China should allow local governments to go bankrupt to help rein in regional authorities’ excessive borrowing, a Chinese central bank official said.
A case like the bankruptcy of the city of Detroit in the US would convince investors that the central government is really determined to dispel beliefs of an implicit guarantee for regional authorities, People’s Bank of China (PBOC) Research Bureau head Xu Zhong (徐忠) yesterday wrote in an article in the China Business News.
Just a couple of days ago, the Chinese Ministry of Finance pledged to break the “illusion” that Beijing would bail out local governments’ hidden debt.
Their calls for limiting local borrowings are in line with the Chinese central government’s financial policy for next year.
Chinese President Xi Jinping (習近平) earlier this month said that a priority for next year is to “effectively” control leverage and prevent major risks.
PBOC Governor Zhou Xiaochuan (周小川) in October urged caution against local government financing vehicles and other means being used “to disguise debts,” and argued for fiscal reforms.
Concerns among investors about a lack of support for local funding units have led to a slump in the issuance of local governments’ debts.
Local government financing vehicles have sold 1.7 trillion yuan (US$259 billion) worth of bonds in onshore and offshore markets this year, a 23 percent drop from last year, according to data compiled by Bloomberg.
Fitch Ratings in September said that the first bond defaults by Chinese local government financing vehicles are becoming more likely.
Chinese Vice Minister of Finance Zhu Guangyao (朱光耀) on Saturday said that addressing “hidden debts” of local governments and state-owned companies’ debts are key to prevention of systemic financial risks, the China Securities Journal reported.
China can achieve a goal of doubling the size of its economy by 2020 even if annual expansion slows to 6.3 percent, a senior Chinese Communist Party official said, signaling a greater willingness to tackle debt and pollution at the expense of growth.
In its blueprint for the 2016-2020 period, China set a minimum annual growth target of 6.5 percent to achieve the goal of doubling GDP from 2010 levels.
However, over the weekend, Yang Weimin, an official from the party committee overseeing economic policy, said annualized growth of 6.3 percent from next year to 2020 would do.
Based on current economic performance, the 2020 target would not be a “huge barrier,” the official Xinhua News Agency cited Yang, deputy head of the Office of the Central Leading Group on Financial and Economic Affairs, as saying.
China is seen growing 6.8 percent this year and 6.5 percent next year, according to economists’ estimates compiled by Bloomberg.
Global shipments of PCs, tablets and mobile phones this year are expected to decline 13.6 percent year-on-year to 1.9 billion units, US market research firm Gartner Inc said in a report yesterday. While PC shipments are forecast to fall 10.5 percent to 235.19 million from 262.71 million last year, the contraction in the overall PC market could have been much more severe, Gartner said. “Government lockdowns due to COVID-19 forced businesses and schools to enable millions of people to work from home and increase spending on new notebooks, Chromebooks and tablets,” Gartner senior research director Ranjit Atwal said. Shipments of tablets and Chromebooks
The Financial Supervisory Commission (FSC) has deferred the implementation of the Basel III standards and capital requirements for “domestic systemically important banks” to ease their capital pressure so they can concentrate on helping businesses affected by the COVID-19 pandemic, FSC Chairman Thomas Huang (黃天牧) said yesterday. The Basel III standards were set by the Basel Committee on Banking Supervision (BCBS) and were originally to take effect on Jan. 1, 2022. They have stricter capital requirements and adopt different approaches to calculating risks. However, the implementation of the standards would be delayed by one year in line with the revised timeline announced by
Phoenix Silicon International Corp (昇陽半導體) yesterday said strong demand from customers means it would maintain its capacity expansion plan for this year. The silicon wafer recycler, which counts Taiwan Semiconductor Manufacturing Co (台積電) among its major customers, next quarter plans to add a capacity of 60,000 12-inch wafers per month, bringing its total capacity to 300,000 wafers a month. “Phoenix Silicon is enhancing its smart manufacturing capabilities and actively expanding 12-inch capacity at an existing fab to satisfy customer demand,” Phoenix chairman Mike Yang (楊聰敏) said in the firm’s annual report. Phoenix is also evaluating the feasibility of building a second fab
FLAMBOYANT: Stanley Ho, who was married four times and had 17 known children, developed the junket VIP system and was loved by Macanese for his philanthropy Macau gambling king Stanley Ho (何鴻燊), who built a business empire from scratch in the former Portuguese colony and became one of Asia’s richest men, died yesterday at the age of 98. The flamboyant tycoon, who loved to dance, and advised his nearest and dearest to shun gambling, headed one of the world’s most lucrative gaming businesses through his flagship firm, SJM Holdings Ltd (澳門博彩控), valued at about US$6 billion. Shielded from challengers by a four-decade monopoly on gambling, Ho helped transform Macau from a sleepy peninsula dotted with seedy, windowless gambling dens into the world’s biggest casino center. However, Ho’s interests in