Caixin
Nov 28, 2019 09:22 AM
CX DAILY

CX Daily: China’s Household Debt Rises to Record, Prompting PBOC Warning

The country’s household debt-to-disposable income ratio surged to a record 99.9% in 2018, a new central bank report shows. Photo: VCG
The country’s household debt-to-disposable income ratio surged to a record 99.9% in 2018, a new central bank report shows. Photo: VCG

Debt /

PBOC issues warning as China’s household debt rises to record

China’s consumers continued their borrowing binge last year even as growth in incomes lagged, driving the country’s household debt-to-disposable income ratio to a record and prompting a warning from the central bank about the need for tougher action to ward off risks.

Outstanding household loans jumped 18.2% to 47.9 trillion yuan ($6.8 trillion), a growth rate 7.5 percentage points higher than that of nominal disposable income, according to data in the PBOC's annual Financial Stability Report published Monday. That pushed the ratio up to 99.9% at the end of 2018 from 93.4% in 2017. Outstanding household loans have doubled since 2014, when the figure stood at 23.1 trillion yuan.

The PBOC’s report adds to growing concerns that the rapid increase in household debt could pose risks to the stability of China’s financial system and the sustainability of its economic growth over the medium term by curbing consumption.

FINANCE & ECONOMICS

bond

A power transmission project in Foshan, Guangdong province, on Nov. 7. Photo VCG

Bonds /

Local governments get 2020 bond quotas early to drive investment

China’s Ministry of Finance made an early allocation of 2020 special-purpose bond (SPB) quotas totaling 1 trillion yuan ($142.4 billion) to provincial-level governments, the ministry said. Policymakers are stepping up efforts to support flagging economic growth by encouraging investment in infrastructure such as roads, sewers and public services.

The allotment amounts to 47% of the SPB quota for 2019, which was 2.15 trillion yuan, and is within the cap of 60% approved last year by the National People’s Congress, the ministry said Wednesday in a statement (link in Chinese) on its website. The early issuance was made to “speed up the sale of bonds to boost effective investment and increase domestic demand,” the ministry said.

Personnel /

Exclusive: China Everbright Bank to get new president

A vice president of state policy lender China Development Bank (CDB) will assume a new role as president of China Everbright Bank Co. Ltd., filling a position that has been vacant for two months.

Liu Jin, an executive vice president of CDB, was chosen to be a deputy secretary of Everbright Bank’s Communist Party committee Wednesday and is expected to become president of the state-backed commercial bank after being approved by the board of directors and regulators, we've learned.

In depth /

China’s small pig farmers stuck in financing mire after swine fever

Recovery from African swine fever has begun for some farmers in China, whose herds have been ravaged by the disease. But now they facing obstacles at every turn in the form of financing woes.

Last year when Chen Lie (pseudonym) lost 1,400 pigs, he requested subsidies for some that died but was denied. Next, he filed an insurance claim but recovered barely enough to cover the premiums. Chen took out a 350,000 yuan short-term loan from a state-owned bank to restart his herd. A month later, he was told he had to repay it in full and the bank refused to extend a new loan. Now he faces lawsuits from rural banks and debt collectors.

Chen’s financial mire isn’t unusual for pig farmers. Six of the top 10 pig farmers in Linshu county have been listed as debt defaulters, he says. Check out our deep dive.

Dollar bonds /

China’s $6 billion bond in U.S. currency draws huge orders

China raised $6 billion in its latest bond offering in the currency after pulling in about $20 billion of investor orders for the sale, according to people familiar with the matter.

The nation sold $1.5 billion of three-year notes, $2 billion each of five-year and 10-year notes and a $500 million 20-year tranche. The strong demand allowed China to cut pricing by 25 basis points on the shortest tranche to 35 basis points above U.S. Treasurys, according to a person with knowledge of the sale who isn’t authorized to speak publicly. A basis point is a hundredth of a percentage point.

Quick hits /

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BUSINESS & TECH

1

A ship carrying imported crude oil is docked at Zhoushan Port, East China's Zhejiang province, Nov. 14. Photo: VCG

Oil /

China guzzles more Saudi oil

China’s thirst for Saudi Arabian oil continues to grow on the back of massive refinery joint ventures, and the nation is also drawing more crude from Russia, as imports from the U.S., Iran and Venezuela dwindle, fresh Chinese customs data for the year to November show.

The world’s largest crude oil importer brought in 414.6 million tons from January to October, a YOY increase of 10.5%, including 45.51 million tons last month. Imports from Saudi Arabia spiked by more than half for the period. The figures, released by China’s General Administration of Customs on Monday, show the impact of Saudi Arabia’s dramatic shift into downstream business, as its state oil giant Saudi Aramco prepares to go public, as well as the effects of U.S. sanctions on imports from nations like Iran and Venezuela.

Shipping /

China Merchants Port to acquire stakes in 10 terminals from CMA CGM

Chinese state-owned conglomerate China Merchants Group’s port operation unit agreed to acquire interests in 10 terminals from French container shipping giant CMA CGM for $468 million. The deal followed an overseas port investment earlier this month by another Chinese state-owned shipping company, Cosco, showing China’s ambition to reach out to global ports as part of the Belt and Road Initiative.

China Merchants Port Holdings Co. already owns a 49% stake in a joint venture with the French shipper. As part of the deal, China Merchants Port will buy as much as $468 million of convertible bonds issued by the joint venture, Terminal Link, and will loan as much as $500 million to CMA CGM, according a Monday statement.

Transactions /

China’s mobile payments grow more than 60% in third quarter

China’s banks processed 59.5 billion electronic payments in the third quarter, representing a total of 612.9 trillion yuan ($87.2 trillion), according to figures published Friday by the central bank.

Of those payments, 27.3 billion were mobile transactions, representing a YOY rise of 61.1%. A total of 86.1 trillion yuan changed hands via mobile, an increase of 31.6% from the same period last year. Overall, 89.8 billion noncash transactions passed through the country’s banks in the third quarter, representing 926 trillion yuan, the central bank said.

Huawei /

Amid U.S. ban, Huawei unveils tablet powered by homegrown chip

Huawei has launched an iPad-like tablet computer powered by its self-developed processor as the embattled Chinese tech company seeks to withstand U.S. restrictions on doing business with American suppliers.

Featuring Huawei’s Kirin 990 processor and its self-made EMUI user interface for the Android operating system, the MatePad Pro is geared toward office use with a magnetic keyboard and a pressure-sensitive pen.

Quick hits /

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