Highlights from the last week of China business news:
Japan finds 5 million tubes of Chinese antifreeze toothpaste and promptly recalls them; a number of august banks get caught fueling the mainland’s stock and property markets with illegal loans and hot money.
Read on for the details .
China can’t brush off product safety concerns
Concerns over the safety of goods made in China are mounting among its trade partners and domestically, following more product recalls and a worrying finding by GAQSIQ, the country’s quality-control watchdog. Namely: Nearly a fifth of all products sold in China do not meet domestic quality standards. It reviewed 114 types of product made by 6,300 companies and found that 19.1% of them were substandard. Bottled water, canned fruit and dried fish were some of the products of particularly low quality.
GAQSIQ’s findings come in the wake of another Chinese toothpaste recall, this time in Japan. Nearly 5 million tubes of toothpaste, distributed to Japanese hotels, were recalled after the government warned that they contained a chemical used in antifreeze. Chinese toothpaste was also recalled in South America in May. The Wall Street Journal reported that the European Union is now voicing more concern about unsafe Chinese goods, an issue that has mainly been raised by the United States recently. Last year, 48% of 924 rejected shipments in the EU originated in China. More rigorous inspections are also scheduled because of the toothpaste recalls.
Banks caught red-handed
Banks are having a field day in China’s booming stock and property markets, and no wonder, because it turns out they’ve played a major role in propping the markets up.
The Financial Times revealed that 29 banks were punished for channeling speculative capital, or “hot money” in finance-speak, “disguised” as trade or investment. Ten of the 29 were foreign banks. The most august names in international and domestic finance were on the punishment list: Citibank, Standard Chartered, HSBC, Bank of China, Industrial and Commercial bank of China and Bank of Communications. The State Administration of Foreign Exchange did not specify what the punishment was.
This is the latest instance of banking violations related to the stock market. Last month, eight banks were fined by the China Banking Regulatory Commission for issuing loans to two state-owned firms to invest in securities. State-owned firms are not allowed to invest directly in the markets.
Also last month, the National Audit Office found that US$2 billion was used for “illegal or irregular behavior” by Bank of China, Bank of Communications and China Merchants Bank. Part of their violations were making improper loans to the real estate industry.
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