BAIC Group announces five year plan for NEVs
Jan-25-2016 By : fcccadmin
BAIC Group’s electric car making arm, Beijing Electric Vehicle Co, has announced its five year plan for developing new-energy vehicles (NEVs), after topping the domestic NEV market in terms of volume. The electric carmaker, also known as BAIC BJEV, plans to expand its annual production to 800,000 units and achieve a sales volume of 500,000 units by 2020. It also expects to realize CNY60 billion in annual revenue in the next five years. BAIC BJEV expanded its market share in the NEV segment to 25.8% and the brand became the world’s fourth-largest fully electric car manufacturer. BAIC group’s Hong Kong-listed arm, BAIC Motor Corp, filed a report with the stock exchange saying its NEV sales totaled 20,131 units in 2015, a jump of 268.6% from the 5,462 units sold in 2014. Future electric cars are going to be built with technologies from the Mercedes-Benz platform. A total of 331,092 new-energy vehicles sold in China last year, including 146,719 fully electric passenger cars, a surge of around 300% from 2014. The electric car company’s five year plan targets a listing on the stock market, with a market value of CNY100 billion, by 2020, the China Daily reports.
Foreign banks to be required to hold yuan in reserve
By : fcccadmin
China will require foreign financial institutions in the country to hold yuan in reserve, as the People’s Bank of China (PBOC) takes steps to curb speculative sell-offs of the Chinese currency. This new regulation will come into effect on January 25, the PBOC said in a statement. Until now, the reserve requirement ratio (RRR) for foreign banks, or the amount of depositor funds they must keep aside, was zero. For major financial institutions in China the RRR is 17.5% of their total deposits. Foreign central banks, sovereign wealth funds and international financial organizations will not come under the purview of the new requirement. The step is a long-term mechanism that regulates cross-border yuan-denominated fund flows and avoids irrational and speculative sell-offs of the currency, according to the PBOC. According to Guotai Junan Securities Co and Haitong Securities Co, more than CNY220 billion of funds will be frozen, which will tighten the renminbi supply in the offshore market and make it more expensive for speculators to short sell. “We believe China is sending a strong message to speculators and trying to stabilize renminbi depreciation expectations”, said Joey Chew, Asian Foreign Exchange Strategist at HSBC Holdings, the China Daily reports. The policy will increase the cost of short-selling offshore yuan and depress arbitrage based on the spreads of offshore and onshore yuan, according to China International Capital Corp (CICC), a Chinese investment bank. “The move will impact the liquidity of offshore yuan, so it can narrow the price gap between the offshore and onshore rates and therefore lessening the room or chances for foreign institutions to short the yuan,” said Nomura International China Economist Wendy Chen.
SAFE says capital outflows “manageable”
By : fcccadmin
The State Administration of Foreign Exchange (SAFE) dismissed concerns about massive amounts of capital moving out of the country, stressing risks are “generally within control.” Chinese banks sold a net USD164.4 billion worth of foreign exchange in the fourth quarter of 2015, down from USD196.1 billion in the third quarter. China’s foreign exchange reserves posted the sharpest monthly fall on record in December, falling to USD3.33 trillion, the lowest level in more than three years. Despite the continuing drop, China’s foreign exchange reserves remain sufficient to guard against external shocks, SAFE reiterated. SAFE pledged to step up monitoring and analysis of cross-border capital flows to prevent potential risks. SAFE also said it has not issued new measures to restrain foreign exchange purchases or sales, though currency traders and banks have reported a number of such steps by authorities in recent months to control cross-border flows and crack down on speculation in the yuan currency. SAFE Spokeswoman Wang Chunying said that the FED’s increase of the interest rate accelerated capital outflows from China and other emerging economies, “but we are better prepared than some emerging countries to resist external shocks”, she added. Economists expected the capital outflows to continue in 2016.
China admits communication failings on renminbi
By : fcccadmin
Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission (CSRC) has conceded that poor communication contributed to global market anxiety over China’s falling currency. “Our system is not structured in a way to communicate seamlessly with the markets,” Fang told an audience in Davos. “You bet we can learn.” Fang sought to counter widespread concern that China is responding to a domestic economic slowdown by pushing the renminbi weaker. Fears of sharp depreciation have fueled unprecedented capital outflows from China in recent months and are also blamed for sparking a global equity sell-off. Christine Lagarde, Managing Director of the International Monetary Fund was reported in the Financial Times as saying that growth would continue at a robust level because the transitions “are all manageable if the right policies are taken”. Consumption accounted for 52.5% of the economy last year, up from 49% five years ago. Jack Lew, U.S. Treasury Secretary, shared the sanguine mood about China’s economic prospects. “I don’t see the situation today being so dramatically different from what we were seeing at the end of last year.” He said the acid test would be if China stuck to its reform path and managed its currency without seeking an unjustified trade advantage, the Financial Times reports.
U.S. investment in China: glass half full or half empty?
By : fcccadmin
Foreign companies still consider China one of the top investment destinations despite the economic slowdown. Of the 496 companies surveyed, 60% listed China as one of the top-three investment destinations, while a quarter considered China the No 1 priority, according to the Business Climate Survey released by the American Chamber of Commerce in China (AmCham), the Shanghai Daily reports. Western media on the contrary emphasized that 25% of companies surveyed planned to reduce or end their investments in China. The survey also showed China’s economic slowdown is hitting profits. The number of foreign companies rating their business profitable dropped to a five-year low in 2015. Compared with 73% in 2014, 64% of respondents said their companies were financially profitable in the last year. Revenues at 45% of the firms remained flat or declined compared 39% in 2014, the report said. “Although many respondents remain optimistic about China’s domestic market growth potential, almost half of the survey respondents expect China’s overall GDP growth in 2016 will be lower than 6.25%,” the AmCham said in the report.
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