China

The opening of the $3.5 billion Baha Mar mega-resort in the Bahamas is expected to be delayed beyond the start of the Christmas season, with the developer deep in an escalating legal battle with the Chinese companies that are providing most of the finance and construction work, Reuters reported. Even if construction on the unfinished resort resumed this month, there is little chance the project could be completed by mid-December, the start of the high season for Bahamas resorts, according to local contractors who have worked on the project.

China’s central bank has warned investors to expect more “two-way volatility” in renminbi trading when foreign exchange markets reopen on Monday, less than a week after a 2 per cent downward “adjustment” sparked a week of roller-coaster trading for the currency, the Financial Times reported. In a statement issued on Sunday, Ma Jun, chief economist at the People’s Bank of China, said the Chinese government had “no intention or need to participate in a ‘currency war’”.

For years, China looked like the principled noncombatant. As other countries, seeking to secure an economic advantage, let the value of their currencies slide on international markets, China held firm on the value of its money, the International New York Times DealBook blog reported. But this week, China jumped into the fray. In a surprise decision on Tuesday, the country’s authorities devalued its currency, the renminbi, which has now fallen by 4.4 percent against the dollar this week, a huge drop for China.

Whenever China’s economy swooned in recent downturns, its currency never buckled. It held steady, or strengthened, even as China’s neighbors or trading partners scrambled to cut the value of their own currencies to deal with the fallout, the International New York Times reported. With the Chinese renminbi now taking its biggest plunge in decades, the worry is that the country’s already slowing economy is even worse off and the government is panicking. By the official measures, the economy is growing at 7 percent, right in line with government targets.

Beijing signaled with its currency devaluation that the domestic economic slowdown it has failed to reverse is no longer a problem confined within China’s borders. It is now the world’s problem, too, The Wall Street Journal reported. Chinese officials have cut interest rates four times in the past 12 months, increased the amount of money banks can lend out and pumped funds into the stock market—measures meant to boost domestic demand in the world’s second-largest economy.

China’s economy started the second half of the year on a weak note, posting disappointing trade and factory-price data in July amid pressure from slack demand at home and abroad, The Wall Street Journal reported. Exports in July slid 8.3% from a year earlier, reversing a gain of 2.8% in June, customs data released Saturday showed. Imports fell for the ninth month in a row, dropping 8.1%, after a decline of 6.1% in June.

China has spent $144bn to bolster the country’s fragile stock market since June, Goldman Sachs has estimated amid investor fears that authorities might run low on firepower to draw on should stocks resume their recent sharp descent, the Financial Times reported. The figure is less than half of the roughly $322bn war chest that the coalition of state financial institutions — known as the “national team” — has at its disposal, the bank reckons. Concern that the national team is short of capital or is preparing to exit its investments has dominated investor sentiment in recent weeks.

Chinese stocks rebounded sharply on Tuesday after the government took further steps to rein in short-sellers, the International New York Times reported. The main Shanghai share index closed 3.7 percent higher, reversing three days of losses, after the country’s two main stock exchanges said they would make it more difficult for investors to bet on falling share prices.

Some of the world’s largest companies have sounded the alarm about the slowdown in the Chinese economy, warning that weaker growth would hit profits in the second half of the year, the Financial Times reported. Car companies such as PSA Peugeot Citroën, Audi and Ford have slashed growth forecasts while industrial goods groups such as Caterpillar and Siemens have all spoken out on the negative impact of China.

Chinese shares bounced back more than 3 percent on Wednesday, as Beijing's latest efforts to prop up values restored a measure of stability to its unruly stock market, the International New York Times reported. After a dramatic plunge of more than 8 percent in Chinese stocks on Monday, China's securities regulator announced probes into share "dumping" and pledged to buy stocks to calm the market, while the central bank hinted at more policy easing.