Thursday, December 14, 2017
Business

IMF: China's economy is 'unsustainable' without major reform

China's economy, fueled by credit and government debt that has increased far faster than official statistics reflect, is heading in an "unsustainable" direction that poses major risks in the years ahead, the International Monetary Fund reported Wednesday.

In one of its sharpest critiques of the world's second-largest economy, the IMF characterized China as at a crossroads: nearing the limits of what it can gain from its reliance on consumer and industrial exports and in need of a dramatic round of restructuring to put more of the country's wealth into the hands of families and private businesses.

China's economic growth remains strong and is likely to remain near or above the 7.5 percent targeted by authorities. But the IMF noted growing risks in a heavily regulated financial sector that is showing signs of strain, including what the fund termed "large-scale regulatory arbitrage and moral hazard" as families and businesses try to subvert the low rates of interest the government allows banks to pay on deposits. That has given rise to an explosion in what the fund termed alternative "wealth management products" — marketed by banks to attract deposits but invested in "opaque" ways that seem reminiscent of the bundled mortgages that caused the U.S. financial crisis.

In one particularly telling statistic, the IMF said that total government debt in China may be as much as double that reflected in official data, once money borrowed by local officials is taken into account.

The fund estimated that combined debt at 45 percent of China's overall economy — compared with the official government debt of roughly 22 percent of gross domestic product. The figure has been growing rapidly in recent years as local officials borrowed heavily for infrastructure and other investments pursued to keep the economy afloat.

The fund said the figure is not in itself alarming because many of the investments are backed up by tangible assets or produce income, and China itself is flush with financial resources to cover any problem. But the rapid growth and the lack of transparency are a concern.

At 45 percent of GDP, the figure is low by developed world standards, where government debt has in many cases approached or exceeded 100 percent of the size of the national economy.

But the IMF's estimate comes at a time when China's economic model is appearing increasingly constrained, whether by external factors such as the fall in demand for its exports among slower-growing developed nations or by internal problems such as pollution, unproductive investments or the unwillingness of some in the ruling Communist Party to shift more income and financial power into private hands.

The new government has pledged to speed up such changes, particularly in deregulating the financial sector so that interest rates and lending decisions are made on the basis of market dynamics rather than dictated by government policy.

Comments
Here’s who’ll benefit, and who might not, if net neutrality is repealed as expected

Here’s who’ll benefit, and who might not, if net neutrality is repealed as expected

WASHINGTON — The Federal Communications Commission is expected to repeal net neutrality rules Thursday, a move that will likely have major implications for internet service providers, startups and consumers.The hotly contested move centers on a set o...
Updated: 1 hour ago
Tampa chamber of commerce evolves to take on more policy challenges

Tampa chamber of commerce evolves to take on more policy challenges

TAMPA — A couple of the ways the Greater Tampa Chamber of Commerce has changed — evolved, really — will be on view today at the organization’s 132nd annual meeting at the Tampa Convention Center.But first, recall what the chamber used to be."A coffee...
Updated: 1 hour ago
Disney buying large part of 21st Century Fox in $52.4 billion deal

Disney buying large part of 21st Century Fox in $52.4 billion deal

NEW YORK — Disney is buying a large part of the Murdoch family’s 21st Century Fox for about $52.4 billion in stock, including film and television studios and cable and international TV businesses, as it tries to meet competition from technology compa...
Updated: 1 hour ago
Exploring the incredible color, cuisine, culture of India

Exploring the incredible color, cuisine, culture of India

DELHIAs I slid my shoes off and handed the man a five-rupee note before entering the Jama Masjid mosque, I could feel the heat from the red stone against my heels. I could also feel the intense stares of the Delhi locals. I don’t know which made me s...
Published: 12/14/17
Florida hospitals call for more funding in effort to address looming doctor shortage

Florida hospitals call for more funding in effort to address looming doctor shortage

The number of doctors practicing in Florida has not kept up with the state’s surging population growth, and more money is needed to recruit and keep them here, hospital leaders said Wednesday.The shortage is particularly acute in four speciality area...
Published: 12/13/17
Allegiant Air mechanics ask to be represented by Teamsters

Allegiant Air mechanics ask to be represented by Teamsters

Allegiant Air mechanics filed with the federal government Wednesday to be represented by the International Brotherhood of Teamsters. If the petition is passed, the union would negotiate on behalf of the mechanics and related technicians on issues suc...
Published: 12/13/17
Federal Reserve boosts key interest rate for third time this year

Federal Reserve boosts key interest rate for third time this year

WASHINGTON — The Federal Reserve is raising its benchmark interest rate for the third time this year, signaling its confidence that the U.S. economy remains on solid footing 8˝ years after the end of the Great Recession. The Fed is lifting its short-...
Published: 12/13/17
Pasco Business Digest for Dec. 15

Pasco Business Digest for Dec. 15

Business digestWho’s newsHOSPITAL APPOINTS ASSISTANT CHIEF NURSING OFFICER: Registered nurse Courtney Stephenson, board certified nurse executive advanced, was recently appointed assistant chief nursing officer at Medical Center of Trinity. Stephenso...
Published: 12/13/17

Hernando Vendors for Dec. 15

Vendors are needed for the following nonprofit events:• Vendors and volunteers are being sought for a National Homeless Persons’ Memorial Day event from 8 a.m. to 3 p.m. Dec. 21 at Crescent Community Clinic, 5244 Commercial Way, Spring Hill. During t...
Published: 12/13/17
Tampa airport ranks No. 4 for most affordable parking rates

Tampa airport ranks No. 4 for most affordable parking rates

TAMPA — Holiday flight prices may be high, but parking rates at Tampa International Airport are a little more manageable. TIA has the fourth-cheapest parking rates in the country, a study by travel and expense app company TravelBank said. TIA, the st...
Published: 12/13/17