NEWS BRIEFS

China Facing Full-blown Banking Crisis

China has failed to curb excesses in its credit system and faces mounting risks of a full-blown banking crisis， according to early warning indicators released by the worlds top financial watchdog. A key gauge of credit vulnerability is now three times over the danger threshold and has continued to deteriorate， despite pledges by Chinese premier Li Keqiang to wean the economy off debt-driven growth before it is too late. The Bank for International Settlements warned in its quarterly report that Chinas “credit to GDP gap”has reached 30.1， the highest to date and in a different league altogether from any other major country tracked by the institution. It is also significantly higher than the scores in East Asias speculative boom on 1997 or in the US subprime bubble before the Lehman crisis.

Studies of earlier banking crises around the world over the last sixty years suggest that any score above ten requires careful monitoring. The credit to GDP gap measures deviations from normal patterns within any one country and therefore strips out cultural differences. It is based on work the US economist Hyman Minsky and has proved to be the best single gauge of banking risk， although the final denouement can often take longer than assumed. Indicators for what would happen to debt service costs if interest rates rose 250 basis points are also well over the safety line. Chinas total credit reached 255pc of GDP at the end of last year， a jump of 107 percentage points over eight years. This is an extremely high level for a developing economy and is still rising fast.

Chinas Wanda Extends Hollywood Footprint with Sony Alliance

Chinas Dalian Wanda Group is extending its footprint in Hollywood after striking a deal with Sony Pictures. The strategic alliance opens the door for Wanda to invest in certain productions. Wanda said it would include the cofinancing of upcoming high-profile Sony releases in China.

The deal marks the Chinese com-panys first multi-picture partnership with a major Hollywood studio. The company wants to boost its influence in the global film industry.

As part of the deal， Wanda “will strive to highlight the China element in the films in which it invests”. Past partnerships between Chinese companies and mainstream Hollywood studios were mostly limited to a small investment in a single film. Wanda is the worlds biggest movie theatre operator and led by Chinas richest man， Wang Jianlin. In January， Wanda bought a controlling stake in Hollywood film studio Legendary Entertainment - a deal valued at $3.5bn （￡2.4bn）.

Shanghai， Beijing Release Draft Rules on Car-hailing Services

Two major Chinese cities Beijing and Shanghai have released draft rules on carhailing services to solicit public opinion.

Both cities are requiring drivers to have local hukou and vehicles with local car plates. According to Shanghais draft， vehicles with less than seven seats must be registered with local car plates. The cars should be privately owned and insurances for people on the vehicles will also required to be purchased. The drivers must be the car owners and with at least one year of driving experience.

China legalized ride-sharing services in July.

According to the national regulations， local governments are responsible for issuing licenses for car-hailing taxis and car-hailing drivers after evaluating them.

Chinas Service Sector Continues to Expand

Chinas service sector continued to expand but at a slightly milder pace in September， a private survey showed.

The Purchasing Managers Index came in at 52 in September， down from 52.1 in August but higher than 51.7 in July， according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co Ltd.

A reading above 50 indicates expansion， while a reading below 50 represents contraction. The surveyed companies attributed the expansion to the growth of new projects and orders， with employment recovering for the first time since June， the survey showed.

The service sector PMI was markedly above that for the manufacturing sector， which edged up to 50.1 in September from 50 in August.

The trend corresponds with the official indicators released earlier by the National Bureau of Statistics， which showed the service sectors PMI at 52.3 in September， compared with 50.4 for manufacturing.

While Chinas economy is growing at its slowest pace since the global financial crisis， the country has achieved solid progress in re-balancing its economic structure from manufacturing and investment to services and consumption.

The service sector grew 7.5 percent in the first half of the year， accounting for 54.1 percent of the overall economy， up 1.8 percentage points from a year earlier， official data showed.

In September， service providers remained cautiously optimistic about business prospects， though their confidence slipped somewhat from August， according to the survey.