John's Feed
Mar 18, 2013
via Breakingviews

China’s new market watchdog may lack teeth

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By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

As head of China’s new market watchdog, Xiao Gang has a tough mission: to bite the hand that fed him. While head of Bank of China, he oversaw an unprecedented lending spree that helped get China’s economy out of a hole. His next mission, as boss of the China Securities Regulatory Commission, will be to beef up the country’s capital markets – weakening the big banks’ stranglehold.

Mar 13, 2013
via Breakingviews

China’s solar bonds leave dim hope of payback

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By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Dim prospects for payback await bondholders in China’s Suntech Power Holdings. The stricken solar panel maker, unlikely to meet a $541 million bond payment due on March 15, has persuaded over half its foreign creditors to hold off for two months. On purely financial grounds, it’s hard to see how the bondholders could come away with anything in the event of a default. What value remains is a bet that China values foreign investors too much to snub them outright.

Mar 11, 2013
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China starts 2013 the way it can’t hope to go on

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By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

China began 2013 with the same old economic model. Growth for the first two months of the year was driven mainly by exports and real estate. The increase in construction appears to have been fuelled by credit. The current trajectory can continue only by pumping ever more leverage, and risk, into the system.

Mar 8, 2013
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China’s currency inflows could be illusory

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By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

China’s currency is a fickle measure of confidence in the country’s fortunes. For much of 2012 the yuan stagnated, causing investors to hold back on previous bets on its appreciation. Recent data suggests they have been piling back in to the Chinese currency – but that may not last.

Mar 5, 2013
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Three roadmaps for an urbanizing China

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By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

China is at an urban crossroads. Almost 53 per cent of its population lived in cities and towns at the end of 2012. In another two decades, China will probably be nearing the 80 percent urbanization level common in the West – suggesting some 1.1 billion city-dwellers. Premier designate Li Keqiang wants urbanization to put people first. The question is: where in China will he put them?

Mar 4, 2013
via Breakingviews

China’s gains tax won’t put a roof on house prices

By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

China’s house prices are too high and local tax revenue too low. What better way to address both problems than taxing capital gains on property? China’s cabinet has promised to enforce such a levy on homeowners. While that drove down the share prices of property developers, it is unlikely to do the same for real estate values.

Mar 4, 2013

Breakingviews:China’s gains tax won’t put a roof on house prices

(The author is a Reuters Breakingviews columnist. The
opinions expressed are his own)

By John Foley

BEIJING, March 4 (Reuters Breakingviews) – China’s house
prices are too high and local tax revenue too low. What better
way to address both problems than taxing capital gains on
property? China’s cabinet has promised to enforce such a levy on
homeowners. While that drove down the share prices of property
developers, it is unlikely to do the same for real estate
values.

Feb 27, 2013
via Breakingviews

Illumination alone won’t slow China shadow banks

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By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

When it comes to China’s shadow banks, switching on the lights isn’t enough to make the risks go away. The country’s lenders may soon be asked to disclose their off-balance sheet lending activities, starting with a trial in Shanghai, according to the Financial Times.

Feb 20, 2013
via Breakingviews

China’s next debt crisis will be a local affair

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By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

China’s next credit crisis may be a local affair. A recent suggestion of setting up local bailout funds reflects the fact that it’s no longer big banks that present the biggest risks, but towns and regions. The elaborate ties between local borrowers, lenders and governments could make future credit problems both chaotic – and concentrated.

Feb 6, 2013
via Breakingviews

Dividend reform won’t fix China SOE money-go-round

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By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

China’s elaborate money-go-round starts and ends with its cash-hoarding state-owned enterprises. So a plan to make them pay bigger dividends sounds promising. Still, if the goal is to return cash to the people, there is a long way to go.