Chinese leaders pledged stepped-up efforts to boost slowing growth, as they try to manage a downshift in a maturing economy and fallout from the trade war with the U.S., the Wall Street Journal reported. An economic blueprint, approved today by President Xi Jinping and other Chinese leaders at the end of an annual closed-door conclave, promised more fiscal and monetary measures with the aim of supporting everything from consumption to infrastructure investment and employment in the coming year—all to ensure that the growth rate will be kept stable.
China
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Soaring hog prices continued to drive up China’s consumer inflation higher in November, but experts remained optimistic that the momentum would slow as the price of pork appears to be heading toward a peak in the coming months, the Wall Street Journal reported. China’s consumer-price index rose 4.5 percent in November from a year earlier, matching a pace set in January 2012, according to data released yesterday by the official National Bureau of Statistics. The inflation reading was higher than a 3.8 percent rise in October.
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U.S. and Chinese trade negotiators are laying the groundwork for a delay of a fresh round of tariffs set to kick in on Dec. 15, according to officials on both sides, as they continue to haggle over how to get Beijing to commit to massive purchases of U.S. farm products President Trump is insisting on for a near-term deal, the Wall Street Journal reported.
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Concern is growing about HNA Group Co. after one of the airlines it backed almost collapsed and trading in some of its bonds was halted, Bloomberg News reported. The group shot to prominence between 2016 and 2017 after spending more than $40 billion on acquisitions across six continents. The once little-known airline operator became the biggest shareholder of iconic companies such as Hilton Worldwide Holdings Inc. and Deutsche Bank AG as well as paying top dollar for high-end properties from Manhattan to Hong Kong.
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The latest bond failure by a Chinese local government investment arm has rekindled concerns about a group of borrowers whose outlook is closely tied to Beijing’s shifting definition of its implicit backing, Bloomberg News reported. The debt woes faced by Hohhot Economic & Technological Development Zone Investment Development Group, a local government financing vehicle from Inner Mongolia, have sent chills among investors holding other such LGFV bonds, driving prices sharply lower for some.
A stalemate between the U.S. and other members of the World Trade Organization, including the European Union and China, stands to cripple the organization’s top court, threatening the global body’s survival, the Wall Street Journal reported. On Wednesday the court, called the Appellate Body, will no longer have enough judges to rule on big trade disputes between countries. At stake are international rules negotiated over five decades by the U.S. and Europe to boost global trade.
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As investors brace for the biggest dollar default by a Chinese government-owned borrower in decades, a new breed of state asset managers tasked with cleaning up the mess is gaining equal attention, Bloomberg News reported. Trading firm Tewoo Group Corp., a onetime Fortune Global 500 company that seemed like a good bet for a full official bailout thanks to its state ownership, is struggling to make payments on its $2.05 billion of offshore debt.
China’s Peking University Founder Group is scrambling for funding after failing to repay an onshore bond, three sources told Reuters on Tuesday, which could trigger defaults on billions of the borrower’s U.S. dollar offshore debt, Reuters reported. State-owned Peking Founder told investors on a conference call on Tuesday it had yet to obtain the 2 billion yuan ($284 million) it needs to repay the overdue note, the sources said, although it had a grace period of 15 days to do that.
China is hurtling toward another record year of onshore bond defaults, testing the government’s ability to keep financial markets stable as the economy slows and companies struggle to cope with unprecedented levels of debt, Bloomberg News reported. At least 15 defaults since the start of November have pushed this year’s total to 120.4 billion yuan ($17.1 billion), within a hair’s breadth of the 121.9 billion yuan annual record in 2018, according to data compiled by Bloomberg.
For years, defaults were few and far between in China's corporate bond market. Most investors thought that the Chinese government would never let companies — whether they be state-owned enterprises (SOEs) or private businesses — actually default on their debt, Bloomberg News reported. But times have changed. Defaults by private companies have been rising and there's even a question mark over the implicit government guarantee in debt sold by SOEs.