China Roundup: Housing Bubble, Credit Squeeze, Grim and Complicated, Bitcoin Closures, Water Runs
The business environment this year has been “grim and complicated” as lenders face pressures on asset quality, liquidity and lending margins, China Huarong Asset Management Co. Chairman Lai Xiaomin said during an internal meeting on April 15, according to a statement today on the website of the Beijing-based company.
“The economic indicators we’ve seen so far are quite disappointing and repayment risks are rising across sectors from property to small businesses due to weak demand,” Rainy Yuan, a Shanghai-based analyst at Masterlink Securities Corp., said by phone. “Banks will be hit in such an operating environment but managers of bad assets like Huarong and China Cinda Asset Management Co. stand to benefit” because they can accumulate more sour loans, she said.
An economic slowdown and the credit squeeze are already claiming victims. Last month, Shanghai Chaori Solar Energy Science & Technology Co. became the first company to default in China’s $4.2 trillion bond market since the central bank started regulating the industry in 1997. Days later, news emerged of the collapse of closely held Zhejiang Xingrun Real Estate Co., based in the eastern town of Fenghua, with 3.5 billion yuan ($563 million) of debt.
“Cities in China are facing some serious real estate bubbles, and the bubbles in third-, fourth-tier cities have the risks of total collapse,” said Tao Ran, director of the China Center for Public Economics and Governance at Renmin University in Beijing, in a phone interview on March 31. “The central government and banks tightened credit in the property market because they realized the risks.”
Liu said three years ago he could get loans from China Construction Bank Corp. (939) and Agricultural Bank of China Ltd. for half the value of the land at about 6 percent to 7 percent interest. Now he’s forced to rely on “friends with connections” and pay rates of about 20 percent.
Nearby is a hole in the ground the size of a football field that will be a musical fountain.
The new Laohekou Number 1 Middle School stands under construction on the outskirts of Laohekou, Hubei Province, China, on Thursday, Feb. 20, 2014.
China Dreamland residential and tourism project by Sichuan Hengxinyuanda Investment Group stands under construction on the outskirts of Laohekou,
The Chinese Housing Ponzi Exposed: “As We Sell Our First Apartments, We’ll Have Cash Flow To Build The Next Stage”
it will provide some perspective on how from one of the most important industries for China’s suddenly cooling economy, housing has becoming nothing more (or less) than one giant Ponzi scheme.
here is continued uncertainty for bitcoin exchanges in China tonight as some large-volume exchanges reported verbal closure notices from banking partners today.
Exchanges OKCoin and Huobi said they had bank accounts closed as of Friday afternoon China time, posting the news on their respective sites.
China has still not ‘banned bitcoin’, despite certain rumors. The implied restrictions refer only to the way bitcoin exchange accounts are funded by their users, and there is no word that withdrawals from exchanges or any other bitcoin transactions are affected.
as of 10am on 4/17 we officially received notification from the Bank of China Beijing Baijiazhuang branch to close our account, and after verification by our senior management in Beijing, we are carefully making this public statement.”
CHBTC: Has the bank received specific directives in the form of documentation?
Bank: It is not convenient for us to answer that, but prior to this we did not know your company was engaged in the bitcoin business, and so since we can find and call you, you can understand that someone has been eyeing all the company accounts used to do bitcoin business, and proactively told us.
C: Must we close our account; can we just zero out our balance?
B: Well it is up to you, however you know that someone is eyeing your account, do you think that it would be appropriate [to keep it open]? since I am making this call to you today, the meaning should be very clear, and I hope that you guys won’t make it difficult for me, and I can’t be more explicit than this.
C: Can we know when you received the notice, was it before 4/15, or is it in the past two days?
B: It is not convenient for me to disclose the specific time, but for us we wouldn’t dawdle over such matters, so you can figure it out yourself.
One of many
CHBTC added that these messages came from just one of its banking partners, and it had not received any similar notices from other business associates. It was, however, preparing for that eventuality and would not be using personal bank accounts to fund exchange accounts in future.
BTC China’s CEO Bobby Lee told CoinDesk all of its bank accounts are still open.
“Contrary to some rumors, we still have not received any notices from any of our banks or the PBOC, requesting to close accounts. All of our customers can continue to use our banking deposit channels to fund their exchange accounts on BTC China,” he added.
Run on mineral water
Forget bank-runs, the water run has begun in China. Residents of the western city of Lanzhou rushed to buy mineral water earlier this month after local tap water was found to contain excessive levels of the toxic chemical benzene. But that is the tip of what is a massive problem facing the Chinese people. Not only do they suffer choking smog day after day, but, as The Business Times reports, sixty per cent of underground water in China which is officially monitored is too polluted to drink directly, state media have reported, underlining the country’s grave environmental problems.