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GREATER CHINA ECONOMICS WEEKLY INSIGHT
2 JULY 2013
FEATURE NOTE HOW BIG IS THE SECOND ROUND IMPACT OF CHINA’S INTER-BANK CREDIT SQUEEZE?
2 6 7 8 10 12 13
INSIDE Feature Note Data Preview Week in Review China Liquidity Report Momentum Barometer Forecasts Important Notice
If China’s central bank continues to tighten market liquidity without accommodating the rapidly deteriorating internal and external environments, we believe financial institutions will start to de-leverage which will last for 1-2 quarters. The real economy will suffer. The high inter-bank interest rate will pass-through to the bond markets and bank lending to corporates. It will also hurt local government’s financing ability. China’s local government debt outstanding remains above RMB10trn, which means that even 10bps rise of the funding cost will bring about RMB10bn in additional interest payments. We believe that medium-small banks will suffer the most from an inverted yield curve as they are price sensitive. The second round impact of the liquidity crunch will hurt small and medium-sized enterprises as it will result in a double whammy with high interest rate and strong RMB exchange rate.
Li-Gang Liu Chief Economist, Greater China LiGang.Liu@anz.com Raymond Yeung Senior Economist Raymond.Yeung@anz.com Hao Zhou Economist, China Economics Hao.Zhou2@anz.com Louis Lam Economist, Greater China Louis.Lam@anz.com
DATA PREVIEW China: We expect China’s CPI inflation to rebound to 2.6% y/y in June, from 2.1% in May, mostly due to base effects. Meanwhile, the PPI inflation is likely to remain soft, at -2.4%. WEEK IN REVIEW Taiwan’s central bank held the policy rate at 1.875% in June as expected. CHINA MARKET LIQUIDITY REPORT The liquidity tightness has started to ease after PBoC fine-tuned its tone last week. However, the overnight and 7-day repo rates stayed high, suggesting that funding costs are unlikely to return to normal levels very soon. CHART OF THE WEEK China’s medium and small banks borrowed intensively from the inter-bank market
China - Net Borrowing from Financial Institutions (RMB trn)
4 3 2 1 0 -1 -2 2010
2012 Big-four Banks
2013 Joint-stock Banks
Medium and Small Banks
Sources: CEIC, ANZ
Greater China Weekly Insight / 2 Jul 2013 / 2 of 14
HOW BIG IS THE SECOND ROUND IMPACT OF CHINA’S INTER-BANK CREDIT SQUEEZE? The continuous and severe liquidity squeeze in China’s inter-bank markets has concerned many that the country is likely to experience a fast de-leveraging process in its financial system. As a result, the real economy will continue to suffer. PBoC Governor Zhou acknowledged over the weekend that the market has basically understood the PBoC’s handling of liquidity. He said banks had great interest to extend loans in early-June but this was not in line with China’s monetary policy, and banks need to adjust. This is the first time that China’s central bank has admitted that the aim of the liquidity tightness is to slow the expansion of the commercial banks’ balance sheets, indicating that a de-leveraging could be inevitable. In our view, if the central bank continues to maintain the relatively tight liquidity conditions without any signal of a policy easing to reflect the rapidly deteriorating internal and external environment, the de-leveraging process in the financial institutions will mean that credit extended to the real economy will fall in the next 1-2 quarters, which will further weaken the already sluggish economy. In this note, we investigate the second-round impact of China’s inter-bank credit squeeze and its implications for the overall economy and some sectors that are likely affected the most in the aftermath of the inter-bank turmoil. IMPACT ON THE BOND MARKET We start from the financial markets first. Most Chinese banks now hold large amount of bonds as a part of their liquid asset holding. China’s bond outstanding reached RMB26trn at the end of 2012, equivalent to 25% of China’s banking assets. Nearly 90% of China’s bond transactions take place in the inter-bank market. In the past few years, China’s bond market transaction picked up steadily, rising by 17.5% from 2010 to 2012. More importantly, inter-bank bond repurchase surged by more than 60% from 2010 and 2012, suggesting that bonds are used as an important liquidity management instrument.
China - Interbank Transactions (RMB bn)
160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0
Interbank Lending 2010 2011 2012
Sources: PBoC, ANZ
This means that a surge in China’s inter-bank rates will quickly transit in the bond markets. If under the pressure of a liquidity squeeze, those banks facing a cash crunch will have to reduce their bond holdings. Furthermore, because bond trading is also financed by short-tenor inter-bank repo (overnight and 7-day repos), a surge in repo rates will result in a negative carry, and thereby drive up bond yields as well. Indeed, we believe a fast rising government bond yield over the past few months is a reflection of the inter-bank credit squeeze, leading the yield curve to be inverted.
Greater China Weekly Insight / 2 Jul 2013 / 3 of 14
China - Government Bond Yields 4.5 4.0 3.5 3.0 2.5 2.0 Sep 11
Jan 12 1-year
May 12 3-year
Sep 12 5-year
Jan 13 7-year
May 13 10-year
Sources: PBoC, ANZ
If the liquidity tightness continues, we will likely see the following sequential developments in China’s bond and credit markets. We believe financial institutions will likely sell government bonds as they are the most liquid asset, followed by the sale of credit bonds such as corporate bonds and chengtou bonds if the overall liquidity environment stabilizes somewhat. This means that government bond yields will rise and the appetite for corporate and chengtou bonds will dry up. Indeed corporates, and particularly local governments, will face more difficulty in issuing bonds. If there is a freeze in the chengtou bond markets, some local governments will likely face difficulty in paying back their loans to the banking system, issued during the GFC period. This could lead to rising non-performing loans in the banking system. Meanwhile, commercial banks will find it difficult to sell lowrated bonds, but have to increase provisions to cover the mark-to-market losses and prepare for possible default. While the above described sequential events that may not be realized, we believe policymakers will need to be aware of these spillover effects. In the past few weeks, at least 15 bond issuances have been cancelled, which is likely to dampen market confidence. IMPACT ON THE BANK LENDING It is reported that some Chinese commercial banks have suspended new loans extension amid the liquidity crunch. There does not seem to be a clear pass-through effect from the inter-bank borrowing rates to the loan rates, largely owing to China’s interest rate controls. However, past experience suggests that the actual lending rates tend to be higher while the inter-bank offered rates saw increased volatilities, and vice versa. This suggests that this round of liquidity tightness will not help increase loans to the real economy, and we will likely see higher lending rates for corporates, as overall credit conditions become tighter.
China - Inter-bank Borrowing Rates vs Loan Lending Rates
8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 2009
14 12 10 8 6 4 2 0
2010 2010 2011 2011 2012 2012 2013 Banks' Lending Rates (Weighted Average) Inter-bank Overnight Repo Rates (RHS)
Sources: PBoC, ANZ
In our view, the lending activities and behavior are different between big banks and the small and medium ones. For the big banks, as they have strong branch networks and hold large deposits, they may still want to offer
Greater China Weekly Insight / 2 Jul 2013 / 4 of 14
loans to corporates, albeit at a higher price. For the small and medium banks, especially those adopting a FTP (fund transfer pricing) system, they may have to stop lending to avoid incurring losses. In most cases, the FTP is priced according to market interest rates, normally SHIBOR and bond yields. As the yield curve has been inverted, the commercial banks will not be able to make money in long-tenor loan extension. We believe most foreign banks will become more cautious in lending if the inverted yield curve does not disappear soon. Commercial banks’ profit margin will be squeezed as a result, as overall funding costs are likely to be higher. For the big banks, the margin squeezing could be offset by higher lending rates. However, for the medium and small banks, the profits will likely decline significantly due to an inverted yield curve. IMPACT ON THE INTER-BANK BUSINESS It is widely believed that this round of liquidity tightness is conducted by the PBoC with the aim to curb the inter-bank business which has flourished in the past few years. In fact, the inter-bank business has developed rapidly as these businesses require less capital and face relative looser regulations. As Chinese banks need to comply with strict loan-to-deposit ratios and are under capital tightness pressure, many banks turn to interbank business (not need to comply with loan-to-deposit ratio) to improve the profitability. At present, interbank business refers to inter-bank borrowing/lending, bonds, bankers’ acceptance draft (BAD), letters of credit (LC), etc. While banks are taking on inter-bank credit exposure in conducting the inter-bank business, we believe that corporates and local governments (via chengtou bonds) are actually the end users of the funding. The chart below shows that China’s medium and small banks have borrowed intensively from the inter-bank market in the past few quarters, suggesting that they will have to reduce such business in the coming quarters. As these businesses need to be financed by inter-bank borrowing and are very price sensitive, a liquidity crunch will sharply cut the scale of such business.
China - Net Borrowing from Financial Institutions (RMB trn)
4 3 2 1 0 -1 -2 2010
2012 Big-four Banks
2013 Joint-stock Banks
Medium and Small Banks
Sources: WIND, ANZ
In our view, the de-leveraging will take about 1-2 quarters, as the inter-bank businesses are normally conducted with one year tenor. Meanwhile, in order to finance the existing business, some commercial banks will have to issue high-yielding wealth management products (WMPs) to diversify the funding structure. IMPLICATIONS FOR THE REAL ECONOMY The tight inter-bank credit conditions will start to affect the real sectors of the economy in the coming months: First, we expect funding costs for the property developers and local government financing vehicles (LGFV) to rise further as they will find it difficult to roll over funds. Official data suggest that China’s local government debt outstanding remains above RMB10trn, which means that even 10bps rise of the funding cost will bring about RMB10bn in additional interest payments. Second, small and medium-sized enterprises (SMEs) will likely suffer amid the liquidity crunch. Past experience suggests that the banks normally reduce the exposure to SMEs when the credit appetite eases. Given many of them are in the export sector, these sectors will experience double whammy effect from both rising credit costs and the strong RMB. Third, the issuance of the WMPs will still be sizable in the foreseeable future as banks have to compete for funds amid the liquidity tightness. However, if the WMPs scale back as the commercial banks lower the leverage ratio,
Greater China Weekly Insight / 2 Jul 2013 / 5 of 14
the medium and small banks’ lending capacity will also be constrained. As the medium and small banks mainly serve the SME sector, the SMEs will be further affected. The challenge for the PBoC is to walk the tightrope between market discipline and over-tightening. If liquidity is too tightly rationed, banks may need to deleverage and will be unwilling to offer funds into inter-bank markets, exacerbating already sparse liquidity conditions. In this case, while the central bank emphasized that it will definitely prevent the systemic crisis from taking place via a series of instruments, this risk would remain if the PBoC cannot strike the correct balance between disciplining the banks and maintaining market stability.
Li-Gang Liu, Hao Zhou
Greater China Weekly Insight / 2 Jul 2013 / 6 of 14
CHINA DATA PREVIEW We expect China’s CPI inflation to rebound to 2.6% y/y in June, from 2.1% in May, mostly due to base effects. Meanwhile, the PPI inflation is likely to remain soft, at -2.4%, reflecting weakness in the corporate sector. Overall, China’s inflationary pressures remain tepid.
GREATER CHINA ECONOMIC DATA CALENDAR
DATE 02 Jul 02 Jul 03 Jul 03 Jul 04 Jul 05 Jul 05 Jul 05 Jul 05 Jul 08 Jul 08 Jul 08 Jul 09 Jul 09 Jul COUNTRY Hong Kong Hong Kong China China Hong Kong Taiwan Taiwan Taiwan Hong Kong Taiwan Taiwan Taiwan China China DATA/EVENT Retail Sales - Value (y/y) Retail Sales - Volume (y/y) Non-manufacturing PMI HSBC Services PMI PMI CPI (y/y) WPI (y/y) Foreign Reserves (USD) Foreign Reserves (USD) Trade Balance (USD) Exports (y/y) Imports (y/y) CPI (y/y) Producer Price Index (y/y) PERIOD May May Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun MARKET 21.2% 15.6% ---0.60% --------LAST 20.7% 19.4% 54.3 51.2 49.8 0.74% -3.28% 406.62bn 305.7bn 4.46bn 0.9% -8.0% 2.1% -2.9% TIME (HK/SG) 16:30 16:30 9:00 9:45 10:30 8:30 8:30 16:20 16:20 16:00 16:00 16:00 9:30 9:30
Greater China Weekly Insight / 2 Jul 2013 / 7 of 14
WEEK IN REVIEW
TAIWAN HOLDS INTEREST RATE AS EXPECTED • Taiwan’s central bank (CBC) held the policy rate at 1.875% in June as widely expected. Low inflation and sluggish growth continue to prompt the CBC to remain accommodative as the current interest rate level has been considered appropriate. Furthermore, the central bank is also watching closely the highly uncertain financial markets. The changing monetary policy stance of major economies is also on the radar. Against this global backdrop, we believe the CBC will continue to act prudentially and maintain a stable monetary policy stance. It is noteworthy that Taiwan’s bond yield has risen sharply on the back of rising US Treasury yields. Given the tapering bias of US monetary policy going forward, Taiwan’s interest rates will also be subject to an upward bias. As the Bank of Korea’s Governor CS Kim noted, “emerging markets may be forced to tighten monetary policy to fight against capital outflows and associated exchange market pressure stemming from the rise in the global interest rate.” Our forecast has been for Taiwan to lift interest rates at the December 2013 board meeting at the earliest. On the exchange rate front, we believe that the CBC may share the concern regarding capital outflows but to a lesser extent than Korea as it could naturally help devalue the currency strength in view of its export competitiveness. The Taiwan market has seen capital outflows in recent trading days. On the other hand, the recent revision (reduction) of securities gains tax law will motivate foreign investors to look at Taiwan’s equity market, limiting the chance of massive capital outflows. Given this market condition, we believe the central bank will continue its policy towards the currency market, aiming to maintain an “orderly movement” of the TWD exchange rate. Raymond Yeung
WEEK IN REVIEW
DATE 25 Jun 25 Jun 25 Jun 27 Jun 27 Jun 27 Jun 27 Jun 28 Jun 28 Jun 28 Jun 28 Jun 28 Jun 28-30 Jun 01 Jul 01 Jul 01 Jul COUNTRY Hong Kong Hong Kong Hong Kong China Taiwan Taiwan Taiwan Taiwan Hong Kong Hong Kong Hong Kong Hong Kong China China China Taiwan DATA/EVENT Exports (y/y) Imports (y/y) Trade Balance (HKD) Industrial Profits YTD (y/y) Coincident Index (m/m) Leading Index (m/m) Benchmark Interest Rate Bounced Check Ratio Govt Mthly Budget Surp/Def (HKD) Money Supply M1 - in HKD (y/y) Money Supply M2 - in HKD (y/y) Money Supply M3 - in HKD (y/y) Leading Index Manufacturing PMI HSBC Manufacturing PMI HSBC Manufacturing PMI PERIOD May May May May May May 27-Jun May May May May May May Jun Jun Jun MARKET 3.4% 3.5% -38.0bn ---1.88% ------50.1 48.3 -ACTUAL -1.0% 1.7% -44.3bn 12.3% 0.20% 0.70% 1.88% 0.18% -7.8bn 18.90% 11.10% 11.20% 99.6 50.1 48.2 49.5 LAST 9.0% 7.7% -42.7bn 11.4% -0.20% 0.40% 1.88% 0.18% 13.4bn 15.50% 9.30% 9.40% 99.8 50.8 49.2 47.1
Greater China Weekly Insight / 2 Jul 2013 / 8 of 14
CHINA ONSHORE MARKET LIQUIDITY REPORT
250 200 150 100 50 0 -50 -100 -150 -200 25 Feb
China - PBoC Weekly Open Market Operations (RMB bn)
China - Weekly Maturing Repo and CB Bills (RMB bn)
180 160 140 120 100 80 60 40 20 0 1 Jul 8 Jul 15 Jul 22 Jul 29 5 12 19 26 2 9 16 23 30 Jul Aug Aug Aug Aug Sep Sep Sep Sep Sep
C B Bill Matured C B Bill Net
Repo Matured Repo
Reverse Repo Rev. Repo Matured
C B Bill Matured
China - 7-day Repo Rate
12 10 8 6 4 2 0 Jun Aug 11 11 Oct Dec Feb Apr Jun Aug Oct 11 11 12 12 12 12 12 Dec Feb Apr Jun 12 13 13 13 12 10 8 6 4 2 0
China - SHIBOR Fixing
Jun Aug Oct Dec Feb Apr Jun Aug Oct 11 11 11 11 12 12 12 12 12 1-month 3-month
Dec Feb Apr Jun 12 13 13 13 6-month
Sources: Bloomberg, CEIC, ANZ
FUNDING COSTS ARE UNLIKELY TO RETURN TO NORMAL LEVELS VERY SOON The PBoC didn’t conduct any open market operations last week, while the matured funds were RMB25bn for the week. Meanwhile, the liquidity tightness has started to ease after PBoC’s statement and designated liquidity injection over the past few trading days, while the overnight and 7-day repo rates stayed high. These suggest that the market is still functioning, but that funding costs are unlikely to return to normal levels very soon. PBOC FINE-TUNES ITS TONE TO EASE LIQUIDITY CONDITIONS PBoC has fine-tuned its tone to ease liquidity conditions, and released a statement on its website last Tuesday evening talking about recent market liquidity tightness. The major points were as follows: • • The overall liquidity conditions are relaxed, and the commercial banks are holding RMB1.5trn excess reserves with the central bank as of 21 June, compared with normal level of RMB1.0trn; The PBoC admitted that it has already provided liquidity to some financial institutions over the past few days, indicating that the central bank could have already used the short-term liquidity operations (SLO) which was introduced in January, for the first time, to ease the market liquidity tightness; The PBoC will continue to use a few instruments including SLO to support financial institutions, and it expects that market liquidity conditions will gradually ease; Big banks should help stabilise the market and report any important and urgent issues to the central bank in a timely manner; The banks should reasonably arrange their assets and liabilities, and the central bank will give liquidity support if there is a temporary liquidity shortage; The SHIBOR price quotation contributors should honour their offering prices, and market makers must not mislead the market via fake deals.
• • • •
Greater China Weekly Insight / 2 Jul 2013 / 9 of 14
CHINA ONSHORE MARKET LIQUIDITY REPORT
CHINA’S LIQUIDITY TIGHTNESS PUSHED UP OFFSHORE RATES AS WELL Chinese banks raise offshore RMB (CNH) interest rates in Hong Kong to absorb cash amid the onshore liquidity squeeze. Some banks are raising the 1-month CNH deposit rates so that exporters will convert their FX assets into RMB, and then repatriate back onshore through Hong Kong’s RMB clearing bank. The onshore and offshore interest rate differential can be as high as 4%, Sina News reported citing unidentified sources. Meanwhile, the yields on the Ministry of Finance’s (MoF) dim sum bonds in Hong Kong were sharply higher than last year due to the liquidity crunch onshore. The MoF sold RMB10bn worth of RMB-denominated bonds in Hong Kong last week, with yields ranging from 2.87% to 3.6%, all higher than last year’s levels. Li-Gang Liu, Hao Zhou
Greater China Weekly Insight / 2 Jul 2013 / 10 of 14
WEEKLY MOMENTUM • China’s industrial profits rose to 15.5% y/y in May, from 9.3 in April. However, this is mainly due to base effects. The manufacturing sector remains weak as indicated by the latest official PMI figure, which declined to 50.1 in June, from 50.8 in May. Meanwhile, in Hong Kong, trade growth slumped due to the crack down by Chinese authorises on false trade activities. • In the onshore market, market interest rates eased significantly following the PBoC’s statement on Tuesday, pledging to ease market liquidity tightness through its liquidity operations. In Taiwan, government bond yields continued to rise on the back of US tapering expectations. REAL ACTIVITY MOMENTUM China’s official PMI fell significantly The official Purchasing Manager’s Index (PMI) fell significantly to 50.1, from 50.8 in May. While in line with market expectations, manufacturing activity remains lukewarm, bordering between contraction and expansion. In addition, the magnitude of the PMI drop has shown that China’s overall economic activity has decelerated further. Notably, the new export order sub-index, which was omitted in the NBS’s official release on 1 July but later released, came in at 47.7 in June, much weaker than the 49.4 in May. China’s industrial profits rose on base effects Industrial profits rose 15.5% y/y in May, compared with 9.3% in April. However, the gain in profits was largely due to base effects instead of a real recovery in the industrial sector. In the first five months, industrial profits increase 12.3% y/y.
20 15 10 5 0 -5 -10 Jan 12 Mar 12 May 12 Jul 12 Sep 12 Nov 12 Jan 13 Mar 13 May 13
China - Official Manufacturing PMI
59 57 55 53 51 49 47 45 Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun 10 10 10 11 11 11 11 12 12 12 12 13 13 Headline New Orders New Export Orders
China - Industrial Profits (ytd, y/y)
Hong Kong’s trade slumped in May due to a crack down of false trade activities Hong Kong’s trade growth declined sharply as the Mainland Chinese government tightened regulations to curb cross-border over invoicing. Exports contracted by 1.0% y/y in May, down from a 9.0% gain in April, and below the market consensus of a 3.4% increase. Imports grew 1.7% y/y, from 7.7% previously, also below market expectations.
Hong Kong - Trade Developments
40 30 20 10 0 -10 -20 -30 -40 -50 Nov 10 Feb 11 May 11 Aug 11 Nov 11 Feb 12 May 12 Aug 12 Nov 12 Feb 13 May 13
Trade Balance, HKD bn
Sources: CEIC, ANZ
Greater China Weekly Insight / 2 Jul 2013 / 11 of 14
MARKET MOMENTUM RMB appreciation expectations have turned around The RMB non-deliverable forward (NDF) has returned to around 6.30, suggesting that markets are now increasingly expecting a RMB depreciation. The NDF reached 6.20 in May.
USD/CNY Spot and NDF
6.5 3 2 6.4 1 0 -1 -2 -3 6.1 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 12 12 12 12 12 12 12 13 13 13 13 13 13
NDF Implied Appreciation, % (RHS) USD/C NY 1y NDF
China’s inter-bank liquidity squeeze have eased somewhat Market interest rates in China eased significantly after the PBoC’s statement on Tuesday evening. The PBoC admitted that it has already provided liquidity to some financial institutions, indicating that the central bank could have already used the short-term liquidity operations (SLO) to ease the market liquidity tightness, and will continue to use a few instruments including SLO to support financial institutions. The weighted average 7-day repo rate declined to below 6% as of Monday, compared with the peak of over 10% last week. Taiwan’s bond yields surged on the back of rising US treasury Taiwan’s bond yield has risen sharply on the back of rising US Treasury yields. The 10-year government bond yield reached 1.45% last week. Given the rising expectation of the US Feb tapering its quantitative easing, Taiwan’s interest rates will be subject to upward pressure.
China - 7-day Repo Rate
12 10 8 6 4 2 0 Jun Aug Oct Dec Feb Apr Jun Aug 11 11 11 11 12 12 12 12 Oct Dec Feb Apr 12 12 13 13 Jun 13
Taiwan - 10 Year Government Bond Yield
1.50 1.45 1.40 1.35 1.30 1.25 1.20 1.15 1.10 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 12 12 12 12 12 12 12 13 13 13 13 13 13
Sources: CEIC, Bloomberg, ANZ
Greater China Weekly Insight / 2 Jul 2013 / 12 of 14
y/y, unless otherwise noted Dec-11 Real GDP China Taiwan Hong Kong 8.9 1.21 3.0 Dec-12 Consumer Price Index China Taiwan Hong Kong Producer Price Index China Unemployment Rate, % Taiwan Hong Kong Exports China Taiwan Hong Kong Imports China Taiwan Hong Kong Trade Balance China, USD bn Taiwan, USD bn Hong Kong, HKD bn PMI and Export Orders China Manufacturing PMI Taiwan Export Orders Industrial Production China Taiwan Electricity Production China Retail Sales China Taiwan (Commercial Sales) Hong Kong M1 Growth China Taiwan (M1 B) Hong Kong M2 Growth China Taiwan Hong Kong 2.5 1.60 3.8 -1.9 4.21 3.3 14.8 8.9 14.4 6.0 1.6 11.9 31.6 4.11 -48.0 50.6 8.51 10.3 2.10 7.6 15.2 1.49 9.1 6.5 4.91 15.9 13.8 3.67 12.1 Mar-12 8.1 0.59 0.7 Jan-13 2.0 1.13 3.0 -1.6 4.20 3.4 25.2 21.6 17.6 28.8 22.2 23.9 29.1 0.5 -27.5 50.4 17.95 19.30 7.80 10.5 15.3 4.0 20.2 15.9 3.0 14.1 2007 Current Account, % of GDP China Taiwan Hong Kong Foreign Reserves, USD bn China Taiwan Hong Kong Government Fiscal Surplus/Deficit, % of GDP China Taiwan Hong Kong (FY ending in March) 10.1 8.9 13.0 1,528 270 153 0.2 0.9 3.8 Jun-12 7.6 -0.12 1.1 Feb-13 3.2 2.96 4.4 -1.6 4.16 3.4 21.8 -15.8 -16.9 -15.2 -8.5 -18.3 15.2 0.9 -34.0 50.1 -14.47 9.9 -11.17 3.4 12.3 -6.00 22.7 9.5 5.7 13.6 15.2 3.5 8.5 2008 9.3 6.9 15.0 1,946 292 183 -0.8 0.9 7.3 Sep-12 7.4 0.73 1.4 Mar-13 2.1 1.37 3.6 -1.9 4.18 3.5 10.0 3.2 11.2 14.1 0.2 11.3 -0.8 3.2 -49.1 50.9 -6.60 8.9 -3.00 2.1 12.6 -1.00 9.8 11.8 6.0 17.6 15.7 3.8 9.2 2009 4.9 11.4 9.5 2,399 348 256 -2.8 -2.2 0.1 Dec-12 7.9 3.97 2.5 Apr-13 2.4 1.05 4.1 -2.6 4.19 3.5 14.7 -1.9 9.0 16.8 -8.2 7.7 18.2 2.3 -42.7 50.6 -1.11 9.3 -0.80 6.2 12.8 1.01 20.7 11.9 5.7 15.5 16.1 3.7 9.3 2010 4.0 9.3 6.6 2,847 382 269 -2.5 -1.2 1.5 Mar-13 7.7 1.67 2.8 May-13 2.1 2.05 3.9 -2.9 4.19 3.4 1.0 0.9 -1.0 -0.3 -8.0 1.7 20.4 4.5 -44.3 50.8 -0.40 9.2 0.20 4.1 12.9 -1.85 11.4(f) 11.3 7.0 18.9 15.8 4.3 11.1 2011 1.9 8.9 4.8 3,181 386 285 -1.8 -1.1 4.1 Forecasts Jun-13 2013 7.9 1.89 2.0 Jun-13 2.8 0.08 4.4 4.23 3.6 4.8 -1.7 -4.8 8.2 -3.8 -5.0 28.3 3.0 -41.8 50.2 -1.48 9.0 1.12 13.0 1.50 7.8 15.5 2012 2.3 10.5 1.3 3,312 403 317 -1.5 -2.6 3.8 7.6 2.36 2.5 Jul-13 2.7 -0.10 3.4 4.28 3.7 12.4 0.9 -2.2 8.4 -8.6 -1.5 34.3 3.3 -41.6 50.5 -0.26 9.2 -0.66 13.2 -0.11 5.4 15.4 2013 2.6* 10.8 2.8 3,443* 407* 306* 2.0 3.1*
2 Jul-13 Foreign Exchange Rate USD/CNY USD/TWD USD/HKD Policy Interest Rate China PBOC 1-year Lending Rate Taiwan CBC Discount Rate Hong Kong Base Rate Shaded cells and column refer to forecast; *Indicates actual released data or YTD Sources: CEIC, Bloomberg, ANZ 6.133 30.006 7.756 6.00 1.875 0.50
Sep-13 6.17 5.75 1.875 0.50
Forecasts Dec-13 Mar-14 6.20 5.75 2.000 0.50 6.23 5.75 2.125 0.50
Jun-14 6.25 5.75 2.250 0.50
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