28/04/2020
BEIJING (Reuters) – China’s factory activity likely rose for a second straight month in April as more businesses re-opened from strict lockdowns implemented to contain the coronavirus outbreak, which has now paralysed the global economy.
The official manufacturing Purchasing Manager’s Index (PMI), due for release on Thursday, is forecast to fall to 51 in April, from 52 in March, according to the median forecast of 32 economists polled by Reuters. A reading above the 50-point mark indicates an expansion in activity.
While the forecast PMI would show a slight moderation in China’s factory activity growth, it would be a stark contrast to recent PMIs in other economies, which plummeted to previously unimaginable lows.
That global slump, caused by heavy government-ordered lockdowns, as well as the cautious resumption of business in China, suggests any recovery in the world’s second-largest economy is likely to be some way off.
“The recovery so far has been led by a bounce-back in production, however, the growth bottleneck has decisively shifted to the demand side, as global growth has weakened and consumption recovery has lagged amid continued social distancing,” Morgan Stanley said in a note.
“The expected slump in external demand has likely capped further recovery in industrial production.”
The latest official data showed 84% of mid-sized and small business had reopened as of April 15, compared with 71.7% on March 24.
Hobbled by the coronavirus, China’s economy shrank 6.8% in the first quarter from a year earlier, the first contraction since current quarterly records began.
That has left Chinese manufacturers with reduced export orders and a logistics logjam, as many exporters grapple with rising inventory, high costs and falling profits. Some have let workers go as part of the cost-cutting efforts.
A China-based brokerage Zhongtai Securities estimated that the country’s real unemployment rate, measured using international standards, could exceed 20%, equal to more than 70 million job losses and much higher than March’s official reading of 5.9%.
Sheng Laiyun, deputy head at the statistics bureau, said on Sunday migrant workers and college graduates are facing increasing pressures to secure jobs, while official jobless surveys show nearly 20% of employed workers not working in March.
Chinese authorities have rolled out more support to revive the economy. The People’s Bank of China earlier in April cut the amount of cash banks must hold as reserves and reduced the interest rate on lenders’ excess reserves.
Source: Reuters
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26/07/2016
Cash is set to lose currency in India, as an explosion in smartphone usage drives a digital payments boom, according to a new report.
By year 2020, nearly $500 billion worth of transactions in India will happen digitally, using online wallets and other digital-payment systems, 10 times the level currently, according to a report by Google India and The Boston Consulting Group.
Indians traditionally prefer to save and spend in cash, and a vast majority of the more-than 1.2 billion population doesn’t have a bank account.
Last year, 78% of all consumer payments in India were made by cash, whereas in developed countries like the U.S. and U.K., only 20% to 25% of such payments were made that way, the report said.
But the reliance on notes and coins in India is likely to diminish, as spending habits change and financial services reach more people, said the Google-BCG report. It expects cash-based consumer payments to fall to 40% to 45% by 2025.
A sharp increase in the use of mobile phones with internet connectivity will help drive the move to digital payments, said the report.
India has more than 1 billion mobile subscribers, a quarter of whom use smartphones, according to the report. By 2020, the number of smartphone users in the country will likely be 520 million, and the number of internet users 650 million, twice the number currently, according to the report.
Personal internet banking has become more popular in India over the past few years along with digital payment options that allow users to settle mobile phone, electricity and even taxi bills.
The recent spurt of growth has come from non-bank companies offering payment services. Cellphone companies like Airtel and Vodafone offer facilities to transfer money using phones, while “wallet” companies like One97 Communications’ Paytm unit, and MobiKwik, allow users to store money digitally and pay through their systems.
The next level of growth will come when local mom-and-pop grocery stores start accepting digital payments, said the report.However, there are plenty of consumers and merchants who still feel skeptical of digital payments, or find them too complicated, said the report. And others just don’t want to give up using cash, it added.
Source: Could India Become a Cashless Economy? – India Real Time – WSJ
Posted in cash, Economics, India alert, smartphone |
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19/05/2013
Manila Bulletin: “Lin Lu remembers the day last December when a Chinese businessman showed up at the car dealership he works for in north China and paid for a new BMW 5 Series Gran Turismo -in cash.
“One of his friends carried about $60,000 in a big white bag,“ Mr. Lin recalled, “and the buyer had the rest in a heavy black backpack.“
Lugging nearly $130,000 in cash into a dealership might sound bizarre, but it’s not exactly uncommon in China.
This is a country, after all, where home buyers make down payments with trunks filled with thick wads of renminbi, China’s currency. And big-city law firms hire armored cars to deliver the cash needed to pay monthly salaries.
For all China’s modern trappings -the high-speed rail networks and soaring skyscrapers -analysts say this country still prefers to pay for things the old-fashioned way, with cash.
Doing business in China takes a lot of cash because Chinese authorities refuse to print any bill larger than the 100-renminbi note. That’s equivalent to $16. Since 1988, the 100-renminbi note, graced by Mao Zedong‘s face, has been the largest note in circulation, even though the economy has grown fiftyfold. No major economy has limited itself to such a low denominated bill as China.
By making the 100-renminbi note the largest bill, the nation’s citizens need more of it to buy a television, never mind a car, home or a yacht.
Chinese economists and govern ment officials often suggest that printing larger denomination notes might fuel inflation. But there is another reason.
“I’m convinced the government doesn’t want a larger bill because of corruption,“ said Nicholas R. Lardy, a leading authority on the Chinese economy at the Peterson Institute for International Economics in Washington, noting that it would help facilitate corrupt payments to officials. “Instead of trunks filled with cash bribes you’d have people using envelopes. And there’d be more cash leaving the country.“
All the buying, bribing and hoarding forces China to print a lot of paper money. China, which a millennium ago was the first government to print paper money, accounts for about 40 percent of all global paper currency output.
Although China’s coastal cities have flourished during the 30 years of economic prosperity, economists say the country’s interior remains poor and disconnected from the more modern aspects of the financial grid. As a result, the poor prefer to do business in cash. The rich also like to deal in cash, and they typically hide their money in the underground economy to avoid government scrutiny.
“The average Chinese trusts neither the Chinese banks nor the Communist Party,“ said Friedrich Schneider, an authority on shadow economies and a professor of economics at the Johannes Kepler University of Linz in Austria.
That lack of trust fosters a game between the government and its subjects, analysts say. Executives make secret cash deals to earn outside consulting fees while working at state-run companies. The government responds by trying to penetrate a vast underground economy, where transactions are conducted almost entirely in cash.
Often, the culprits are the very government officials who are supposed to be upholding the laws.
Take the case of Wen Qiang, the former police chief in the city of Chongqing. He was caught in 2009 with nearly a million dollars in renminbi, carefully wrapped in plastic bags and hidden in a water tank at a relative’s home.
To keep a lid on the illegal cash transfers, China restricts cross-border money transfers and places limits on foreign currency exchange.
And then there’s the issue of rodents. In March, a migrant worker in Shanghai discovered that mice had chewed into tiny pieces the $1,200 his wife stored in a closet. A local bank agreed to exchange the money if the man could reassemble at least three-quarters of a bill.
“But the bills are now in small pieces and it’s almost impossible to fix them,“ said Zhao Zhiyong, the 37-year-old worker. “Who could know that the money would be chewed by mice?“ Xu Yan contributed research in Shanghai.
via : http://mb.pressmart.com/manilabulletin/publications/ManilaBulletin/MB/2013/05/18/articlehtmls/Chinese-shoppers-Bring-Bags-of-Cash-18052013648009.shtml
Posted in cash, China alert, Economics |
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CHINDIA ALERT: You'll be living in their world, very soon 