Short news
January 25, 2016 Category Short news, Weekly
Automotive
- Qoros’ President Chen Anning said that targeted sales in 2016 are 30,000 to 50,000 units. Chen took over as Qoros CEO when Phil Murtaugh offered to quit in early January “for personal reasons”. Qoros is pinning its hopes on its SUV, the Qoros 5, which it unveiled at the Guangzhou auto show in November. The automaker said the SUV would hit the market in March. In 2015, SUV sales in China surged 52.4%, a striking contrast to the 4.6% growth for the overall Chinese auto market.
Finance
- Dalian Wanda Group Co is planning to launch an initial public offering (IPO) of its internet finance arm and has announced plans for the development of its internet finance business, namely big data analysis, credit investigation, online lending, mobile payment, as well as membership cards issuance and development. By 2020, Wanda’s internet-based financial services are expected to cover 5,000 large shopping centers, 2 million commercial tenants, and 700 million to 800 million consumers.
- Shanghai has widened the use of electronic invoices and simplified online tax application, the local tax bureau announced. The moves took effect from the beginning of 2016. Simplifying the online tax system is aimed at attracting international talent and boosting “Internet Plus” development strategy as well as encouraging innovation and entrepreneurship.
- The People’s Bank of China (PBOC) intended to issue a digital currency as soon as possible. The bank said the currency could reduce the costs of circulating banknotes, facilitate economic activities and help combat money-laundering. A virtual currency would also help the bank improve control of the money supply and payment efficiency, it added. Ecuador last year became the first nation to issue a state-backed digital currency.
- “The fluctuations in the currency market are a result of market forces and the Chinese government has no intention and no policy to devalue its currency,” China’s Vice President Li Yuanchao told Bloomberg in an interview on the sidelines of the World Economic Forum’s annual meeting in Davos, Switzerland.
- China’s foreign exchange market posted a turnover of CNY110.93 trillion last year, the State Administration of Foreign Exchange (SAFE) said. It is the first time the annual turnover of the country’s foreign exchange market has been released. In 2015, China opened its interbank foreign exchange market to 14 overseas central banks and similar institutions to build up a market-oriented and more transparent market.
- Financial markets need more clarity on how Chinese authorities are managing their currency, particularly the relationship of the yuan to the U.S. dollar, IMF Managing Director Christine Lagarde said, as Bank of Japan Governor Haruhiko Kuroda told a World Economic Forum (WEF) panel in Davos that China should use capital controls to stabilize its currency while keeping domestic monetary policy loose.
Foreign investment
- Contracted foreign direct investment (FDI) in Shanghai surged 86.5% year-on-year to USD58.9 billion last year with only USD1.96 billion flowing into the manufacturing sector, down 22.2% on an annual basis. Foreign funds in the service sector climbed 95.7% to USD54.5 billion. 535 multinational companies had located their regional headquarters in Shanghai. There are close to 9,100 foreign-invested manufacturing companies in Shanghai.
- Health
- The MD Anderson Proton Therapy Center at the University of Texas in the U.S. has agreed with China’s Concord Medical Services Holdings to create a referral office providing free services to Chinese patients seeking proton therapy abroad. Industry analysts put the number of potential patients in the country at around 3,000 each year. Proton therapy is radiation treatment using a beam of protons to deliver radiation directly to a cancer tumor, destroying abnormal cells while sparing healthy tissue.
Macro-economy
- The wealthiest 62 people who own as much as half the world’s population – according to Oxfam – include five investors from the Chinese mainland and three tycoons from Hong Kong. Robin Li, Founder of search engine Baidu; Ma Huateng, also known as Pony Ma, CEO of Tencent Holdings; Jack Ma, Founder of the online shopping platform Alibaba; Wang Jianlin, Chairman of Chinese real estate and entertainment conglomerate Wanda Group; and Li Hejun, Chairman of the Hanergy Group, are among the world’s richest. In Hong Kong, business tycoon Li Ka-shing and property moguls Lee Shau Kee and the Kwok brothers, Thomas and Raymond, feature on the list.
- President Xi Jinping said that China’s long-term economic fundamentals remain sound despite downward growth pressure and recent financial market volatility, adding that the new normal would be the major characteristic of the economy during the 13th Five Year Plan period (2016-2020), and a necessary course the economy must go through to realize higher, more balanced development. Xi also said innovation should be made the pivot of economic development, which would help foster new engines of economic growth.
- While global growth is forecast to rise to 3.4% in 2016 and 3.6% in 2017, China is expected to continue slowing, with its growth rate dropping to 6.3% in 2016 and 6% in 2017, the International Monetary Fund (IMF) said in its World Economic Outlook update. Robert Bergvist, Chief Economist at SEB, said China was experiencing a cyclical slowdown coupled with a structural slowdown, as the economy becomes more mature.
- China’s working-age population saw its largest decline in modern history in 2015. Defined as people between 16 to 60, it fell by a record 4.87 million, more than the population of Ireland, to 911 million. Cai Fang, Vice President of the Chinese Academy of Social Sciences (CASS), has long argued that the demographic change reduced the country’s potential growth rate to 6.2% from 2016 to 2020. People older than 60 accounted for 16.1% of the population by the end of 2015.
- Shanghai’s economy grew 6.9% last year, the same as nationally, accelerating from its 6.8% growth in the first three quarters, the Shanghai Statistics Bureau said. The city’s economic output amounted to CNY2.49 trillion in 2015, with the service sector producing 67.8% of total output, compared with 2014’s 64.8%. The output of six key industries – refinery, biomedicine, machinery, information technology, steel and automobiles – fell 0.2% due to weak market demand.
- China’s migrant population decreased for the first time in about 30 years in 2015, dropping to 247 million, a decrease of 5.68 million on 2014. A drop in the migrant population coupled with a shrinking labor force will slow economic growth as increased labor costs will reduce investment. China’s newborn population dropped by 320,000 from 2014 to 16.55 million last year.
- Over the next three years, the government plans to close 4,300 coal mines, eliminate 700 million tons of outdated production capacity and relocate one million workers. A budget of CNY30 billion has been allocated to finance the measures. Domestic demand for coal likely fell by about 4% year-on-year in 2015, following a 2.9% drop in 2014.
- Employees in China may see an average salary rise of 5% to 8% this year and more jobs are likely to be found in the services sector, recruitment firm Morgan Mckinley said. The overall job market is cooler amid an economic slowdown, but there are still opportunities in banking and financial services as well as in the technology innovation sector, market observers said.
- China’s urban unemployment rate remained at 4.05% at the end of 2015, unchanged from the end of the third quarter. The government aimed to keep the urban jobless rate below 4.5% last year.
Mergers & acquisitions
- China National Chemical Corp (ChemChina) has bought a 12% stake in Swiss energy and commodities trader Mercuria Energy Trading, the second overseas investment by the company in a week. ChemChina also said it would buy Germany’s KraussMaffei Group, which makes machinery for producing plastics and rubber, for €925 million.
- The Hellenic Republic Asset Development Fund (HRADF) has accepted COSCO Group’s improved bid for the acquisition of 67% of Piraeus Port Authority (PPA) shares. The improved binding offer amounts to €368.5 million. The Chinese company was the sole bidder. The concession deal must be approved by PPA’s shareholders in February, then Greece’s Court of Audit and the parliament. The process was expected to be completed by May.
- Synaptics, the maker of touch-screen technology used in mobile devices and computers, is nearing an agreement to be bought by a state-backed Chinese investment group that values the company at more than USD110 per share. A deal could be reached in early March. No final agreement has been made and talks may still fall apart. Samsung Electronics Co is Synaptics’s largest customer.
Real estate
- Grade A office rents in China’s four first-tier cities will be stable this year but face downward pressure in most second-tier cities amid abundant supply, according to CBRE. New supply of Grade A offices in the four first-tier cities is forecast to fall 1.6% this year from 2015 while the inventory in second-tier cities is seen to jump 22%. Around 9.3 million square meters of Grade A office space are set to be released across China in 2016.
- The mainland China and Hong Kong commercial real estate markets were standout performers in the Asia Pacific last year, and investment activity is expected to remain at similar levels this year, according to property consultant JLL. Real estate transaction volumes in Hong Kong climbed 66% year-on-year in 2015 to USD12 billion, led by Chinese investors seeking to invest offshore. In mainland China, transaction volumes reached USD10.5 billion in the final quarter of 2015, up 49% year-on-year. For the full year, volumes were up 51% to a record CNY179 billion in local currency terms.
- Two units of China Orient Asset Management Corp said they had formed a strategic partnership with global investment firm KKR & Co to co-invest in credit and distressed asset opportunities in the Chinese market, especially in the property sector.
- Outstanding loans for real estate development, including land and housing, rose 21% in 2015 from a year earlier to CNY21.01 trillion, a growth rate 2.1 percentage points faster than in 2014. New loans to the sector amounted to CNY3.59 trillion last year, CNY843.4 billion more than in 2014. New home mortgages reached CNY2.66 trillion last year, up CNY936.8 billion from 2014.
- Country Garden said Forest City, its mega reclamation project in south Malaysia’s Johor state, will start apartment pre-sales in the next six months and target global buyers. The project, comprising four man-made islands at the junction of Singapore and Malaysia, is the Chinese developer’s largest project overseas, with an expected total investment amounting to CNY250 billion.
- Retail
- Chinese brands accounted for 40% of global smartphone sales in 2015 and took seven spots in the top-10 list. Global smartphone sales reached 1.29 billion units last year, up 10.3% year-on-year, according to TrendForce, a Taiwan-based research company. The market share of Chinese brands is expected to hit 45% this year. The top-five global brands in terms of sales were Samsung, Apple, Huawei, Xiaomi and Lenovo. Other Chinese brands in the top 10 in 2015 were TCL, Oppo, Vivo and ZTE.
- Chinese shoppers, who largely propped up growth last year, are likely to trim spending this year. A survey by ANZ Bank showed Chinese consumer confidence at a record low this month, and data from the China Beige Book showed fourth-quarter job growth and wage gains at four-year lows. The trend is expected to continue this year.
Science & technology
- China’s first mission to Mars scheduled for 2020 will be one the most ambitious ever attempted and more complex than other maiden flights to the red planet carried out by other nations, as China plans to put a lander and rover on its surface, according to Yuan Minhui, Director of the Beijing Institute of Space Science and Technology Information.
- For the first time four Chinese students have won Rhodes Scholarships – the world’s most prestigious award for postgraduates and Ph. D. students outside the United Kingdom. There were 16 Chinese candidates.
- Uber CEO Travis Kalanick said at the Geekpark conference in Beijing that “in the next five years, there will be more innovation, more invention, more entrepreneurship happening in China, happening in Beijing, than in Silicon Valley”. That will in turn spur Chinese corporations to begin to go global and open up to entrepreneurs from abroad, he added.
Stock markets
- The China Securities Regulatory Commission (CSRC) denied a report by Reuters claiming that Chairman Xiao Gang had offered to resign.
- The China Securities Regulatory Commission (CSRC) has approved seven companies to issue IPOs, raising an estimated CNY4 billion in total. Three of them, including Eastern Pioneer Driving School Co and Southern Publishing & Media Co, will float their shares on the Shanghai Stock Exchange, while the other four will do so on the Shenzhen market. Under new regulations, the CSRC removed the requirement for full subscription payment before share sales. The seven companies are expected to launch their IPOs before the Chinese Lunar New Year holidays in February.
- Share prices rose on January 22 after the government signaled it will curb overcapacity in industries that have been dragging down economic growth. The benchmark Shanghai Composite Index gained 1.25% to close at 2,916.56 points while the Shenzhen Component Index jumped by 1.36%.
Travel
- The China Tourism Academy, a think tank under the China National Tourism Administration (CNTA), forecast that the country would see 133 million outbound visits in 2016, a rise of 11% year-on-year, close to the 12% growth seen in 2015, but down significantly from rates of 18% to 22% experienced from 2010 to 2012.
- China plans to merge more than 40 entities working on plane engines into a group with CNY145 billion in assets, including new additional investment of CNY35 billion. China is eager to develop its own engine to power its planes, and to push its economy from labor-intensive work into more sophisticated sectors.
- Passengers flying from Hong Kong will no longer have to pay fuel surcharges after February 1 in a historic cancelation of the levy following the collapse in oil prices. Savings will amount to HKD109 off long haul airfares and HKD24 on regional flights but passengers with tickets booked before February for travel afterwards will not be refunded.
- Some 2.91 billion trips are expected to be made in China during the 2016 Spring Festival travel period between January 24 and March 3, up 3.6% year-on-year, according to the National Development and Reform Commission (NDRC). Travel will peak between February 5 and 7, a day before Spring Festival, and again between February 11 and 13, a day before people start working again. About 2.48 billion trips will be made via road, 332 million by railway and 54 million via air, according to the NDRC.
- Cathay Pacific Airways has drastically scaled back its expansion plans this year, including postponing new international routes and delaying a planned increase in flight frequency. Put off were the introduction of daily flights to Manchester and Boston, and the launch of flights to London’s Gatwick airport.
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