For a country attempting to grow at double digit rates, there is a push within China to also grow “green”. Among the new measures recently passed by the National People’s Congress is an amendment that will require state owned electric grid companies to buy power from renewable sources even when coal is a cheaper alternative. This “contributes to the global fight on climate change” was how Wang Zhongying, director of the renewable energy center of the National Development and Reform Commission, viewed the passage of the amendment.
Efforts to go green are not only being made at the national level but by private industry as well as Wang Shi, 58 year old chairman of China Vanke Co., China’s largest housing developer and avid mountain climber, who is building a new corporate headquarters that will achieve a Leadership in Energy and Environmental Design ranking of “Platinum” which is the highest level given by that organization for green buildings.
While going green seems to be a focus for the Chinese, it appears some of the green has already gone as auditors have recently discovered that 234.7BN Yuan, or $34.3BN, has disappeared from public funds between January and November of last year. Evidently some 67 senior officials and 164 less senior folks were handed over to the authorities after the investigation. “Despite some improvement, embezzlement, waste of money and false reporting still existed in central departments,” is how Xinhua, a major news organization paraphrased Liu Jiayi, the country’s chief auditor.
One possible reason there was enough money around to allow such a sum to be misappropriated was the size of China’s stimulus program. At $586BN, there has been a lot of Yuan sloshing around the Chinese economy, evidently enough for 5% of it to slip through the cracks.
With that said, it doesn’t appear as if there is any fiscal tightening in the cards as analysts who cover China’s banking industry expect new loans of as much as eight trillion Yuan in 2010. “In 2009, the economy needed the credit to avoid the recession. But now, a strongly recovering economy will naturally need credit to keep going,” was how Victor Wang at UBS in Hong Kong put it.
That’s a lot of green for a country whose most popular color is red, which by the way, is considered good luck by Feng Shui practitioners.
CDS on China have risen to the low 90bps levels a few times since falling below that level in May of 2009. The low since May was touched on 9/23/2009 at 58bps. Last night’s close was 76bps.
Enjoy the week.