China business news digest

Bad loans from banks highest in four years and Beijing residential property market feels the pinch.

Bad loans from banks highest in four years

Caijing

The total volume of non-performing loan for Chinese commercial banks reached 766.9 billion yuan at the end of third quarter 2014, according to data from China Banking Regulatory Commission.

The level has increased RMB 72.5 billion compared to the same period last year. The percentage of non-performing loan has increased for 14 consecutive quarters, reaching its highest level in the past four years.

The non-performing ratio for Chinese commercial banks is 1.16 per cent.

State Council to ease burden on SMEs

Caijing

China’s State Council has announced it will introduce a range of measures to ease the financial burden on small and medium sized businesses. The total financial amount is expected to be around RMB40 billion.

Coal export tariffs material down to 3% from 10%

21st Century Business Herald

China will reduce export tariffs for thermo and coking coals from 10 per cent to 3 per cent to encourage more exports of coal.  Analysts say the new policy is unlikely to encourage more exports as domestic coal prices are still higher than international prices.

According to data from Chinese Customs, China exported 7.51 million tonnes of coal in 2013. During the same period, the country imported 330 million tonnes of coals from abroad.

China has overinvested in its coal industry in the last few years resulting in massive over-capacity in the industry.  Analysts predict the industry will reach its peak production level between 2014 and 2016.

The cut in export tariffs is part of Beijing’s effort to support the struggling industry.

RMB 800 billion investment in Yangtze River economic belt

21st Century Business Herald

The Sichuan provincial government has announced a plan to invest RMB 800 billion yuan between 2014 and 2020 to rejuvenate the economy in the relatively underdeveloped region of China.

Beijing residential property market feels the pinch

Caijing

Housing transaction volumes in Beijing, one of the hottest property markets in China, declined 38.6 per cent during the first 10 months of 2014.  It was the lowest level since the outbreak of the global financial crisis in 2008.

Chinese developers sold RMB 151.6 billion worth of housing stock during the first ten months of the year, RMB 83.2 billion less than the same period last year.  (caijing)

Hebei Iron and Steel under pressure

Caijing

Hebei Iron and Steel, one of the largest steel producers in China, has suffered a significant decline in profitability since 2011. The company’s net profit in 2011 was RMB 1.38 billion and RMB 109 million in 2012, a decline of 92 per cent.  Its profitability increased 6.2 per cent in 2013.

The steel mill’s profitability increased dramatically during the first three quarters 2014, surging 328 per cent to 500 million yuan.

Analyst says the average profit per ton of steel is 28 yuan, but it is significantly less if one strips out the non-steel making component.  Because Chinese steel mills engage in other non-steel making businesses. “It’s only 4 yuan per tonne, less profit you can make on a lollipop,” said one Chinese steel analyst.