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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (2415)	5/6/2019 1:01:46 PM
From: Elroy Jetson	Respond to of 13796

You can see from TJ the past few years, it's like China's decisions are being informed by lines of cocaine. China has transformed their country with shabby new cities built with Third World quality, which look good from a distance. They're so full of themselves, they've been acting like the new Emperor trying to bully their neighbors. But when it comes to IP theft they know how truly backward they are, so they say they're still a small-child-economy not ready for big boy pants, so everyone needs to let them act naughty. Well, which is it? Are they a coke-ed up thug or a small child? Xi was furious with Obama calling him to the White House to see the proof the FBI had of the Chinese military participating in IP theft through the internet and essentially forcing him to sign an extradition treaty - which they don't honor. So now the Trump administration is inflicting economic damage on both of our economies knowing it hurts China more right now. It will be interesting to see what it takes to finally bring a resolution. In spite of my Emperor comments, Xi is still not such a complete Emperor that he can agree to terms until his military and other constituencies are hurting so badly they know it's the only choice. The pain level is not there yet.

To: elmatador who wrote (2415)

5/6/2019 1:40:16 PM

From: richardred

Read Replies (3) | Respond to of 13796

China to cut reserve requirements for small banks

BEIJING: China's central bank said Monday (May 6) it would cut the amount of cash that small and medium-sized banks hold in reserve in Beijing's latest move to boost the stuttering economy.

Authorities will slash the reserve requirement ratio (RRR) on May 15, with the aim of lowering financing costs for small businesses, the People's Bank of China said in a statement.

For county-level rural banks with limited scope, the RRR will be cut to eight percent, in line with the rate at rural credit cooperatives.

Roughly 1,000 banks will benefit from the action, unlocking 280 billion yuan (US$41.6 billion) for lending to small private companies, the central bank said.

It is the second such move this year as China seeks to blunt the impact of a weakening economy and slowing global demand for its exports.

The move comes as Donald Trump on Sunday threatened to raise tariffs on hundreds of billions worth of Chinese goods at the end of the week, throwing a spanner in trade talks that had appeared on track to conclude soon.

Beijing's top policymakers outlined a looser monetary policy during parliamentary meetings in March with Premier Li Keqiang pledging China would reduce the amount of cash banks must keep in reserve to support growth.

channelnewsasia.com

China to Impose Stricter Policy on Bad-Loan Recognition Bloomberg News
May 5, 2019, 10:17 PM EDT Updated on May 6, 2019, 1:17 AM EDT

Corporate loans overdue for 60 days should be considered NPLs

Authorities want to boost loan quality, banks’ risk controls

China’s banking regulator has told the nation’s major lenders to accelerate recognition of nonperforming loans, as officials seek to bolster the quality of lending, according to people familiar with the matter.The China Banking and Insurance Regulatory Commission in recent weeks used so-called window guidance to inform banks with nationwide operations that they must classify corporate loans overdue for more than 60 days as nonperforming, down from 90 days previously, said the people, who asked not to be identified discussing private information.

China’s regulators are walking a tightrope as they balance the need to keep credit flowing in the face of U.S. trade sanctions with making sure bad debts don’t spiral out of control. While forcing quicker recognition may help ensure banks make better lending decisions, some analysts also cautioned that the move could lead to a spike in non-performing loans.

“For listed banks, the move will increase their NPL balance by about 50 billion to 70 billion yuan,” Wang Yifeng, chief banking analyst at Everbright Securities Co. in Beijing, said by phone. “This is a prudent act. The regulator wants to ensure that banks can have bad credit exposed as early as possible and make up the shortfall in a bumper year.”

Read more: China Banks Grapple With Soured Loans Amid Fresh Policy Push

China’s largest state-owned banks and national joint-stock banks have until later this year to meet the new requirements, the people said. The CBIRC didn’t reply to a fax seeking comment.

Two tweets by U.S. President Donald Trump threatening steeper tariffs were enough to send the yuan plunging by its most since 2016 and roiled China’s stock market on Monday. Chinese authorities are considering delaying the next round of trade talks, according to people familiar with the matter.

The new requirements only apply to corporate loans. The four biggest lenders, including Industrial & Commercial Bank of China Ltd., started adopting the tougher bad-loan recognition last year, said the people. The so-called big four last month reported that they are seeing bad loans grow at the fastest pace since at least 2017.

Chinese lenders are sitting on more than 2 trillion yuan ($295 billion) of soured loans after flooding the financial system with cheap credit for years to prop up economic growth. While more prudent NPL recognition will boost the industry’s health over the long run, it may also portend a new wave of bad loans on balance sheets and weaken some banks’ capital buffers.

Authorities have taken a stricter stance on dealing with bad-loan issues since early last year, when all lenders were forced to reclassify loans overdue for more than 90 days as non-performing. The move soon led to a record quarterly surge in soured debt and wiped out capital at some small lenders.

What Bloomberg Intelligence Says“I expect continuous, sizable increases in provision charges at the banks for the rest of year. The CBIRC has been asking for this as it wants the sector to better reflect their actual asset quality -- with more loan risks ahead amid a protracted trade war and economic slowdown -- so the regulator can make better policy decisions going forward.”

--Francis Chan, banking analyst

The gap between a lender’s overdue loans and its reported NPLs has often been used by analysts as one gauge for measuring the accuracy of its asset quality. Outstanding NPLs were near a 15-year high at the end of last year, yet some analysts believe the reported figures understate the problem.

Bad loans may keep piling up as the government pushes banks to lend more to risky small and private businesses to reinvigorate the economy. About 5.8 trillion yuan of new loans were advanced in the first quarter, almost a fifth more than the same period a year ago, official data show. In a survey published last month by China Orient Asset Management Co., one of four state-owned bad-debt managers, respondents said they expect the nation’s bad-loan ratio to peak next year.

— With assistance by Jun Luo, Heng Xie, Dingmin Zhang, and Lucille Liu

bloomberg.com