Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Tuesday, Jan. 21:
PBoC pumps cash to banks ahead of Chinese New Year
The People’s Bank of China opened on Monday a 120 billion yuan (US$19.83 billion) worth borrowing window to the interbank market through its Standing Lending Facility, a pilot channel similar to the Federal Reserve’s discount window and made available to financial institutions in 10 selected provinces when interbank lending rates top certain levels. Also as part of a move to soothe recent cash squeeze ahead of the Chinese New Year holidays, the central bank will resume its sales of reverse repurchase contracts to provide short-term liquidity to lenders.
China growth slows to 14-year low at 7.7 percent
China has posted 7.7 percent economic growth for 2013, the lowest in 14 years, with an inflation rate of 2.6 percent, the National Bureau of Statistics said on Monday. The growth rate came amid a dip in the economy in the second quarter last year. It compares to a 7.5 percent government target and in contrast to a record high aggregate social financing levels as unveiled by the central bank earlier, reflecting that a major portion of the lending was used for repaying old debts. Researchers with the State Information Center forecast that the country will be able to achieve an annual expansion pace of at least 7 percent for the next decade.
China South City issues US$300 million bonds
China South City Holdings Ltd. (01668.HK) has raised US$300 million through a bond issue Monday for refinancing and operational purposes, according to a term sheet obtained by HKEJ. The 5-year bonds bear an annual interest rate of 8.5 percent, way below the 13.5 percent level of two batches of preferred notes the company issued in 2011 and 2012 of the same tenor. Sources said the bond issue has drawn over US$1.6 billion in subscription, possibly due to the recent surge in the company’s share price following a stake purchase by Tencent Holdings Ltd. (00700.HK).
Top government officials differ over public finance management
Two top government officials in Hong Kong were divided in tone, if not substance, over the principle of fiscal prudence. Financial Secretary John Tsang reiterated his concern Monday about growing pressure on public finances. He called for early moves to cut spending, raise revenue and keep savings. Chief Secretary Carrie Lam said separately that public finances remain strong, dismissing fears that the government would not be able to afford spending. Former financial services chief Frederick Ma said although the city’s reserves are good, the city should prepare for rainy days.
Ming Pao journalists protest plan to name Malaysian newsman as editor
More than 100 journalists of the Chinese language Ming Pao newspaper staged a silent protest outside their office building last night against the management’s refusal to heed their demands over the post of chief editor. Staff said the management still preferred to install a veteran journalist from Malaysia, Chong Tien Siong, to replace Kevin Lau, who was formally transferred to head their digital media unit yesterday. Editorial Adviser Cheung Kin-bor will be acting chief editor before the formal replacement is made. Staff said Chong did not meet their requirements for being familiar with Hong Kong and having the trust of editorial staff.
Economic ‘deleveraging’ set to slow China GDP growth in 2014
China’s central bank needs to find an effective balance between prevention of credit risk and the maintenance of stable economic growth as capital costs are set to rise in the process of economic and financial deleveraging. The difficulty in regulating monetary policy will become the major source of risk of economic fluctuations this year. China’s gross domestic product growth came down from 9.3 percent in 2011 to 7.7 percent in 2013. The growth pace is likely to slow further this year due to economic restructuring and deleveraging. Boosting the efficiency of the use of capital is vitally important in providing a solid base for stable economic growth this year.
Better balance between interests of mainland migrants and middle class needed, Lam says
New mainland migrant families are the major beneficiaries of the new subsidy for low-income families announced by Hong Kong Chief Executive Leung Chun-ying in his policy address last week. The values of “old Hong Kong middle class” have been seen as the major source of trouble for the government. The move to help grass-roots migrant families become middle class is in line with Leung’s pledge to abandon short-sighted thinking and plan for the long term, HKEJ founder Lam Hang-chi wrote. The policy bias in favor of grass-roots cannot be faulted. But should the new generation of “old Hongkongers” be ignored?
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