China Digest

Economics and policy from China’s newspapers

Thursday February 16, 2017

Banking industry must avoid debt risks: PBOC paper

People’s Bank of China’s working paper released on Wednesday warns that the industry should avoid debt market liquidity risks and asset bubbles triggered by increasing leverage ratio too quickly. In a Sina Finance report on Wednesday, the banking industry should reduce loans and approving investments too quickly will lead to “debt-deflation” risks, the PBOC said.

China attracted US$139 billion in foreign investment in 2016

Foreign investment into the country rose 2.3% to US$139 billion in 2016 from 2015, said Zhao Chenxi, a spokesman of the National Development and Reform Commission. In a China Internet Information Center report, this showed the country was still attractive for foreign investment, while the total global volume of cross-border investment saw a 13% decrease last year.

Steel production rose in 2016 missing a reduction target

Steel capacity should have dropped by 45 million metric tons in 2016 to comply with government planning targets, but production increased by 1.2%, a Sina Finance report said on Wednesday. Wu Jinglian, a researcher at the State Council’s Development Research Center, said low-efficiency plants did not comply with the government order and it was one of the many limitations of such planning.

Jiangsu set to cut 2017 crude steel output

Jiangsu has set a goal to cut 6.5 million metric tons of crude steel capacity in 2017, the provincial Development and Reform Commission said in a Shanghai Securities Journal report on Wednesday.

SOEs need capital and clarity on debt-to-equity ratios

The State Council department in charge of managing state-owned enterprises (SOEs) should clarify the debt-to-equity ratio, and channel in more capital when appropriate, Caixin reported on Wednesday, citing Yang Kaisheng, an advisor to China’s Banking Regulatory Commission. Yang said the asset-debt ratio of state-owned enterprises increased to 61.5% from 61.2% in the third quarter of 2016, showing the difficulty of deleveraging and the necessity to solve the problem at its root.