China:Why Hasn’t Loan Growth Generated Economic Growth?

"In its latest monetary policy report (in Chinese), China’s normally tight-lipped central bank offered various explanations, some more reassuring than others:

• Loans going into areas that don’t immediately generate growth — like land needed for construction projects.

• Hoarding of cash by businesses at a time of economic uncertainty, with some businesses using funds to make more loans at a higher interest rate.

• Old industries fading away and new industries firing up both need credit, but neither generates stellar output.

• A more sophisticated financial system takes longer to get credit to end users.

The central bank sees risks — especially with businesses sticking to their credit-hoarding ways despite a shift to lower potential growth. But overall they strike a reassuring tone. Wide gaps between growth in credit and the real economy are not uncommon, they say, especially during slowdowns".

Source: WSJ

Japan: pump price tops 160 yen for 1st time in nearly 5 years

The average retail price of regular gasoline in Japan as of Monday topped 160 yen per liter for the first time since October 2008, government data showed Wednesday.

The increase reflects continuing high prices of crude oil due to concerns about political uncertainty in Egypt as well as the weakening yen.

The average gasoline price climbed 1.3 yen from a week before to 160.1 yen per liter, the Agency for Natural Resources and Energy said.

Japanese companies increase summer bonuses

Average summer bonuses that major Japanese companies agreed to pay rose for the first time in two years in 2013, a private-sector survey showed Wednesday.

This year's summer bonuses totaled 809,502 yen per unionized worker, topping 800,000 yen for the first time since 2008, according to the survey by the Japan Business Federation.They represented an increase of 4.99 pct from a year earlier

China: CRC to increase railway investment

State-owned railway giant China Railway Corporation (CRC) has announced a plan to raise fixed-asset investment to 660 billion yuan (106.5 billion U.S. dollars) this year to boost railway development.

The amount, 10 billion yuan more than the investment target set earlier this year, has been interpreted as a signal that greater investments will be made in infrastructure to boost the economy, sources with the CRC said.

About 5,500 kilometers of railway lines will be put in operation, bringing the total length of railways in operation to 100,000 km by the end of 2013. Express rails are expected to exceed 10,000 kilometers.

In the first seven months of this year, the CRC has invested 261.7 billion yuan in railway fixed assets, up 16 percent year on year.

China's Huawei unveils Ascend P6 smartphone, the world's slimmest model

Huawei, a leading global information and communications technology (ICT) solutions provider, unveiled its two new products in the Philippines on Wednesday.

One was Ascend P6 smartphone, the world's slimmest model measuring only 6.18 mm and weighing just about 120 grams.

"It is a star among smartphones with its industry-leading design, high-quality camera and intuitive user interface," said Johnson Ma, country manager of Huawei Divice Philippines.

"The newly launched Ascend P6, Huawei's flagship phone, features a 1.5GHz quad-core processor, android 4.2.2 operating system, 200mAh battery, 4.7-inch in-cell LCD screen technology, and 'MagicTouch' for enhanced screen responsiveness even when wearing gloves," he added.

The other was Ascend Mate, a pocket cinema phablet that features an ultra huge 6.1-inch HD display, a super fast 1.5 GHz Hi-Silicon quad-core processor and a long lasting 4050 mAh battery.

Huawei, founded in China's Shenzhen city in 1987, is an entirely employee-owned private company and a leading global information and communications technology (ICT) solutions provider.

Source: Xinhua

IMF Report of Japan

The new government announced in December 2012 a new policy to end decades-long deflation and raise growth. The new policy framework—“three-arrows” of Abenomics comprising 
aggressive monetary easing, flexible fiscal policy, and structural reforms—provides a unique 
opportunity to end decades-long deflation and sluggish growth, and reverse the rise of public 
debt. 
 Japan's Q1 growth accelerated to 4.1%(seasonally adjusted annual rate) after two quarters of
stagnation. Exports rebounded because of a weaker yen,and the stock market rose sharply 
stimulating consumption. Inflation expectations have started to increase and actual inflation 
was recorded in June.
From September 2012 to mid-May 2013 the Nikkei stock index rose by about 80 percent, but temporarily dropped sharply by around 15 percent. As of end June, the yen has depreciated by about 20 percent in real effective terms since mid-2012. Ten-year bond yields have remained unchanged around 80-90 basis points since the beginning of the year, although they briefly declined to historic lows of about 45 basis points after the announcement of QQME.
  The Japanese economy is expected to grow by about 2% in 2013 as a result of monetary easing,and fiscal stimulus, increased consumption and investment.
  In 2014, growth is expected to moderate to 1.2 percent as a continued pick-up in private domestic demand is offset by fiscal withdrawal from the consumption tax increase from 5 to 8 percent and an unwinding of reconstruction spending.
  Over the medium term, growth is expected to converge to 1 percent as a recovery in investment is offset by a slowdown in labor supply due to population aging.

  The Executive Board agrees that Japan's fiscal stimulus and aggressive monetary easing have 
improved in the short term growth prospects for the Japanese economy. Directors agreed, however, that the growth outlook is subject to significant risks, primarily stemming from incomplete domestic reforms and a weaker external environment, and that sustained implementation of the authorities’ reform program is the best way to minimize these risks.

   But because of the dismal fiscal situation,  Japan will have this year a gross debt of 246.9 % of 
GDP. Japan's Government should implement a credible fiscal plan in the medium term, to avoid politicaal uncertainties and avoid fiscal risks.
    Bringing down public debt as a share of GDP will require a significant adjustment over the next decade. In this regard, the IMF board supports Government plans to double the consumption tax rate by 2015, although a few Directors expressed concern over the possible adverse impact on growth. Directors also underscored that additional revenue and expenditure measures will be needed beyond 2015.

Source:   Executive Board of the International Monetary Fund (IMF)  Article IV consultation discussions with Japan

Global property investors are looking for buying real estate in Japan

Global property investors are turning their attention from Hong Kong - where the government has rolled out restrictive measures to curb investment demand - to offshore markets ranging from Japan to Vietnam.

While they remain positive about the long-term market outlook in China, including, Hong Kong, British property investment company Grosvenor and New York-based investment fund Angelo, Gordon & Co, say they are actively looking for buying opportunities in Japan.Investment fund Gaw Capital Partners singled out Vietnam as an option.
"At the moment, we think Tokyo presents the best market in terms of timing and opportunity in pricing," said Nicholas Loup, chief executive at Grosvenor Asia Pacific.

Source:  South China Morning Post