China Aug fiscal spending jumps 25.9% as Beijing looks to spark economy

China's fiscal spending jumped 25.9 per cent in August from a year earlier as Beijing tries to re-energise flagging economic growth. 

PHOTO: REUTERS

SEP 15, 201510:16 AM

[BEIJING] China's fiscal spending jumped 25.9 per cent in August from a year earlier as Beijing tries to re-energise flagging economic growth.

That was biggest rise since April, when spending leapt 33 per cent, data from the Ministry of Finance showed on Tuesday.

For the first eight months of the year, fiscal expenditure is now up 14.8 per cent over 10 trillion yuan (S$2.2 trillion) compared with the same period last year.

With traditional monetary responses such as interest rate cuts having less impact on economic activity than in the past, China is trying to increase fiscal stimulus to both shore up short-term growth and defend against deflationary pressures.

Spending on education rose 15.8 per cent in Jan-Aug; healthcare 19.5 per cent; energy conversation and clean technology 22.7 per cent; and social security and employment 21.7 per cent.

However, China's clunky budget process, and at times strained relationships with some local government officials, appear to be still complicating the transmission process in terms of turning higher spending into actual actiovity.

Angry Chinese authorities have seized up to 1 trillion yuan from local governments who failed to use their budget allocations, Reuters reported on Monday, quoting sources.

The huge underspend, linked to officials' reluctance to splash out on big-ticket projects while authorities crack down on corruption, supports the argument of some economists that Chinese state investment has grown too slowly this year.

Fiscal revenues rose 6.2 per cent in August from a year earlier and are now up 7.4 per cent for the first eight months from a year earlier, according to the data.

Unsteady domestic and global demand, a wobbly housing market and cooling investment are expected to drag China's official full-year growth to 7 per cent in 2015, the lowest in a quarter of a century, though some analysts suspect real growth levels are already much lower.

A near 40 per cent drop in China's stock market in the summer and a shock near-2 per cent devaluation in the yuan in mid-August have added to concerns about the health of the economy, roiling global financial markets.

In another sign China is prepared to crank up fiscal stimulus, the powerful economic planner, the National Development and Reform Commission (NDRC), held an internal teleconference on Monday to discuss the ways to stabilise investment growth.

Measures to be taken include dispensing a second round of financing for construction projects by September, and ensuring that funding for projects paid for by the central government will be ready in the next two weeks.

REUTERS

      

Oil extends losses as Opec cuts demand growth forecast

A driver refuels his luxury Ferrari automobile with unleaded petrol at an Esso gas station, operated by Exxon Mobil Corp., in Guildford, U.K., on Monday, Dec. 8, 2014. World crude prices extended their losses Monday, pressured by persistent concerns about the global supply glut as Opec lowered its demand growth forecast for next year. 

PHOTO: BLOOMBERG

SEP 15, 20157:09 AM

[NEW YORK] World crude prices extended their losses Monday, pressured by persistent concerns about the global supply glut as Opec lowered its demand growth forecast for next year.

US benchmark West Texas Intermediate for delivery in October dropped 63 cents to US$44.00 a barrel on the New York Mercantile Exchange.

Brent North Sea crude for October, the global benchmark for crude oil, tumbled to US$46.37 a barrel in London, down US$1.77 from Friday's settlement.

Both key contracts had fallen Friday, capping weekly losses of about three percent. Worries about the global oversupply, which has outpaced demand, have pushed crude prices down by more than half since June 2014.

On Monday, the Organisation of the Petroleum Exporting Countries cut its forecast for global oil demand growth in 2016 as emerging markets, the motor of the world economy in recent years, struggle with slowing growth.

The cartel said demand would grow by 1.29 million barrels per day to 94.08 million barrels a day next year, 50,000 barrels less than its previous estimate.

The market also is focused on the Federal Reserve's upcoming interest rate decision on Thursday, with speculation divided over whether the Federal Open Market Committee will hike the benchmark federal funds rate for the first time since 2006.

"The petroleum markets are testing the downside in Monday trade amid concerns over apparent slowing in China's economy and uncertainty over whether the FOMC will opt to raise the fed funds rate this week," said Tim Evans of Citi Futures.

Analysts say that a hike in the zero-level benchmark rate would likely push the dollar higher, making dollar-priced crude oil more expensive and potentially further damping demand.

AFP

      

China investigates senior labour ministry official for graft

President Xi Jinping has launched a sweeping campaign against graft since assuming the party leadership in 2012 and presidency in 2013.

PHOTO: REUTERS

SEP 15, 20159:13 AM

[BEIJING] A senior official in China's labour ministry is being investigated for suspected corruption, the ruling Communist Party's anti-graft watchdog said, the latest person to come under suspicion in a sweeping anti-corruption campaign.

Zuo Chunwen, head of the unemployment insurance division of the Ministry of Human Resources and Social Security, is suspected of "serious breaches in discipline", the usual euphemism for graft, the Central Commission for Discipline Inspection said late on Monday.

It provided no other details. It was not possible to reach Zuo for comment and it was not clear if he has a lawyer.

Zuo, 58, had been appointed to his current position in 2008, according to his official biography.

President Xi Jinping has launched a sweeping campaign against graft since assuming the party leadership in 2012 and presidency in 2013.

He has warned, like others before him, that the problem is so severe it could affect the party's grip on power.

Dozens of senior officials have been caught up, including former domestic security chief Zhou Yongkang, once one of China's most powerful people. Zhou was jailed for life in June after being found guilty at a secret trial of bribery, leaking state secrets and abuse of power.

REUTERS