China Lending Inflates Real Estate, Stocks, Even Egg Futures
HONG KONG — China is pouring hundreds of billions of dollars into its economy in a new effort to support growth. Some of it is going into roads and bridges and other big projects that will keep the economy humming.
And some of it is going into eggs.
China’s latest lending deluge has sent money sloshing into unexpected parts of the economy. That includes a financial market in Dalian where investors can place bets on the future productivity of the country’s hens.
Egg futures have surged by as much as one-third since March, the sort of move that would be justified if investors believed China’s chicken flocks were headed for an unfortunate fate.
But the market’s usual participants say the flocks are fine. In fact, the actual price of eggs in the country’s markets has fallen from a year ago, according to government statistics.
The reason for the unusual jump in egg futures, they say, is China’s tendency to experience investment bubbles when the government steps up spending and lending. China’s previous efforts to bolster growth unexpectedly sent money into real estate and the stock market — markets that had unexplained rises followed by striking drops.
“Many commodities prices have gone up crazily,” said Du Shaoxing, a futures trader in Guangzhou, in southern China. “We surely hope for a more stabilized trend where futures can reflect economic fundamentals. The way in which recent commodity prices went up is worrisome.”
China’s latest bubble illustrates the potential risks of its newest effort to spur growth. The Chinese economy is already burdened with too much debt, economists say. And sometimes, stopgap measures to help the economy create long-term problems.
China is the world’s biggest producer of eggs, but it is not clear whether the investment surge in eggs will have an impact on real-world prices. Jumps in the futures prices on commodities markets can take months to trickle down to the real world, and if the commodities surge subsides, then the price of eggs in local markets may not budge.
Eggs are not the only commodity suddenly out of kilter. Domestic prices and trading volumes on steel, garlic, cotton, iron ore and other items have all soared. This despite the fact that China’s economic slowdown has hurt demand for many items. Officials at Chinese commodities markets are now taking steps to cool speculative fervor to avoid crashes, and prices have begun to ease.
By mid-April, the frenzy made Shanghai futures contracts in steel rebar, the rods used in construction to reinforce concrete, the most actively traded in the world — overtaking trading volumes of two major oil futures contracts, West Texas Intermediate and Brent crude, that have helped set oil prices for decades, analysts at Citigroup said in a report last week.
花旗集团(Citigroup)分析师在上周的一份报告中称，截至4月中旬，这种狂潮让上海期货交易所的螺纹钢期货合约交易量超过了美国西德克萨斯中质原油（West Texas Intermediate，简称WTI）和布兰特原油(Brent)期货合约交易量，使其成为了全球最活跃的期货交易品种。螺纹钢是建筑业中用于加固混凝土的钢筋条，而西德克萨斯中质原油和布兰特原油这两大原油期货合约，数十年来一直在影响原油的定价。
“There is very little rational or fundamental basis for why prices have gotten as out of hand as they have, or why volumes are so high, other than just irrational exuberance,” said Alex Wolf, an emerging markets economist at Standard Life Investments in Edinburgh, who previously worked as an American diplomat based in Beijing and Taipei.
“价格如此失控，交易量如此之大，却没有什么合理的依据或基本面支撑，只能说这是非理性繁荣的结果，”爱丁堡标准人寿投资公司(Standard Life Investments)致力于新兴市场研究的经济学家亚历克斯·沃尔夫(Alex Wolf)说。沃尔夫曾任美国驻北京和台北的外交官。
Government officials increased lending by state-controlled banks and offered other support measures in the first few months of the year as economic growth slowed and longtime drivers like manufacturing and exports showed continued weakness.
Saad Rahim, the chief economist at Trafigura, one of the world’s biggest traders of metals and oil, calculates that China added about $1 trillion in new liquidity in the first quarter of the year — an amount that would be roughly equal to the entire quarterly economic output of Germany during the same period.
“This kind of scale is unprecedented and some of it will leak into speculative investments,” Mr. Rahim said.
In the short term, the new lending may be good news for global growth, if it works. China’s first-quarter growth came in at 6.7 percent, about where economists had expected, despite some indications that growth had weakened further.
The problems are most acute when it comes to China’s corporate borrowers, which have gorged on cheap credit in the years since the global financial crisis. In a report released in April, the International Monetary Fund found that nearly 600 companies had almost $400 billion of debt that was considered at risk, accounting for 14 percent of total corporate borrowing in China.
问题最严重的是中国的企业借款人，在全球金融危机爆发以来的许多年里，它们获得了大量廉价信贷资金。国际货币基金组织(International Monetary Fund)今年4月发布的一份报告显示，发放给近600家企业的大约4000亿美元信贷资金被认为存在风险，占中国企业借款总额的14%。
But the renewed push for credit-fueled growth shows that policy makers’ concerns about China’s debt burden appear to have been set aside for now. By delaying efforts to wean itself off cheap credit, China may be setting itself up for some problems related to debt and industrial overcapacity.
There are few places for China’s money to go. The country has tightened already stringent limits on how much money its people can send or invest abroad. Its stock market is still recovering from a crash last year. And its property market remains saddled with a glut of apartments in many cities.
A property market bubble arose from the huge stimulus that Beijing deployed after the 2008 financial crisis, which set off a building boom.
Stocks overtook property in investor interest last year.
As for eggs, Chen Jie, who works in the futures department at Hubei Shendan Healthy Food, the biggest egg company in China, said in a phone interview that “there is definitely speculative capital in the market.”
Her company supplies eggs to KFC and McDonald’s restaurants, and sells them at more than 10,000 supermarkets across China, including those of chains like Walmart, Carrefour and Metro.
Hubei Shendan uses the futures market to hedge its bets against swings in actual egg prices. An abnormally volatile futures market makes that job more difficult.
“The reason we are in the egg futures market is because the big swings in egg prices will affect our profitability, and a good futures market will help us in that regard,” Ms. Chen said.