Beijing boosts local government bond issuance to spur economy

China will ramp up infrastructure spending to support economic growth. (AFP)
Updated 17 July 2019

Beijing boosts local government bond issuance to spur economy

  • Data on Monday showed China’s economic growth slowed to 6.2 percent in the second quarter — the weakest pace since 1992 — from 6.4 percent in the first as demand at home and abroad faltered in the face of mounting US trade pressure

BEIJING: China’s local governments sharply accelerated their bond issuance in June as they looked to ramp up infrastructure spending to support economic growth that slowed to a 27-year low.
Beijing is counting on a recovery in infrastructure investment to help stabilize the world’s second-largest economy as the US-China trade war drags on, weighing on its vast manufacturing sector and business confidence.
But the economy has been slow to respond to earlier growth boosting measures, raising questions over whether more support is needed and if that risks a sharper build-up in debt.
Net local government bond issuance rose to 717 billion yuan ($104.31 billion) in June, the highest so far this year and accounting for a third of the first half’s total, Hao Lei, a finance ministry official, told reporters on Tuesday.
More than 60 percent of the funds raised from bonds in the first six months were used for infrastructure projects such as shanty-town redevelopment, and highway and railway construction, said Hao, adding that more than half of the funds went to existing projects.
In the first half, local governments’ total net bond issuance reached 2.1765 trillion yuan, accounting for 70.7 percent of the annual quota, the finance ministry said. It did not give figures on local governments’ issuance of special bonds, which exclusively fund infrastructure projects.
Data on Monday showed China’s economic growth slowed to 6.2 percent in the second quarter — the weakest pace since 1992 — from 6.4 percent in the first as demand at home and abroad faltered in the face of mounting US trade pressure.

FASTFACT

More than 60 percent of the funds raised from bonds in the first six months were used for infrastructure projects.

Fixed-asset investment in January-June rose 5.8 percent from a year earlier, picking up from 5.6 percent in the first five months.
Infrastucture investment rose 4.1 percent, only slightly better than the 3.8 percent increase seen in all of 2018. But investment readings for June showed some signs of improvement, albeit modest, raising hopes that policy loosening efforts over the past year are beginning to gain traction.
Infrastructure growth quickened last month to 3.9 percent year-on-year from 1.6 percent in May, according to Bank of America Merril Lynch.
Separate official data on Tuesday showed fixed-asset investment project approvals in the first six months increased 81 percent by value from a year earlier.
Beijing began fast-tracking approvals last year as part of its push for more infrastructure spending, though analysts had cautioned it would take time for the effects to be felt.
The National Development and Reform Commission (NDRC) approved 94 fixed-asset investment projects in January-June, worth a total of 471.5 billion yuan ($68.60 billion), Meng Wei, a spokeswoman for the state planner, told reporters.
That compared with 102 projects worth 260.3 billion yuan in the same period last year. “We estimate the quickest turnaround time for project launch post-NDRC approval is four to six months,” ANZ said in a report on Tuesday.
Earlier this month, Premier Li Keqiang said China’s economy was facing new downward pressure, and the government would respond with more fiscal policy measures. Beijing has already announced tax cuts worth nearly 2 trillion yuan.


Getting more women into leadership positions top priority: CEO

This June 23, 2018 photo, shows a general view of Riyadh, Saudi Arabia. (AP)
Updated 18 January 2020

Getting more women into leadership positions top priority: CEO

  • Saudi Arabia is focusing on the Business 20 (B20), making this one of the key engagement groups. Women in Business will be Saudi Arabia’s signature topic

RIYADH: The boss of one of Saudi Arabia’s biggest banks says that getting more women into leadership positions is a top priority.
Samba CEO Rania Nashar chairs the action council for Women in Business created by the Business Twenty (B20), which is the official G20 dialogue with the business community. It represents the global business community across all G20 member states and all economic sectors.
She said the council was set up to boost women’s particpation not only in business but also in global leadership positions.
During the launch of the B20 in Saudi Arabia this week, Nashar highlighted the under-representation of women in the economy.
“There is a gap of 27 percent between male and female workers; 75 percent of males are part of the labor force while only 48 percent of females are working,” she said.
She said it was important not to just talk about women as workers but as business owners.

FASTFACT

Saudi Arabia will host the 15th G20 Summit in Riyadh on Nov. 21-22, 2020.

“That’s why entrepreneurship is very fundamental to our task force,” she said.  “The majority of the finance development programs have incentives for giving loans to females; however, despite the fact that many large borrowers are females, the amount of loans granted to them is far below what is granted to males,” she added.
Nashar said that two-thirds of female business founders feel that they were not taken seriously by investors when they pitch for investments. They also feel that they are treated differently from their male counterparts.
Saudi Arabia will host the 15th G20 Summit in Riyadh on Nov. 21-22, 2020. The Kingdom is focusing on the Business 20 (B20), making this one of the key engagement groups. Women in Business will be Saudi Arabia’s signature topic.