China & East Asia 24 Aug 2015 by Tojo Jose

China’s rattling economy brings down global financial markets

China’s rattling economy brings down global financial markets

The biggest crisis after 2008 has reached. From Japan to US, financial markets and commodity prices have crashed down by the latest turn of faults in Chinese economy.  Leading the scoop in stock markets, the Chinese Shanghai Composite Index has fallen by 8.5%; its biggest fall since 2007. Stock markets in Europe, US and Asia- all have recorded value collapse in response to the negative news from China. Over the last one month, the Chinese economy was showing symptoms of crack. Stock market value has come down by nearly five percent on many trading days. Worst is that every official attempt to arrest the market fall had failed. Financial markets are reading that China ca

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China & East Asia 14 Aug 2015 by Tojo Jose

‘Two birds in one shot’ is all about China’s currency devaluation

‘Two birds in one shot’ is all about China’s currency devaluation

In a reward maximizing move, China has made its official exchange rate equal to that of the market exchange rate. The result of aligning the two exchange rates was that the Yuan has undergone devaluation of around three and a half percent over three days. Of course there are two interpretations for the Yuan devaluation- one by China and the other by the rest of the world. The financial world has assessed Beijing’s move as a devaluation effort to make export gains. Many analysts have described the step as currency war. Devaluating domestic currency increases exports at the same time decreasing imports. Obviously, the Chinese economy is undergoing a tough and unprecedent

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China & East Asia 06 Aug 2015 by Tojo Jose

Renminbi’s global currency status: IMF extends the review of SDR currency basket to the next year

Renminbi’s global currency status: IMF extends the review of SDR currency basket to the next year

China has to wait for one more year to include the Renminbi under the IMF’s SDR basket.  A decision on this has been taken by the IMF on Tuesday, indicating that the Fund will introduce any change only by September 2016. The SDR (Special Drawing Rights) is the reserve asset of the IMF and its value depends upon a basket comprised of the four important global currencies- the US Dollar, the Euro, British Pound Sterling and the Japanese Yen. China has been insisting on every global front that the IMF should reform the currency basket by including its currency – the Renminbi. Inclusion of Renminbi is an indicator of the rising status of the Chinese economy and a big

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China & East Asia 08 Jul 2015 by Tojo Jose

Markets in Panic: Burst in China continues;Indian market absorbs the shock

Markets in Panic: Burst in China continues;Indian market absorbs the shock

The stock market’s steep fall continues in China despite many precautionary measures by the Chinese central bank. Leading index the Shanghai Composite is down by 4.7%, recovering from an 8 % scoop early in the day. The fresh faults are despite stopping of trade in nearly 50% of the listed companies. Earlier, 1476 listed companies have stopped their trading in the exchanges. Hong King's Hang Seng lost 5.8% while the Nikkei of Japan has lost 3.14%. The Indian market that surprisingly withstood the Greek shock on the previous day seems to be deeply affected by the Chinese burst. Mid day, both Sensed and Nifty lost around 1.9%.  Sensex and Nifty plunges following the C

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China & East Asia 08 Jul 2015 by Tojo Jose

China to supply central bank liquidity into the stock market and bans share selling by big share holders

China to supply central bank liquidity into the stock market and bans share selling by big share holders

China has come out with extraordinary and extreme measures to stop the crash in the equity market. Two new measures that were rare in use were to be deployed to prevent what the Chinese authorities describe as the irrational drop in share prices.   The first one–large shareholders are not allowed to sell shares of listed companies. Investors who holds more than 5% share in listed companies are banned from selling those shares for the next six months. Second, in a rare step, the central bank will provide liquidity to support the market. Chinese stocks continued their free fall as the Shanghai Composite Index closed down 5.9 per cent after falling as much as 8 per ce

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China & East Asia 07 Jul 2015 by Tojo Jose

China’s stocks disobey government support measures and continues to fall

China’s stocks disobey government support measures and continues to fall

World’s strictly regulated economy- China is undergoing a rare market experience over the last fifteen days. Its stock market is falling steeply. Most surprising and worrisome is that the market is not obeying government’s effort to block the decline. The Composite Shanghai index has fallen by 1.8% on Tuesday, July 7, reversing the slight gain made on the previous day. China’s stock market has grown by 117% in the last eight months before June. From mid June, the index has fallen by nearly 30 percent. Later, the government has introduced many market stabilization measures but the stock prices scooped down after looking at government signals for one day. C

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China & East Asia 02 Jul 2015 by Niranjan Verma

China’s new security law puts more control on internet; declares it as a matter of sovereignty and security

China’s new security law puts more control on internet; declares it as a matter of sovereignty and security

China has introduced a new security law that adds internet under the sovereign control of the state. As per the law, internet is a matter of sovereignty and security and they should be “secure and controllable”. The new law becomes a model for state controlled internet. The National security law of China, passed by the top legislature on Wednesday extends from military to economy. It also brings space exploration and cyber security under the concern of security establishment. The new policy comes at the time of China’s increased aggressiveness in the East China Sea. In the internet world, many secretive hacking and invasions into the US military sites were

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China & East Asia 25 Jun 2015 by Tojo Jose

For China, AIIB is the superstar while the NDB is not shining

For China, AIIB is the superstar while the NDB is not shining

Within no time, two global institutions will start functioning in China’s Shanghai and Beijing. First is the BRICS managed New Development Bank (NDB). Second is the keenly watched development magnet that is attracting even advanced countries– the Asian Infrastructure Investment Bank (AIIB). The NDB’s (or the previously announced BRICS Bank) President nominee, KV Kamath has told that the bank will start functioning from second half of 2015. If it happens, Shanghai will host the first international organization that China hosts. But there is strong perception that China is more interested in the AIIB than the NDB. This is because of the probability of high Chine

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China & East Asia 14 Jun 2015 by Tojo Jose

China makes calculated risk on Myanmar

China makes calculated risk on Myanmar

During the first ten days of this month, China has made some ultra speed moves on Myanmar. Two important moves happened during the first two weeks of June. First was the visit made by the former human right activist and pro democracy leader, Aung Sann Suu Kyi’s to China. Second was the PLA’s military exercise - land and air mode, near Myanmar border. Myanmar is very important for China, in its dreamt reach to the Indian Ocean. An easy look into the map will show that there are only two land route options for China to put its leg into the Indian Ocean- Pakistan and Myanmar. The other option – the risky route through Pakistan has less attraction because of sec

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China & East Asia 09 Jun 2015 by Tojo Jose

China registers hurting low inflation; indicating future slowdown

China registers hurting low inflation; indicating future slowdown

World’s second largest economy and emerging market giant, China registered an uneasy low inflation of 1.2 per cent. According to the data released by the National Bureau of Statistics, the economy has registered a further decline in its Consumer Price Index compared to the 1.5 per cent inflation experienced in April. The low inflation for China given its inflation target of 3 per cent is not good news for its growth trend. Deflationary trends are just hinting the arrival of slow growth. China expects a mutually combatable GDP growth rate of 7 per cent and inflation rate of 3 percent. The slowing prices are strongly visible in manufactured items. The producers’ pric

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