Is China Facing a Financial Crisis?

Is China Facing a Financial Crisis? In a first for Chinese Banks and its Big Four, the Industrial and Commercial Bank of China (ICBC) unseated Exxon Mobil last year to take the top spot on the Forbes Global 2000[i] as the world’s largest company. China Construction Bank moved up 11 spots to No. 2 on the list.  Agricultural Bank of China stood at No. 8 and Bank of China with its double digit growth in sales and profits; improved its ranking by 10 places to No. 11[ii]. However what is more interesting is that ICBC, world’s largest and most profitable bank itself was on the verge of defaulting until a last minute decision to bail it out earlier in January this year. A 3 Billion Yuan (around $500 million) product issued by China Credit Trust Co., a shadow bank and marketed through ICBC was underpinned by a loan to a mining operation of Shanxi Zhenfu Energy Group that later collapsed as the price of coal plummeted. Investors were promised a hefty 10% annual return over three years, but were told in January n ot to expect payment. Some of the investors, who reportedly put as much as $500,000 each into the fund, said ICBC should reimburse them since it had marketed the product. ICBC insisted that it had never guaranteed the product, and had no legal responsibility to pay investors. The banks chairman even went so far as to describe the episode as a learning opportunity for investors, shadow banks and ICBC. However the learning opportunity was missed, thanks to a bailout by an unnamed third party that ensured investors will recover their initial investment, though interest will not be paid[iii]. Shadow Banking in China comprises of a web of non-banks that includes pawn shops, underground banks, various wealth management products, trust companies, and guarantors – many of which don’t take deposits to insure against risky lending activities and operate completely beyond the eye of regulators and authorities.These firms offer loans to companies or individuals that may have trouble securing traditional bank financing. Often, the loans are then packaged and sold to investors looking for higher returns. In China, the sectors exact reach is unknown, but some estimates put its size at roughly 60% of Chinas GDP[iv]. The China Banking Regulating Commission (CBRC) caps the value of loans that banks can extend relative to the value of deposits at 75%. Because of this cap, banks prefer to issue off-balance sheet loans in order to maintain lower loan-to-deposit ratios (LDRs).While the latest estimates for lending from China’s biggest banks put February 14’s new loans at 800 Billion Yuan, the highest February figure since the 4 Trillion Yuan stimulus in 2009, reports are emerging that the strength in new loans is not driven by real demand, but rather by banks moving off-balance sheet loans on to the balance sheet as part of the government’s broader crackdown on shadow banking[v]. It is one of the many indicators that signify the slowdown of Chinese economy. In 2012, there were two trust defaults, one for a product distributed by Huaxia BankLtd. and one sold by CITIC Trust. While it was learned thatZhongfa Industrial Groupin the end guaranteed the first, the solution to the second was never made public[vi]. Beijing knows that a default could prompt investors to pull theirmoneyfrom other trust products and stop providing the deposits needed to supply credit and fuel economic growth. A default would likely lead to a loss of confidence in Chinas trust and other shadow credit markets and a shrinkage of liquidity in those markets, and hence, a credit crunch. Some analysts however argue that a default is needed to demonstrate Beijings commitment to allow market forces to play a larger role in the economy, and to send a message to investors that high-yield investments carry significant risk. The China Banking Regulatory Commission said non-performing loans (NPLs) made by Chinese lenders reached 592 Billion Yuan in the final three months of last year. The last NPLs were at the same level was September 2008, the month when US investment bank Lehman Brothers collapsed. Loans by Chinese lenders have grown at an unprecedented rate in the past five years, with banks increasing the size of their balance sheets by 89 Trillion Yuan, an amount roughly equivalent to the size of the entire US banking industry[vii]. Chinese non-financial companies held total outstanding bank borrowing and bond debt of about $12 trillion at the end of last year equal to over 120 percent of GDP according to Standard Poors estimates[viii]. Trust companies along with other non-bank financial institutions such as securities brokerages have become a vital source of credit, allowing banks to arrange off-balance-sheet refinancing for maturing loans that risky borrowers such as the local government financing vehicles (LGFV) cannot repay from their internal cash flow. By law, China’s local governments are not allowed to borrow. After the 2008 global financial crisis, Beijing conceded some relaxations and local governments created LGFV (Local Government Financing Vehicles), also known as UDICs (Urban Development and Investment Companies), which though separate from but owned or controlled by the local government, were permitted to borrow. The LGFV generally borrowed funds predominantly from banks (as much as 80% or more), with the remainder raised by issuing bonds or equity-like instruments to insurance companies, institutional investors and individuals. Recently, with pressure on banks to curtail loans, these financing vehicles have borrowed from China’s shadow banking system. Audits released for the first time show that Chinas wealthiest eastern provinces are the most indebted, though repayment burdens are more onerous in poorer areas such as the southwestern provinces. Tibet was the only region that did not release an audit report[ix]. According to statistics from the National Audit Office, as of June 2013 government debt at all levels totaled about 20.7 Trillion Yuan (US$3.4 trillion), of which domestic government debt accounted for around 10.9 Trillion Yuan (US$1.8 trillion). Of this amount, 2.39 Trillion Yuan (US$390 billion), or 22%, is due in spring of this year[x]. We can add that including the local government debt that matures this year, there is an estimated 5 Trillion Yuan of trust products that are maturing, including as much as 1 Trillion Yuan in May[xi]. If the China Credit Trust product was allowed to default, China’s financial system might have been sitting on hundreds of billions, if not trillions of Yuan worth of non-performing loans in just a few months time. Chinacan rarely allow corporate failures, particularly of state-backed companies, partly out of fear that widespread layoffs could lead to social unrest. All this makes things all the tougher for the People’s Bank of China espec ially when interbank rates are at an all time high to control the local debt. Further the rising Chinese Yuan, which has gained around 33% since 2005 against the U.S. currency, increases their returns has led to asurge in loans to Chinese companies from outside the country has contributed to big inflows of cash into the mainland (mainly short-term and speculative in nature), trying to profit from the mainlands relatively highinterest rates[xii]. Hence when the more the PBOC pumps into the system, the more it encourages risky lending, pushing the country closer to a debt crisis. But when the central bank has declined to add cash to the system—notably in June  and  December of 2013—liquidity has seized up. The scale of trust assets however still pales in comparison to total banking sector assets of more than 100 TrillionYuanas of the end of June. But without trusts, the banking systems non-performing loans (NPL) ratio might be much higher, although accurate estimates are not possible[xiii]. China bears argue that a vast majority of the trust loans cannot be repaid, which will eventually require substantial bailouts and lead to a collapse in the banking system and a larger economic crisis. Even if this is exaggerated and the assets are good, huge liquidity risks exist given the known mismatch between the duration of trust loans and their underlying investments. [i] The Forbes Global 2000 are public companies with the top composite scores based on their rankings for sales, profits, assets and market value. [ii] Forbes: The World’s Biggest Companies at http://www.forbes.com/sites/scottdecarlo/2013/04/17/the-worlds-biggest-companies-2/ [iii] Charles Riley, â€Å"Chinas $500 million shadow bank rescue†, January 28, 2014 at http://money.cnn.com/2014/01/28/investing/china-icbc-default/ [iv] ibid [v] Oliver Barron, â€Å"Latest Developments for Chinas Shadow Banking and its Implications for RMB†, February 26, 2014 at http://www.forbes.com/sites/oliverbarron/2014/02/26/latest-developments-for-chinas-shadow-banking-and-its-implications-for-rmb/ [vi] Oliver Barron, â€Å"China Trust Default Avoided†¦ What Comes Next?†, January 27, 2014 at http://www.forbes.com/sites/oliverbarron/2014/01/27/china-trust-default-avoided-what-comes-next/ [vii] Harry Wilson, â€Å"Chinese bank bad debts hit crisis level high†, February 14, 2014 at http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10638811/Chinese-bank-bad-debts-hit-crisis-level-high.html [viii] Matthew Miller and Umesh Desai, â€Å"Chinas $12 trillion corporate debt pushes up refunding costs, drives mergers†, February 25, 2014 at http://www.reuters.com/article/2014/02/26/us-china-debt-companies-idUSBREA1P06420140226 [ix] â€Å"China details $3-trillion local public debt risk†, January 27, 2014 at http://www.reuters.com/article/2014/01/27/us-china-economy-debt-idUSBREA0Q0LA20140127 [x] â€Å"RMB350bn in local government debt up for repayment†, February 27, 2014 at http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20140227000050cid=1202 [xi] Oliver Barron, â€Å"China Trust Default Avoided†¦ What Comes Next?†, January 27, 2014 at http://www.forbes.com/sites/oliverbarron/2014/01/27/china-trust-default-avoided-what-comes-next/ [xii] Enda Curran and Prudence Ho, â€Å"Concern Over Hong Kong Banks Growing Lending into China†, February 27, 2014 at http://www.marketwatch.com/story/concern-over-hong-kong-lending-to-china-2014-02-27-124492221 [xiii] Gabriel Wildau and Lu Jianxin, â€Å"Growth in China trust assets slows as shadow banking crackdown bites†, August 6, 2013 at http://in.reuters.com/article/2013/08/06/us-china-economy-trust-idUSBRE97504Q20130806

Organizational culture Essay

For a company, organizational culture is very important because the culture is like something that the employee can be based for. In addition, the organizational culture is defined as a system of shared meaning and beliefs within an organization that determines, in a large degree, how employee’s act (Robbins, et al., 2003, p. 70). Founders of new organizations and managers play an important role in creating and maintaining organizational cultures. However, ethical organizational cultures are those in which ethical values and norms are emphasized. As Jones and George (2003, p. 350) argue that ethical organizational cultures can help organizations and their members behave in a socially responsible manner. Some might believe that if they do the ethical corporate culture, they will be able to get much profit. Meanwhile, Arnold and Lampe (1999, pp. 1-19, cited in Robbins, et al., p. 154) claim that the content and strength of an organization’s culture also influences ethical behavior. Nevertheless, a strong culture will have a very powerful and positive influence on managers’ decisions to act ethically and unethically. whereas, in a weak organizational culture, managers are more likely to rely on subculture norms as a behavioral guide. Work groups and departmental standards will strongly influence ethical behaviour in organizations with weak overall cultures. Alongside with organizational culture, there are two more things that have strong correlation with it. The first one is ethics. Ethics is the code of moral principles and values that govern that behavior of a person or group with respect to what is right or wrong (Robbins, et al., 2003, p. 150). The second thing that has strong correlation with culture is social responsibility. It is a management’s obligation to make choices and take action that will contribute to the welfare and interest of society as well as to the interest of the organization (Robbins, et al., 2003, p. 138). Nevertheless, managers who have ethical behavior and social responsibility can build a good reputation for their company. As Donaldson and Werhane (1993, pp.249-254) argue that having a good reputation of a company can increase profit. In addition, Robbins (et al., 2003, pp. 161-165) defines social responsibility is â€Å"an obligation, beyond that required by the law and  economics, for a firm to pursue long-term goals that are good for society†. However, social responsibility is the duty of manager to make decision consider with well-being of stakeholders and society. In fact, there are two main views of management’s social responsibility, which are classical view and socioeconomic view (Robbins, 2003, p. 407). Additionally, classical view aims to maximize profits, whereas socioeconomic view is that social responsibility goes beyond the increasing profit to improve the welfare of society. It is very important that managers support and develop an ethical culture because employees more likely to act ethically if their leader work having an ethical role model (Jones, & George, 2003, pp.101-103). Working ethically is a responsibility to the society. Nevertheless, this is very important as it can avoid harming stakeholders and also enhance the well-being of society as a whole. Stakeholders including employees, customers, suppliers, competitors, governments, media, union, communities, social and political action groups, etc (Robbins, et al., 2003, pp. 92-93). There are still some examples for the reference of socially responsible behavior such as providing training for workers, eliminating discrimination and reducing pollution (Robbins, et al., 2003, p. 407). Providing training for workers can enhance their skills and techniques for work and it can improve the productivity and efficiency. Workers will not be obsolete by the changes of technology so it benefits employees as well as the company (Tsang, 2003, p. 25). Social responsibility and economic growth is related sometimes. At first, the profit may be reduced by the costs of training workers, however, when the trained employees can work efficiently, the productivity will be increased followed by increasing profit at last. Eliminating discrimination is a social responsibility of managers. Some companies would like to employ a specific kind of person but not the others and cause inequality is known as discrimination. For instance, some companies would prefer employ a local student to an international student or they prefer employ man to woman (Pagan, 2000, p. 619). It is harm to firm if they refuse to employ some other races people since they can provide some  new ideas to the company for reference. These new ideas may not be gained from local employers as foreigners have different culture from the local and they can offer some useful information from the other view for the decision making. This is why an organizational culture which has formally adopted a specific position, philosophy, or set of beliefs regarding the fundamental values or principles, is an important thing to be used as the basis for business decision making. Moreover, if managers keep labor Market discrimination, it would lead to society chaotic and harm the society. Therefore, managers should bear the social responsibility to reduce discrimination. Another point that supports an organization to become socially responsible is that when a company being socially responsible, which means that the company has long-term goals. Company should higher the quality of a product to benefit customers to provide a better quality of life (Samli, 1992, p.12). The real example about this is The Body Shop. Although The Body Shop is looking for the profit, they still very concern about the environment. They use goods that not give bad impact on the environment. The product that the body shop sells is more expensive than others because they use the materials that do not give bad impact to the environment. As a result, people still buy their product because people know that they choose the right product. More expensive but in their product, it can’t be found anything that can damage their self and more important damage the environment. As we have seen, by being socially responsible, the firm can gain long-run profit and improve the company’s public image (Davis, et al., 1988, p. 37). In short, it can be seen that being socially responsible and following ethical corporate culture is much more profitable. But, since not all the companies have ethical corporate culture, there are some policies or practices that can be worked to encourage it. Firstly, the company should provide some training for the new and current employee because with the training activities it will make all the employee know about the culture and can adapt with the organization’s culture. Secondly, the company should punish the person who do not obey or perform appropriate with the culture and give respect to the person who perform and do the culture. With that  punishment and respect the employee will think that obey the culture is important. Third, the leaders in the company have to do the culture, so the employee can follow the leader to do the culture. Senior management needs to zealous avoid any decision or action that could reasonably be expected to communicate selfish motive for im posing an ethics philosophy, system, or measurement on employees (www.centeronline.org/knowledge/article.cfm?ID=2431). In conclusion, social responsibility is an important element for a company to success. Social responsibility brings company reputation followed by higher profit. Those firms having social responsibility can improve people’s quality of life and their health. It can also stable the society from chaotic. Therefore, managers should follow regulations and work ethically with the consideration of society’s well-being. Briefly, if one company is concerned about the ethical corporate culture which means that the company and the employee know what is right and wrong and know how to behave in the company. Thus, in one company it is very important to have ethical corporate culture.

Comparing and Contrasting

Compare and contrast the way the poets present a rustic activity? The two poems ‘Photograph of Haymaker 1890’ by Molly Holden and ‘Hay-making’ by Gillian Clarke portray rustic activity in a similar way. The poem ‘Photograph of Haymaker 1890’ consists of two stanzas and this could be linked to the fact that it is a reminiscing photo of a man who cuts hay. This shows the rustic activity due to the fact it is the poet possibly describing a relative of hers working. Whereas, the poem ‘Hay-making’ has three very short stanzas. We can link the short, fast flowing stanzas with the fact that the title seems synonymous with love making.The poet Molly Holden cleverly uses the imagery of life and death throughout her poem ‘Photograph of Haymaker’. An example being ‘to whet his scythe’ this conveys the message of death and an image of a grim reaper. Holden cleverly juxtaposes this with the phrase ‘white shirt lit by another summer’s sun’. Gillian Clarke also uses an intriguing juxtaposition, ‘these hot nights’. This juxtaposition shows a sultry image of natural passion. You could also link this to rustic activity if you imagine a worker possibly working in the night time. The tones of the two poems seem completely different from each other.Holden’s poem, ‘Photograph of Haymaker’ has a nostalgic tone ‘he pausing from his work†¦ trousers tied below the knee’. The phrases used give the connotation of the poet bringing back good memories. This is what photographs tend to do. Clarke uses enjambment as she does not use punctuations to break up the flow of her poem and this adds to the dreary tone. Towards the end of the poem we see more evidence of rustic activity. The poet Molly Holden uses enjambment throughout the last stanza, ‘sweet hay and gone some seventy years ago and yet they stand before me in the sun’.This en jambment gives the image of hay possibly falling down. We can link this to rustic activity if we create an image in our head of hay falling down in a country farm. Gillian Clarke’s poem has an interesting caesura before the word ‘Breathe’, this can be seen as a command possibly suggesting how the ritual of harvesting is metaphorically inspirational. Another important phrase which is strongly linked to rustic activity is, ‘in the scratch of the hay’. The ‘scratch’ of the hay creates a physical link between rural nature of a farm for instance and the act of human love making. We can also say that this is onomatopoeia.

Mini Thesis - 4482 Words

SMALL BUSINESS CLIENT MANAGEMENT DATABASE A mini-thesis written at MAG MEDIA DESIGN and submitted to KETTERING UNIVERSITY in partial fulfillment of the requirements for the degree of BACHELOR OF SCIENCE IN COMPUTER SCIENCE by ANTHONY MONTALBANO 2003 December 9th ___________________________________ Author ___________________________________ Employer Advisor ___________________________________ Faculty Advisor DISCLAIMER This thesis is being submitted as partial†¦show more content†¦Criteria and Parameter Restrictions The only restrictions in the software development are limited to the author’s knowledge in the programming language, Visual Basic. The software is also dependent of Microsoft Access 2002, a powerful database management tool. Methodology Mainly Microsoft Access 2002 drove the design of the software database. The author designed the program using Microsoft Access 2002 as a foundation. The author, along with his previous knowledge of Visual Basic, studied database development and design to construct this program. The main concept of the database is saying that there is companies MAG Media Design will do work for and each company will have projects, and each project will have smaller sub-projects. It’s based on a hierarchy of data, shown in Figure 1. Each company will have individual properties that are independent of each other. The projects and sub-projects will have independent properties as well as dependent properties of its parent company. Individual forms will be created for each level of the database for easy data entry. A user friendly GUI (graphical user interface) will also make navigation and data access easy and simple. Using the methods of Visual Basic coding in Access allows the author to i ntegrate each menu, table, and report with a uniform approach to the code design, which in turn will allow easier improvements to the program in theShow MoreRelatedMini Thesis1451 Words   |  6 PagesTHE IMPACT OF LIFESTYLE DECISIONS THAT CAUSE END-STAGE RENAL DISEASE IN AFRICAN AMERICAN MALES Submitted in Partial fulfillment of the Requirements For Health Care Marketplace Thesis By: Laquita Hailey Professor: Cornelius Cash, PH.D., MBA American InterContinental University 6600 Peachtree-Dunwoody RD 500 Embassy Row Atlanta, GA 30328 June 18, 2005 TABLE OF CONTENTS ABSTRACT Chapter 1 – Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦4 Background and Problem†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 4 StatementRead MoreAuthor Christopher Browning867 Words   |  3 Pagesactions of Battalion 101 and how it impacted their lives. 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