China Economic Scan - Your daily update on the Chinese economy.
In this edition: PSBC lends 70 bln yuan to SMEs, Top Chinese banker calls for US sales of yuan bonds, China Eastern and Shanghai Air to merge, Vestas to boost global sales and China workforce, Chinese stocks finish mixed on Monday.
Top 5 headlines
Postal Savings Bank of China extends 70 bln yuan in small loans
- The Postal Savings Bank of China (PSBC) has extended 70 billion yuan (10.2 billion U.S. dollars) in loans to small and medium-sized enterprises since it started giving small loans last June, PSBC governor Tao Liming said Sunday.
- PSBC lent 3-400 million yuan on average every day to small and medium-sized enterprises, and total credit was expected to exceed 100 billion yuan at the end of this year, said Tao.
- The PSBC's small loan program was first launched in Henan Province last June. It targets small and medium-sized companies and requires no collateral. The maximum loan for small business owners is 100,000 yuan, and for medium-sized firms 3 million yuan.
Top China banker calls for U.S. sales of yuan bonds
- A top Chinese banker on Sunday called on the U.S. government and the World Bank to sell yuan-denominated bonds in Hong Kong and Shanghai to encourage the development of debt markets in those centers and to promote the yuan as a major international currency.
- "I think the U.S. government and the World Bank can consider the possibility of issuing renminbi bonds in the Hong Kong market and the Shanghai market," said Guo Shuqing, the chairman of state-controlled China Construction Bank.
- Last Wednesday, banking groups HSBC Holdings Plc and Standard Chartered Bank both said they were preparing for yuan-denominated bond issuance in China to help the country develop its local-currency financial markets.
China Eastern, Shanghai Air to Combine After Losses
- China Eastern Airlines will combine with Shanghai Airlines after joint losses of 16.5 billion yuan ($2.4 billion) last year prompted the government to bail out the two state-controlled carriers.
- The combined group would have 306 planes and more than 600 routes, giving it a 50 percent share of air travel in China’s financial capital.
- “It shows that the government wants to improve the performance of state-owned companies through consolidation,” said Kelvin Lau, an analyst at Daiwa Institute of Research Ltd. in Hong Kong. And, “since they have accepted money from the government there is no other choice for them” except to follow the government’s plans.
Vestas to Boost Global Sales, Add China Workforce
- Vestas Wind Systems A/S, the world’s biggest maker of wind turbines, plans to increase global sales by 20% this year as it adds production centers and boosts workforce by a third in China.
- Vestas’s workforce in China will rise to 3,000 by 2009 from about 2,000 at the end of last year, Lars Andre Andersen, the head of the company’s China unit, said.
- 4 new production centers will also open this year, taking its number in China to 10, said Andersen. Vestas had sales of about 6 billion euros ($8.3 billion) in 2008.
China’s Stocks Rise for First Time in Three Days; Vanke Climbs
- Chinese closed mixed on Monday, the Hang Seng lost -2.28% at 18,253, the Shenzhen Component also fell -0.52% to 10,612, but the Shanghai Composite managed a gain up +0.52% to 2,768.
- Vanke jumped +4.7% after Shenzhen trading after the company reported the first monthly gain in the average price of its apartments this year. Minsheng Banking rallied +5.8% on the move to replenish capital. Jiangxi Copper, China’s biggest producer of the metal, dropped -4.2% on lower commodity prices.
- “Expectations of an economic recovery are still driving this rally,” said Wang Peng, Shanghai-based chief investment officer at First Trust Fund Management Co., which oversees about $2.1 billion. “In the short term, the market needs a break to allow some profit-taking pressure to be relieved.”
Financial Indicators:
| Metric | Value | Point change | % change |
| Hang Seng Index | 18,253 | -426.14 | -2.28% |
| Shanghai Composite | 2,768 | 14.45 | 0.52% |
| Shenzhen Component | 10,612 | -55.36 | -0.52% |
| TAIEX | 6,628 | -139.08 | -2.06% |
| CNY/USD | 6.8373 | 0.0013 | 0.02% |
Source: China Economic Scan
