Caixin
Dec 18, 2019 09:52 AM
CX DAILY

CX Daily: The IMF Raises China's 2020 GDP Forecast

IMF Managing Director Kristalina Georgieva. Photo: VCG
IMF Managing Director Kristalina Georgieva. Photo: VCG

Economy /

Exclusive: IMF boosts China 2020 GDP forecast following U.S.-China trade deal

The new head of the International Monetary Fund applauded the phase one trade deal between China and the U.S. as a “very positive step” for both countries and the world economy and called for continued discussions on broader policy topics.

In an exclusive interview with Caixin Monday in Washington, IMF Managing Director Kristalina Georgieva said she expects the agreement between the two countries to boost China’s growth to around 6% next year, up from the IMF’s previous estimate of 5.8% in October.

The earlier forecast was made before the U.S. and China agreed on the phase one deal Friday which effectively pauses their 18-month trade war, rolls back certain tariffs, increases imports of some agriculture products from America, and contains a commitment to structural reforms and other changes to China’s economic and trade system.

FINANCE & ECONOMICS

1

Qingdao, Shandong province. Photo: Bloomberg

Debt /

Defaults in one of China’s richest provinces spook investors

Six privately owned companies in one of China’s wealthiest provinces defaulted on their debt or came perilously close in the last three months. With 68.1 billion yuan ($9.7 billion) in outstanding debt among the six companies, the distress in Shandong has rattled even seasoned investors.

The problem isn’t the defaults themselves — other provinces have experienced more and worse. It’s the practice common among Shandong companies of guaranteeing each others’ debts. Businesses don’t have to make these liabilities public, leaving investors to wonder who’s on the hook and for how much. With the once-strong industrial economy flagging, the murky ties among the province’s private companies may threaten to drag them all down together.

Bonds /

Overseas investors’ growing appetite for Chinese government bonds

Overseas investors are buying more Chinese bonds than ever before and increasingly prefer central government bonds to corporate bonds. The total value of Chinese onshore bonds held by overseas institutional investors reached 2.2 trillion yuan ($313.6 billion) at the end of November, growing 33.5% YOY, according to Caixin calculations based on data from state-owned financial infrastructure providers.

Policy /

Securities law revisions set for NPC review next week

The Standing Committee of the National People's Congress (NPC), China's top legislature, will convene its bi-monthly session next week to review draft revisions to nine measures including the Securities Law, the NPC said Monday.

The review comes eight months after the previous reading of the revised law in April, which was the third reading by legislators. The development indicates completion of final revisions is nearing, analysts said. Once past the final review, the new Securities Law may be enacted as soon as the end of this year.

Foreign credit /

Japan widens lead on China as top foreign Treasurys holder

Japan widened its lead over China as the largest foreign owner of U.S. Treasurys as its holdings rebounded to the second-highest level since 2015, while China’s stake was little changed.

Japan’s holdings of U.S. notes, bills and bonds increased to $1.17 trillion in October from $1.15 trillion a month earlier, the Treasury Department said in a report Monday. Japan overtook China as the largest non-U.S. holder of Treasurys in June — the first time it’s held that position since May 2017.

Quick hits /

Creditors’ woes deepen as Gionee liquidation hits another snag

Opinion: High deficit ratio should come along with hard budget constraints

BUSINESS & TECH

aviation

China was the first major jurisdiction to ground the Max plane since March after two fatal crashes. Photo: Bloomberg

Aviation /

Grounding of Boeing Max dries up $300,000 pilot jobs in China

Expatriate pilots flying Boeing Co.’s most popular plane for Chinese airlines used to be able to take their pick from dozens of jobs paying $300,000 plus perks thanks to a shortage of experienced aviators. The grounding of the 737 Max changed that.

Chinese carriers have largely stopped hiring foreign pilots for Boeing’s main narrow-bodied jet, nine months after two crashes led to the grounding of the best-selling 737 Max, according to recruitment agencies. Airlines in China’s booming aviation market were among the most enthusiastic buyers of the plane, accounting for 20% of a global fleet that now sits idle.

Auto /

Lenovo co-founder set to retire

Liu Chuanzhi, who 30 years ago founded a company in a Beijing workshop that would go on to become global PC titan Lenovo, will step down from his role as chairman of Lenovo’s parent this week, a source close to the company told us.

Now 75, one of modern China’s earliest high-tech entrepreneurs and a man sometimes called “China’s godfather of entrepreneurs,” will hand over the reins of the company to a younger generation as he moves into a more advisory role, the source said, speaking on condition of anonymity pending an official announcement. He will resign as chairman and executive director of Lenovo Group Ltd.’s parent Legend Holdings Corp.

Self-driving /

Beijing allows self-driving cars to carry passengers in road tests

Beijing has given the green light to road tests for self-driving cars carrying passengers, two years after the city became the first in China to allow autonomous vehicle companies to test driverless cars in designated areas.

China-registered companies operating in the autonomous driving sector can now apply to test passenger transportation on Beijing roads that are not open to the public, according to a regulation issued last week by the city’s transport commission. For safety reasons, test vehicles must have self-driving data recorders and an emergency system that allows a human to manually override the automated driving system, the regulation stipulates.

E-commerce /

Avon drops direct sales in China

London-based cosmetics group Avon Products Inc. is bringing an end to its signature door-to-door sales model in China amid double-digit growth in e-commerce sales.

China will become the only market in which Avon no longer uses the direct sales model, said Jiang Ruichang, the company’s China marketing head, at a company media event in Beijing on Monday.

Quick hits /

China could see smartphone shipments grow in 2020 amid 5G push

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