Beijing says China is an open economy, but the IMF differs
Aug-28-2018 By : fcccadmin
The International Monetary Fund (IMF) has urged China to adopt further steps to open its market, disagreeing with Beijing’s assessment of the country’s progress in reforming state-owned enterprises (SOEs), reducing trade and investment restrictions, and its efforts to reduce government debt. “We are looking at China and comparing it with other G20 countries in terms of service trade and investment, the Chinese economy is still very restrictive,” Alfred Schipke, IMF’s Chief China Representative, said at a symposium in Beijing. Fostering further openness was one of the policy recommendations made by the Washington-based fund after its annual economic consultations with China in May. In its report, the IMF urged China to de-emphasize its annual growth target, enhance its controls on credit growth and modernize its policy framework.
International calls for further reform have grown louder, with Beijing’s restrictions on market access raised at the World Trade Organization (WTO) and cited as the justification for the unprecedented trade war with the United States. The IMF findings were based on available data from the Organization for Economic Cooperation and Development (OECD), the World Bank and the International Finance Corporation (IFC). Beijing, however, said the IMF should not have used OECD indicators to measure China’s openness because it is not a member of the Paris-based organization. Instead, it argued, the country’s trade and investment regime is “more open” than the IMF’s assessment and has already complied with all its WTO commitments. Chinese authorities have mounted a vigorous defense of their market openness as this year marks the 40th anniversary of the start of the country’s economic reforms.
The government announced earlier this year that it would allow foreign control of financial and auto joint ventures, increase access to its capital market and narrow the list of sectors in which foreign investment is restricted. JP Morgan has expressed interest in starting a financial joint venture in China, while the government will allow Tesla to have full ownership of its planned auto factory in Shanghai. Both the U.S. and European Union have refused to recognize China as a market economy, a move that would limit their ability to limit Chinese imports, the South China Morning Post reports.
Geely now third-largest carmaker in China
By : fcccadmin
Geely Automobile Holdings has become the third-largest carmaker in China, trailing only Volkswagen and General Motors in the world’s largest vehicle market. The ranking came after the Hong Kong-listed carmaker delivered 766,630 vehicles in the first half of the year, beating Nissan Motor’s 720,447. Nissan has been the best-selling Japanese brand in China in recent years. Geely’s market share increased to 6.4% in the first half of this year, from 5% in 2017. Reporting a 54% jump in net income to CNY6.67 billion for the six months through June, the carmaker owned by billionaire Li Shufu said in a filing that sales this year will beat its target of 1.58 million units. Geely sold 1.25 million vehicles in 2017, up 63% year-on-year.
Geely is among Chinese carmakers seeking to play a more important role in the auto industry. In a strategy document released in 2015, the company said electric cars, hybrids and plug-in hybrids will account for 90% of its vehicle sales by 2020. Geely has been expanding, offering vehicles such as those under the Lynk & Co brand jointly developed with Volvo Cars, which Li’s Zhejiang Geely Holding Group Co bought in 2010. Geely has been far outpacing the broader market by posting a 43% increase in its sales in the first seven months this year. Geely has also been expanding overseas. After the purchase of Volvo Cars from Ford Motor Co in 2010, the carmaker snapped up stakes in the iconic British sports-car maker Lotus Cars and Malaysia’s Proton Holdings last year. In February, Geely took a 9.7% stake in Daimler, emerging as the largest shareholder in the maker of Mercedes-Benz cars.
The carmaker has multiple production bases outside China. It is also planning to sell its Lynk & Co cars in Europe soon, Geely Automobile Holdings CEO Gui Shengyue told reporters in Hong Kong. “We have a real product to go global now,” he added, as reported by the China Daily.
China to invest heavily in semiconductor development
By : fcccadmin
China must invest heavily to develop its own advanced chips to close the gap with the United States, after the forced shutdown of ZTE Corp earlier this year exposed the country’s weakness in a core technology, according to Ding Wenwu, President of the National Integrated Circuit Industry Investment Fund, also known as the Big Fund. “Everyone is aware that the global situation is complicated, we must face the situation squarely,” he said in a speech at the Smart Expo conference in Chongqing. “The incident in the first half has made the average man-in-the-street understand about chips. Previously, people only knew about mobile handsets.”
Ding’s remarks followed a statement made by President Xi Jinping to the same conference, where he broadly reiterated China’s efforts to keep pace and collaborate with information technology initiatives around the world. “China pays serious attention to innovative development,” said Xi in the statement read at the event by Vice Premier Han Zheng. “The country will speed up the development of both its digital industry and the digitalization of industries. China wants to actively participate and cooperate in global digital developments.” Developing a strong domestic semi-conductor supply chain would enable the country to become more competitive with chip industry leader the U.S.
Semiconductors are at the center of a technology gap that China wants to close. No mainland Chinese semiconductor company has so far been able to crack the world’s top 20 ranking in terms of chip sales, which is dominated by companies from the U.S., Japan, South Korea and western Europe. Three Taiwanese firms – Taiwan Semiconductor Manufacturing Co, MediaTek and United Microelectronics Corp – were among those in the top 20, according to data from IC Insights. The Big Fund was set up in 2014 by China’s central government to lead the national effort to catch up in the global semiconductor industry by raising funds and backing semiconductor start-ups and research and development (R&D) to help China become self-sufficient in chips. China makes more than 90% of the world’s smartphones, 65% of personal computers and 67% of smart televisions, according to Bernstein Research, but it has had to buy much of the chips that go into these devices from abroad. Annual chip imports by China have risen to more than USD200 billion since 2013 and reached USD260 billion last year, the South China Morning Post reports.
U.S.-China trade war worries shippers and container makers
By : fcccadmin
Singamas Container Holdings, the world’s second-largest maker of shipping containers, said its clients were turning cautious as a trade war escalated between the U.S. and China, and that the second half of the year could become increasingly challenging as the rhetoric heats up. Chairman and Chief Executive Teo Siong Seng told a briefing on the company’s first-half results that rising tensions between the world’s two biggest economies had not yet cut into shipping volumes or hurt the company’s business, but “people are watching it very carefully”.
“As long as the U.S. demand is there, the supply chain will be prolonged,” he said, adding that some shipping could be shifted from China to other countries in Southeast Asia, such as Vietnam, Cambodia or Myanmar. “If anything, the demand for boxes will go up,” he said. However he noted that while container orders were full up to September 2018, buyers had become more cautious when placing orders because of concerns over the trade war as well as rising interest rates and currency fluctuations. The company, a subsidiary of Singapore-based transport and logistics company Pacific International Lines, reported a loss of USD2.1 million in the first half of the year, compared with a profit of USD16.6 million in the first six months of 2017. The rising cost of materials sent its manufacturing segment, which accounted for more than 98% of its revenue, to a pre-tax loss in the first half.
Singamas warned in July that it would report a first-half loss because of an increase in the costs of raw materials, including corten steel, used to make its containers, and because of a rapid appreciation of the yuan against the dollar in the first few months of this year. The company has manufacturing facilities throughout mainland China. The yuan has since lost 8% of its value against the dollar since a peak in March, which Singamas said has helped moderate its costs recently. Revenue rose 63% to USD969.2 million in the first six months, compared with USD545 million in the first half of 2017. Shipping containers have been removed by the U.S. from its list of proposed tariffs, the South China Morning Post reports. A.P. Moller-Maersk, the world’s largest shipping company, warned that global trade could be reduced by 0.1% to 0.3% because of the trade tensions between the U.S. and China. But the impact could be much greater on the U.S., with imports from China reduced by up to 4% and U.S. exports to China cut by as much as 6%.
HNA Chairman’s family tightens grip on company’s management
By : fcccadmin
HNA Group Chairman Chen Feng promoted two family members this month, tightening his family’s control over the conglomerate after the sudden death of Co-Chairman Wang Jian last month. He promoted his son Daniel Chen to Deputy Chief Executive Officer of the group, responsible for HNA’s international business, while his nephew Dennis Chen became Chief Investment Officer (CIO). The management changes come as Chen seeks to persuade banks, investors and the government to restore their confidence in a group that is saddled with one of the biggest piles of debt in corporate China – more than USD85 billion as of the end of December. The group is so indebted that its interest expenses surged to a record CNY32.1 billion in 2017, exceeding its earnings and topping all other non-financial companies in Asia. Deceased Co-Chairman Wang Jian was the mastermind behind the purchase of many of the assets that are now being sold. Adam Tan remains CEO of the group.
HNA was at the forefront of an unprecedented shopping spree by acquisition-hungry firms seeking out high-profile assets around the world before the Chinese government started reining them in last year amid concerns about unsustainable corporate debt levels. The company also caught the attention of regulators in the U.S. and Europe over questions about its ownership.
Daniel Chen is also Vice General Secretary at the Cihang charity, which is a big shareholder of HNA Group, and President of investment firm Pacific American Investment. He received a Bachelor of Science in industrial engineering from the University of Washington and completed Harvard Business School’s China Business Leader Executive Training Program.
Dennis Chen, has more than 11 years of management experience and has an undergraduate degree in economics from the University of Massachusetts. He also held various positions at HNA Group International, a unit formed in Hong Kong in 2010 to be the Chinese conglomerate’s offshore investment and foreign capital management arm.
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