BUSINESS

Risk Watch: Declining Export Surplus Will Affect China’s Forex Earnings

The Sino-U.S. trade war and China’s worsening economy have hurt China’s export surplus. According to official economic figures released near the end of September, China’s export surplus fell by a third in the first eight months of 2018 as compared to the previous year. China’s top three performing provinces by GDP, Guangdong, Jiangsu, and Zhejiang, …

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Risk Watch: The CCP’s ‘Controlled Blow Up’ of Local Debt Could Trigger a Black Swan

China’s State Council and the Chinese Communist Party (CCP) General Office published guidelines that call on state-owned enterprises (SOEs) to reduce their debt ratio on Sept. 13. A measure in the guidelines that allows local government financing platforms to go bankrupt has sparked social debate and some panic.[1] We believe that the CCP is carrying …

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Risk Watch: China’s Social Security and Taxation Changes Could Spark Wave of Business Failure and Unemployment

The Standing Committee of the National People’s Congress (NPCSC) revised China’s tax law on Aug. 31. At a glance, the revision seemed to be helpful. Individual taxpayers saw their annual tax-free threshold raised from 3,500 yuan per month to 5,000 yuan per month (60,000 yuan per year). However, in an overhaul of its income tax …

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Risk Watch: China’s State-owned Enterprise Debt Financing ‘Ponzi Scheme’

On July 24, China’s Ministry of Finance (MoF) released economic data for state-owned enterprises (SOEs) for the first half of 2018. In the statement accompanying the data, the MoF declared that SOEs performed well in H1 2018, and that “both solvency and profitability had improved over the same period last year.” On July 27, China’s …

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Risk Watch: China’s Industrial Firms’ Profits Fell, Not Grew, in H1 2018

According to China’s National Bureau of Statistics (NBS) data released on July 27, the country’s industrial firms’ (“industrial enterprises above designated size”) profits grew 17.2 percent from the previous year. We compared the 2018 figures with that from 2017, and found that China’s industrial firms’ profits actually fell 6.8 percent. The statistics bureau’s official explanation …

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Risk Watch: China’s Local Debt ‘Iceberg’ Emits ‘Cracking Sounds’

Caijing Magazine’s 16th issue of 2018 (published on July 9) featured a cover page with a man hauling a piggy bank atop a cracking iceberg. The headline read: “The Worries of Local Debt Hanging High Overhead.” The cover page article likened China’s local government implicit debt to an iceberg, with a small portion publicly visible …

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Risk Watch: Does China Have Ammo for a Trade War?

On July 6, the United States imposed 25 percent tariffs on $34 billion worth of Chinese goods. China hit back with tariffs on a similar scale on the same day. News reports say that another $16 billion of U.S. tariffs targeting products under China’s “Made in China 2025” program would go into effect two weeks …

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Risk Watch: Can China’s New Negative List Help Defuse Trade Dispute with America?

China’s National Development and Reform Commission and the Ministry of Commerce jointly released a shortened negative list of industries where foreign industries are restricted or banned on June 28. The new list reduces the number of sectors restricted to foreigners from 63 to 48, and will go into effect on July 28. The sectors where …

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Risk Watch: China’s Industrial Profits Fell, Not Rose, Between January to May

Data published by China’s National Bureau of Statistics (NBS) indicates that industrial profits in the period of January to May 2018 rose by 16.5 percent from the previous year. Western media outlets described the industrial profits as “steady” and “solid.” We checked the NBS figures with those of the year before, and found that industrial …

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Risk Watch: Official Data Shows China’s Economy Worsened in May

According to Chinese economic data for May provided by the National Bureau of Statistics (NBS), China’s total retail sales of consumer goods, investments in national urban fixed assets, and aggregate financing to the real economy all showed downward growth trends. Also, the NBS data for total retail sales of consumer goods appears to be false. …

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