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  1. #1
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    [EN] One Belt One Net: Singapore magnate plans $5bn data center company

    One of Southeast Asia’s richest men, Oei Hong Leong, eyes opportunity in China’s One Belt One Road initiative

    Sebastian Moss
    19 September 2017

    Singaporean billionaire Oei Hong Leong, 69, has revealed plans for a US$5 billion (S$6.7bn) data center business, One Belt One Net.

    As the name suggests, the company aims to take advantage of China’s One Belt One Road initiative, a vast, multi-trillion dollar infrastructure project spanning some 60 countries.

    Concentrating on Singapore

    “Over the past decade, in the field of artificial intelligence, electronic payment and other high-tech areas, Singapore is not really in the leading position,” Oei said. “Now in the big data age, to catch up and to lead is imperative.”

    He continued: “The large-scale data warehousing company will be beneficial to attract the world’s science and technology investment funds and start-up companies inflowing to Singapore and being concentrated in Singapore, so that Singapore will become a new information technology center and investment center.”

    It remains unclear how the new company will raise funds - Oei is himself worth $1.36bn, according to Forbes - but Oei said that money raised will primarily be spent on building facilities, procuring machinery, equipment and cloud computing services and software, as well as employee recruitment and training.

    Oei hopes that One Belt One Net could “tremendously improve” the Singapore Exchange (SGX), adding: “It may create listed companies such as Tencent and Meitu, which are social media gaming companies and artificial intelligence companies. It will improve the stock’s activeness and gradually bring the emerging industries of science and technology into the companies listed in SGX.

    “This type of changes is very meaningful and positive.”

    One is the magic number

    The One Belt One Road initiative, first announced in 2013, primarily connects Asia and Europe, with Oceania and East Africa also included. Depending on the scale and length of the project, it is expected to cost between $4 trillion and $8 trillion.

    An unprecedented and audacious plan, One Belt One Road has been interpreted in various ways by political thinkers - and is primarily seen as a way to keep China’s burgoning infrastructure industry humming, while consolidating global power as it chips away at America’s hegemony.

    Significant infrastructure projects including ports in Pakistan, roads in Laos and railroads in Kenya, solidify trade routes to the east, and - in some cases - provide China’s navy access to new regions.

    The upgrades are planned across six geographic corridors, all originating from the Chinese mainland:

    • New Eurasian Land Bridge, running from Western China to Western Russia
    • China–Mongolia–Russia Corridor, running from Northern China to Eastern Russia
    • China–Central Asia–West Asia Corridor, running from Western China to Turkey
    • China–Indochina Peninsula Corridor, running from Southern China to Singapore
    • China–Myanmar–Bangladesh–India Corridor, running from Southern China to Myanmar
    • China–Pakistan Corridor, running from South-Western China to Pakistan
    • Maritime Silk Road, running from the Chinese Coast through Singapore to the Mediterranean

    Each corridor will see digital infrastructure upgrades, with large investments being made in fiber connectivity.

    Targeting the Eurasian Land Bridge, China Mobile built the largest data center in Northwest China at the Karamay Cloud Computing Industrial Park, by the rail transport route for moving freight and passengers overland from Pacific seaports in the Russian Far East and China to seaports in Europe.

    State-owned China Unicom has also turned to Russia, establishing a Moscow-based subsidiary. At the time, Li Hui, Chinese ambassador to Russia, said: “The establishment of China Unicom (Russia) Operations Limited is a major event for the cooperation between China and Russia, and a bridge that connects Belt and Road with Eurasian Economic Union.”

    Meanwhile, Kazakhstan’s largest telecoms firm will deliver a fiber route from Hong Kong to Frankfurt with a latency of only 162ms, for China Telecom Global. Elsewhere, Huawei Marine is helping build submarine cables in the Maldives as part of the Maritime Silk Road, and Flexenclosure is setting up data centers in Ethiopia as China builds massive railway networks.

    State-backed CITIC Telecom International CPC is also getting in on the initiative, acquiring parts of the networking and data center business of Linx Telecommunications, including a 470 kilometer optic fiber network in the Baltic Sea, network operations centers (NOCs) in Russia and Estonia, and a data center in Tallinn, which hosts Estonia’s largest neutral Internet Exchange (TLL-IX).


  2. #2
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Tycoon sets up $6.7 billion data centre business

    Stanislaus Jude Chan

    Billionaire businessman Oei Hong Leong is upping the ante with plans of a US$5 billion ($6.7 billion) data centre business to propel Singapore forward as a new information technology and investment centre.

    “Over the past decade, in the field of artificial intelligence, electronic payment and other high-tech areas, Singapore is not really in the leading position,” Oei says in a statement on Monday. “Now in the big data age, to catch up and to lead is imperative.”

    To achieve his goal, Oei last Friday incorporated a new company, One Belt One Net. The name mirrors China’s ambitious One Belt One Road initiative, a massive infrastructure programme that will stretch across more than 60 countries along the ancient Silk Road.

    While it is still unclear how Oei is planning to fund the data centre project, he says the investment will mainly go towards the building of the facility, the procurement of machinery and equipment, cloud computing services and software architecture, as well as the recruitment and training of employees.

    In particular, Oei highlights two types of clients for his data centres: companies involved in e-payments, and those working with cryptocurrencies and blockchain technology.

    “The large-scale data warehousing company will be beneficial to attract the world’s science and technology investment funds and start-up companies inflowing to Singapore and being concentrated in Singapore, so that Singapore will become a new information technology centre and investment centre,” he says.

    In addition, Oei believes One Belt One Net could “tremendously improve” the Singapore Exchange (SGX), which he says is currently solely relying on the traditional service industry.

    “It may create listed companies such as Tencent and Meitu, which are social media gaming companies and artificial intelligence companies. It will improve the stock’s activeness and gradually bring the emerging industries of science and technology into the companies listed in SGX,” Oei says. “This type of changes is very meaningful and positive.”

    In a separate filing, Oei is also making a foray into the artificial intelligence business using 32.55% owned IPC Corporation to buy a 51% stake in Beijing iJourney Technology Development Co. for US$5.1 million.

    The seller is Xinyuan (China) Real Estate Co., a subsidiary of Xinyuan Real Estate Co. which listed on the New York Stock Exchange.

    IPC has also agreed to sell Grand Nest Hotel Zhuhai to Xinyuan (China) for RMB 200 million ($41 million).

    Beijing iJourney is engaged to the research & development and marketing of robots using artificial intelligence to serve the needs of families.

    “It is the aspiration of the Beijing iJourney that its products will benefit the market of smart home and become an internet traffic portal to the next generation of the Internet of things,” says IPC.

    One of Beijing iJourney's newest products is the butler robot, which has been launched throughout China and targets "the educational needs of children, the healthcare needs of the elderly, and the connectivity of smart appliances" among others.

    The proposed acquisition will be satisfied through the issue of some 17.2 million new IPC shares at 40 cents each, 5.3% higher than its Monday closing price of 38 cents, giving it a market cap of $32 million.


  3. #3
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Is there a tech agenda in China’s One Belt One Road Initiative?

    The official news coverage of the One Belt One Road story does not really mention digital or electronic commerce, which is surprising.

    Case Lane
    May 15, 2017

    The market town – the one hub of commerce for a region, river or road – has now become Amazon.com. But more than two millennia ago, global market towns were the designated stopping routes on the Silk Road trading lanes covering half the world. And now with extensive publicity those roads appear to be reopening as part of China, and the world’s, biggest global infrastructure project. China’s One Belt One Road (OBOR) initiative is expected to re-connect Asia, Europe and all the lands in-between via road, rail and shipping ports destined to change the face of world commerce. This week, Beijing hosted the largest diplomatic meeting to date to publicize and promote its intentions.

    But behind all the fanfare, I have a question. What are the digital plans in this project?

    After all, we are no longer dealing with camels and caravans and sailboats. In this 21st century resurrection of the old trade routes, does China have a plan for a digital network to guide, supplement or even, provide surveillance over global trade, and individual personal travel along the way? To begin, the One Belt One Road project refers to the literal construction of highways, railways and shipping ports accessing 65% of the world’s population, who today control one-third of world GDP and one-quarter of all the goods and services moved around the world.

    In case you’re wondering, the belt is the physical roads, and the road is the seaways (I know confusing, but I guess belt and water did not work). Big numbers means big spending – the usual cost estimates start at the comfortably round $1 trillion price tag, and go up from there. Some commentators put the entire package at closer to $4 trillion. But, again depending on who you ask, this is not benevolence or aid – it’s loans from China to the receiving countries who then turn around and pay for China’s companies to complete the construction. So that’s the basics, what about the tech?

    Now when I think about the tech impact, I’m imagining a Life Online scenario as it would play out in my technothriller books. But to bring the ideas closer to home, think of the average consumer and the implications for online shopping. You could make your purchase for goods coming from anywhere in the world, and track the entire shipment from manufacturing through distribution along the new Silk Road. This would mean there is a control hub somewhere (maybe, in China) that effectively tracks all the cargo, and people, moving through the Belt and Road countries. The official reason for this would be to provide security and reassurance to commercial businesses. The unofficial reason could be to control a significant portion of world trade and to, at a moment’s notice, say, cut-off vital shipments bound for a country that may not be playing along with the bigger agenda. I’m thinking that’s a credible outline for a future Life Online thriller.

    Surprisingly, the official news coverage of the One Belt One Road story does not really mention digital or electronic commerce, which is surprising. Why would they be building a replica of a two-thousand year old trading network? Why not update it for the 21st century?

    I’ve seen some mention of the idea of a “Cyber Silk Road” in e-commerce. This refers to the opportunity for smaller companies to do business online and transport goods with more efficiency. Obviously all products will move faster than back in Marco Polo’s day. The number one impact of OBOR will be the shortening of transportation times, sometimes by half, from China to Central Asia and Europe. But is that all the digital productivity Belt and Road will offer?

    In the Life Online books, the entire world is connected via The Network, which is run under the auspices of the United Nations. The Network tracks all human activity including trade and personal travel. If China has created a digital network connecting One Belt One Road, this independent project would one day need to be integrated with the world system. You can also imagine the military implications. The central hub for OBOR would be able to provide military interests with an up-to-the-second map of all activity on major trans-national roads and rails, and in ports, which would greatly facilitate strategic decision-making.

    As a traveler, I love the idea of taking the Beijing to London railway one day. But as a future world observer, I cannot help but wonder what kind of technology underlies all of the OBOR projects, and whether or not the plans include surveillance and tracking. For that part of the story, we will have to wait and see. In the meantime, I think I should start working on the plot for the fictional version of the story.

    If you want a detailed overview of OBOR check out this “visual explainer” from the South China Morning Post.

    I also go into more detail about the initiative and the facts future tech folks can track in my You Tube video about OBOR.


  4. #4
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Data Centers and "One Belt, One Road"

    Strategic Media Asia
    February 2, 2016

    With the aim to connect major Eurasian economies through infrastructure, trade and investment, President Xi Jinping launches the 13th 5-year plan and “One Belt, One Road” strategy which promote two international trade connections: The land-based "Silk Road Economic Belt" and oceangoing "Maritime Silk Road."

    he “Belt” is a network of overland road and rail, oil and natural gas pipelines, and other infrastructure projects that run along the major Eurasian Land Bridges, through China-Mongolia-Russia, China-Central and West Asia, China-Indochina Peninsula, China-Pakistan, Bangladesh-China-India-Myanmar.

    The “Road” is a network of planned ports and other coastal infrastructure projects from South and Southeast Asia to East Africa and the northern Mediterranean Sea.

    Data Centers, the mission critical purpose-built facilities, take important role in the “One Belt, One Road” strategy. It serve users for telecoms, electronics and the Internet industries first, followed by companies that develop the Internet of Things, aiming to foster a hi-tech information industry cluster and to accelerate the enterprises' digital transformation such as mobility, cloud and big data.

    Not only are they the essential infrastructure supporting various industries such as oil and gas, trading and finance, but also the catalyst for the development of new industries and applications that empower the economic growth.

    China Mobile, for example, is building the largest data center in Northwest China. Located at the Karamay Cloud Computing Industrial Park, the mission critical facilities offer 119,000 sqm of floor space and capable of hosting 14,000 racks. The facilities in phase one, by the end of 2016, will offer 3,600 racks and start to provide the services.

    The data center not only boasts a strategic geographic position as it is located on the Eurasia Land Bridge, which is the rail transport route for moving freight and passengers overland from Pacific seaports in the Russian Far East and China to seaports in Europe, but also becomes a symbolic meaning taken by one of the key telecommunications players in the world and participate in the “One Belt, One Road” strategy.

    Countries, investors and enterprises in engineering, critical facilities design, project consultant, construction, operations and management, etc., can take this opportunity to have their staff well trained, to offer quality services, required skills and management systems and to become one of the key infrastructure enablers during years.


    Cloud rendering service opens in Karamay

    Sun Hui

    Karamay launched an IT project in the Karamay Cloud Computing Center on Nov 28 to provide cloud rendering services to special effects companies in China and Central Asia.

    The platform allows animators to offload lengthy rendering processes used in movie special effects to a collection of servers in the cloud. This frees up computers, allowing animators to continue working on movie projects and meet tight production deadlines.

    The platform took six months to complete co-construction and was co-constructed by VSOChina Group, Bring Life to Data and the Xinjiang branch of China Mobile.

    The service will be offered via the website of VSOChina and will support popular animation software such as 3ds Max and Maya, and render engines such as Mental Ray and V-Ray.

    VSOChina also runs China’s biggest rendering platform in Suzhou, which is supported by “Tianhe”, the world’s largest supercomputer. Major Chinese box office movies have used the platform, including Roco Kingdom 4 and Seer 3 & 4.

    Equipped with tens of thousands of rendering nodes, the Karamay-based platform is the largest rendering cloud in Central Asia.

    “The rendering platform makes full use of the regional advantages of Karamay and CMCC’s data resources,” said Lu Yongquan, president of Vsochina Group. “Our company utilizes its powerful resource integration capability to provide rendering cloud services for countries and regions in the Central Asia.”

    The platform was set up in the CMCC (Xinjiang) data center in Karamay, the largest data center in Northwest China. With a total planed investment of 8 billion yuan ($1.16 billion), it will occupy an area of 11.27 hectares.


  5. #5
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Chinese overseas lending dominated by One Belt One Road strategy

    Majority of loans approved by largest policy lenders support expansion of trading routes

    China Investment Research
    15 June 2015

    China’s commitment to building infrastructure in countries covered by its “One Belt, One Road” initiative — a scheme to boost development along ancient “silk road” trading routes between China and Europe — is revealed by data showing that the lion’s share of Beijing’s recent overseas lending pledges have been in countries that lie along the routes.

    A study by Grison’s Peak, a boutique investment bank based in London, shows that the majority of 67 overseas loan commitments made by Beijing’s largest policy lenders, the China Development Bank and the China Ex-Im Bank, have been in areas defined by the “One Belt, One Road” strategy since it was agreed in late 2013 (see map).

    If loans to regions not included in the strategy — namely Latin America and west/central Africa — are excluded from calculations, the proportion of overseas state loans that were directed to countries on or close to the trading routes is 76 per cent of total overseas state lending by the institutions during the five quarters ended in March this year, the Grison’s Peak study shows.

    The “One Belt, One Road” strategy, a key policy of the administration of President Xi Jinping, was first incorporated into official Communist party documents in late 2013. Its principal aim is to boost connectivity and commerce between China and 65 countries with a total population of 4.4bn by building infrastructure and boosting financial and trade ties.

    These aims also come through in the data crunched by Grison’s Peak. Loans for infrastructure projects, including road, rail and power schemes, made up 52 per cent of the 67 loans pledged while trade finance accounted for a further 30 per cent. The value of the 67 loans included in the study was $49.4bn.

    The focus on infrastructure is consistent with what Parag Khanna, senior fellow at the New America Foundation, describes as China’s strategy to build up “infrastructure alliances” with countries it regards as important for commercial and strategic reasons.

    “Infrastructure is a way of asserting connectivity . . . as a tool of geopolitical leverage,” Mr Khanna said. “Infrastructure, particularly railways, has been a tool of extending influence for a couple of hundred years now, but not necessarily on this scale.”

    “China is winning the new ‘Great Game’ by building the new silk roads,” Mr Khanna said, referencing the 19th century rivalry between Russia and Britain for influence in Central Asia.

    “The silk road economic belt . . . is not new. There is 25 years of evolution on these projects. The purpose has always been the same for China, to smooth the flow of commodities imports and to smooth the outbound flow of goods,” he added.

    Just as in the development assistance programmes led by western powers and Japan in previous decades, the policy bank loans extended under the “One Belt, One Road” initiative have mostly been tied to the involvement of Chinese companies, either as suppliers of machinery and raw materials or in constructing and operating projects.

    Grison’s Peak found that 70 per cent of the loans pledged were linked to the involvement of a China-based corporation. While this has been standard for trade finance, it seems now to have become a standard feature of Chinese state lending to infrastructure projects overseas as well, the investment bank said.

    Lastly, the concessionary nature of Chinese state lending may be diminishing. Though interest rate details on state loans overseas are often not disclosed, Grison’s Peak estimates that during the early stages of the “One Belt, One Road” project, rates “seemed to average 2 to 2.5 per cent”. More recently, they have been in the region of 4 to 4.5 per cent, the bank said.


  6. #6
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    One Belt, One Road, and One Debt Hangover

    James Rickards
    June 5, 2017

    China is not only one of the world’s largest debtors, it is one of the world’s largest creditors.

    China uses debt not in the customary financial manner, but as a political tool to generate employment and maintain social stability. Likewise China uses loans and investment as a tool to advance its strategic interests. This may be good geopolitics in the short run, but it will be a disaster economically in the long run.

    Just as Chinese state owned enterprises (SOEs) can’t repay debts to Chinese banks, China’s foreign partners will not be able to repay debts to China itself. These twin disasters-in-the-making may converge in such a way that China’s assets disappear or become illiquid at exactly the time they are most needed to bail-out its own banking system.

    China has launched four major overseas investment initiatives in the past ten years. The oldest is their sovereign wealth fund, China Investment Corporation, or CIC, established in 2007. Sovereign wealth funds are a way for countries to invest their reserves in securities other than safe instruments such as U.S. Treasury notes.

    CIC today has assets of over $800 billion, spread among stocks, corporate bonds, hedge funds, private equity, commodities, and commercial real estate. Some of CIC’s investments are directly-owned enterprises, including gold mines in Zimbabwe.

    While these assets may outperform Treasury notes over time, they are also illiquid, and would tend to decline in value during a financial panic. This means that about 20%, of China’s reserves are unavailable for critical tasks such as bailing out the banking system or defending the currency.

    The second and third initiatives are the New Development Bank, NDB, created by the BRICS in 2014, and the Asia Infrastructure Investment Bank, AIIB, created by China in 2016. These have participation from 35 countries in the Asia/Australia region, and 18 other countries from outside that region, mostly in Europe. The United States refused to join.

    Although NDB and AIIB are both multilateral institutions, China was the principal sponsor and a major source of funding. It provided about $10 billion to NDB and $30 billion to AIIB.

    These banks will expand their lending capacity by issuing notes and will fund infrastructure projects in competition with the World Bank and its regional development banks — without interference from the U.S. on priorities.

    China, One Belt, One Road

    By far, the most ambitious outbound investment effort by China is the “One Belt, One Road” initiative. The “belt” refers to overland routes from central China to Europe. The “road” refers to maritime routes from eastern China to Southeast Asia, Africa, and Europe.

    It is a recreation of the original Silk Road caravan route of the thirteenth century, and China’s glory days as a naval power led by Admiral Zheng He in the Ming Dynasty in the early fifteenth century.

    The scope of the One Belt, One Road initiative is immense. It will include port facilities, railroads, highways, telecommunications channels, airports, transshipment facilities, renewable energy sources, and more strung out from Xian to Rotterdam, and from Guangzhou to Venice.

    The graphic on the previous page shows the main corridors of the belt and road, but there are many ranches and capillaries not shown in detail. Of these offshoots, one of the most critical is a transportation link from Kashgar in western China to the port of Gwadar on the Arabian Sea in Pakistan. This route passes through disputed territory in Kashmir that could lead to a war with China and Pakistan on one side, and India on the other.

    Another critical belt link runs from Kunming in southern China through Myanmar, Thailand, and Malaysia before terminating in Singapore.

    At a global leaders’ summit in Beijing on May 14–15, 2017, President Xi Jinping of China laid out his vision for the One Belt, One Road and committed $55 billion of lending capacity.

    Vladimir Putin, president of Russia, was one of many foreign leaders present. The U.S. sent a low level delegation, probably including CIA assets, attempting to get a read on Putin, Xi and the North Korean delegation.

    The problem with One Belt, One Road is that many of the potential recipients of development loans are not highly creditworthy or have a track record of defaulting on debts or requiring substantial debt restructuring in order to stay current.

    As with Chinese bank loans to SOEs, the NDB, AIIB, and One Belt, One Road efforts are not primarily economic but political. China is seeking to use its economic clout to create jobs and control critical infrastructure.

    In the end, China is attempting to create a geopolitical sphere of influence of even greater scope than the Japanese Empire prior to World War II, called by Japan “The Greater East Asian Co-Prosperity Sphere.”

    As with its other policies, China will turn liquid assets into illiquid assets in order to pursue its ambitions. This could make sense if nothing goes wrong. But, things will go wrong.

    China will face a monumental liquidity crisis sooner than later and find that its liquid assets have been turned into bridges to nowhere.

    Última edição por 5ms; 21-09-2017 às 15:39.

  7. #7
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    S&P cuts China’s sovereign credit rating for first time since 1999

    S&P pours cold water on Beijing’s upbeat economic narrative

    Frank Tang, Wendy Wu, Sidney Leng
    21 September, 2017

    The US rating agency said the downgrade, from AA- to A+, reflected increased economic and financial risks in China after “a prolonged period of strong credit growth”.

    The downgrade was the second by an international rating agency this year, after Moody’s in May cut China’s rating for the first time since 1989. A day after that move, Moody’s also downgraded Hong Kong’s rating.

    Also on Thursday, S&P lowered the ratings of three foreign banks that operate in China, namely HSBC China, Hang Seng China and DBS Bank China.

    The downgrades of China’s rating by two agencies in four months suggest Beijing is failing to convince the world of its economic sustainability, despite the rosy economic picture it likes to paint.

    The latest downgrade came despite Beijing reporting “stronger-than-expected” growth of 6.9 per cent in the first half of the year, improving the profitability of its indebted industrial sector, engineering a noticeable appreciation in the value of the yuan against the US dollar, and stemming the outflow of capital funds.

    Chinese Premier Li Keqiang last week told the heads of six multilateral agencies, including the World Bank and International Monetary Fund, that China’s economy had improved and that its debt situation was “under control”.

    S&P said, however, that China’s credit growth in the next two to three years “will remain at levels that will increase financial risks gradually”.

    Louis Kuijs, head of Asia Economics at Oxford Economics in Hong Kong, said and it “made sense” for rating agencies to flag risks as they saw them.

    The Chinese government’s tolerance of “a continued steady increase in leverage in the coming year – on top of an already high level of leverage – is worrying many people”, he said.

    However, he added that China would not be facing a systemic financial crisis any time soon.

    A sovereign rating downgrade could make it more costly for Chinese companies and the government to borrow money on the international market, and more difficult for Beijing to attract investors to its financial markets.

    When Moody’s downgraded China in May, the finance ministry issued a statement saying the agency had “overestimated China’s economic difficulties and underestimated the capabilities of the Chinese government”. It has yet to respond to Thursday’s downgrade.

    Raymond Yeung, chief Greater China economist with ANZ Bank in Hong Kong, said S&P changed its outlook for China last year, which hinted at a future downgrade. Yesterday’s move, therefore, was “well within market expectations and its market impact is limited so far”, he said.

    The S&P statement was published a day after the US Federal Reserve set out a timetable to steadily increase interest rates and sell off bonds to reduce its balance sheet, a development that is expected to make it more urgent for Beijing to tackle its domestic debt and financial problems.

    Outstanding aggregated financing rose by 13.1 per cent at the end of August, according to the People’s Bank of China, despite its claims of adopting a prudent and neutral monetary policy to facilitate financial deleveraging and structural adjustment.

    Meanwhile, Chinese researchers said S&P was exaggerating China’s debt risks.

    Zhao Xijun, deputy dean of the school of finance at Renmin University of China, said the downgrade was “neither objective, nor accurate or responsible”.

    “The key issues regarding China’s credit growth and debt are destination, return and repayment ability,” he said. “China’s investment funds have gone to much needed areas and the likelihood of default is very low.”

    Yu Miaojie, deputy head of the National School of Development at Peking University, said China had enough reserves to cover its external liabilities while its domestic debt was not in the danger zone in the context of its economic growth.

    “S&P may have over emphasised one or two specific indicators and read a bit too much into them,” he said.


    Does Fed’s latest move add urgency to Beijing’s financial rescue mission?

    Higher interest rates and returns in US could lead to a flow of cash out of China as investors seek alternative haven for their money, according to observers

    Frank Tang, Wendy Wu
    21 September, 2017

    China has less time to defuse its debt bomb and address domestic financial risks after the US Federal Reserve set out a timetable to steadily increase interest rates and sell off bonds to shrink its balance sheet, analysts warned.

    Higher interest rates and returns would make the US dollar more attractive to investors and spark fears of a flight of cash out of China, putting a strain on the world’s second largest economy, according to observers.

    The Fed on Wednesday outlined a road map of further monetary tightening by raising interest rates six more times over next three years and starting to reduce its bond holdings from October, nine years after the US central bank began to embrace quantitative easing.

    Beijing has always put on a brave face to any change in Fed policy, but they remain one of the most important external factors influencing the direction of Chinese domestic monetary policy.

    The tapering of US monetary easing started in 2014 almost coinciding with a peak in China’s foreign exchange reserves.

    A narrower interest rate gap between China and the US, a stronger US dollar and reduced liquidity in international markets from the Fed’s move will all turn into headwinds for Beijing to contain financial risks at home, according to Iris Pang, chief Greater China economist at the banking and financial services firm ING in Hong Kong.

    “The Chinese central bank needs to give the market a clear signal of what it will do next, otherwise, investor confidence over yuan assets will be eroded” said Pang.

    As early as the summer of 2015, the Fed was forced to postpone its first rate rise in nearly a decade partly because of capital outflow concerns in China. When the Fed did raise rates in December 2015, it did spark capital flight from China, with the country’s foreign exchange reserves dropping US$100 billion that month alone.

    The yuan has appreciated six per cent against the dollar this year and China’s capital outflows have eased after the government adopted draconian measures to curb the movement of cash overseas. The Fed’s decision to scale down its US$4.5 trillion balance sheet next month could test whether this hard-earned stability is secure, according to analysts.

    “Our nervousness about the Fed ... indicates [the] absence of a shock absorption mechanism,” said Lu Zhengwei, chief economist at Industrial Bank in Shanghai. “China may have to passively follow the steps of the Fed” if it wants to defend the value of the yuan, said Lu.

    Higher interest rates in China along with reduced liquidity may put stress on the economy as the country’s debt level approaches 300 per cent of its gross domestic output.

    The central bank has injected about 1.2 trillion yuan into the banking system so far this month so banks can roll over debts and lend money to clients, a move that will help ensure stable economic growth ahead of the five-yearly Communist Party Congress due to open next month.

    “A process of balance sheet shrinking, just like Fed’s unconventional easing a few years ago, is something that China has never experienced before,” said Xie Yaxuan, chief macro analyst at China Merchants Securities. “China’s monetary policy is likely to follow the Fed if their economic fundamentals are consistent, but if economic divergence appears, the yuan needs to be more flexible,” he said.

    The Chinese central bank has kept benchmark lending and borrowing interest rates unchanged since 2015. While the central bank is seeking to cut “leverage”, the process is slow and the interbank market rate edged up in an equally slow manner.

    The central bank did not give any formal response to the Federal Open Market Committee’s latest statement and the updated economic and interest rate projections.

    The People’s Bank of China said four months ago, however, that it would not follow the Fed immediately to tighten monetary policy.

    In a quarterly monetary policy report published in May, China’s central bank said a shrinkage in its balance sheet in March was a result of capital outflows and reduced deposits from fiscal authorities and it should not be read as a sign that China was tightening monetary policy to echo the Fed’s plans.

    Larry Hu, chief China economist at Macquarie Securities, said China still has a buffer zone since the European Central Bank and the Bank of Japan have not fully exited quantitative easing and the interest rate gap between higher rates in China and the US still remains large.

    Meanwhile, the Fed’s balance sheet downsize may do Beijing a temporary favour to weaken the yuan a little and to create a “two-way fluctuation in the yuan exchange rate” because China has been busy in the past couple weeks engineering a modest yuan depreciation.

    “The strengthening of the US dollar, with the backing of interest rate hikes, may will help alleviate the yuan’s appreciation pressure,” said Hu.

    Última edição por 5ms; 21-09-2017 às 21:00.

  8. #8
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    S&P says downgraded China as credit growth still too fast

    China's credit growth vs GDP growth

    Elias Glenn, Yawen Chen
    September 21, 2017

    China’s attempts to reduce risks from its rapid buildup in debt are not working as quickly as expected and credit growth is still too fast, S&P Global Ratings said on Friday, a day after it downgraded the country’s sovereign credit rating.

    While S&P warned in June that a cut may be on the cards, it said it decided to make the call after concluding that China’s “de-risking” drive that started early this year was having less of an impact on credit growth than initially expected.

    “Despite the fact that the government has shown greater resolve to implement the deleveraging policy, we continue to see overall credit in the corporate sector to stay at a 9 percent point,” Kim Eng Tan, an S&P senior director of sovereign ratings, said in a conference call to discuss the one-notch downgrade to A+ from AA-.

    “We’ve now come to the conclusion that while we do expect some deleveraging in the next few years, this is likely to be much more gradual than we thought could have been the case early this year.”

    China’s finance ministry said the downgrade was “a wrong decision” that ignored the economic fundamentals and development potential of the world’s second-largest economy.

    “China is able to maintain the stability of its financial systems through cautious lending, improved government supervision and credit risk controls,” it said on its website.

    S&P’s move put its rating in line with those of Moody’s and Fitch, though the timing raised eyebrows as it came just weeks ahead of one of the country’s most politically sensitive events, the twice-a-decade Communist Party Congress (CPC).

    S&P does not have a set schedule to review China’s credit ratings, Tan said.

    “As part of our ongoing surveillance we do meet with the government and have calls with them. All these were done in the past few months,” he told Reuters by phone later on Friday.

    But S&P is obliged to make a call “when the data points to one direction or another”, Tan said.

    “Unfortunately it comes close to the Congress.”


    Tan said broader lending by all financial institutions, excluding equity fund-raising, has started to rise after growing by a steady 12-13 percent in the last few years.

    “That was the key metric we look at...we believe while this growth of aggregate debt financing could come down somewhat over the next few years, it’s not likely to come down very sharply.”

    Indeed, China’s new bank lending and total social financing (TSF), a broad measure of credit and liquidity in the economy, look set to hit record highs again this year.

    “One of the things that we do look for is more than just stabilization of financial risks, but actual decline or moderation in financial risks,” Tan said.

    To be sure, China’s economic growth has unexpectedly accelerated this year, racing ahead at 6.9 percent in the first half, but much of the impetus has come from record bank lending in 2016, a property boom and sharply higher government stimulus in the form of an infrastructure spending spree.

    While the crackdown on riskier lending has pushed up borrowing costs from corporate loans to mortgages, it has not yet dampened growth as many China watchers predicted.


    The head of a government research institute said on Friday that China’s rising debt is not a big concern since it funds infrastructure and urban development, which support future economic growth.

    “China’s debt sustainability is different form Western countries and other developing countries...if you just look at the size of debt, the debt-to-GDP ratio, and reach a conclusion on the credit rating, it’s very one-sided,” Liu Shangxi, head of the Chinese Academy of Fiscal Sciences under the Ministry of Finance, told a news conference.

    But the International Monetary Fund warned this year that China’s credit growth was on a “dangerous trajectory” and called for “decisive action”, while the Bank for International Settlements said last September that excessive credit growth was signaling a banking crisis in the next three years.

    The IMF said in August it expected China’s total non-financial sector debt to rise to almost 300 percent of its gross domestic product (GDP) by 2022, up from 242 percent last year.

    The IMF and others have called on China to drop its focus on growth targets, which add pressure to take on more debt.

    “From our perspective, as long as any growth target cannot be obtained without very strong credit growth, that is something that will weaken the credit support for the government,” S&P’s Tan told Reuters.


    Analysts say China’s campaign to cut financial risks this year has had mixed success so far, and opinions differ widely on whether Beijing is moving fast enough, or decisively enough, to avert a debt crisis down the road.

    Regulators appear to be making significant inroads in reducing interbank borrowing – perhaps the most pressing risk - and have curbed some riskier types of shadow banking.

    But analysts agree more comprehensive structural reforms are needed. Though the pace of credit growth may be easing by some measures, it continues to outpace economic growth.

    Moreover, a recent Reuters analysis showed corporate debt is growing faster than last year, with few companies using stronger profits to reduce debt.

    “There has actually been some progress recently in tackling credit risks, particularly in reining in the activities of the ‘shadow’ banking sector (and) broad credit growth has slowed,” Capital Economics said in a research note.

    “But it continues to rise relative to GDP so the overall trend remains deeply unhealthy.”

    Última edição por 5ms; 22-09-2017 às 11:59.

  9. #9
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    China stock regulator vows crackdown on capital market misbehaviour

    Samuel Shen and John Ruwitch
    September 22, 2017

    China’s top securities regulator has vowed to crack down hard on misbehaviour including market manipulation, insider trading and collusion with “big crocodiles” in the country’s capital markets.

    In a statement on Friday on its website, the China Securities Regulatory Commission (CSRC) said its chairman, Liu Shiyu made the comments at a recent internal meeting.

    Liu, also said regulators should nip illegal activities in the bud, with zero tolerance, according to CSRC.

    The statement did not say when Liu, who did not identify any of the “big crocodiles”, made his vow to crack down on misbehaviour.

    Separately, CSRC said on Friday it would simplify disclosure rules regarding corporate restructurings in a bid to shorten the period of share suspensions.

    Foreign investors have long complained that Chinese companies tend to suspend their share trading for too long a time.


  10. #10
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Four reasons why China’s credit rating downgrade matters

    Agency made ‘wrong decision ... ignored the country’s sound economic fundamentals’, finance ministry says

    Frank Tang
    22 September, 2017

    International rating agency S&P Global has downgraded China’s sovereign credit rating, citing the country’s growing debt risks.

    China’s finance ministry said on Friday the move was the wrong decision and that the agency had ignored the country’s sound economic fundamentals and development potential.

    Another ratings agency, Moody’s, downgraded its crediting rating for China in May, also citing concerns about growth and levels of debt.

    So what will be the impact of the latest downgrade?

    1. Government narrative questioned

    A sovereign credit rating downgrade is a small public relations crisis for the Chinese government. Beijing is sparing no efforts to try to convince domestic and overseas audiences that the Chinese economy is doing fine and what problems exist are being dealt with properly.

    The downgrades by S&P and Moody’s cast doubts on Beijing’s rhetoric.

    2. Higher lending costs

    There is no concrete data to show the financial cost of any downgrade on Chinese government bond issuance abroad. China’s finance ministry plans to sell 14 billion yuan (US$2.1 billion) in yuan denominated bonds and US$2 billion in dollar denominated bonds overseas this year, and the Chinese government could be forced to pay more if investors factor in the downgrades and demand higher interest rates.

    A sovereign ratings downgrade could also translate into higher financing costs for a group of Chinese state-backed enterprises and institutions when borrowing abroad. Chinese enterprises raised US$127 billion by selling dollar bonds to overseas investors last year and many of the issuers could be affected indirectly by the ratings downgrade.

    Moody’s, for instance, downgraded 39 Chinese enterprises after it cut China’s credit rating in May.

    The overseas financing cost of the Industrial and Commercial Bank of China and the Bank of China, two state lenders, rose 20 to 30 basis points after Fitch Ratings, another ratings agency, downgraded China’s sovereign rating in 2013, according to a local brokerage firm Tianfeng Securities.

    3. Tougher job to woo investors

    A sovereign rating downgrade is a kind of vote of no confidence in China’s economic prospects and Beijing’s capabilities to manage risks. It will increase the difficulty for the Chinese government to woo foreign investors to put money in China, whether it is a greenfield factory project or the onshore bond market.

    China’s inbound foreign direct investment dropped by about six per cent in the first seven months of this year and the Chinese leadership under President Xi Jinping is redoubling efforts to woo overseas investors.

    China has also opened its onshore bond market to foreign investors through a Bond Connect programme with Hong Kong, but a twin sovereign rating downgrade may make investors more cautious in entering the Chinese market.

    4. Fresh reason to bet against the yuan

    The Chinese government has adopted draconian capital account controls to stem an exodus of capital and to engineer a modest appreciation of the yuan against the dollar.

    The downgrade by S&P, along with the Moody’s downgrade in May, could undermine the fragile confidence in the Chinese economy and its currency, especially when the Federal Reserve has announced a programme of interest rate rises and the sale of bonds.

    It could, in turn, lead to the further flow of cash overseas and put more pressure on the value of the yuan.


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