An analysis by international accounting firm PricewaterhouseCoopers (PwC) of 30 A and H-share listed banks found that the Chinese banking sector was in urgent need of new sources of growth – as the sector confronts slower profit growth, shrinking interest margins and rising non-performing loans (NPLs). PwC found that as of June 30, the overall loans balance for the 29 listed banks that disclosed NPL information increased 10.06% from the end of 2015 to CNY1.13 trillion. During the same period, the NPL ratio went up four basis points to 1.66%. On top of this, the proportion of special mention loans, potentially weak loans presenting unwarranted credit risks, rose 18 basis points to 3.57%. “The NPL balance grew rapidly despite the fact that the listed banks stepped up write-offs, packaging and selling of NPLs in the first half of 2016. The situation will continue to worsen in the second half due to shrinking net interest margins and large increases in NPLs and special mention loans,” said Jimmy Leung, PwC China Financial Service Leader. “The pressure will be huge for Chinese banks to increase net profits because rising NPLs will lead to further growth in loan loss provisions,” Zhou Zhang, PwC China Financial Service Partner, said. “Even worse, interest margins will keep shrinking under the influence of benchmark interest rate cuts by the central bank.” In the first half of 2016, the overall net profits of 30 listed banks increased by 4.6% from the previous year to CNY774.45 billion, the China Daily reports.

China’s private companies have taken the lead over state-owned enterprises (SOEs) in the country’s surging outbound investment for the first time. Private enterprises are leading in both the amount invested and the number of mergers and acquisitions (M&As) abroad. The change has taken place as outbound direct investment (ODI) surpassed foreign direct investment (FDI) last year. Private companies account for 65.3% of total ODI, which amounted to USD145.7 billion by the end of last year, according to the 2015 Statistical Bulletin of China’s Outward Foreign Direct Investment. Meanwhile, ODI surged by more than 18% last year, exceeding the USD135.6 billion in FDI, said a report jointly issued by the Ministry of Commerce (MOFCOM), the National Bureau of Statistics (NBS) and the State Administration of Foreign Exchange (SAFE). “The private companies have really become an important force in driving the growth of outbound investment,” said Zhang Xiangchen, Deputy International Trade Representative at the Ministry of Commerce. Private deals account for 75.6% of the total amount of overseas acquisitions, Zhang added. Chinese aviation and shipping conglomerate HNA Group bought total foreign assets worth at least USD17 billion last year. Even though SOEs still have a competitive edge over their private peers in such highly regulated industries as electricity, energy and mining, that has not dimmed the enthusiasm of private companies for overseas growth, the China Daily reports.

China’s coal output fell 10.2% year-on-year to 2.18 billion tons during the first eight months of the year. The fall eased from the previous three months, but it still marked the fifth consecutive month of declines of over 10%. Coal imports rose 12.4% from a year earlier to 1.56 trillion tons during the period on surging demand. In August alone, coal imports surged 52.1% year-on-year to 265.9 billion tons. Crude oil output fell 9.9% year-on-year in August, the biggest monthly drop since 2003. Imports have trended upward after private refineries were given permission to import crude last year. In the first eight months, China’s crude oil imports rose 13.5% compared with the same period of last year, while refined oil output gained 2.1%. China’s oil giants plan to reduce oil output due to flagging prices. Sinopec, the largest oil refiner in China, and PetroChina, the largest oil and gas producer, have both lowered their oil production targets for 2016.

China’s foreign trade remains under considerable pressure as uncertainties mount, the Ministry of Commerce (MOFCOM) said, describing the current situation as “complicated and severe.” Although August trade data suggests an improving trend, China should not be “blindly optimistic” on its outlook, and further measures need to be taken to stabilize growth, MOFCOM Spokesman Shen Danyang said. China’s foreign trade improved markedly in August due to stronger domestic and external demand. Yuan-denominated exports rose 5.9% year-on-year, while imports increased 10.8%. But in the first eight months of the year, foreign trade was down 1.8% from a year earlier, with exports dropping 1% and imports falling 2.9%. The weak performance comes against a backdrop of flagging trade growth worldwide. Last year was the fourth-consecutive year that global trade growth was below GDP growth, according to the World Trade Organization (WTO). Protectionism is also on the rise. Shen said that in the first eight months of the year, China was subject to 85 trade remedy probes, an increase of 49% year-on-year. The probes involved trade of USD10.32 billion, an increase of 94% year-on-year. Criticism that China’s investment environment for foreign businesses had worsened was rejected by the Ministry of Commerce as biased. China’s foreign service trade amounted to CNY3.01 trillion during the first seven months of the year, up 24.6% year-on-year. The service trade accounted for 18.2% of the country’s total imports and exports in the January-July period, 2.8 percentage points higher than in 2015. Exports of telecommunications, computing and information services grew by 20.8% to CNY103.96 billion during the first seven months. China’s foreign service trade volume grew from USD362.4 billion in 2011 to USD713 billion in 2015, the Shanghai Daily reports.

A U.S. appeals court threw out a USD147.8 million price-fixing verdict against two Chinese companies that were accused of conspiring to raise prices and lower supply of vitamin C sold to U.S. purchasers. The 2nd U.S. Circuit Court of Appeals in New York said the case should not have gone to trial after China, in a “historic act,” formally advised that its laws required the vitamin C makers to violate the Sherman Act, a U.S. anti-trust law. Circuit Judge Peter Hall said the Brooklyn judge who presided over the March 2013 jury verdict should have deferred to China’s interpretation of its own laws, regardless of the country’s motives. Hall said principles of international comity, and the “stark differences” between the U.S. and Chinese legal and economic regulatory schemes, meant the judge should not have asserted jurisdiction. “Recognizing China’s strong interest in its protectionist economic policies and given the direct conflict between Chinese policy and our antitrust laws, we conclude that China’s interests outweigh whatever anti-trust enforcement interests the United States may have in this case,” Hall wrote.