Wei's Feed
May 15, 2012
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Chongqing won’t be allowed to fail with Bo

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By Wei Gu

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

China’s most populous city won’t be allowed to fail the way its disgraced former leader did. With Bo Xilai ousted, a bailout is already being assembled, with new funds from the country’s main policy bank, and help from state-owned firms. Chongqing’s debt-financed growth model is discredited, but the need for stability and growth prevails.

May 10, 2012
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Hong Kong’s LME bid is big bet on China flows

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By Wei Gu

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

Hong Kong is playing the China card in the bidding for the London Metal Exchange. Proximity to the world’s largest consumer of metals might make up for the Hong Kong Exchange’s relative inexperience in trading commodities. But Beijing may open up regardless of who owns the LME.

May 8, 2012
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China throws a juicy bone to foreign brokers

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By Wei Gu

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

Wall Street may be the winner from this year’s bilateral talks between the United States and China. Foreign banks who run Chinese securities joint ventures, including Morgan Stanley and Goldman Sachs, will soon be allowed to raise their stakes to 49 percent, according to a U.S. official in Beijing. It still doesn’t match the heavy lifting they do, but it is a breakthrough in an important market.

May 3, 2012
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China’s stock reforms should benefit brokers most

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By Wei Gu

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

China’s stock market is reforming fast, but investors hoping for higher stock prices may be disappointed. New chief securities regulator Guo Shuqing took office just half a year ago, but has already brought in a slew of new rules. The latest is to lower trading fees. The aim may be to pep up valuations across the market, but the biggest beneficiaries are likely to be China’s brokerage firms.

Apr 30, 2012
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Weak exports bring double whammy for Chinese banks

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By Wei Gu

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

After posting record earnings in 2011, Chinese banks are facing a squeeze this year. Weak external demand hurts lending and weakens its asset quality. Deposits are harder to find, due to the decline in the automatic inflow from the shrinking trade surplus. Hit by poor external demand, losses are rising on loans to smaller businesses.

Apr 24, 2012
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China bank pay is the wrong target for reform

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By Wei Gu

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

While Western banks get criticised for rewarding failure, those in China are doing the opposite. Despite robust earnings growth, some top-paid Chinese bank heads took home less last year. This may be a response to public discontent over widening income gaps and a lack of competition in the banking sector. It doesn’t really address the problem.

Apr 17, 2012
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Freer yuan sends the right message

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By Wei Gu

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

China’s moves to free up the way its currency trades might seem like throwing a bone to the United States, ahead of the two countries’ strategic summit in May. But it is China itself that gains most from this kind of reform, however gradual. The benefits are likely to include less foreign hot money, happier trade partners and the prospect of more capital account opening in the future.

Mar 27, 2012
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Global asset values may find new zest from China

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By Wei Gu

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

Slower growth and doubts about accounting are leading international investors to rethink China. That’s precisely what the Chinese themselves are doing. As they diversify beyond the borders of the Middle Kingdom, the value of global property assets could benefit.

Mar 14, 2012
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Youku-Tudou price pop not only about synergies

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By Wei Gu

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

Investors are hooked on Internet video portal Youku’s plan to merge with smaller rival Tudou. The companies’ combined market capitalisation swelled by $1.5 billion after the unveiled merger. Cost savings of $50 million to $60 million a year only partly explain it. Other factors may include a squeeze on short sellers, a re-rating of the sector, and hopes that an enlarged Youku could itself be a bid target.

Mar 12, 2012
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China’s trade deficit is sign of things to come

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By Wei Gu and Edward Hadas
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

China will have to get used to monthly trade deficits. Special factors contributed to the $4.2 billion negative number for the first two months of 2012, but something fundamental is changing. A smaller portion of China’s imports are of goods which will be processed for export, and a higher portion is going straight into domestic consumption.