China Central Bank Chief Signals for Calm as February Credit Data Tops Forecasts (Reuters, Mar 12) New yuan-denominated loans totaled 1.02 trillion yuan in February, well ahead of the 750 billion yuan expected among economists polled by Reuters. Meanwhile, loans outstanding increased by 14.3%, accelerating from 13.9% growth in January. During the January-February period, new loans totaled 2.49 trillion yuan, up from 1.96 trillion yuan during the on-year period.
China’s January-February Fiscal Income Growth Cools as Economy Slows (Reuters, Mar 16) Figures from the Ministry of Finance show fiscal income rising 3.2% to 2.57 trillion yuan during the January-February period. This compares with the 8.6% average notched in 2014 as slack in the economy cuts into tax collection and other sources of government income. Specifically, income from land transfers dropped 20.9% to 391 billion yuan. Income tax collection fell to 164.6 billion yuan, down 7.1% from a year earlier. On the other side of the government’s balance-sheet, spending on social security and employment rose 15.6% to 331 billion yuan.
In China, Trust Firms Shift, Rather than Reduce, Shadow Banking Risk (Reuters, Mar 15) In response to tighter rules surrounding risky forms of shadow financing, trust firms are steering away from loans and placing more clients’ into stocks, bonds and OTC products such as asset-backed securities and bankers’ acceptances. According to a Reuters analysis of data from the China Trust Association, growth in “tradable financial assets” and “saleable fixed-term investments” rose 77% and 47% respectively in 2014, while overall loans outstanding grew by just 8%. A source at one of China’s largest trust companies explained to Reuters that his firms’ investment in shares and bonds had risen by 30-40% and 50% respectively over the previous year.
China Lets Local Authorities Convert Debt Into Muni Bonds (Bloomberg, Mar 9) Under a new debt-swap program announced last week by China’s Ministry of Finance, local governments will be allowed to convert upwards of 1 trillion yuan in high-yield loans into low-return municipal bonds with longer maturities. This could save authorities as much as 50 billion yuan in interest payments each year, according to the ministry. Bond sales among local government financing vehicles – corporate entities set up to borrow on behalf of officials – totaled 66.3 billion yuan during the January-February period, down 47% from a year earlier, Bloomberg data show.
China’s Retail Sales, Industrial Output Miss Forecasts in Jan-Feb (CNBC, Mar 11) Retail sales were up 10.7% year-on-year in the first two months, data from the National Bureau of Statistics show. Industrial output was up 6.8% over the same period. Meanwhile, fixed-asset investment was up 13.9%.
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