- Yang Rong, the automotive tycoon who went on a self-imposed exile in the United States after losing a 2002 feud with Bo Xilai, then Governor of Liaoning province, is making a comeback to the industry that made him China’s third-wealthiest businessman almost two decades ago. He owns 13.5% of Hong Kong’s Hybrid Kinetic Group, a producer of lithium-ion batteries and hybrid vehicles, and is Chairman of the company. At the Shanghai auto show, Hybrid Kinetic unveiled two SUVs — the five-seat K550 and the seven-seat K750 — which it describes as prototypes.
- Future Mobility Corp (FMC), an electric car start-up considered one of China’s “Tesla challengers,” said it will unveil its first concept smart car in the second half of this year before starting mass production in 2019. Daniel Kirchert, President of FMC, said that the concept car will be a mid-size SUV priced between CNY300,000 and CNY400,000 and featuring a host of smart technologies. The company is ramping up preparations for a production line with a capacity of 300,000 units in Nanjing.
- China has taken a small step to relax its controls over yuan outflows, as there is a smaller risk of capital exodus and greater market confidence in the value of the yuan. The People’s Bank of China (PBOC) in early January required commercial banks to stop processing cross-border yuan payments unless the banks could show at the end of every month that the amount of outbound yuan matched the sum that came in, but that restriction has now been scrapped. The move is expected to help boost liquidity in offshore yuan markets, especially Hong Kong.
- The disappearance of CNY3 billion from China Minsheng Bank’s private banking accounts has once again highlighted Chinese banks’ weak internal controls and the risks associated with the sale of so-called “innovative” wealth-management products. An accidental inquiry from an investor exposed the fact that the WMPs sold by a Minsheng branch didn’t even exist. The Manager of the bank branch has been arrested. Although defaults of WMPs issued by smaller banks, non-bank financial institutions and online lenders are not uncommon in China, such incidents at big banks are rare.
- China increased its holding of U.S. Treasury securities in February by USD8.6 billion after a reduction by USD7.3 billion in the previous month. Its total holding now amounts to USD1.0597 trillion. China’s foreign exchange reserves climbed to USD3.009 trillion at the end of March. Concerns about capital outflows from China have receded lately.
- China’s tax revenue grew faster in the first quarter. The tax authority collected CNY3.33 trillion, excluding export rebates, up 11.8% from a year ago. The central government collected CNY1.54 trillion, and local governments received CNY1.79 trillion, up 11.1% and 12.4% respectively. The service sector contributed 55.7% of the total.
- Net forex sales by Chinese banks rose slightly in March. Banks bought USD145 billion worth of foreign currencies and sold USD156.6 billion, resulting in net sales of USD11.6 billion last month, according to the State Administration of Foreign Exchange (SAFE). “Generally speaking, the pressure of cross-border capital outflow eased significantly in the first quarter. Supply and demand of foreign currencies have become more balanced,” said SAFE Spokeswoman Wang Chunying. In the first quarter, banks’ net forex sales were USD40.9 billion, down 67% from a year earlier.
- Ant Financial, the payment affiliate of Alibaba Group Holding, has acquired Singapore-based payment service HelloPay Group, the payment subsidiary of e-commerce firm Lazada group, which is majority-owned by Alibaba after a USD1 billion deal in 2016, and will be rebranded as Alipay in relevant markets, including Singapore, Malaysia, Indonesia and the Philippines. The rebranded service will remain independent of Alipay’s existing app, which has 450 million users in China.
- China and Ireland have signed a formal protocol on beef exports to China. The protocol is related to inspection, quarantine and veterinary health requirements for Irish frozen beef to be exported to China. China imposed a ban on Irish beef after Europe’s mad cow disease outbreak in 2000. Beef consumption in China increased almost six-fold between 1990 and 2015 and is forecast to rise further over the coming years. However, Chinese beef production has not kept pace with rising demand. Irish agri-food exports to China have risen from €240 million in 2012 to €780 million in 2016.
- Shanghai’s foreign trade in the first quarter jumped 20.1% from a year earlier to CNY751.13 billion amid improving external and domestic demand, reversing a 4.1% drop in the same period of last year. Exports gained 13.2% and imports surged 25.3%.
- China is pushing the U.S. to relax controls on exports of high-tech goods. Based on data from 2004 to 2009, if the U.S. were to liberalize export barriers against China to the same level as those applied to France, U.S. exports to China would increase by an estimated USD45.7 billion to USD76 billion, narrowing the deficit by 20.3% to 33.7%, according to the Carnegie Endowment for International Peace, a leading U.S.-based think tank. U.S. multinational companies also contribute to a large portion of the deficit. Part of their production overseas will eventually go back to the U.S. and get registered as imports.
- U.S. President Donald Trump has ordered a comprehensive investigation of steel imports that could result in broad restrictions on imports of steel from China. The investigation will determine the extent to which Chinese steel imports have undercut the ability of domestic producers to meet increasing demand from U.S. military equipment manufacturers, U.S. Commerce Secretary Wilbur Ross said. The domestic steel industry is running at 71% of capacity while foreign imports account for 26% of the domestic steel market, Ross added.
- China Southern Airlines has banned shark fin shipments and promised to “actively participate” in animal conservation. The decision is significant as the company is based in Guangzhou, the world’s largest trading hub for the delicacy, and it narrows the options for Chinese importers. It means that 51% of international airlines, based on seat capacity, have now banned the cargo. Among the big three Chinese airlines, only China Eastern has yet to declare a position. Worldwide, 17 of the 19 biggest shipping lines measured by container capacity have banned shark fin, impacting 71% of the global market.
- China should open up its services sector to ease trade tensions with the U.S. and bolster global trade, according to Changyong Rhee, the Asia-Pacific Director at the IMF. The medical, health, legal and financial services sectors are among areas that could be liberalized, he said in Washington.
- Railway authorities of China, Belarus, Germany, Kazakhstan, Mongolia, Poland and Russia have signed an agreement to deepen cooperation on China-Europe freight rail services. The countries will jointly push for better railway infrastructure for a safe, smooth, fast, convenient and competitive rail route, according to the agreement. The countries will expand the rail services to more areas with faster customs clearance.
- China’s steel production amounted to 72 million tons in March, nearly the total output of the United States last year. China’s steel prices had plunged for 33 trading days in a row as of April 17, reaching a five-month low at CNY3,590 per ton on average. Lange’s steel price index posted the largest and longest decline since June after it shrank by 12.7% from its peak on February 28. China’s steel prices surged more than 70% from a year earlier to peak around CNY4,110 per ton at the end of February.
- Chinese start-up companies are increasingly looking to expand abroad in the early stages of operations – even as their home market offers plenty of growth opportunities. Start-up company managers said that technology and innovation should not be bound by borders. Beyond the prospects of better financial returns, start-ups also see surviving in the global marketplace as a test of their businesses’ viability and resilience.
- China’s military is offering to fund 2,000 projects to private Chinese firms and institutes for research on equipment and weapons, a move that experts said will further boost military-civilian integration and upgrade military technologies. The Central Military Commission’s Equipment Development Department recently released a guideline on its website, saying that China plans to invest CNY6 billion this year for research in shared technology and other research. Private Chinese firms have been allowed to carry out research and manufacture military equipment since 2005, and more than 1,000 private firms have gained approval to enter the military industry.
- Premier Li Keqiang called at a meeting for boosting the nation’s economic transformation and pace of growth by promoting technological innovation, emerging industries and effective investment and consumption. Hundreds of governmental officials and well-known entrepreneurs were present at the meeting, which focused on enhancing new development concepts and new economic drivers. Li called for cultivating emerging sectors and upgrading traditional industries by focusing on technological innovation to enhance productivity.
- China has made new progress toward carrying out supply-side structural reform in the first quarter of the year, the National Bureau of Statistics (NBS) said, including cutting overcapacity, reducing inventories, deleveraging, lowering costs and strengthening weak links. The capacity usage rate of major industrial firms rose 2 percentage points from the fourth quarter of last year to 75.8% in the January-March period, while coal output dropped 0.3% year-on-year, the NBS said. The amount of unsold commercial housing space fell by 6.4% year-on-year, 3.2 percentage points higher than at the end of last year.
- Shanghai’s gross domestic product (GDP) grew 6.8% in the first quarter from a year earlier to CNY692.28 billion. The growth was 0.1 percentage points faster than in the same period of last year but slower than the national level by the same margin. Industrial production climbed to CNY782.15 billion during the three months, a year-on-year rise of 7.1%, the highest first-quarter gain since 2012.
- China’s grain output is expected to decline by 1% this year to about 610 million metric tons, and its agricultural trade deficit will decrease to about USD35 billion, according to the Green Book of Rural Areas (2016-17), released by the Chinese Academy of Social Sciences’ Rural Development Institute. Last year, grain output fell by 0.8% to 616.2 million tons, the first decline since 2004.
- Chinese manufacturers are not well prepared for the coming wave of digitalization, McKinsey & Co suggested in a report when it launched a Digital Capability Center at Tsinghua University, the fifth it has set up after those in the United States, Germany, Italy and Singapore, to facilitate the application of smart production and digital operation to reshape manufacturing. As the world’s factory, China produced 70% of mobile phones, 80% of air conditioners and 91% of personal computers, but its manufacturing productivity was still only a quarter of developed countries, McKinsey said. Less than 5% of Chinese manufacturers were first movers or pioneers with innovative business models and advanced digitalization, such as Haier, Lenovo and Huawei, it said.
Mergers & acquisitions
- HNA Airport Holding Group is close to buying out the 30% stake of engineering conglomerate Odebrecht in Brazil’s second-busiest international airport, Rio de Janeiro International Airport, commonly known as Galeão. A corruption scandal has severely limited Odebrecht’s access to credit and new contracts in Brazil and almost a dozen other countries. Before the deal can be concluded, Odebreacht still needs to pay overdue licensing fees.
- Fidelity & Guaranty Life (FGL) terminated its USD1.6 billion agreement to be purchased by China’s Anbang Insurance Group Co. Anbang, one of China’s most active cross-border acquirers, was unable to get approval from the U.S. states of Iowa and New York, where FGL does business, within the time frame set out in an extended takeover agreement. Nevertheless, the deal had received clearance from the Committee on Foreign Investment in the United States (CFIUS).
- The number and value of overseas mergers and acquisitions made by Chinese enterprises plunged in the first quarter of 2017 amid tougher regulatory requirements on authenticity and compliance, PricewaterhouseCoopers (PwC) said in a report. Chinese enterprises concluded 142 M&A deals worth USD21.2 billion overseas from January to March, a year-on-year drop of 39% and 77%, respectively. Privately owned enterprises became the most active investors last year, outperforming their state-owned counterparts for the first time.
Science & technology
- The Springer Nature publishing company has retracted 107 research papers by Chinese authors published in the journal Tumor Biology after learning about irregularities in their peer review process. The authors had supplied the journal’s editors with made-up contact information of third-party reviewers. The latest move constitutes the single largest withdrawal of academic papers, according to Retraction Watch, which monitors academic fraud.
- The Netherlands seeks closer clean technology collaboration with China, such as converting fertilizers into electricity and recycling wasted heat, said Sigrid Bollwerk, Manager at the Energy Research Center of the Netherlands. The Netherlands hopes the two countries can develop new technologies in oil and gas together to “help cut carbon emissions and lower energy costs,” Bollwerk added.
- China is creating a consortium, including state-owned oil giants and banks, and its sovereign wealth fund, that will act as a cornerstone investor in the initial public offering (IPO) of Saudi Aramco. Due to list next year, Aramco’s potential USD100 billion equity sale that is expected to be the world’s largest to date. Saudi Aramco’s board is expected to meet in Shanghai in May.
- Feng Xiaoshu, a former Member of the Review Committee under the China Securities Regulatory Commission (CSRC), has been banned for life and fined CNY499 million for trading stocks under his mother-in-law’s and sister-in-law’s names. He made an illicit profit of CNY248 million.
- Zhou Hang, Founder of Yidao Yongche, the premium vehicle-sharing company controlled by LeEco, has admitted the company has cash flow problems but blamed the situation on misappropriation of CNY1.3 billion in funds by the controlling shareholder – an allegation LeEco has rejected. Yidao drivers have accused the company of not getting paid.
- China is considering turning the entire Tibetan plateau and surrounding mountains into a huge national park to protect “the last piece of pure land”. It would be called the Third Pole National Park and become the world’s biggest national park. The plateau covers an area of more than 2.5 million sq km. The park would be more than 250 times larger than the Yellowstone National Park in the U.S.
- Heads of state from 28 countries will attend a major summit on May 14 and 15 in Beijing to discuss China’s “Belt and Road Initiative”, although leaders from major Western countries will not attend. The summit will be China’s major diplomatic event this year. Leaders who will attend include Russian President Vladimir Putin, Philippine President Rodrigo Duterte, Turkish President Recep Tayyip Erdogan, Vietnamese President Tran Dai Quang and Myanmar’s leader Aung San Suu Kyi. Heads of state from Hungary, Italy, the Czech Republic, Switzerland and Spain would also attend, as well as African leaders from Kenya and Ethiopia.
- Foreign residents of the Shanghai Free Trade Zone (FTZ) will be able to apply for permanent residency in China with only a letter of recommendation from the FTZ authorities. The new policy will take effect later in April. The reform is to support Shanghai’s ambition of becoming a world science and technology innovation hub. A Chinese green card is one of the hardest to obtain, with no more than 7,000 issued since 2004, when the policy was introduced. In 2016, 1,576 foreigners became permanent Chinese residents, an increase of 163% from a year earlier.
- Larry Yung, the son of the late Rong Yiren, Founder of the CITIC conglomerate, has been cleared by a Hong Kong court, along with four former Directors of CITIC, of charges of misconduct and of providing misleading information to the investing public over a 2008 foreign-exchange loss. Rong was China’s Vice President from 1993 to 1998, and was listed as early as 2000 as one of Asia’s wealthiest men.
- China Huishan Dairy Holding said a Shanghai court has frozen assets of the company and its Chairman as requested by Gopher Asset Management, and that HSBC alleges it has defaulted on a USD200 million loan. The dairy farm operator is facing a major challenge from creditors, which range from peer-to-peer (P2P) lending platforms and wealth management firms to 23 banks, amid an unfolding debt crisis that has erupted following a mysterious collapse in its stock price and the disappearance of its Treasury Manager.
- City commercial banks in China are increasingly relying on interbank funding and wealth management products as deposit substitutes – but growing investment holdings, waning liquidity and weakened capital buffers have rendered them more vulnerable to financial disruption, according to analysts at Fitch Ratings. City commercial banks’ market share doubled to 12% of system assets at the end of 2016, from around 6% at the end of 2006.
- M2, the broadest measure of money supply, has declined for three consecutive months. M2 grew by only 10.6% year-on-year in the first quarter, compared with 13.4% growth in 2016. Slower growth in new yuan loans to the property market is a significant factor in the slower money supply growth. New housing loans issued in the first quarter of this year reached CNY1.7 trillion, accounting for 40.4% of total new yuan loans in that period, 4.5 percentage points lower than in the previous quarter.
- Yang Jiacai, former Assistant Chairman of the China Banking Regulatory Commission (CBRC), was reported to be “out of contact”, and may be under investigation in the case of Xiang Junbo, Chairman of the China Insurance Regulatory Commission (CIRC). His case is believed to be linked to the abnormal fast emergence of China’s unlisted small insurance companies.
- Foreign direct investment (FDI) in China rose 6.7% year-on-year in March, slowing from February’s 9.2%. FDI reached CNY87.8 billion in March, the Ministry of Commerce said. Most investment went to the service sector, which saw FDI expand 7.1% year-on-year in the first quarter to account for 73% of total FDI. Investment from the European Union grew 11.2% in the first quarter.
- A crude oil pipeline to southwestern China through Myanmar began operations after years of delays, allowing China to receive supplies faster from the Middle East and Africa. A Suezmax-sized tanker, which can hold 140,000 tons of crude, began offloading oil for the pipeline at Myanmar’s Made Island. Trial operations began in 2015 on the 771 km pipeline, which is designed to carry 22 million tons of crude a year.
- Fujian authorities have cracked down on a sophisticated smuggling ring controlled from the U.S. and China, involving CNY150 million worth of baby formula and health supplements. A search of warehouses of DCS Global Import and Export in Shenzhen, Xiamen and Fuzhou turned up more than 3,000 boxes of baby formula, health supplements, and more than CNY660,000 in cash.
- The first-ever freight train from Britain to China, laden with whisky, soft drinks and baby products left from the London Gateway container port on the river Thames estuary, bound for Yiwu on the Chinese east coast. The 32-container train is around 600 meters long. It will take 18 days to cover the 12,000-kilometer journey. The first train from China to Britain arrived on January 18, filled with clothes and other retail goods. The rail route is cheaper than air freight and faster than sea freight, offering logistics companies a new middle option.
- China’s foreign trade in March firmed beyond market expectations, reflecting improving external and domestic demand. Exports in yuan-denominated terms rose 22.3% year-on-year in March to CNY1.24 trillion, while imports surged 26.3% to CNY1.07 trillion, the General Administration of Customs said. The figures compared with a 11% increase in exports and 34.2% growth in imports in the first two months of this year. In U.S. dollar terms, exports jumped 16.4% and imports rose 20.3%.
- ShanghaI has emerged as the world’s largest international trading city, overtaking Hong Kong and Singapore. Imports and exports through the city’s ports totaled CNY6.88 trillion last year, accounting for 28.3% of the national total and 3% of global trade, the Shanghai Commission of Commerce said. Shanghai’s foreign trade is set to grow 20% in the first quarter of this year to around CNY750 billion.
- Negotiators from China, Japan and South Korea met in Tokyo for the 12th round of talks on a trilateral free trade agreement (FTA). Wang Shouwen, Chinese Vice Minister of Commerce, said at the meeting that if the three countries could make substantial headway in the FTA talks, it will send a positive signal to the world on anti-protectionism and safeguarding economic globalization. The trilateral talks were launched in November 2012.
- The China Wealth index, compiled every two months by the Bank of Communications (BoCom) and research firm Nielsen, rose to 138 in March to rank the second-highest on record, up 4 points from January. A reading above 100 reflects optimism among over 1,800 households interviewed. The household income sub-index surged 8 points from two months ago to 151, and the gauge for the economy rose 6 points to 136. However, people’s willingness to invest edged up only 1 point as there was dimming interest for real estate investment.
- The China Academy of Social Sciences (CASS) said China’s economy may grow between 6.5% and 6.7% this year with growth slowing in the second half while inflation may rise but will remain below the official target of 3%.
- Shanghai has slacked off in its efforts to improve the environment, levying fines too small to deter polluters, hundreds of whom have flouted closure orders, the central government said. The environmental protection work that remained undone could hold back Shanghai’s development, the Ministry of Environmental Protection (MEP) said. From 259 water samples tested, 88 were found unfit even for farm or industrial use, falling below the Ministry’s “grade V” categorization. Overall water quality in some districts had worsened conspicuously since 2013.
- Consumer inflation warmed up slightly in March while factory gate inflation cooled for the first time in six months. The Consumer Price Index (CPI) rose 0.9% year-on-year in March, 0.1 percentage points higher than in February. The Producer Price Index (PPI) rose 7.6%, 0.2 percentage points lower than February’s 7.8%, which was an eight-year record.
- China is expected to unveil pilot mixed-ownership reform schemes for the first group of central state-owned enterprises (SOEs) soon. The first pilot reform scheme includes China Unicom, China Eastern Airlines, China Southern Power Grid, Harbin Electric Corp, China Nuclear Engineering and Construction Corp, and China Shipbuilding Industry Corp.
Mergers & acquisitions
- China’s efforts to secure more advanced technologies in the United States and Europe through buying companies overseas will face greater problems this year as regulators in Western countries may place barriers on Chinese investment amid concerns over security, the Chinese Academy of Social Sciences and China Bond Rating have warned.
- China’s Aier Eye Hospital announced the purchase of Spain’s Clinica Baviera, the largest eye clinic group in Europe. Aier will spend €152 million to buy 59.35% of Baviera’s shares through its subsidiary in Europe. Aier Eye Hospital is China’s largest private ophthalmic medical chain, which went public on the Shenzhen Stock Exchange in 2009. By 2016, Aier had more than 160 specialized eye hospitals in China.
- A consortium led by China’s Fosun International plans to buy a 20% to 25% stake in Russia’s top gold producer Polyus for up to USD2 billion. The Chinese side will have the right to sell a portion of Polyus’s gold production in line with its size in the consortium.
- The Beijing government has revised its land supply plan upwards. In its residential land supply plan for the five years to 2021 the municipal government has promised to provide 6,000 hectares that could translate into a total of 1.5 million homes, or 1,200 hectares with 300,000 units per year. This is almost twice the size of a previous plan announced in February, in which only 610 hectares of land was to be made available for residential use, and much higher than the 454 hectares of actual supply in 2016. Analysts said the revised plan is not a radical change from previous policy, but brings supply closer into alignment with actual demand. Inadequate land supply is believed to be a major factor behind the city’s 36.7% rally in home prices last year.
- A report by the Shanghai Existing House Index Office said the average price of pre-occupied homes rose in 92 of the 130 areas in Shanghai monitored by the office in March, up from 13 areas in February, as sales rose notably. Prices fell in 17 areas and remained flat in 21 areas.
- Hong Kong’s Securities and Futures Commission (SFC) says it is willing to be more flexible in approving “One Belt, One Road” initiative-linked companies to list on the main board, even if they do not meet certain criteria. The city’s stock exchange is fighting hard to become a fund-raising center for projects planned within the Beijing-led initiative, that are expected to require some USD8 trillion until 2020. A number of infrastructure companies have already expressed their interest with the Commission to list in Hong Kong. The SFC has stepped up its efforts at attracting new listings after Hong Kong lost out to New York, Shanghai and Shenzhen’s ChiNext in the first quarter of this year on the value of funds raised via IPO.
- The China Securities Regulatory Commission (CSRC) is considering lowering the profitability threshold for companies to qualify for a listing on the main board of the Shanghai and Shenzhen exchanges, in a move that makes it easier for new businesses to raise capital. Companies with at least two consecutive years’ of profits would be allowed to list, shorter than the current three years. The regulator may keep the pace of approving initial public offerings (IPOs) at about 10 per week, sources said. As many as 134 companies raised a combined CNY70 billion in the first quarter, the highest quarterly figure since 2014, according to KPMG.
- Leading stock index providers continue to reject including A-shares in their main global benchmarks. But they are expected to increasingly launch mini indices to track the Chinese stocks to meet demand amid easier access and a recovering onshore stock market, according to Michael Orzano, Director of Global Equity Indices Product Management at S&P Dow Jones Indices.
- Around 170 of the world’s top business aircraft makers and operators participated in the 2017 Asian Business Aviation Conference and exhibition at Shanghai’s Hongqiao Airport. They displayed 35 planes. China has become the world’s major business jet market, Brazilian manufacturer Embraer said.
- Ticket prices for some bullet trains traveling in China’s Southeastern coastal area will be adjusted from April 21, according to China Railway Corp. The move will affect trains running at 200 to 250 kilometers per hour between Shanghai and Shenzhen, Guangdong province. Some prices will increase, while others will be lowered, depending on the route and train a passenger takes. Last year, 818,000 journeys a day were made on the Shanghai-Shenzhen railway. On a typical day, there were 622 bullet trains operating at more than 80% occupancy.
- Chinese tourists again spent more overseas than travelers from any other country last year, according to the United Nations World Tourism Organization (UNWTO), despite the nation’s weakening currency and slowing growth. The UNWTO said spending by Chinese tourists hit USD261 billion in 2016, 12% more than a year earlier. The 2016 figures mark the 13th straight year of double-digit growth in overseas expenditure by Chinese tourists. They spent more than twice the amount while overseas than U.S. travelers in 2016 In 2001, the year China joined the World Trade Organization (WTO), only 12 million Chinese tourists went abroad, but the number has since grown more than 10-fold.
- The Los Angeles County Metropolitan Transportation Authority (La Metro) has signed a USD647 million deal to buy 282 subway cars from China’s CRRC Corp. A first batch includes 164 cars with a total value of USD178 million.
- Myanmese President Htin Kyaw visited China for talks with his Chinese counterpart, resulting in an agreement for China to start using an oil pipeline from the Myanmar coast to Yunnan province.
- Top diplomats from China and the European Union will discuss supporting globalization and reducing the impact of populism and protectionism when they meet this week. State Councillor Yang Jiechi and Frederica Mogherini – the EU’s Foreign Affairs Representative – will lead the 7th EU-China Strategic Dialogue in Beijing from April 18th to 20th.
- China’s foreign exchange reserves rose for the second consecutive month in March, the first two-month rise since last April. Data released by the People’s Bank of China (PBOC) showed foreign exchange reserves rose by USD3.96 billion in March to USD3.0091 trillion, after rising USD6.9 billion in February. In the first quarter, the reserves fell by USD1.4 billion compared with the end of last year.
- Minsheng Bank has revealed outstanding loans worth CNY1 billion with troubled Huishan Dairy. The bank suspended any new credit to the company last December, after the dairy producer had run into problems, although the bank insisted Huishan and its related companies had not yet defaulted on paying any debt interest payments. Hong Kong listed, Huishan Dairy saw its share price plummet 85% within a few hours on March 24, a day after its top executives held an emergency meeting to discuss capital shortages, and repaying its CNY11 billion worth of debt.
- China is to include “green” financing in the risk monitoring regimes of the country’s banks, to stimulate stronger financing of environmentally-friendly projects. The new measure is likely to be included this year in the macro-prudential assessment (MPA) framework of the People’s Bank of China (PBOC), said Ma Jun, Chief Economist at the PBOC’s Research Bureau. Green credit, such as loans to projects offering energy savings or emission reductions, currently account for nearly 9% of total outstanding loans.
- Bank of East Asia and Credit Suisse Group are among 23 financial services companies that will set up offices in the special economic zone in Qianhai, Shenzhen. Known as the Qianhai SZ-HK Fund Town, the new area is scheduled to finish construction in October, with 29 buildings that can accommodate 100 fund management companies. Shenzhen Metro, the city’s subway operator, is the developer of the zone, while Qianhai Financial Holdings manages the leasing. Already, 124,560 companies have registered in Qianhai, of which 51,188 are financial firms, with 90% of them classified as wealth managers.
- Xiang Junbo, former Chairman of the China Insurance Regulatory Commission (CIRC), has been put under investigation for corruption or other financial malfeasance. A member of the Communist Party’s Central Committee, he is the highest-ranking cadre in the financial industry to be caught up in the government’s crackdown on financial crimes. In the past, Xiang has also been Vice Governor of the People’s Bank of China (PBOC) and President of the Agricultural Bank of China (ABC).
- Annual spending on robotics in China is forecast to exceed USD59 billion by 2020. That would make up about half of the Asia-Pacific’s USD133 billion in forecast robotic spending in 2020. The country will remain the single largest and fastest-growing robotics market in the world, accounting for more than 30% of global spending during that period, according to technology research firm IDC. Chinese installations of industrial robots reached about 90,000 units last year, up from 68,556 in 2015.
- China Singyes Solar Technologies plans to spend up to CNY700 million to raise its solar farms generation capacity by 37% this year by finishing projects in its home province of Guangdong. The Zhuhai-based firm aims to complete 102 megawatt (MW) of projects in Guangdong, adding to the 271 MW it had at the end of last year. The company posted a 41% jump in net profit to CNY502 million for last year, as revenue grew 25.3% to CNY5.2 billion.
- Four companies signed a framework agreement to establish China’s first steel industry restructuring fund. It is expected to initially have a capitalization of CNY40 billion to CNY80 billion. China Baowu Steel Group’s Hwabao Investment Co and the U.S.-China Green Fund will hold 25% each,WL Ross & Co 26% and China Merchants Finance Holdings Co 24%. The fund will help the Chinese steel industry to eliminate excess capacity, speed up restructuring, raise industry concentration and promote international cooperation.
- China’s service sectors expanded at the slowest pace in six months, reigniting worries that economic growth may be ebbing. The Caixin China General services Purchasing Managers’ index dipped for the third straight month to 52.2 last month from February’s 52.6. Business activity and new orders both expanded at the weakest pace in six months, while employment growth was the slowest this year so far. The Caixin China General Manufacturing PMI fell to 51.2 in March from 51.7 in February. However, China’s official manufacturing PMI rose to 51.8 in March from 51.6 in February.
- Investment by privately owned businesses, after posting a lackluster 3.2% year-on-year growth in 2016, is set to rebound to 6% to 10% this year, according to JP Morgan Chief China Economist Zhu Haibin. Private-sector investment accounts for about 60% of the country’s total fixed-asset investment (FAI).
- The average net profit of 1,598 SMEs listed on the National Equities Exchange and Quotations (NEEQ) hit CNY21.05 million last year, up 26.29% year-on-year. The SMEs posted an average annual business revenue of CNY212 million in 2016, up 25%. Total assets of each company averaged CNY464 million at the end of 2016, up 23.9% year-on-year.
Mergers & acquisitions
- U.S. and European regulators have cleared ChemChina’s proposed USD43 billion acquisition of Swiss agribusiness giant Syngenta on condition it sells some businesses to satisfy anti-monopoly objections. It would be China’s biggest foreign acquisition to date. ChemChina subsidiary Adama Agricultural Solutions agreed to sell businesses in the U.S. that produce the herbicide paraquat, the insecticide abamectin and the fungicide chlorothalonil to American Vanguard Corp and its affiliate Amvac Chemical Corp. ChemChina has also agreed to sell significant parts of its European operations in pesticides and plant growth regulation products.
- Shanghai’s housing market will be generally stable in 2017 but sales are likely to be subdued due to strictly-enforced policies to curb speculation. In the first three months of this year, about 1.3 million square meters of new homes were sold across the city, a plunge of 68.7% from the same period a year earlier, Cushman & Wakefield said. These new homes were sold for an average CNY47,335 per square meter, up 6% from the previous quarter and an annual surge of 35.5%. More than 1.03 million square meters of new houses were released locally in the January-March period, little changed from 1.04 million square meters during same period a year ago.
- China Railway Group, one of the country’s largest rail and infrastructure builders, expects to more than double its overseas business as a proportion of total revenue to 10%, Chairman Li Changjin said. This is despite contribution from the firm’s international revenue dropping to 4.4% of the total last year from 5% in 2015. Li’s projection is backed by a 49.6% surge in new contracts clinched overseas to a record CNY102.5 billion last year, which boosted its overseas order book by 62% to CNY170.8 billion.
- China has risen two positions to 15th in the latest global tourism competitiveness ranking, released by the World Economic Forum (WEF). The forum’s Travel and Tourism Competitiveness Report 2017 ranks 136 countries and regions across 14 dimensions. China received nearly 57 million tourists in 2016, which took up over 20% of global arrivals in Asia, the report said. It attributes the improvement of China’s tourism competitiveness ranking mainly to the country’s increased international openness, improved information and communications technology readiness and further investments in its tourist service infrastructure.
- China and Norway agreed to restart negotiations on a free trade agreement (FTA), after Premier Li Keqiang’s meeting with Norwegian Prime Minister Erna Solberg in Beijing.
- Zhengzhou Yutong Bus Co. Chairman Tang Yuxiang said the world’s biggest bus maker will stay out of the North American market since there are enough profits to make in countries that are more welcoming to Chinese products. The company has sold vehicles in more than 130 markets outside the U.S. Sales increased almost 6% last year.
- Tencent Holdings has acquired a 5% stake in U.S. electric carmaker Tesla for USD1.8 billion to become its fifth-largest shareholder. Tesla is one of only nine U.S.-listed companies with annual revenue of more than USD5 billion that are expected to organically grow about 20% for the next two years, according to Bernstein Research. The firm is valued at USD45 billion, which rivals General Motors at USD52 billion, Ford at USD46 billion and BMW at USD54 billion.
- Billionaire Wang Chang-fu, Chairman of BYD, said that sales growth of the company’s new energy vehicles (NEV) will decelerate this year due to cuts in government subsidies for green energy cars. BYD reported its net profit rose 78.9% to CNY5.1 billion in 2016. Sales of the group’s new energy vehicles surged 70% to 96,000 units in 2016, but failed to meet the target of 120,000 units. “The sales growth of NEVs is expected to slow to 40% to reach 140,000 to 160,000 units in 2017,” said Wang.
- China’s current account surplus stood at USD196.4 billion last year. The surplus of goods trade fell 14% from 2015 to USD494.1 billion last year, while the service trade posted a deficit of USD244.2 billion, up 12% on year, the State Administration of Foreign Exchange (SAFE) said. The current account surplus last year was 1.8% of the country’s GDP. The capital and financial account had a surplus of USD26.3 billion in 2016, with a deficit of USD300 million for the capital account and a deficit of USD417 billion for the non-reserve financial account.
- Chinese central bankers have done the economic “impossible”, finding a way to have a stable yuan, a free market, and effective monetary policy, known in financial theory as the “impossible trinity”. The assessment was made by two central bank researchers in a paper published on the People’s Bank of China’s website. China is trying to keep the yuan exchange rate steady, create an open domestic market and ensure the independence of the central bank – goals that many observers see as conflicting and destined to fail.
- China’s big four state-owned banks quietly slashed 18,824 jobs last year, as mobile phones and automated services cut the need for tellers. Although the positions accounted for just 1.14% of the Big Four’s total payroll, more were likely to follow. ICBC still had 461,749 employees at the end of 2016, or nearly double the number at HSBC.
- A new rule by the State Administration of Taxation is targeting tax evasion through transfer pricing at multinational companies. The tax authority wants to make sure complicated transactions and corporate structures are for real business operations, and are not being manipulated for avoiding tax.
- Wealthy Chinese are rushing to secure U.S. EB-5 immigrant investor visas as the U.S. Congress in Washington is debating raising the minimum required investment to obtain such a visa from USD500,000 to USD1.35 million. Chinese investors spent a total of USD3.8 billion in the fiscal year that ended September 30 on the EB-5 visa program. Chinese investors have made up as much as 85% of the annual EB-5 investor total, according Rosen Consulting and the Asia Society.
- U.S. Commerce Secretary Wilbur Ross criticized China as one of the most protectionist major countries, less than a week before Presidents Donald Trump and Xi Jinping meet for the first time in Florida. Ross said China’s effort to obtain market economy status was critical, and negotiations continue.
- The U.S. Department of Commerce has removed Chinese telecommunications equipment maker ZTE Corp from a trade blacklist after the company pleaded guilty to violating sanctions on Iran and agreed to pay nearly USD900 million. “By acknowledging the mistakes we made and taking responsibility for them, we are committed to a ZTE that is fully compliant, healthy and trustworthy,” ZTE Chief Executive Zhao Xianming said in an statement. Restrictions would have prevented suppliers from providing ZTE any U.S.-made equipment, potentially blocking the Chinese handset maker’s supply chain.
- Profits at China’s major industrial companies rose in the first two months of this year to pass the CNY1 trillion mark for the first time. Industrial profits surged 31.5% year-on-year in January and February combined – the fastest pace in nearly six years – to CNY1.02 trillion. This compared with a 2.3% rise in December and an 8.5% annual increase in 2016. Coal miners, oil refiners and chemical producers led the increase, which was boosted by soaring raw material prices. State-owned enterprises (SOEs) made combined profits of CNY301.86 billion for the January-February period, up 40.3% from the same period a year ago, the Ministry of Finance said.
- China will spur the development of a modern coal chemical industry to reduce its reliance on overseas crude oil and gas and to diversify its fuel supply, the Ministry of Industry and Information Technology (MIIT) said. Four model districts for the modern coal chemical industry will be developed in Inner Mongolia, Ningxia, Xinjiang and Shaanxi.
- Semiconductor Manufacturing International Corp (SMIC), China’s largest contract chip maker, is ratcheting up its domestic production capacity this year. With more than USD2 billion cash on hand, SMIC is also looking at another strategic acquisition following its takeover of Italian contract chip maker LFoundry last year. SMIC, which recently reported record-high revenue of nearly USD3 billion for last year, plans to accelerate its move to a 28-nanometer fabrication process for creating integrated circuits on silicon wafers.
- Activity at China’s factories expanded at a slower pace last month, raising concerns a recovery that began late last year may be losing steam. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) for March was 51.2, showing expansion for the ninth straight month, but the figure was below economists’ forecast of 51.6 and was down from February’s 51.7.
Mergers & acquisitions
- The value of mergers and acquisitions (M&As) in China’s health care industry amounted to USD36.2 billion last year, contributing 5% of the total M&A value in the country, PricewaterhouseCoopers (PwC) said. The drugmaking sector saw the biggest number of M&A deals at 301 last year, contributing 49% of the overall M&A deals in the health care industry. Eight M&A deals saw a transaction volume exceeding USD1 billion last year. PwC expects the M&A deals in the health care sector to hit even higher figures as China’s population ages and creates huge demand for health care services.
- Japan’s Toshiba is coming under increasing pressure not to approve the sale of its semiconductor business to a Chinese company, with the Japanese government concerned any such deal could compromise national security. In an effort to balance its books, Toshiba wants to sell off some of its assets, with the semiconductor division one of the first on the block. Ten companies have so far indicated an interest in taking over Toshiba’s semiconductor business, including Tsinghua Unigroup of China, Taiwan-based Hon Hai Precision Industry, and Taiwan Semiconductor Manufacturing.
- The number of private equity and venture capital investments in China’s technology, media and telecommunications (TMT) companies hit a new high in the second half of 2016, but the value of deals fell, according to PricewaterhouseCoopers (PwC). The second half of last year saw 1,478 deals valued at USD25.02 billion, with capital going to internet companies taking up 73% of the total amount.
- Chinese conglomerate HNA Group is in talks to buy a controlling stake in the owner of Forbes Magazine’s publisher, Hong Kong-based Integrated Whale Media Investments (IWM), which is also in talks with another Chinese media firm. The deal would be worth at least USD400 million. The move comes three years after the Forbes family, which founded the financial magazine 100 years ago, sold its controlling stake in Forbes Media to IWM. That transaction valued the Forbes company at USD475 million.
- China Vanke has not yet set a time frame to select a new board as various parties are discussing proposals, Board Secretary Zhu Xu said after Vanke reported 2016 net profit rose 16% to CNY21 billion. The tenure of Vanke’s current board members expires this month, but its rules allow the current board to serve until a new one is formed.
- Beijing housing authorities tightened regulations on commercial real estate projects. They may be sold only to qualified enterprises, public institutions and social organizations. In addition, the smallest unit for sale should not be less than 500 square meters. Moreover, personal loans for purchasing commercial real estate also have been suspended. Due to Beijing’s strict housing purchase rules, some investors started buying small units in commercial projects that had not been subject to restrictions. The average price of such properties in Beijing is now likely to drop by more than 30%, according to Zhang Dawei, Chief Analyst with property agency Centaline.
- The People’s Bank of China (PBOC) has asked state banks to reduce the growth in the number of mortgages in an effort to cool down the real estate market. As a result, home buyers could face longer waiting times on loan approvals. Known in China as “window guidance,” the Chinese central bank has been using “moral suasion” since late 2016 to regulate the pace of credit disbursement. Mortgages in Shanghai amounted to CNY22.3 billion in February, CNY1.1 billion less than a month earlier. Last year, the value of all Shanghai mortgages more than doubled year-on-year to CNY335.2 billion.
- Beijing will introduce a lottery to allocate some primary school places in a bid to rein in rising prices for homes near prestigious schools. Most pupils in the capital are assigned to a school within their neighborhood, and many parents have spent millions of yuan to buy a home in areas with elite schools, hoping the purchase would lead to a prized spot. Property prices in residential areas with top primary schools have risen from to an average of CNY150,000 per square meter.
- Anbang Insurance Group and Kushner Companies have ended talks to redevelop a Manhattan office tower at 666 Fifth Avenue. Anbang had discussed investing more than USD400 million as part of a USD4 billion transaction with Kushner Companies that may have included terms that some real estate experts considered unusually favorable for the Kushners. The property has been losing money for three years and faces increasing loan fees this year.
- Authorities in Xiong and Anxin counties in Hebei province, which will become part of a new free trade zone (FTZ), have banned all property sales to deter speculators. The area is about 160 km south of Beijing. After the announcement of the new zone, home prices in Xiong county, an economic backwater, soared overnight from CNY10,000 per square meter to CNY17,000 per sq m as would-be buyers lined up outside real estate offices.
- The value of Chinese stocks held by mutual fund houses has dropped to a historical low as a result of the country’s A-share market slump last year, while the market share of funds has been diluted by competitors. “Mutual fund houses are the biggest professional institutional investors in China’s A-share market, but the A-share market value held by mutual fund houses has dropped to a historical low of 3.4% from a historical high of 7.9% before 2008,” said Hong Lei, Chairman of the semi-official Asset Management Association of China (AMAC). By the end of 2016, assets under management in the mutual fund industry were worth CNY9.16 trillion.
- China’s three biggest airlines reported robust combined profits, even as currency losses from a weakening yuan eroded earnings. Air China, China Eastern Airlines and China Southern Airlines’ net income fell short of estimates, as losses from swings in foreign exchange dragged down total combined profits to CNY16.3 billion. The eighth consecutive annual profit follows aggressive capacity additions, new routes and cheaper fares, as 488 million people in China take flights every year.
- Plans to mass-produce jet fuel from waste kitchen oil will come a step closer in China next year when Zhenhai Refining and Chemical, a Sinopec subsidiary based in Ningbo, starts building a plant to convert 100,000 tons of leftover kitchen oil into 30,000 tons of aviation-grade biofuel a year. The fuel would be sold to airlines operating long-haul international flights, especially to countries that charged high emissions taxes.
- Nepal, Micronesia and Madagascar are welcome to take part in the Belt and Road Initiative, President Xi Jinping separately told leaders of the three countries, Nepalese Prime Minister Pushpa Kamal Dahal, Madagascan President Hery Rajaonarimampianina, and Micronesian President Peter M. Christian.
- The China Securities Regulatory Commission (CSRC) introduced new restrictions for financial institutions seeking to outsource fund management to external fund managers. Regulators are worried that such funds are used as a shadow banking channel by lenders to make risky bets in corporate bonds or equities, without effective management by the external fund house.
- Bank of China’s overseas corporate loan growth surpassed domestic corporate loan growth in 2016 for the first time, signaling a new stage of internationalization. The contribution of its overseas loans to total loans rose from 19% to 23%. The bank supported Chinese companies in about 3,200 “going global” projects from 2009 to the end of 2016. Currently, BOC has nearly 600 overseas branches and representative offices.
- Lufax, China’s biggest peer-to-peer (P2P) lender backed by Ping An Insurance, is planning to set up a platform to facilitate global asset allocation for middle income earners in Asia and Chinese investors. The Singapore-based platform will be launched this year. Lufax, originally established as a P2P platform five years ago, aims to transform itself into the largest wealth tech company in China.
- CITIC, China’s largest state-backed conglomerate that acquired McDonald’s mainland and Hong Kong business in January, saw net profit for 2016 rise 3% on-year to HKD43.1 billion, partly thanks to a gain of HKD10.3 billion by selling its mainland residential property assets to China Overseas Land and Investment. Total revenue slid 4% to HKD380.8 billion. Citic Bank, China’s eighth-largest commercial bank that made up around 90% of CITIC’s assets, reported a 1.1% increase in net profit, while Citic Securities saw net profit fall 48% due to the high base in 2015 and a lackluster A-share market last year.
- Ping An Insurance Group’s net profit rose 15% year-on-year to CNY62.4 billion last year, the biggest annual profit since 2003. Retail business contributed 65.4% of the total net profit last year, an increase of 7.3 percentage points from a year ago. The number of customers rose 20% year-on-year to 131 million, while profit per customer increased 7.8% to CNY311.51.
- China’s large state-owned banks are expected to disappoint when they report earnings for 2016 this week. The Agricultural Bank of China (ABC) is expected to post the largest profit decline of 2% to CNY177.3 billion, according to a poll of 21 analysts by Bloomberg. This will mark the lender’s first earnings drop since 2010. Industrial and Commercial Bank of China (ICBC), Bank of China (BOC) and Bank of Communications (BoCom) may even have slipped into a loss. Meanwhile, China Construction Bank (CCB) is set to perform the best with a 0.2% rise in profit to CNY228.1 billion. The poor performance was caused by falling interest income, which traditionally provided the bulk of the banks’ revenues.
- Robert Bosch plans to open a new joint venture for gasoline engine management systems in Chongqing, an automotive electronics plant in Changzhou, Jiangsu province, a power tools plant in Chengdu, and a thermo-technology joint venture with Guangdong Vanward New Electric, a gas appliance exporter based in Foshan. Bosch Chairman Volkmar Denner told China Daily that his company would develop connected mobility, smart city and smart home products from a long-term perspective. In 2016, Bosch invested around CNY5.4 billion in China, including establishing a research and development (R&D) facilities in Suzhou and Nanjing.
- Frontier Services Group (FSG) is planning to built two operation bases in Xinjiang and Yunnan, Erik Prince, Executive Chairman of the firm, said. He is better known as the founder of the private military company Blackwater, now known as Academi, which provides executive security services and specialized training. FSG will provide Chinese companies protection services abroad.
- Morocco and the Haite Group signed a memorandum of understanding (MOU) to invest USD1 billion to build an industrial and residential park in Morocco’s northern city of Tangiers. The park will host hundreds of Chinese companies in numerous industries, including car manufacturing, aerospace, aviation spare parts, electronic information, textiles, and machinery manufacturing. The project will cover an area of 2,000 hectares and generate 100,000 jobs.
- Huawei is making a massive investment in research and development (R&D) in New Zealand. The plans include the building of a cloud data center and establishment of innovation labs in Christchurch and Wellington. The company plans to spend NZD400 million over five years on the projects.
- China’s centrally-administered SOEs have 9,112 business entities operating in about 185 countries and regions. The SOEs have total overseas assets of more than CNY5 trillion and 346,000 employees operating overseas, Xiao Yaqing, Director of the State-Owned Assets Supervision and Administration Commission (SASAC) said.
- Foreign companies have no obligation to transfer their technologies to local partners under a joint-venture format in China, the Ministry of Commerce (MOFCOM) reiterated. Spokesman Sun Jiwen said there are no compulsory technology transfer obligations for foreign investors, and most industries are completely open for them. Only a few sectors deemed sensitive have equity share limits and restrictions. These were reduced from 43 to 15 in 2015.
- The Trump administration has announced sanctions on 30 foreign companies and people from 10 countries, including China, accusing them of engaging in nuclear or missile proliferation activities with Iran, North Korea, and Syria.
- A team of Chinese scientists in Chongqing have developed a method to determine a blood type within two minutes, a procedure which now takes about half an hour. The researchers at the Southwest Hospital affiliated with the Third Military Medical University said that they have designed a dye-assisted paper-based procedure that is not only quicker, but also more cost effective. The procedure could be suitable for use in emergencies.
- Police detained eight executives – including one foreigner – of French bakery Farine in Shanghai for allegedly using expired flour. Four bakeries of the chain were sealed by local authorities. They also confiscated bread and white flour. The bakeries violated China’s food safety law by using food items beyond their expiry date.
- Beijing has announced a plan to end markups on drug prices and adjust the cost of 435 medical services in the boldest move yet to improve China’s health care system. From April 8, a medical service fee will replace drug markups, registration and treatment fees. Drug prices were previously marked up by as much as 15%, but this will now not be allowed in more than 3,600 hospitals and medical institutions in the capital. Most prices for the 5,300-plus medical services offered at the city’s public hospitals were set in 1999, 75% of which have been below cost.
- The Australian operation of Alibaba Group is using the blockchain technology to track the product life cycle of food products and curb the spread of counterfeit food online. Blockchain technologies are mainly used to track transactions of bitcoin and other cryptocurrencies.
- The Intellectual Property Court in Beijing has overturned a ruling by the Beijing Intellectual Property Office that Apple violated a patent of Shenzhen Baili, which led to an order to stop selling the iPhone 6 and 6 Plus in Beijing. Sales, however, were not suspended while Apple appealed against the administrative order. The Shenzhen firm had accused Apple of having “copied” the exterior design of Baili’s 100C smartphone, which has a curved edge and rounded corners.
- According to a survey by the People’s Bank of China (PBOC), the percentage of bankers feeling confident about the economy jumped to 64.9% in the first quarter, from 53.7% in the preceding three months. However, 20.3% of bankers said monetary policy was “relatively tight” in the January-March quarter, up from 5.7% the previous quarter. Business confidence among entrepreneurs improved notably in the first quarter, to 61.5% of respondents from 54.1% in 2016’s fourth quarter.
- Chinese cities are becoming cheaper to live in globally following the yuan’s depreciation against the U.S. dollar, the Economist Intelligence Unit (EIU) Worldwide Cost of Living Survey showed. Shanghai’s ranking fell five places but it remained the most expensive city in mainland China, followed by Shenzhen and Dalian. Beijing dropped the most in the past year, falling 16 places to 31st in the global ranking. Singapore topped the global ranking for the fourth year running, with Hong Kong at no. 2. The biannual survey compared the prices of over 160 items in 140 cities around the world with the collated prices converted into U.S. dollar. New York was used as the basis for comparison.
Mergers & acquisitions
- Zhonghong Group has bought Blackstone Group’s 21% stake in SeaWorld Entertainment. Zhonghong is paying a 33% premium, but the deal includes licensing and consulting deals for theme-park development in China. Two Zhonghong Executives will join SeaWorld’s board.
- Air Products & Chemicals, based in Pennsylvania in the U.S., is pulling out of its bid to buy control of Yingde Gases Group Co, which would have given it as much as a 22% share of China’s market for industrial gases. PAG Asia has acquired a 47.2% stake in Yingde and is seeking total control of the company.
- HNA Group agreed to buy a 25% stake in Old Mutual’s U.S. asset management unit for about USD446 million. Old Mutual is selling down its holdings in OM Asset Management to HNA in two tranches. The first, comprising 9.95%, would be completed within 30 days, with a second 15% stake taking place in the second half. After the transactions with HNA, Old Mutual’s holding of OM Asset Management would drop to about 26% from about 51% now.
- Developer China Aoyuan Property is looking to expand into more cities in China’s booming Greater Pearl River Delta (PRD) to reach its goal of CNY50 billion in annual sales by 2019. Aoyuan already has a presence in most cities in the delta, and is speeding up land acquisition in Shenzhen and neighboring cities such as Huizhou. While a number of big cities further tightened home-buying policies over the weekend to cool the market, Aoyuan is “cautiously positive” about the overall market, as there is still an under-supply of new-homes in China’s first- and leading second-tier cities.
- Over half of Chinese households (52.2%) think housing prices are too high and more than a quarter worry they will rise more, according to a survey by the People’s Bank of China (PBOC). That was a slight decline from the previous quarter but higher than in the first three months of 2016. The survey showed 27.2% of households expect housing prices to rise in the second quarter. Despite steep prices, 22.9% of households plan to buy properties in the next three months. The PBOC also asked banks to appropriately adjust mortgage lending policies in 2017 to match local housing conditions.
- HNA Group Co and at least one partner are bidding to acquire Manhattan’s 245 Park Avenue for USD2.21 billion, one of the highest prices ever paid for a New York skyscraper. The 158,000-square-meter office tower, with tenants including JPMorgan Chase & Co, is being sold by Brookfield Property Partners and its 49% partner in the property, the New York State Teachers’ Retirement System. If completed, the deal would bring Chinese ownership to the heart of midtown Manhattan’s financial core.
- Country Garden, China’s third largest developer, has reported better-than-expected profit growth for 2016, driven by strong house sales, especially in smaller cities. Core profit rose 22% from a year earlier to CNY12 billion, and net profit was up 24% to CNY11.5 billion. The Guangdong-based developer has set a 2017 contract sales target of CNY400 billion, a 30% jump from 2016.
Science & technology
- The highest sea level along China’s coast in decades has prompted scientists to warn of a greater risk of marine disasters. The average sea level recorded last year was 82 mm higher than the average for the period covering 1993 to 2001, according to the State Oceanic Administration (SOA). It was 38 mm higher than that of 2015.
- Wu Jianguo, 49, a former stockbroker who fled Shanghai 14 years ago with CNY3.6 million stolen from clients, has been sentenced to 13 years in prison for embezzlement and misappropriation of funds.
- Chinese brokerages, including the country’s biggest, CITIC Securities Co, reported a sharp drop in profits in 2016 as lackluster stock market activity dragged down commission incomes. Brokers in China have been struggling after a stock market boom came to a turbulent end in 2015. Two of China’s top listed brokerages – GF Securities and Changjiang Securities – saw their 2016 net profit drop 39.2% and 36.8%, respectively, last week.
- The number of flights landing and taking off from Beijing Capital International Airport will be cut by more than 300 a day in April to allow for runway maintenance. The world’s second busiest airport will close one of its three runways between April 2 and April 29. About 40% of flights take off or land on this runway every day. The closure will reduce flights by about 20% and the number of passengers by 10% to 15%.
- China Southern Airlines, Asia’s biggest carrier by passengers, is in advanced talks to sell a stake to American Airlines for about USD200 million. The sale likely would take place through a private placement. China Southern has a market value of about USD10 billion. An investment in China Southern would allow American to strengthen its presence in the Chinese market. Rival Delta Air Lines acquired a minority stake in China Eastern Airlines in 2015. China Southern and Delta are members of the SkyTeam global airline alliance. American is in the competing Oneworld group, which doesn’t have a China-based partner.
- China is expected to get moving soon on construction of Indonesia’s beleaguered high-speed rail project. China Development Bank (CDB) could disburse pre-agreed loans for the 142 km Jakarta-Bandung rail line as early as the end of this month. The project has been stalled for over a year amid delays in government clearances and local resistance to the route, but if it does go ahead, it will be a milestone in China’s ambitions to export its high-speed rail technology.
- Domestic and foreign airlines plan to open more than 100 new international routes linking China with regions along the Belt and Road Initiative in the coming aviation season, the Civil Aviation Administration of China (CAAC) announced. The routes are mostly to Russia, countries in Central, Southeastern and Southern Asia, as well as the southern Pacific Ocean region. The 2017 summer and autumn civil aviation season started on March 26 and will end on October 28.
- China Railway Corp said that it had replaced all cables provided by Shaanxi Aokai Cable Co that supplied a substandard product that might ignite and release toxic gases. The problematic cables were first found to have been used on subway Line 3 in Xian. Eight people at the private company have been detained, and local police also shut down the company’s production sites. Beijing metro said no lines in the capital used Aokai’s products.
- The board of the Southeastern Pennsylvania Transit Authority in Pennsylvania in the U.S. approved the purchase of 45 multi-level rail carriages from CRRC MA for its regional rail network, saying they offered the best value. The multilevel coaches will meet “Buy America” requirements, with 60% or more of the parts, labor and fabrication done in the U.S. CRRC beat Bombardier and Hyundai Rotem to win the order. The carriages will be produced primarily at CRRC MA’s main U.S. manufacturing facility in Springfield, Massachusetts.
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