China rocked by cash crunch, surprise fall in factory output
June 21, 2013 -- Updated 1954 GMT (0354 HKT)
- Lack of bank access to cash, surprise fall in factory output rock China
- China's seven-day rate jumped to record 12% after Beijing refused new funds
- China central bank aims to slow expanding debt, easy access to credit
- Shanghai Composite Index has slid 10% since the start of June
Hong Kong (CNN) -- China delivered a one-two punch of negative economic data this week, hitting first with an initial report on factory activity falling to a surprise nine-month low and then with interbank lending rates rocketing to a record high.
The gloomy numbers keep fears alive that the world's second-largest economic engine is not just slowing down -- but also seizing up.
China's main seven-day repurchase rate jumped to a record 12% this Thursday, according to CME Group. China's weighted average overnight repo rate hit 13.1% -- the highest in more than a decade.
The rate spikes are a reaction to Beijing's decision earlier this week to withhold new infusions of cash into the markets. One of the central bank's aims is to slow the growth of China's ballooning debt and stop easy access to credit.
China's cash crunch a 'homegrown issue'
In China, economics influences politics
China's GDP expected to grow
U.S.: China currency very 'undervalued'
The country's total debt is estimated to stand at more than 200% of GDP when debt from the central government, local governments, corporations and households are included, says Swiss bank UBS.
In April, Fitch had warned China of its high debt levels, downgrading the country's long-term currency rating. The ratings agency cited expansion of easy credit and structural weakness in China's economy.
However on Friday, repurchase rates fell on reports that China's central bank had supplied more than $8 billion in new liquidity to ease the current cash crunch.
On June 20, the same day that China's repurchase rates hit record highs, HSBC's June "flash" purchasing managers' index fell to a nine month low of 48.3. A PMI reading below 50 indicates contraction in the country's manufacturing sector as new export orders plunged from major trading partners like the United States and Europe.
Some China watchers fear the country will miss its self-imposed 2013 growth target of 7.5%.
Since June 1, China's benchmark Shanghai Composite Index has fallen 10%.
Today's five most popular stories
Part of complete coverage on
September 24, 2014 -- Updated 1414 GMT (2214 HKT)
Liberia, Sierra Leone and Guinea -- the three countries facing the biggest health crisis -- are also facing huge bills to try and contain the virus.
September 22, 2014 -- Updated 1316 GMT (2116 HKT)
Twitter has lost its position in the top 20 coolest brands for the first time in three years.
September 25, 2014 -- Updated 1554 GMT (2354 HKT)
As the crisis in Iraq escalates, CNN looks at how Iraq could crack down on ISIS' oil riches under the guidance of its new oil minister, Adel Abdul Mahdi.
August 29, 2014 -- Updated 0842 GMT (1642 HKT)
Recep Tayyip Erdogan is Turkey's new president . So can he revitalize its economic fortunes?
September 19, 2014 -- Updated 1724 GMT (0124 HKT)
Experts share their tips on cities they see as emerging financial hubs...they're not where you think.
September 19, 2014 -- Updated 1340 GMT (2140 HKT)
Growing numbers of us are willing to serve as bank, teacher or travel agent to people we have never met, and entrust them to serve us in turn.
August 28, 2014 -- Updated 1244 GMT (2044 HKT)
The European Union is stepping in to save its dairy from going sour.
August 18, 2014 -- Updated 1236 GMT (2036 HKT)
Europe's deteriorating relationship with Russia has hit the region's growth, even before new food sanctions begin to bite.
July 16, 2014 -- Updated 1634 GMT (0034 HKT)
With cyberattacks on the rise and here to stay, it's a modern-day challenge for people and businesses to get smarter about preventing them.
August 14, 2014 -- Updated 1324 GMT (2124 HKT)
Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
September 19, 2014 -- Updated 1124 GMT (1924 HKT)
Peer-to-peer finance lets businesses bypass bank loans. Creative companies with quirky ideas find new lending models advantageous.
July 20, 2014 -- Updated 1524 GMT (2324 HKT)
Evidence points to pro-Russian separatists as perpetrators of the attack and Vladimir Putin is facing questions, David Clark writes.
September 3, 2014 -- Updated 0952 GMT (1752 HKT)
CNN's Jim Boulden looks on the future of online shopping.
August 5, 2014 -- Updated 1440 GMT (2240 HKT)
The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.