Short news
March 6, 2017 Category Short news, Weekly
NPC and CPPCC sessions
- Li Shufu, Chairman of Chinese carmaker Geely Automobile, has urged Beijing to allow more companies to be involved in high-definition mapping, which he sees as the key barrier that may prevent the country from winning the global autonomous driving race. He made the suggestion in his capacity as a member of the National Committee of the CPPCC.
- China would “never” launch a currency war to devalue the yuan to boost exports, Yi Gang, Vice Governor of the People’s Bank of China (PBOC), said on the sidelines of the CPPCC meeting. “Our overall direction is to keep the exchange rate basically stable within a reasonable range,” Yi said. He added that there was no need at present for the PBOC to follow the U.S. Federal Reserve in tightening monetary policy by raising interest rates.
- China’s government has a selection of policy tools to respond to any potentially hostile trade or economic policies by U.S. President Donald Trump, Economist Li Daokui told the South China Morning Post outside the meeting of the National People’s Congress. “What’s important is not what Trump says, but what his team says. The government has regular communications” with officials of the Trump administration, he added.
- China has pledged to simplify the value-added tax (VAT) regime this year to level the playing field and shore up the real economy. Premier Li Keqiang said the government will trim the four-tier VAT regime to three levels. Li promised to cut the tax burden by CNY350 billion this year, and slash administrative fees by CNY200 billion. While tax revenues rose 4.3% to CNY13 trillion in 2016, revenue growth has declined annually since 2010.
- Beijing will press ahead with a controversial plan for greater integration between Hong Kong and the mainland, Chinese Premier Li Keqiang announced. The Guangdong-Hong Kong-Macao Greater Bay Area concept was mentioned for the first time in the Premier’s annual report. The concept dates back to 2011 when it was proposed in a study called “The Action Plan for the Bay Area of the Pearl River Estuary”.
Automotive
- Volkswagen’s luxury division Audi is recalling 681,000 cars in China to fix coolant pumps that could overheat. The measure is part of a global recall affecting around 1.1 million units of the A4, A5, Q5, A6 and A8 hybrid models, whose engine control units will require software updates to resolve the problem.
Finance
- Zhou Xiaochuan, 69, Governor of the People’s Bank of China (PBOC), looks likely to remain in the post for a while as the central government needs his experience and expertise more than ever to navigate uncharted financial waters, analysts said. He was appointed to lead the PBOC in late 2002. U.S. President Donald Trump’s threat to label China a currency manipulator has made it all the more important for Beijing to have a trusted voice that can be heard in Washington. He is already the longest-serving central bank chief in the world’s top 20 economies.
- President Xi Jinping said China must “unswervingly” crack down on financial irregularities and illegal behavior, while improving shortcomings in market supervision. Such reforms must be specific and according to international standards, he added. The country’s top leaders have criticized the flow of speculative funds into the property market, which recorded the fastest price gains last year since 2011, fueling a dangerous price bubble and inflating China’s debt load.
- The National Development and Reform Commission (NDRC) has called for accelerated research on new tax regulations for the rapidly growing sharing economy sector. In 2016, the transaction volume of China’s sharing economy reached CNY3.45 trillion, marking a 103% year-on-year growth. Employees working on sharing economy platforms numbered 5.85 million, up 850,000 year-on-year. Among them, the number of service providers increased by 10 million to 60 million.
- Tibet and Xinjiang “have virtually become China’s version of the British Virgin Islands,” according to Shen Meng, Executive Director of boutique investment bank Chanson & Co. in Beijing. Thanks to a package of tax breaks, companies registered in Tibet are subject to a corporate tax rate of 15%, well below the national standard rate of 25%. The overall tax rate can drop to as low as 9% as a result of other incentives granted by local governments. The most favorable territory in terms of preferential taxes is Khorgos, a border city in Xinjiang.
- Bonds issued in China last year totaled CNY36.1 trillion, the People’s Bank of China (PBOC) said, a 54.2% rise on 2015. China’s debt-to-GDP ratio rose to 277% at the end of 2016 from 254% the previous year, with an increasing share of new credit being used to pay debt servicing costs.
- Dalian Wanda Group has signed a strategic partnership with China UnionPay. Wanda Group and its partner merchants plan to gradually accept UnionPay QuickPass. Meanwhile, they will also jointly expand customer service channels, carry out joint marketing campaigns, and explore offering value-added services to consumers both at home and abroad.
- The Dalian Commodity Exchange (DCE) is making preparations for the participation of foreign investors in iron ore futures trading, said Chairman Li Zhengqiang, as he addressed the two-day 2017 China Iron Ore Conference. The DCE launched China’s first iron ore futures with physical delivery in October 2013.
Foreign investment
- China will continue to be the world’s most attractive destination for global investment this year, with new materials, new technologies and the healthcare industries being the new focus, according to a report by the China Center for International Economic Exchanges (CCIEE). The growth rate of China’s foreign direct investment (FDI) was expected to reach over 15% in 2017, up from 4.1% growth in 2016 to USD118 billion. Data also showed foreign-funded businesses, which account for less than 3% of the number of companies operating in China, generated nearly half of the nation’s foreign trade and one-fifth of tax income over the past four years.
- Chinese companies looking to invest in Australian businesses should avoid bidding on “national icons” to prevent being rejected by the Australian government, Brian Wilson, Chairman of Australia’s Foreign Investment Review Board (FIRB) has said.
- Atlas Copco has opened two joint ventures with Chinese drilling equipment maker Hongwuhuan Group to produce and sell drilling rigs in China. One of the joint ventures is based in Quzhou, Zhejiang province, and will develop and produce surface drilling rigs and rock drilling tools. The other one, based in Shanghai, will focus on sales. The companies expect to achieve CNY200 million in sales this year.
Foreign trade
- Eleven shipping companies will cut terminal handling costs in China, saving CNY3.5 billion a year for domestic trading companies, the National Development and Reform Commission (NDRC) said. Cosco has promised to cut the charge to CNY596 per TEU from CNY717, while Maersk will lower it to CNY566 per TEU from CNY681.
- The European Commission announced its final ruling to impose anti-dumping taxes on Chinese steel plate for a five-year period, with duties ranging between 65.1% and 73.7%. Wang Hejun, Director of the Ministry of Commerce’s Trade Remedy and Investigation Bureau, said China has grave doubts about the ruling and is highly concerned about the EU’s protectionist tendencies regarding Chinese steel products.
- China called on the European Union to put an end to punitive duties imposed on Chinese solar panels as soon as possible following a decision by the EU to extend the tax for 18 months with a gradual phase-out.China’s Ministry of Commerce regrets that the EU has extended the duties, disregarding the opposition of Chinese firms, although the extension period has been cut.
- Chinese telecom equipment maker ZTE Corp is nearing an agreement to plead guilty to U.S. criminal charges and pay hundreds of millions of dollars in penalties over allegations it violated the International Emergency Economic Powers Act that restricts the sale of U.S. technology to Iran. ZTE received U.S. sanctions relief till March 29. An agreement would cap a year of uncertainty for the Shenzhen-based company.
- Trading turnover at the East China Fair edged up 0.28% from last year while the number of overseas buyers rose slightly, the Shanghai Commission of Commerce said. The turnover at the five-day event, which closed in Shanghai on March 5, amounted to USD2.3 billion. The number of foreign professional visitors rose 3.2% from last year to 22,140. Japan remained the largest source of foreign buyers, accounting for 42% of the total.
IPR protection
- Businesses in Shanghai can now apply to register a trademark in the city at the first trademark registration window in Xuhui district. “It will significantly improve the efficiency of trademark application and save time and cost for businesses that want to register trademarks in Shanghai,” said Lin Haihan, Director of the Trademark Department at the Shanghai Administration for Industry and Commerce. The review of a trademark will take nine months. In the past, businesses in Shanghai had to visit the Beijing office of the SAIC for the trademark application process.
Macro-economy
- China’s coal consumption fell for the third straight year in 2016. It declined by 4.7% annually in 2016, and the share of coal in the country’s energy mix slipped to 62%, down 2 percentage points year-on-year, the National Bureau of Statistics (NBS) said. Coal production also fell, down 9% to 3.41 billion tons in 2016.
- Talks between Russian gas supplier Gazprom and Chinese officials on a deal that would channel gas from Siberia to northwest China have slowed because of uncertainty amid ongoing energy industry reform and weaker demand. Gazprom Deputy Chairman Andrey Kruglov told the South China Morning Post that China’s slowing economy was a factor in the gas-supply negotiations, which are considered a follow up to a 30-year gas export deal, worth USD400 billion, that was agreed in 2014.
- The official Purchasing Managers’ Index (PMI) rose to a three-month high of 51.6 in February, compared with the previous month’s 51.3. Analysts had predicted a reading of 51.1, pointing to a modest expansion as China’s industrial firms continued to benefit from higher sales prices and a recovery in demand fueled by a construction boom. The official non-manufacturing PMI rose 0.1 points to 54.6 last month.
- Chinese business executives are more optimistic about their companies’ revenue growth amid a global recovery and opportunities emerging from the Belt and Road initiative, PricewaterhouseCoopers (PwC) said. PwC found 33% of 182 business executives, covered by the China part of its global CEO survey, said they are “very confident” about the outlook of their companies’ income in the next 12 months, up from 25% last year. Meanwhile, 31% of China’s executives said they believe the global economy will improve over the next 12 months, higher than the global level of 29%.
Mergers & acquisitions
- Chinese chemical company Lianhetech has bought UK-based chemical manufacturer Fine Industries in a GBP103 million deal, providing Lianhetech with its first European base. Shenzhen-listed Lianhetech snapped up Fine Industries, based near Middlesbrough, from private equity firm NorthEdge Capital. Lianhetech is one of China’s leading contract chemical manufacturers. It has a market value of USD2 billion and operates seven chemical factories, two machinery plants and two research and development centers in China.
Real estate
- Chinese investors spent GBP805 million on property in London’s West End in January, around 80% of the amount spent by Chinese investors in that market during the whole of 2016. Four out of six deals involved Chinese buyers, according to Savills. A single massive transaction involving CC Land Holdings acquiring One Kingdom Street in Paddington accounted for GBP292 million. It was the second-biggest transaction ever by a Chinese investor in the West End market.
- The area of new homes sold in Shanghai, excluding government-subsidized affordable housing, fell 6.7% month-on-month to 363,000 square meters in February, Shanghai Centaline Property Consultants Co said. The volume, a 49.1% plunge from the same month a year ago, was also the lowest February data recorded in six years. Around 286,000 sq m of new houses were released locally last month, down 23% from January. New homes sold for an average CNY47,201 per sq m last month, little changed from January.
Retail
- China Mobile retained its ranking this year as the world’s third most valuable telecommunications brand, behind U.S. network operators AT&T and Verizon Communications. Hong Kong-listed China Mobile, the world’s largest wireless network operator, had a brand value of USD46.8 billion, according to the latest industry survey published by London-based consultancy Brand Finance. China Telecom was ranked No 11, with a brand value of USD17.6 billion, and China Unicom No 20, with a brand value of USD9.3 billion.
Stock markets
- Following the debut of the Shanghai-Hong Kong Stock Connect in 2014 and the Shenzhen-Hong Kong Stock Connect in 2016, financial regulators are exploring whether mutual market access can be extended to exchange traded funds (ETFs). But due to the difference between trading systems, the much-anticipated ETF Connect may not be rolled out this year, HKEX Chief Executive Charles Li said, adding that the Bond Connect was currently under discussion.
Travel
- IHG, one of the world’s largest hotel groups by room numbers, is banking on vibrant growth in China in the years ahead. “Last year saw a record number of signings in China, where 82 hotels, or 19,000 rooms, have been added to our pipeline,” said Kenneth Macpherson, CEO of IHG China. “The average revenue per available room climbed 2.2% year-on-year at our hotels in China, with even stronger growth of 3.9% for hotels in the Chinese mainland and 6.3% for those in first-tier cities,” he added. IHG operates 292 hotels spread over six brands in 100 Chinese cities at the end of last year.
- HNA Group has acquired a majority 82.5% stake in Hahn airport in western Germany, its owner, the state government of Rheinland-Pfalz, said. This is the first acquisition of an overseas airport by HNA, the parent of Hainan Airlines. Hahn is a former military base now mainly used by budget carrier Ryanair. A source familiar with the matter said the purchase price was around €15 million.
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