China's economy grew at its slowest rate since 1990, stoking fears about the impact on the global economy.
China expanded at 6.6% in 2018, official figures out Monday showed.
In the three months to December, the economy grew 6.4% from a year earlier, down from 6.5% in the previous quarter.
The data was in line with forecasts but underlines recent concern about weakening growth in the world's second-biggest economy.
China's rate of expansion has raised worries about the potential knock-on effect on the global economy. The trade war with the US has added to the gloomy outlook.
The official figures out Monday showed the weakest quarterly growth rate since the global financial crisis.
China's economic slowdown is not news in itself. Beijing has broadcast this for several years, that it's going to focus on the quality not quantity of growth.
But still, we should be worried.
Slower growth in China means slower growth for the rest of the world.
It accounts for one-third of global growth. Jobs, exports, commodity producing nations - we all depend on China to buy stuff from us.
Slower growth in China also means it is harder for China to address its mountain of debt, even with the Communist Party's undoubted ability to be able to support the economy.
Growth has been easing for years, but concern over the pace of the slowdown in China has risen in recent months as companies sound the alarm over the crucial market.
Earlier this month Apple warned weakness in China would hit its sales.
Carmakers and other firms have spoken out on the impact of the trade war with the US.
Policymakers in China have stepped up efforts in recent months to support the economy.
Those measures to boost demand include speeding-up construction projects, cutting some taxes, and reducing the level of reserves banks need to hold.
Capital Economics China economist Julian Evans-Pritchard said the Chinese economy remained weak at the end of 2018 "but held up better than many feared".
"Still, with the headwinds from cooling global growth and the lagged impact of slower credit growth set to intensify... China's economy is likely to weaken further before growth stabilises in the second half of the year."
2018 was a year characterised by abysmal stock-market performances all over the world. South African shares lost more than 11% this year. Europe had its worst year since the financial crisis, and in the USA, barring a drastic upswing on New Year's Eve, the same is likely to be true.
One nation's stock market, however, takes the crown as the world's worst in 2018: China.
The CSI 300, China's benchmark share index, finished trading for the year on Friday, December 28, and at its close had lost roughly 27% of its value, almost double the fall of its closest rival, Japan's Nikkei 225, which slid 14%.
Reasons for the Chinese stock market's slump are numerous, with global factors such as the continued tightening of monetary policy in developed nations and the ongoing trade dispute between Washington and Beijing helping to subdue stocks in the country.
Chinese investors, however, have also been forced to contend with a whole other set of concerns.
Investors realised the blockbuster growth China has enjoyed over the last decade is on the decline, and that things are likely to slow down to a strong, but not stellar, rate.
That view was exacerbated by the rise of the trade war between the US and China, which has seen the world's two largest economies exchange tit-for-tat tariffs, which now apply to goods totaling close to a cumulative $300 billion.
Many economists see the trade war having a major negative impact on Chinese growth, with JPMorgan in October saying a full-blown trade war could have a 1% shrinking effect on the economy. Tensions may have thawed a little after the Xi-Trump summit in Argentina, but 2019 could see the fight kick off once again.
Not only is the trade war helping to subdue the Chinese economy, there are also fears that something much more devastating is lurking beneath the surface. Numerous major institutions have warned of worrying trends, with the ratings agency S&P Global in October highlighting a hidden debt pile in the country worth as much as $6 trillion.
China's Iranian oil imports are set to rebound in December after two state-owned refiners in the world's largest oil importer began using the nation's waiver from U.S. sanctions on Iran, according to industry sources and data on Refinitiv Eikon.
Sinopec resumed Iran oil imports shortly after Tehran's biggest crude buyer received its waiver in November, while China National Petroleum Corp (CNPC)will restart lifting from its own Iranian production in December, three sources with knowledge of the matter told Reuters.
Reuters reported in November that China's waiver on U.S. sanctions allows it to buy 360,000 barrels per day (bpd) of oil for 180 days.
Top Chinese energy group CNPC, which has invested billions of dollars in Iranian oilfields, is ready to load its full share of production from December, said an oil executive with direct knowledge of CNPC's Iran activities.
The executive, who asked not to be named, estimated CNPC will load at least two million barrels a month from December, doubling previous levels to help compensate for cuts made before sanctions on Iran's oil exports went into effect on Nov 5.
Before the waivers had been announced, Sinopec, Asia's largest oil refiner, had planned to stop loading Iran oil in November, but resumed imports within days of getting the exemption, a second source said, also asking to remain unnamed.
"We continued lifting Iranian oil in November because we received the waiver," the second source said.
Sinopec and CNPC will likely use up the 360,000 bpd of Iranian oil imports allowed to China under the waiver.
Another source said Iranian oil is "attractively priced" versus rival supplies from the Middle East.
For November and December, Iranian Heavy crude sold to Asia has been priced at $1.25 a barrel below Saudi's Arab Medium, a discount not seen since 2004.
The source also said many Chinese refiners were geared toward processing Iranian crude grades.
At 360,000 bpd, China's purchases would still be 45 percent less than the average 655,000 bpd imported during the January-September period.
The rise in Iranian oil supply and surging production from the United States, Russia and OPEC countries has pulled down crude oil prices by almost a third since October.
Ahead of the sanctions being implemented in early November, China's crude oil imports from Iran fell to 1.05 million tonnes (247,260 bpd) in October, the lowest since May 2010, Chinese customs data shows.
Data from Refinitiv Eikon, however, shows that 2.77 million tonnes of Iranian crude were discharged into Chinese ports in October, including into bonded storage tanks in Dalian.
By December, China's Iran oil imports could reach almost 3 million tonnes, the Eikon data showed. A total 2.51 million tonnes of Iranian crude were discharged into Dalian in October and November, according to the data.
Other major Iranian oil buyers, including India, South Korea and Japan, are also increasing or resuming orders.
It is still not clear whether Iran will be able to export much oil after the U.S. sanctions waivers expire around the start of May.
President Donald Trump seemed ready to escalate the trade war with China in an interview with The Wall Street Journal on Monday.
Trump said it was "highly unlikely" that a planned meeting with Chinese President Xi Jinping at the G20 summit would yield a deal to prevent an increase in tariffs.
Trump also said he was prepared to hit another $267 billion worth of Chinese goods with tariffs — which would include duties on consumer goods like iPhones.
President Donald Trump seems ready to escalate the trade war with China even further as a crucial meeting with Chinese President Xi Jinping nears.
In an interview with The Wall Street Journal on Monday, the president said it was "highly unlikely" that the US and China would reach a deal to prevent the 10% tariffs on $200 billion worth of Chinese goods from increasing to 25% on January 1.
In addition, Trump told The Journal that if planned weekend talks with Xi at the G20 summit in Argentina did not go well, more tariffs could be on the way.
"If we don't make a deal, then I'm going to put the $267 billion additional on," Trump said.
Trump first announced tariffs on Chinese goods in March, ostensibly to punish the country for the theft of US intellectual property.
After failed negotiations on a trade deal with China, the first round of tariffs on $50 billion worth of Chinese goods went into effect in July.
A second round of tariffs on another $200 billion of goods went into effect in late September, and Trump has repeatedly threatened to impose a third round on the remaining imports not subject to tariffs.
While Trump said the third round would hit another $267 billion in goods, some reports peg the remaining amount at $257 billion.
After mostly avoiding consumer goods in the first two rounds of tariffs, Trump said he was also willing to place tariffs on items such as Apple's iPhone and laptops imported from China. The administration backed off plans to impose tariffs on some Apple products as part of the previous round after the tech giant lobbied the president.
Economists warn that tariffs on consumer goods would drive up prices for Americans, curtail consumer spending, and eventually hurt US economic growth. Trump disagreed with that assessment, instead suggesting that a low tariff rate on such goods would go unnoticed by consumers.
"I mean, I can make it 10%, and people could stand that very easily," he told The Journal.
In addition to the tariffs, the Trump administration is employing a suite of other measures to crack down on China's economic practices. For instance, the Department of Commerce is considering stricter rules on which types of technology can be exported to China, and the Justice Department has charged some Chinese companies and people with economic espionage.
While there were hopes a Trump-Xi meeting could deescalate the trade tensions, recent moves by the administration seem to point to a sustained trade war.
Perhaps most significant, US Trade Representative Robert Lighthizer last week released an update to the investigation into Chinese intellectual-property theft that kicked off the tariff battle. It found China had not changed any of the practices that precipitated Trump's tariff decision.
African states need work with African developmental finance institutions, as well as with those outside the continent, in filling the massive infrastructure gaps that exist.
Speaking to Press on the sidelines of the three-day Africa Investment Forum – held at the Sandton Convention Centre in Johannesburg this week – CEO of the Africa Finance Corporation (AFC) Samaila Zubairu said that, rather than choose foreign financiers over locals, countries should make use of both on a complementary basis.
“African states should work with both because we all have different roles to play,” he said, adding that the most prominent foreign financiers hailed from China.
“We as locals can help the government to structure the project and to define the need for the Chinese to come in – as opposed to having the Chinese define the role that they will play.
MOST TIMES WHEN AFRICAN GOVERNMENTS WORK WITH CHINA, THE CHINESE WILL PROVIDE A PORTION OF FUNDING AND EXPECT THE GOVERNMENT TO PROVIDE ITS PORTION. AFRICAN FINANCE INSTITUTIONS CAN HELP GOVERNMENTS PROVIDE THEIR OWN PORTIONS
Samaila Zubairu, CEO of the Africa Finance Corporation
Zubairu said the AFC had been a beneficiary of a $300 million (R4.3 billion) loan from China.
He said Chinese finance should not generate fear or pose a major threat, as all finance, irrespective of the financier, should be based on rational decision making.
“All financing should be based on viability, even if the money is coming from your mother. If you want to take the money, you should have a plan on how you are going to repay it. Once that plan is clear, you should make contingencies for things that could go wrong,” he said.
Zubairu said another challenge facing the continent was uncertainty with regard to what some governments want. He praised President Cyril Ramaphosa’s multibillion-rand investment inflow target as a noble initiative to which the AFC also wanted to contribute. “We think it is a great plan and we want to participate once we have projects to support the investment flow,” he said.
Established in 2007, the AFC is a Pan-African development finance institution with 20 African states as members. It is partly owned by the Central Bank of Nigeria and the government of Ghana, among other shareholders. So far, it has invested $4 billion across 28 countries.
Zubairu said that although South Africa was not a member of the AFC, it had invested in the Bakwena toll road in Gauteng – first in 2010 and then it increased its investment five years ago. “We have approached them (government) and they have not accepted membership. We hope that with this new government we can advance that, because the government is open to investments,” he said, adding that the benefit of membership lay in facilitating bigger investments faster.
In his opening address at this week’s investment forum, Ramaphosa said that the event – the first of its kind, convened by the African Development Bank – was a milestone in shaping the continent’s fortunes.
“The forum is a platform for African governments and businesses, continental and international financial institutions, and other development partners, to focus on the critical task of making Africa the next global frontier in investment,” he said.
Ramaphosa said a number of areas needed more attention to attract investments.
“To realise this potential, Africa needs to invest in the skills, capabilities and wellbeing of its people. It needs to improve governance and promote peace and stability. Most importantly, if Africa is to seize the opportunities of the future, it needs to mobilise large-scale, sustained investment, especially in infrastructure. African governments cannot do this without business.
“The private sector and private markets are key players in the African investment landscape, supported by the lending capacity of financial institutions both on the continent and beyond.”
China is minting a billionaire every three days as tech boom unlocks ‘stealth wealth’
Posted on October 29, 2018 by Admin
The total number of billionaires reached 2,158 last year, up 9% from 2016, according to a new report from UBS and PwC.
The growth was fastest in Asia, with China minting roughly one new billionaire every three days.
Asian billionaires will be wealthier than their American peers in less than three years.
The rich are getting richer and more numerous.
The world added 332 billionaires last year, with their cumulative wealth increasing 19% to a record $8.9 trillion, according to an annual survey from UBS and PwC.
What’s behind this phenomenon? Explosive wealth creation in China.
“China is where we’re seeing unbelievable and unprecedented growth,” said John Mathews, head of ultra high net worth Americas for UBS Global Wealth Management. For the first time ever, billionaire growth in Asia Pacific outpaced that of the US last year.
In 2006, there were just 16 Chinese billionaires. But in 2017, the tally hit 373 – a fifth of the global total. The US still leads regionally, with 585 billionaires, but wealth creation in the region is slowing. The US created 53 billionaires in 2017, compared with 87 in 2012.
In China, 106 people became billionaires in 2017 (although a number dropped off the list from 2016). That comes out to roughly one new billionaire every three days.
If current trends hold, Asian billionaires’ wealth will surpass that of their American counterparts in three years.
That growth has been driven by self-made entrepreneurs in China, particularly in the technology industry.
More than 300 Chinese companies went public last year, unlocking what UBS deems “stealth wealth,” the difficult-to-measure wealth of individuals in private markets with little transparency.
About 97 percent of Chinese billionaires are self-made, and, at 56 years old on average, they’re about a decade younger than their North American counterparts.
US entrepreneurs could play catch-up next year, though. Mathews said major anticipated initial public offerings in 2019, including Uber, could reveal more stealth wealth, potentially adding more billionaires to the US’s count. Of the 53 new billionaires in the US last year, 30 were self-made.
Global markets fall once again on Tuesday after brief two-day relief rally.
A "poisonous brewing cauldron of geopolitical and economic issues" is to blame for the risk-off sentiment gripping investors.
Losses are led by Asia, which has seen virtually all major indexes drop more than 2% on Tuesday.
Europe is following suit, with Germany's DAX down more than 1.2%. US futures are also pointing to substantial losses.
The JSE fell almost 2%.
You can follow the latest developments in global markets at Markets Insider.
Global markets slumped once again on Tuesday as the continent's two-day-long relief rally came to an abrupt end, thanks to a cocktail of negative drivers.
All major Asian indexes lost ground during Tuesday's session, with the FTSE China A50 the biggest casualty, down more than 3%. Other mainland Chinese indexes lost more than 2%, with the Shanghai and Shenzhen Composite indexes both down around 2.2%.
Losses were not contained to China, however, with Japan's Nikkei losing 2.7%, and Hong Kong's Hang Seng dropping close to 3% after a sharp fall into the close.
There was no single catalyst for the losses, with growing geopolitical tensions between Saudi Arabia and the West over the death of journalist Jamal Khashosggi, resurfaced fears about President Trump's trade war, and generally waning confidence in the Chinese economy all partially to blame.
"Big swings in the Chinese markets continued, with the previous two-day rally moving sharply into reverse. After mulling over Chinese stimulus plans the market is seeing these stimulus measures as cushioning a fall rather than boosting the economy," Jasper Lawler, head of research at London Capital Group said in a morning briefing.
"It was all too much for the markets on Tuesday. The poisonous brewing cauldron of geopolitical and economic issues led to one of those opens as nuance-less as it was red," Connor Campbell, analyst at Spreadex added.
Fears abound that the sell-off in China could get worse as a wave of forced share selling kicks in for Chinese companies who use their shares as colleteral for loans.
According to Bloomberg, about 4.18 trillion yuan (R8.7 trillion) worth of shares have been put up by company founders and other major investors as collateral for loans, accounting for about 11% of the country's stock market capitalization, based on calculations using China Securities Depository and Clearing Corporation data.
The South China Morning Post, citing a report by Tianfeng Securities, said earlier in the week tha tmore than 600 company stocks have fallen to levels where forced sales may kick in.
"It's a vicious cycle: share drops lead to liquidation and liquidation leads to further share drops," Wang Zheng, chief investment officer at Jingxi Investment Management told the South China Morning Post last week.
The JSE's all share index was down 1.7% by midday, but the rand was marginally stronger at R14.35/$.
Naspers, down 3% to R2,725.58, and Nedcor, which lost 3.7% to R225.03 were some of the worst hit among large companies.
Gold stocks are booming again, with Sibanye up 11% to R11.64. Nervous investors are buying gold, which jumped a percent to $1,234/oz this morning.
European stocks have also witnessed losses in the first hour of trading, although not as severe as those in Asia. By midday, Germany's DAX has dropped 1.2%, while the UK's benchmark FTSE 100 index is around 0.7% lower. The Euro Stoxx 50 broad index is down 0.8%.
"Sentiment continues to take a hit from a combination of geopolitical tensions including the growing isolation of Saudi Arabia, Italy's defiant stance towards the ECB and Brexit," Lawler said.
US futures are also pointing to big losses when markets open stateside, with the Nasdaq pointing to an opening loss of 1.1%, while both the S&P 500 and the Dow Jones look to fall around 0.9%
Perhaps the biggest financial market story in 2018 so far is the colossal fall from grace of the Chinese stock market, which has witnessed losses in excess of 30% since the start of the year.
The fall, which has seen the benchmark Shanghai Composite index drop to its lowest level in almost four years this week, is generally explained through the prism of investors realising that the blockbuster growth China has enjoyed over the last decade is on the wane, and that things are likely to slow down to a strong, but not stellar, rate.
Such a view has been exacerbated by the rise of the trade conflict between the US and China, which has seen the world's two largest economies exchange tit-for-tat tariffs, which now apply to goods totalling close to a cumulative $300 billion (about R4.3 trillion).
Many economists see the trade war having a major negative impact on Chinese growth, with JPMorgan earlier in October saying a full-blown trade war could have a 1% shrinking effect on the economy.
While these two factors are evidently at play, there's reason to believe that another factor could soon come into play, and force Chinese stocks even deeper into bear market territory - forced selling.
In China, hundreds of companies use their shares as collateral for loans, but when share prices fall they are forced to sell in order to maintain a certain level of balance in brokerage accounts, used to lend the companies money.
According to the Report available, about 4.18 trillion yuan (R8.6 trillion) worth of shares have been put up by company founders and other major investors as collateral for loans, accounting for about 11% of the country's stock market capitalisation, based on calculations using China Securities Depository and Clearing Corporation data.
The South China Morning Post, citing a report by Tianfeng Securities, said earlier in the week that more than 600 company stocks have fallen to levels where forced sales may kick in.
"It's a vicious cycle: share drops lead to liquidation and liquidation leads to further share drops," Wang Zheng, chief investment officer at Jingxi Investment Management told the South China Morning Post earlier in the week.
"The recent declines, particularly in small caps, are blamed for the problem arising from share pledges."
China's government has hit back at the Trump administration, accusing the US president of "bullying" over his aggressive tactics in the escalating trade conflict between the two nations, saying it will "rise up" should a full-scale trade war break out.
"China doesn't want a trade war, but would rise up to it should it break out," Zhong Shan, China's minister for commerce said in a statement.
So far, the Trump administration has placed tariffs on $250 billion (R3.7 trillion) worth of Chinese goods, affecting more than 5,000 products. The president, however, has said he is willing to "go to 500"- a colloquial term for placing tariffs on all US imports from China.
What was initially seen as an empty threat is now viewed by many observers as a genuine possibility after the latest round of tariffs were announced in late September, after which Trump doubled down on his threats to tax all Chinese imports. Such threats, Zhong said, will not lead China to back down and offer the US concessions.
"There is a view in the US that so long as the US keeps increasing tariffs, China will back down. They don't know the history and culture of China," he said.
"This unyielding nation suffered foreign bullying for many times in history, but never succumbed to it even in the most difficult conditions," he continued.
"The US should not underestimate China's resolve and will."
Zhong's comments came just a few hours after President Trump once again accused China of taking advantage of the US over trade.
"We can't have a one-way street," Trump said during a press conference to discuss the resignation of UN Ambassador Nikki Haley on Tuesday afternoon.
"It's got to be a two-way street. It's been a one-way street for 25 years. We've got to make it a two-way street. We've got to benefit also," he told reporters.
Alongside increasing tariffs, communications between the two sides have become more and more strained in recent weeks. China in September called off planned talks between mid-level officials, and this week US Secretary of State Mike Pompeo exchanged displeased words with Chinese foreign minister Wang Yi during a trip to Beijing.
"Recently, as the US side has been constantly escalating trade friction toward China, it has also adopted a series of actions on the Taiwan issue that harm China's rights and interests, and has made groundless criticism of China's domestic and foreign policies," Wang said at a press conference.
"We demand that the US side stop this kind of mistaken action."
Pompeo hit back, saying the US has "great concerns about the actions that China has taken."
A currency war brewing?
Away from the escalating tensions over trade, the US Treasury has shown new concern about China's devaluation of the renminbi, an action it believes Beijing is using to strengthen its hand with regard to trade by making Chinese goods cheaper.
"As we look at trade issues there is no question that we want to make sure China is not doing competitive devaluations," Treasury secretary Steven Mnuchin said in an interview with the Financial Times published on Wednesday.
"We are going to absolutely want to make sure that as part of any trade understanding we come to that currency has to be part of that."
Trump has frequently criticised China for his belief that Beijing is artificially weakening its currency to make Chinese exports more competitive, something he believes Beijing is doing to hurt the US economy.
In August, he claimed that Beijing is a "currency manipulator."
More Kenyans believe that China constitutes the biggest threat to the country’s economic and political development than the United States of America, a survey shows.
The survey by Ipsos Synovate released on Wednesday revealed that 26 per cent of Kenyans see the Asian country as a threat to the development of Kenya, more than double the perception towards the US which ranks at 12 per cent up.
According to the survey conducted between July 25 and August 2, the unfavourable perception of China comes in the shape of threats posed by its cheap goods, fear of fostering corruption and leading to job losses.
A total of 38 per cent of Kenyans think that the continued relationship between Kenya and China will lead to job losses. This is only 11 percent in the relationship between Kenya and USA.
Another 25 per cent think that China will flood the Kenyan market with cheap goods compared to 18 percent perception of the US.
Perception of Kenyans towards China has taken a nosedive since March this year dropping from 34 per cent at that time while US’s has been on the rise since then from 26 percent to the current 35 per cent.
The perception is, however, skewed politically with more National Super Alliance (Nasa) supporters thinking that Kenya’s bilateral relationship with China is a bigger threat at 33 percent compared to 10 percent with USA.
For Jubilee supporters, only 23 per cent hold similar views on Kenya’s relationship with China but more on US compared to Nasa supporters at 16 percent.
On the flipside, approval for China comes because of its infrastructure projects in the country at 86 per cent compared to only 38 per cent for US. For US, its loan and grants to Kenya wins it an approval of 49 per cent compared to a paltry 11 per cent for China.
This is even as 35 per cent Kenyans say that USA is more important for Kenya to have relations with compared to only 25 per cent for China.
However, more Kenyans think that the country’s relationship with US will see the world superpower undermine the Kenyan culture, her elections and encourage terrorism at 14, 12 and 9 per cent respectively. This the Chinese are seen to have no effect on with 3, 0 and 2 per cent perception in that order.
More Nasa supporters at 49 per cent compared to Jubilee supporters’ 28 percent see bilateral relations with the US as critical.
However, more Jubilee supporters at 30 per cent to 19 per cent for their Nasa counterparts approve of relationship with China.
A total of 2, 016 Kenyans were interviewed in 46 counties using face to face interview at the household level with a margin of +/-2.16 per cent and a 95 per cent confidence level.
The survey also came before four important events in the country’s foreign relation development.
It was before Foreign Affairs Cabinet Secretary Monica Juma held talks with US counterparts in Washington DC on August 22 ahead President Uhuru Kenyatta’s visit five days later.
Five days later President Kenyatta held talks with US President Donald Trump and also met US business leaders.
President Kenyatta then welcomes British Prime Minister Theresa May three days later in Kenya before flying to China the next day for a major African-Chinese summit on economic partnership.