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2017-12-08 17:35:00

CHINA STRENGTHENS FINANCE

CHINA STRENGTHENS FINANCE

IMF - On November 10, 2017, the Executive Board of the International Monetary Fund (IMF) discussed the IMF's latest Financial System Stability Assessment (FSSA) of the People's Republic of China.

Since the 2011 Financial Sector Assessment Program (FSAP), China's impressive economic growth has continued, and it is now undertaking a necessary but prolonged economic and financial transformation. While the financial system has facilitated this high growth rate, it has developed rapidly in size and complexity, and it has emerged as one of the world's largest with financial assets at nearly 470 percent of GDP.

Tensions, however, have emerged in various areas of the Chinese financial system. First, monetary and fiscal policies aimed at supporting employment and growth have, in recent years, been expansionary. Pressures to keep non-viable firms open—rather than allowing them to fail—are strong, particularly at the local government level, where these objectives, at times, conflict with financial stability. As a result, the credit needed to generate additional GDP growth has led to a substantial credit expansion resulting in high corporate debt and household indebtedness rising at a fast pace, albeit from a low base.

Second, demand for high-yield investment products coupled with strengthening oversight of the banking sector has led to regulatory arbitrage and the growth of increasingly complex investment vehicles. Risky lending has thus moved away from banks toward the less-well-supervised parts of the financial system. Non-bank financial institutions, including asset managers and insurance companies, which offer a proliferation of investment products, have grown even faster than the banking sector. Banks continue to be positioned at the core of this highly interconnected system of indirect lending, with uncertain linkages among numerous institutions constituting a challenge for supervision.

Third, widespread implicit guarantees have added to these risks. A reluctance among financial institutions to allow retail investors to take losses; the expectation that the government stands behind debt issued by state-owned enterprises and local government financing vehicles; efforts to stabilize stock and bond markets in times of volatility; and protection funds for various financial institutions, have all contributed to moral hazard and excessive risk-taking.

The system's increasing complexity has sown financial stability risks. Given the centrality of banks to the financial system, the FSAP team recommended a gradual and targeted increase in bank capital. The authorities have recognized these risks, including at the highest level, and are proactively taking important measures to address them. These include the strengthening of systemic risk oversight, further improving regulation, and moving toward functional supervision.

Executive Board Assessment

Executive Directors broadly agreed with the findings and recommendations of the FSSA. They welcomed the significant steps taken by the People's Bank of China and regulatory agencies to strengthen financial sector supervision against a background of rapid financial sector growth and deepening. Directors commended the authorities for major reforms undertaken since the 2011 FSAP, notably in introducing Basel III standards, a risk‑oriented solvency standard for insurers and improving oversight of securities market products. They encouraged the authorities to implement the recommendations of the FSSA to further strengthen systemic risk analysis and oversight, data quality and collection, and information sharing.

Directors noted the tension between sound microprudential oversight and significant risks posed by credit overhang and "shadow banking". They noted that unresolved tensions between policies promoting the economic and financial transition and concerns to smooth the effects of adjustment—notably by maintaining GDP growth and protecting employment—could give rise to financial stability risks. In this context, they encouraged the authorities to align incentives at the national and regional levels to ensure that due priority is given to financial stability. For this, enhancing supervision of financial conglomerates and carefully sequenced reforms to tackle implicit guarantees, including for financial institutions and state‑owned enterprises, will be important. Directors also recommended further efforts to ensure credible loan classification and uniform treatment of similar financial market products.

Directors stressed the importance of adequate legal protection, clear institutional mandates and accountability to ensure sufficient independence and resources for oversight agencies to act effectively and foster interagency cooperation. Clear prioritization of financial stability over development objectives at the agency and cross‑sectoral levels—including in the proposed Financial Stability Sub‑Committee—will be crucial to ensure that risks outside the regulatory perimeter are monitored. There is also a need for increased emphasis on functional supervision in addition to the current institution‑based approach. Strengthening the financial safety net and the legal framework for bank resolution would improve incentives and reduce the potential risks to public resources that could arise from the failure of financial institutions.

Directors noted the significant expansion of fintech in the Chinese market and its benefits for financial inclusion and urged the authorities to further develop the oversight framework for digital finance, balancing innovation with safety and soundness.

Directors welcomed the progress in enhancing the AML/CFT framework. They called on the authorities to overcome remaining deficiencies and continue with efforts to align the framework with the revised Financial Action Task Force standard.

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Earlier:

CHINA:

 

 

 

 

 IMF:

 CHINA'S INDUSTRY UP
2017, November, 27, 20:00:00

CHINA'S INDUSTRY UP

REUTERS - Indeed, mining and heavy industry contributed the biggest gains in October, propelling overall industrial profits by 25.1 percent year-on-year to 745.4 billion yuan ($112.94 billion), compared with a 27.7 percent jump in September, the National Bureau of Statistics (NBS) said on Monday.

 

 

         IMF: SOUTHEAST ASIA'S TRANSFORMATION
2017, September, 13, 15:10:00

IMF: SOUTHEAST ASIA'S TRANSFORMATION

IMF - When we think about Asia’s economic future, we know that this future is being built on strong foundations—on the richness and diversity of its cultures, on the incredible energy and ingenuity of the people who have changed the world by transforming their own economies. China and India have been driving the greatest poverty reduction in human history by creating the world’s largest middle classes. 

 

 IEA: GLOBAL ENERGY DEMAND UP BY 30%
2017, November, 15, 15:15:00

IEA: GLOBAL ENERGY DEMAND UP BY 30%

Global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.

 

         WBG & IMF NEED CHINA
2017, September, 13, 15:05:00

WBG & IMF NEED CHINA

We reiterate our commitment to a strong, quota-based, and adequately resourced IMF to preserve its role at the center of the Global Financial Safety Net. 

 

 SOUTH CHINA CEA CALM
2017, November, 13, 10:40:00

SOUTH CHINA CEA CALM

Vietnam’s state television said Chinese President Xi Jinping had told Vietnam’s General Secretary Nguyen Phu Trong he wanted to work with Southeast Asian nations on a code of conduct in the sea. China’s Xinhua news agency said China and Vietnam had agreed to properly handle maritime issues and strive to maintain peace and stability.

 

        IMF WANT EUROPE
2017, July, 26, 14:35:00

IMF WANT EUROPE

The European Union could do more to convince countries to put EU reform recommendations into practice. For example, targeted support from the EU budget could be provided to incentivize reforms. The EU should also continue pushing for greater integration of the energy, transport, and digital markets.

 
 OPEC: 2040 GLOBAL ENERGY CHANGES
2017, November, 9, 14:00:00

OPEC: 2040 GLOBAL ENERGY CHANGES

Within the grouping of Developing countries, India and China are the two nations with the largest additional energy demand over the forecast period, both in the range of 22–23 mboe/d.

 

 

         IMF NEED RUSSIA
2017, July, 17, 13:50:00

IMF NEED RUSSIA

Directors underscored that accelerated structural reforms and broader trade relations can help promote a diversified export mix. They also urged the authorities to strengthen property rights, advance privatization, improve governance, and invest in innovation and infrastructure to build the foundations for higher potential growth.

 

 WORLD OIL DEMAND UP BY 1.5 MBD
2017, October, 16, 12:20:00

WORLD OIL DEMAND UP BY 1.5 MBD

World oil demand growth in 2017 is now expected to increase by 1.5 mb/d, representing an upward revision of around 30 tb/d from last previous report, mainly reflecting recent data showing an improvement in economic activities. Positive revisions were primarily a result of higher-than-expected oil demand from the OECD region and China. 

 

 

         IMF NEEDS SAFEGUARD
2017, July, 10, 12:20:00

IMF NEEDS SAFEGUARD

“The current period of growth should be used as an opportunity: to further safeguard the financial sector--by building up capital buffers and strengthening corporate and bank balance sheets; to address the issue of stagnant real wages--which can undermine the recovery and fuel discontent; and to confront the problem of excessive current account imbalances--with both surplus and deficit countries playing their part."

 

 RENEWABLE ENERGY UP
2017, September, 25, 13:10:00

RENEWABLE ENERGY UP

China accounts for the lion’s share of the upsurge. But Middle East and north African countries are scheduled to have installed 14GW in solar plants by the end of 2018 — a seven-fold increase from 2015. Central and South America are also expected to reach 14GW, nearly five times more than in 2015, while India is set to hit 28GW, a jump of nearly six times.

 

         IMF: U.S. ISN'T WORKING WELL
2017, June, 28, 15:05:00

IMF: U.S. ISN'T WORKING WELL

All in all, in our judgement, the U.S. economic model is not working as well as it could in generating broadly shared income growth.

 

 

 

 WORLD ENERGY CONSUMPTION UP TO 28%
2017, September, 15, 08:55:00

WORLD ENERGY CONSUMPTION UP TO 28%

The U.S. Energy Information Administration projects that world energy consumption will grow by 28% between 2015 and 2040. Most of this growth is expected to come from countries that are not in the Organization for Economic Cooperation and Development (OECD), and especially in countries where demand is driven by strong economic growth, particularly in Asia. Non-OECD Asia (which includes China and India) accounts for more than 60% of the world's total increase in energy consumption from 2015 through 2040.

         RUSSIAN STRUCTURAL REFORMS
2017, May, 22, 16:45:00

RUSSIAN STRUCTURAL REFORMS

IMF - advancing decisively on the structural reform agenda to improve growth potential and rebalance growth towards non-commodity sectors.

 

 

 

 

 

Tags: IMF, CHINA, FINANCE

Chronicle:

CHINA STRENGTHENS FINANCE
2018, January, 19, 12:15:00

S.KOREA'S DIVERSIFICATION

PLATTS - For full-year 2017, South Korea's crude imports from its biggest supplier Saudi Arabia fell 1.7% to 319.02 million barrels, compared with 324.45 million barrels in the previous year, customs data showed. On the contrary, South Korea has imported 1.77 million mt, or around 13 million barrels, of crude from the US in 2017, about four times higher than in 2016. Shipments from Russia grew to 140,000 b/d last year from 112,000 b/d in 2016.

CHINA STRENGTHENS FINANCE
2018, January, 19, 12:10:00

ADNOC'S 2030 STRATEGY

AOG - ADNOC’s 2030 strategy, he said, aims to capitalise on predicted global economic growth and demand for oil and petrochemical products, particularly in non-OECD countries. As its business responds to changing market dynamics, the company will continue to broaden its partnership base, strengthen its profitability, adapt to new realities and expand market access.

CHINA STRENGTHENS FINANCE
2018, January, 19, 12:05:00

TOSHIBA SELLS WESTINGHOUSE

WNN - Under the terms of the assignment and purchase agreement it has signed with Nucleus and Brookfield, Toshiba will sell its rights to assert claims against Westinghouse related to the parent guarantees in the amount of $5.788 billion, and on account of other claims Toshiba holds against Westinghouse in the amount of $2.284 billion to Nucleus, for the sale price of $2.160 billion.

CHINA STRENGTHENS FINANCE
2018, January, 17, 23:50:00

OIL PRICES: NOT ABOVE $70 YET

REUTERS - Brent crude futures LCOc1 were at $69.23 a barrel at 0808 GMT, up 8 cents from their last close, but down from a high of $69.37 earlier in the day. Brent on Monday rose to $70.37 a barrel, its highest since December 2014, the start of a three-year oil price slump. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $63.84 a barrel, down from a high of $63.89 earlier, but up 11 cents from their last settlement. WTI hit $64.89 on Tuesday, also the highest since December 2014.

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