Business
Report warns contagion risk grows among Chinese banks as capital levels weaken
Connectivity within the Chinese banking system is growing, a new report has warned, increasing financial contagion risk across the sector as a whole, if any companies were to suffer serious distress.
The study, by top Chinese securities company Everbright Securities, released on Wednesday, highlighted national joint-stock commercial banks, as well as some city commercial banks, as accounting for 40 per cent of such “interrelated assets”, which grew at a compound annualised pace of 23 per cent through 2014-16 to reach a value of 40 trillion yuan (US$5.88 trillion).
At the same time, many of these banks are operating from a weak capital base and have high leverage, the report said.
Industry observers have long been concerned about the true level of capital buffers at many of China’s smaller banks.
Everbright now suggests that including interbank and off-balance-sheet lending, the tier 1 capital adequacy ratio dropped to 9.33 per cent, by the end of 2016, down from the official 11.25 per cent and that banks now need about 2.3 trillion yuan of additional funding to cement their capital bases.
It names particularly national banks such as Industrial Bank, China Minsheng Bank, SPDB, Citic Bank, and city commercial banks such as Shanghai Bank, Nanjing Bank, Hangzhou Bank, Ningbo Bank and Beijing Bank.
The Tier 1 capital ratio – the comparison between a bank’s core equity capital and its total risk-weighted assets – at some of these banks has now hit the type of levels “reached by western institutions, in the run-up to global financial crisis”, the report says.
China’s banking sector is facing new headwinds as asset growth cools
“The ratio rose before 2014 due to implementation of Basel III accord. But since then it declined to 5.31 per cent by the end of 2016.
“Factoring in sizable off-balance-sheet assets, the ratio was 4.59 per cent, below the recommendable level of 5 per cent,” the report noted.
The findings echo a working paper published by the People’s Bank of China a month ago, which, which said national joint-stock banks now play a bigger role than the country’s “Big…
Business
China Reports Agreement on Ceasefire between Myanmar’s Factions
Myanmar’s conflicting parties have reached a ceasefire agreement, facilitated by China, aiming to reduce violence and promote peace in the region.
Myanmar Ceasefire Agreement
In a significant development, conflicting parties in Myanmar have reached an agreement for a ceasefire, with China facilitating discussions. This breakthrough is crucial for restoring peace in a nation that has been marred by violence and political strife in recent years. The ceasefire aims to pave the way for reconciliation efforts and improve the humanitarian situation in affected areas.
Role of China
China’s involvement as a mediator highlights its growing influence in resolving regional conflicts. The Chinese government has been working closely with both sides to promote dialogue and trust, crucial elements for a long-term peace solution. Increased stability in Myanmar can benefit regional security and economic development, making China’s mediation significant.
Looking Forward
The hope is that this ceasefire will lead to further negotiations addressing underlying issues in Myanmar. While challenges remain, both parties have expressed willingness to work towards a peaceful resolution. The international community will be watching closely to see if this ceasefire can be sustained and lead to enduring peace for the people of Myanmar.
Business
China Limits Apple Operations as BYD Manufacturing Moves to India and Southeast Asia Amid Trade Frictions | International Business News – The Times of India
China is restricting the export of high-tech manufacturing equipment and personnel to India and Southeast Asia, aiming to maintain domestic production amid potential US tariffs, impacting companies like Foxconn and BYD.
China Curbs on High-Tech Manufacturing
China is intensifying restrictions on the movement of employees and specialized equipment essential for high-tech manufacturing in India and Southeast Asia. This measure aims to prevent companies from relocating production due to potential tariffs under the incoming US administration. Beijing has urged local governments to restrict technology transfers and export of manufacturing tools as part of this strategy.
Impact on Foxconn and Apple’s Strategy
Foxconn, Apple’s primary assembly partner, is facing challenges in sending staff and receiving equipment in India, which could impact production. Despite these hurdles, current manufacturing operations remain unaffected. The Chinese government insists it treats all nations equally while reinforcing its domestic production to mitigate job losses and retain foreign investments.
Broader Implications for India
Additionally, these restrictions affect electric vehicle and solar panel manufacturers in India, notably BYD and Waaree Energies. Although the measures are not explicitly targeting India, they complicate the business landscape. As foreign companies seek alternatives to China, these developments are likely to reshape manufacturing strategies amidst ongoing geopolitical tensions.
Business
EFIS Maroc and China Eastern Airlines Set to Launch Service Between Morocco and China
China Eastern Airlines and EFIS Maroc will launch three weekly flights between Casablanca and Shanghai via Marseille starting January 19, 2025, enhancing cargo logistics for Morocco-China trade, particularly in the automotive sector.
New Flight Route Launch
China Eastern Airlines has partnered with EFIS Maroc to introduce three weekly flights between Casablanca (CMN) and Shanghai (PVG) via Marseille (MRS). This service is set to commence on January 19, 2025, operating on Tuesdays, Fridays, and Sundays, using Boeing 787-900 aircraft with a capacity of 18 tonnes for cargo.
Supporting the Automotive Industry
The service aims to enhance logistical support for the automotive sector, facilitating the secure and timely transport of high-value components between Morocco and China. This new route will not only strengthen local supply chains but also promote economic growth and trade relations between Africa and Asia.
Innovative Cargo Solutions
Jean Ceccaldi, CEO of ECS Group, emphasized that this collaboration marks a significant achievement for EFIS Maroc. Leveraging advanced digital tools like Squair for customs optimization and CargoAi for booking, EFIS Maroc will enhance operational efficiency, ensuring a superior cargo management solution tailored for China Eastern Airlines.
Source : EFIS Maroc and China Eastern Airlines to launch Morocco-China service
- China Reports Agreement on Ceasefire between Myanmar’s Factions
- 2024 China Economic Review: GDP, Trade, and Foreign Direct Investment Analysis
- How China’s appetite for salmon could reshape global seafood markets – new research
- China Limits Apple Operations as BYD Manufacturing Moves to India and Southeast Asia Amid Trade Frictions | International Business News – The Times of India
- China’s GDP Grows 5% in 2024: Key Insights and Main Factors
- Can science be both open and secure? Nations grapple with tightening research security as China’s dominance grows
