By the Blouin News Business staff

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Posts Categorized: Asia-Pacific

China secures more grain power

March 3, 2024 by Alex Erquicia in Asia-Pacific, Europe.

A Chinese farmer harvests wheat at the f

Cofco, China’s largest food company, acquires 51% of Dutch agricultural commodities trader Nidera, in a bid to secure further food imports and to give the country global leverage in the sector.

China’s economic presence riles Africa

February 27, 2024 by Alex Erquicia in Africa, Asia-Pacific.

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Some Africa Heads of State and other dig

The overall perception that African citizens have of Chinese business in the continent is negative, according to a study.

Can the world feed China?

February 26, 2024 by Lester Brown in Asia-Pacific.

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China’s turn to the outside world for massive quantities of grain is forcing us to recognize that we are in trouble on the food front.

China’s FDI inflows and the diversification of its economy

February 19, 2024 by Alex Erquicia in Asia-Pacific.

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China is expected to surpass Japan as the world’s second-biggest consumer when it releases private consumption data backing the momentum of foreign direct investment to the service sector.

Thailand’s rice-buying scheme to end – further uproar to follow

February 12, 2024 by Alex Erquicia in Asia-Pacific.

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THA: Struggling Thai Economy Battle The Global Downturn

Southeast Asia’s second-largest economy divisive rice-buying scheme will not be renewed at the end of February, when it’s set to expire.

China beats Brazil in Uruguay

February 4, 2024 by Alex Erquicia in Americas, Asia-Pacific.

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Brazilian President Dilma Rousseff and U

China became Uruguay’s main trade partner taking over a position long-held my neighbor and ally Brazil.

Japan and India strengthen an already healthy relationship

January 27, 2024 by Alex Erquicia in Asia-Pacific.

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Prime Minister Shinzo Abe three-day visit to India highlighted the path both countries intend to follow.

Japan enters the game for Africa’s resources

January 9, 2024 by Alex Erquicia in Africa, Asia-Pacific.

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From January 10-14 Abe will travel to Ivory Coast, Mozambique and Ethiopia where he is expected to seal several commercial and energy deals.

RED ZONE: China’s local-government debt

December 31, 2024 by Paul Maidment in Asia-Pacific.

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China’s local-government debt bomb is a curious piece of financial ordinance. Whether it explodes or is defused may end up costing Beijing much the same. A newly published audit by the country’s state auditor puts China’s debt-to-GDP ratio at 58%. By international standards that is a modest number and no where near the red zone where a country’s sovereign indebtedness starts to become detrimental to growth. A debt implosion along the lines of a Greece or Cyprus is widely regarded as being highly unlikely. Yet China’s authorities see this as one of the biggest risks to their country’s economy in the medium term and have put addressing it high on their list of economic policy priorities. The cause for concern is that three-fifths of it is local-government debt. The state auditor says local governments’ outstanding debt at the end of June 2013 was 17.9 trillion yuan ($2.95 trillion), including contingent liabilities and debt guarantees. Some private estimates put the number as high as 25 trillion yuan. But even the official figure is still two-thirds higher than it was at end-2010, the previous time the state auditor tallied the numbers, and the first time it made the figures public. Much of this debt was taken on by provincial and municipal governments in the wake of the 2008 global financial crisis to fund infrastructure projects, frequently through captive commercial investment companies used to get around the rudimentary system Beijing has for allocating tax revenues to provinces and cities for spending. Many of these investments aren’t generating sufficient returns to pay operating and interest costs or to repay the loans taken on. The U.S. rating agency Moody’s said earlier this year that 53% of all municipal construction companies needed to restructure their loans. That, in turn, points to a potential rise in non-performing bank loans, especially at smaller (and weaker) regional and local banks, or the risk of local governments left holding the can — which in a country as state-centric as China would mean the can ultimately ending up in Beijing. Ever since the initial audit, central government has been containing new borrowing by local authorities, getting state-owned banks to impose tighter lending standards and starting to expand municipal bond issuance as an alternative to land sales as a source of local government revenue. At the same time it has been writing off the worst of the loans that have gone sour and getting banks to reschedule others in order to avoid any embarrassing failures. At the same time, there will be a hurrying up of fiscal reform, which will reform governance as well as their finances. This will eliminate extra-budgetary funds, bringing all government revenues on budget, and expose many more provincial and municipal officials to the discipline of the marketplace as the municipal-bond market expands. That will not prove particularly comfortable for local officials used, as the Chinese proverb holds, to the mountains being high and the emperor far away. It will also make the dipping of local hands into the honeypot of public money more difficult.

The rapid increase in the debt of China’s provinces and municipalities will fast forward much needed reform of local government’s finances and governance.

RED ZONE: China’s economic reforms

December 25, 2024 by Paul Maidment in Asia-Pacific.

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2014 is the year when China has to start picking up momentum of structural reform if it is to clear the “middle income trap” and become a rich country.

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