Tag Archives: china
Bank Lending To Emerging Markets Soars To Record
http://www.ft.com/cms/s/0/20802e26-1e12-11e3-a40b-00144feab7de.html#ixzz2f3VWpQSH By Claire Jones, Economics Reporter Banks piled into emerging markets at a record pace earlier this year, highlighting the scale of the global search for yield that has partially reversed since the US Federal Reserve said it intended to slow its bond buying. Cross-border lending to emerging markets surged by $267bn, to an estimated $3.4tn, in the first quarter of 2013, the Bank for International Settlements said on Sunday. The BIS said the 8.4 per cent increase was by far the highest recorded, with the amount of interbank lending rising by almost $200bn, or 12 per cent. The so-called central bankers’ bank, which compiles what are widely regarded as the most comprehensive set of statistics on cross-border capital flows, said in its latest Quarterly Review that 85 per cent of the rise was accounted for by more lending to China, Brazil and Russia. The publication of the figures comes as the US Federal Open Market Committee gears up for its policy meeting, ending on Wednesday, when it could decide the timing and pace at which it will slow its $85bn worth of monthly bond purchases. With interest rates close to zero across advanced economies and liquidity abundant as a result of their central banks’ mass bond-buying sprees, credit has flowed into emerging markets in recent years as lenders and investors sought higher returns. According to the BIS data, interbank lending to emerging markets in the Asia-Pacific region alone has doubled since the investment bank Lehman Brothers collapsed five years ago. Lending to emerging markets has shown signs of retrenchment since Ben Bernanke, chairman of the Fed, signalled in May that the US central bank had begun to consider unwinding its exceptional monetary stimulus. The expectation of a return to higher interest rates in advanced economies in the years ahead has led to a retreat – particularly from emerging markets with large current account deficits such as India – although the pace of that retrenchment has slowed in recent weeks. According to the BIS data, the record rise in cross-border lending to emerging markets in the first quarter mainly reflected buoyant interbank lending, while cross-border credit that was extended to borrowers in China rose by $160bn, or 31 per cent. With international demand for Chinese assets growing, companies in the world’s second-largest economy can borrow at cheaper rates from lenders abroad and are reliant on banks headquartered off the mainland for foreign-currency loans to help fund their expansion overseas. The BIS data showed emerging market companies were also increasingly turning to debt markets in offshore financial centres such as Hong Kong to secure funds. Chinese businesses’ borrowing through offshore financial centres has soared from less than $1bn between 2001 and 2002 to $51bn in the 12 months to June. Of these bonds, 16 per cent is denominated in renminbi, with most of the rest – 77 per cent – in dollars. Though there are restrictions on bringing capital into China, businesses apply for permission to bring funds borrowed abroad into the domestic market. Overseas lending to Brazil expanded by 14 per cent, or $34bn; for Russia, the figure was $29bn, an 18 per cent rise. Both were the largest quarterly increases on record. Euro area banks increased their lending to emerging markets for the first time since the second quarter of 2011. Lenders in France, the Netherlands, Germany and Luxembourg accounted for most of the growth. In contrast to the rapid rise in lending to emerging markets, cross-border claims on banks in the advanced economies slipped by $341bn, or 1.5 per cent. Though bank lending to emerging markets could remain strong as long as growth remains so, the end of quantitative easing and an eventual rise in interest rates in advanced economies are likely to slow the pace of cross-border flows. Additional reporting by Simon Rabinovitch. Continue reading
Novozymes Sticks to Sales Goal as China Slows
By Bloomberg News – Sep 6, 2013 (Corrects to say sugarcane-bagasse plants in fifth paragraph of story originally published Sept. 5) Novozymes A/S (NZYMB) , the largest maker of industrial enzymes, expects to achieve a target to sell its output to more than 15 cellulosic-ethanol plants by 2017 even as markets in the U.S. and China slow. “That will happen, so I’m not so concerned,” Peder Holk Nielsen, chief executive officer of the Bagsvaerd, Denmark-based company, said in an interview in Beijing. Novozymes, which hasn’t said how many cellulosic-ethanol plants it already sells to, seeks to add clients as governments study using more biofuel to replace gasoline. Its expansion in Brazil , where use of sugarcane biogas is growing, was given a boost with its 2012 acquisition of a stake in Beta Renewables SpA , which uses Novozymes products to break down non-food crops or waste and turn them into the sugary liquids used in biofuels. Beta Renewables has sold a technology license to Brazil for production of biofuels that use agricultural waste as feedstock, Nielsen said yesterday. The CEO expects more sugarcane-bagasse plants to open in the Latin American country, the world’s top sugar producer, around 2015. Residue from sugarcane processing “already sits in the backyard of ethanol plants, so it’s very available and makes it easiest for the Brazilians to go for it.” Biofuels growth has eased in North America and China as economic expansion ebbs. The U.S. corn-ethanol market shrank last year after overproduction caused a glut and corn prices soared, and will recover slowly, Nielsen said. China doesn’t yet offer subsidies to blend cellulosic ethanol into gasoline, curbing demand. Expansion Slows “Back in 2008, Chinese companies had very aggressive plans, so did American companies, and everything got delayed because of the crisis at least outside China and a lack of political commitment to do it,” Nielsen said. Beta Renewables has a cellulosic-ethanol demonstration plant in Crescentino, Italy , that started in the first half and will produce as many as 20 million gallons a year. Producers of biomass use the facility to process their material and can buy enzymes — the catalysts needed for conversion — from Novozymes, Nielsen said. “There’s a long line of partners waiting to get in. We’re working to get the plant running at full speed continuously,” he said. He expects the site to operate at maximum capacity this year. Novozyme’s bioenergy division accounted for 15 percent of sales in the first half. The household-care unit contributed the biggest share at 35 percent. To contact Bloomberg News staff for this story: Feifei Shen in Beijing at fshen11@bloomberg.net To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net Continue reading
China Corn Imports Could Reach 20-30 Million Tonnes
Reuters | September 6, 2013 China could import 20 million to 30 million tonnes of corn a year to cover growing supply shortages, a researcher with a government think tank said on Thursday, as much as four times current levels. This would be around a quarter of globally traded corn and up to twice as much as number one importer Japan buys, a boon to exporters like the United States, Ukraine and Argentina. While Xu Xiaoqing, the head of the rural department at the State Council’s Development and Research Centre, didn’t give a timeframe, his comments to a conference are another sign that China is relaxing its policy of being self sufficient in the feed grain. The think tank, an agency of the country’s cabinet, doesn’t decide policy but does directly advise and issue policy recommendations to Chinese leaders. “For corn, we can maintain basic self-sufficiency and whenever there is a shortfall, we could import – there would be no problem importing 20-30 million tonnes,” said Xu. “But we should keep self-sufficient in staple grains of wheat and rice.” Imports are expected to rise to 7 million tonnes in 2013/14, 3.3 percent of China’s total domestic output of 211 million tonnes. Xu’s comments reflect a wider debate in government about the country’s food security goals in the light of soaring demand, rapid urbanisation, declining farmland and a shortage of agricultural labour. Agriculture minister Han Changfu on Sunday told state media that corn imports would have to rise gradually in order to meet feed demand, reversing his 2012 vow that China would not allow itself to become dependent on foreign supplies. China could tweak its grain security strategy by allowing its corn self-sufficiency rate to fall to around 80 percent, Xu said. China has long vowed to maintain a 95-percent rate of self-sufficiency in major staples, but imports of rice and corn have been steadily rising, and analysts also expect the country to start sourcing large quantities of meat from overseas. Xu said China’s demand for beef has risen more than twice as quickly as domestic production in recent years, driving up prices. He said meat consumption would continue to rise as China urbanises, and imports could be increased. Continue reading
