China Money Podcast

John Barnes: Red Light Ahead For Chinese Green Tech Sector

Podcast Editor — Wed, 16 May 2012 14:25:06 +0000

In this episode of China Money Podcast, guest John Barnes examines investment opportunities in China’s drive to achieve a more sustainable and greener growth. In particular, he explains the enormous potential of wastewater treatment businesses in China, and why many green tech companies might fail as the industry consolidates.

Listen to the podcast or read the excerpt below.

Q: First, give us a brief definition of “sustainability”, particularly relating to your work at PWC?

A: Sustainability is all about building a sustainable business. It’s not an add-on. It’s not a separate thing that companies do. It’s about looking at every facet of all business operations and looking for ways to make operations more sustainable.

We work with companies at a high level, looking at how they can build sustainable programs within their daily operations: from looking at their core products and services to the carbon footprint and life cycle analysis of their products.

Q: When we look at China where the policy and business environments are very different, what specific areas (under the sustainability umbrella) do you see opportunities?

A: Given that the Chinese government has made a commitment to switch the economy way from high-energy, high polluting industries, the potential sectors to watch would be renewable energy, energy efficiency improvement technologies, environmental protection technology and equipment, water management, waste water treatment management, etc.

There is a word of caution here. Just because it’s green, doesn’t mean it will grow. (For foreign investors), clearly you need to do your homework. A lot of things have a green label, whether they are green or not, who knows. Some of these technology companies in renewable energy and wastewater management will eventually fail.

Q: In those sectors you just mentioned, wastewater treatment for example, any specific technologies that would be the most relevant?

A: With wastewater treatment in China, the government has said that it would have a wastewater treatment plant for all its major cities. The government has already built thousands of wastewater treatment plants around in China.

In China, there are a successions of quite small water treatment plants. You need engineering technology but also technologies to monitor the levels of toxins in the water and be able to add things that would break down the solids and wastes.

There are two sorts of plants in China, the government-owned and also private ones. The private wastewater treatment plants are licensed by the government and have contracts with the government to treat specified amounts of wastewater for a certain price. They will have certainty of their revenues.

The biggest costs are electricity and staff. The electricity is fixed by the government. So for example, if you run a water treatment plant heavy at night, then you will be more efficient. Obviously, all the (Chinese) companies are looking for foreign companies with the technologies to make their wastewater treatment process more efficient and more cost effective.

Q: Do you have any estimate of the pace of future growth in wastewater treatment in China?

A: The issue we have in China is that the price of electricity and water is set by the government, so there is less opportunity for companies to shop around for efficiency. Over time, as China grows, these fixed prices will be freed up. Whether it’s three to five years, I don’t know.

At the moment, wastewater is a safe bet because you know what your costs are and your revenue. However, the profitability is not that high. But as time goes on, as the market frees up, there will be more opportunity to make a greater return.

For example, you go to different cities and you will find different operators running different plants. There are not many operators operating more than two or three plants. We need consolidation in the market so that people can benefit from the economy of scale.

Q: You mentioned profitability is not high. How low is it right now?

A: I think it’s about seven to ten percent return on the private ones. The public ones are probably at five percent return on investments.

Q: With this kind of return, is it really attractive for foreign companies to come to China?

A: People come to China because other people are doing it. If you think you are going to come to China to make a fast buck, you should think again.

Five to seven percent it’s not huge, but in this market, it’s not bad either. The only way I can see is up as the market consolidates and as regulatory policies ease.

Q: What pitfalls should investors be watching out for, and a word on the lessons learned from previous mistakes?

A: I want to propose eight steps to succeed in China.

1, Find a reliable local partner; 2, Use consultants; 3, Don’t rely entirely on Guanxi; 4, Do homework and due diligence before jumping in; 5, Be flexible and patient; 6, Bring your first-rate technology; 7, Protect your intellectual property rights; 8, Have a good business model.

Q: Lastly, what’s your outlook for the sustainability/green sector in China?

A: We will see continued emphasis and focus on the renewable energy sector. China has developed its own carbon-trading scheme, which will again push companies to be more energy efficient.

There will be lots of new businesses with “green” labels (coming into the market), and a lot of traditional businesses will embed these concepts into their general business operations. So we will see lots of businesses reinventing themselves along the sustainable practice principle.

Our Guest Today:
John Barnes is a partner at PricewaterhouseCoopers Consultants (Shenzhen) Ltd. Based in Beijing, Mr. Barnes leads PwC’s sustainability and climate change services across Hong Kong and China, where he and his team help address issues including sustainability strategy; sustainable supply chain and life cycle analysis; and environmental and social due diligence.

Visit ChinaMoneyPodcast.com for more great audio and video episodes covering important investment news and financial events in China. Follow us on Twitter @chinamoneypod subscribe to all episodes on iTunes.

Richard Herd: No Need To Cut Taxes In China; Instead Raise Government Deficit For Fiscal Stimulus

Podcast Editor — Tue, 08 May 2012 11:29:42 +0000

In this episode of China Money Podcast, prominent China economist at the Organization for Economic Co-operation and Development (OECD), Richard Herd, takes on China’s tax systems and financial reform. Contrary to popular opinion, Mr. Herd disagrees with policy suggestions to cut taxes as fiscal stimulus. As he sees it, China’s tax burden on companies and individuals is still light.

Mr. Herd talked with China Money Podcast on the sidelines of the EU-China Urbanization Partnership conference in Brussels. Listen to the podcast or read the excerpt below.

Q: In your research report, you pointed out the strong fiscal position of the Chinese government. The government has little net debt, and fiscal revenue has been growing at an average of 1.5 times of nominal GDP. Therefore, some Chinese economists are calling for tax cuts. Do you think that will be a good policy move?

A: Over the past 15 years, the growth in tax revenue has been quite rapid. But it was needed and was rooted in the tax reform of the mid 1990s. It lifted, in total with social security, government tax revenue to around 30 percent (of GDP). I think 30 percent, or perhaps 35 percent (of GDP), should be enough to cover most of the governmental expenditure needs. It will allow for a considerable increase in social benefits that’s so badly needed. Beyond that, there is a need to reform taxation so that tax revenue doesn’t grow too rapidly.

The disincentive effect is still quite limited because most people still don’t pay income tax. The main problem on incentives with the taxation system is in social security, where social security contribution (by employers) is around 40 percent of a person’s wage, that’s probably too high. Some of that too should be transferred to general taxation so that the incentives for employing labor are not cut too much.

As to whether taxes should be cut at this moment, I think that some of the main calls to cut taxes have come from those who think that the Chinese economy is going to a hard landing this year. I don’t think that seems at all likely at the moment. The need to reduce taxes is much less than a trillion Yuan. In fact, the government has announced income tax cuts and also stimulus programs to slightly raising the deficit to around 400-500 billion Yuan. That will go quite a long way to getting the economy going again.

Q: The domestic economists are arguing that the tax burden for individuals and companies are too heavy. Sounds like you have a different opinion?

A: I think that the tax rate for companies is 25 percent. That’s quite low by international standards. The tax rate for most individuals is, well, only a very small proportion of the Chinese population actually pays income taxes. You could perhaps say that in relation to other transition countries, China’s top tax rate is quite high because it’s at 45 percent. It’s much higher than in Hong Kong for example, which is 15 percent.

But on the other hand, China has a bigger social system than Hong Kong. The 45 percent tax rate doesn’t come until someone earns 36 times of the average wage, even then it’s just very few people who pay 45 percent. There is certainly a case for trying to move some of the social security contributions paid by the employer to a more general tax base.

Q: You said the government’s increasing the deficit to around 500 billion Yuan is sufficient to stimulate the economy, but of course, you still think that the government should (further) loosen monetary policy, right?

A: Yes, indeed. The People’s Bank of China has reduced the reserve requirement ratio (RRR) twice now. That’s had an impact on interbank interest rates. Some more RRR rate cuts is likely in the next few months. Also, the growth of credit has picked up as well. That too should stimulate the economy.

Q: Lately, there have been many new policy initiatives in Beijing to reform the financial sector, including an experiment program on private lending in Wenzhou, setting up another offshore RMB center in London, significantly increasing QFII (Qualified Foreign Institutional Investors) quotas. There has been much debate about how best to open up China’s financial sector. What’s your recommendation?

A: At the moment, the Chinese government does have a window open for opportunity for opening up the capital account. The extent of the current account surplus has diminished enormously. Already overseas investments by Chinese companies are growing rapidly. The current account surplus in the first quarter of this year was 1.4 percent (of GDP). That means the output pressure on the exchange rate is much less now than it was five years ago when current account surplus was ten percent of GDP.

The way the government should move on financial reform would be first to take more steps on the QFII and RQFII (Renminbi Qualified Foreign Institutional Investors) areas. It is also important to allow people to invest outside of China, expanding that experiment in Wenzhou.

An equally important factor is at the same time of opening up the capital account, you need to liberate the setting of the interest rate. Otherwise, when you open up the capital account, that offers an opportunity for arbitrage between foreign markets and domestic markets. So I think the banking systems should be sheltered. You need to get rid of interest rate regulation and that should happen very early on.

Q: Is there a certain sequence that all these needed reforms should be following?

A: I think the essential thing is to start preparing the Chinese banking system so that it can live with much lower margins that it has been earning due to regulated interest rates. That would be among the first to try. The second is to open up the equity markets, then the bond market.

Q: If there is one or two pressing reforms that you could advise the Chinese government on, what would that be?

A: There are two areas. One is to improve the position of migrate workers in the cites. The way to do that is to detach social benefits for having a local Hukou. That makes it easier for the whole family of migrant workers to join and settle in the city. That’s a policy that China should follow and that is also a way to generate more consumption in the cities as well.

The other area is State Owned Enterprises (SOE). There are lots of areas to improve, but certainly one would be that SOEs should pay 30-40 percent of their profits to the Ministry of Finance and the Ministry of Finance should use that to either cut taxes or to increase social spending.

Our Guest Today:

Richard Herd is senior economist at the Organization for Economic Co-operation and Development (OECD), an influential Paris-based international organization that promotes better government policies. Mr. Herd is the head of OECD’s China and India research team and has been researching the Chinese economy for eight years. He graduated from the University of Cambridge.

Track China’s Money Supply And Loan Growth For Risks

Podcast Editor — Sat, 05 May 2012 06:32:44 +0000

In this episode of China Money Podcast, hear what Mr. Ewen Cameron Watt has to say about China’s property sector. Mr. Cameron Watt is a managing director and portfolio manager at BlackRock, Inc, and below is an excerpt of his viewpoints.

On the Chinese property market, is it a bubble and is it bursting?

What’s happening in the real estate market in China is fascinating, where the government has deliberately engineered a decline in prices to deflate a bubble. It’s really an experiment because it’s the first time in the fifteen years or so there has been a private housing market in China. The big question for us is to what extent does it hurt activity levels and to what extent does it impact the financial systems.

On the outlook for the property sector and how will it impact other parts of the economy?

One of the big risks in China is that, investors in property invest on the basis that the value will always rise. This is the first real decline in prices induced by the central government in the 15 or so years of the private housing sector in China.

No one knows what’s going to happen for sure. On the positive side, more urbanization, household formation and all that supports the idea that there is an ongoing demand. That’s certainly true. On the negative side, how will that demand manifest itself?

I think that here the rate of return is important because there are very few avenues for real returns for savers in China. They’ve gone into real estate, gold, wine and jade, because they think they get a real rate of return, which they don’t get for bank deposits. Bank deposits are 90 percent plus of the savings vehicles in China. So it’s a critical question how the psychologies recover. If I’m honest, at this stage, I don’t know.

For global investors, what key indicators in China should they monitor closely to better position themselves?

One of the things we have watch closely is the rate of money growth. There are some opportunities for the government to relax restrictions on banks to help the growth of monetary supply. Monetary supply has got to grow at nearly 15 percent to get 10 to 11 percent nominal growth. We will give it an inflation rate of four percent, then you got a seven percent real growth that people have come to believe is minimum growth for Chinese society and Chinese stability.

If you think about what investors would monitor, they should monitor Chinese money supply, loan growth, and watch closely if these really decelerate; if that’s the case, then the global financial risk is rising, not just Chinese risk.

Jonathan Fenby: Hukou System An Entry Point In China’s Next Stage Of Reforms

Podcast Editor — Thu, 26 Apr 2012 23:34:32 +0000

In this episode of China Money Podcast, well-known British writer and China expert Jonathan Fenby gives his diagnosis of China’s long-term challenges. Will the world’s second largest economy go on to surpass the U.S. in a couple of decades? Or, is an apocalypse in the cards?

Listen to the podcast on our website, or read an excerpt from the audio interview.

Q: In your latest book, Tiger Head, Snake Tails, you point out that China’s future dominance is far less certain than people have been led to believe. Why is that?

China has certainly achieved a lot in the past thirty years. But China is now in a stage where it must rethink its economic model. The assumption that China will continue in the rapid pace of economic growth and that it will bring in political dominance is far from established.

Its economy needs re-balancing, reshaping and remodeling. China will spend the next ten years or so on getting its economic model up and running rather than thinking about dominating the rest of the world.

Q: The Chinese government certainly understands that the model needs to be changed, but with the complicated system now China finds herself in, it seems hard to find a starting point?

The difficulties with reforms in a situation like China after all those years of growth is that everything is interconnected. If you start reform in one area, for example, if you privatize farm land, people can then build up much more efficient farms in China.

That would be good, but if you do that, the local authorities which own the farm land and rely on selling them for revenues, they will need to introduce new tax systems to give the local authorities much more power to raise taxes locally and spend it themselves. If that happens, Beijing will lose an element of control over local authorities.

If you can start in one place, I would say the one area where you could consider is the Hukou registration system. You could allow migrant workers, especially second generation migrant workers, greater rights and the possibility to buy properties in the cities.

Q: There is a consensus that the reform process in China is stalled and needs to be jump-started again. How likely do you think it can pick up speed under the next leadership?

I think it will be slow and cautious. The people who run China have adopted a consensus style of leadership management. There are so many special interests involved in any debate of change.

But what I find interesting is that when I was last in Beijing, there is this awareness on the need to have a serious debate on reform. You have senior people like Wang Yang talking openly about the need to reform. There are similar commentaries on China Daily and other state newspapers.

Q: So you are saying China is at a turning point in its economic growth model and it will have a paradigm shift from now on, what does that mean for investors who are looking to invest in China?

First, I think there should be a paradigm shift. My question is that if the consensus style of leadership can be able to make that shift or not.

As for investors, this means China, in the short term, will be a rocky place to invest with lots of uncertainties. But for foreign companies investing in China, if they got something the Chinese government or the Chinese consumers want, whether it’s consumer goods or technologies, they will be welcomed.

The idea of coming to China to simply exploit cheap land, cheap labor and tax breaks, that stage is over.

Q: Lastly, what is your forecast on the Chinese economy this year at Trusted Sources?

We expect the economy to grow at 7.5 percent; inflation rate to fall below 3 percent; and exports to decline but not as fast as forecasters think they will. We think monetary easing in China will be prudent. It will be staged and slow.

We don’t see a property crash in China. We expect a 10 to 15 percent decline in property prices with an upturn in the second half of the year. Overall, this will be a shift of investment away from infrastructure towards machinery and factory to improve productivity.

Q: The consensus forecast is 8.3 percent this year. Why is your forecast notably lower than others?

Because we see the declining export market having a more notable effect than others. Secondly, we see a very cautious approach toward credit easing. We see the first half of this year as a rather tight period.

People’s Bank of China is adopting a cautious policy and they want to keep inflation below 3.5 percent. They don’t want it to bounce up again during the leadership transition period. Lastly, monetary supply will be kept tight. They want monetary supply back to the level of before 2008.

Our Guest Today

Jonathan Fenby is co-founder and managing director of the China research team at UK-based consulting firm, Trusted Sources. He is formerly editor of the UK newspaper, The Observer, and Hong Kong-based daily, South China Morning Post. A prolific writer, he has published 12 books in the last 14 years. His latest book, Tiger Head, Snake Tails: China Today, How it Got There and Where it is Heading, analyzes China’s future.

Michael Shaoul: We Are Shorting Chinese H Shares; China’s Property Slide Is Just Beginning

Podcast Editor — Wed, 18 Apr 2012 23:30:38 +0000

In this episode of China Money Podcast, guest Michael Shaoul discusses his view on the Chinese economy. He is bearish and expects the current economic slowdown to last until the end of this year, in stark contrast to the consensus view that the economy will pick up speed during the second half of 2012.

Here are his main points:

- The major concern of the Chinese economy is the real estate sector. The softness we have seen in this sector is only the beginning of a broader and deeper correction that will affect peripheral industries such as materials and commodities more harshly than people expect.

- China’s real estate cycle will be different from the US housing cycle. Though China’s property sector is less leveraged, the losses are still real on behalf of property owners.

- Even after the Chinese policymakers loosen monetary policy sometime during this quarter, the stimulus effect will not translate into economic improvements immediately. The economic deterioration will continue well into the end of this year, if not longer.

- The current transition will be difficult for the Chinese economy and for investors who are exposed to the Chinese “growth” story (as well as other emerging markets such as Brazil and Hong Kong).

- China’s economy is 25 to 35 percent of the U.S. economy, but China has 140 percent of the money (M2) that the U.S. has. The massive amount of liquidity will take time to unwind.

- We only have short exposures to some H shares in Hong Kong. It is difficult to find good investments in China right now as it was difficult to find good investments in the U.S. in 2007. Investors will have to hold through a difficult period and endure potential losses.

Our Guest Today:
Michael Shaoul is chairman of Marketfield Asset Management, a New York-based investment firm that oversees more than $1.5 billion. The Marketfield Fund beat 97 percent of its peers in 2011. Mr. Shaoul also serves as chief executive officer of Oscar Gruss and Son Incorporated, a New York Stock Exchange member firm. Between 1992 and 1996, Mr. Shaoul ran Park Square Associates, a Manhattan-based real estate investment and management company.

Powell Yang: Wine Investments In China Still Have Huge Upside

Podcast Editor — Thu, 12 Apr 2012 20:09:10 +0000

In this episode of China Money Podcast, guest Powell Yang discusses Chinese investors’ increasingly important role in fine and rare wine investments. How mature are Chinese wine investors? What common mistakes do they tend to make and what potential returns are they after?

Here are his main points:

- Wine investment is similar to other commodity investments. The key is to do your own research. As much as 99 percent of the wine produced will never go up in price. Only the very top wines of Bordeaux and some Burgundy wines are traded in high dollar prices.

- Everyday investors without deep wine knowledge can still invest in wine by buying the tried-and-true labels. If bought at the right price, it is likely to earn a decent return. More knowledgeable wine investors can explore the up-and-coming labels that could potentially yield greater reward.

- With Chinese wine investors growing, wine producers are catering more to the Asian and Chinese markets. They are shifting availability to China and hosting signature wine conventions in locations such as Hong Kong.

- The mistake Chinese wine investors tend to make is to chase the market in disregard of the price. They could also be impatient to see their wine collections increase in price, though generally it is recommended to hold wine for at least five years to achieve a reasonable return.

Our Guest Today:
Powell Yang is director of consignments at Spectrum Wine Auctions, an auction house of fine and rare wine established in 2009. Yang’s primary focus is to explore potential wine investors, particularly in the fast-growing Chinese market. Previously, Yang worked at Anheuser-Busch, Diageo Chateau & Estate Wines, and Winebid.com. Spectrum Wine Auctions is a subsidiary of Spectrum Group International, Inc.

Alberto Forchielli: Incredible Evaluation Arbitrage Opportunities Exist Between China And Europe

Podcast Editor — Fri, 06 Apr 2012 23:30:10 +0000

In this episode of China Money Podcast, guest Alberto Forchielli discusses China-Europe cross-border deals, the challenges Chinese companies face when expanding overseas, and the mistakes he has made but never regretted.

In his own words:

- There are great evaluation arbitrage opportunities between Europe and China. We have never bought companies at more than seven times EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization). We were even able to buy companies at as low as 3.2 times EBITDA. But in China, valuations are likely 20 times or 30 times, sometimes as high as 40 times EBITDA.

- Chinese companies face many challenges when doing overseas M&A. They are still not insiders and often do not have access to deals. Getting the required approvals from Chinese government also takes time and hurts their competitiveness.

- We were able to achieve our accomplishments because we have made all the mistakes possible. One pitfall is working with people who are interested to gain insights from you, rather than doing a real deal. Another is co-investing with Chinese companies that dragged down the whole deal process. We also stay clear from pre-IPO deals now after learning a lesson.

- We are just in the beginning of an enormous trend where Chinese companies will become more and more dominant in overseas investment. As investors, we have to stay ahead of the pack.

Our Guest Today

Alberto Forchielli is managing partner at Mandarin Capital Partners, a private equity fund that focuses on investing in Chinese and European companies. Primarily, the fund invests in Chinese companies seeking overseas expansion and European companies in search of local presence in China. Among many previous positions, Forchielli was at the World Bank in Washington, D.C. for three years. He was also president for Asia Pacific at Italian industrial conglomerate, Finmeccanica S.p.A.

News Review: Financial Reform Experiment In Wenzhou, China IPO Market Remains Tough

Podcast Editor — Fri, 30 Mar 2012 11:43:57 +0000

In this episode of China Money Podcast, our host Nina Xiang reviews this week’s investment news:

- China initiated a financial reform in Wenzhou, legalizing private or underground lending and possibly allowing direct overseas investments by local residents
- IPO market remains the toughest in years for China’s A-share market

Dan Ikenson: U.S.-China Trade War Is More Roar Than Dragon Fire

Podcast Editor — Thu, 22 Mar 2012 13:22:45 +0000

In this episode of China Money Podcast, guest Dan Ikenson discusses the latest U.S.-China trade frictions and if there is really a trade war between the two countries:

- People often forget that the vast majority of U.S.-China trade is healthy
- Bilateral trade relationship could improve after this year when government transitions are accomplished in both countries
- Recommended action is that the U.S. should grant China market economy status and China should improve intellectual property and technology protection

Our Guest Today:
Dan Ikenson is the director at Herbert A. Stiefel Center for Trade Policy Studies at American think-tank, the Cato Institute. Having worked in international trade since 1990, Ikenson’s research focuses on WTO disputes, regional trade agreements and U.S.-China trade issues. Ikenson is the coauthor of book Antidumping Exposed: The Devilish Details of Unfair Trade Law.

“The U.S. and China together have brought 18 cases to the WTO… (but) there have been around 54 cases between the US and Europe at the WTO. So I don’t think these actions necessarily reflect a deterioration of relationship as much as a late maturing of the relationship.”

- Dan Ikenson

Yukon Huang: China’s Unbalanced Economy Is A Strength

Podcast Editor — Thu, 15 Mar 2012 23:16:21 +0000

Yukon Huang is the senior associate at Washington D.C.-based think tank, Carnegie Endowment, where he researches on China’s economic development and its impact on Asia and the global economy. He was the World Bank’s China director from 1997 to 2004, and also served at the U.S. Treasury previously. Mr. Huang holds a B.A. from Yale University and a M.A. and Ph.D. from Princeton.

In this episode of China Money Podcast, special speaker Yukon Huang discusses China’s unbalanced economy. Is it really a problem, or in fact a virtue?

- Deng Xiaoping is the unbalanced reformer who favored the coastal regions in the beginning of the country’s economic development
- Other countries all went through similar unbalanced growth periods in their history
- China’s unbalanced economy is the result of its unfinished urbanization process

“Unbalanced growth is actually associated with tremendous economic strength rather than a liability.”
- Yukon Huang

Ben Simpfendorfer: the Era of Cheap Made-in-China Goods Is Over

Podcast Editor — Wed, 07 Mar 2012 21:42:27 +0000

In this episode of China Money Podcast, guest Ben Simpfendorfer discusses China’s manufacturing sector and its challenges to improve productivity:

- China will remain number one in manufacturing, but it is transferring higher costs to consumers
- China needs to focus on expanding the private sector and the services sector to avoid failing into the so-called middle-income trap
- China’s interior provinces will likely stagnate in economic growth if major reforms do not take place

Our Guest Today:
Ben Simpfendorfer is managing director at Hong Kong-based consultancy, Silk Road Associates. He is the former chief China economist at the Royal Bank of Scotland and the former senior China economist at JPMorgan. He published the book The New Silk Road in 2009 on China’s economic relations with the Middle East.

“China will remain number one (in manufacturing) even though we will see erosion at the margin. The implication is that the country will start to pass on higher production costs to the rest of the world — so higher prices in Wal-Mart and Tesco. The era of cheap goods is over.”
- Ben Simpfendorfer

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Tom Delatour: Long on Real Estate Investment in China’s Tier II Cities

Podcast Editor — Fri, 02 Mar 2012 02:01:21 +0000

In this episode of China Money Podcast, guest Tom Delatour discusses investing in residential real estate in China’s second-tier cities:

- Middle class in China’s tier II cities have growing abilities to afford housing as income increases faster than housing prices
- When forming joint-ventures with Chinese property developers, it is essential to align interests by having the local partners to put up substantial equity
- Policies on buyer restrictions in China will likely remain longer than expected

Our Guest Today
Tom Delatour is CEO and co-founder of Beijing-based Century Bridge Capital, a firm that invests in residential properties in China’s second-tier cities. Delatour previously managed the real estate investments of the Robert M. Bass organization. Before that, he was with Lincoln Property Company and KPMG Peat Marwich.

“In tier two cities, housing prices were growing at 11.9 percent a year, but household income was growing at 13.1 percent. So you actually had the affordability for housing for the middle class in the tier two cities to really stay stable or actually slightly improve.”
- Tom Delatour

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Michael Werner: Chinese Banks Will Surprise On The Upside

Podcast Editor — Sat, 25 Feb 2012 05:27:50 +0000

In this episode of China Money Podcast, guest Michael Werner discusses Chinese banks’ stocks; banks’ exposure to local governments and the property sector; and whether Chinese banks will see their non-performing loan ratios skyrocket.

- Chinese banks’ exposure to local governments and the property sector is manageable. NPL ratio will likely go up to only 2.5 percent
- Most listed Chinese banks have sustainable capital regimes and don’t have to raise additional equity
- Chinese banks’ should focus on wealth management, custody business and financial advisory to boost their fee-based revenue
- Fee-based revenue will keep growing at a 20 to 25 percent annual rate and will take up to 25 percent of banks’ total revenue in five years
- China could begin to liberalize deposit interest rates in a year or two, but it will not hurt banks’ profitability

Our Guest Today:
Michael Werner is senior research analyst covering the Chinese and Hong Kong banks at Sanford Bernstein & Co. He has been with Bernstein for 12 years, previously covering U.S. banks, brokerages and European banks. Werner graduated from Brown University in 2000 with a BA in Economics and a BA in Mathematics.

“In general, I think Chinese banks are going to surprise people on how well they are provisioned and what the ultimate NPL ratio will be. Some people have been forecasting 8 to 12 percent (NPL ratio); that does not seem likely in our viewpoint.”
– Michael Werner

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Anthony Siu: Chinese Cross-Border Deals Are Diversifying

Podcast Editor — Thu, 16 Feb 2012 07:39:52 +0000

In this episode of China Money Podcast, guest Anthony Siu discusses Chinese cross-border M&A, what challenges Chinese companies face when doing deals overseas and what they need to do to improve:

- Chinese outbound M&A will continue to grow at a high single digit to low double digit rate annually
- Cross-border deals will tilt more toward outbound transactions with industries diversifying from natural resources to industrials, consumers and technologies
- Physical distances, language barriers and valuation perspectives put Chinese companies at a disadvantage
- Advising Chinese companies involves more hand-holding and helping Chinese companies learn the deal-making process along the way
- Chinese buyers are not necessarily at a disadvantage as sellers’ key focuses are to get the deal done with good valuations

Our Guest Today:
Anthony Siu is managing director at Robert W. Baird & Co. Based in Shanghai. He is the head of Asia investment banking at Baird. Prior to Baird, Siu was a director of corporate advisory at Standard Chartered Bank, responsible for cross-border M&A transactions in China.

“It’s very typical for deals to be done with a handshake here in China. But…extra due diligence is required if you want to make sure that the acquisition will end up to be a successful one.”
-Anthony Siu

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David Gosset: Debt Crisis Draws China And EU Closer

Podcast Editor — Sat, 11 Feb 2012 21:24:36 +0000

In this episode of China Money Podcast, guest David Gosset discusses China’s potential help to the Eurozone and the long-term relationship between China and the European Union:

- China probably prefers to offer potential assistance to the Eurozone through the IMF
- There is no explicit trade-off for China’s financial assistance to Europe
- Eurozone debt crisis will push further the process of integration of EU nations
- The coming China-EU Summit will be a symbol to a more indispensable relationship between China and the EU
- In the longer term, Chinese companies’ investment in Europe will be key for the Continent to propel growth

Our Guest Today:
David Gosset is the director of the Euro-China Center for International and Business Relations at China Europe International Business School in Shanghai and Beijing. He is also the Founder of the Euro-China Forum with the objective of nurturing mutual understanding between the two edges of the Eurasian continent.

“The European integration process has been a series of answers to a series of crises. The Euro debt crisis is another important series of crises, probably the third biggest crisis that Europe has faced since WWII. The result of that is going to be more European integration and more transfer of sovereignty.”
– David Gosset

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Jack Perkowski: Bullish On Energy Efficiency Technology, Health Care And Financial Services In China

Podcast Editor — Wed, 01 Feb 2012 12:14:26 +0000

In this episode of China Money Podcast, guest Jack Perkowski, a.k.a. Mr. China, discusses his views on China’s economy in the Year of the Dragon, where he sees great investment opportunities and key challenges facing China for the long term.

- Chinese government has great monetary and fiscal resources to achieve a soft-landing
- Property market and its potential downturn is not a threat to China’s overall economy
- Chinese stock market may swing upward along with loosening monetary policy
- In five years and beyond, the Renminbi will become fully convertible
- Great investment opportunities exist in energy efficiency and environmental technologies, health care and the financial services

Our Guest Today
Jack Perkowski is the founder and managing partner at China-focused merchant bank JFP Holdings. Acclaimed as Mr. China, Mr. Perkowski came to China in the early 1990s and founded ASIMCO, one of the largest auto components companies in China. That journey is captured in his book: Managing the Dragon: How I’m Building a Billion Dollar Business in China.

“China needs to grow at somewhere between 7 to 9 percent (annually) to have an economy to absorb all of the new workers every year…so we are quite optimistic that china will continue on that growth path.”
– Jack Perkowski

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News Review: Average New Home Prices In China Declined In December, But Rose For 2011

Podcast Editor — Wed, 25 Jan 2012 12:28:39 +0000

In this episode of China Money Podcast, Nina Xiang reviews the news on:

- China’s economy is projected to grow at 8.4 percent this year by the World Bank
- China and the United Arab Emirates signed a currency swap deal to expand the usage of the RMB
- Average new home prices declined in December for the third consecutive month, but prices rose for the whole year in 2011
- China approved 14 institutions as Qualified Foreign Institutional Investors, expanding the scope of the QFII program

Robert Blohm: Why You Might Want To Short China

Podcast Editor — Sat, 21 Jan 2012 15:56:02 +0000

In this episode of China Money Podcast, guest Robert Blohm discusses his views on China’s long-term challenges:

- Changes of China’s demographics point to lower or even zero economic growth sooner than expected
- The low-hanging fruit of reforms has been exhausted and serious actions are need to sustain the economic miracle
- China is likely to follow Japan’s path to a “lost decade”
- Absent of major shift in policies, China will fall into the “middle-income trap”
- China’s next leadership is key to China’s long-term future as it faces point of inflection

Our Guest Today:
Robert Blohm is managing director at Keen Resources Asia. He is a professor of economics at China’s Central University of Finance and Economics. With a B.A. and a M.B.A. from McGill University, he studied under Nobel economist Robert Mundell while pursuing his P.h.D in economics from Columbia University.

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News Review: Chinese Economy Reaches Turning Point

Podcast Editor — Mon, 16 Jan 2012 07:50:19 +0000

In this episode of China Money Podcast, we review the news on:

- China’s trade surplus fell for the third consecutive year in 2011
- China’s consumer-price index continues to moderate with December CPI index lower for the fifth straight month
- China’s total foreign reserves dropped for the first time since 1998
- Beijing and Shanghai continue property restriction policies this year
- Overseas M&A by Chinese companies up 10% in 2011
- London to work with Hong Kong to become an offshore trading center for the RMB

Christopher Rothery: Europe Will Muddle Through, China Will Manage A Soft Landing

Podcast Editor — Sat, 14 Jan 2012 14:03:54 +0000

In this episode of China Money Podcast, guest Christopher Rothery discusses where he sees opportunities in emerging market bonds and how the Eurozone debt crisis might affect emerging markets this year.

- European Central Bank will help ensure that the Eurozone debt crisis does not spiral out of control
- There is value in some currencies in Asia including the Korean Won and the Malaysian Ringgit
- Corporate debt of food producing companies in emerging markets are attractive
- China will manage an economic soft landing that will give markets further confidence
- China’s currency, the RMB, might appreciate at a slower rate this year between 2% to 3%
- There is value to be found in the corporate bonds of select Chinese property developers

Our Guest Today:
Christopher Rothery is a portfolio manager in the fixed income division at Baltimore, Maryland-based T. Rowe Price Group Inc. He has twenty-four years of investment experience and currently focuses on emerging market bonds, both USD or local currency denomiated. Rothery attended London Guildhall University.

“Europe will probably continue to muddle through.…Yes, Greece may default, but the European Central Bank will manage the situation in the other periphery markets to the extent that they manage themselves either through the buying of periphery bonds by the ECB or providing liquidity to the banks…”
- Christopher Rothery

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News Review: China To Expand Short Selling Program

Podcast Editor — Sun, 08 Jan 2012 02:52:18 +0000

In this episode of China Money Podcast, we review the news on:

- Nomura expects China’s economy to slow down to 7.9% for 2012 due to investment and consumption slowdown
- Bernstein Research cuts earning estimates for major Hong Kong banks by 7% for 2012
- China plans to launch an intermediary entity to expand margin trading and short selling operations
- China’s new loans are estimated to increase to RMB8 trillion to RMB8.5 trillion in 2012
- China’s National Social Security Fund is said to consider investing in foreign private equity funds

Philip Cunningham: Expect Smooth Power Shift to China’s Xi Jinping

Podcast Editor — Wed, 04 Jan 2012 17:21:26 +0000

In this episode of China Money Podcast, guest Philip Cunningham discusses China’s pending leadership transition, and what that means for investors:

- China will achieve a smooth leadership transition to the fifth generation of leaders led by Xi Jinping
- That objective could point to a heavier media crackdown and potential disruptions of business
- Investors should stay cautious before and during the transitional phases in 2012 and 2013
- China’s near-term will remain stable as prosperity prevents messy, large-scale social upheaval

Our Guest Today
Philip Cunningham is a professor of media studies who has taught at Doshisha University in Kyoto and Chulalongkorn University in Bangkok. He is the author of Tiananmen Moon, a book on China’s student uprising in 1989. He is currently a visiting fellow at Cornell University.

“China looks pretty stable to me. There are sparks but I don’t see a chance of prairie fire right now, because prosperity brings some kind of fire quenching capacity. Things could muddle through for a long time. I don’t see (China) being explosive as it was in Egypt.”
- Philip Cunningham

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John Wong Sees Opportunities In Chinese Consumer Discretionary Stocks

Podcast Editor — Sat, 17 Dec 2011 19:53:58 +0000

In this episode of China Money Podcast, guest John Wong discusses his outlook for investment opportunities in 2012:

- Chinese government will probably begin to ease monetary policy further after the second quarter
- Inflation in China will likely be more subdued and stay around 3-4% going forward
- Investment opportunities are in consumer discretionary stocks due to the increasing spending power of China’s new rich
- Automation companies that benefit from Chinese factories’ move toward a more automated manufacturing process will outperform
- Strong Chinese property developers will become attractive investments once policy starts to loosen
- Biggest risks are continuing turmoil in Europe and a more severe slowing of the Chinese economy

Our Guest Today:
John Wong is president of Oberweis Asset Management (Asia) Ltd and the lead manager of Oberweis’ Asia Opportunities fund and co-manager of the China Opportunities Fund. Previously, Wong was a senior portfolio manager at Wells Fargo Bank in San Francisco. He also managed assets at Founders Asset Management and at Offitbank.

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Kevin Pollack Sees More U.S.-listed Chinese Companies Go Private

Podcast Editor — Sun, 04 Dec 2011 21:57:33 +0000

In this episode of China Money Podcast, guest Kevin Pollack discusses:

- Short-seller Carson Block’s attack on Focus Media Holdings: Will his accusations prove to be viable?
- Chinese companies continue to retreat from U.S. stock market: What are the drivers and how long will this continue?
- What are the methods to take U.S.-listed Chinese companies private, and how expensive are they?
- How should Chinese companies decide if they should go private, and what happens afterward?

Our Guest Today:
Kevin Pollack is a Managing Director at Paragon Capital, a New York-based investment firm with a focus on Chinese investments. He previously worked as an investment banker and attorney at Bank of America and Sidley Austin. He is a magna cum laude graduate of Wharton and holds J.D. and M.B.A. from Vanderbilt University.

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Jim Rogers Sees An Ugly Chinese Property Bubble Burst

Podcast Editor — Thu, 24 Nov 2011 17:58:24 +0000

Our Guest Today:
Jim Rogers is the chairman of Rogers Holdings. He is an author with a number of best-selling books, including A Gift To My Children, Investment Biker and Adventure Capitalist. He received bachelor’s degrees from Yale University and Oxford University. He currently lives in Singapore with his wife and two daughters.

In this episode of China Money Podcast, guest Jim Rogers discusses:
- China’s economy and stock market: Will the economy manage its challenges? Is there a bull market waiting ahead?
- China’s property market: What will be the consequence of a price correction?
- China’s Renminbi: Will it continue to appreciate against the dollar? What will happen once the Renminbi is freely convertible?
- Should China buy European debt? If so, what should China expect in return?

Stan Abrams: Progress Seen On China’s Anti-Monopoly Law

Podcast Editor — Sun, 13 Nov 2011 11:12:06 +0000

Our Guest Today
Stan Abrams is a Beijing-based lawyer with focuses on technology, intellectual property and Internet-related law issues. Mr. Abrams has extensive experience in foreign direct investment in China, having worked here for over 12 years. He also teaches law at Beijing’s Central University of Finance and Economics.

In this episode of China Money Podcast, guest Stan Abrams discusses:
- SEC’s tightened new rules regarding reverse mergers of companies listing in the U.S.: Is this sufficient to protect investors?
- Yum! Brands’ acquisition of Chinese restaurant chain Little Sheep approved: Does this mean China is loosening its grip on foreign takeovers?
- China National Development and Reform Commission investigates China Telecom and China Unicom: Will other big state-owned enterprises be next?
- The U.S Trade Representative requests information on China’s Internet censorship: What is the real motive behind the U.S. regulator’s move?

Paul Gillis: China’s Expat Social Insurance Tax Lacks Clarity; Conundrum Between U.S. and Chinese Regulators Needs To Be Solved By Diplomacy

Podcast Editor — Thu, 03 Nov 2011 16:19:10 +0000

Our Guest Today:
Paul Gillis is a professor of accounting at the Guanghua School of Management, Peking University in Beijing, China. Prof. Gillis is also an independent director and chairman of the audit committee of Pansoft, a NASDAQ listed Chinese software company.

In this episode of China Money Podcast, guest Paul Gillis discusses:

- What is the impact of the new expat social insurance tax to companies and expatriate workers in China?
- What can the U.S. and Chinese securities regulators do to improve the auditing process of U.S.-listed Chinese companies?
- Will the PCAOB (Public Company Accounting Oversight Board) really withdraw registration of all auditing firms in China?

News Review: China’s Oct PMI Climbs; Analyst Sanguine On China’s Shadow Banking Sector

Podcast Editor — Tue, 25 Oct 2011 16:06:50 +0000

In this episode of China Money Podcast, we reviews the news on:

- China’s October PMI climbs and market sentiment improves
- BlackRock predicts that the Chinese economy will stagnant at 7-8% annual growth in the next few years
- Two Chinese officials jailed for leaking secret economic data to professionals in the securities industry
- China’s central banker, Zhou Xiaochuan, argues that the Chinese economy is already rebalancing
- Bernstein analyst is sanguine on China’s shadow banking sector

IMF’s Murtaza Syed: A Smooth Landing For China’s Economy

Podcast Editor — Sun, 16 Oct 2011 11:17:59 +0000

Today’s Speaker:
Murtaza Syed is IMF’s deputy chief representative in China. With a Ph.D. in Economics from Oxford University, he worked as Research Economist at the Institute for Fiscal Studies in London, Senior Policy Analyst at Human Development Center in Islamabad, and taught at Oxford before joining IMF.

In this episode of China Money Podcast, we hear special speaker Dr. Murtaza Syed, the deputy chief representative of the International Monetary Fund in China, talk about the following topics:

- Economic outlook for China and the global economy
- The causes of China’s property market bubble
- How should China respond if there is another global crisis
- Is China’s informal financial market, or the so-called shadow banking sector, a threat to China’s economy?
- How should the Chinese government reform RMB’s exchange rate?

Review: Sunshine Private Equity In China

Podcast Editor — Sat, 08 Oct 2011 12:42:53 +0000

In this episode of China Money Podcast, we review a unique phenomenon in China’s asset management industry, sunshine private equity funds:

- What is sunshine private equity?
- Why does it exist, and how is it different from other PE funds?
- What is happening to China’s sunshine private equity funds right now, and what lies ahead?

Malcolm Riddell: Be Alert To China’s “Red Revival”; U.S. Municipalities Must Protect Themselves From Chinese Investments

Podcast Editor — Sun, 02 Oct 2011 05:37:11 +0000

Our Guest Today:
Malcolm Riddell is president of China-focused investment banking firm RiddellTseng Partners and editor of online portal China Debate. Mr. Riddell is an associate-in-research at Harvard University’s Fairbank Center for Chinese Studies, senior visiting fellow at Peking University Law School, and a member at Council on Foreign Relations.

In this episode of China Money Podcast, guest Malcolm Riddell discusses:

- What are the economic ramifications of China’s “Red Revival” phenomenon?
- What is the future direction of the “Red Revival”, and what does it mean for foreign investors?
- What changes will take place in China’s outbound investment within the 12th five-year plan?
- How should U.S. municipalities protect themselves from Chinese investments?

Tanuj Khosla: Bullish On Dim Sum Bonds, Distressed Debt Opportunities In China And India Very Attractive

Podcast Editor — Sun, 25 Sep 2011 09:45:39 +0000

Our Guest Today:
Tanuj Khosla is a research analyst at Singapore-based 3 Degrees Asset Management. A graduate from Nanyang Technological University, he currently focuses his research on investment opportunities in the Asian fixed income space.

In this episode of China Money Podcast, guest Tannuj Khosla discusses:

- Malaysian government investment arm Khazanah National postpones RMB500 million dim sum bond deal: should investors be concerned?
- How large can the dim sum bond market grow to in the next 12 months?
- Where attractive distressed debt investment opportunities are in Asia?
- Will China’s large income disparity lead to total social chaos?

Mark Williams: China Inflation May Decline To 5% By Year-end; No Worries On China Falling Into Middle Income Trap

Podcast Editor — Fri, 09 Sep 2011 16:35:43 +0000

Our Guest Today
Mark Williams is chief China economist at Capital Economics, a UK-based independent macroeconomic consultancy. Williams previously worked at the UK Treasury, responsible for economic analysis of Asia. He has degrees in Chinese and economics from the universities of Edinburgh and Oxford respectively.

In this episode of China Money Podcast, guest Mark Williams discusses:

- China’s August inflation declines to 6.2%: Will it continue to fall? China’s Central Bank is unlikely to tighten policy, but will it consider loosening?
- Will China fall into the so-called Middle Income Trap?
- Bad economic news from Europe and the U.S.: How much will China suffer from a global slowdown?
- Can China save the world again if there is a double-dip recession?

News Review: China’s August PMI, New Loan Issuance, Upcoming Hong Kong IPOs

Podcast Editor — Sun, 04 Sep 2011 12:21:22 +0000

In this episode of China Money Podcast, we review the news on:

- China’s August PMI recovers from July, pointing to an economic soft landing
- RMB1.63 trillion trade settled in the Chinese currency until July: faster growth ahead with projections of $2 trillion trade settled in RMB by 2015
- Slow progress is witnessed a year after China allows insurance companies to allocate 5 percent of their assets to private equity investment
- Several IPOs to test Hong Kong’s investors’ appetite for new shares: Sany Heavy Industry and Citic Securities to list in October

Roger Gordon: Tax Structures in China and India Followed Similar Path; RMB Could Become An Alternative Safe Haven

Podcast Editor — Thu, 25 Aug 2011 17:07:06 +0000

Our Guest Today:
Roger Gordon is professor of economics at the University of California San Diego and visiting professor of economics at Cheung Kong Graduate School of Business. He has done extensive research on taxes in developing countries and economies in transition. He attended Harvard College and received a Ph.D. in economics from MIT.

In this episode of China Money Podcast, guest Roger Gordon discusses:

- How taxes influence economic development in emerging markets: How do China and India compare with each other?
- The division of tax revenues between local government and the central government: What should China do to make its taxes more efficiently divided between the two layers of governments?
- Revenue from local governments’ land sale is declining: What other sources of revenue can fill the hole?
- RMB’s internationalization: Can the Chinese Yuan become a reserve currency, and how long will it take?

Fredrik Öqvist: Tudou’s Valuation Could Go Lower; Potential Revenue Downturn For Baidu.com

Podcast Editor — Thu, 18 Aug 2011 16:33:03 +0000

Our Guest Today:
Fredrik Öqvist is a Beijing-based analyst and consultant focusing on IPO, private equity and venture capital. He previously worked at the Swedish Trade Council in Beijing and served as a consultant to a number of international and Chinese tech companies in their early development stages.

In this episode of China Money Podcast, guest Fredrik Oqvist discusses:

- Tudou.com is finally listed on NASDAQ: Shares down 9% during its first day of trading, will it go lower?
- China’s national television station CCTV’s mysterious attack on search engine giant Baidu.com: Is Baidu’s revenue model at risk?
- Both QDII and QFII performed less than stellar since its establishment: Is the market the only excuse?
- Full pipeline for Hong Kong’s IPO market: Can you count on an IPO market recovery?

Stan Abrams: Variable Interest Equity Is A Very Risky Structure

Podcast Editor — Thu, 11 Aug 2011 16:01:47 +0000

Our Guest Today:
Stan Abrams is a Beijing-based lawyer with focuses on technology, intellectual property and Internet-related law issues. Mr. Abrams has extensive experience in foreign direct investment in China, having worked here for over 12 years. He also teaches law at Beijing’s Central University of Finance and Economics.

In this episode of China Money Podcast, guest Stan Abrams discusses:

- What is VIE and why do investors use them in China?
- Alibaba Group’s transfer of key asset without consent of shareholders including Yahoo: Is this a wake-up call for investors?
- What should investor do post the Alibaba-Yahoo dispute: Can risks be managed?
- Tudou Holdings’ pre-IPO nightmare: What lessons should investor learn?
- Finally, is there a way to get around VIE?

Gabriel Yap: Bullish On China’s Venture Capital; Offshore RMB Bond Market Needs Faster Growth

Podcast Editor — Sat, 06 Aug 2011 04:31:32 +0000

Our Guest Today:
Gabriel Yap is executive chairman of GCP Global, a Singapore-based investment firm, which is an anchor investor in several Chinese IPOs including Sun Art Retail Group. He previously worked at brokerage firms.

In this episode of China Money Podcast, guest Gabriel Yap discuss:

- Total assets of China’s venture capital industry up 50% last year: Where can investors find attractive returns?
- Shenzhen Stock Exchange to launch an ETF for its growth enterprise board: Other new products to follow?
- KKR to invest in water treatment firm United Environtech: A fantastic deal, or is it?
- China’s Ministry of Finance to issue RMB 20 billion dim sum bonds in Hong Kong: It is the largest to date, but for how long?
- Sixty percent of China’s outbound investment in the mining sector is unsuccessful: How can Chinese companies improve their record?
- China plans to launch its own version of the 401K plans: A good move, but what should it look like?

Xiang Songzuo: U.S. Default Possible, QE3 Will Be A Mistake, and China’s Train Crash Won’t Slow Investment

Podcast Editor — Sun, 31 Jul 2011 04:14:34 +0000

Our Guest Today:
Xiang Songzuo is deputy director and senior fellow at the Center for International Monetary Research Institute at Renmin University in Beijing. With a Master’s Degree in International Affairs in Economic Policy Management from Columbia University, Xiang edited and translated Selected Works on Economics by Robert A. Mundell into Chinese.

In this episode of China Money Podcast, guest Xiang Songzou discusses:

- The impact of a U.S. default on China: What damage will it do to the biggest holder of U.S. debt?
- The economic aftermath of China’s high-speed train crash: Will infrastructure and high-tech investment be slowed?
- China’s banking regulator releases stress test results: A 50% decline in property prices can be withstood, but are China’s banks solid?
- Will the U.S. Federal Reserve launch Quantitative Easing 3: How will this impact the Chinese economy?

Kevin Pollack: A Great Opportunity To Buy Chinese Stocks – Right Now

Podcast Editor — Fri, 22 Jul 2011 07:22:39 +0000

Our Guest Today:
Kevin Pollack is a managing director at Paragon Capital, a New York-based investment firm with a focus on Chinese investments. He previously worked as an investment banker and attorney at Bank of America and Sidley Austin. He is a magna cum laude graduate of Wharton and holds J.D. and M.B.A. from Vanderbilt University.

In this episode of China Money Podcast, guest Kevin Pollack discusses:

- Short sellers including Carson Block’s attack on Chinese companies listed overseas: Is the trade overdone, Is the trade over?
- Hedge fund big shot John Paulson’s $500 million loss: Could he have lost less?
- Chinese companies’ stocks under pressure: When is the right time to buy?
- What is next for investors: What due diligence is necessary and how do you do it?
- Yuan reaches historical high: How much will it appreciate this year?
- PICC’s big IPO: Will it get done and can it revive the IPO market?

Patrick Chovanec: Nestle To Buy Hus Fu Chi and Investors Likely To Sell Huge Stakes in Chinese Banks

Podcast Editor — Thu, 14 Jul 2011 14:42:41 +0000

Our Guest Today:
Patrick Chovanec is an associate professor at Tsinghua University. He has worked for several private equity funds focused on China, and continues to serve as a fund advisor. He holds an BA in Economics from Princeton University and an MBA from the University of Pennsylvania’s Wharton School.

In this episode of China Money Podcast, guest Patrick Chovanec discusses:

- China’s second quarter economic data remain robust: Another interest rate hike on the horizon?
- China will buy five million metric tons of corn this year: How will China’s huge demand for crops impact markets?
- Monsanto is in advanced deal talk with Sinochem Corp: Will the Chinese government be accommodating in the sensitive food industry?
- Nestle plans to buy Hus Fu Chi International: Will the deal go on a different path from that of Coca-Cola/Hui Yuan?
- Big corner stone investors in Chinese banks can now sell their massive holdings of Chinese bank shares: Will they sell?
- China Securities Regulatory Commission likely to conduct stress test on China’s brokerages: Who will pass the test?
- Plan to launch an international board in Shanghai is delayed: Is a USD-denominated board feasible in the near future ?

He Weiwen: PBOC Interest Rate Hike and Rare Earth Dispute in China

Podcast Editor — Sat, 09 Jul 2011 02:21:10 +0000

Our Guest Today:
He Weiwen is co-director at the Study Center for China-US/EU. He is also an adjunct professor at Southwestern University of Finance and Economics. From 1997 to 2003, he was Economic and Commercial Counselor at the Chinese Consulate General in New York and San Francisco.

In this episode of China Money Podcast, guest He Weiwen discusses:

- People’s Bank of China raises key interest rates by 25 bps: Will this stifle inflation?
- Temasek sells stakes in two major Chinese banks: Are more major investors to sell?
- US and China to hold talks on China-based auditing firms: Will this help prevent future scandals?
- WTO rules on raw industrial material trade dispute: Will a complain on Rare Earths to follow?
- Oil leak in Bohai Bay announced one month after the leak took place: Why wasn’t an earlier disclosure on a major environmental disaster made?

Robert Blohm: Local Government Debt and Shale Gas Production

Podcast Editor — Fri, 01 Jul 2011 07:53:19 +0000

Our Guest Today:
Robert Blohm is managing director at Keen Resource Asia. He is a professor of economics at China’s Central University of Finance and Economics. With a B.A. and a M.B.A. from McGill University, he studied under Nobel economist Robert Mundell while obtaining his P.h.D in economics from Columbia University.

In this episode of China Money Podcast, guest Robert Blohm discusses:

- China’s final tally on local government debt: Is RMB10 trillion too low?
- China’s property market facing correction: Is a crash inevitable?
- First tender issued for China’s shale gas exploration:
- Possible oil leak in Bohai Harbour
- Hong Kong’s IPO market under pressure