Business

MONTREAL/EDMONTON — Foreign investors are snapping up ski chalets and commercial properties in Canada as a drop in the nation's sagging currency in the past two years means their money buys much more.

The bargains are especially attractive in Alberta's resort country, where home prices in the energy heartland have fallen with the price of oil, adding to the 25 per cent drop in the value of the Canadian dollar since 2013.

"Canada is absolutely gorgeous, but I'm on more of a time schedule because the dollar is so bad," said Dave Smith, who owns a New York information-technology business and is looking for an Alberta property. 

"It's crazy not to invest in it now because it's just a matter of time before it bounces back," he added.

While local buyers have disappeared, realtors in the picturesque Alberta mountain cities of Canmore and Banff hope foreign interest can counter the slump in the province, where the unemployment rate has climbed to its highest level since 2010.

"Things dried up significantly until about six months ago, when the dollar started turning," said Christian Dubois of Sotheby's International Realty. "In fairly strong numbers, we're starting to see inquiries coming again."

Dubois indicated that the biggest uptick in interest was from the United States and Britain, returning demand to levels he had not seen since the mid-2000s.

Wealthy foreigners are also buying in the ski country in neighbouring British Columbia, where Asian money is often credited with buoying the Vancouver housing market.

Commercial real estate is benefiting as well, with some investors seeing Canadian properties as an attractive alternative to low bond yields and tumultuous equity markets.

Foreign investment in commercial properties in Toronto hit its highest level last year since 2007 at almost C$1.1 billion ($774.59 million), according to RealNetCanada Inc. data. Of the 39 deals worth C$1 million or more, 90 per cent occurred in the second half of the year, when the currency's decline sped up.

Vancouver is hot as well. European billionaire Klaus-Michael Kuehne is about to acquire the Royal Centre office building for about C$420 million from Brookfield Canada Office Properties, a source familiar with the deal said.

This would be the highest price ever paid for such a property there, industry data shows.

Kuehne's representatives and a Brookfield spokesman declined to comment.

To be sure, some US buyers are treading cautiously after snapping up vacation properties in the early 2000s, when the Canadian dollar hit record lows, only to be forced to sell when the global financial crisis hit.

North of Toronto, where the rich and famous have often boasted the biggest cottages on the best Muskoka lakes, the discounted Canadian dollar also offers another way for US visitors to take advantage: by building up.

"The Americans that own in Muskoka right now are doing massive renovations — complete tear downs or rebuilds," said real estate agent and builder Bob Clarke. "And that's based on the dollar."

TOKYO — Japan's trade deficit narrowed sharply in 2015 as tumbling oil prices took pressure off its soaring post-Fukushima energy import bill, official data showed Monday, while autos led a pick-up in exports.

The deficit decline offered up some good news for Prime Minister Shinzo Abe as he struggles to stoke growth and ahead of a test to his leadership in upper house elections this summer. 

Stronger demand in some key markets, including the United States, and a sharply weaker yen boosted exports from the world's number three economy, the finance ministry indicated.

The figures showed Japan recorded its fifth-straight annual trade deficit, but the latest figure narrowed by 78 per cent from 2014 to 2.83 trillion yen ($23.8 billion).

Auto exports surged 10.3 per cent from a year ago, while the value of crude oil imports dropped 41 per cent.

For December alone, the nation saw a trade surplus of 140 billion yen, returning to the black for the first time in two months.

Japan remains highly dependent on energy imports to power the economy, but a big drop in oil prices over the summer has taken pressure off the cost of its energy needs.

The nation has kept most of its nuclear reactors closed since a tsunami and earthquake triggered meltdowns at the Fukushima plant in 2011. 

The accident forced Japan to turn to pricey imported fossil fuels to keep the lights on, leading to a string of big trade deficits.

"The continued weakening in energy prices is exacerbating the fall in import prices," said Marcel Thieliant at research house Capital Economics.

Abe has pushed to restart nuclear plants, backed by Japan's business community, but the public is sharply divided with many opposed to returning to atomic power.

'Energy question' 

Several reactors have been restarted since the worst atomic accident in a generation.

"The resumption of nuclear power plants had only a very marginal impact on the 2015 trade statistics," said Junko Nishioka, chief economist at Sumitomo Mitsui Banking.

"But if the Abe administration moves forward [on more restarts] in the near term, it would have...further impact towards reducing the trade deficit," he added.

But Nishioka warned that overseas demand, particularly in China, was at risk in the face of a struggling global economy.

"Given the market turmoil, it will likely dampen business confidence," Nishioka said.

Falling oil prices have also depressed oil-related investment in the United States, denting demand for Japanese construction machinery, said Junichi Makino, chief economist at SMBC Nikko Securities.

"Looking forward, automobile demand is expected to stay solid, while a pickup is expected for electronics," Makino added. "But a downside risk remains with general machinery."

The trade figures come as economists look to next month's release of gross domestic product figures for the final quarter of 2015.

Revised data showed Japan's economy grew a stronger-than-expected 0.3 per cent in the July-September period, after initial estimates had showed a contraction.

Japan's economy fell into a brief recession in 2014 after consumers tightened their belts as Tokyo hiked the country's consumption tax to help pay down a massive national debt.

That downturn spurred the Bank of Japan to sharply increase its massive asset-buying programme, a cornerstone of Abenomics, effectively printing money to spur lending.

The bank holds a meeting this week with speculation rising that policymakers may unleash another round of easing to counter weakness in the economy.

SYDNEY/LONDON — Global insurance firms are circling Iran for business opportunities following the lifting of sanctions, and the first test of their appetite could come in March when some Iranian companies seek new cover.

Insurers, the reinsurers that share their risk and the brokers that forge deals are exploring ways to tap a market worth $7.4 billion in premiums after a nuclear accord between world powers and Tehran led to the removal of restrictions on financial dealings with Iran this month.

Allianz, Zurich Insurance, Hannover Re  and RSA, for example, said in recent days that they would evaluate potential opportunities in the country.

Insurance and reinsurance specialists regard the marine and energy sectors as among those offering the best opportunities in oil-producing Iran. 

Alongside commercial cover, life insurance is a potential growth area as it represents less than a tenth of overall Iranian premiums, compared with more than half globally.

At first, international companies are likely to link up with Iranian firms to capitalise on their local knowledge and to reinsure local insurance in the international market, according to industry experts, with international brokers helping foreign firms get that business.

American insurance industry players are still banned from doing business in Iran, however, due to separate US sanctions that remain in place.

The insurance contracts of some Iranian companies expire when the Persian calendar year ends in late March, similar to the January renewal season in Western countries, and they will be looking to strike new agreements. This could include insurance firms themselves seeking new reinsurance cover.

Mohammad Asoudeh, vice chairman and managing director of Iranian Reinsurance Co., told Reuters he had already been contacted by foreign insurance players looking to forge tie-ups with his company and enter the market.

"They have been waiting for implementation day," said the 30-year industry veteran, referring to the day this month when the UN atomic agency confirmed Tehran had met its commitments under the nuclear deal. 

"We have had enough visits [from foreign firms]... resuming business could be quick but will depend on the terms and conditions they offer us," he added. "There are some market renewal dates in two months' time. This will be a good point to start."

Sasan Soltani, regional business development manager at Dubai-based but majority Iranian-owned Iran Insurance Company, said his firm had also been approached about tie-ups by British and Japanese brokers and insurers.

Hurdles remain

Foreign players have been awaiting the lifting of sanctions for months; eight out of 11 established Western and Middle East insurance and reinsurance firms who responded to Reuters questions last year said Iran was an attractive market, especially in the marine and energy sectors.

However despite the lifting of sanctions, hurdles still remain which are making companies cautious about a speedy entry.

The US curbs still in place exclude American nationals, banks and insurance industry players from trading with Iran including dollar business, so concerns remain on whether other foreign insurers can transact without the risk of penalties.

London-headquartered United Insurance Brokers (UIB) said it was active in Iranian reinsurance before the imposition of international sanctions and planned to reopen its Tehran office "as soon as we can", according to Chairman Bassem Kabban.

"Under the sanctions we ceased to operate, but we have maintained the salaries of our people there for the past five and a half years," said Kabban, adding that firms could be wary due to concerns about having US shareholders or subsidiaries.

"People will be very careful what to do. If they are not sure, they would rather not do it," he elaborated.

He indicated, though, that French and Japanese players were likely to be quickest off the blocks in providing reinsurance as they had large presences in Iran in the past, noting that sectors such as aviation, power generation and energy would require large amounts of cover.

Reinsurers help insurers shoulder the burden of large losses in return for a proportion of the premiums.

Another London-based broker said his firm had decided against opening an office in Tehran for now, preferring not to take the risk of being a "front runner".

While Iran has 27 direct insurance companies and two reinsurance firms, most established in the last 10 years, they lack international credit ratings because they have been shut out of markets.

This could also deter foreign firms and their penalty-wary compliance departments from doing business with them.

Iranian Reinsurance Co. is now working to obtain a rating and has held discussions with two rating agencies for this purpose, said Asoudeh, declining to name them.

"Because of sanctions they couldn't price it, so this is first in our agenda. Several insurance companies in Iran are also waiting to be rated," he added.

Currently around 4 per cent of total Iranian insurance premiums are ceded to reinsurers, which would amount to an estimated $300 million of reinsurance business in the country, Asoudeh indicated. 

Reinsurance volumes are expected to pick up with wider access to foreign players, he remarked.

AMMAN — A total of 8,073 new institutions, mostly  Jordanian, joined the Amman Chamber of Commerce (ACC) in 2015, compared to 8,166 institutions in 2014. Their total capital investment last year was nearly JD239 million, spread over 46 nationalities, compared to JD1.3 billion in 2014.

Jordanians invested JD102 million capital, 79 per cent of the total, followed by Iraqis who invested JD6.3 million (5 per cent) and Syrians who contributed JD5.8 million (4 per cent). There were 7,196 partners in the new companies, 6,769 of whom were Jordanians, 157 Syrians and 96 Iraqis.

In terms of sector distribution,1,399 facilities joined the service and consultation sector with a total capital of JD99 million, while 1,556 institutions joined the constructions and building materials sector with a capital of JD96 million.

The financial and banking sector received 17 facilities whose capitals totalled JD11 million, whereas the ACC registered 2,091 institutions at the foodstuff sector with a total capital of JD9 million, and 649 institutions joined the furniture and stationery sector with a capital of JD7 million.

LONDON — Britain's banks need to dedicate far greater resources towards securing their IT infrastructure and should have a designated board member overseeing the issue, a senior lawmaker said, following a string of high-profile technology failures.

Andrew Tyrie, chairman of parliament's Treasury committee, also suggested that Andrew Bailey, the deputy governor of the Bank of England (BoE) who heads its banks supervisory arm, should be tasked with ensuring the banks develop more resilience.

Britain's retail banks have been hit by a number of technology failures in recent years, causing inconvenience for hundreds of thousands of customers and prompting lawmakers to call for more investment in financial technology.

"Every few months we have yet another IT failure at a major bank," Tyrie said in a statement on Sunday. "These IT blunders and weaknesses are exposing millions of people to uncertainty, disruption and sometimes distress. Businesses suffer, too. We can't carry on like this."

Tyrie said someone, probably Bailey, the head of the BoE's Prudential Regulation Authority (PRA) supervisory arm, needed to take "a leadership role" over an issue that poses systemic risk to the banking system.

"Currently, no one group seems to be directly responsible for developing a full understanding of the risks carried," Tyrie said in a letter to Bailey dated January 22 and published by the committee.

"A group of this type should now be formed with the primary task of ensuring that the banks develop more robust resilience to protect banking and payment systems. The head of the PRA may be best suited for the leadership role," he added.

HSBC suffered an online and mobile banking blackout in January while in 2015 thousands of Britons failed to receive their wages when some HSBC business customers were blocked from making payments.

State-backed Royal Bank of Scotland (RBS) has promised to invest hundreds of millions of pounds in its computer systems after a series of high-profile glitches. Some customers at Barclays have also endured problems.

Earlier this month, eleven major banks, including Barclays, UBS and HSBC, said they had tested a system that could make trading much faster and cheaper, using the technology that underpins crypto-currency bitcoin.

The banks are part of a consortium of 42 major lenders, brought together last year by New York-based software company R3 to work on ways blockchain technology could be used in financial markets — the first time so many have collaborated on using such systems.

A blockchain is a huge, decentralised ledger of every bitcoin transaction, verified and shared by a global computer network, that can also be used to secure and validate any exchange of data, including real assets, such as commodities or currencies.

Banks reckon the technology could save them money by cutting out middlemen and making their operations more transparent. But analysts caution it is early days — bitcoin was invented just six years ago and blockchain experiments are still under way.

For this test, R3 used a Microsoft platform, which runs on a blockchain built by Ethereum, a non-profit organisation.

The 11 banks in the simulation, operating across four continents, each used their own computer, or "node", and transferred "Ether" to each other — Ethereum's equivalent of bitcoin, R3 said.

They were able to settle the transactions almost instantaneously, it added. That compares to settlement times of days or even weeks, depending on the asset class, under the current systems used by banks.

R3 Managing Director Charley Cooper said the technology could be used by banks to transfer real assets within the next one or two years.

"Rather than just talking about what we might do, we've moved into a new phase, which is actually executing these plans and demonstrating how this technology might work in practice," said Tim Grant, who runs R3's test labs.

Peer-to-peer

The other eight banks involved in the experiment were BMO Financial Group, Credit Suisse, Commonwealth Bank of Australia, Natixis, Royal Bank of Scotland, TD Bank, UniCredit and Wells Fargo - all members of the R3 consortium.

"Proving the scale and peer-to-peer operation of blockchain experiments is an important next step," said UBS' senior innovation manager Alex Batlin, who is in charge of a blockchain lab for the bank in London.

R3 has recruited many heavyweights from the worlds of bitcoin and technology more broadly. Mike Hearn, a former lead bitcoin developer who last week said the crypto-currency had been a failed experiment, is its lead platform engineer.

Banks see potential in the so-called "smart contracts" that blockchain technology facilitates: agreements that are automatically executed when pre-determined conditions are met.

"Though... there are still many implementation hurdles left to overcome, this exercise further validates the utility of smart contract consensus technology," a spokesman for Ethereum said.

Separately, entrepreneurs who want to open a bank in Britain can call a new helpline to chat about how much capital they need, and get invitations to rub shoulders with supervisors.

The Financial Conduct Authority and the PRA said this month they had opened a New Bank Start-up Unit to give information and support to newly-authorised banks and people thinking of setting up a bank.

The government is keen for new banks to enter a market where consumer banking is dominated by a handful of lenders such as HSBC, Barclays, Lloyds, RBS and Santander UK.

Regulators have already made changes, such as easing the initial capital burden and fast-tracking approval of a new bank's top officials, leading to 12 new lenders authorised since 2013 with more in the pipeline.

"With the launch of the New Bank Start-up Unit, applicants will now benefit from having a single place where they can get the advice and guidance they need to start a new bank and support once they are authorised," Bailey, said in a statement.

New banks will benefit from access to a helpline, meetings with supervisors, regulator capital reviews, monthly updates by email, and invitations to seminars on regulatory topics.

Elsewhere, the BoE has proposed a new rule for recovering bonuses of rule-busting bankers who have moved to a new employer.

Britain already has among the world's toughest rules on banker pay, introduced amid public anger over lenders being bailed out by taxpayers in the financial crisis and bankers pocketing big payouts at a time of austerity for most people.

These rules allow for a bonus to be cut, stopped or clawed back.

But regulators said this month they wanted to go further to crack down on so-called "rolling bad apples" or bankers who pocket a bonus and then join another lender before any reckless behaviour is uncovered.

"Individuals should be held accountable for their actions and not be able to actively evade the consequences of their actions," Bailey said in a statement.

"Today's proposals seek to ensure that individuals are not rewarded for bad practice or wrongdoing and should help to encourage a culture within firms where reward better reflects the risks being taken," he added.

The proposed new rule targets buyouts, or when a bank compensates new employees for unpaid bonuses that were cancelled when they left their old bank.

Regulators say that undermines the ability to claw back a bonus which has been paid or withhold or cut the unpaid portion of a bonus, when misconduct is later discovered.

The proposed rule states an employee's new contract would allow for a bonus to be recovered or not paid should the person's former employer determine guilt in misconduct or risk management failings.

"The proposed rules would also allow new employers to apply for a waiver if they believe the determination was manifestly unfair or unreasonable," the BoE said.

The proposals, put out to public consultation, would make it impossible for a banker to wipe the slate clean by changing jobs, said Alexandra Beidas, an employment lawyer at Linklaters.

"It remains to be seen if this will be workable in practice as it will involve sharing potentially sensitive information between banks," Beidas said.

Last year, the BoE said it would stop short of actually banning buyouts as it would most likely lead to a competitive disadvantage for British firms given there is no similar rule in other financial centres around the world.

AMMAN — Cooperation between the public and private sectors is essential to bolster the Free Trade Agreement between Jordan and Canada, Industry, Trade and Supply Minister Maha Ali said Sunday.  She was speaking to representatives of industry and commerce chambers, the Jordan Exporters Association and the Canadian embassy in Amman besides the president of the Jordanian-Canadian Business Association, according to ministry statement.

Ali urged a follow up on the recent visit by a Jordanian delegation to Canada in order to increase national exports to the Canadian market. The Jordanian private sector is crucial in helping exporters penetrate the Canadian market and acquaint them with the free trade agreement which went into effect in 2012, Ali added.

The agreement contributed to the growth of bilateral commercial movement by 42 per cent between 2012 and 2014, with Jordanian exports to Canada improving by threefold during the same period. In the first eight months of 2015, the value of national exports to Canada stood at $37 million, marking an increase of 15.6 per cent compared to the same period of 2014, while Jordanian imports from Canada valued $23 million, with a drop of 22.7 per cent during the same comparison periods. 

AMMAN — Remittances of Jordanian expatriates stood at $3.798 billion in the year 2015, 1.5 per cent higher than the $3.743 billion in 2014, the Central Bank of Jordan (CBJ) announced Sunday.

These remittances, in addition to the tourism revenues, contribute to boosting foreign currency reserves and improving the current account of the Kingdom, the CBJ said.

DAVOS, Switzerland — Financial markets need more clarity on how Chinese authorities are managing their currency, particularly the relationship of the yuan to the US dollar, International Monetary Fund (IMF) Managing Director Christine Lagarde said on Saturday.

Sharp swings in the yuan have contributed, along with a dramatic fall in the price of oil, to global market volatility since the beginning of 2016.

Bank of Japan Governor Haruhiko Kuroda, speaking on the same panel at the World Economic Forum (WEF) in Davos, said he believed China should use capital controls to stabilise its currency while keeping domestic monetary policy loose.

Asked whether she would back capital controls by China for a period, Lagarde avoided a direct reply but said: "Certainly a massive use of reserves would not be a particularly good idea... Some of it was already used."

She added that the market needed "clarity and certainty" about China's exchange rate basket "in particular with reference to the dollar, which has always been the reference".

"That would be the right move to make," she indicated.

According to Kuroda, China was right to keep monetary policy accommodative to help cushion the country's transition from a export-led industrial economy to a demand-driven consumer economy without excessive depreciation of the yuan.

"This is my personal view and may not be shared by Chinese authorities, but in this kind of contradictory situation, capital controls could be useful to manage exchange rate as well as domestic monetary policy in a consistent, appropriate way," he said

He noted that Beijing was struggling to avoid either an excessive depreciation or an excessive appreciation of its currency.

Chinese economic data signalling slowing growth in the world's second-largest economy have sent investors into a panic globally in the first three weeks of 2016, with oil prices also plunging as a result of oversupply in the market.

Credit Suisse Chief Executive Officer Tidjane Thiam told the Davos panel that many people in the markets did not necessarily believe China's official growth figure of 6.9 per cent for 2015 and feared the Chinese economy was facing a "hard landing".

"We believe China will have a soft landing, not a hard landing. A lot in people in the market believe demand in China is decreasing. We don't agree," he said.

Part of the market slide was due to a massive distressed sales of assets by sovereign wealth funds and asset managers prompted by falling oil prices, Thiam added.

Both Lagarde and Kuroda suggested investors could trust China's official growth data.

The Chinese central bank has been generous with liquidity, pumping a net 315 billion yuan ($48 billion) into the banking system ahead of the Lunar New Year holiday in early February.

It was the biggest weekly injection since January 2014 and analysts suspected it was larger than that warranted to avoid any hint of a cash crunch during the long holiday.

According to sources, Zhang Xiaohui, an assistant governor of the central bank, said it would not rush to cut the amount of cash banks must hold in reserves, as doing so could send a strong signal on policy easing.

Yi Gang, a vice governor of the central bank, also said it would keep the yuan basically stable against a basket of currencies.

Italian Economy Minister Pier Carlo Padoan told Reuters the IMF board's decision to include China's yuan in the basket of major currencies used to calculate the Special Drawing Right in which the fund lends to members was "an additional positive constraint" on China's management of its currency.

Lagarde described China's slowdown as "very normal" but the road ahead will be bumpy.

Lagarde told the WEF that China's transition to an economy led by consumer demand instead of state investment was unlikely to lead to a "hard landing" for the world's second-largest economy.

She said on the final day of the Davos meeting: "We are not seeing a hard landing... We are seeing an evolution, a big transition which is going to be bumpy.

"We have to get used to it and it's a very normal and proper way to actually move towards a more sustainable and a more quality growth, we all hope," she added.

"[It] is simply the worst start of any year on the record on financial markets ever, it's simple," Thiam said. "The market is very worried about China, of course. They fear we will fall into a global recession." 

British Finance Minister George Osborne remarked that China had overshadowed proceedings at the annual gathering of the rich and powerful.

"The world has not been very good over previous centuries at accommodating rising powers and it has often led to unhappy outcomes," Osborne said bleakly. "I think it is massively in our interest that we bring China into the multilateral institutions of the world." 

Support for Lagarde repeat 

Lagarde herself was also an issue at Davos, as she quietly campaigned to win backing for a second mandate as IMF managing director.

With her term coming to an end in July, the IMF formally began accepting nominations on Thursday for who will guide the global crisis lender for the next five years.

The biggest powers governing the Washington-based fund, including Britain, Germany and France, all gave their support to Lagarde.

In her first term, she was deeply involved in the decision to add the Chinese yuan to the IMF's basket of reserve currencies, a highly symbolic move that was greatly appreciated by Beijing.

Lagarde's plans to run again nonetheless face a potential hurdle. She could have to stand trial in France over her role in a banking scandal that predates her arrival at the IMF.

In December, French judges placed her under formal investigation in the long-running affair of former Adidas owner Bernard Tapie, who received a large state payout for his dispute with a state bank during her time as finance minister.

Lagarde has said she will fight the trial order, and the IMF executive board at the time reiterated its confidence in her.

ALGIERS — Algeria is turning to China to finance several infrastructure projects, including a new $3.2 billion port, as the North African country, a member of the Organisation of Petroleum Exporting Countries (OPEC), looks for ways to weather the collapse in global oil prices.

Algeria, where oil and gas production account for 60 per cent of the state budget, saw energy earnings collapse 40 per cent last year, forcing the government to slash spending, raise some subsidised fuel prices and freeze major projects.

With little foreign debt and more than $130 billion in reserves, Algeria's government says its economy can manage the fall in crude prices. Nevertheless, it appears Algiers is willing to move out of its comfort zone to help it cope. The Chinese funding represents the first time it has sought external funding in a decade.

Chinese businesses are already well-established in Algeria, especially in housing and construction. In one flagship project, Chinese firms are helping to build a huge new mosque worth $5 billion in the capital Algiers.

Now Chinese banks will fund the port in Cherchell, east of Algiers, for a mega-port of 23 docks capable of processing 26 million tonnes of goods per year, according to a source at transport ministry.

"The port will be funded by China," the official told Reuters.

China's Shanghai Ports Group will manage the project, he said. Another source at the Algerian trade ministry confirmed this.

"This is an important and strategic project [port] not only for Algeria, but for Africa," China's ambassador in Algeria told reporters this week.

China is Africa's largest trading partner and its investments in the continent amounted to $32 billion at the end of 2014, according to London-based BMI Research.

China has offered loans totalling $32 billion to African nations in the past two years and investments range from Zambian power plants, cobalt mines in Congo, rail links in East Africa and other infrastructure in Equatorial Guinea.

"We have $60 billion available for projects in Africa in the next three years, and Algeria is in a good position to take advantage of this amount," the ambassador said.

Trucks, houses

The total amount of the loans requested by Algeria from China is not known, but a vehicle and trucks assembly plant and thousands of houses are among the Chinese-funded projects planned for the next couple of years.

In one sign of the growing trade between the two countries, Algeria uses the yuan in exchanges with China instead of the dollar. As a result, traders on the black currency market in Algiers have begun to make the yuan available to clients.

"There is a big demand over the yuan,” Salim, a young trader at Algiers Port Said Square, told Reuters.

For Algeria, the Chinese funding may also be more politically palatable than multilateral lenders such as the International Monetary Fund (IMF), analysts said.

After it signed a debt restructuring agreement with the IMF in 1994, Algeria saw social tensions rocket as a result of a raft of unpopular measures such as closing state firms, sacking thousands of workers and lifting subsidies on primary consumption items. It also devaluated its currency by 40 per cent.

Many Algerians blamed the IMF, seeing it as a foreign tool that created poverty.

But the presence of China is widely seen as beneficial for Algeria and its economy. There are 35,000 to 40,000 Chinese workers in Algeria, according to the Chinese ambassador.

Algeria, a key US ally in its fight against Islamist insurgency and a top gas supplier for Europe, avoided the upheaval of the 2011 Arab Spring revolts that toppled leaders in neighbouring Tunisia, Egypt and Libya.

Tapping its energy wealth, the government increased handouts, subsidies and cheap loans to help ease protests calling for reforms. Memories of the country's 1990s war with Islamists in which 200,000 people died also keeps many Algerians wary of turmoil.

BEIJING — China's economic slowdown is hitting profits at more foreign companies, a survey by an American business lobby showed, while the vast majority of respondents believed China's growth in 2016 would fall short of the central bank's forecast.

The number of foreign companies rating their business profitable dropped to a five-year low in 2015, while 45 per cent of about 500 respondents in the American Chamber of Commerce in China's annual survey reported that revenues in 2015 were down or remained flat from a year earlier.

Data from China's statistics bureau on Tuesday showed growth for 2015 was 6.9 per cent, its weakest pace in a quarter of a century, capping a tumultuous year that witnessed a huge outflow of capital, a slide in the currency and a summer stocks crash. .

"Although many respondents remain optimistic about China's domestic market growth potential, almost half of survey respondents expect that China's overall gross domestic product growth in 2016 will be lower than 6.25 per cent," the American Chamber said in its business climate survey.

‘Unclear laws’

The People's Bank of China (PBoC) in December forecast that the country's annual economic growth will slow to 6.8 per cent in 2016.

The American Chamber survey results, published on Wednesday, underscore the growing unease and challenges faced by some overseas companies in the world's second-biggest economy.

Forty-eight per cent of respondents expected gross domestic product growth this year to reach 6.25 per cent or less, while 35 per cent said the economy would increase between 6.25 and 6.75 per cent.

Business confidence also was impacted by regulatory and protectionist concerns, following a series of government investigations targeting foreign companies and the roll-out of a national security law limiting the use of overseas technology.

For the first time in five years, respondents cited "inconsistent regulatory interpretation and unclear laws" as the top business challenge, the report said.

Seventy-seven per cent of respondents said they believed foreign companies were less welcome than before.

"While the Chinese leadership has emphasised that the country will follow the rule of law, our members continue to report that the regulatory and judicial process are less than fair and lack adequate oversight," James Zimmerman, chairman of AmCham, said in the report.

Overall, 64 per cent of respondents said their companies were financially profitable in the last year, compared with 73 per cent in 2014.

Revenues at 45 per cent of the firms remained flat or declined compared with a year earlier, compared with 39 per cent in 2014, the report indicated.

"While China remains a top investment priority, fewer compaies are increasing their investment levels in China," the report concluded. 

Concerns about Beijing's grip on economic policy have shot to the top of global investors' risk list for 2016 after a renewed plunge in its stock markets and the yuan stoked worries that the economy may be rapidly deteriorating.

China's slowdown, along with the slump in commmodity prices, prompted the International Monetary Fund to cut its global growth forecasts again on Tuesday, and it said it expected the world's second-largest economy to see growth of only 6.3 per cent in 2016.

Data from China's statistics bureau showed that industrial output for December missed expectations with a rise of just 5.9 per cent, while electric power and steel output fell for the first time in decades last year, and coal production dropped for a second year in row, illustrating how a slowing economy and shift to consumer-led growth is hurting industry.

December retail sales growth was also weaker than expected at 11.1 per cent last month, disappointing those counting on the consumer to be the new engine of growth.

"While headline growth looks fine, the breakdown of the figures points to overall weakness in the economy," said Zhou Hao, senior emerging markets economist for Asia at Commerzbank Singapore.

"All in all, we believe that China will experience a 'bumpy landing' in the coming year," he added.

There was relief in the markets, however, that growth at least matched forecasts, and a growing expectation that more monetary easing measures were imminent, possibly before Lunar New Year holidays in early February.

Angus Nicholson, market analyst at IG in Melbourne, said in a note that further cuts in interest rates and the reserves that banks have to set aside were already looking "a foregone conclusion" before the data release, and now it was a question of timing.

"That gives investors an excuse to buy stocks, after sharp falls recently," said Linus Yip, strategist at First Shanghai Securities Ltd.

Currency risk

The PBoC did its bit to calm nerves by keeping the yuan largely steady, setting the currency's daily midpoint fix at 6.5596 per dollar.

That followed news of plans requiring overseas banks to hold a certain level of yuan in reserves, a move that could raise the cost of wagering on further falls in the currency, which has lost about 5 per cent since August.

Tommy Xie, economist at OCBC Bank in Singapore, said he expected more stimulus to the economy from the PBoC, but the stability of the yuan, also known as the renminbi, was critical to maintaining growth.

"This is a new risk for China. If the renminbi continues to weaken, the volatility and capital outflows get worse, then that is likely to pose a challenge to growth," he added.

Confusion over China's currency policy and its commitment to reforms has sparked mayhem in financial markets in recent weeks, as the PBoC allowed the yuan to fall sharply in early January then switched to aggressive intervention to steady it.

Likewise, concerns have mounted that the economy's troubles might be beyond Beijing's ability to fix.

Markets have long harboured doubts about the veracity of China's growth data, given their habit of closely matching official forecasts year after year despite wildly changing circumstances at home and globally.

Investors used to comfort themselves with the assumption that the authorities, while often inscrutable, were competent managers who could be trusted to ultimately guide the economy to a more consumer-driven model.

That trust has been challenged by perceived policy missteps over the yuan and stock markets, giving weight to a voluble clique of China bears who claim high debt levels and massive overcapacity are bound to end in tears.

Even relative optimists are worried.

"A recent trip back to China suggests the economy remains in a rather bad shape. Public confidence and expectations are very low," indicated Wei Li, China and Asia economist at Commonwealth Bank of Australia.

"Faced with rising non-performing loans, banks are cutting credit lines despite policymakers calling for more support. New credits are mainly used to repay existing debts, rather than flowing into new investment projects," he said.