China hit by cash crunch, factory output fall

Screen shot 2013-06-24 at 9.45.36 AMChina delivered a one-two punch of negative economic data this week, hitting first with an initial report on factory activity falling to a surprise nine-month low and then with interbank lending rates rocketing to a record high.

The gloomy numbers keep fears alive that the world’s second-largest economic engine is not just slowing down — but also seizing up.

China’s main seven-day repurchase rate jumped to a record 12% this Thursday, according to CME Group. China’s weighted average overnight repo rate hit 13.1% — the highest in more than a decade.

The rate spikes are a reaction to Beijing’s decision earlier this week to withhold new infusions of cash into the markets. One of the central bank’s aims is to slow the growth of China’s ballooning debt and stop easy access to credit.

The country’s total debt is estimated to stand at more than 200% of GDP when debt from the central government, local governments, corporations and households are included, says Swiss bank UBS.

In April, Fitch had warned China of its high debt levels, downgrading the country’s long-term currency rating. The ratings agency cited expansion of easy credit and structural weakness in China’s economy.

However on Friday, repurchase rates fell on reports that China’s central bank had supplied more than $8 billion in new liquidity to ease the current cash crunch.

On June 20, the same day that China’s repurchase rates hit record highs, HSBC’s June “flash” purchasing managers’ index fell to a nine month low of 48.3. A PMI reading below 50 indicates contraction in the country’s manufacturing sector as new export orders plunged from major trading partners like the United States and Europe.

Some China watchers fear the country will miss its self-imposed 2013 growth target of 7.5%.

Since June 1, China’s benchmark Shanghai Composite Index has fallen 10%.

 

 

 

Source : CNN | June 21, 2013

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About thomasdinnocenzi

Thomas D'Innocenzi is a highly accomplished, results-focused senior international executive with extensive experience in global sourcing and market development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global sourcing operations worldwide. Extensive experience in international market development operations to accommodate rapid growth. Skilled in building top-performing teams, benchmarking performance, and restricting organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. As principal of Nova Advisors, LLC I’ve assembled an exemplary team that brings with them the knowledge and experience gained from starting up a Global Sourcing program with multiple Fortune 500 companies as well as the largest supplier network throughout the Asia-Pacific region. We have experience and expertise in more than a thousand medical and pharmaceutical products in manufacturing and sourcing at the best value. The right product, the right price point and the right branding fueled these successes that resulted in double-digit growth for top line sales and bottom line net margins for our customers. What sets us apart: • Our reach includes a large network of suppliers & manufacturers spanning 13 countries in Asia-Pacific region • We understand the manufacturing process and the business of the supplier and the buyer • Our company culture is based on quality assurance and our process is based on local quality control Our commitment is to be your partner offering the best products and services at the lowest cost. Contact me to discuss how we can make the global marketplace work for you. thomas@novaadvisors.com In addition, I am open to discussing opportunities in global sourcing, international marketing & sales, logistics and medical/pharma in Thailand, Vietnam, Malaysia, Philippines & Japan. Aside from my work I enjoy piano, astronomy, physics, and assisting my daughters with their studies. SPECIALTIES: Global Sourcing, Supply Chain Management, Business Development, Marketing, Logistics, Global Networking, Market Development, Healthcare Solutions, Pharmaceuticals, Medical Devices, Technology, Asia, Southeast Asia, US and Canada
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