The yuan rose to a record high against the dollar on June 21, the first time the yuan has broken the psychologically-important level of 6.8 against the greenback. The yuan has been de facto pegged to the U.S. dollar since the middle of 2008 at around 6.83 to minimize the impact from the global financial crisis on Chinese exporters. The yuan is allowed to fluctuate by a 0.5% daily trading band, whose upper limit was never tested. The People’s Bank of China (PBOC) set the yuan’s central parity rate at the highest level against the U.S. dollar in five years, reaffirming its pledge to allow increased flexibility of the yuan. The parity rate was 6.7896 on June 25, 0.56% higher than a week ago, and the highest since July 2005, when the country started its yuan appreciation process. But economists have warned that if the European debt crisis does not improve and the euro and other major currencies continue to depreciate, the yuan is expected to depreciate, too. Yuan currency flexibility may not produce the rapid gains China’s trading partners would like. Analysts expect the yuan will be allowed to rise over time but at a pace that is too slow to soon narrow China’s huge trade surplus with the United States.

Profit at Chinese industrial firms with annual revenue of more than CNY5 million soared 81.6% year on year to CNY1.54 trillion in the first five months of the year. The profit of industrial companies foreigners invested in rose 83.6% to CNY451.83 billion during the period, the National Bureau of Statistics (NBS) said. Earnings at state-owned industrial enterprises jumped 118.9% to CNY524.38 billion, while those of private industrial firms grew 61.1% to CNY377.66 billion. The annual revenue of industrial firms with more than CNY5 million rose 38.2% to CNY25.35 trillion, compared with a 0.8% drop last year, the bureau said.

China Media Capital announced it established a CNY2 billion fund that focuses on the media and entertainment sectors. Shanghai Media Group and China Development Bank (CDB) were among the major investors in the new fund. “We will focus on growth capital, corporate restructuring, management buyout and privatization opportunities,” Michael Tung, Chief Investment Officer of China Media Capital, said.

PetroChina plans to consolidate the natural gas assets of three of its subsidiaries — Kunlun Energy, Kunlun Gas and Kunlun Natural Gas. Hong Kong-listed Kunlun Energy builds pipelines and sells natural gas. Kunlun Gas is the firm’s platform for city natural gas business, while Kunlun Natural Gas mainly deals in compressed natural gas and liquefied natural gas (LNG). Kunlun Gas and Kunlun Natural Gas may be injected into the listed Kunlun Energy in the future or the three companies may be merged. No timetable has been announced. Natural gas is expected to account for half of the company’s total production in the next decade. PetroChina will also focus more on coal seam gas, boosting production to 4 billion cu m per year. PetroChina has explored coal seam mines in Shaanxi province and the Xinjiang Uygur Autonomous Region with combined proven reserves of 153 billion cu m in 2009, the Shanghai Daily reports.

New home prices in 36 major Chinese cities continued to climb month on month in May despite the government’s attempt to cool the property market, the National Development and Reform Commission (NDRC) said. The average price was CNY8,479 per square meter in May, up 0.81% from April. However, the May growth rate in those 36 major cities was 2.65 percentage points lower than the April figure. According to the National Bureau of Statistics (NBS), home prices in 70 large and medium-sized Chinese cities rose 12.4% year on year in May. To rein in prices, the Chinese government has issued a series of measures, including raising mortgage rates and tightening down-payment requirements for second-home purchases. Property prices are expected to fall between 15% and 20% in the last quarter of this year, according to a report by Credit Suisse. “The fate of the Chinese economy for the rest of this year depends largely on the housing market,” Tao Dong, Chief Economist of Asia (excluding Japan) at Credit Suisse, said in Shanghai. The government’s cooling measures have led to a strong “wait-and-see” sentiment among sellers and buyers.