CHINA

thelivyjr
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Re: CHINA

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MARKETWATCH

"Bank of China sold oil’s May contract into a historic implosion in crude — and retail investors may have gotten crushed"


By Sunny Oh

Published: April 23, 2020 at 9:29 a.m. ET

As the dust settles from a record-breaking crude selloff, it’s turning out that retail investors in China may have been on the hook.

Chinese banks hawked wealth-management products tracking U.S. oil futures, marketed with flashy labels like “crude oil treasure” to ordinary Chinese.

Buyers are now crying foul over the losses as some investors report they now owed money to banks when crude briefly fell below $0 on Monday.


Local news reports say these oil-related funds were slammed by the strained liquidity in energy trading this week as banks offering these products needed to sell their soon-to-expire futures for the most recent contract and buy the following month’s futures to maintain exposure to oil markets.

But the combination of an oil surplus and winnowing demand saw prices for U.S. benchmark crude futures trade in subzero territory for the first time in history as traders and other speculative investors attempted to avoid taking delivery of physical oil shipments.

Bank of China was rolling over West Texas Intermediate U.S. futures for May delivery on Monday, only a day before they were set to expire, unlike other Chinese banks who rolled over their oil futures at earlier dates, reported Caixin, citing traders familiar with the matter.

It’s unclear how many May contracts they needed to sell on Monday.

The date of the rollover had been pre-arranged, said Caixin, citing sources at the Bank of China.

Faced with a glut of oil swirling around the world, Bank of China sold the May contract into a maelstrom of selling, with the now-defunct contract eventually settling at negative-$37.63 a barrel on Monday.

Trading was suspended for these Chinese oil funds the following day, the bank said.

Although trading in Bank of China’s products were theoretically scheduled to end at 10 a.m. Eastern time Monday, when May crude futures were still trading above $0, the absence of demand and liquidity led to these oil funds taking losses when the prices of the crude contracts fell and then slid deeper into negative territory.

Angry retail investors are now reporting they had lost all their principal, while some even said they now owed money to Bank of China, even though investors are prohibited from borrowing money to buy the funds, according to Chinese social-media posts.

Buyers of Bank of China’s oil-related funds are nursing 600 million yuan ($85 million) of losses, with two thirds of that sum due to crude futures falling into subzero territory on Monday, reported Bloomberg, citing sources familiar with the matter.

Law firms in China have urged investors to sue Bank of China in order to receive compensation for their losses.

The historic collapse in prices had investors scratching their heads and consulting experts to determine how to react to a unprecedented decline in crude prices that ultimately meant traders were willing to pay to have oil taken off their hands a day before contract expiration.

Bank of China issued a statement saying it had consulted with exchange operator CME Group on settlement arrangements when crude prices traversed into subzero territory earlier this week, and confirmed that its oil funds would settle roughly where WTI settled on Monday.

Officials at the CME, one of the biggest exchanges for oil futures trading, didn’t immediately respond to a request for comment.

“At present, all the main investors will settle their trades based on the exchange prices."

"We’ve also completed the May contract expiry process according to earlier agreements,” Bank of China said in its statement.

Going forward, the bank also said it would restrict subscriptions to its oil-related funds due to “market and settlement risks,” following similar moves by other competitors like China Construction Bank.

That drama in Asia comes as the United States Oil Fund came under pressure this week.

The biggest exchange-traded fund tracking the performance of oil, it is now down more than 80% year-to-date.

After Monday, energy prices started to stabilize.

June futures for WTI crude were trading at around $16.6 a barrel.

In stocks, the S&P 500 and Dow Jones Industrial Average gained around 2% on Wednesday.

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Re: CHINA

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MARKETWATCH

"White House report blasts Chinese ‘malign activities’"


By Associated Press

Published: May 21, 2020 at 7:57 a.m. ET

Beyond its hard-hitting rhetoric against China over its handling of the coronavirus, the White House has issued a broad-scale attack on Beijing’s predatory economic policies, military buildup, disinformation campaigns and human rights violations.

The 20-page report does not signal a shift in U.S. policy, according to a senior administration official, who was not authorized to publicly discuss the report and spoke only on the condition of anonymity, but it expands on President Donald Trump’s get-tough rhetoric that he hopes will resonate with voters angry about China’s handling of the disease outbreak, which has left tens of millions of Americans out of work.

“The media’s focus on the current pandemic risks missing the bigger picture of the challenge that’s presented by the Chinese Communist Party,” Secretary of State Mike Pompeo said Wednesday before the White House released its report.

“China’s been ruled by a brutal, authoritarian regime, a communist regime since 1949."

"For several decades, we thought the regime would become more like us — through trade, scientific exchanges, diplomatic outreach, letting them in the World Trade Organization as a developing nation."

"That didn’t happen,” he said.

“We greatly underestimated the degree to which Beijing is ideologically and politically hostile to free nations."

"The whole world is waking up to that fact.”

Later in the day, the State Department announced that it had approved the sale of advanced torpedoes to the Taiwanese military, a move sure to draw a rebuke from Beijing, which regards the island as a renegade province.

The department said it had informed Congress of the $180 million sale of heavy-weight torpedoes, spare parts, support and testing equipment, which “will help improve the security of (Taiwan) and assist in maintaining political stability, military balance, and economic progress in the region.”

While pushing back on China, Trump has sometimes uttered contradictory statements.

He has talked about having a great personal relationship with Chinese President Xi Jinping yet has repeatedly denounced China for not doing more to stop the virus from spreading across the world.

He’ll criticize China, then say he wants Beijing to sign Phase II of a trade deal and join the United States and Russia in a three-way nuclear arms control treaty.

Late Wednesday, Trump wrote on Twitter that China’s “massive disinformation campaign” is intended to help Joe Biden win the 2020 presidential election.

In the past 20 years, the U.S. believed that if it opened its markets wider, invested more money in China and provided greater access to top U.S. technology and training for Chinese military officers that somehow this would cause China to liberalize, the official said.

Instead, China is more authoritarian than at any time since Beijing killed anti-government protesters on Tiananmen Square in 1989, and the Chinese Communist Party is increasingly asserting its political ideas across the globe.

The U.S. and China established diplomatic relations during the Nixon administration.

“More than 40 years later, it has become evident that this approach underestimated the will of the Chinese Communist Party to constrain the scope of economic and political reform in China,” the report said.

“Over the past two decades, reforms have slowed, stalled, or reversed.”

According to the report, the Trump administration sees “no value” in engaging with Beijing for symbolism and pageantry.

“When quiet diplomacy proves futile, the United States will increase public pressure” on China.

The latest example of U.S. and China power competition is playing out at the World Health Organization.

At the U.N. health agency’s annual assembly this week, Xi joined by video conference to offer more money and support.

Meanwhile, Trump railed against the WHO in a letter accusing it of covering up the coronavirus outbreak with China — and threatening to permanently halt U.S. funding that has been its main financial lifeblood for years.

China also has been engaged in a military buildup, has engaged in cyber hacking and Beijing’s pledge to end predatory economic practices “is littered with broken and empty promises.”

China promised during the Obama administration that it would stop government-directed cyber theft of trade secrets for commercial gain and restated the same promise in the first two years of the Trump administration, the report said.

In late 2018, however, the U.S. and a dozen other countries reported that China was hacking computers to target intellectual property and steal business information.

“Since the 1980s, Beijing has signed multiple international agreements to protect intellectual property."

"Despite this, more than 63 percent of the world’s counterfeits originate in China, inflicting hundreds of billions of dollars of damage on legitimate businesses around the world,” the report said.

The Trump administration also is upset at how China continues to argue to the World Trade Organization that it is a “developing country,” even though it is the top importer of high-tech products and ranks second only to the U.S. in terms of gross domestic product, defense spending and outward investment.

Under the Xi government, Chinese officials have purged political opposition; bloggers, activists and lawyers have been unjustly prosecuted; stringent controls have been imposed to censor not only media, but universities, businesses and non-governmental organizations; citizens and corporations have been targeted with surveillance; and people perceived as dissidents have been subjected to arbitrary detention, torture and abuse.

China retains its non-market economic structure and state-led approach to trade and investment, the report said.

Political reforms have likewise atrophied or reversed and distinctions between the government and the Chinese Chinese Party are eroding.

“Xi’s decision to remove presidential term limits, effectively extending his tenure indefinitely, epitomized these trends,” the report said.

“In a stark example of domestic conformity, local officials publicized a book burning event at a community library to demonstrate their ideological alignment to ‘Xi Jinping Thought.’”

Chinese authorities also have detained more than 1 million Uighurs and members of other ethnic and religious minority groups in indoctrination camps where many endure forced labor, ideological indoctrination and physical and psychological abuse.

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Re: CHINA

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THE HILL

"Trump steps up effort to blame China for coronavirus"


By Morgan Chalfant and Niv Elis

05/04/20 05:14 PM EDT

The Trump administration is escalating an effort to blame China for the novel coronavirus pandemic as global pressure grows on Beijing to cooperate with an investigation into the origins of the outbreak.

President Trump, who has endured consistent scrutiny for his own lagged response to the virus domestically, has accused China of covering up the outbreak and suggested that the virus wouldn’t have spread globally if Beijing had been more transparent to begin with.

“I think they made a horrible mistake and they didn’t want to admit it."


"We wanted to go in."

"They didn’t want us there,” Trump said during a Fox News virtual town hall Sunday.

“This virus should not have spread all over the world."

"They should have put it out.”

The Trump administration is weighing steps to punish Beijing, including leveling new tariffs on imports from China.

After initially complimenting China’s handling of the virus, Trump has hardened his rhetoric as COVID-19 has spread across the United States, infecting more than 1 million Americans and devastating the U.S. economy.

Trump and Secretary of State Mike Pompeo have claimed there is significant evidence that the virus emanated from a lab in Wuhan — though neither has actually provided any evidence.

The intelligence community is investigating the virus’s origins, including whether it could have come from a lab.

Heath and virology experts broadly believe the virus was transferred from an animal to a human in nature.

World Health Organization (WHO) officials at a Monday briefing said evidence based on nearly 15,000 fully sequenced samples of the coronavirus suggested it is of natural origin and that they had seen no evidence a laboratory was involved.

“We have not received any data or specific evidence from the United States government relating to the purported origin,” said Mike Ryan, director of the WHO's emergency program.

“From our perspective, this remains speculative.”

Trump has also targeted the WHO, halting U.S. funding to the organization and saying it has been biased toward China.

He has more broadly criticized China’s handling of its outbreak, arguing it “could have been stopped at the source.”

This is an argument that has been joined by U.S. allies, with Australia and European countries pressing for an investigation into the novel coronavirus’s origins.

Health experts say China could have helped prevent the size of the international outbreak if the country had acted more quickly to contain the coronavirus in Wuhan and more readily shared critical details about it with the international community, such as evidence of human-to-human transmission.

“Wherever that first jump occurs, whether it's from animal to human or lab to human, it doesn't really matter."

"Whoever, wherever that happens, you have to overcommunicate,” Deborah Birx, a top health official on the White House coronavirus task force, said on “Fox News Sunday.”

“That didn't happen, and it didn't happen until late, and you know it didn't happen until mid-January that they even talked about human-to-human transmission,” Birx continued.

“And when you see how many countries now are infected, that did fan the virus across the globe.”

The administration is considering stripping Beijing of its sovereign immunity or withholding U.S. debt to China, according to The Washington Post.

Trump first suggested last week that he could slap new tariffs on China but was noncommittal when asked about his plans on Sunday.

“It’s the ultimate punishment."

"I will tell you that,” Trump said.

“I don’t like to tell you what because we’re all playing a very complicated game of chess or poker.”

Matthew Funaiole, a senior fellow at the Center for Strategic International Studies’s China Power Project, said the use of tariffs could conflate the current dust-up with Trump's ongoing trade war with China.

“Any tit-for-tat action between the two sides could very well get lumped in with the ongoing trade dispute, especially if tariffs come into play,” he said.

The vast majority of tariffs Trump imposed on China over the last few years have remained in effect through the pandemic, though the administration allowed some exceptions for materials related to masks and ventilators.

Tariffs remain in place on materials for hand sanitizer, thermometers and disinfectant wipes, according to manufacturers, who have called for a reduction.

Trump trade adviser Peter Navarro said he expected new laws to limit government purchases abroad, at least for government agencies.

“Buy American is going to be the law of the land, I believe, soon at HHS, DOD, the Veterans administration,” he told Fox News Monday, referring to the Department of Health and Human Services and the Department of Defense.

Rep. Chip Roy (R-Texas), a Trump ally in Congress, noted that China could choke off America's key supplies.

“Americans have seen in real time the extent to which we are dependent on China for drugs, medical supplies and equipment,” he said.

“If the Chinese wanted to put us in a serious bind, they could withhold these lifesaving drugs from the United States.”

On Monday, he introduced a bill to incentivize pharmaceutical and medical companies to move their supply lines back to the U.S.

Treasury Secretary Steven Mnuchin threatened harsh retaliation if China pulls back from its promise to buy an additional $50 billion of agricultural products from the United States, a condition it seems unlikely to meet.

“I have every reason to expect that they honor this agreement, and if they don't, there will be very significant consequences in the relationship and in the global economy as to how people would do business with them,” Mnuchin told Fox Business on Monday.


Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations, argued that taking retaliatory measures against Beijing could backfire by setting a damaging precedent and potentially discourage countries from reporting new outbreaks in the future.

“Essentially there is no effective mechanism to really hold a country accountable,” Huang said.

“Secondly, this could just open a can of worms if we proceed to do so.”

Funaiole agreed, saying China could use the United States’s own poor handling of the pandemic against it.

“Whatever actions China does take will likely be designed to paint the administration as spreading anti-Chinese propaganda and to question U.S. global leadership,” Funaiole said.

“U.S. credibility abroad is already suffering — and not just because of the U.S. response to the coronavirus — which provides low-hanging fruit for the Chinese to pluck,” he added.

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thelivyjr
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Re: CHINA

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MARKETWATCH

"Trump says U.S. will quit World Health Organization, begin to revoke special treatment for Hong Kong as China brawl ramps up"


By Robert Schroeder

Published: May 29, 2020 at 4:30 p.m. ET

President Donald Trump on Friday said the U.S. is quitting the World Health Organization and is beginning to revoke Hong Kong’s special status, in an escalation of tension with China.

Speaking in the White House Rose Garden, Trump also said the U.S. would move to sanction Chinese officials over what he called the “smothering” of Hong Kong, but the president steered clear of any discussion of reneging on a trade deal between the two countries, or wider sanctions.

U.S. stocks reversed early losses to post a mixed finish Friday after Trump announced the measures to be taken.

Trump also announced entry into the U.S. for some Chinese nationals would be suspended and said the U.S. would “study” the accounting practices of Chinese companies listed on U.S. exchanges.

Trump’s move came amid simmering tension between Beijing and Washington over China’s management of the coronavirus pandemic, as well as China’s tightening of controls on Hong Kong.

U.S. Secretary of State Mike Pompeo this week declared Hong Kong to be no longer autonomous from China, after the country’s legislature approved a resolution imposing national-security laws.

Trump said he was beginning the process of revoking a policy granting Hong Kong special treatment by the U.S., including its preferential treatment as a customs and travel territory separate from China.

“My announcement today will affect the full range of agreements that we have with Hong Kong, from our extradition treaty, to our export controls and technologies,” said Trump.

Amid criticism of his administration’s own months-long denial of the risk posed by the coronavirus, Trump has accused China of covering up the initial outbreak, saying earlier this month on a Fox News program, “I think they made a horrible mistake and they didn’t want to admit it.”

Both Trump and Pompeo have claimed there is evidence the virus came from a lab in Wuhan, but neither has produced evidence.

Pompeo has since backed away from the claim.


The U.S.’s top infectious-diseases official, Dr. Anthony Fauci, has said that the likeliest source of the pathogen remains a Hubei Province wet market.

The president charged that the WHO failed to response to the coronavirus pandemic because China has “total control” over the organization.

House Speaker Nancy Pelosi, a California Democrat, has called Trump’s April decision to pause U.S. funding to the WHO “illegal.”

Trump and presumptive Democratic presidential nominee Joe Biden, meanwhile, have attacked each other as being too soft on China.

Biden has a lead over Trump in national polls ahead of the November election, and has an edge over Trump in several important swing states.

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Re: CHINA

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Bloomberg

"China Halts Some U.S. Farm Imports, Threatening Trade Deal"


Bloomberg News

‎June‎ ‎1‎, ‎2020‎ ‎4‎:‎08‎ ‎AM, Updated on ‎June‎ ‎1‎, ‎2020‎ ‎10‎:‎21‎ ‎AM

* Sinograin, Cofco told to halt soy imports as relations worsen

* Move comes after Trump chastises Beijing over Hong Kong

Chinese government officials told major state-run agricultural companies to pause purchases of some American farm goods including soybeans as Beijing evaluates the ongoing escalation of tensions with the U.S. over Hong Kong, according to people familiar with the situation.

State-owned traders Cofco and Sinograin were ordered to suspend purchases, according to one of the people, who asked not to be identified discussing a private matter.

Chinese buyers have also canceled an unspecified number of U.S. pork orders, one of the people said.

Private companies haven’t been told to halt imports, according to one of the people.

The halt is the latest sign that the hard won phase-one trade deal between the world’s two biggest economies is in jeopardy.

While Chinese Premier Li Keqiang last month reiterated a pledge to implement the agreement that was inked in January, tensions have continued to escalate since then amid a standoff over Beijing’s move to tighten its grip on Hong Kong.

Beijing’s move eroded the risk-on sentiment that had been prevailing over markets.

The S&P 500 Index was little changed, while soybean futures in Chicago gained 0.4% after falling as much as 0.8% earlier.

Shares of Archer-Daniels-Midland Co. were down 1.7% at $38.64.

“The market has already seen the deteriorating relationship between the China and the U.S. and many think that with the slow progress of Chinese commodity buying so far, the trade deal’s future was already in jeopardy,” said Michael McDougall, a managing director at Paragon Global Markets in New York.

Hong Kong

The measures to halt imports come after President Donald Trump on Friday lobbed a barrage of criticism at Beijing after it moved to impose controversial new national security legislation on Hong Kong.

Critics say it will crack down on dissent and undermine the “one country, two systems” principle that has kept Hong Kong autonomous of the mainland since the 1997 handover from the British.

Cofco and Sinograin are China’s key importers of farm goods.

They had been making pricing inquiries for 20 to 30 cargoes of U.S. soybeans on Friday but held off on going through with purchases after Trump indicated he would punish Chinese officials, one of the people said.

Beijing is waiting to see what steps Trump takes before deciding its next move, one of the people said.

Nobody from the commerce ministry responded to a fax seeking comment.

Officials from Sinograin and Cofco also didn’t respond to calls.

Trump’s Threats

Trump said the U.S. would begin the process of stripping some of Hong Kong’s privileged trade status, without detailing how many changes would take effect and how many exemptions would apply.

He also promised sanctions against Chinese and Hong Kong officials “directly or indirectly involved” in eroding Hong Kong’s autonomy, though stopped short of giving specifics.

Equity investors had reacted positively to Trump’s remarks, as he didn’t provide any details or time-frame for what actions might come next.

It’s unclear how soon the U.S. would move on a range of options, from sanctioning Chinese officials to imposing tariffs on Hong Kong to attacking the territory’s financial stability.

While Trump has periodically threatened to call off the “phase one” trade deal, his top economic advisers have suggested it would continue.

Larry Kudlow, director of the National Economic Council, told CNBC on Thursday that the trade agreement “does continue to go on for the moment and we may be making progress there.”

The two sides have traded blows over a range of issues from the coronavirus to Taiwan in recent weeks, and China’s Foreign Minister Wang Yi warned during high-profile legislative meetings in Beijing that some in America were pushing relations to a “new Cold War,” and urged the U.S. to give up its “wishful thinking” of changing China.

China had agreed to buy U.S. farm goods worth about $36.5 billion for 2020 as part of the phase-one trade deal signed in January.

However, the coronavirus outbreak roiled those plans, with China only managing to import $3.35 billion in American agricultural products in the first three months of the year, the lowest for that period since 2007, according to data from the U.S. Department of Agriculture.


Still, as China started to gradually reopen its economy from the virus-led lockdown, it had increased its pace of imports, including a more-than 1-million ton cargo of American soybeans in just two weeks in May, and rare purchases of U.S. soybean oil and ethanol.

But then tensions between the U.S. and China began escalating, with Trump blaming the Asian nation for misleading the world about the scale and risk of the coronavirus outbreak.

The fallout filtered through to the commodities markets, with China opting to buy Brazilian soy instead of American beans.

— With assistance by Anna Kitanaka, Shuping Niu, Steven Yang, Alfred Cang, and Isis Almeida

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Re: CHINA

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MARKETWATCH

"Trump says U.S. has option of 'decoupling' from China, contradicting his trade chief"


By Robert Schroeder

Published: June 18, 2020 at 4:25 p.m. ET

President Donald Trump on Thursday said the U.S. has the option of "a complete decoupling from China," a day after his top trade adviser said such a move isn't a reasonable policy.

"It was not Ambassador Lighthizer's fault (yesterday in Committee) in that perhaps I didn't make myself clear, but the U.S. certainly does maintain a policy option, under various conditions, of a complete decoupling from China," Trump wrote in a tweet.

On Wednesday, U.S. Trade Representative Robert Lighthizer told lawmakers that "I don't think [decoupling is] a policy or reasonable policy option at this point."

Lighthizer told House lawmakers that the U.S.-China trade deal is on track.

Trump's tweet came a day after excerpts of former national security adviser John Bolton's book were released, including one in which Bolton says Trump asked Chinese President Xi Jinping to buy U.S. farm products in order to help him win agricultural states in the November election.

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Re: CHINA

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MARKETWATCH

"Mnuchin says he expects China will live up to trade commitments"


By Robert Schroeder

Published: June 23, 2020 at 3:01 p.m. ET

Treasury Secretary Steven Mnuchin said Tuesday he expects China will live up to its trade deal with the U.S., in a statement that came after some confusion about the state of trade relations between Beijing and Washington.

Monday night, Trump trade adviser Peter Navarro said the U.S.-China trade deal was "over," but shortly afterwards said his comments were taken out of context.

President Donald Trump also followed up by saying the deal was "fully intact."

Speaking during a conference sponsored by Bloomberg, Mnuchin added the U.S. and other nations are seeking more transparency from China over the coronavirus, and also said he's expecting a new round of coronavirus stimulus to pass Congress in July.

The Dow Jones Industrial Average was up more than 200 points as Mnuchin spoke Tuesday, following a round of late-night volatility after the Navarro comments.

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Re: CHINA

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BLOOMBERG

"China State Funds Start Selling in Warning Sign for Stock Rally"


Bloomberg News

‎July‎ ‎9‎, ‎2020‎ ‎10‎:‎28‎ ‎PM

Updated on ‎July‎ ‎10‎, ‎2020‎ ‎4‎:‎15‎ ‎AM

* PICC slumps 7.4% as national pension fund plans to cut holding

* Chinese stocks have added $1 trillion in value this week


China acted to cool the speculative frenzy in its $9.5 trillion stock market, ending a euphoric eight-day surge that had fueled worries of a new bubble in the making.

Signs of Beijing’s unease over the rally’s speed emerged late Thursday, when a pair of government-owned funds announced plans to trim holdings of stocks that soared this week.

On Friday the state-run China Economic Times warned about the dangers of a “crazy” bull market, while Caixin reported that regulators had asked mutual fund companies to cap the size of new products.


Traders said the moves amounted to a warning from Chinese officialdom that the country’s world-beating equity boom has gone too far, too fast.

While cheerleading from state-run media helped ignite gains at the end of last month, authorities appear keen to engineer a steady bull market rather than a repeat of the bubble that ended in a $5 trillion crash five years ago.

“The signal could not be clearer -- stocks have just become too hot for the regulators’ liking,” said Niu Chunbao, a fund manager at Shanghai Wanji Asset Management Co.

“A slight dip or so may put their minds more at ease at this point.”

The SSE 50 Index of Shanghai’s largest stocks ended the day 2.6% lower.

The gauge had closed Thursday within 2 percentage points of its intraday peak in 2015.

Chinese officials have plenty of reasons to want a rising stock market.

The wealth effect could help revive virus-crushed consumer demand, and higher share prices will make it easier for indebted companies to finance themselves.

Investor optimism has also spilled into Hong Kong, helping to ease concern that China’s tightening political grip on the city will end its status as a financial hub.

But authorities also want to avoid a replay of 2015, when they were wrong-footed by both the scale of the stock market’s boom and severity of its bust.

Beijing’s fumbled response to the crash eroded its reputation for competent economic management and saddled millions of individual investors with losses.


China’s National Council for Social Security Fund -- the country’s national pension fund -- said Thursday it intends to sell a stake of as much as 2% in People’s Insurance Company (Group) of China Ltd.

The fund, which oversees about 2.2 trillion yuan ($314 billion) in assets, said the sale was part of its “regular divesting activities.”

The stock dropped 7.4% in Shanghai, the most in five months.

The National Integrated Circuit Industry Investment Fund Co. -- a far smaller state-backed semiconductor fund aimed at fostering China’s homegrown chipmakers -- announced plans to offload shares in three firms.

Textile maker Wuxi Taiji Industry Co., Shenzhen Goodix Technology Co., and Beijing BDStar Navigation Co. fell at least 3.8%.

Foreign-based funds turned net sellers of Chinese shares for the first time this month on Friday, dumping a net 4.4 billion yuan, the most since late March.

They had pumped a net 63 billion yuan across the border via exchange links in July.

Chinese stocks had added about $1 trillion in value this week -- far outpacing gains in every other market worldwide amid signs of euphoria among the nation’s investing masses.

Turnover has soared, margin debt is rising at the fastest pace since 2015 and online trading platforms have struggled to keep up with demand.

While the reaction from Beijing has been swift this time, it pales in comparison to the heavy-handed trading restrictions imposed after the 2015 crash.


As well as warnings from state media and caps on equity funds, China’s securities regulator took some concrete steps Wednesday to limit speculative behavior, publishing a list of 258 illegal margin financing platforms.

Managing a slow bull run in China’s momentum-driven stock market has always been a challenge for Beijing.

Whether current policies will achieve that goal remains to be seen.

One retail investor said she made the most of Friday’s losses to load up on more shares.

“It’s still just the middle of the rally,” said 30-year-old Jess Huang, who works at a state-owned enterprise in Beijing.

— With assistance by Sharon Chen, April Ma, Amanda Wang, and Gregor Stuart Hunter

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Re: CHINA

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REUTERS

"Chinese banks must brace for surge in bad loans, regulator says"


11 JULY 2020

BEIJING (Reuters) - China's banks should brace for a big jump in bad loans due to coronavirus-induced economic pain, the financial regulator said on Saturday, noting the deterioration of asset quality at some small and mid-sized financial institutions was accelerating.

China's Banking and Insurance Regulatory Commission said in a statement that profit growth would slow sharply at some banks while others could see profits decline.

If banks were to make the minimum amount of provisions for their non-performing loans, which some have yet to do, profits for the sector would fall by more than 350 billion yuan ($50 billion), the statement said.

Data from the commission shows that Chinese commercial banks booked 2 trillion yuan in profits in 2019, up 8.9% from a year earlier.

Outstanding non-performing loans in the sector totalled 3.6 trillion yuan as of end-June, while the bad loan ratio rose to 2.10%, 0.08 percentage points higher than the beginning of the year, the statement said.

Small firms have been allowed to delay loan and interest payments and the central government has called on the country’s financial institutions to sacrifice 1.5 trillion yuan in profits this year to help counter the economic impact of the virus on companies.

Beijing has also allowed local governments to use the proceeds of special bonds to replenish the capital of certain small banks.

The regulator warned of illegal fund flows into real estate and the stock market, and of renewed risks in the shadow banking sector without elaborating.

It also vowed to strengthen regulation of capital flows and crack down on speculation in the financial sector to prevent asset bubbles.

(Reporting by Lusha Zhang, Cheng Leng and Ryan Woo; Editing by Edwina Gibbs)

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Re: CHINA

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FOX NEWS

"Devastating China flooding puts controversial Three Gorges Dam under new scrutiny - Questions are being raised about the dam's impact on floods and if the massive structure itself may be at risk"


By Travis Fedschun | Fox News

15 JULY 2020

The second-highest rainfall that's swamped China in more than a half-century has fueled new questions about the world's biggest hydroelectric facility, billed as helping to tame floodwaters.

Since last month, at least 141 people have died and around 28,000 homes have been damaged in the Yangtze River region, affecting virtually all of mainland China.


Vice Minister of Emergency Management Zheng Guoguang told reporters on Monday that the Yangtze, Asia's longest river, and parts of its watershed have seen the second-highest rainfall since 1961 over the past six months.

But after weeks of devastating flooding, questions are being raised about the Three Gorges Dam's impact on Yangtze floods and if the massive structure itself may be at risk.

“One of the major justifications for the Three Gorges Dam was flood control, but less than 20 years after its completion we have the highest floodwater in recorded history,” David Shankman, a geographer with the University of Alabama who studies Chinese floods, told Reuters.

“The fact is that it cannot prevent these severe events.”


The Three Gorges Dam was completed officially in 2006.

Its power operation went online in 2012, and it is one of China’s most expensive and questionable developmental projects.

The dam also was touted as the best way to end centuries of flooding along the Yangtze and provide power for China's industrial boom.

But some geologists contended that damming up too much water in the reservoir carried a heightened risk of earthquakes and prolonged damage to the river's ecology.

In 2012, the Ministry of Land Resources said the number of landslides and other disasters around the reservoir had increased 70 percent after the water level in the $23 billion project rose to its maximum in 2010.

Critics of the project, like Chinese geologist Fan Xiao, have said that Three Gorges and other major dam projects may make flooding worse by altering the flow of sedimentation down the river.

He told Reuters that at Three Gorges, the storage capacity amounts to less than 9 percent of average floodwaters.

“It can only partially and temporarily intercept the upstream floods, and is powerless to help with floods caused by heavy rainfall in the middle and lower reaches of the Yangtze River,” he said.

Damage from this season's floods has been estimated in the hundreds of millions of dollars, further pressuring an economy deeply impacted by the coronavirus pandemic.

Hubei province, through which the Yangtze flows, is known for its numerous lakes and rivers and is under particular threat.

The province's capital Wuhan was the epicenter of China's coronavirus outbreak.

On Friday, a resident in Wuhan south of the dam posted a video showing that the Yangtze River was well above average, even though it hadn't rained recently, the Nikki Asian Review reported.

Residents in the Yangtze River basin in recent weeks have expressed concerns over the ability of the massive dam to handle more heavy rain, even though authorities have been releasing floodwater from the structure.

State media said last week that since June 29, the outflow of the Three Gorges Dam has been controlled at an average daily rate of 35,000 cubic meters per second, reducing up to 30 percent of the Yangtze's peak discharge.

CGTN claimed that it "effectively relieved the pressure of flood control on the middle and lower reaches of the river."

Chinese state media dismissed concerns as being "hyped by some Western media," with the Global Times claiming the dam is able to meet a "once-in-a-millennium" water level at 175 meters or flow up to 70,000 cubic meters per second.

The company running the Three Gorges Project said on Saturday that downstream water discharges had been halved since July 6, “effectively reducing the speed and extent of water level rises on the middle and lower reaches of the Yangtze.”

The total amount of stored floodwater had now reached 88 percent of the reservoir’s total capacity, it added.

But critics of the controversial project are still skeptical.

"With hindsight, I think that all those experts who opposed the building of the Three Gorges were right," Zhang Jianping, an activist in Jiangsu, said on Radio Free Asia.

"Since it was built, it has never played a role in preventing flooding or droughts, like we thought it would back then."

The Associated Press contributed to this report.

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