Hot debates about the evolving, if not worsening, global financial crisis offer much needed food for thought as China's financial development enters a new era.
Explanations of the root cause of the current financial tsunami vary greatly, but few disagree on the need for China to further deepen financial reforms to sustain its long-term growth.
"Among all the financial crises, this may be the one that affects China most," Tang Shuangning, chairman of China Everbright Bank, told a financial forum in Beijing Tuesday.
With the world's largest foreign exchange reserve worth more than 1.8 trillion U.S. dollars, China is relatively well positioned to weather the financial crisis. But the impact it may exert upon the Chinese economy remains huge.
According to Tang, such negative consequences may include a crashing stock market, loss of overseas investment, declining exports, economic slowdown, rising unemployment and a collapse of market confidence.
The soundness of the Chinese economy and limited participation in the international financial market have so far saved the country from bearing the brunt of the financial crisis.
"But we cannot take it lightly," warned Tang.
The one-year-old crisis has already resulted in astronomical losses for many established financial giants around the world. The world was particularly shocked over the past few days when Lehman Brothers went bust, Merrill Lynch gave up, Goldman Sachs and Morgan Stanley became regulated banks, and AIG was practically nationalized.
By constantly improving the financial system as well as strengthening the effective regulation of the financial market, the Chinese government has put great efforts and resources into creating an increasingly competitive domestic financial market.
China's financial reform has surely contributed to its rise as an emerging global financial power. But a question mark hangs over how global financial liberalization, securitization and integration will influence China's further financial system reform.
Many domestic experts said one of the key lessons to draw from the US subprime crisis was that regulation should be further strengthened.
In view of the latest developments in international financial regulation, "we should strike a better balance between government regulation and the self-discipline of the financial market," noted Gong Minghua, a researcher from China Banking Regulatory Commission.
Admittedly, China now boasts the most profitable lenders in the world after market-oriented reforms transformed State-owned banks into commercial lenders. But domestic financial market and financial institutions remain unable to meet the country's growing demand for financial services to fuel its economic growth.
For instance, the government has spearheaded a national campaign to revive the rural economy. But by the end of last year, as much as 7 percent of villages and towns lacked any financial outlets offering simple, low-cost financial services to boost local economic growth and raise farmers' living standards.
Therefore, "while emphasizing the importance of market self-discipline, we must overcome such defects in the market with effective regulation", added Gong.
Challenging the argument that the current financial crisis is the result of failed regulation, Didier Cossin, a professor of banking and finance from Switzerland's IMD business school, claimed that the crisis is about a culture of greed rather than a lack of regulation.
He said that the nationalization of a triple-A insurance company is more telling than the fall of a leading investment bank like Lehman Brothers.
"Everyone knows that investment banking is a risky business," said Cossin. The fact that AIG was highly regulated but still failed points to a culture of greed in the financial sector.
As to how long the current financial crisis will last, the professor refused to forecast but insisted that the cost of credit will rise.
"And the long-term consequence of the crisis may be the end of the free-market way of thinking," added Cossin.
Chinese policymakers are trying to use these experiences to minimize risks and avoid potential catastrophes that may be encountered during the process of financial innovation. But it seems that the complexities and consequences of the global financial crisis will make the learning curve long and lead to conclusions that may even contradict each other.
Source: China Daily)
Wednesday, September 24, 2008
Macao's gaming revenue growth slowdown arouses fears of mass lay-offs
As expectations that Macao's gaming sector will experience a single-digit year-on-year growth in September 2008, the Special Administration Region, the only place in China where gambling is legal, started to feel the pinch after a long lasting boom since opening its gaming sector to international investments in 2002.
The city's gross gaming revenue for the first half of this month only reached 3.6 billion patacas , and the whole month is expected to reach between 7.2 billion patacas and 7.5 billion patacas , according to Portugal's Lusa News Agency, which quoted sources from gaming operators.
That means gaming revenues for September will grow by between less than one percent and around five percent, compared with the same period last year. The drop in the gaming revenue growth was largely blamed on the global economic downturn while China's tightening of its visas arrangement which allow mainlanders to travel to the SAR was also blamed as one of the factors on the decrease of game-doers, a source linked to one of Macao's casinos told Lusa.
The slowdown of the sector's development has caused many speculations that it will trigger a domino effect in the sector, forcing several small-scale casinos to be closed one after another and leading to mass lay-offs among dealers and other casino staff.
If the domino effect materializes, the SAR will be dealt a heavy blow, since gaming taxes and levies account for over 70 percent of the SAR government's income, and a large number of lowly-educated citizens worked at the city's 31 casinos as dealers, the jobs of which the government bans non-permanent residents from taking.
Therefore, the SAR's government is quick to deny such predictions. "Gaming revenue growth slowed down...but there are no signs that the sector is shrinking, and the lay-offs are not common for the current stage," said Tam Pak Yuen, the SAR's Secretary for Economy and Finance, when asked about the issue by the press at a public function on Tuesday.
The lay-offs have actually started months ago, when Galaxy Entertainment, one of the six licensed gaming operators in Macao but based in Hong Kong, sacked several dealers and dealer inspectors working at some of its small casinos. The move led to a strong backlash from local communities, and the laid off locals even took to the street to protest against the operator's "rash decision".
The action brought considerable pressure on the government as well, as local communities yelled for job protection from the SAR government. The result was a government demand that the six gaming operators to promote more local employees to higher positions in the casinos, making more job vacancies for locals to fill.
Tam pointed out that the gaming sector is still undergoing a "stable period", and the domino effect of small and medium casinos being closed one after another is not happening at present. "The SAR government understands that local civilians concern about the development of gaming sector, and any insignificant trifle will bring up sensitive reactions, but the adjustment of staff by individual gaming operator can happen at any time."
He also pointed out that if the gaming operators intends to adjust their staff in a large scale, they will need to communicate with the SAR's labor department, but currently no such plan were brought up by these operators.
However, the government's optimism toward the gaming sector was not shared by the experts.
"The near-term economic data and the gross gaming revenues has evidently sounded the alarm for local gaming sector," said Davis Fong, director of Institute for the Study of Commercial Gaming at the University of Macao.
He said that the SAR government should no long expect a significant increase in its gaming tax income, and if the casino companies do not diversify their operations, they will have difficulties running business.
From September till the end of 2008, the gaming sector is expected to see "very slow or even negative growth", Lusa quoted the source as saying.
With regard to the impact on local job market, Fong pointed out that jobs generated by casinos have peaked, although two new casino resort projects, set to be put into operation in the near future, can partly alleviate such employment pressure.
"The society must reach a common consensus on whether to maintain Macao's gaming-led economy or extend vertically diversified development," he said.
He also proposed that since many non-gaming industries, such as hospitality and MICE , are emerging and taking off in Macao, the government should guide market capitals and operators to invest in these industries, in a bid to create more jobs in the non-gaming sectors.
Source:Xinhua
The city's gross gaming revenue for the first half of this month only reached 3.6 billion patacas , and the whole month is expected to reach between 7.2 billion patacas and 7.5 billion patacas , according to Portugal's Lusa News Agency, which quoted sources from gaming operators.
That means gaming revenues for September will grow by between less than one percent and around five percent, compared with the same period last year. The drop in the gaming revenue growth was largely blamed on the global economic downturn while China's tightening of its visas arrangement which allow mainlanders to travel to the SAR was also blamed as one of the factors on the decrease of game-doers, a source linked to one of Macao's casinos told Lusa.
The slowdown of the sector's development has caused many speculations that it will trigger a domino effect in the sector, forcing several small-scale casinos to be closed one after another and leading to mass lay-offs among dealers and other casino staff.
If the domino effect materializes, the SAR will be dealt a heavy blow, since gaming taxes and levies account for over 70 percent of the SAR government's income, and a large number of lowly-educated citizens worked at the city's 31 casinos as dealers, the jobs of which the government bans non-permanent residents from taking.
Therefore, the SAR's government is quick to deny such predictions. "Gaming revenue growth slowed down...but there are no signs that the sector is shrinking, and the lay-offs are not common for the current stage," said Tam Pak Yuen, the SAR's Secretary for Economy and Finance, when asked about the issue by the press at a public function on Tuesday.
The lay-offs have actually started months ago, when Galaxy Entertainment, one of the six licensed gaming operators in Macao but based in Hong Kong, sacked several dealers and dealer inspectors working at some of its small casinos. The move led to a strong backlash from local communities, and the laid off locals even took to the street to protest against the operator's "rash decision".
The action brought considerable pressure on the government as well, as local communities yelled for job protection from the SAR government. The result was a government demand that the six gaming operators to promote more local employees to higher positions in the casinos, making more job vacancies for locals to fill.
Tam pointed out that the gaming sector is still undergoing a "stable period", and the domino effect of small and medium casinos being closed one after another is not happening at present. "The SAR government understands that local civilians concern about the development of gaming sector, and any insignificant trifle will bring up sensitive reactions, but the adjustment of staff by individual gaming operator can happen at any time."
He also pointed out that if the gaming operators intends to adjust their staff in a large scale, they will need to communicate with the SAR's labor department, but currently no such plan were brought up by these operators.
However, the government's optimism toward the gaming sector was not shared by the experts.
"The near-term economic data and the gross gaming revenues has evidently sounded the alarm for local gaming sector," said Davis Fong, director of Institute for the Study of Commercial Gaming at the University of Macao.
He said that the SAR government should no long expect a significant increase in its gaming tax income, and if the casino companies do not diversify their operations, they will have difficulties running business.
From September till the end of 2008, the gaming sector is expected to see "very slow or even negative growth", Lusa quoted the source as saying.
With regard to the impact on local job market, Fong pointed out that jobs generated by casinos have peaked, although two new casino resort projects, set to be put into operation in the near future, can partly alleviate such employment pressure.
"The society must reach a common consensus on whether to maintain Macao's gaming-led economy or extend vertically diversified development," he said.
He also proposed that since many non-gaming industries, such as hospitality and MICE , are emerging and taking off in Macao, the government should guide market capitals and operators to invest in these industries, in a bid to create more jobs in the non-gaming sectors.
Source:Xinhua
Chinese shares edge up, led by rebounding of PetroChina
Chinese shares edged up at close despite plunge in the morning session, led by rebounding of PetroChina.
The benchmark Shanghai Composite Index gained 15.3 points or 0.69 percent to 2,216.81. The Shenzhen Component Index was 0.3 percent or 21.37 points higher to close at 7,083.45.
The combined turnover on the two bourses shrank to 69.5 billion yuan from previous day's 107.9 billion yuan.
Source:Xinhua
The benchmark Shanghai Composite Index gained 15.3 points or 0.69 percent to 2,216.81. The Shenzhen Component Index was 0.3 percent or 21.37 points higher to close at 7,083.45.
The combined turnover on the two bourses shrank to 69.5 billion yuan from previous day's 107.9 billion yuan.
Source:Xinhua
China's insurers saw assets decline in August
Insurance sector assets declined in August, reflecting ebbing returns on equity investments and regular payments, the China Securities Journal reported on Wednesday, quoting the China Insurance Regulatory Commission.
Insurance assets totaled just over 3 trillion yuan in the first eight months of this year, down1.26 percent from the January-July period.
From January to August, premiums totaled 713.4 billion yuan, up 12.1 percent over the January-July level and up 71.38 percent year-on-year. The total included 165 billion yuan in property policies and 548 billion yuan in personal policies.
Life insurers' premiums amounted to 491.7 billion yuan nationwide, up 66.5 percent from a year earlier.
Source: Xinhua
Insurance assets totaled just over 3 trillion yuan in the first eight months of this year, down1.26 percent from the January-July period.
From January to August, premiums totaled 713.4 billion yuan, up 12.1 percent over the January-July level and up 71.38 percent year-on-year. The total included 165 billion yuan in property policies and 548 billion yuan in personal policies.
Life insurers' premiums amounted to 491.7 billion yuan nationwide, up 66.5 percent from a year earlier.
Source: Xinhua
New CNPC oil refinery to start up in December, serve SW China
China's largest oil producer, China National Petroleum Corp. , will start up a 10-million-ton oil refinery in south China's Guangxi Zhuang Autonomous Region in December, a step to relieve tight energy supply in southwest China, the regional governor said on Wednesday.
Work on the plant, costing more than 15 billion yuan , was launched at the end of 2006 in the coastal city of Qinzhou on the northern shore of the Beibu Gulf.
It is expected to process 10 million tons of crude oil and produce 6.7 million tons of refined products, said Ma Biao, the regional governor.
Annual revenue would be more than 40 billion yuan, he said.
"The distribution of oil plants in China is illogical. Southwest regions like Guangxi, Yunnan, Guizhou and Sichuan completely rely on outside supply and the refined oil supply is tight at present," said Shen Shaohong, an official with the Qinzhou Port Economic Development Zone said.
CNPC currently supplies its southwest market from a refinery in Dalian, a port city in northeast China's Liaoning Province. By processing imported crude in the Qinzhou refinery, CNPC could cut its transportation costs by 200 yuan per ton.
Source: Xinhua
Work on the plant, costing more than 15 billion yuan , was launched at the end of 2006 in the coastal city of Qinzhou on the northern shore of the Beibu Gulf.
It is expected to process 10 million tons of crude oil and produce 6.7 million tons of refined products, said Ma Biao, the regional governor.
Annual revenue would be more than 40 billion yuan, he said.
"The distribution of oil plants in China is illogical. Southwest regions like Guangxi, Yunnan, Guizhou and Sichuan completely rely on outside supply and the refined oil supply is tight at present," said Shen Shaohong, an official with the Qinzhou Port Economic Development Zone said.
CNPC currently supplies its southwest market from a refinery in Dalian, a port city in northeast China's Liaoning Province. By processing imported crude in the Qinzhou refinery, CNPC could cut its transportation costs by 200 yuan per ton.
Source: Xinhua
Hong Kong stocks end higher on Buffett's boost
Hong Kong stocks rose 89.14 points, or 0.47 percent, to close at 18,961.99 on Wednesday, on news that U.S. tycoon Warren Buffett was investing five billion dollars in beleaguered U.S. bank Goldman Sachs.
The Hang Seng benchmark index opened the morning session at 18,954.32 points, or 0.43 percent higher, and climbed to the day's high of 19,291.02 before it slid on rumors about Bank of East Asia's stability that was dismissed by both the bank and Hong Kong's financial regulators.
Bank of East Asia tightened its loss to 6.85 percent after a 11.3-percent slump in the afternoon on the strong statement by its management that the malicious rumors were not founded on facts and the bank had reported police and notify regulators in connection to the SMS fabrication.
The rumor on the bank's stability was also rejected as unfounded by the Hong Kong Monetary Authority and John Tsang, financial secretary of the Hong Kong Special Administrative Region government.
Total market turnover fell to 59.01 billion HK dollars from Tuesday's 64.37 billion HK dollars (8.29 billion U.S. dollars
Analysts said that the market remained jittery after U.S. lawmakers Tuesday refused to pass the government rescue plan unless amendments were made.
They said Buffett's move will calm markets only briefly, as investor bearishness could return to the fore in the near term.
On local bank stocks side, heavyweight HSBC Holdings was up 0.32 percent, while Hang Seng Bank remained unchanged. BOC HK was down 0.95 percent, but StanChart was up 1.25 percent.
The mainland bank stocks close mixed. CB and Bank of China slid0.95 percent and 0.63 percent while ICBC lifted 0.86 percent. Bankcomm and CITIC Bank climbed 0.27 percent and 0.83 percent. CM Bank lost 3.81 percent.
Property stock Cheung Kong trimmed 1.05 percent, and SHK PPT dipped 0.22 percent despite the news that its substantial shareholder the Kwok family further raised holding by 650,000 shares.
Mainland's telecom stocks moved individually. China Mobile was up 1.99 percent and China Telecom up 1.21 percent. But China Unicom was down 1.2 percent and Netcom down 0.12 percent, With international oil futures easing, CNOOC, the largest offshore oil producer in the mainland, was up 0.42 percent, and PetroChina, thelargest oil firm in the mainland, was up 2.52 percent. Sinopec Corp, the largest oil refiner in the mainland, was up 2.78 percent.
Source: Xinhua
The Hang Seng benchmark index opened the morning session at 18,954.32 points, or 0.43 percent higher, and climbed to the day's high of 19,291.02 before it slid on rumors about Bank of East Asia's stability that was dismissed by both the bank and Hong Kong's financial regulators.
Bank of East Asia tightened its loss to 6.85 percent after a 11.3-percent slump in the afternoon on the strong statement by its management that the malicious rumors were not founded on facts and the bank had reported police and notify regulators in connection to the SMS fabrication.
The rumor on the bank's stability was also rejected as unfounded by the Hong Kong Monetary Authority and John Tsang, financial secretary of the Hong Kong Special Administrative Region government.
Total market turnover fell to 59.01 billion HK dollars from Tuesday's 64.37 billion HK dollars (8.29 billion U.S. dollars
Analysts said that the market remained jittery after U.S. lawmakers Tuesday refused to pass the government rescue plan unless amendments were made.
They said Buffett's move will calm markets only briefly, as investor bearishness could return to the fore in the near term.
On local bank stocks side, heavyweight HSBC Holdings was up 0.32 percent, while Hang Seng Bank remained unchanged. BOC HK was down 0.95 percent, but StanChart was up 1.25 percent.
The mainland bank stocks close mixed. CB and Bank of China slid0.95 percent and 0.63 percent while ICBC lifted 0.86 percent. Bankcomm and CITIC Bank climbed 0.27 percent and 0.83 percent. CM Bank lost 3.81 percent.
Property stock Cheung Kong trimmed 1.05 percent, and SHK PPT dipped 0.22 percent despite the news that its substantial shareholder the Kwok family further raised holding by 650,000 shares.
Mainland's telecom stocks moved individually. China Mobile was up 1.99 percent and China Telecom up 1.21 percent. But China Unicom was down 1.2 percent and Netcom down 0.12 percent, With international oil futures easing, CNOOC, the largest offshore oil producer in the mainland, was up 0.42 percent, and PetroChina, thelargest oil firm in the mainland, was up 2.52 percent. Sinopec Corp, the largest oil refiner in the mainland, was up 2.78 percent.
Source: Xinhua
Beware of "mistaking area" in development
"On no account should any business and enterprise seek rapid development and fat economic profits at the expense of the people's life and health," Chinese Vice President Xi Jinping reiterated the importance of the "scientific outlook of development" pinpointing a swirl of food safety scandals set up in recent days. He stressed the industries and local governments in question are obliged to learn a lesson from their mistakes.
Obviously, quickening the pace of economic development in itself is nothing mistaken, for it is the basic means to the settlement of people's livelihood issues. Nevertheless, if the economic development has gone astray, disregarding human conscience, social morality and people's life, and totally running counter to the "scientific outlook of development," the rapid development will go nowhere but to the dead end.
To boost economic development must be based on the principle of "people first," otherwise, the situation will be worrisome. "People first" means economic development must be people-oriented, in the interest of the public, and for the benefit of people's all-round development. More important, economic development must subject to the human survival rights. When the deadly earthquake hit Sichuan, the government called for a desperate rescue of human lives, indicating life is put above all. It is evident that economic development will be meaningless if not in line with the human development.
The costs induced by liability accident and illicit conduct are already too heavy to bear, and the lesson learnt form all these mistakes is that economic development would backfire if it were in violation of the "scientific outlook of development." The disastrous scenes will always remind us of the man-made evils in pursuit of the so-called economic growth: the infamous "cancer villages" along the contaminated Huaihe River, cities engulfed in poisonous gas, vegetables polluted by pesticides and fertilizers, food adulterated with toxic chemicals, and the shoddy buildings scattered almost anywhere in the country-all this reflecting the utter disregard of humans lives.
The "mistaking area" in development is generally created by the unscientific performance testing on officials. For so many years in the largest developing country in the world, the GDP growth rate has been regarded as the only yardstick to judge the officials at different levels qualified or not. Even though the government has began to reverse the course, many local authorities still place their top priority on economic growth, as the achievements scored in developing the local economy still acts as the decisive factor to determine their performance as qualified officials and their promotion. More over, the prosperous economy is also considered the most outstanding "image projects" in many places. Clad in the disguise of developing the local economy, some officials have even gone so far as to be found in collusion with illegal businesses.
In a nutshell, the "mistaking area" in development is not a pitfall luring merely those with some particular ailment to go to such depth, instead, many forces put together create the "mistaking area." In this case, to erase the "harmful area" and prevent economic development from slipping into the "mistaking area," a more comprehensive treatment on the basis of the "scientific outlook of development" will have to be put in place with no time to spare.
By People's Daily Online
Obviously, quickening the pace of economic development in itself is nothing mistaken, for it is the basic means to the settlement of people's livelihood issues. Nevertheless, if the economic development has gone astray, disregarding human conscience, social morality and people's life, and totally running counter to the "scientific outlook of development," the rapid development will go nowhere but to the dead end.
To boost economic development must be based on the principle of "people first," otherwise, the situation will be worrisome. "People first" means economic development must be people-oriented, in the interest of the public, and for the benefit of people's all-round development. More important, economic development must subject to the human survival rights. When the deadly earthquake hit Sichuan, the government called for a desperate rescue of human lives, indicating life is put above all. It is evident that economic development will be meaningless if not in line with the human development.
The costs induced by liability accident and illicit conduct are already too heavy to bear, and the lesson learnt form all these mistakes is that economic development would backfire if it were in violation of the "scientific outlook of development." The disastrous scenes will always remind us of the man-made evils in pursuit of the so-called economic growth: the infamous "cancer villages" along the contaminated Huaihe River, cities engulfed in poisonous gas, vegetables polluted by pesticides and fertilizers, food adulterated with toxic chemicals, and the shoddy buildings scattered almost anywhere in the country-all this reflecting the utter disregard of humans lives.
The "mistaking area" in development is generally created by the unscientific performance testing on officials. For so many years in the largest developing country in the world, the GDP growth rate has been regarded as the only yardstick to judge the officials at different levels qualified or not. Even though the government has began to reverse the course, many local authorities still place their top priority on economic growth, as the achievements scored in developing the local economy still acts as the decisive factor to determine their performance as qualified officials and their promotion. More over, the prosperous economy is also considered the most outstanding "image projects" in many places. Clad in the disguise of developing the local economy, some officials have even gone so far as to be found in collusion with illegal businesses.
In a nutshell, the "mistaking area" in development is not a pitfall luring merely those with some particular ailment to go to such depth, instead, many forces put together create the "mistaking area." In this case, to erase the "harmful area" and prevent economic development from slipping into the "mistaking area," a more comprehensive treatment on the basis of the "scientific outlook of development" will have to be put in place with no time to spare.
By People's Daily Online
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