China Economic Scan - Your daily update on the Chinese economy.
In this edition: World Bank says China recovery hopes may be premature, BoC says China-Brazil yuan trade settlement not yet practical, Chinese overseas assets rose 23% to $2.92 trln in 2008, Shenzhen Development Bank to issue RMB 1.5 bln bonds, Chinese stocks close down slightly on Wednesday.
Top 5 headlines
World Bank Says China Recovery Hopes May Be Premature
- “Until we see a recovery in private investment, it’s hard to get too excited about the future,” David Dollar, country director for China, said at a forum in Beijing.
- Private investment, the main driver of growth, was “way down” in Q1, Dollar said, without citing a figure. Manufacturers have excess capacity and “a lot of the real-estate sector is over-built,” he said.
- Private investment is “the main source of job creation,” Dollar said. “It’s very important for private investment to come back if China’s going to be able to continue to grow at a high rate that is sustainable.”
China, Brazil Yuan Trade Will Take Years, Bank of China Says
- China and Brazil’s plans to conduct bilateral trade in yuan and reais will be limited because the Chinese currency is still not fully convertible, Bank of China Ltd. said.
- China is seeking to promote the yuan as an international currency after signing 650 billion yuan ($95 billion) in swap agreements with Argentina, Indonesia, South Korea, Hong Kong, Malaysia and Belarus in recent months.
- “It may take a couple of years for China and Brazil to really start using yuan in trade because the currency is of limited use outside China,” said Shi Lei, an analyst in Beijing at the nation’s largest foreign-currency trader.
Overseas assets in 2008 soar to $2.92t
- China's foreign financial assets rose 23% last year to reach a total of $2.92 trillion, the State Administration of Foreign Exchange (SAFE) said yesterday.
- Of that amount, nearly $2 trillion, or 67%, were foreign exchange and gold reserves, the foreign exchange regulator said.
- The outbound direct investment, however, was just $169.4 billion, accounting for 6% of the total foreign financial assets.
Shenzhen Development Bank to issue up to RMB 1.5 bln in bonds
- Shenzhen Development Bank is planning to issue up to RMB 1.5 billion in 15-year bonds on May 26, sources reported.
- Dagong Global Credit Rating Co has rated the bonds AA-. Haitong Securities and UBS Securities Co have been assigned as major underwriters for the issuance.
- In the first quarter of this year, the bank's net profit jumped 12% year on year to RMB 1.12 billion, with basic earnings per share at RMB 0.36, up 6% from a year earlier.
Chinese stocks down 0.94% on Wed
- Chinese stocks slipped on Wednesday - the Hang Seng fell -0.39% to 17476, and the Shanghai Composite fell -0.94% to 2651; however the Shenzhen Component rose slightly +0.28% to 10453, and the TAIEX was up +0.72% at 6704.
- Coal stocks ended higher; Shanxi Coking, the biggest publicly traded coke producer in China, swelled +5.68% to RMB 7.82. Guizhou Panjiang Refined Coal jumped +8.15% to close at RMB 26.82. China Coal Energy, the country's second-largest coal miner by revenue, grew +2.10% to RMB 12.64.
- Gold firms were also gainers; Zhongjin Gold jumped +7.89% to close at RMB 66.88. Shandong Gold Mining, China's second-largest listed gold miner, grew +2.44% to RMB 40.67. Zijin Mining Group increased +1.02% to RMB 8.88.
Financial Indicators:
| Metric | Value | Point change | % change |
| Hang Seng Index | 17,476 | -68.19 | -0.39% |
| Shanghai Composite | 2,651 | -25.27 | -0.94% |
| Shenzhen Component | 10,453 | 29.04 | 0.28% |
| TAIEX | 6,704 | 48.03 | 0.72% |
| CNY/USD | 6.8299 | 0.0007 | 0.01% |
Source: China Economic Scan
