Thursday, November 20, 2008
Dear All, in Boston now, but here is a new post for RGE Monitor, along with the original article in Chinese:
Who is getting the money?
Email PrintShare
Delicious Digg Facebook reddit Technorati
Victor Shih | Nov 20, 2008
More details have emerged about the 4 trillion stimulus package that China has rolled out. The main questions remain: who will get the money? How will it be spent? In a revealing article published the 21st Century Economic Herald (my favorite), reporter Wu Hongying gives a detailed account of how Chongqing (a provincial unit controlled by princeling Bo Xilai) plans to spend the money. I believe the situation faced by Chongqing is similar to that in many Chinese cities and provinces. Basically, Chongqing SOEs, which focus on land holding, real estate, electricity, and financial services, are in deep trouble. Land prices in Chongqing have fallen by over 70%. The electricity group is in the red by about 250 million RMB. The debt asset ratio for the 8 major SOE groups in Chongqing has risen to 72%. No details are given about the financial holding companies, but considering that their main role is to inject capital in the other SOEs, they can't be doing too well either. Things are not pretty, and the well off SOEs have to inject capital in the problematic ones.
So, the central government rolls out a 4 trillion stimulus package. As I pointed out in the last note, only a part of the money will be from the central government, but at this point, local governments are desperate to get this part. Thus, a massive fraud whose working and purpose are perfectly clear to all the players involved is perpetrated. Basically, local governments propose projects which may or may not be implemented with the sole purpose of receiving central funding and "supplementary" (peitao) bank loans from the state banks in order to stave off the bankruptcy of local SOE groups, which are heavily indebted at this point. The local "self raised" part of the capital can be a piece of idle land or a redundant factory. The excuses are many, but both the local and the central governments know that the center and the banking system must give a large chunk of money in order to prevent (delay?) massive bankruptcies of local and a few central SOEs. As for Chongqing, it has applied for 20 billion in investment before the end of 2008 (out of the 100 billion announced by the NDRC for China as a whole). Almost all of the money will go toward large SOEs in Chongqing. Due to Bo's political connections, Chongqing will probably get at least 5-10 billion, thus staying solvent for some time.
Similar to the US bailout, this Chinese bailout prevents (delays?) the mass bankruptcy of provincial and municipal state owned enterprises. If these entities go bankrupt, the unemployment impact would actually be moderate since the state sector only employs around 30% of the urban work force now. Bankruptcies would also cause a huge problem for state owned banks which have lent heavily to these SOEs (especially China Development Bank). However, China has plenty of resources with which to recapitalize banks. The real reason for resuing local SOEs is political--their bankruptcy would cause an upheaval (perhaps THE political upheaval). Without these entities, local officials would be completely reliant on central money and would have many fewer rent-seeking opportunities. Given the low salaries of Chinese officials (13,000 bucks for provincial governor?), they would have much weaker incentive to be loyal to the regime. Even if the 4 trillion brings little stimulative effect, rent must be preserved for provincial officials for this reason. Of course, like the US bailout, the Chinese bailout only buys time. Given that many state owned groups bet heavily on the real estate market recently, I suspect that more bailouts will be needed in the near future. In the near future at least, the Chinese budget can handle these costly, but necessary bailouts.
重庆国资“有进有退” 拉动内需促国企解困
南方报业新闻 时间: 2008年11月21日 来源: 21世纪经济报道
作者：吴红缨
新华社
本报记者 吴红缨 重庆报道
当地一位不愿具名的学者认为,从过去的“国退民进”到“有退有进”,这只应
是非常之时的非常之举,而不应做为常态,否则就是国企改革的倒退。
11月19日,重庆市国资委召开“国资系统贯彻落实中央和市委、市府扩大内
需,促进经济增长精神”专题会议。
随着国际金融危机蔓延,下半年以来,重庆国资系统全面出现经营和利润下
滑趋势,部分企业集团甚至举步维艰。
此次会议,国资委召集了市属39个重点企业的负责人,除商讨对策,更为重要
的是要求各大企业集团,快速跟进国家宏观调控政策,以摆脱困境,抢占发展先机
。
市国资委主任崔坚在会议上表示,“国有企业要成为政府拉动内需重要的操
作平台”。
危机显现
至今年10月,重庆国有资产已由直辖之初的1700亿上升至7200亿。这些资产
主要分布在三个领域,从事基础设施领域的八大集团占到40%,金融企业占30%,还
有另外30%为工商产业集团。受国际金融危机的影响,今年下半年,尤其近两个月
以来,这三大领域的国有企业都不同程度受到拖累。
重庆八大集团在19日的会上表示,企业普遍存在现金流困难,资产负债高的
难题,进而将影响到融资质量。另八大集团兼具了政府土地储备职能,由于房地
产市场的不景气,使得该市土地价格较去年同期下降70%甚至100%,因此,下半年
这些集团实现土地变现的数量寥寥。这对八大集团是个严竣挑战。另重庆市产
权交易所也透露,今年下半年以来,产权交易所成交量明显减少,甚至出现流拍和
无人竞拍的情况。
“我们估计,这一趋势,到年底,甚至明年会更加明显。”重庆八大集团之一渝
富集团何智亚说。
重庆能源集团则深受国际、国内电、煤价格下降之苦。该集团负责人称,集
团的利润今年很难保证,过去集团每年通过参股的电厂,能分到红利2到3亿元,今
年这些电厂均大幅亏损,集团不仅不能分红,还要按参股股权,分摊亏损金额达
2.5亿以上。
“目前,仅金融机构暂未受到重大挫折。”崔坚称。
但是,金融危机的影响已经显现。调研显示,该市国有企业的资产负债率上
升至72.8%,较6月下降0.6个百分点。已达到需要十分关注的指标数；企业库存
明显增大,6月为593亿,10月陡增为678亿,上升了14.3个百分点,资金占用持续加
大,企业资产流动性减弱。
市国资委分析,重庆深居内陆,经济结构中外向因素与沿海地区相比,显得薄
弱,外向型主导产业及外贸出口企业数量有限,使整体经济未受重创,但作为日益
开放的直辖市,在疲软的宏观经济形势中,重庆无法独善其身。
国资委提供的资料称,“个别原本如履薄冰的国企,陷入更加严重的经营桎梏
,生存岌岌可危。”
不过重庆市国资委要求,国企要严控裁员,并确保兑现今年年初承诺的平均
达10%的职工工资增幅。
对策
国有企业的危机,受到地方政府的高度重视。
对于国企的困难,市国资委及重庆市政府提出了多项解决举措,包括组建金
融危机工作小组,建立集团之间互相支撑机制,并要求每户企业集团都配备财务
顾问机构,支撑集团把握宏观形势,加强成本控制及防范风险。
同时,将发挥地方金融机构作用,通过创新资源配置方式,大幅增加国企资本
金,及引导富裕企业入股其他企业,以改善集团负债结构,解决资金问题。由于国
家发改委放开了企业发债审批额度限制,重庆的地产集团、水务集团、能源集团
、化医集团等国企已筹备向全社会发行170亿元的债券。
这些举措当中,建立起集团之间支撑机制尤其引起关注。它的进一步解释是
,在企业集团之间,推动形成“抱团式”的业务支持,金融支撑,信息对接体系。
当地一位学者认为,这可能意味着过去市政府对八大集团树立的“互不担保”
“互不参股,”“互不借债”原则,在非常情况下,将会有所突破,但其影响及效果仍
有待观察。
不过,国企解困的最大机遇,则来自中央扩大内需的政策调整。
本月11日中央提出第一批1000亿扩大内需投资以后,全国各省(市)纷纷提出
申请,重庆政府方面也向国家发改委上报总额近200亿的申请计划。据会议透露
的消息,重庆提出的包括廉租房、棚户区安居等保障性安居等6方面的项目得到
初步认可。
这批项目和资金,绝大部分将由代表政府的国企具体运作。由于整个内需拉
动主要由政府主导,国有企业的结构布局也将面临调整。
重庆国企改革一个原则性的变化是“坚持国有资本有进有退”。
崔坚称,国有资本的“有进有退”,指“推动国有资本向经济链的关键领域集中
,向产权链的核心部位集成,向产业链的关键部位集约,向价值链的高端部位集聚
,充分发挥国有经济的控制力,影响力和带动力”。
当地一位不愿具名的学者认为,从过去的“国退民进”到“有退有进”,这只应
是非常之时的非常之举,而不应做为常态,否则就是国企改革的倒退。
Who is getting the money?
Email PrintShare
Delicious Digg Facebook reddit Technorati
Victor Shih | Nov 20, 2008
More details have emerged about the 4 trillion stimulus package that China has rolled out. The main questions remain: who will get the money? How will it be spent? In a revealing article published the 21st Century Economic Herald (my favorite), reporter Wu Hongying gives a detailed account of how Chongqing (a provincial unit controlled by princeling Bo Xilai) plans to spend the money. I believe the situation faced by Chongqing is similar to that in many Chinese cities and provinces. Basically, Chongqing SOEs, which focus on land holding, real estate, electricity, and financial services, are in deep trouble. Land prices in Chongqing have fallen by over 70%. The electricity group is in the red by about 250 million RMB. The debt asset ratio for the 8 major SOE groups in Chongqing has risen to 72%. No details are given about the financial holding companies, but considering that their main role is to inject capital in the other SOEs, they can't be doing too well either. Things are not pretty, and the well off SOEs have to inject capital in the problematic ones.
So, the central government rolls out a 4 trillion stimulus package. As I pointed out in the last note, only a part of the money will be from the central government, but at this point, local governments are desperate to get this part. Thus, a massive fraud whose working and purpose are perfectly clear to all the players involved is perpetrated. Basically, local governments propose projects which may or may not be implemented with the sole purpose of receiving central funding and "supplementary" (peitao) bank loans from the state banks in order to stave off the bankruptcy of local SOE groups, which are heavily indebted at this point. The local "self raised" part of the capital can be a piece of idle land or a redundant factory. The excuses are many, but both the local and the central governments know that the center and the banking system must give a large chunk of money in order to prevent (delay?) massive bankruptcies of local and a few central SOEs. As for Chongqing, it has applied for 20 billion in investment before the end of 2008 (out of the 100 billion announced by the NDRC for China as a whole). Almost all of the money will go toward large SOEs in Chongqing. Due to Bo's political connections, Chongqing will probably get at least 5-10 billion, thus staying solvent for some time.
Similar to the US bailout, this Chinese bailout prevents (delays?) the mass bankruptcy of provincial and municipal state owned enterprises. If these entities go bankrupt, the unemployment impact would actually be moderate since the state sector only employs around 30% of the urban work force now. Bankruptcies would also cause a huge problem for state owned banks which have lent heavily to these SOEs (especially China Development Bank). However, China has plenty of resources with which to recapitalize banks. The real reason for resuing local SOEs is political--their bankruptcy would cause an upheaval (perhaps THE political upheaval). Without these entities, local officials would be completely reliant on central money and would have many fewer rent-seeking opportunities. Given the low salaries of Chinese officials (13,000 bucks for provincial governor?), they would have much weaker incentive to be loyal to the regime. Even if the 4 trillion brings little stimulative effect, rent must be preserved for provincial officials for this reason. Of course, like the US bailout, the Chinese bailout only buys time. Given that many state owned groups bet heavily on the real estate market recently, I suspect that more bailouts will be needed in the near future. In the near future at least, the Chinese budget can handle these costly, but necessary bailouts.
重庆国资“有进有退” 拉动内需促国企解困
南方报业新闻 时间: 2008年11月21日 来源: 21世纪经济报道
作者：吴红缨
新华社
本报记者 吴红缨 重庆报道
当地一位不愿具名的学者认为,从过去的“国退民进”到“有退有进”,这只应
是非常之时的非常之举,而不应做为常态,否则就是国企改革的倒退。
11月19日,重庆市国资委召开“国资系统贯彻落实中央和市委、市府扩大内
需,促进经济增长精神”专题会议。
随着国际金融危机蔓延,下半年以来,重庆国资系统全面出现经营和利润下
滑趋势,部分企业集团甚至举步维艰。
此次会议,国资委召集了市属39个重点企业的负责人,除商讨对策,更为重要
的是要求各大企业集团,快速跟进国家宏观调控政策,以摆脱困境,抢占发展先机
。
市国资委主任崔坚在会议上表示,“国有企业要成为政府拉动内需重要的操
作平台”。
危机显现
至今年10月,重庆国有资产已由直辖之初的1700亿上升至7200亿。这些资产
主要分布在三个领域,从事基础设施领域的八大集团占到40%,金融企业占30%,还
有另外30%为工商产业集团。受国际金融危机的影响,今年下半年,尤其近两个月
以来,这三大领域的国有企业都不同程度受到拖累。
重庆八大集团在19日的会上表示,企业普遍存在现金流困难,资产负债高的
难题,进而将影响到融资质量。另八大集团兼具了政府土地储备职能,由于房地
产市场的不景气,使得该市土地价格较去年同期下降70%甚至100%,因此,下半年
这些集团实现土地变现的数量寥寥。这对八大集团是个严竣挑战。另重庆市产
权交易所也透露,今年下半年以来,产权交易所成交量明显减少,甚至出现流拍和
无人竞拍的情况。
“我们估计,这一趋势,到年底,甚至明年会更加明显。”重庆八大集团之一渝
富集团何智亚说。
重庆能源集团则深受国际、国内电、煤价格下降之苦。该集团负责人称,集
团的利润今年很难保证,过去集团每年通过参股的电厂,能分到红利2到3亿元,今
年这些电厂均大幅亏损,集团不仅不能分红,还要按参股股权,分摊亏损金额达
2.5亿以上。
“目前,仅金融机构暂未受到重大挫折。”崔坚称。
但是,金融危机的影响已经显现。调研显示,该市国有企业的资产负债率上
升至72.8%,较6月下降0.6个百分点。已达到需要十分关注的指标数；企业库存
明显增大,6月为593亿,10月陡增为678亿,上升了14.3个百分点,资金占用持续加
大,企业资产流动性减弱。
市国资委分析,重庆深居内陆,经济结构中外向因素与沿海地区相比,显得薄
弱,外向型主导产业及外贸出口企业数量有限,使整体经济未受重创,但作为日益
开放的直辖市,在疲软的宏观经济形势中,重庆无法独善其身。
国资委提供的资料称,“个别原本如履薄冰的国企,陷入更加严重的经营桎梏
,生存岌岌可危。”
不过重庆市国资委要求,国企要严控裁员,并确保兑现今年年初承诺的平均
达10%的职工工资增幅。
对策
国有企业的危机,受到地方政府的高度重视。
对于国企的困难,市国资委及重庆市政府提出了多项解决举措,包括组建金
融危机工作小组,建立集团之间互相支撑机制,并要求每户企业集团都配备财务
顾问机构,支撑集团把握宏观形势,加强成本控制及防范风险。
同时,将发挥地方金融机构作用,通过创新资源配置方式,大幅增加国企资本
金,及引导富裕企业入股其他企业,以改善集团负债结构,解决资金问题。由于国
家发改委放开了企业发债审批额度限制,重庆的地产集团、水务集团、能源集团
、化医集团等国企已筹备向全社会发行170亿元的债券。
这些举措当中,建立起集团之间支撑机制尤其引起关注。它的进一步解释是
,在企业集团之间,推动形成“抱团式”的业务支持,金融支撑,信息对接体系。
当地一位学者认为,这可能意味着过去市政府对八大集团树立的“互不担保”
“互不参股,”“互不借债”原则,在非常情况下,将会有所突破,但其影响及效果仍
有待观察。
不过,国企解困的最大机遇,则来自中央扩大内需的政策调整。
本月11日中央提出第一批1000亿扩大内需投资以后,全国各省(市)纷纷提出
申请,重庆政府方面也向国家发改委上报总额近200亿的申请计划。据会议透露
的消息,重庆提出的包括廉租房、棚户区安居等保障性安居等6方面的项目得到
初步认可。
这批项目和资金,绝大部分将由代表政府的国企具体运作。由于整个内需拉
动主要由政府主导,国有企业的结构布局也将面临调整。
重庆国企改革一个原则性的变化是“坚持国有资本有进有退”。
崔坚称,国有资本的“有进有退”,指“推动国有资本向经济链的关键领域集中
,向产权链的核心部位集成,向产业链的关键部位集约,向价值链的高端部位集聚
,充分发挥国有经济的控制力,影响力和带动力”。
当地一位不愿具名的学者认为,从过去的“国退民进”到“有退有进”,这只应
是非常之时的非常之举,而不应做为常态,否则就是国企改革的倒退。
Comments:
Post a Comment
Friday, November 14, 2008
Dear All, my latest post for Roubini's RGE Monitor
A Tour of the Stimulus Package and Beyond
Email PrintShare
Delicious Digg Facebook reddit Technorati
Victor Shih | Nov 13, 2008
A lot has been said about the 4 trillion RMB "stimulus package" already. As a China specialist, I will just go over some details on how it is likely to be carried out and its implications.
First, a brief primer about state directed investment in China, the core of the forthcoming package. Usually, the central government sets a ceiling on large fixed asset investment projects. If a local government wants to build a port somewhere, even if it is doing so entirely with its own money, it has to receive National Development and Reform Commission (NDRC) permission to do so. If it is a state sponsored project, which means it is part of the five-year plan (yes, those still exist), a project can lobby the NDRC for central funding. However, even if that were the case, the majority of the financing typically comes from local government (or SOE) self-raised capital and bank loans. Thus, the 4 trillion is not all central government money; the majority will come from local budget and bank loans.
Traditionally, such government project financing benefits rich localities which are more able to put up part of the financing. The NDRC would like to approve as many projects as possible, especially now due to political pressure from the top, so they like localities with clear plans and a large chunk of the financing. Thus, a lot of the central money will be distributed to coastal areas and provincial capitals. It is possible that due to the tight cash situation of many local governments, the share of central money would increase in this round. Regardless, bank loans will be a large part of it, and the removal of credit ceiling makes sense in this case. Typically, once a project receives the NDRC's seal of approval, banks are more than happy to lend since it basically receives a government loan guarantee. That has caused some NPL problems in the past, and will likely cause problems in the future.
On to other issues. There is a rumor that Chinese Academy of Social Sciences, a government think-tank, came up with a plan to set up a government fund to buy up Chinese stocks if the market falters drastically. The argument is that since the total market capitalization is only like 930 billion RMB, a fund of 6-800 billion can "save" the market. I think this suggestion is quite problematic. First, it would of course reverse decades of reform, which aimed at making firms more responsible for their own well-being. If the state buys up shares, large firms will simply revert back to state owned enterprises (well of course the US now has plenty of those as well....). Second, if the stock market is allowed to continue, then it will operate under the sword of Domicles as participants wonder when the government will sell the shares back to the public. That was the situation for a long time in China due to legal-persons shares and was the source of a prolonged bear market. Finally, the largest companies are also listed in Hong Kong and New York. Would the Chinese government mobilize CIC to buy in those markets?? What a way to spend one's foreign exchange reserve! In any event, I don't think there will be enough political will to carry this out due to potential charges that this is used only to bail out the rich, which runs counter to Hu Jintao and Wen Jiabao's populist agenda.
In the mean time, the situation in the housing market is only going to get worse since part of the stimulus package seeks to drastically increase the supply of public housing, thus sucking demand away from the lower end of the private housng market. On top of that, slowing export is finally hitting the banking system. The vice head of the Guangdong CBRC recently revealed that loans in Guangdong to the textile sector is now nearly 30% NPL. With the global slow-down continuing, the situation is only going to get worse in places like Guangdong, Fujian and Zhejiang. Fourth quarter may still look okay, but I think we will see some interesting data for 1Q next year.
A Tour of the Stimulus Package and Beyond
Email PrintShare
Delicious Digg Facebook reddit Technorati
Victor Shih | Nov 13, 2008
A lot has been said about the 4 trillion RMB "stimulus package" already. As a China specialist, I will just go over some details on how it is likely to be carried out and its implications.
First, a brief primer about state directed investment in China, the core of the forthcoming package. Usually, the central government sets a ceiling on large fixed asset investment projects. If a local government wants to build a port somewhere, even if it is doing so entirely with its own money, it has to receive National Development and Reform Commission (NDRC) permission to do so. If it is a state sponsored project, which means it is part of the five-year plan (yes, those still exist), a project can lobby the NDRC for central funding. However, even if that were the case, the majority of the financing typically comes from local government (or SOE) self-raised capital and bank loans. Thus, the 4 trillion is not all central government money; the majority will come from local budget and bank loans.
Traditionally, such government project financing benefits rich localities which are more able to put up part of the financing. The NDRC would like to approve as many projects as possible, especially now due to political pressure from the top, so they like localities with clear plans and a large chunk of the financing. Thus, a lot of the central money will be distributed to coastal areas and provincial capitals. It is possible that due to the tight cash situation of many local governments, the share of central money would increase in this round. Regardless, bank loans will be a large part of it, and the removal of credit ceiling makes sense in this case. Typically, once a project receives the NDRC's seal of approval, banks are more than happy to lend since it basically receives a government loan guarantee. That has caused some NPL problems in the past, and will likely cause problems in the future.
On to other issues. There is a rumor that Chinese Academy of Social Sciences, a government think-tank, came up with a plan to set up a government fund to buy up Chinese stocks if the market falters drastically. The argument is that since the total market capitalization is only like 930 billion RMB, a fund of 6-800 billion can "save" the market. I think this suggestion is quite problematic. First, it would of course reverse decades of reform, which aimed at making firms more responsible for their own well-being. If the state buys up shares, large firms will simply revert back to state owned enterprises (well of course the US now has plenty of those as well....). Second, if the stock market is allowed to continue, then it will operate under the sword of Domicles as participants wonder when the government will sell the shares back to the public. That was the situation for a long time in China due to legal-persons shares and was the source of a prolonged bear market. Finally, the largest companies are also listed in Hong Kong and New York. Would the Chinese government mobilize CIC to buy in those markets?? What a way to spend one's foreign exchange reserve! In any event, I don't think there will be enough political will to carry this out due to potential charges that this is used only to bail out the rich, which runs counter to Hu Jintao and Wen Jiabao's populist agenda.
In the mean time, the situation in the housing market is only going to get worse since part of the stimulus package seeks to drastically increase the supply of public housing, thus sucking demand away from the lower end of the private housng market. On top of that, slowing export is finally hitting the banking system. The vice head of the Guangdong CBRC recently revealed that loans in Guangdong to the textile sector is now nearly 30% NPL. With the global slow-down continuing, the situation is only going to get worse in places like Guangdong, Fujian and Zhejiang. Fourth quarter may still look okay, but I think we will see some interesting data for 1Q next year.
Comments:
Post a Comment
