Express delivery

• Shanghai’s 23 million residents sent about 400 million pieces of express mail last year, or an average of about 17 per person, much more than the national average of 2.8. The express delivery sector employs more than 72,000 people in the city.

Ports & sea transport

• China Cosco posted a wider first-quarter loss due to higher fuel prices and lower fees for carrying containers and commodities. The net loss widened to CNY2.67 billion from CNY502 million a year earlier.
• Shanghai’s Yangshan Deep-water Port handled more than 7.5 million TEU of containers in the first quarter of this year, an increase of 3.5% from a year earlier. Growth slowed from a 12.3% rise recorded in the same quarter of last year.
• Chinese shipyards were set to take an increasing share of the burgeoning offshore vessel construction market of so-called floating, production, storage and offloading (FPSO) ships, shipping experts said. These vessels are either converted supertankers or specially built ships that are moored close to offshore oil and gas fields, and store and partly refine the hydrocarbons. Among the shipyards specializing in FPSOs are Shanghai Waigaoqiao Shipbuilding, Hudong-Zhonghua Shipbuilding and Dalian Shipbuilding Industry. Smaller shipyards such as Fujian Mawei Shipbuilding and Qingdao Qianjin Shipyard, which has built eight anchor handling vessels for Swire Pacific Offshore, concentrate on smaller offshore ships.
• The Shanghai Cultural Relics Management Commission has promised to protect the former site of the Commercial Shipping Club, the city’s earliest club for shipping bosses in the Qing Dynasty (1644-1911), which was built in 1715. The buildings stand alone in a wasteland on Huiguan street in Huangpu district as surrounding residential buildings were removed in 2010. The buildings are dilapidated and occupied by construction workers. Shanghai once had a total of 250 such clubs for industry alliances, but only 30 were left now. The shipping club is the oldest and most valuable among them.
• Companies can use bonded cargo in the Yangshan Free Trade Port Area as a pledge to get bank loans under a trial. Copper and aluminum are the first goods allowed to be used as collateral, but more products will be included in the future. Yangshan is the first port in China to implement the preferential policy.
• Chimbusco Pan Nation Petro-Chemical, which is owned by Cosco and PetroChina, failed in its bid to secure claims for unpaid bills totaling USD4.22 million for fuel supplied to the dry cargo ship Decurion and 10 other ships it said were controlled by Maruba SCA. But Hong Kong Admiralty Judge Anselmo Reyes ruled that while it was accepted there could be a claim against the Decurion, Maruba SCA did not control the other 10 vessels. As a result, Chimbusco was due only USD85,460 owed by Maruba SCA for fuel supplied to the 64,200 DWT Decurion.
• SITC International saw net profit slump 46.2% to USD13.5 million in the first quarter from a year earlier, despite an 18.7% rise in revenue to USD288.3 million, up from USD242.9 million in the first three months of 2011. It said revenue rose on the back of higher container volumes and average freight rates, but it was hit by increased ship chartering, fuel and cargo transport costs.

Finance

• Creditor banks are taking legal action to freeze the assets of Dalian Shide, a plastics-to-property conglomerate founded by a close business ally of disgraced former Chongqing Party Secretary Bo Xilai.  Shide’s founder Xu Ming was detained the day before Bo was sacked.
• Hong Kong Monetary Authority (HKMA) Chief Executive Norman Chan received a pay rise of 8% last year, giving him a total take-home sum of HKD9.04 million. Hong Kong lawmakers and analysts considered that to be too high. His base salary remained at HKD6 million, unchanged from the previous year.
• Yuan deposits from retail depositors fell for the fourth consecutive month in Hong Kong in March, but the Hong Kong Monetary Authority (HKMA) said professional investors were still big buyers of yuan certificates of deposit (CDs). Yuan deposits in the city fell by 2.1% month-on-month to CNY554.3 billion as of March 31, down 5.8% from  December last year, and 13.17% lower than the CNY627.3 billion peak recorded on November 30. The amount of outstanding yuan CDs stood at CNY118.1 billion on March 31, up from CNY73.1 billion in December of last year, offsetting the fall in retail deposits.
• Chinese banks may see a drop of 50% in profit growth this year as earnings generated from their net interest margin shrink and fee income growth slows, said May Yan, Director of Barclays Capital Asia in Beijing. “Last year commercial banks registered an average profit growth of somewhere between 33% to 34%. This year the rate will fall to a range of 11% to 15%,” she said. Average net fee growth among lenders slowed to 26% year-on-year in the first quarter, from 30% in the fourth quarter of last year.
• Temasek is selling USD2.4 billion worth of shares in Bank of China (BOC) and China Construction Bank (CCB). A banking analyst, who preferred not to be named, said Temasek was engaging in purely speculative profit taking. The sale would net the fund hundreds of millions of dollars in profit. Jeffrey Fang, Spokesman for Temasek in Singapore, said the fund was “rebalancing” its position after buying a USD2.3 billion stake in Industrial and Commercial Bank of China (ICBC) last month. Temasek still owns 3.38% of Bank of China’s H-shares and 8.76% of CCB’s H-shares.
• The first yuan-denominated bond released outside China was listed on the London Stock Exchange (LSE) last week. The bond, issued by HSBC Holdings, is the first denominated in a currency other than the pound sterling to be offered to retail investors since the bond-trading system was introduced in February 2010. The listing comes as the British government aims to make London an offshore center for yuan trading.
• China, Japan and South Korea agreed to boost cross-investment in government bond markets, worth a combined USD14.61 trillion at the end of 2011. Chinese and Japanese bonds accounted for 97% of the total, Asian Development Bank data showed.
• The insurance industry will grow more slowly this year after witnessing rapid growth in past years, according to Ping An Insurance, but the potential of the life insurance business is still huge compared with developed countries. Ping An had a 16.4% share of the life insurance market in China in terms of premiums last year, 1.3 percentage points higher than in 2010. The insurer reported a first-quarter net profit of CNY7.8 billion, up 31% from CNY5.95 billion in the same period last year.

Foreign trade

• The Chinese government said in a new guideline that China will stabilize its imports of commodities and actively increase the imports of advanced technology and equipment, key components and parts, as well as resources and raw materials. Imports of consumer goods will also be increased “appropriately”, said the 18-clause guideline.
• The Ministry of Commerce (MOFCOM) has issued the “Spring 2012 Report on the Foreign Trade Situation of China”. The second quarter will continue to see slow trade growth while the whole year is expected to see slower but more balanced trade growth than 2011, the report said. Foreign trade is expected to grow by an average 10% a year till 2015.
• Five Chinese makers of household ceramics have been chosen to represent the industry in the latest anti-dumping investigation by the European Commission, and also plan to take legal action in the case. “We have invited international lawyers from Belgium to help us in the time leading up to the anti-dumping investigation,” Ding Xuewen, Vice Chairman of Hunan Hualian China Industry Co said. The other four companies are the Sanhuan Enterprises Group and Beiliu City Laotian Ceramic Co, both from Guangxi; Zhuhai-based CHL International; and the Shandong-based Niceton Group.

Mergers & acquisitions

• At present there is no central regulator for the fast-growing private-equity fund industry. The China Securities Regulatory Commission (CSRC) and the National Development and Reform Commission (NDRC) are both involved, which sometimes led to registration and tax problems as well as uncertainly over how to legally raise onshore capital. A new law could settle the regulatory dispute later this year. Last year, private equity firms launched about 300 yuan-denominated onshore funds earmarked for investments in China, raising a total of about CNY20 billion. The Ministry of Commerce (MOFCOM), the State Administration of Foreign Exchange (SAFE) and the State Administration of Taxation (SAT) are also trying to wield influence over the private equity industry.

Real estate

• More than 40% of land, or about 70 hectares, to be used this year for public housing will be in downtown areas of Beijing, according to a land-use plan of the Municipal Bureau of Land and Resources. Industry insiders said the bulk of new land for all kinds of residential housing in the past three years was approved in suburban areas, meaning prices for private apartments in downtown areas were expected to rise.
• House prices in Shanghai are still very high compared to household incomes so the policy restricting the number of houses a family can buy is still necessary, said Liu Haishen, Director of the Shanghai Housing Support and Building Administration Bureau. Last year, the average cost of a new home in Shanghai was CNY2.58 million, according to the China Real Estate Information Corp, while the average annual income was CNY51,968. The restrictions that limit every local household to, at most, two housing units and confine every non-local family to just one were introduced in January 2011. About 40 cities have the same restrictions.

Retail

• Chinese bankcard owners’ expenditure surged an annual 27% to CNY145 billion during the three-day Labor Day holiday on strong retail spending while that on travel soared 68%. They spent 29% more at domestic retailers and their retail expenditure overseas jumped 28%, UnionPay said.
• U.S. farmers will raise 117.1 million pigs this year, the most in at least a half century, as world pork output gains 2.7% to an all-time high of 104.4 million tons, U.S. Department of Agriculture estimates show. China may produce 690 million hogs, the most since at least 1976. These two factors combined could drive pork prices down 10% by the end of the year, according to the median of 10 analyst estimates compiled by Bloomberg. Pork prices are one of the most important items in China’s Consumer Price Index (CPI). While Chinese pork imports will drop 14% to 650,000 tons this year, shipments will still be the third-highest on record.
• Shenzhen’s wealthier residents are relying on regular shopping trips to Hong Kong for not only big-ticket purchases, but also everyday items, such as toothpaste, spending CNY20 billion annually. The spending in Hong Kong is equivalent to about 6% of Shenzhen’s total retail sales volume last year, or CNY352 billion, according to a survey by the Shenzhen Retail Business Association. The survey interviewed 2,116 Shenzhen residents and found that more than 27% had shopped in Hong Kong last year, and a quarter of those had visited at least once a month.

Science & technology

• The China National Tobacco Corp has withdrawn its research on cigarette improvement from a top award competition amid a nationwide outcry, with opponents accusing it of promoting smoking and misleading the public. China’s National Office for Science and Technology Awards received 33 objections since March on the “Chinese-style cigarette” research, which focused on adding fragrance and enhancing taste.

Stock markets

• Of the 1,156 Shanghai and Shenzhen-listed companies that have released their first-quarter financial reports, 52 have qualified foreign institutional investors (QFIIs), among their top 10 stockholders. Foreign investors were most active in the vehicle, real estate, infrastructure and non-ferrous metal sectors. The sectors of steel, food and beverages, and biomedicine, saw decreases in holdings by foreign investors in the first quarter. The value of the shares held by QFIIs accounted for 1.09% of the total traded A shares. The total number of QFIIs has risen to 158.
• China City Railway Transportation Technology hopes to cash in on an investment boom in urban metro systems after raising about HKD246 million from listing on the Growth Enterprise Market (GEM) in Hong Kong. The company supplies city rail networks with information technology systems, ranging from automatic fare collection to passenger information equipment. Shares start trading on May 16.
• Lin Songli, Macro-economics Analyst with Guosen Securities Co, was sentenced to six months in jail with a one-year probation. Lin was the fourth person to have received a jail sentence after suspicions arose in late 2010 that key economic data, including gross domestic product (GDP), consumer price index (CPI) and credit increase details, were being leaked. The leaks could allow some traders to make a profit at the cost of other investors by anticipating how securities prices would react after the official release of the data.
• Jewelery maker and retailer Graff Diamonds got Hong Kong stock exchange approval for a listing worth up to USD1 billion. The initial public offering (IPO) could be the biggest in Hong Kong by an international issuer so far this year, but details of the issue, including its timing, have yet to be confirmed.
• The State Administration of Foreign Exchange (SAFE) approved USD3.61 billion in quotas for 28 qualified foreign institutional investors (QFIIs) between January 1 and April 16, bringing the total quota issued to USD25.19 billion. Individual quotas may be raised. China last raised individual quotas for QFIIs to USD1 billion from USD800 million in 2009.

Travel

• Air China launched new non-stop flights between Beijing and London Gatwick Airport, increasing its capacity on the route by more than 50%, in addition to daily direct flights to London Heathrow. According to official figures, more than 1 million business people, students and tourists travel between China and the UK every year. Hong Kong Airlines launched its first service between Hong Kong and London Gatwick in March.
• China will begin issuing a new type of passport on May 15 with an electronic chip to store the holder’s personal details, including name, date of birth, photograph and fingerprints.
• Boeing has reached a trade-in deal with China Eastern to buy 10 of its Airbus A340 jets as part of a USD6 billion agreement to sell Boeing 777s to the airline. Airbus has itself agreed to take back the other half of China Eastern’s A340 fleet as part of a separate deal to sell 15 A330 jets, but this deal could be delayed due to a row between China and Europe over emissions. Aircraft manufacturers sometimes offer to take back their old models when trying to persuade airlines to upgrade to the latest models.
• The cost of business travel airfares for Hong Kong firms is the highest in the world, a report by Concur, a U.S. provider of travel and expense management services says. In its second global report on corporate spending on travel and entertainment (T&E), Concur reveals that the average cost of airfare in Hong Kong is USD1,112, while in India it is USD263, the lowest in the world. The average spending on airfare globally is USD441, up 5.2% from 2010. The findings, based on data from Concur’s corporate clients, represented more than USD50 billion in spending last year by firms in more than 100 countries.
• Beijing launched an hourly updated online index of crowds at major tourist sites at bjta.gov.cn. The index covers six major sites in Beijing, including the Palace Museum, Summer Palace and Badaling section of the Great Wall. It indicates the size of crowds according to a five-level system. More than 1 million people visited 24 sites in Beijing on April 30, the second day of the three-day May holiday. Beijing is ranked third in the top 10 list of Chinese tourist destinations during the May Day holiday.
• Hong Kong has four of the world’s 100 best restaurants – Amber, Bo Innovation, Caprice and Lung King Heen – according to the San Pellegrino World’s Best Restaurants List. Only one mainland restaurant – Shanghai’s Mr and Mrs Bund – is represented, ranking 95th. Macao’s Robuchon a Galera is ranked at No 82.
• China’s first air-rail combined service began receiving passengers at Shanghai’s Hongqiao International Airport. The service allows passengers to transfer between a domestic or international flight and a train with a single ticket. The service, jointly launched by the Shanghai Railway Bureau and China Eastern Airlines, allows travelers to take a flight to either of Shanghai’s two airports and then transfer by rail free to the cities of Suzhou, Wuxi, Changzhou and Ningbo.

One-line news

• A Guangzhou court has sentenced Charlotte Chou, an Australian businesswoman, to eight years in jail for  embezzling funds from the private school she helped found in China. Her supporters said a former minority shareholder had used his influence with officials to have her jailed to try to gain control of the school. Chou plans to appeal.
• Chinese Economist Mao Yushi has received the Milton Friedman Prize for advancing liberty from the Cato Institute in Washington. The award committee cited his push for “an open and transparent political system” in China, and his work in creating private charities and self-help programs that fostered individual empowerment. He also will receive USD250,000. Mao said his most important work in recent decades had been raising awareness about the principles of a market economy among the public.
• China’s lottery sales rose by 30% year on year to hit CNY60.3 billion in the first quarter of this year, an increase of CNY13.9 billion, the Ministry of Finance said. Last year, lottery sales in the country rose 33.3% to CNY222 billion.

Alternative energy

• China may approve fewer wind power projects this year than last year. The National Energy Administration (NEA) plans to approve 16.76 gigawatt (GW) of such projects in 2012, Shi Lishan of its Renewable Energy Division said. Beijing approved 26.83 GW last year. Authorities began tightening approvals last year after rapid growth of capacity led some wind farms to produce less power than they were capable of.
• Xinjiang Goldwind Science & Technology, China’s second-largest wind power turbine maker, saw first-quarter net profit plunge 97% to CNY6.18 million as revenues slid 8.4% to CNY1.7 billion. Gross profit margin dropped to 11% from 22%. The company attributed the profit fall to lower selling prices for turbines amid keen competition and higher administration and financing costs.
• Two Chinese wind turbine makers, Xinjiang Goldwind Science & Technology and Sinovel Wind Group, are considering bids for world number one Vestas Wind Systems. They approached corporate bankers after a plunge in Vestas’ shares.
• Yingli Solar said it plans to sell from 2,500 MW to 2,600 MW of solar panels in 2012, including 900 MW in China. If the goal is met, China will become the company’s largest market for the first time.
• Shanghai will use shallow geothermal energy to heat and cool buildings covering a total of 4 million square meters by 2015, which could save 28,000 tons of coal, cutting the emission of 245,000 tons carbon dioxide and 2,000 tons of sulfur dioxide every year, the Shanghai Municipal Bureau of Planning and Land Resources said. About 1.3 billion people would not need heaters or air conditioners if all the resources of the energy could be used.

Pollution

• At least seven cities in Hebei province will begin monitoring PM2.5 data from June. The cities are Shijiazhuang, Qinhuangdao, Tangshan, Baoding, Zhangjiakou, Chengde and Langfang.
• More than 4 million tons of daily rubbish has for 17 years been piled in a disposal plant in Kaifeng, Henan province, due to the lack of a proper disposal facilities. Inspectors were sent to investigate pollution issues in the province and the provincial environmental protection department pledged to tackle the issue.
• Testing services for indoor air pollutants will be available free for Shanghai residents by contacting the Shanghai Environmental Protection Industry Association. Families with children, the elderly and those suffering from blood diseases will be prioritized, said Li Wei, Deputy Secretary General of the Association. It is the sixth year in which they have monitored indoor pollution for residents, but it is the first time PM2.5 has been included. More than 13,000 households have benefited from the free service in the past five years.
• Large amounts of new but defective electronic gadgets as well as discarded ones, manufactured by Hewlett Packard, Samsung, Panasonic and others, have been found in a giant recycling hub in Guiyu town in Guangdong province and are suspected of causing children in nearby villages to have high levels of lead in their blood. The site processes 70% of all the electronic waste in the world, according to the Bund, a Shanghai-based magazine. Still, the electronics producing companies claim to engage in so-called green policies to protect the environment.
• Hebei province brought more than 80 enterprises to court last year for causing environmental pollution, including the Hebei branch of China Mobile. The provincial environmental authorities fined the involved companies a total of CNY8 million, with half fined more than CNY200,000. The Tangshan-based Sanyou Group’s Dongguang Pulp Co drew the biggest fine of CNY500,000. The province plans to launch a 100-day campaign in June to examine oil processors, chemical manufacturers and heavy metal plants.

Finance

• China Minsheng Banking Corp said its first-quarter profit rose 47.7% year on year to CNY9.17 billion. The impressive growth was driven by interest income, which rose 56.1% in the period to reach CNY35.86 billion, while fee income from the wealth management business rose 78.13% to CNY5.44 billion.
• Beijing may first relax controls on borrowing costs and widen the “range” for deposit rates as part of changes to financial industry rules, said People’s Bank of China Governor Zhou Xiaochuan. The government is waiting for a consensus to emerge among officials and for a suitable time to act, as adjustments have been complicated by inflation and capital inflows, he told Caijing Magazine in a recent interview.
• China Investment Corp, the Chinese sovereign wealth fund, has received a further USD50 billion in capital from the government. CIC has more than USD400 billion under management, according to its 2010 annual report, which is the most recent. In 2010, CIC earned 11.7% on the money invested abroad. The fund is looking to invest more in China, in spite of the fact that it was established explicitly to invest money abroad.
• Banks are charging almost 2 percentage points less for yuan-denominated loans in Hong Kong than in China. Standard Chartered’s one-year interbank offered rate for yuan stood at 3.2%, 193 basis points less than the 5.13% for the one-year Shanghai interbank offered rate and less than half of the central bank’s best lending rate. “This will be the year when dim sum loans really start to pick up,” Wilson Wan at BOCI Asia said. The lack of a reference rate has been one of the biggest inhibitors to growth of the loan market, according to the Asia-Pacific Loan Market Association (APLMA).
• Insurers must move quickly to take advantage of the challenges and opportunities of the aging Chinese population, according to a report by The Boston Consulting Group and Swiss Re entitled “From Silver to Gold: How Insurers Can Capitalize on Aging in China”. As early as 2015, China’s working age population ― those who are 15 to 59 years old ― will begin to decline. The segment of people 60 years of age and above will grow rapidly from about 165 million in 2010 to as high as nearly 440 million by 2050, accounting for roughly 34% of the population.
• The State Administration of Foreign Exchange (SAFE) reported that capital inflows fell by 56% year on year to USD49.9 billion in the first quarter, leading to a smaller increase in foreign reserves. This in turn could ease the pressure on the yuan to strengthen further.
• The China Banking Regulatory Commission (CBRC) reported there were CNY1.05 trillion of non-performing loans (NPLs) in the banking system at the end of last year, a figure which some analysts say is probably understated. China recovered only 21% of some CNY1.4 trillion of bad loans it sold after removing them from its top four banks in 1999, compared to the 60% recovery by the United States during its savings and loans crisis in the 1990s.
• Industrial and Commercial Bank of China (ICBC) has posted its slowest profit growth in three years. Net profit rose 14% to CNY61.3 billion year on year. The bank said loans to strategic emerging industries would double compared to last year and those to advanced manufacturing would increase to 25% of total loans. The bank’s fee income rose 10.4% year on year to CNY28.6 billion, which was lower than analysts had expected.
• Shanghai-based Bank of Communications (BoCom) reported a 19.6% increase in net profit for the first quarter of this year, earning CNY15.88 billion. But the net interest margin decreased 2 basis points from a quarter earlier to 2.6%. For the first three months, BoCom’s interest income rose 19.5% to CNY28.37 billion as the net interest margin grew 9 basis points year on year. Its fee-based income jumped 21.9% to CNY6 billion.

Foreign trade

• The time is ripe for establishing a Free Trade Area among China, Japan and South Korea, officials and experts said, but talks have not started yet, said Zheng Xinli, Vice Chairman of the China Center for International Economic Exchanges. In March, Minister of Commerce Chen Deming said the negotiations may start as early as May, when officials from the three countries are to meet in Beijing.

Macro-economy

• China’s manufacturing sector could contract for a sixth consecutive month in April, but at a slower pace because of easing steps by the government, HSBC Holdings said. The HSBC Flash Purchasing Managers Index increased to 49.1 in April from 48.3 in March, showing a rebound in real economic activity. New export orders rose to 49.8, the highest in three months, compared with 47.7 in March.
• China’s foreign reserve holdings dropped by USD4.69 billion from February to March, according to the People’s Bank of China (PBOC). In the first three months, the holdings increased to USD3.3 trillion from USD3.18 trillion at the end of December. “The fall in reserves in March was probably due to losses in euro-denominated assets because the euro weakened against the U.S. dollar,” said Li Jie, Director of the Foreign Reserves Research Center at the Central University of Finance and Economics.
• Industrial output grew by 11.6% year-on-year in the first quarter of 2012, the slowest growth since July 2009, according to figures released by the National Bureau of Statistics (NBS). The Ministry of Industry and Information Technology (MIIT) said in December it would set an industrial output growth target of about 11% for this year, the same goal as for 2011 when production actually expanded 13.9%.
• China’s industrial companies’ profits climbed 4.5% year on year last month to CNY438.9 billion on stronger demand. For the first three months, profits were down 1.3% at CNY1.04 trillion.

Petrochemicals

• Offshore oil and gas producer CNOOC and its United States-based partner ConocoPhillips agreed to pay CNY1.68 billion to compensate for the ecological damage caused by oil spills in the Bohai Bay and to enhance environmental protection in the area. ConocoPhillips will pay CNY1.2 billion, while CNOOC will pay CNY480 million. The spills contaminated at least 5,500 square kilometers of water and affected many fish farmers in Shandong, Hebei and Liaoning provinces.
• Sinopec’s first-quarter profit was hit by a sharply higher refining loss and much weaker profit from chemicals. Net profit tumbled 35% year-on-year to CNY13.41 billion, despite revenues rising 14% to CNY671.37 billion. Operating profit from oil-and-gas production jumped 48.8% to CNY19.55 billion, thanks to a 4.5% rise in crude-oil output and an 11.8% rise in gas output. This was more than offset by an operating loss on oil refining of CNY9.17 billion, which compared to a loss of CNY0.58 billion in the year-earlier period.

Real estate

• China Vanke posted a 16% increase in first quarter profit to CNY1.4 billion, while revenue rose 30% to CNY10.3 billion. Vanke focussed on the mass market of first-home buyers rather than speculators to minimize the impact of government cooling measures. Vanke, with CNY39 billion of cash as of the end of March 31, will remain cautious about land acquisitions. Vanke’s contracted sales fell 12.5% to CNY31 billion in the first three months from a year earlier.
• Garth Peterson, a former Morgan Stanley Executive, has pleaded guilty to conspiracy for his role in the transfer of a multimillion U.S. dollar interest in a Shanghai building to himself and the former Chairman of Yongye Enterprise, according to the United States Justice Department. Peterson led Morgan Stanley’s effort to build a Chinese real estate portfolio. In federal court in Brooklyn, New York, Peterson pleaded guilty to conspiring to evade accounting controls. Peterson, who is scheduled to be sentenced on July 17, faces as long as five years in prison and a maximum fine of USD250,000.
• Most of the top 30 listed Chinese developers are posting record negative cash flows and debt ratios. 22 recorded a negative cash flow in the last quarter of 2011. The debt ratio of 13 developers has crossed 70%, while the unsold inventory turnover rate has shot up to an average of 1,667 days. A higher rate indicates the difficulty in selling property. In the 2008 property downturn, just seven of the 30 developers had reported positive cash flows.

Retail

• Fashion retailer Vancl was forced to pull a line of T-shirts featuring quotes by Premier Wen Jiabao from the shelves because they violated rules on depicting government leaders. Authorities planned to take action against Vancl, which is known for its edgy designs.
• An investigation found that some preserved fruit was processed in filthy factories and contained excessive additives. Preserved peaches were found packed in bags that had been used to hold animal feed, and hawthorn berries were soaked in a pool of water that contained garbage. A China Central Television (CCTV) report detailed illegal processes at 16 preserved-fruit companies, mostly from Hangzhou in Zhejiang province and some from Linyi, Shandong province.
• Shanxi provincial authorities have ordered Coca-Cola (Shanxi) to suspend production after confirming media reports that about 120,000 boxes of soft drinks produced at the Shanxi factory were tainted with chlorine. The move comes after Coca-Cola said less than two weeks ago that the allegations were false.

Stock markets

• Shares of China Everbright International recovered after Bo Xiyong, who is  also known as Li Xueming and is Bo Xilai older brother, stepped down as Vice Chairman and Director of the company. The rebound erased most of the stock’s losses this month following reports of Li’s connection to Bo. Bo Xiyong owns 10 million shares in the company worth about HKD33 million.
• The trading debut of shares in Haitong Securities, the biggest initial public offering (IPO) in the Asia Pacific this year, ended on a disappointing note as they closed at their listing price. It was the most actively traded stock on the main board of the Hong Kong stock exchange, with turnover of HKD1.72 billion, advancing sharply to HKD10.70 in the first hour but declining over the next hour to a low of HKD10.40 and closing at HKD10.60. Brokers said investors remained skeptical about investing in new shares because of market uncertainty. Haitong raised HKD13 billion.

Travel

• China Southern Airlines saw its net profit dive 74% year on year to CNY319 million in the first quarter. Operating profit plunged 80% to CNY324 million as fuel costs surged and net exchange gains dropped because of slower yuan appreciation.
• Air China said it would issue CNY1.05 billion worth of new A shares to its controlling shareholder China National Aviation Holding Company, raising money to reduce bank borrowing and for working capital. The holding of the controlling shareholder will be increased to 40.85%, from 39.98%, on completion of the deal.
• Fuzhou is planning to invest CNY9 billion to build China’s largest manufacturing base of general aviation aircraft. Construction will start on May 18. The project is part of a CNY22 billion joint effort between the local government and state-owned Avic International Holding to build an aviation center and general aviation zone.
• Residents in six cities were given official permission to visit Taiwan individually under a cross-strait agreement, adding to the previously approved cities of Beijing, Shanghai and Xiamen. The move to give approval to Tianjin, Nanjing, Chongqing, Hangzhou, Guangzhou and Chengdu is expected to stimulate tourism and boost cross-strait relations. About 74,000 people from the mainland have applied so far to travel individually in Taiwan.
• Macao casino operator Galaxy Entertainment said it plans to invest HKD16 billion in the second phase of its integrated resort Galaxy Macao. The project on the Cotai Strip, which already houses a cluster of well-known resort brands, including the Venetian, City of Dreams and Galaxy, will comprise two new luxury hotels, including the world’s largest JW Marriott with 1,300 rooms, and Ritz-Carlton’s first all-suite hotel. Galaxy’s next phase of development would boost retail space to more than 100,000 square meters, with some 200 luxury stores. Gaming capacity would grow by about 500 tables and 1,000 slots.

VIP visits

• Vice Premier Li Keqiang has met Russian Prime Minister Vladimir Putin in Moscow, and will also travel to Hungary, Belgium and the European Union’s headquarters in Brussels. China-Russia trade surged by 42.7% in 2011, from a year earlier, to USD79.25 billion. China’s imports from Russia last year grew by 55.6% and exports to Russia were up by 31.4%. By the end of 2011, Russia’s accumulative investment in China was USD818 million, while China’s investment in Russia reached USD2.91 billion.

One-line news

• Beijing is the most popular Chinese city for foreigners to live and work, followed by Shanghai, Tianjin, Shenzhen and Wuhan, according to poll of more than 180,000 foreigners. Factors weighed included the working environment, local government management and living conditions. Rounding out the top 10 were Guangzhou, Suzhou, Chongqing, Xiamen and Hangzhou.
• Huaneng Power International returned to the black in the first quarter, thanks to a 6.7% rise in the average price of power in December last year. The firm posted a four-fold year-on-year jump in net profit to CNY919.36 million in the first quarter, a turnaround from a CNY230 million loss in the fourth quarter. After falling about 10% from a high of CNY850 a ton in November last year to CNY770 in February, the benchmark spot market power-station coal price in Qinhuangdao – the country’s largest coal port – has  rebounded 2%. Coal typically accounts for 70% of a power plant’s operating cost.
• A new visa category has been proposed in a draft law to streamline the hiring procedures for international talent. A system centralizing information about foreigners in the country is also likely to be introduced in a move to tackle illegal employment. Beijing, second only to Shanghai in terms of the number of foreigners with a residency permit, was home to nearly 120,000 foreigners by the end of 2011. The Ministry of Public Security would also issue more “green cards”. By the end of 2011, 4,752 foreigners had a green card.
• A draft legal amendment to the Civil Procedure Law stipulates that plaintiffs of class-action lawsuits should be limited to “government agencies as provided by law and social organizations”, severely restricting the number of possible plaintiffs in class-action lawsuits. Luo Dongchuan, Deputy Director of the Supreme People’s Court’s Research Department, said fewer than 20 suits concerning public interests had been filed and heard in the country in the past decade.
• The United States is willing to open up its markets to China and give it more access to U.S. technologies if Beijing makes progress on key issues, U.S. Treasury Secretary Timothy Geithner said. “We are willing to continue to make progress on these issues, but our ability to do so will depend in part on how much progress we see from China on issues that are important to us,” Geithner said ahead of government meetings in Beijing this week.

Hardware

• NCR Corp will expand production and productivity at its Beijing manufacturing plant ― NCR (Beijing) Financial Equipment Co. The production of Automatic Teller Machines’ volumes in NCR’s Beijing facility is predicted to grow 66% between 2009 and 2012, according to Rick Marquardt, Senior Vice President, Worldwide Operations for NCR. The Beijing plant has now extended its production portfolio to include retail point-of-sale terminals and kiosks. NCR is the ATM supplier with the largest installed base in China. The country is expected to overtake the U.S. as the world’s largest ATM market by 2013 and China’s installed base of Electronic Point-of-Sales terminals is forecast to  double by 2016 from 2010.
• Semiconductor Manufacturing International Corp (SMIC), China’s largest contract chipmaker, raised its earnings guidance for the first quarter to 14% to 15% over the previous quarter, up from 7% and 9%. “We have seen solid order momentum and an improved outlook from our customers across the board, exceeding our earlier expectations,” said SMIC CFO Gary Tseng. SMIC operates seven fabs located in Shanghai, Beijing and Tianjin, and is building a new fab in Shenzhen.
• Chongqing will spend CNY2.5 billion to build the country’s first “supercomputer center” to aid scientists in their research. The construction of the center is expected to take 18 months and should finish by 2015.

Operators

• China reached a new milestone when its mobile phone user base surpassed 1 billion, but the 3G penetration rate was still low at 14.3%. In the first two months of this year, China added 21 million new handset users to create a total of 1.01 billion mobile phone users, the Ministry of Industry and Information Technology (MIIT) said. The penetration rate of China, now at 73.6%, is still lower than that of the West, where it reaches over 90%. During January and February, China added 25 million new 3G users to reach a total of 143 million.
• Hong Kong’s City Telecom has agreed to sell its telecommunications assets for HKD5.01 billion to Metropolitan Light, a company backed by British buyout firm CVC Capital Partners. The company plans to devote “very significant financial resources” to its multimedia operations. The assets include fixed-line communications provider Hong Kong Broadband Network (HKBN), which owns and operates a fiber-optic network serving 2 million homes and 1,700 commercial buildings in Hong Kong. City Telecom plans to become a major force in the free-to-air TV market.

Radio, film & TV

• China has sent its largest delegation ever to the MIPTV entertainment trade show in Cannes, whereby China indicated its willingness to increase television tie-ups around the world by inking co-production deals with foreign broadcasters. BBC Worldwide announced it had signed its first co-production deals with CCTV-9, the documentary arm of state broadcaster CCTV, for two new science series. CCTV-9 also signed a memorandum of understanding with France Televisions.

Software

• The value of China’s online gaming industry is expected to exceed CNY100 billion by the end of 2015, the Ministry of Culture said. The market scale reached CNY46.85 billion by the end of 2011, a 34.4% increase year-on-year. The industry’s growth rate is expected to be between 20% and 25% over the next three years. Chinese developers exported 92 new online games in the past year, which brought the total number of exported games to more than 150. Major overseas markets include South Korea and Vietnam. Development of the sector is driven by new types of games such as browser games and mobile games.
• Tata Consultancy Services (TCS) aims to expand its network of “global delivery centers” in China. “In mainland China, we’re present in five different locations with reasonable scale. We have centers in Hangzhou, Beijing, Shanghai, Tianjin and Shenzhen,” Chief Executive and Managing Director Natarajan Chandrasekaran said. Potential locations for the global delivery centers included Chengdu, Dalian and Chongqing.
• Revenue of China’s software and information technology service industry will surpass CNY4 trillion in 2015, more than double the 2010 level, thanks to new opportunities like cloud computing, next-generation network and chip design, the Ministry of Industry and Information Technology (MIIT) said. According to the 12th Five Year  Plan (2011-2015), the software and IT service industry will create 6 million jobs by 2015, double the 3 million in 2010.

Telecom Mfg. Co.

• An Australian government decision to ban Huawei from working on a national broadband network does not signal new rules on Chinese investment in Australia, Trade Minister Craig Emerson said. He added the current government, since coming to power in 2007, had approved all 350 foreign investment applications from China, although conditions were placed on six of them. “No one is saying to Huawei don’t invest in Australia. We’re just saying in the National Broadband Network, that’s a problem,” Emerson said.

Web

• China plans to build a next-generation IPv6 internet network by 2015, which can provide more internet addresses. China’s internet penetration rate will rise above 45% by the end of 2015 from 38.3% in 2011, according to the Chinese government. The new IPv6 network bandwidth can reach 2.5-10 gigabytes per second, 100 times faster than the current internet speed. Upgrading to the IPv6 network will also create 3 million jobs.
• Popular micro-blogging services briefly stopped allowing posting of comments after six people were detained for posting rumors about a possible coup in Beijing following the ouster of former Chongqing Communist Party Secretary Bo Xilai. Sixteen websites were also shut down for allegedly spreading rumors.
• Web access  was hindered for more than two hours in China on April 22, as virtually all foreign websites were inaccessible. Internet users outside the mainland, including in Hong Kong, reported they couldn’t access China-based websites. Neither service providers nor the government offered an explanation. Engineers of Ccidnet.com
  traced the problem to a bottleneck involving two routers in Shanghai.
• The Hong Kong Cloud Standards Alliance was formed to speed up the development of cloud computing in the city. The Hong Kong government has been promoting the city as a regional data center hub to entice cloud service providers. Google last August unveiled a USD300 million investment to build a new data center in Hong Kong.
• Sohu, Tencent and Baidu are teaming up to buy video content together, in the hope of beating down the price. The three firms said the copyright cost of an episode of new television soap operas hit CNY1 million last year, up from tens of thousands of yuan in 2009. The move follows last month’s merger between the country’s two main online-video-service companies, Youku and Tudou. Youku spent CNY240 million to buy content last year, compared with CNY82 million in 2010.
• Baidu forecast weak sales in the second quarter of CNY5.33 billion to CNY5.46 billion, but the company’s full-year revenue growth is predicted to be strong at 55%. JP Morgan calculated revenue for Baidu this year to reach USD3.57 billion. Analysys International estimated that Baidu had 78.5% of China’s internet search market in the first quarter, far ahead of Google’s 16.6%.
• China has by far the world’s most active social media population, with 95% of the nation’s 513 million internet users having registered on a social networking site such as Twitter-like Sina Weibo, according to a survey by management consultancy McKinsey. Some 39% of the respondents to the McKinsey survey said they had already used these services as their primary digital tool to reach customers. The survey also showed that 91% of Chinese internet users have visited a social media site in the last six months, compared with 67% in the United States and 30% in Japan.

One-line news

• China Post and Tom Group aim to soon turn their joint venture Beijing Ule E-Commerce into China’s pre-eminent e-commerce infrastructure services provider for online retailers. China Post has a network of 46,000 post offices, 150,000 postal workers, 36,000 Postal Savings Bank branches, 56,000 delivery vehicles and 17 aircraft. Tom is providing the information-technology system that runs Ule’s e-commerce, which online merchants can plug into like a utility.
• Kunshan, Jiangsu, where one in every two of the world’s personal computers and tablets is made, is pressing hard to upgrade its industries by joining hands with international financial firms, including Blackstone Group and Deutsche Bank’s private equity arm. The Huaqiao Economic Development Zone in Kunshan has entered an agreement with Blackstone to invest CNY100 million in the investment firm, which manages approximately USD160 billion in assets around the world.