China’s first high-speed passenger railway line to the borders with North Korea and Russia has been put into service. The 361-kilometer line runs from Jilin city, the second-largest city in Jilin province, to Hunchun. With trains running at speeds of up to 250 km/h, traveling time between the two cities has been cut from six hours by long-distance bus to two and a quarter hours. The new route gives travelers scenic views of Songhua Lake, Jingpo Lake, Changbai Mountain and Fangchuan township. It includes 115 bridges and 85 tunnels.

The major results of Chinese President Xi Jinping’s visit to the U.S. may be summarized as follows:

• Cyber-security: launching a twice-yearly ministerial level dialogue by the end of the year.
• Climate change: setting up a bilateral fund to help developing countries combat climate change.
• Military relations: expand the Memoranda of Understanding on Confidence Building measures to include air-to-air safety and crisis communications.
• Anti-corruption: enhancing cooperation on criminal investigations, repatriation of fugitives and asset recovery issues.
• Tourism: the U.S.-China Tourism year to be held in 2017.

U.S. President Barack Obama met his Chinese counterpart Xi Jinping at the White House on September 25, and the two leaders outlined their common vision for a global climate change agreement. Xi and his wife Peng Liyuan received a 21-gun salute and full ceremonial military honors, underlining the huge symbolic importance of the state visit. China is the only country to have had two state dinners during the Obama administration. Xi’s predecessor, Hu Jintao, was honored with a state dinner in January 2011 during his final trip to Washington as President.

China confirmed that it plans to launch in 2017 a national emission trading system covering power generation, steel, and cement. China will also set aside USD3.1 billion as a fund to help developing countries fight climate change. U.S. President Obama reiterated that the U.S. welcomes the rise of a China that is “stable, prosperous and peaceful.” Xi underlined the need to be “broad-minded” about the two countries’ differences, to have “mutual respect” and “meet each other halfway” in order to improve relations. China will make available CNY20 billion through a bilateral fund to help developing countries combat climate change. “The significant and new climate finance pledges made by China are a game changer. These are a drastic increase from China’s previous finance commitments,” said Li Shuo, Senior Climate Policy Analyst with Greenpeace East Asia. “With this deal, it’s clear that China is ready to lead on climate,” he added. President Xi Jinping also pledged not to further lower the value of the yuan against the U.S. dollar.

Visiting Seattle on the first leg of his trip, Xi pledged to work with the U.S. to fight cyber crime. Both countries’ leaders agreed not to conduct commercial cyber attacks against each other. Boeing announced in Seattle that it had won USD38 billion worth of orders and commitments for 300 planes from China and would set up an aircraft interior completion and painting center in Zhejiang province for Boeing 737 planes. Washington state exports more to China than any other U.S. state. The Paulson Institute, in partnership with the China Council for the Promotion of International Trade (CCPIT), co-hosted a U.S.-China Business Roundtable, attended by 30 business executives, including Tim Cook of Apple, Jeff Bezos of Amazon, and Warren Buffett of Berkshire Hathaway. CEOs from China included Jack Ma of Alibaba, and Robin Li of Baidu. In the official photo, Xi was flanked by IBM’s Ginni Rometty and Microsoft’s Satya Nadella. Governors from five U.S. states signed an agreement to cooperate with China on the use of clean-tech to combat climate change, and on nuclear energy and smarter electricity use. TerraPower, an energy company founded by Bill Gates, signed an agreement with China National Nuclear Corp (CNNC) on next-generation nuclear power plant technology.

Britain’s Chancellor of the Exchequer George Osborne – visiting Beijing – expressed his confidence in the slowing Chinese economy, saying the country was going through a necessary transformation but was still a driver of global growth. Chinese companies are expected to help finance the GBP16 billion Hinkley Point nuclear plant in southwest England, and Osborne said their participation could lead to China developing and owning a future nuclear plant, possibly at Bradwell. Osborne presented Britain as one of the West’s most open countries to Chinese investments. China and Britain will also study linking the stock markets of London and Shanghai. China and the UK also endorsed 53 agreements at the 7th China-UK Economic and Financial Dialogue, covering a range of sectors including nuclear energy, infrastructure, trade, finance and space programs. Chinese President Xi Jinping is expected to visit the UK in October.

Automotive

• In the first eight months of 2015, China sales of Mercedes-Benz rose by 30% year-on-year to more than 227,000 cars. Meanwhile, Audi’s sales decreased by 0.8% and BMW lost 0.9%. In August alone, Mercedes-Benz sales in China increased by 56.7%. Mercedes-Benz plans to bring almost its entire product portfolio to China by around 2020. The company will consider “Chinese preferences” in future development of the brand.
• Italian motorcycle producer Ducati is increasing its presence in China with the foundation of Ducati China as a new business unit of Audi China. The company plans to double its dealerships in China in two years and introduce four new models in the coming months. Denker Group, the current importer, will remain the Ducati partner in China managing the dealerships in Beijing, Shanghai and Chongqing. Ducati said its sales in China increased by 46% year-on-year between January and July this year.
• Dong Yang, Deputy Director of the Chinese Automobile Manufacturers Association (CAMA), wants the seven Chinese cities that restrict car purchases to distribute an additional half a million plates in total this year. The extra cars would allow the Chinese auto market to grow by about 2%. It grew by an annual average of 24% between 2000 and 2010, but the growth rate declined to 7% between 2010 and 2014. In the first eight months of 2015, both production and sales dropped slightly from a year earlier.
• A Hong Kong-based electric vehicle charging company aims to push the growth of electric cars in China by developing a charging network in the country. EV Power Group founder Martin Tsang said that by having installed 600 charging stations in cities like Beijing, Shanghai and Guangzhou, the company was quickly putting in place the infrastructure to facilitate the faster adoption of electric vehicles. EV Power already operates 3,000 regular and fast chargers in shopping malls, office buildings and residential sites in mainland China, Hong Kong and Macao.
• Volkswagen, which is involved in a pollution-cheating scandal in the United States, may face a tough battle to retain its brand image and sales record in China, its biggest global market. Volkswagen Group China said it has no further comments on the issue, and its joint venture FAW-Volkswagen said that vehicles it produces and sells have no such problems. Volkswagen’s sales in China during the first six months of the year dropped 5.6% year-on-year to 1.74 million units. In 2014, its sales had surged by 12.4% in the country.

Finance

• China should continue with financial reform because costs will rise if it is delayed, Sheng Songcheng, Director of the Survey and Statistics Department at the People’s Bank of China (PBOC) said. “The slow pace of reform will leave domestic markets vulnerable to global volatility,” Sheng told a financial conference in Shanghai. “We shouldn’t miss the opportunity of financial reform and opening because of market volatility.”
• China will push forward with market-based reform of its currency regime and make the yuan convertible on the capital account over time, President Xi Jinping told The Wall Street Journal. A recent drop in China’s foreign exchange reserve was “moderate and manageable”, and the level of reserves remained abundant, Xi added.
• China may expand a trial to replace business tax with value-added tax (VAT) next year if not this year, Ernst & Young said. “The reform has been proven as a stimulus to the service industry,” Kenneth Leung, Indirect Tax Leader at EY China, told Shanghai Daily. China launched the VAT reform in January 2012 in Shanghai in an effort to ease the tax burden for companies and boost the service sector. VAT has still to be applied to four sectors – real estate, construction, financial services and customer services.
• The People’s Bank of China (PBOC) raised the ceiling on cross-border yuan fund flows for multinationals via two-way cross-border yuan cash pooling and cut the threshold to conduct the business. The cap on the net inflow was raised to 50% of the total shareholders’ equity in the cash pool. The initial ceiling for inflow was 10% and there was no limit on outflow. Two-way cross-border yuan cash pooling allows multinationals to more conveniently allocate capital between group companies.
• A rising bad loan ratio is expected to cause some Chinese banks to post zero growth in profits or even negative growth in the second half of this year or in 2016, PricewaterhouseCoopers (PwC) said. “The banking industry in China is facing three turning points at present — profit growth declines, the interest margin narrows and most importantly asset quality is under growing pressure,” said Raymond Yung, Financial Service Leader of PwC China.
• The U.S. government is backing a possible IMF decision to add the Chinese yuan to its Special Drawing Rights (SDRs).

Foreign investment

• Hollywood studio Warner Bros is setting up a joint venture with a consortium led by China Media Capital (CMC) to produce Chinese-language movies for the international market. Flagship Entertainment Group will have offices in Beijing and Los Angeles. The new company is 51% owned by a consortium led by CMC – of which 10% will be held by Hong Kong broadcaster TVB – and 49% by Warner Bros.
• Authorities are investigating two Chinese managers of Swiss lift and escalator maker Schindler over possible embezzlement and bribery. A company statement said: “This primarily concerns embezzlement to the detriment of Schindler, as well as passive bribery (acceptance of bribes), and possibly bribery relating to private individuals.” Schindler, which entered the China market 36 years ago, said it is working closely with authorities on the case.

Macro-economy

• China’s industrial production and retail sales improved modestly in August but fixed-asset investment continued to slow in the first eight months, according to the National Bureau of Statistics (NBS). Industrial output grew 6.1% from a year earlier in August, up slightly from 6% in July but still below the gain of 6.8% in June. Retail sales added 10.8% to CNY2.48 trillion in August, up from 10.5% in July and 10.6% in June. Fixed-asset investment (FAI) increased 10.9% from January to August to CNY33.9 trillion.
• China now has 111 central state-owned enterprises (SOEs) under the State-owned Assets Supervision and Administration Commission (SASAC), with around 25,000 SOEs owned and managed by local governments. The state sector employs nearly 7.5 million people. SOEs were hit by declining profits and increased losses since the beginning of this year. The profits of the country’s central SOEs fell by 3.1% year-on-year.
• China should reaffirm its commitment to moving toward a market-oriented, consumer-driven economy, which is in the best interests of the Chinese and world economies, U.S. Treasury Secretary Jack Lew wrote in an article in The Wall Street Journal, ahead of President Xi Jinping’s state visit to the U.S.
• The Asian Development Bank (ADB) cut its forecast of China’s 2015 economic growth to 6.8% from the previous 7.2% made in March. The bank added that China’s exports and consumption would pick up in the coming months to offset the economic slowdown in the third quarter. The ADB also revised down its forecast for the country’s economic growth in 2016 to 6.7% from 7%.
• Crude oil output in China reached 18.3 million tons in August, a year-on-year increase of 4.9%. China refined 40.37 million tons of crude oil last month, up 2.8% year-on-year, while refined oil production rose 3.7% to 25.15 million tons, the National Development and Reform Commission (NDRC) said. Apparent consumption of refined oil, calculated as production plus imports minus exports, gained 2.2% from a year earlier to 24.52 million tons.
• Chinese manufacturing activity fell to its lowest level in six and half years in September. The Caixin Flash China General Manufacturing Purchasing Managers’ Index (PMI), the earliest indicator of manufacturing activity slated toward private and export-oriented firms, fell to 47 in September from 47.3 in August. China’s factories have now seen activity contract for seven months. Sub-indexes showed that manufacturing output, new orders, new export orders and employment all fell at a faster pace.
• The Chinese government published a guideline on the development of areas around the Bohai Rim, including the cities of Beijing and Tianjin, Hebei, Liaoning, Shandong and Shanxi provinces, and Inner Mongolia. The guideline calls for major infrastructure to be built to establish inter-regional transport, energy, water resources and information networks.
• China has been ranked 14th out of 60 leading economies based on an assessment of the business-growth environment, according to a survey by Grant Thornton. The position, although a drop from third in 2013, is higher than some major developed countries, including France at 23rd and Britain at 27th. Singapore was ranked first.

Mergers & acquisitions

• China Electronics Corp (CEC), the nation’s largest state-owned information technology company, is in preliminary talks to acquire United States-based Atmel Corp, a maker of chips used in industrial machinery and cars. The thin premium being discussed and the regulatory scrutiny that would come with a Chinese buyer raise the risks that a deal might not materialize, according to one source.

Real estate

• Andrew Taylor, co-founder and co-CEO of Juwai.com, a major overseas property information platform for buyers in China, told China Daily that consistent online traffic and phone calls showed there is no sign of waning appetite for overseas properties. “We believe overseas property transactions will climb to USD220 billion by 2020 from USD52 billion last year. The era for overseas investment has just begun,” he said.
• Ding Qingping, who built his fortune in real estate as Founder of Zhonggang Group, has been extradited from Spain to China, where he is wanted for fraud totaling more than CNY200 million. Ding fled China with his wife seven years ago, leaving behind huge debts and an unfinished high-rise in Zhejiang province. The couple went to Canada before settling down in Spain.
• Chinese property investors have cast their sights on Dubai as a new investment destination as opportunities in China dwindle following the recent stock market turbulence. In Dubai, rental yields for residential properties are 8% on average annually, driven by strong, stable expatriate demand, compared with yields of just 2% to 3% in China, according to a property consultant at Knight’s Court Real Estate. The number of Chinese nationals interested in buying property in Dubai rose 1,200% in August from the same period last year.

Retail

• JD.com, China’s second-largest e-commerce services provider by sales, is gearing up to expand operations across Asia and pursue potential international investments after opening its new office in Hong Kong. JD.com will also have a mergers and acquisitions (M&A) team based in Hong Kong. The company plans to raise the number of its Hong Kong staff to about 30 in the next several months.
• Toshiba Corp plans to shut down two of its sales subsidiaries in China and authorize its mainland partner to make and sell its white goods as the Japanese company downsizes its overseas business to narrow losses. Toshiba will tie up with Shenzhen-based Skyworth Digital Holdings Co to sell refrigerators, washing machines and vacuum cleaners from October, widening sales channels.

Science & technology

• China launched a new, smaller type of rocket – the Long March-6 – on September 20 which will be primarily used for carrying satellites. Using liquid propellant in an eco-friendly engine, the rocket carried 20 “micro” satellites, a record for a Chinese rocket. The smaller rocket could make China more competitive in the lucrative market for commercial satellite launches. The Long March-6 is China’s first new rocket in more than 20 years.
• With backing from Microsoft, the University of Washington and Beijing’s Tsinghua University are opening a new technology graduate school in the U.S. city of Bellevue called the Global Innovation Exchange. It is the first Chinese research institution to be established at a U.S. location, with students and faculty from both universities working to tackle complex global problems.
• About 284,700 students headed overseas to study in 2010, while about 108,300 returned to work in China – less than 40%. Last year, 459,800 headed out, while about 364,800 came back – a return rate of 79%, according to the Beijing-based think tank Center for China and Globalization.

Stock markets

• The China Securities Regulatory Commission (CSRC) said it had punished those responsible in nine cases of securities market violations, including insider trading, market manipulation and spreading false information. The CSRC decided to impose fines of CNY22.23 million on two legal representatives of companies and 25 persons in the nine cases.
• Euronext said it would partner with the Shanghai Stock Exchange for the marketing of its cash, derivatives, commodities and index data in China to boost the visibility of Euronext’s listed firms. The Shanghai Stock Exchange’s SSE Infonet unit would act as its market data agent in China. Euronext is the parent company of the Paris-based bourse and the largest exchange in continental Europe.
• Imax Corp’s Chinese business unit is seeking to raise as much as USD276 million in a Hong Kong IPO as the use of large-screen cinema technology expands in China. Imax China’s net income excluding some items more than doubled in the first half of 2015 to USD18.3 million, while revenue increased 57% to USD43.9 million. The company’s largest customer is Wang Jianlin’s Wanda Cinema Line, China’s largest theater operator. There were 221 Imax theaters showing commercial films in mainland China at the end of June, as well as four in Hong Kong and eight in Taiwan.

Travel

• Canadian plane maker Bombardier is close to sealing an order from an unidentified Chinese lessor for its CSeries aircraft. Any such deal would signal increasing interest in Bombardier’s biggest-ever jet. The CSeries is more than two years behind schedule, and several airlines that had shown early interest, including the customer that was supposed to be the first operator, have backed away.
• The Great British Teddy Bear Co is investing CNY50 million to build an amusement park in Beijing that will feature British-themed teddy bears. The 400-hectare park, which will have a teddy bear themed museum at its center, will be built in Daxing district, about 30 km from central Beijing, in partnership with Tenio Architectural Design. Parts of the park will open to the public next May, when the International Heritage Rose Conference is held. 250,000 visitors are expected annually.
• State-owned plane maker Commercial Aircraft Corp of China (COMAC) has signed an initial agreement with lessor ICBC Financial Leasing Co to lease 10 ARJ21 regional jets and 10 of its C919 single-aisle commercial jets to Thai airline City Airways. The Bangkok-based carrier, established in 2011, has become the 21st client for the C919, the China-made 160-seat passenger airplane, and the 20th client for ARJ21, the domestically made regional jet with 70 to 90 seats.
• Russia and China are expected to sign an intergovernmental agreement on the joint development of a wide-body jetliner before the end of the year, according toYury Slyusar, President of Russia’s United Aircraft Corp. “The new jetliner is totally different from the C919 in terms of passenger volume and flight range. The two aircraft are aimed at different markets, so they will not compete with each other,” he said, adding that the new plane will be able to carry 210 to 350 passengers.
• 24 intercity lines will be added to the Beijing-Tianjin-Hebei region. With an investment of about CNY615 billion, construction will be completed by 2050, with the total length reaching 3,453 km, the Third Railway Survey and Design Institute Group Corp said. The Yujiapu high-speed railway station already started operation, shortening the travel time from Beijing to the central business district in the Tianjin Binhai New Area to 45 minutes.
• Didi Kuaidi, operator of China’s top ride-hailing mobile application, is joining forces with professional networking platform LinkedIn to further develop both companies’ operations in the country. The strategic partnership was announced by the two companies on the sidelines of the eighth U.S.-China Internet Industry Forum in Seattle, Washington, which Chinese President Xi Jinping attended.
• A consortium led by China Railway has won a bid for a feasibility study into a 1,200 km long high-speed rail link between India’s New Delhi and Mumbai. China has hugely expanded its own high-speed rail network in recent years, and it is now the largest in the world with around 17,000 kilometers of track in service.

• China ranked second in the global art market last year, with 22% of the world’s art sales, according to the Art Market Report by the European Fine Art Fair. The U.S. topped the list, with 39%.
• Xiao Tian, former Vice Director of the General Administration of Sports, who once sat on China’s Olympic Committee, will be prosecuted for graft after an investigation found he abused his position and took bribes. He held a position equivalent to that of a Vice Minister.
• Investigations into a blast at a chemical warehouse in Tianjin that killed 165 people on August 12 have uncovered evidence of corruption and dereliction of duty by officials. Those found responsible of such wrongdoing would be held fully accountable, whoever they were, Premier Li Keqiang vowed, following a briefing by the investigation panel.