China’s chief auditor discovered 94.4 billion yuan (US$15.2 billion) of loans backed by falsified gold transactions, adding to signs of possible fraud in commodities financing deals.
Twenty-five bullion processors made a combined profit of more than 900 million yuan by using the loans to take advantage of the difference between onshore and offshore interest rates, and the appreciation of the Chinese currency, according a report on the National Audit Office’s Web site. China is the biggest producer and consumer of gold.
Public security authorities are also probing alleged fraud at Qingdao Port where the same stockpiles of copper and aluminum may have been pledged multiple times as collateral for loans.
As much as 1,000 tonnes of gold may be tied up in financing deals in China, in which commodities including metals and agricultural products are used to get credit amid restrictions on lending, according to World Gold Council estimates through last year.
“This is the first official confirmation of what many people have suspected for a long time — that gold is widely used in Chinese commodity financing deals,” said Liu Xu (劉旭), a senior analyst at Capital Futures Co (首創期貨) in Beijing. “Any scaling back by banks of gold-backed financing deals might lead to a short-term reduction in Chinese imports and also spur some sales by companies looking to repay lenders.”
Mark To (涂國彬), head of research at Wing Fung Financial Group (永豐金融集團) in Hong Kong, said the audit office’s report is unlikely to have a significant impact on the underlying demand for gold in China.
Steps by the Chinese government to rein in credit and inflation by raising borrowing costs since 2010 created a surge in the use of commodities as a means of getting access to cash from abroad.
These deals are worth US$81 billion to US$160 billion, according to projections by Goldman Sachs Group Inc, accounting for as much as 31 percent of the nation’s short-term, foreign currency loans.
The National Audit Office’s report was delivered by its chief, Liu Jiayi (劉家義), at a National People’s Congress meeting on Tuesday and posted on the office’s Web site. The report covers a period beginning in 2012 and does not specify an end date. It does not identify companies or banks.
An official in the media department of the audit office asked for inquiries to be faxed when contacted yesterday. There was no immediate response to faxed questions.
The investigation at Qingdao focuses on a company called Decheng Mining (德誠礦業) and its owner, Singaporean national Chen Jihong (陳基鴻), according to two bankers assisting with the probe by public security officials.
Chen has been detained, according to Singapore’s foreign ministry.
He is also involved in a separate inquiry in northwestern Gansu Province, said the bankers, who asked not to be identified because they were not authorized to speak publicly.
Local lenders and foreign banks including Standard Chartered PLC, Citigroup Inc and Standard Bank Group said they are reviewing potential fallout from any lending linked to Qingdao.
The Chinese agency that stockpiles strategic commodities is checking to ensure that its copper purchases are free of collateral risks while the customs authorities issued new rules to help prevent goods being pledged multiple times as collateral, people with direct knowledge of these matters said previously.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”