Every Chinese administration since Deng Xiaoping’s has taken on an ambitious economic project that defines its legacy. For President Xi Jinping, that project is to link 130 million people across Beijing, Tianjin and Hebei province into a single megalopolis, the so-called Jing-Jin-Ji region. Compared to the Yangtze River Delta and Pearl River Delta, the northern Bohai Bay cluster lags in the development of private enterprises, lacks their cohesive industrial base, and is less open to the outside world. In 2012, exports accounted for 15% of its gross domestic product (GDP), compared to 60% in the Yangtze River Delta and 63% in the Pearl River Delta. Vice Minister of Finance Wang Bao’an has said the new metropolis would require an investment of CNY42 trillion. The industrial base in the Pearl River Delta took shape in the 1980s after Deng’s move to turn Shenzhen, Xiamen and Zhuhai into special economic zones. A decade later, the administration of Jiang Zemin and Zhu Rongji pushed forward the industrialization of the Yangtze River Delta by designating Shanghai’s Pudong area as the financial hub of the nation. The fourth generation of leaders, Hu Jintao and Wen Jiabao, turned their focus to underdeveloped areas, and sought to address income disparity with their “Go West” and “Develop Central China” campaigns. President Xi Jinping’s plan to integrate Beijing, Tianjin and Hebei would test the leadership’s determination to break down barriers of vested interests groups, according to Shen Jianguang, Chief China Economist with Mizuho Securities. The region’s gross domestic product (GDP) was USD1 trillion last year, similar to South Korea’s, and the 15th highest in the world. But wealth is spread unevenly: the per-capita GDP of Beijing is USD15,000, while Tianjin’s is USD11,500 and Hebei’s only USD6,300.

Profit growth at major Chinese industrial companies decelerated in May because of sluggish business, higher inventories and rapidly increasing costs, said analysts. The year-on-year growth rate of 9.8% for the first five months was down slightly from the 10% pace for the first four months, the National Bureau of Statistics (NBS) said. Slower growth in the electronics, coal and general equipment industries depressed the overall rate. Profits of state-owned enterprises increased 3.4% , while they rose 12.9% at private companies. Among the 41 industries surveyed, 32 registered profit growth in the first five months, while eight saw their profits decline. The coal mining and processing industries recorded a 43.9% profit decline in the first five months. Five industries－including vehicle manufacturing, electricity and heating power production and supply－accounted for 77% of the profit growth. Oil refining, coking, and nuclear fuel processing recorded 49.3% profit growth in the first five months, the highest among all industries. Vehicle manufacturing recorded 29.6%. Xu Sitao, Chief Representative of the Economist Group in China, said an improved reading for the manufacturing PMI in May suggested that the slowdown abated slightly in the second quarter.

Bright Food Group Co, the Chinese owner of British cereal maker Weetabix, said it is seeking acquisitions and has the ability to pay as much as CNY10 billion for a target. Bright Food is open to buying domestic and overseas companies and it is not interested in deals that are “too small” and prefers to work on one acquisition at a time, Chairman Lu Yongjie said. The company is also preparing an initial public offering (IPO) for its Australian unit Manassen Foods, he said. The Shanghai-based company, which has interests that span food and beverages, farming and retailing, bought Israel’s Tnuva Food Industries last month. “Chinese food firms seek overseas deals to acquire product research capabilities and better resources,” said Todd Yang, Shenzhen-based Analyst at Guosen Securities Co. Bright Food, whose domestic brands include White Rabbit candy, has retail outlets across China and also operates tea, dairy and rice farms. It sells fresh milk, yogurt and baby formula in China.

China may be bolstering its emergency crude reserves as refiners expanded commercial stockpiles to a record high last month. Crude inventories rose 4% from April, China Oil, Gas & Petrochemicals, published by Xinhua, said in a report. That is about 33.59 million tons, or 246.2 million barrels, the most in records going back to January 2010. Petrol supplies also swelled to a record, climbing 0.9% to an estimated 7.6 million tons. Refiners accelerated crude imports in April and May as the nation sought to increase its energy security with prices at a “fairly” high level, said Amy Sun, Oil Analyst at ICIS-C1. “We believe high commercial stocks may indicate refiners are potentially stocking feedstock for the government,” she said. “China may be taking this opportunity to start filling strategic storage.” Beijing does not publicly release strategic stockpile figures.

Shares of China Gas Holdings and its largest shareholder Beijing Enterprises Holdings have surged more than 10% on the back of Russia’s long-term natural gas supply deal with China that was signed in May, as they are seen as the biggest beneficiaries with substantial operations in China. The import deal secures long-term energy for Chinese distributors whose growth has been crimped by supply. But the companies may have underestimated the risk of potential delays in gas delivery and the time it will take for output to ramp up. This could be a challenge for China Gas to hit its target to triple distribution volume with Russian gas in the next five financial years, Macquarie Securities analysts said in a research report. They expected Russian gas to start flowing to China in 2019 at the earliest and that a ramp-up to full capacity would take five years. This cautious view is in line with that of the Oxford Institute for Energy Studies, which is affiliated with Britain’s University of Oxford. “Russian infrastructure projects are typically over budget and late,” the report said, which cited an even more conservative projection by industry consultancy Wood Mackenzie, which expects 5 billion cubic metres (BCM) of gas supply via the ‘Power of Russia’ pipeline in 2020, and thereafter expects a gradual ramp-up to the contracted 38 BCM by 2025 – seven years later than expected, the South China Morning Post reports.