Short news
Mar-29-2016 By : fcccadmin
Automotive
- The number of cars registered in Shanghai rose 13% last year to almost 2.5 million, according to a report by the Shanghai Urban-Rural Construction and Transportation Development Research Institute. The number of cars that are restricted to suburban districts under license plate rules increased by 23% to 830,000 in the year, while those with non-local plates rose 24% to 1.2 million. The increase in the total number of cars was the fastest in the past few years. Over the same period, the city’s road network grew by 388 kilometers or 2.2%.
- General Motors expects China’s auto market to grow 3% to 5% annually through 2020, with 80% of the growth to come from sport-utility vehicles (SUVs), multi-purpose vehicles (MPVs) and luxury segments. GM revealed that 60 new and refreshed car models will be released in the country over the next five years, starting with 13 this year. Up to 40% will be SUVs and MPVs. There will also be 10 product launches for Cadillac, GM’s sole luxury brand.
- Great Wall Motor, China’s largest sport-utility vehicle (SUV) maker, dropped plans to issue shares worth CNY12 billion after its stock fell below the minimum offer price. The company said it would now use its own funds to expand production and develop new energy vehicles. The company reported 2015 net profit increased 0.22% to CNY8 billion.
Finance
- China’s cross-border capital outflow has slowed significantly since the start of this year, Wang Yungui, Director of the Policy and Regulation Department at the State Administration of Foreign Exchange (SAFE) said. China’s foreign exchange reserves declined by USD28.6 billion in February, much less than in January. Total foreign exchange reserves at the end of February stood at USD3.2 trillion. “In March, capital outflows further declined from the February level,” Wang added.
- The Asian Development Bank (ADB) is aiming to increase its sovereign lending to China to about USD2 billion a year from 2016 to 2020, up from the annual average of USD1.5 billion in the past five years. The actual lending volume will depend on approval by the board of the bank of actual projects and programs. In 2015, the bank’s sovereign lending to China was USD1.7 billion, accounting for 12% of its sovereign lending to all member countries.
- Chinese Vice Finance Minister Zhu Guangyao denied that there was an agreement between China and the United States over the recent weakening of the U.S. dollar. He commented after the U.S. central bank decided to keep the interest rates unchanged over a longer term, fueling speculation that there was a tacit understanding to relieve pressure on currencies. The U.S. dollar fell to a five-month low, while the yuan has strengthened to 6.49 per U.S. dollar in recent weeks.
- Rating agency Fitch said that major Chinese banks are likely to show subdued earnings growth for 2015 amid margin compression and asset depreciation. The net profit of China’s banking sector grew only 2.4% in 2015, a drop from the 9.6% year-on-year growth recorded in 2014, data from the China Banking Regulatory Commission (CBRC) showed. Financial statements of major banks will be released this week.
- China Life Insurance Co posted sharply slower profit growth last year as reduced interest rates affected balance sheets. The company earned CNY34.7 billion in net profit attributable to shareholders, up 7.7% year-on-year, down from a 30.1% net profit increase recorded in 2014. A rise in investment returns was the major driver for profit growth in 2015, but this was offset by higher claims reserves the company had to set aside. China Life’s revenue rose 14.7% year-on-year to CNY511.4 billion in 2015, with premiums up 9.8% to CNY362.3 billion.
- The State Administration of Foreign Exchange (SAFE) is considering the imposition of a Tobin tax on short-term capital flows, as the exchange rate of the yuan dropped on several consecutive days last week.
- Chinese Premier Li Keqiang said that China will never devalue its currency to stimulate the country’s exports. Currency devaluation does little to encourage enterprises to engage in competition and innovation, and does not help the country move into high-end manufacturing, the Premier said during his keynote speech at the opening ceremony of the Boao Forum for Asia (BFA). “The yuan will be kept at reasonable and equilibrium levels,” he reiterated.
- Jin Liqun, President of the Asian Infrastructure Investment Bank (AIIB), said that he was “patient in waiting” for the United States to decide on whether to join the bank. “Even if you decide not to join, that does not mean we cannot work together,” Jin said. He added that more than 30 countries were waiting to join and that “the new members problem will be solved by the end of this year.” Hong Kong may also be allowed to become a member, he said.
Foreign investment
- All enterprises registered in China, domestic and foreign, will get fair treatment, Premier Li Keqiang said at a seminar with more than 120 foreign participants at the annual China Development Forum. “All companies registered in China – no matter if they are invested with local or foreign capital, no matter if they are of sole proprietorship or are joint ventures – will get equal treatment and an environment of fair competition,” the Premier said.
- Shanghai’s foreign direct investment (FDI) edged up 0.4% from a year earlier to USD1.32 billion in February, decelerating from an increase of 3.8% a month earlier. Contracted foreign investment in the month expanded 11% to USD5.3 billion, indicating more funds are in the pipeline. Among the contracted investment, the service sector attracted USD5.14 billion, up 28.9% on an annual basis. There were only three foreign investment projects in the manufacturing sector in February, but their combined value was USD170 million, jumping 44.2% year-on-year.
Foreign trade
- China and Nepal are set to jointly study the feasibility of a free trade agreement (FTA). Nepal could become a frontier market for China to enter South Asia and may encourage other countries in the region to consider FTAs with China. The FTA with Nepal would require interconnection between the two countries’ infrastructures, building of cross-border economic zones and agreements on transit trade. China also agreed to consider building a railway to Nepal.
- China is concerned about the tougher stance by the European Commission toward cheap steel imports from China, a Ministry of Commerce (MOFCOM) official said. The Commission said it may speed up procedures by two months, bringing the European Union’s response time more in line with other countries. Such policies will hinder exporters in exercising their rights of defense.
- China has taken a further step to fight the legal ivory trade by banning imports of ivory and carved-ivory items acquired before July 1, 1975, when the Convention on International Trade in Endangered Species of Wild Fauna and Flora took effect. The ban, which took effect on March 20, will last until December 31, 2019, the State Forestry Administration, announced.
- Chongqing, and the coastal city of Zhoushan, in Zhejiang province, are favorites to be chosen as new free trade zones (FTZs) in the Yangtze River Economic Belt. China has four FTZs, all in coastal regions.
Health
- China has reported five yellow fever cases – all from people who were not vaccinated before leaving for areas with epidemics. The infected Chinese workers were returning from Angola and were detected in Beijing and Shanghai, where they had connecting flights to their hometowns. Lu Hongzhou, Director of the Shanghai Public Health Clinical Center, urged stricter border quarantines and checks to help cut cross-border transmissions.
IPR protection
- As intellectual property filings fell flat worldwide, China maintained robust growth in international applications for patents and trademarks, according to the World Intellectual Property Organization’s latest report. Nearly 30,000 international patent applications filed through the Patent Cooperation Treaty (PCT) came from China in 2015, a 16.8% rise from a year earlier and allowing the country to hold onto its No 3 world ranking for the third consecutive year, after the United States and Japan. Overall PCT filings worldwide increased 1.7% to 218,000 last year.
- China is emerging as an originator of patents in 3D printing, nanotechnology and robotics. Since 2015, Chinese applicants have contributed more than a quarter of first filings worldwide in 3D printing and robotics – the highest among all countries – and close to 15% of nanotechnology patent fillings worldwide, ranking third.
Macro-economy
- Companies in Shanghai may save CNY13.5 billion in operational costs this year after being allowed to pay less to the social security fund for their employees. Shanghai has decided to cut the proportion that companies pay to the social security fund by 2.5 percentage points to ease their operational costs as part of supply-side reforms. Companies need to pay the equivalent of 20% of their employees’ income to a pension fund account, down from 21%; and 10% to a medicare fund, down from 11%. The rate of payment to the unemployment fund was reduced to 1% from 1.5%.
- The strongest Chinese brands are worth USD525.6 billion after their combined value rose 13% in the past year, with Tencent being the country’s most valuable brand whose value surged 24% to USD82.1 billion. Technology companies contributed a combined 27% of the total value of the top-100 brands, up from 16% two years ago, according to market research company Millward Brown. It was the first time that privately-held companies’ combined brand value surpassed that of state-owned companies, evidence of China embracing a market economy.
- The Development of Emerging Economies Annual Report 2016, released at the annual Boao Forum for Asia in Hainan province, said that the economic growth of 11 major emerging economies (E11) slowed in 2015, but less than developed economies. The 11 economies, which are also members of the G20, are Argentina, Brazil, China, India, Indonesia, South Korea, Mexico, Russia, Saudi Arabia, South Africa and Turkey. In 2015, the average growth rate of both the G7 and the EU was 1.9%, far below the E11’s 4.5%.
- China’s ongoing transition to “new normal” with slower but better growth means new investment opportunities from e-commerce to high-end manufacturing, according to participants to the Boao Forum for Asia. “Aggravated overcapacity would not be an issue if investment was channeled to sectors with capacity shortages,” said Justin Lin, a former World Bank Chief Economist. China is implementing supply-side structural reforms, with a focus on reducing overcapacity, destocking, deleveraging, reducing costs and shoring up weak growth areas. “Investing in industrial upgrading and technological innovation would be an entry route for businesses seeking opportunities in China,” he said.
- Hong Kong signed an agreement covering 92 areas of cooperation with Guangdong, ranging from the “One Belt, One Road” initiative, and innovation and technology, to financial and professional services and environmental protection. The three free-trade zones in Guangdong province – Qianhai, Nansha and Hengqin – are expected to play a greater role in cooperation between the southern province and Hong Kong in the coming years.
- The sheer scale of the Chinese market gives the country an edge to develop smart manufacturing, David Cruickshank, Chairman of Deloitte Touche Tohmatsu said. The Chinese government is pressing ahead with its “Made in China 2025” initiative to encourage companies to apply automation to build more intelligent manufacturing solutions that rely less on labor. It also encourages customization of goods, instead of focusing on mass production. China’s output of smart manufacturing was about CNY1 trillion in 2015 and is expected to exceed CNY3 trillion by 2020, with an average annual growth of 25%.
- China’s state-owned enterprises (SOEs) saw profits slump 14.2% year-on-year in January and February to CNY222.6 billion. The SOEs administered by local governments were the worst hit, with their profits plunging 40.9% from a year earlier. Centrally-administered SOEs saw profits slip 8.2% year-on-year. The total business revenue of the SOEs dropped 5.8% year-on-year to CNY6.2 trillion in the first two months. At the end of February, the combined debts of the SOEs swelled by 17.9% to CNY79.7 trillion, while their total assets expanded CNY15.6 to CNY120.3 trillion.
Mergers & acquisitions
- Marriott won over Starwood with a sweetened bid worth over USD14.4 billion just days after Anbang appeared to win the contest. The buyout, which may still be contested by Anbang, would create the world’s biggest hotel company. Marriott has more than 4,400 properties in 87 countries and regions, under brands such as Ritz-Carlton, Residence Inn and Marriott. Starwood has nearly 1,300 properties in about 100 countries. Anbang, or any other suitor, has until April 8 to top Marriott’s bid.
- China’s Sparkle Roll Group is in talks to acquire Bang & Olufsen, the Danish maker of high-end hi-fi systems, but several issues remain to be resolved. The price needs to be “reasonable” and reflect “the significant uncertainty and the investments needed to ensure further development and growth”, the company said, without disclosing pricing or payment details. In 2012, Bang & Olufsen started a partnership with Sparkle Roll to boost sales in China. The company also announced it would outsource the production of televisions to LG Electronics.
- The value of M&A deals involving China reached a record high of USD189.7 billion so far this year – a 31.5% growth from the same period of last year, according to Thomson Reuters. Outbound acquisitions by Chinese companies reached an all-time high, with transactions worth USD97.8 billion, up 237.8% year-on-year. In the U.S., China’s outbound M&As reached USD38.6 billion, at least four times that in the full year of 2015. Domestic M&As in China fell 8% in deal value to USD84.7 billion.
- Shanghai-listed ENN Ecological Holdings, a subsidiary of the ENN Group, has agreed to buy a 11.7% stake in Australian oil and gas producer Santos for USD750 million. ENN Group will become Santos’ largest single shareholder. The stake was purchased from the China-based private equity group Hony Capital. “This introduction to the upstream oil and gas sector takes us a step forward in our aim to generate value across the entire natural gas value chain,” ENN Group Chairman Wang Yusuo said.
Real estate
- Fosun International is set to close the acquisition of the Thomas More Square complex in London for around GBP300 million. The majority of its tenants since 2014 have been Rupert Murdoch’s News Corp businesses. Once finalized, the deal will become Fosun’s biggest real estate transaction in Europe. Fosun had already bought London’s Lloyds Chambers in 2013 and Milan’s historic Palazzo Broggi in 2015.
- Chinese authorities are to crack down on the widespread use of foreign names for buildings and residential compounds. Li Liguo, Minister of Civil Affairs, said the use of foreign names was undermining traditional Chinese culture. Examples of foreign names include Palm Springs and Manhattan Garden. The Ministry introduced a set of guidelines forbidding the use of westernized names for residential areas or buildings in China in 1996, but the rules have not been properly enforced.
Retail
- Alibaba aims to double its annual online retail transactions within five years by cooperating with online and offline business partners and vendors. The gross merchandise volume (GMV) on its retail sites Taobao and Tmall for the current fiscal year, which started on April 1, 2015, already surpassed CNY3 trillion, an annual rise of around 23%.
- The noodle business in China experienced tough times last year, with two leading companies reporting double digit profit declines. Tingyi, the maker of the popular Master Kong instant noodle brand, reported its net profit last year fell 36% to USD256 million from USD400 million in 2014. Annual turnover dropped 11.09% to USD9.1 billion last year. Noodle retailer Ajisen China reported that its net profit last year fell 17.7% to HKD226.9 million.
Science & technology
- Professor Peter Salovey, President of Yale University in the United States, has led a delegation to visit Peking University where he gave a speech to students. Yale signed a memorandum of understanding (MOU), allowing medical students from Peking University to participate in clinical training at Yale. Lin Jianhua, President of Peking University, said the arrival of the delegation from Yale was the highlight of the ongoing Peking University-Yale University Exchange Week.
- China’s first orbiting space laboratory has been scrapped and will burn up in the coming months as it is gradually allowed to descend into the earth’s atmosphere. The Tiangong-1 laboratory was put into orbit in 2011, but was only designed to operate for two years and had exceeded its lifespan, the China Manned Space Engineering Office said in a statement. “Its functioning failed recently, its data service has been terminated officially,” the statement added. It successor will be launched in the third quarter of this year. An unmanned and two manned Shenzhou spacecrafts have docked with the spacelab and it received six visitors, including Liu Yang and Wang Yaping, China’s first female astronauts.
- Companies remain a top employment choice among Chinese students returning from overseas study, while those wanting to start their own businesses are a small minority, according to the “2015 Blue Book on the Employment of Chinese Students Returning from Study Overseas”. Two-thirds of the Chinese students polled prefer to work at companies after coming back – 29% hope to enter foreign-invested corporations, 20% prefer state-owned enterprises (SOEs) and 17% favor private ones. Only 3.3% want to become entrepreneurs.
Stock markets
- Confronted with a plunge in the stock market last year, the People’s Bank of China (PBOC) contacted the U.S. Federal Reserve (FED), asking it to share its play book for dealing with Wall Street’s “Black Monday” crash of 1987. The request came in a July 27 e-mail from Song Xiangyan, the PBOC’s New York-based Chief Representative for the Americas. The FED quickly provided a bunch of publicly available documents, but it is unclear if they played a role in shaping Beijing’s actions.
- The CSRC said that IPO applications by seven companies had passed its review. The total capital to be raised by the seven firms is expected to be no more than CNY2.6 billion. Four of the seven firms will be listed on the Shanghai Stock Exchange, one on the small and medium enterprise board of the Shenzhen bourse, and two on the Nasdaq-style ChiNext board. The firms include Flyco Group Co, Zhejiang Lang Di Group and Shandong Swan Cotton Industrial Machinery Co.
Travel
- Chinese tourists splashed out a record USD215 billion on their holidays abroad last year. The figure was 53% higher than the 2014 total, adding greatly to the growth in global spending on travel and tourism, according to a World Travel and Tourism Council report. The report also put China ahead of the United States and other developed countries as the top global source of tourists, in both number of trips made and money spent on overseas trips. Spending by foreign visitors in China increased just 3% last year.
- More international and local cruise companies have been expanding restaurants and shopping facilities on board ships to cater to the demands of Chinese tourists. They have closed bar and spa facilities, which did not interest Chinese travelers. “On average, every Chinese tourist spends USD200 on a cruise trip, with most of the money spent on meals and shopping,” said Liu Jianbin, Cruise Division Manager at China’s leading travel website Tuniu. The Beijing-based China Cruise & Yacht Industry Association says there were about 2.5 million Chinese tourists taking cruises last year – an increase of 44% compared with the year before.
- China has stepped up security measures at its airports in response to the attacks in Brussels, the Civil Aviation Administration of China (CAAC) said. The latest measures were intended to “inspect every passenger entering the airport.” At Beijing Capital Airport, three officers were stationed at a terminal entrance testing bags under a sign that read: “Security inspection for anti-explosive. Please cooperate,” although not all passengers were checked.
VIP visits
- Chinese President Xi Jinping is visiting the Czech Republic. Ahead of Xi’s arrival, Vojtech Filip, Vice Chairman of the Czech parliament, said China would jointly fund the construction of the international Danube-Oder-Elbe Canal. The two sides will invest around €1 billion in phase one. The proposed canal will be a Y-shaped water corridor from Poland and the Czech Republic to Slovakia and Austria.
One-line news
By : fcccadmin
- President Xi Jinping has asked all institutions in China to hire professional legal representatives and advisers, encouraging all political parties, government departments, citizens’ organizations and state-owned institutions to have public-sector lawyers or corporate legal counsels. The initiative will help develop the rule of law in China, Xi said.
- Jiangxi Copper plans to raise up to HKD8.4 billion from its parent and Chinese private investors to expand two mines and bolster working capital, after reporting a 76% profit drop to CNY689.6 million for last year due to weak metal prices. The average three-month futures price of copper fell 13% on the London Metals Exchange last year from 2014.
- Huaneng Power International, China’s largest power producer, said its 2015 net profit rose 26.9% to CNY13.65 billion from 2014, helped by a 13.7% fall in each ton of coal used. Revenue edged up 2.8% to CNY128.9 billion, with an 8.9% increase in output partially offset a 2.6% decrease in average power prices.
- Chen Yingchun, former Deputy Mayor of Shenzhen for 11 years, has died after falling from a building.
Quote of the week
By : fcccadmin
“You cannot talk people into believing you. You have to convince people by your performance.”
Jin Liqun, President of the Asian Infrastructure Investment Bank (AIIB), quoted in the Shanghai Daily, March 26, 2016.
NPC and CPPCC sessions end in Beijing
Mar-21-2016 By : fcccadmin
The annual session of the National People’s Congress (NPC) concluded on March 16 with the Delegates approving Premier Li Keqiang’s Report on the Work of the Government. After making dozens of people-oriented changes, the NPC also approved the blueprint for the13th Five Year Plan (2016-20) with 2,778 “yes” votes, or 97% of the total. NPC and CPPCC Delegates made 57 revisions to the draft plan during nearly two weeks of deliberations. The session also adopted China’s first Charity Law, which will come into effect in September. The Fourth Session of the 12th NPC voted on nine draft resolutions, including the annual government work report, the 13th Five-Year Plan and the judicial work reports.
The annual government report by Premier Li Keqiang received only 27 “no” votes from the 2,857 Delegates. The 13th five-year plan received 53 objections, down by about 10% on vetoes for the previous five year plan in 2011. The NPC gave the annual work reports of the China’s Supreme People’s Court (SPC) and Supreme People’s Procuratorate (SPP) its highest support since 2000. The SPC work report received 2,600 votes, or 91.1%, with 208 votes against and 46 abstentions, while the SPP work report received 2,560 votes, or 89.8%, with 239 against and 52 abstentions. In 2009, the SPC and SPP work reports were supported by only 75.3% and 76.8% of the NPC Delegates, respectively.
Delegates to the China People’s Political Consultative Congress (CPPCC) session in Beijing finished their meeting on March 14, having submitted more than 5,375 proposals to the central government, 42% of which focused on economic development. The proposals included proceeding with supply-side economic reform, encouraging entrepreneurship and innovation, reducing the tax burden on enterprises, improving the quality of consumer goods and the service industry, speeding up the implementation of the Free Trade Area strategy, and the development of e-commerce in rural areas. 1,972 Members of the CPPCC National Committee (89.1% of the total) submitted proposals. CPPCC Chairman Yu Zhengsheng said all Members of the CPPCC should fulfill their duties by focusing on economic development during the 13th Five Year Plan (2016-20) period.
Premier Li Keqiang holds post-NPC press conference
By : fcccadmin
Chinese Premier Li Keqiang met hundreds of domestic and foreign journalists at the Great Hall of the People in Beijing. The Premier said that is pushing ahead supply-side reforms, such as streamlining regulatory procedures and cutting taxes, to free up market vitality. While China’s economy was presently facing difficulties, hopes were bigger than the difficulties. China had the policy reserves to handle headwinds from the global economic slowdown. “We are full of confidence in the long-term good prospects of the Chinese economy,” Li said. He added that the central government would try its best to solve issues concerning people’s livelihoods, such as pension payments and health insurance. “There will be absolutely no problem for the government to meet the public’s pension payment needs,” Li said. The national pension insurance reserve recorded a surplus of CNY340 billion last year, taking the cumulative figure to CNY3.4 trillion since it was established in 1998. said China would try to avoid mass lay-offs in its economic restructuring process. “We will press ahead to reduce capacity, but we must ensure that the rice bowls of workers are still there, or we must give them new rice bowls,” he said. The central government had already set aside CNY100 billion to help laid-off workers, and Beijing was ready to boost the fund if necessary, he said.
Foreign journalists were mainly interested whether the Chinese economy would face a hard landing. Premier Li said new forces would replace old forces to keep on powering the economy and avoid a hard landing. Li said the required reserve ratio (RRR) and interest rate cuts were not quantitative easing measures. China took measures last year to manage abnormal volatility in the stock market, and the measures had achieved their desired effects. Still, the Premier said, China needed to improve its financial regulatory system. Premier Li expressed confidence over Beijing’s ties with Washington, regardless of the outcome of the U.S. presidential election later this year. China became the U.S.s’ top trading partner, with two-way trade reaching USD560 billion last year. Li said both countries need to follow the principles of equality and mutual benefit, such as in negotiations on a bilateral investment treaty.
About 24 million people took part in a poll organized by China Daily and online news portal Toutiao.com asking them to choose three out of 10 questions they would like to ask the Premier. The top question was: “How to achieve national portability of medical insurance plans”. Premier Li said the government “is resolved” to achieve national portability of health insurance plans “at a faster pace” and that provincial-level portability will be achieved within the year. At present, patients face difficulties to have their medical expenses reimbursed outside their hometown as listed in their household registration. Hundreds of millions of migrants are affected by the policy.
Some issues were not mentioned at all during the press conference, including environmental pollution, soaring property prices, the reform of China’s state-owned enterprises (SOEs), ties with Europe, and ethnic tensions.
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