Business
China Balance of Payments Deficit Risks Currency and Asset Crash
China’s falling savings rate coupled with increasing government directed investment rate threatens a balance of payments crisis that could crash currency and asset values.
China became the “factory to the world” and built incredible infrastructure over the last three decades based on the strength of individual savers who remembered the hard times of the Great Famine of 1958–1962 that starved to death 30 million people.
The world savings rate as a percentage of gross domestic product has averaged at about 25 percent since 1990, allowing about a 24 percent of GDP world investment rate. In comparison, China’s savings rate went from 37.4 percent of GDP in 1990 to 52.4 percent in 2008, allowing its investment rate to spike from 34.4 percent to 43.2 percent of GDP, according to consultancy Enodo Economics that closely tracks China money flows.
But over the last decade, China’s savings rate fell 7.2 percent to 45.2 percent, while the investment rate rose 1.6 percent to 44.8 percent. The slightly positive net savings rate of $56 billion might be sustainable, but China also suffered capital flight of $500 billion in 2015, $675 billion in 2016, $380 billion in 2017, before dropping to $22 billion last year.
Chinese leader for life Xi Jinping was successful in shriveling capital flight by running a ferocious anti-corruption drive that has netted up to 2.5 million officials at various levels, from ranged from what he referred to as the elite “tigers,” to the ordinary “flies.”
About two-thirds of Chinese savings are held in interest-bearing deposits at banks that loan the money out according to the “policy” dictates of the Communist Party leaders. The policy focus is to support state-owned enterprises that despite only representing 5 percent of industrial enterprises, receive 65 percent of bank loans, control $10.4 trillion of assets and dominate about 85 percent of the high-profit industries such as finance, power, energy, telecommunications and defense manufacturing.
But the before-tax profitability of the “factory to the world” fell from…
Business
China’s Golden Rooster Film Festival Kicks Off in Xiamen – Thailand Business News
The 2024 China Golden Rooster and Hundred Flowers Film Festival began in Xiamen on Nov 13, featuring awards, cultural projects worth 31.63 billion yuan, and fostering international film collaborations.
2024 China Golden Rooster and Hundred Flowers Film Festival Opens
The 2024 China Golden Rooster and Hundred Flowers Film Festival commenced in Xiamen, Fujian province, on November 13. This prestigious event showcases the top film awards in China and spans four days, concluding with the China Golden Rooster Awards ceremony on November 16.
The festival features various film exhibitions, including the Golden Rooster Mainland Film Section and the Golden Rooster International Film Section. These showcases aim to highlight the achievements of Chinese-language films and foster global cultural exchanges within the film industry.
On the festival’s opening day, a significant milestone was reached with the signing of 175 cultural and film projects, valued at 31.63 billion yuan ($4.36 billion). Additionally, the International Film and Television Copyright Service Platform was launched, furthering the globalization of Chinese film and television properties.
Source : China’s Golden Rooster film festival opens in Xiamen – Thailand Business News
Business
China’s New Home Prices Stabilize After 17-Month Decline Following Support Measures
China’s new home prices fell for the 17th month in October, declining 0.5% from September, but slowing, indicating potential market stabilization amid supportive measures. Second-hand home prices showed mixed trends.
Decline in China’s Home Prices Stabilizes
China’s new home prices continued to decline in October for the 17th consecutive month, although the drop showed signs of slowing. Recent support measures from Beijing appear to be inching the market toward stabilization, as evidenced by a lighter decline compared to earlier months.
Monthly and Yearly Comparisons
According to the latest data from the National Bureau of Statistics, new home prices across 70 mainland cities fell by 0.5% from September, marking the smallest decrease in seven months. Year-on-year, prices dropped by 6.2%, slightly worse than the September decline of 6.1%. In tier-1 cities like Beijing and Shanghai, prices decreased by 0.2%, a smaller fall than 0.5% in the previous month.
Second-Hand Home Market Trends
Second-hand home prices in tier-1 cities experienced a 0.4% increase in October, reversing a 13-month downward trend. Conversely, tier-2 cities observed a 0.4% drop in second-hand prices, while tier-3 cities faced a similar 0.5% decline. Overall, recent trends indicate a potential stabilization in China’s property market.
Source : China’s new home prices slow 17-month decline after support measures kick in
Business
Business Update: Southern Sun Reports Earnings Growth; China Stimulates Property Market – News24
Southern Sun reports increased earnings, attributed to growth in the hospitality sector, while China’s property market receives a boost, reflecting economic recovery and renewed investor confidence.
Southern Sun Earnings Surge
Southern Sun has reported a significant increase in its earnings, showcasing solid financial performance amid evolving market conditions. This growth highlights the company’s resilience and adaptability to changing consumer demands, positioning it well for future opportunities in the hospitality industry.
China’s Property Market Recovery
In a bid to rejuvenate its economy, China has introduced measures to boost its property market. These initiatives aim to stabilize real estate prices and encourage investment, which is crucial for maintaining economic momentum. The government’s commitment to supporting the sector reflects its understanding of the industry’s importance in overall economic health.
Broader Economic Implications
The rise in Southern Sun’s earnings and China’s proactive approach to revitalizing its property market indicate broader economic trends. Investors and stakeholders are keenly observing these developments, as they may signal recovery and growth opportunities in both the hospitality and real estate sectors. The collaboration between local businesses and governmental actions will be pivotal in shaping future economic landscapes.
Source : Business brief | Southern Sun sees earnings rise; China boosts its property market – News24
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