst, Chinese stocks close up slightly.
Top 5 headlines
Report: China new bank loans likely fell in April
- China's new bank lending in April was likely above 600 billion yuan ($87.8 billion), sharply lower than the record trillion-plus yuan loans in earlier months this year
- New loans in March totaled 1.9 trillion yuan ($220 billion), with new lending for the first quarter totaling 4.58 trillion yuan ($670.6 billion).
- "Clearly, new lending in the rest of the year at the same pace ... or half as fast ... as in the first quarter would be unthinkable and too fast," UBS economist Tao Wang said.
China surpasses U.S. to become Brazil's biggest trading partner
- China replaced the United States to become Brazil's biggest trading partner, said Brazil's Ministry of Development, Industry and Exterior Trade on Monday.
- The sum of Brazil's exports and imports with China reached $3.2 billion in April, greater than the $2.8 billion in its trade with the U.S.
- According to Brazil's official statistics, the bilateral trade volume between Brazil and China reached $36.44 billion in 2008, increasing 55.9% from 2007. Brazil's export volume to China was $16.4 billion, import volume $20 billion, rising 50.8% and 56.9% from the previous year respectively.
China To Let Foreign-Registered Cos Open Accts At Local Banks
- China's foreign-exchange regulator said it plans to allow companies registered overseas to open foreign-currency accounts at domestic banks, ending the practice of restricting this business to just foreign banks.
- The State Administration of Foreign Exchange (SAFE) said in a statement on its Web site the move will help ensure the safety of domestic firms' funds used for overseas investments, particularly during the financial crisis.
- SAFE said companies registered abroad, including in Hong Kong, Macau and Taiwan, will be allowed to set up foreign-currency accounts at domestic banks under the draft rules. It is seeking public opinion on the rules through May 19.
China Stocks ‘Bubble’ Ready to Burst, Galaxy Says
- China is at risk of a stock market “bubble” that may burst as investor confidence in the nation’s economic recovery weakens and bank lending slows, according to China Galaxy Securities Co., the nation’s largest brokerage.
- The Shanghai Composite Index has surged 50% since last year’s low on Nov. 4, driving valuations on the index to 27.2 times earnings.
- “China’s economy has bottomed but the recovery may be weaker than forecast,” said Teng Tai of Galaxy, “Bank lending will have to slow down. This will cap the growth in money supply and affect the supply of funds for the stock market.”
China stocks rise 0.3 pct to 9-mth closing high
- Chinese stocks rose slightly on Tuesday, the Hang Seng +0.30% to 16,430.08, Shanghai Composite +0.29% to 2,567.34, Shenzhen Component +0.49% to 9,947.81.
- China Vanke advanced +2.73% to 9.04 yuan, extending Monday's 3.77% gain. Fujian Cement and Fujian Zhangzhou Development jumped by their +10% daily limit after China's State Council, or cabinet, approved plans for an economic development zone in the southeastern province of Fujian to promote economic ties with Taiwan.
- China Shenhua Energy -0.71% to 26.50 yuan after jumping +7.93% on Monday. CITIC Securities dropped -0.83% to 25.15 yuan after rising +4.58 percent on Monday, while Jiangxi Copper sank -2.92% to 24.95 yuan after gaining +6.07% on Monday.
Financial Indicators:
| USD/CNY | Hang Seng Index | Shanghai Composite | Shenzhen Component |
| 6.8235 | 16,430.08 (+0.30%) | 2,567.34 (+0.29%) | 9,947.81 (+0.49%) |
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