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ICBC Plans No Fund Raising; Loans Jump to Record in 2009

Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, said it has no fund-raising plan at the moment even as it boosted lending by 24 percent to a record last year.

ICBC’s capital adequacy ratio is “sound” and the highest among rivals, and pressure on capital raising is “not big,” President Yang Kaisheng said at a press conference in Beijing yesterday.

China’s banks doled out a combined 9.59 trillion yuan ($1.4 trillion) in new loans last year, helping the government engineer a turnaround in the world’s third- largest economy. The credit binge drained lenders’ capital and sparked concerns about asset bubbles, a higher number of bad loans and increased inflation pressure.

China’s publicly-traded banks have already raised about 131 billion yuan from bond and share sales since the second half of last year to replenish capital drained by loan growth, and they have announced plans to raise a further 127 billion yuan, according to Bloomberg data.

Beijing-based ICBC’s capital adequacy ratio, a measure of the bank’s financial strength, fell to 12.60 percent at the end of third quarter, from 13.06 percent at the end of 2008.

The nation’s policy makers aim to avert asset bubbles and restrain inflation by limiting new credit at 7.5 trillion yuan this year. China’s growth accelerated to 10.7 percent in the fourth quarter, the fastest pace since 2007, and property prices climbed the most in 21 months.

Boost Financing

ICBC said it will boost financing to projects already under construction and to small-and-medium sized firms and cut loans to new projects that are not government-backed and if they’re energy-intensive or polluting. Loans would also be reduced to sectors with overcapacity, Yang said.

Loans by the bank this year will be less than in 2009, Yang said. ICBC’s new loans were 1.03 trillion yuan last year, Yang said. That’s a record, according to calculations based on Bloomberg data.

After a government bailout five years ago, ICBC is now the world’s biggest bank by value. The lender has more than doubled profit during the past three years and has more than 16,000 outlets nationwide and 112 branches outside China, and 190 million personal customers — equivalent to the populations of Russia and Canada combined.

ICBC on March 4 submitted a tender offer to buy all shares in Thailand’s ACL Bank Pcl in a deal that would give ICBC a foothold in the southeastern Asian nation after acquisitions in Indonesia, Macau, South Africa and Canada since 2007. The bank aims to triple the share of profit coming from abroad to 10 percent.

ICBC will be “active and prudent” with overseas expansion this year, Yang said.

Mar

07

2010

China steps up defense of Internet controls


China widened its attack against U.S. criticisms of Internet censorship on Monday, raising the stakes in a dispute that has put Google in the middle of a political quarrel between the two global powers.

China has stepped up its defense of curbs on the Internet nearly two weeks after the world’s biggest search engine provider, Google Inc., said it wanted to stop censoring its Chinese Google.cn website and was alarmed by online hacking attacks from within China.

Google’s complaints received backing from the White House, but China countered with accusations that Washington was using the Internet to support subversion in Iran.

The dispute has stoked friction between Beijing and Washington, already wrestling over trade, U.S. weapons sales to Taiwan and human rights.

The rising heat over the Internet feud could narrow room for both sides to back down quietly while they seek to cooperate on broader financial and diplomatic worries.

“The more this case takes on high-level political import for the Chinese government, the more likely it is to stick to its guns,” said David Wolf, president of Wolf Group Asia, a Beijing-based company that advises investors on China’s media and telecommunications sectors.

“The Chinese government can’t be seen as backing down on such a fundamental issue,” said Wolf.

SHARP REBUKE

Secretary of State Hillary Clinton last week urged China and other authoritarian governments to pull down Internet censorship, drawing a sharp rebuke from Beijing.

After Google first made its criticisms, Beijing was tight-lipped. Now Chinese officials have decided to swing back at Washington.

In the latest jab, a spokesperson for China’s State Council Information Office said the nation “bans using the Internet to subvert state power and wreck national unity, to incite ethnic hatred and division, to promote cults and to distribute content that is pornographic, salacious, violent or terrorist.”

The comments from the unnamed spokesperson were issued on the central government’s website (www.gov.cn).

“China has an ample legal basis for punishing such harmful content, and there is no room for doubting this. This is completely different from so-called restriction of Internet freedom,” the spokesperson said.

The government comments were accompanied on Monday by scathing official newspaper commentaries aimed at Washington.

DALAI LAMA

“This year, we’re seeing problems over trade, the Dalai Lama, and U.S. weapons sales to Taiwan coming to the surface,” said Jin Canrong, a professor of international relations at Renmin University in Beijing.

“The politicization and ideological turn of the Google case could make it more difficult to work together. The basic need for cooperation, economically and diplomatically, hasn’t changed, but each of these issues could disrupt cooperation from day to day.”

President Barack Obama may meet the Dalai Lama, Tibet’s exiled Buddhist leader, in coming months. Beijing calls the Dalai Lama a dangerous separatist for seeking Tibetan self-rule, and is sure to be angry about such a meeting.

Washington has also unveiled arms sales to Taiwan, the self-ruled island Beijing regards as a renegade province.

The State Council Information Office is the cabinet arm of China’s propaganda apparatus, which is steered by the Communist Party, and is one of several agencies behind Internet policy.

The latest comments from China made no direct mention of Google or Clinton.

They appeared intended to amplify the government’s case that its Internet controls are for it to decide, and expressing non-violent views online can be a crime in China.

China has jailed dissidents and advocates of self-rule in Tibet who have used the Internet to challenge Communist Party policies and one-party rule.

Late last year the country’s most prominent dissident, Liu Xiaobo, was jailed for 11 years on charges of “inciting subversion,” largely through essays he published on overseas Internet sites.

On Sunday, the People’s Daily, the mouthpiece of the Communist Party, accused the United States of exploiting social media, such as Twitter and YouTube, to foment unrest in Iran.

On Monday, the paper said Washington was hypocritical about Internet controls, noting the U.S. has laws seeking to restrict images and words that can be seen by children.

“This ‘Internet freedom’ that is being promoted everywhere is nothing more than a foreign policy tool, a fantasy of freedom,” said a commentary in the paper.

Since Google said it could pull back from China over censorship and hacking, the company has stressed it wants talks with Beijing seeking ways to defuse its complaints.

But, especially in ideologically-sensitive sectors such as the Internet and media carefully watched by the Communist Party, foreign companies can find political uncertainties never far from the negotiating table.

“Google may look back and see it pursued an ill-advised course by bringing in the U.S. government in such high-profile way,” said Wolf, the industry consultant.

China has blocks YouTube, Twitter and Facebook, and imposes a “Great Firewall” of filtering to stop citizens seeing banned images and ideas on overseas websites.

On Monday, China’s Ministry of Industry and Information Technology, rejected suggestions the government was behind the sophisticated hacker attacks described by Google.

Jan

25

2010

China says Google, foreign firms must respect laws

Foreign firms, including Google, must respect Chinese laws and customs, China’s foreign ministry spokesman said on Tuesday, a week after the world’s largest search engine said it might pull out of China due to hacking and censorship.

Ma Zhaoxu also said he did not know whether Chinese officials had held talks with Google executives. Google (GOOG.O) said it would seek meetings on how to offer a legal, unfiltered search service after losing intellectual property to a sophisticated cyber-attack that also affected more than 30 other firms.

“The Chinese government encourages the development of the Internet,” Ma said.

“Foreign firms in China should respect China’s laws and regulations, and respect China’s public customs and traditions, and assume the corresponding social responsibilities, and of course Google is no exception.”

Ma’s comments mostly repeated the foreign ministry’s statements on Thursday, but this was the first time the foreign ministry referred directly to Google.

Jan

19

2010

Gold inches down a day after topping $1,140

Gold slipped on Thursday after reaching a three-week high above $1,140 per ounce the previous day, weighed down by investors’ caution ahead of U.S. non-farm payrolls data for December due later this week.

A possible signal of tighter liquidity by China’s central bank was expected to affect gold less than industrial metals.

“The impact of such news of tightening would be harsher on industrial metals like copper,” said Koichiro Kameim, managing director at financial research firm Market Strategy Institute in Tokyo.

“As for the gold market, the impact would be neutral. Chinese demand in the precious metals would be hardly affected,” he said.

Economic indicators suggest the U.S. economy is recovering, but employment is a key component for shaping the outlook for U.S. interest rates and the dollar’s direction.

Spot gold was at $1,132.80 an ounce by 0623 GMT, down 0.5 percent from New York’s notional close of $1,137.90.

U.S. gold futures for February delivery were at $1,133.40 per ounce, down 0.3 percent.

Spot gold rose as high as $1,140.20 on Wednesday, up 4 percent since the start of the year, on fresh new year investment flows, partly thanks to a rise in Asian currencies against the dollar inspiring buying from the region, traders said.

It is still well below a lifetime high of $1,226.10 struck in early December.

“It’s good to buy gold, oil and stocks as everything is up since the start of the year,” Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, said, referring to the recent rally in these asset classes.

Leung said gold could reach $1,500 this year as inflation concerns encourage investor buying, while China’s bright economic outlook means demand from the region as a whole will likely stay strong.

But he was cautious prior to U.S. Labor Department non-farm payrolls data on Friday.

“If the U.S. employment is still improving, it’s a good sign for the recovery in demand and the economy. But if not, they would pull back their money for now,” he said.

The non-farm payrolls data is expected to shape expectations for when the U.S. Federal Reserve will start tightening its ultra-loose monetary policy, which could set the direction of the dollar.

Wednesday’s data on the U.S. private job market did little to change expectations for the more comprehensive data. Economists forecast the United States lost 8,000 jobs overall last month, fewer than 11,000 lost in November.

In the currency market, the dollar was steady on Thursday after falling the previous day when minutes from the Federal Reserve’s latest policy meeting suggested the possibility of more stimulus measures for the economy.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings fell to 1,123.869 tons as of January 6, down 4.876 tons or 0.4 percent from the previous business day.

Among other precious metals, spot platinum was little changed after matching Wednesday’s high of $1,561 per ounce, a 16-month high, on expectations of higher demand for the metal.

The auto industry, which is expected to pick up this year, accounts for more than half the consumption of platinum.

Also, the first platinum and palladium exchange-traded funds proposed for the United States have cleared a major hurdle with U.S. market regulators bringing the products.

Analysts anticipated a rush of investment dollars into platinum and palladium if the U.S. Securities and Exchange Commission gives its final nod.

Spot palladium rose as high as $428.50 per ounce, its highest since July 2008, before trading down at $423.50.

Jan

06

2010

Obama in Asia – building block or bow?

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Barack Obama’s first presidential trip to Asia was also his first big step in recasting U.S. ties with a region in flux, and showed this will demand patience and compromise from a superpower used to pushing its weight around.

In a tone-setting speech in Tokyo, Obama cast his nine-day Asia odyssey as a return to full U.S. engagement, but his trip covering Japan, a regional summit in Singapore, China and South Korea also became a tutorial in the disputes and shifting forces standing in his way.

Above all, in China the U.S. President found its Communist Party leaders glad for the prestige of his presence but showing little public sign of yielding over currency friction, human rights or putting greater weight behind efforts to bottle in the nuclear ambitions of North Korea and Iran.

All that could be cast as a failure, and already has been by Obama’s domestic critics and some commentators.

But U.S. summits with China and the rest of Asia have rarely brought instant rewards and are even less likely to now the U.S. has been wounded by financial crisis and Beijing sees itself as an emerging regional gatekeeper.

Whoever is in the White House, Washington’s dealings with Asia in coming years will look less like a clean sprint and more slog through a muddy obstacle course, with plenty of chances to stumble along the way.

“The United States is a big power that became used to having it’s way,” said Liu Jiangyong, a professor of East Asian security affairs at Tsinghua University in Beijing.

“Just by showing that he’ll listen, Obama has won credit that will give the U.S. a boost (in the region),” he said.

“Especially in the next decade, China and the rest of Asia will be going through huge changes, and the United States will have to adjust.

“President Obama’s visit was a start, but even if he’s happy with it, it showed there’s a lot to be done.”

EASING REGIONAL ANXIETIES

Obama did not start entirely from scratch in Asia.

While President George W. Bush was preoccupied with wars in Afghanistan and Iraq, he avoided major discord with China and other Asian powers.

Many of Obama’s key staff on Asian affairs served in the Clinton administration.

“Especially in the wake of the financial crisis, the United States has faced regional anxieties about its future role in Asia,” said Zhu Feng, a professor of international security at Peking University.

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Nov

20

2009

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