Fears over debt Chinese surface

October 6, 2011, last updated 04: 28 GMT China market with deep pockets could see slow growth and buoyant, China touted as a White Knight in the world.

But fears are growing that the country can meet its debt crisis as its economy and signs of a slowdown.

Prime weekend urged stronger financial support for small businesses that are missing.

Its a conversation between reports many factories of the private sector are facing bankruptcy due to tightening credit, informal lending operations.

In the eastern city of Wenzhou, a fifth of small businesses to midsize, 360,000 city stops due to lack of cash, reported by China's official Xinhua News Agency on Thursday.

"Efficient means must be taken to contain the trend of usury, crack on illegal fund-raising and handle correctly the problem of collateral, lack of capital to prevent risks from spread and develop regional scale," said Mr. van when visiting the city.

According to media reports, more than 80 businessmen fled town bakpa loans taken from underground banks, owner of a shoe one jumped off a building and killed himself.

' Time bomb '

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we take informal lending market most likely short-term time bomb of China's economy, "

end quote Dong Tao, Credit Suisse economists believe it could be the start of a wave of Corporate bankruptcies.

A central concern of China loan informal or shadow banking market-rich individuals and businesses that offer loans at interest rates spanning from 14% to 70%.

Companies and entrepreneurs have turned in this underground, with Chinese banks tightening lending as part of the Government's fight against inflation.

Credit Suisse says it sector statistics was rare, but as total 4 trillion yuan ($ ￡ 627bn; 406bn) is equal to 8% of the formal banking sector-and loans may increase by 50% per year.

He estimates that 60% of informal loans to property developers have with the rest going to other small businesses that need loans bridge.

"We consider formal lending market most likely short-term time bomb of China's economy," Tao Dong, Asia Economist at Credit Suisse, said the report.

"Beijing take decisive measures to deal with active, problem, or the credit crisis is species emerge in our opinion," he says.

Default swaps

Fears of economic slowing down in China has also fuelled a rise in trade of credit default swaps are financial instruments which insure against-risk of debt defaults.

The net value of credit default swaps outstanding bahov Chinese Government rose to US $ 3bn, compared to $ 6bn. two years ago, the Financial Times reported on Thursday.

Investors are worried that China's economy could have a "hard landing" slowed suddenly after years of blistering growth.

The property market is considered to be particularly vulnerable, with home prices soaring over the past two years.

The State raised interest rates three times so far this year and ordered banks to increase their reserves and six times during the same period.

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Chinese demand boosts Yum profits

AppId is over the quota
AppId is over the quota
5 October 2011 Last updated at 01:37 GMT Yum Brands is planning to expand its presence in China even further to cater to growing demand Fast food giant Yum Brands has reported a jump in third-quarter profit as sales at its Chinese outlets continue to grow.

Yum reported a net profit of $383m (￡248m) in the three months to 3 September, up from $357m last year.

The owner of Pizza Hut and KFC said same-store sales in China rose 19% during the period.

With close to 4,200 outlets, China accounts for more than 40% of Yum's profits.

"This tremendous sales growth, combined with our expectation to open a record 600 new restaurants this year, gives us even more confidence our China business model is as strong as ever," said David Novak, chairman and chief executive officer of Yum Brands.

Domestic trouble

While it continues to grow in China and other emerging markets, Yum Brands has been struggling in the US market.

The company said like-for-like sales at its US outlets fell as much as 3% in the third-quarter, resulting in a 16% drop in profit during the period.

"We're obviously disappointed in our US performance," Mr Novak said.

Analysts said the company was still suffering the effects of the lawsuit against Taco Bell earlier this year, over allegations that it used large amounts of additives and little actual meat in its beef products.

Though the company denied the claims and the lawsuit was dropped, it damaged Yum's brand image.

"They've got a job to do PR-wise to repair that," said Jack Russo of investment firm Edward Jones.

"It looks like it's stabilising and we'll get to the point next year where they'll be bouncing up against some easier comparisons so that will help," he added.

Yum said that it was planning to launch innovation and productivity initiatives in the US in a bid to improve sales and profits.

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