Thursday, November 29, 2007
Hu Jintao is now consolidating power in the capital. With Mayor Wang Qishan, who was a compromise candidate after Meng Xuenong's departure, Hu did not quite have complete grasp over Beijing, especially with Liu Qi still being the party secretary. Now that Wang is being promoted into the State Council, Guo Jinlong, who worked closely with Hu in Tibet, will oversee Beijing for Hu. It is almost certain that within a couple of years, Liu Qi will be rotated to a ceremonial post, and Guo will take over the party secretary position. This further fortifies Hu's increasing hold over Beijing. Recently, Wang Anshun, a known Hu partisan, was rotated from Shanghai to Beijing to serve as vice-secretary. Wang may then become the mayor, while Guo becomes the party secretary.
晨报讯 (京报集团记者 汤一原徐飞鹏)昨天下午，市委常委会召开扩大会议，传达中央关于北京市政府主要领导职务调整的决定。中央组织部常务副部长沈跃跃受中央委派宣布中央决定：王岐山同志不再兼任北京市委副书记、常委、委员职务，郭金龙同志任北京市委委员、常委、副书记。中央同意王岐山同志不再担任北京市市长职务，提名郭金龙同志为北京市市长候选人，按有关法律规定办理。中共中央政治局委员、市委书记刘淇主持会议并讲话；中共中央政治局委员王岐山，市委副书记郭金龙出席会议并讲话。
1969年至1973年任四川忠县水电局电力股干部、技术员。1973年至1979年任忠县体委教练。1979年至1980年任忠县县委宣传部理论教员。1980至1981年任忠县文教局副局长。1981年至1983年任忠县文化局局长。1983年至1985年任中共忠县县委副书记、县长。 1985至1987年任省委农研室副主任，省农经委副主任。1987年至1990年任中共乐山市委副书记。1990年至1992年任中共乐山市委书记。 1992年10月任中共四川省委常委。1993年4月在中共四川省委第六届一次会议上当选为中共四川省委副书记(1993年12月免)，同年12月调任中共西藏自治区党委副书记。1995年8月在中共西藏自治区委第五届一次全会上当选为中共西藏自治区委副书记。2000年10月任中共西藏自治区党委书记。 2004年12月，中共中央决定郭金龙任安徽省委委员、常委、书记，不再担任西藏自治区党委书记、常委、委员职务。2005年1月，安徽省十届人大会议上郭金龙当选安徽人大常委会主任。 2006年10月，在中共安徽省第八届委员会第一次全体会议上当选中共安徽省委书记。
Wednesday, November 28, 2007
Wall St. lobbies Beijing
By Jessica Holzer
November 28, 2007
Lobbyists for the financial services industry are in Beijing this week urging China’s No. 2 central banker and other top regulators to open the country’s banking, securities and insurance sectors to more foreign competition.
The discussions, which will span three days beginning on Wednesday, will coincide with separate meetings between Chinese officials and a handful of Republican and Democratic staff from the House Financial Services Committee.
The lobbyists said they would strike a collegial tone in the meetings by arguing that China stands to gain from allowing greater market access for U.S. firms because it needs foreign expertise to grow its financial sector.
“We are in the position of being on the side of the angels here. If you look at economic history, there’s literally no developing country that was able to make the transition to developed status without creating an advanced capital market,” argued Nick Ronalds, the executive director of the Asia branch of the Futures Industry Association, one of five trade groups that will attend the meetings.
The lobbyists will meet with the vice minister of the People’s Bank of China, Wu Xiao Ling, and the chairman of the Chinese banking regulatory commission, Liu Mingkang. They will also meet with Sun Xiao Xia, the director general of the Ministry of Finance.
The trip is timed ahead of Treasury Secretary Henry Paulson’s and other cabinet members’ visit to Beijing next month for high-level talks on a range of economic issues.
Aside from the futures industry group, representatives from the Financial Services Forum, the Financial Services Roundtable, the American Council of Life Insurers (ACLI) and the Securities Industry and Financial Markets Association (SIFMA), Wall Street’s main lobby in Washington, will participate. The Forum, which represents 20 chief executives from the financial industry, took the lead in organizing the trip.
The lobbyists’ first goal is to convince the regulators to lift the foreign ownership caps in the Chinese financial sector. At present, a foreign firm can own only up to a 20 percent stake in a Chinese bank, and there are similar limits on ownership of Chinese securities and insurance firms.
They will also urge regulators to allow more input from the private sector in the regulatory process and to ease restrictions on setting up new branches and licensing products.
The meetings of the Capitol Hill staff were planned to allow the aides to learn firsthand from Chinese officials about the currency and trade issues straining the U.S.-China relationship, according to a spokesman for the Financial Services Committee.
The trade groups did not organize the staffers’ meetings or fund their travel. The lobbyists said they briefed lawmakers and top administration officials of their trip but did not coordinate with them in any substantial way.
The trade groups argue that allowing greater market access for foreign firms will help China achieve its own goal of spurring more domestic consumption.
Chinese households currently save between 35 and 50 percent of their income. But with more access to insurance, mortgage and banking products, they might consume more and save less, helping to lessen China’s reliance on export-driven growth, the lobbyist argued. That, in turn, could ease tensions with the U.S. over the two countries’ huge trade gap and Beijing’s currency policy.
“One point we will make is that as they modernize the marketplace, that will help the trade imbalance and the currency,” Rob Nichols, the Forum’s president, said.
He added, “We want to be helpful, we want to be a colleague.”
The Chinese market presents a huge opportunity for U.S. financial firms. China lags behind the West in the array of financial and retirement products available to consumers. Chinese firms also lack access to many of the sophisticated derivatives and hedging instruments available in developed countries.
As a result, there is about $2 trillion in “mattress money” in China, estimates David Strongin, managing director at SIFMA, who will participate in the meetings. “We’d like to unleash that capital,” he said.
The lobbyists cited China’s reluctance to introduce more foreign competition in their financial sector as the biggest obstacle. “Domestic participants aren’t necessarily eager to face additional competition,” Ronalds said.
Ben Carliner, the director of research at the Economic Strategy Institute in Washington, said that the Chinese would benefit from more sophistication in their financial sector but warned that the pace of any reforms would be slow.
Internal forces, rather than prodding by foreigners, would spur the changes.
“They’re happy to talk to the Americans who are going there and, if they have something they want, they’ll take it. But they’ll do it because of their own domestic pressures,” he said.
Tuesday, November 27, 2007
2007-11-27 记者:张莫 来源:经济参考报
From Factions and Finance in China: Elite Conflict and Inflation
Victor C Shih
Cambridge University Press
Former Prime Minister Zhu Rongji "...began to reveal his anti- inflationary preference in the spring of 1993. The break came when Li Peng suffered a heart attack and was hospitalized in April, which made Zhu the acting premier. At the end of May, Chen Yun returned to Beijing to coordinate retrenchment one last time (Document Research Center of the CCP CC 2000). With Li Peng in convalescence and Yao Yilin gravely ill, Chen relied on Zhu to carry out the retrenchment. Soon after Chen’s return, Zhu Rongji held an emergency meeting on the economy at the Fengtai Hotel in Beijing, where he invited numerous veteran state planners to provide him political support (Brahm 2002: 17). To the astonishment of his audience of central and local officials, Zhu first announced that the current PBOC governor Li Guixian – a Li Peng loyalist – would be removed from his post, replaced by Zhu himself. Second, Zhu issued the “Sixteen Measures” (shiliu tiao) to constrain inflationary pressure, anchored by strict limits on fixed asset investment, real estate development, lending, the flow of foreign exchange, and the issuance of securities (CCP Central Committee and State Council 1999; Li 1994b). The Sixteen Measures also called for a crackdown on illegal financial institutions and the re-centralization of relending authorities to the PBOC headquarters (Chen 2000b: 553). Most astonishingly, Zhu ordered bank managers to forcefully recall all “irregular loans” to enterprises and 50% of such loans to non-bank financial institutions by 15 August, barely two months from the time of the meeting (Zhu 1999). If Zhu’s centralizing tendency had been in doubt, the Fengtai meeting conclusively put these doubts to rest."
My book also points out that lending freezes don't work all the time; it really depends on the political clout of the lead technocrat:
"Given the mixed signals emanating from the central leadership, it was not surprising that the Sixteen Measures were met with stiff local resistance. In July 1993, the State Council sent out seven work teams to determine the amount of irregular loans in twenty provinces and to ensure that local banks were earnestly recalling these loans before the 15 August deadline. However, the work teams had to contend with recalcitrant local officials in many places. In one case, the local government shut down all the banks, causing depositors to stage large-scale protests, which forced Zhu to give additional liquidity to the province to preserve social stability (Chen 2005: 277). In other cases, work-teams could not find the provincial leadership, who were “out on inspection,” which paralyzed the work teams’ progress (Chen 2005:277). Furthermore, even after the issuance of the 16 Measures, local governments continued to pressure banks for generous loans (Zhu 1999). Strong-arm tactics had allowed Zhu to solve the triangular debt problem quickly in 1991. Nonetheless, Zhu’s earlier effort with triangular debt had enjoyed Deng’s support; these retrenchment measures were subverted by Jiang. According to the Hong Kong press, the PBOC was only able to collect 1/3 of all irregular loans by mid August. Guangdong only recovered 40 percent of the loans, while Hainan collected 50 percent (Lam 1995). "
Work teams, sounds familiar? Wen Jiabao is sending out these work teams to inspect real estate development--good luck!
Thursday, November 22, 2007
Dear Readers, as some of you may know, my book is on the cusp of publication. I just got advanced copies today, and you can now pre-order it at barnesandnoble.com or amazon.com. The book will ship on December 1st (amazon has the wrong info.) What is the book about? Here is a synopsis:
Factions and Finance in China: Elite Conflict and Inflation
Victor C. Shih
Cambridge University Press
The contemporary Chinese financial system encapsulates two possible futures for China’s economy. On the one hand, extremely rapid financial deepening accompanied by relatively stable prices are both manifestations of a vigorous growth trajectory that will one day make China the world’s largest economy. On the other hand, the colossal store of non-performing loans in the banking sector augurs a troubling future. Factions and Finance in China inquires how elite factional politics has given rise to both of these outcomes since the reform in 1978. The competition between generalists in the Chinese Communist Party and politically engaged technocrats over monetary policies has time and time again prevented inflation from spinning out of control. Nonetheless, elite politicians, whether party generalists or technocrats, continue to see the banking sector as a ready means of political capital, thus continuing government intervention in the banking sector and slowing down reform. Shih shows that elite politics has exerted a profound impact on monetary policies and banking institutions in contemporary China.
Stay tune for a review of the book and excerpts in the coming days!
Monday, November 19, 2007
China Freezes Lending to Curb Investing Frenzy
By James T. Areddy
19 November 2007
The Wall Street Journal
(Copyright (c) 2007, Dow Jones & Company, Inc.)
SHANGHAI -- Chinese authorities are slamming the brakes on bank lending, in their latest attempt to curb the runaway investment threatening to overheat what is soon to be the world's third-largest economy.
In recent weeks, regulators have quietly ordered China's commercial banks to freeze lending through the end of the year, according to bankers in several cities. The bankers say that to comply, they are canceling loans and credit lines with businesses and individuals.
A China Banking Regulatory Commission official here confirmed that local and Chinese subsidiaries of foreign banks have been asked to ensure that loans at the end of the year don't exceed the total outstanding on Oct. 31. The official described the request as "guidance aimed at supporting the macro-control measures being implemented."
Over the past few years, Chinese authorities have repeatedly sought to rein in investment in sectors such as property development, where they deemed it was becoming excessive. But even in China a blanket edict to halt lending growth is unusual.
Curbing lending by raising interest rates, as China already has done four times this year, would be more in keeping with Beijing's increasingly market-oriented approach to business. But the lending freeze shows how the slowing U.S. economy may be complicating Chinese policy making. Lower interest rates in the U.S. give Beijing less room to push up rates without creating a ripple effect.
By raising rates further China could risk boosting the value of its currency, the yuan, too much for the comfort of its exporters, a critical part of the Chinese economy. A stronger yuan would make Chinese exports less competitive in world markets.
Bankers say they will honor the lending edict, partly because it comes with threats of financial penalties for noncompliance. "Which commercial bank would dare not obey this?" says Liu Haibin, chairman of the supervisory committee of Shanghai Pudong Development Bank Co.
A Bank of China Ltd. official in Suzhou said over the weekend his branch is pushing big corporate loans into next year. An official of the same bank in central Henan province said the new measure in effect extends existing lending controls on property developers and power producers across the board to all banking clients. The measure could pose a particular challenge for the Chinese units of foreign banks, which have less flexibility than their larger local peers.
How much lasting impact the measure has could depend on whether it is extended in some form in January, bankers say.
Even a temporary lending freeze, however, could cast a chill on important segments of the Chinese economy, including the stock market, whose steep run-up over the past year has given rise to fears of a speculative bubble. Though off their highs, Chinese share prices have nearly doubled since late 2006.
The lending freeze doesn't appear directly related to concerns about a stock bubble. Still, it could weaken the earnings of banks and other listed companies and leave less cash for investors to plow into stocks. In recent weeks, stocks have tumbled 15% or so from their record highs on concern China's central bank would lift interest rates or take other steps to cool the economy. China's benchmark one-year lending rate is currently 7.02%.
Less lending also could rein in China's resurgent housing market or hurt consumer confidence. Some companies operating in China, particularly smaller ones, may be hard put to find basic working capital to pay staff or buy materials at year end, bankers say.
"If loan growth were to stop, that would seriously disrupt investment plans and would introduce a high degree of uncertainty regarding financing," says Stephen Green, an economist at Standard Chartered Bank in Shanghai.
It has been three years since Premier Wen Jiabao pledged to deal with "severe" problems associated with rampant credit growth. But despite repeated rate increases, economic data still point to risks that haphazard investment could make the Chinese economy spin out of control and possibly lead to hyperinflation or a spate of bad loans.
Just last week, the government said fixed-asset investment in factories and property expanded nearly 27% in the first 10 months of 2007 from a year earlier, one of the highest rates in recent years.
Gross-domestic-product growth, at 11.5% in the first nine months of 2007, is on pace this year for its fastest rate since the blowout years of the early 1990s, when growth peaked at more than 14%. Soaring food prices and rising fuel charges are sowing concerns about consumer-price inflation -- which in October stood at a decade high of 6.5% -- and risking social discontent.
It isn't easy to predict whether a pause in bank lending so late in the year might dent China's economy. Several bankers said the fourth quarter is generally quiet for lending anyway, and that many banks have already met or even exceeded year-end lending targets. In late 2005 and 2006, regulatory officials backed up rate increases by jawboning bankers to slow lending in the fourth quarter, but bankers say the end result was a rebound in lending in the first quarter of the following year.
Individuals may be less affected than businesses because smaller loans may not raise eyebrows like big corporate working-capital loans. But at least one property agency in Shanghai is advising clients to delay mortgage applications until January.
Meanwhile, a China Construction Bank Corp. official in Shanghai said he is for now rejecting loans for everyone but established clients.
Instead of trying to target lending levels, economists say China could try to damp credit expansion by pushing up interest rates and letting the yuan appreciate against the U.S. dollar, since both adjustments would make borrowers and lenders think twice before committing to projects. U.S. officials, including Treasury Secretary Henry Paulson, regularly deliver such a message, saying a more market-oriented financial system is in Beijing's own interests.
But after its four interest-rate increases this year, the People's Bank of China appeared to question that idea after the Federal Reserve cut U.S. interest rates in September to offset turmoil in the subprime-mortgage market.
Beijing's concern about the stability of the yuan may be the reason, since higher interest rates tend to attract more depositors, an unwelcome prospect for Chinese policy makers keen to minimize enthusiasm for the yuan. A stronger yuan could hurt exporters by making some goods more expensive for buyers paying in dollars or euros.
Beijing may still raise interest rates. It had been tolerating a moderate strengthening of the yuan for much of this year, giving the currency about a 10% gain since a revaluation in mid-2005. But bankers say in recent weeks authorities have nudged large Chinese banks to buy dollars and sell yuan, trades that pushed the yuan down 0.2% last week in Shanghai trading.
The loan freeze may have a particularly disruptive effect on foreign banks with subsidiaries incorporated in China. Foreign bankers occupy just a corner of China's financial system, and they say they are eager to remain on good terms with regulators.
Foreign banks in the important Shanghai market -- including Britain's HSBC Holdings PLC and Standard Chartered PLC, New York-based Citigroup Inc. and Hong Kong's Bank of East Asia Ltd. -- controlled 6.2% of industry deposits at the end of September and more than 16% of loans outstanding, according to official figures.
Because foreign banks have fewer deposits than their more entrenched Chinese counterparts and regulators are already pushing them to keep outstanding loans at 75% of deposits, they have very little financial flexibility. Their earnings could also take a hit if they need to borrow in local money markets or sell loans to comply with the freeze.
Beijing has a long history of dictating policy to banks, which until recently were all state-owned institutions. Regulators have pushed banks to address bad loans held over from government-ordered "policy" lending in the 1990s. Since 2004, authorities have leaned on bankers to curtail lending to particular industries deemed to be squandering investment, including aluminum smelters and small property developers, to avoid another upsurge in nonperforming loans.
In April 2004, the China Banking Regulatory Commission offered "guidance" to banks that they slow new loan approvals. But it quickly backed off when economists complained that the government should treat banks like commercial enterprises, and instead authorities later lifted interest rates for the first time in nine years.
Jason Leow in Beijing and Bai Lin and Ellen Zhu in Shanghai contributed to this article.