China copper smelters plan to cut output after margins fall
The output cuts underscore the industry’s struggle with a shortage of feedstocks caused by recent mine production setbacks.
Bloomberg reports on Monday Chinese banks “misclassified” $286 billion of outstanding loans to local governments according to the country’s banking regulator.
China’s massive banks such as Agricultural Bank of China and China Construction Bank wrongfully put about 20% of these loans in the safest category.
Banks will now have make bigger provisions on their books because of a higher likelihood that these borrowers will default.
Reuters reports “the Chinese government said last year that local governments had borrowed an estimated 10.7 trillion yuan [$1.7 trillion] and analysts estimate at least a fifth of the loans may be delinquent.”
China Briefing News parsed Chinese Premier Wen Jiabao’s words on “market-based approaches” to the debt at press conference last week and has some good news for foreign investors in the world’s second largest economy:
While the Chinese government has come up with various approaches – such as extending the loans’ maturity period and raising more capital – to avoid a major bank default, faster privatization might be the ultimate measure that helps the country finally get away from a vicious lending and spending cycle.
The Hong Kong based research company also quotes Leo Zhang, chairmen of China-based Jumbo Consulting: “In industries where you can exit, you exit… Why do we need over 100 SOEs? It’s unnecessary. You should sell them all.”
