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mate China interest rate not even zero how can it be QE

the RRR trend is positive primarily for banking sector and secondarily real assets. I don't think they will let speculative bubble to build up too much but for sure there will always be a delayed policy response as they have to discuss how to react.

(19-04-2015, 06:58 PM)greengiraffe Wrote: [ -> ]Clamping down on speculative bubble but underwriting slowing real economy... China style QE but certainly liquidity will prevail...

Chinese central banks are extremely busy over weekends... nothing new as new policies are better digested over weekends where herd instincts have little avenue to unleash their energy...

"An annual survey by HSBC last month suggested the yuan’s rise in global trade is losing momentum"?

I didn't read the report, but I reckon it might be a blip, rather than a trend...

China payment system key to yuan global usage, shows survey

HONG KONG (April 20): China needs to start its cross-border payment system soon as the nation pushes for the yuan to be added to the International Monetary Fund’s basket of four reserve currencies, a survey by Allen & Overy shows.

The London-based law firm, which interviewed 150 companies in the US, Europe and Asia-Pacific regions in January and February, said 74 percent of those surveyed cited a delay in the start of the China International Payments System, or CIPS, as the major obstacle to their use of cross-border yuan transactions.

A centralized payment system serves to ease technical issues such as language, bolstering usage that could make the yuan “freely usable”, a key requirement under the IMF’s twice-a-decade review of its reserve-currency basket.

“Companies now see China as a regional play rather than an isolated island,” Jane Jiang, Allen & Overy’s China regulatory partner in Beijing, said in an April 17 phone interview.

The CIPS will offer a global platform for yuan transactions, she said.

An annual survey by HSBC last month suggested the yuan’s rise in global trade is losing momentum.

China will start the international payment system later this year, allowing 24-hour settlement, Chen Xingdong, the Beijing-based chief China economist at BNP Paribas, said in a March 18 phone interview.
...
http://www.theedgemarkets.com/sg/article...ows-survey

Is Beijing about to join the global easing club?

PETER CAI 3 HOURS AGO
ECONOMY CHINA


Chinese investors have had a rollercoaster weekend. The country’s securities regulator warned about the trading risks for millions of retail investors amid a red-hot bull market and tightened rules around margin lending last Friday. A day later, the regulator tried to assure investors it was not its intention to kill a dramatic rally in China’s stock market.

By Sunday evening, the People’s Bank of China, the country’s central bank, swung into easing mode, cutting the reserve requirement ratio (RRR) by as much as one per cent, the largest since the darkest days of the global financial crisis. RRR refers to the amount of money banks must set aside in reserve.

Chinese lenders are required to hold 18.5 per cent of deposits in reserve, one of the highest requirements in the world. The move is expected to inject as much as 1.5 trillion yuan worth of liquidity into the financial market, according an estimate by Minsheng Securities.

It is the second such cut this year. It is quite noticeable for the reason that the Chinese government has been reluctant so far to engage in another round of stimulus spending. But there are increasing signs that Beijing is prepared to join the easing camp alongside the European Central Bank and the Bank of Japan.

MORE FROM PETER CAI

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It is not hard to see why the Chinese government is increasingly turning to monetary policy to prop up its economy. The world’s second largest economy grew 7 per cent during the first quarter, the slowest pace in the past six years. All traditional growth engines such as manufacturing, real estate and fixed asset investments are spluttering.

The country’s industrial production grew 6.4 per cent and state-owned enterprises only managed to expand at 1.7 per cent. Real estate data looks particularly terrible. New floor space under construction was down 18.4 per cent, sales of apartments declined 9.3 per cent, and purchases of new land by developers dropped 32.4 per cent.

“The decision is a response to the weakness of recent economic data. Most of the activity and spending data for March comes in below consensus,” says Capital Economics, a London-based economic consultancy. “…but the downside risks to growth appear greater now than they did a month or two ago.”

The increased liquidity will support the government’s infrastructure spending program, says Li Qisheng, an analyst from Minsheng Securities. He argues that short-term liquidity injections by the central bank cannot support the financial needs of infrastructure projects, and the cut in reserve requirement will bolster the availability of long-term liquidity.

Wang Tao, UBS’ chief China economist says the move will be welcomed by the market as the most significant policy easing to date. The move will certainly increase the cash supply within the banking system, which has been under pressure due to a large drop in foreign exchange related supply.

Apart from the across the board cut in reserve requirements, the central bank also provided additional capital relief for rural credit unions and rural commercial banks through an additional RRR cut of one per cent. China Agricultural Development Bank’s reserve requirement has been cut by two per cent age points.

Commercial banks that dedicate a certain portion of their lending to small and medium sized enterprises and agribusiness will get a further 0.5 percentage point relief. It’s clear the central bank is still trying desperately to lower the cost of funding for small and medium sized businesses.

According to a recent report from the Ministry of Industry and Information Technology, the cost of funding for small and medium businesses increased 17.5 per cent during the first half of 2014. Some businesses are paying as much as 30 per cent interest on their loans.

Bank of Communications chief economist Lian Ping estimates the average cost of capital for small businesses in Shanghai is about 18 per cent. Having tried and failed to lower the cost of funding for SMEs through various measures including a RRR cut back in February, the central bank had no choice but to further lower the reserve requirement.

Despite the significant easing policy, the government has not yet used its big bazooka, namely cutting the benchmark rate. At 5.35 per cent, China still has the highest benchmark rate among major economies in the world. The US, Eurozone, Britain and Japan all have interest rates near zero.

When and if Beijing decides to lower interest rates further to boost its economy, it is a much surer sign that the government is switching to a more stimulatory mode. Beijing is facing a dilemma where it must practice credit discipline as well as trying to maintain growth at the same time.

The central bank has been walking on a tightrope so far. Loosening the purse strings too much will undermine the reform effort but at the same time, it can’t afford the economy to be starved of credit and fall off a cliff. The latest move suggests that policy makers in Beijing are worried but not yet in panic mode.

Follow Peter Cai on Twitter: @peteryuancai

One step closer to mainly market driver, rather than "planned". The China exchanges are following HKSE method, with a listing review committee...

China drafts rules for IPO plans to be vetted by stock exchanges

(April 20): China’s government has drafted rules for companies’ applications for initial public offerings to be reviewed by the nation’s two stock exchanges, rather than regulators, the state-run Xinhua News Agency reported on Monday.

The proposed amendments to securities laws include removing some profitability requirements for companies planning IPOs, Xinhua reported on its microblog, citing rules submitted to the National People’s Congress standing committee.

Pushing forward a registration-based system for IPOs is the “most important” matter this year for the reform of China’s capital markets, China Securities Regulatory Commission Chairman Xiao Gang said in January.

Planned changes would leave questions of IPO supply and timing of deals to companies, not regulators who now must approve most facets of an offering.

China currently relies on the CSRC to act as a gatekeeper for offerings.

A seven-person listing review committee examines each application, judging factors such as investment potential and profit sustainability.
http://www.theedgemarkets.com/sg/article...-exchanges

Kaisa Group Holdings Ltd. became China’s first real estate company to default on its U.S. currency debt, capping a month of distress in bond markets amid an anti-corruption probe and fueling concern that losses will spread.

The default coincides with the expiration of a 30-day grace period on $52 million of missed interest payments on two dollar-denominated bonds, according to a Hong Kong stock exchange statement Monday. Kaisa, based in the southern city of Shenzhen, is struggling to service 65 billion yuan ($10.5 billion) of debt owed to both onshore and offshore lenders while becoming embroiled in President Xi Jinping’s crackdown on graft.

The developer’s problems have rippled across the region’s debt market, where investors starved of yield elsewhere in the world have swooped in to boost returns. As the government’s anti-corruption probes widen, it’s raising concern that defaults will spread after overseas noteholders bought a record $21.3 billion of bonds issued by Chinese property companies.

“It’s been a canary that has been chirping for some time,” Gary Herbert, a money manager who helps oversee about $45 billion of fixed-income assets at Brandywine Global Investment Management LLC in Philadelphia, said in a telephone interview. “This is the beginning of an adjustment period in China that will see a lot of credit investors, who were chasing the promise of higher yields, ultimately disappointed.”
Founder’s Return

Kaisa’s default follows the surprise return of founder Kwok Ying Shing last week.

Major Chinese Developer Says It Can’t Pay Dollar Debts

(21-04-2015, 03:43 PM)BlueKelah Wrote: [ -> ]Major Chinese Developer Says It Can’t Pay Dollar Debts

Kaisa founder-boss came back on Board. Some other article said Sunac due diligence team also kenna kicked of Kaisa office.

Fast food chains goes stale for China’s consumers
LAURIE BURKITT, ILAN BRAT THE WALL STREET JOURNAL APRIL 22, 2015 1:46PM

Exterior of KFC store location, New South China Mall, Dongguan, China. Source: Supplied

Yum Brands, which gets around half its revenue from China, is facing a new reality: Chinese consumers who once found its KFC and Pizza Hut chains fresh and different now see them as neither.

On Tuesday, Yum posted profit and revenue declines in the fiscal first quarter of 2015 as it struggles to overcome setbacks in China. Yum’s China sales in the quarter were down 9 per cent from a year earlier, to $US1.26 billion, following declines in the third and fourth quarters of last fiscal year. Overall net income slid 9 per cent to $US362 million in the quarter from a year earlier on sales of $US2.62 billion.

Novelty was a big draw for Chinese customers when Pizza Hut and KFC — along with other American brands such as McDonald’s Corp. and Wal-Mart Stores Inc — swept into China in the late 1980s and 90s. Decades down the line, these brands face customer defections to newer rivals.

Liu Yue, a 30-year-old finance worker who began eating at Pizza Hut several years ago, this weekend tried out a newly opened Pizza Express in one of Beijing’s hottest shopping centres instead of going to the nearby Pizza Hut.

“I wanted a nice restaurant, not fast food,” he said, describing Pizza Hut’s offerings as “unsophisticated”.

Pizza Express, originally a UK chain that Chinese private-equity firm Hony Capital acquired last year, sells pizzas for 80 yuan to 135 yuan, or from $US13 to as much as $US22, including one with spicy Italian sausage and mascarpone and fennel seeds, with chefs tossing the dough in view of customers.

Yum Brands promoted Pizza Hut in China by offering food far beyond pizza, such as fried Chinese rice dishes and French steak. That approach led to some baffling menu items, such as a pizza sold two years ago that had 24 Milanese sausages baked into the crust, circling a pie topped with squid, crab, fried prawns and a mayonnaise drizzle.

It is a recipe for success that may have run its course with some consumers.

“Pizza Hut sells food they think Chinese will like, not authentic food,” said a 27-year-old government employee who gave only her surname, Liu.

Sales at Chinese Pizza Hut stores open more than a year declined 6 per cent in the first quarter.

Pizza Hut’s travails are emblematic of the brands that arrived early in China but are losing cachet.

In 2012, 39 per cent of consumers in China surveyed by market-research firm Millward Brown called McDonald’s a desirable brand, while a third said the same of Pizza Hut. In a survey last year, that had dropped to less than a quarter for both brands.

Some domestic dining chains have also eaten into the US brands’ turf. China’s Xiabuxiabu Catering Management Holdings Co serves hot pot — a broth in which customers cook their own meat and vegetables — at a price that competes with Pizza Hut’s 88 yuan black-pepper-beef-fajita dish. Xiabuxiabu, which listed its shares in Hong Kong last year, aims to double the number of its stores to 1000 in the next four years, rivalling Pizza Hut’s count.

Jonathan Blum, Yum’s chief spokesman, said since last (northern) summer, the company’s scores on its monthly consumer surveys show steady improvements in key areas including trustworthiness and a category called “my favourite quick-service restaurant brand”.

The company’s China results “are still negative, and we’re not happy with negative,” said Mr Blum. But “there’s a lot to be excited about at KFC China, and … we have every expectation that we will continue to regain sales and build on this momentum.”

Yum Brands, based in Louisville, Kentucky, has seen the writing on the wall for a while. “It’s true, we’re not [new] anymore,” said Yum’s China chief, Sam Su, in an interview in 2013.

To win consumers looking for a more upscale experience, Yum Brands is opening a high-end Italian eatery in Shanghai, Atto Primo, by the end of April, said a China-based spokeswoman for Yum. In the Bund area along Shanghai’s Huangpu River, Yum will sell pasta dishes in the $US25 range as well as Wagyu steak for 298 yuan, roughly $US50, well above the 35 yuan spaghetti it sells at its Pizza Huts in China.

For now, Atto Primo appears little more than an experiment. Yum has “no future plans other than to see how this performs with consumers,” the spokeswoman said, adding that Atto Primo “may serve as an innovation lab for Pizza Hut.”

Meanwhile, KFC, the first Yum Brand chain to enter China, in 1987, is facing an even worse loss of appeal. Only 19 per cent of respondents called it a desirable brand, down from 42 per cent in 2012, according to the Millward Brown survey, while a quarter view it as “different,” compared with 42 per cent in 2012.

KFC has faced other setbacks in the market. Chinese media reports last (northern) summer connected KFC with a restaurant supplier that allegedly sold expired meat. Yum responded quickly by pulling the supplier, but last October said that companywide sales in China for the fiscal third quarter fell 14 per cent at restaurants open at least a year. Before that, the company, which runs more than 6000 restaurants in China, was dealing with public backlash that began in November 2012 over reported use of growth hormones and antibiotics by two KFC chicken suppliers. The company subsequently reduced its number of suppliers and apologised for “communication missteps,” but said its products were safe.

Attempting a comeback, Yum’s Mr Su overhauled the KFC menu last year, adding more rice dishes, and has been remodelling restaurants. Most recently, KFC launched coffee drinks to compete with McDonald’s McCafé stores. But Mr Su has said he wasn’t trying to match the aspirational image that Chinese consumers once had of KFC.

McDonald’s, which opened in China in 1990, is also trying tactics for renewal there, such as restaurants with Barbie and Hot Wheels themes. McDonald’s declined to comment.

Loss of lustre isn’t confined to the fast-food chains. Wal-Mart Stores in recent years is treading water in China while domestic megamarket retailer China Resources Enterprise, which gears itself to a growing Chinese middle class, has moved ahead.

Wal-Mart’s market share has stayed constant at 11.2 per cent, while China Resources has overtaken it, going from a 9.8 per cent share in 2009 to 13.9 per cent in 2014, according to market-research firm Euromonitor International.

A spokesman for Wal-Mart said the comparison between the stores was unrealistic. “It is like comparing Whole Foods in the US to Wal-Mart,” he said.

He said the company continued to gain in all areas, including market share, but declined to give details.

Consultants say that refreshing stale brands will be challenging, but that some brands, such as Starbucks, are investing frequently in remodelling their stores to stay fresh. A Starbucks spokesman declined to disclose its investment in remodelling but said that the company had overhauled stores since entering China in 1999.

“Nobody can rest on past success anymore, and companies have to keep reinventing themselves to remain relevant,” said Matthew Crabbe, an Asia-Pacific research director for consultancy Mintel Group.

http://www.bloomberg.com/news/articles/2...icy-makers

China Has a Massive Debt Problem
by Enda CurranLianting Tu
5:23 PM SGT
April 22, 2015

How Concerned Should We Be Over China Defaults?

China has a $28 trillion problem. That’s the country’s total government, corporate and household debt load as of mid-2014, according to McKinsey & Co. It’s equal to 282 percent of the country’s total annual economic output.
President Xi Jinping’s government aims to wind down that burden to more manageable levels by recapitalizing banks, overhauling local finances and removing implicit guarantees for corporate borrowing that once helped struggling companies. Those like Baoding Tianwei Group Co., a power-equipment maker that Tuesday became China’s first state-owned enterprise to default on domestic debt.
Now hold that thought, and consider this: China’s also trying to prop up a $10.4 trillion economy that’s decelerating and probably will continue to do so through 2016, or so says the International Monetary Fund. The economy expanded 7 percent -- the leadership’s growth target for this year -- in the first quarter, the weakest since 2009 and a far cry from the 10 percent average China managed from 1980 through 2012.
Against this backdrop, a barrage of recent policy moves out of China in recent days comes into sharper focus. It also helps explain why various parts of the government don’t always seem to be working from the same playbook.
Two Goals
“There’s obviously a contradiction between attempts to deleverage the economy and attempts to boost growth,” said Dariusz Kowalczyk, a senior economist at Credit Agricole SA in Hong Kong who’s covered emerging Asia for a decade and used to work at the Chicago Mercantile Exchange. “There’s a trade-off. China will focus on deleveraging as long as growth meets its target but if growth slows excessively then they will refocus.”
On April 17, securities regulators clamped down on margin lending that has helped fuel epic stock market rallies in Shenzhen and Shanghai over the last year.
Three days later, officials unleashed about 1.2 trillion yuan ($194 billion) into the economy -- and stock markets -- by cutting the level of deposits that banks need to hold in reserve with the central bank. For large lenders, the reserve requirement was lowered a full percentage point, to 18.5 percent, the PBOC’s most aggressive such step since 2008.
In a separate move, the People’s Bank of China injected a combined $62 billion worth of capital into two state-owned lenders that are referred to as policy banks, as they carry out government objectives, a Caixin magazine report showed.
Roll Over
Also in recent weeks, China’s Premier Li Keqiang has urged banks to support economic growth and roll over loans when needed to key borrowers.
That call didn’t apply to Baoding Tianwei, which suffered losses last year amid a glut of investment in the solar-energy industry. Nor to Kaisa Group Holdings Ltd., which on Monday became the first Chinese property developer to default on dollar debt.
Kaisa’s delinquency on $1 billion of bonds served as a reminder of the risks for overseas investors -- Chinese companies have $275 billion in dollar-denominated bonds outstanding, according to data compiled by Bloomberg. China’s property developers alone have tapped international bond and equity markets to the tune of almost $79 billion.
Ying Wang, a credit analyst with Fitch Ratings in Shanghai, sees more defaults ahead for “non-strategic, commercially unviable SOEs.” Such events may help “instill greater market discipline and reallocate capital more efficiently within the economy,” she wrote in a statement published Wednesday.
Market Calm
For many observers, the defaults are the logical outcome of companies piling on excessive debt year after year. Financial markets, lubricated by the PBOC’s actions, took the incidents in their stride: the main Shanghai stock index touched a seven-year high Wednesday and the benchmark money-market rate dropped.
The question is whether the calm remains as a weakening economy makes it harder for borrowers to service interest payments and the government gets more tolerant of some companies going under in crowded sectors such as real estate, steel and cement production.
“China is moving to a new model where the check is not blank anymore,” said Chi Lo, a senior strategist on China at BNP Paribas Investment Partners in Hong Kong. “It will be controlled and measured -- large companies won’t be allowed to fail. Small private and state companies in sectors with excess capacity will fail.”
More Coming
Another source of coming failures may be banks themselves, at least smaller ones. Among regulatory overhauls in train is a deposit-insurance program and ending a cap on deposit rates that effectively subsidized credit and punished savers. The deposit-rate ceiling may be abandoned this year and deposit insurance, a vital prerequisite, is scheduled to start May 1.
Putting depositor safeguards in place would allow for bank failures without stoking the kind of panic that spurred almost 1,000 customers to rush to outlets of Jiangsu Sheyang Rural Commercial Bank last year amid rumors the lender might go bust.
Moving toward a financial system where risk is more accurately priced and defaults tolerated is also crucial to the government’s fiscal overhaul of debt-besotted local governments.
In March, China’s Finance Minister Lou Jiwei unveiled a plan letting local governments swap 1 trillion yuan of existing high-interest borrowing for lower-cost municipal bonds. In future, local authorities will also issue bonds directly rather than relying on off-balance sheet financing vehicles.
Local authorities will issue at least 1.6 trillion yuan of notes this year, four times as much as in 2014, according to Ministry of Finance estimates.
Fair Pricing
Getting investors to soak up that supply will be easier if bond prices are viewed as fairly priced, with less credit-worthy local issuers paying a higher interest rate than sound ones.
“The biggest hurdle doing the debt swap is moral hazard,” said David Cui, head of China equity strategy at Bank of America Corp. “Without significant pain suffered by the local government and lenders, it is hard to instill discipline into local-government borrowing and lenders’ risk assessments.”
As policy makers in Beijing complete the strategy, regional governments are struggling to find cash to keep building roads, metro systems and water works. A slump in investment is a big reason behind the economy’s slowdown.
All this explains why cleaning up the debt mess matters. With $3.73 trillion in foreign currency reserves, China has the financial resources to handle any future bank bailout or economic stimulus if need be.
Even so, if borrowing levels keep rising, at some point the country’s ability to both roll over existing credit and fund new projects will get tapped out. That’s not a good place to be for a one-party state with huge inequality and still-considerable development needs.
“The only hope of deleveraging the economy successfully is to redirect lending away from inefficient SOEs towards private firms,” said Michael Spencer, chief Asia Pacific economist at Deutsche Bank AG in Hong Kong.

Why China’s true growth figures are a mystery
MARK MAGNIER THE WALL STREET JOURNAL APRIL 27, 2015 7:57AM

When China released its tabulation of first-quarter growth earlier this month, the 7 per cent figure — the worst in six years — stirred fears of a deepening slowdown.

It also raised fresh doubt about the trustworthiness of China’s own statistics.

“Growth Likely Overstated,” said a Citibank report, concluding that actual quarterly growth could be below 6 per cent year to year, depending on the factors weighed. Other research firms put their numbers far lower, with Capital Economics pegging the quarter at 4.9 per cent, the Conference Board’s China Center at 4 per cent and Lombard Street Research at 3.8 per cent.

Efforts to discern China’s actual growth rate have kept economists pinned to their calculators for years, and for good reason.

For one, the figures are suspiciously smooth, with none of the sharp gyrations seen in the US or other economies. The methodology often appears inconsistent or contradictory. Also, no one knows how China accounts for inflation when tabulating its gross domestic product.

Then there are the many ways China’s GDP figures appear to clash with other data points considered more difficult to manipulate. Economists point to the discrepancy between headline GDP growth and industrial production, often seen as a proxy for growth, which grew by 5.6 per cent year to year in March — its lowest level since late 2008.

This came amid weaker recent readings for electricity consumption, investment, industrial profits, manufacturing output and real-estate investment, among others.

This dissecting of the official growth numbers received the roundabout backing of Premier Li Keqiang, who in 2007 as Communist Party chief of north-eastern Liaoning province criticised China’s GDP numbers as “man-made and therefore unreliable,” according to a memo by the US ambassador at the time, later released by WikiLeaks. Mr Li said he found electricity output, rail cargo and bank loans more trustworthy, according to the memo, which has since inspired financial institutions to create their own versions.

China is hardly alone among emerging countries in releasing questionable statistics. But Beijing has come under particular scrutiny because of the size and importance of its economy and the hunger that a growth-starved world has for genuine output. There is also suspicion the shortcomings involve wilful doctoring rather than data-collection problems common to India and other developing countries.

Most economists say China’s National Bureau of Statistics has become more professional in recent years, considering its limited bureaucratic clout and skimpy budget.

As China’s economy pivots away from heavy manufacturing, the bureau has struggled to better reflect the growth contribution from services and consumption over production, the traditional focus, economists say. And it has tried to rely less on data from local officials with an interest in inflating growth to secure promotions.

“Local exaggeration is not the problem it once was, though I assume it is not eradicated,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics.

The statistics agency hasn’t helped its case. It doesn’t explain its methodology or inflation assumptions and many of its calculations are difficult to reproduce, economists say.

The statistics agency and the National Development and Reform Commission, China’s top economic planning agency, declined to respond to questions.

How the agency obtains GDP figures is “anybody’s guess,” said Hong Kong University of Science and Technology economics professor Carsten Holz, author of a paper on the quality of China’s GDP statistics, citing what he calls an “atrocious lack of transparency.”

Suspicion centres on two major issues: How wilful is the fudging, and does China have a second set of books so leaders know what’s “really” going on?

China has an incentive on both counts. Because it is a one-party state, economic growth takes on over-size importance as a way to prevent social instability that could loosen the party’s grip on power. At the same time, it needs accurate information to plan and even route subsidies to groups that could fuel dissent.

There is no evidence that the Communist Party has a separate set of books, said Harry X Wu, professor at Japan’s Hitotsubashi University and special adviser to the Conference Board.

The fudging question is more difficult to assess, economists say. The Federal Reserve Bank of San Francisco in a 2013 study that compared China’s GDP figures with a range of domestic and foreign data concluded that actual growth was broadly in line with the official numbers.

Ultimately, said Mr Holz, China’s statistic agency is headed by party cadres and not above adding a touch to its growth figures to reach the politically desirable 7 per cent figure.

“I wouldn’t take the 7 per cent figure too seriously,” Mr. Holz said.

Others believe the number is much further off. “I have to laugh at the official estimates of 7 per cent first-quarter GDP growth. I think that’s completely out of line,” said Mr Wu.

Wall Street Journal

China plans mergers to cut number of big state firms to 40: state media

http://www.channelnewsasia.com/news/busi...09350.html

How would this affect China Merchant Group (owns CMHP) and China National Aviation Fuel Group (owns China Aviation Oil)? If they are affected by merger, it could mean a change in strategy. 40 sounds a bit drastic for a big economy like China.