Short news
March 20, 2017 Category Short news, Weekly
NPC & CPPCC sessions
- The National People’s Congress (NPC) passed the General Provisions of the Civil Law, the opening chapter of a civil code planned to be enacted in 2020. The provisions, which take effect on October 1 this year, were adopted with 2,782 of 2,838 National People’s Congress Deputies present voting in favor. The compilation of five books that deal with property, contracts, tort liability, marriage, and inheritance, began late last year and work on the books is progressing.
- Of the 2,838 Deputies to the National People’s Congress (NPC) who attended the closing ceremony, the overwhelming majority voted in favor of documents submitted, including the Government Work Report, the work report of the NPC Standing Committee, the work reports of the top court and top procuratorate. Lawmakers filed 514 motions: 492 on legislation, 16 on NPC supervision and six on other issues, according to the NPC.
- A pledge to contain fast rising home prices was added to the Premier’s annual work report on the closing day of the NPC session on March 15. Several lower-tier cities have raised the bar for home purchases this month as speculators from outside flood smaller markets, with home prices nationwide continuing to rise.
- The government will cut business taxes and administrative fees at a faster pace to ease the burden on the nation’s enterprises, Premier Li Keqiang said at the first meeting of the State Council since the annual gatherings of the National People’s Congress and the Chinese People’s Political Consultative Conference.
Automotive
- An international new energy vehicle expo scheduled for late May in Nanjing, Jiangsu province, is expected to attract nearly 1,000 new energy vehicle manufacturers as well as suppliers of batteries and charging equipment from China and abroad.
- Qingdao Doublestar Group, one of the oldest rubber companies and a leading tire manufacturer in China, may acquire a 42.01% stake in South Korean tire maker Kumho Tire, becoming its largest shareholder. Doublestar has two tire production plants – one in Qingdao, Shandong province, and the other in Shiyan, Hubei province with a combined annual production capacity of 15 million tires.
Finance
- China’s policymakers support opening financial markets for capital and investment to flows both in and out of the country, according to People’s Bank of China Vice Governor Pan Gongsheng. Scrutiny of foreign companies transferring profits out was “not excessive”, he added. A healthy foreign-exchange market helped all participants, said Pan, who also heads the State Administration of Foreign Exchange (SAFE), which executes currency policy. Funds in yuan aren’t fully convertible to other currencies under current capital account rules. Companies must provide supporting documentation including tax records and audit reports when they plan to transfer profit out of the country.
- Hong Kong could become a member of the Beijing-led Asia Infrastructure Investment Bank (AIIB) at a meeting at the end of June as long as lawmakers’ approve a HKD1.2 billion share buy-in, payable over five years. The buy-in will secure an approximate 0.7% stake in the AIIB. Hong Kong would like to become the corporate treasury center for the AIIB. Over 30 countries are applying for membership.
- China’s holdings of U.S. Treasuries have declined to USD1.05 trillion in January, down USD7.3 billion from December, but the drop could be underestimated as the tally of Belgium, which analysts say is holding Chinese custodial accounts, dropped USD8.2 billion to USD112 billion, the lowest since August 2015.
- Guo Shuqing, Chairman of the China Banking Regulatory Commission (CBRC), urged banks to draft new rules on wealth and asset management, and to more tightly control risky leveraged investments. Funds raised from wealth management products should support real economic activity, he added. Guo made the comments in a speech at a meeting of the China Banking Association.
- Russia’s central bank has opened its first overseas office in Beijing, marking a small step forward in forging a Beijing-Moscow monetary alliance to bypass the U.S. dollar in the global monetary system. It is a “very timely” move to aid specific cooperation, including bond issuance, anti-money laundering and anti-terrorism measures between China and Russia, said Dmitry Skobelkin, Deputy Governor of the Central Bank of Russia. Russia is preparing to issue its first federal loan bonds denominated in Chinese yuan.
- Net foreign exchange sales by Chinese banks continued to drop in February signaling a let-up of capital outflow. Banks bought USD108.8 billion worth of foreign currency and sold USD118.9 billion, resulting in net sales of USD10.1 billion last month, according to the State Administration of Foreign Exchange (SAFE). The deficit fell from January’s USD19.2 billion and USD46.3 billion in December.
- The China Banking Regulatory Commission (CBRC) has eased licensing rules for foreign-owned banks on investment banking services in the country, and their investment into domestic banking institutions. Wholly-owned foreign banks, joint ventures and their branches can now cooperate with their parent groups overseas to assist Chinese companies expand globally through overseas bond sales, IPOs, mergers and acquisitions (M&As), and other financing activities. They can also invest in some domestic financial institutions. By the end of last year, foreign banks had set up 39 locally-incorporated entities in China, 121 subsidiaries and 166 China representative offices.
Foreign trade
- China sent its Special Representative on Latin American Affairs Yin Hengmin to a high-level dialogue on Asia-Pacific economic integration in Chile, but Foreign Ministry Spokeswoman Hua Chunying said that the gathering was “not a meeting of the Trans-Pacific Partnership as some media have said”. Representatives from 15 countries, covering all signatories of the Trans-Pacific Partnership (TPP), all members of the Pacific Alliance, as well as China and the Republic of Korea, were invited to the two-day meeting in Vina del Mar.
Macro-economy
- Private investors will be encouraged to play a bigger role in upgrading the manufacturing sector, as China steps up efforts to widen access to key industries, Miao Wei, Minister of Industry and Information Technology said. Speaking at the three-day China Development Forum in Beijing, he said investment in manufacturing grew by only 3% last year, partly because the sector yields lower returns than the real estate and financial sectors.
- China will continue to deepen its supply-side structural reform to address economic imbalances while holding the bottom line to contain risks in the financial and property markets. He Lifeng, Chairman of the National Development and Reform Commission (NDRC), warned about capital abandoning real economic activities and engaging in financial speculation, as well as excessive funds flowing into the property sector.
Real estate
- Baoneng Group subsidiary Jushenghua has pledged 182 million in China Vanke A-shares as collateral to Ping An Securities in a repurchase agreement. The shares represent 1.65% of Vanke’s total issued capital. The pledge comes amid a ban on Baoneng Group Chairman Yao Zhenhua from working in the insurance industry for 10 years, a move announced by the China Insurance Regulatory Commission (CIRC) last month when Foresea Life Insurance, a unit of Yao’s Baoneng group of companies, was found to have provided “fake materials” and “violated rules for using an insurance fund”.
- The planned re-election of China Vanke’s 11-member Board of Directors on March 27 is likely to be delayed until at least early May amid an unsettled fight among shareholders for control of the company. Currently Baoneng Group, Vanke’s largest shareholder with a 25.4% stake, and China Evergrande, the third-biggest shareholder with a 14.07% holding, have no seats on the board. China Resources, formerly the second largest shareholder which this year transferred its entire 15.29% stake to Shenzhen Metro Group, still occupies three seats.
- Hong Kong-listed homebuilder Agile Group Holdings, which is very active in Hainan province with a huge tourism property project, posted better-than-expected 2016 core earnings. Pensioners from China’s Northeastern provinces flock to Hainan every winter to escape the smog and cold in their home provinces. Agile bought another two Hainan sites, in Clearwater Bay and Haikou, recently where land costs are around CNY3,000 per square meter, bringing its total land resources on the island to 5.74 million sq m. Agile’s core earnings for 2016, excluding foreign exchange losses, increased 13% to CNY2.7 billion. Net profit grew 32.5% to CNY3 billion, while revenue was up 8.5% to CNY46.7 billion.
- Milway Development, a unit of HNA Group, has paid HKD7.44 billion for its fourth plot of development land at Hong Kong’s former Kai Tak airport. The site sold at a price slightly exceeding the market expectation of between HKD6.1 billion to HKD7.4 billion, raising concern it could add fuel to the already hot residential market. After combining all four sites into a big plot, it will yield a total gross floor area of 2.02 million sq ft with an average land cost of HKD13,416 per sq ft.
- Between January and February, CNY912.1 billion of new homes, excluding government-funded affordable housing, were sold across the country, a year-on-year increase of 22.7%, the National Bureau of Statistics (NBS) said. But the gain slowed from the 36.1% rise in 2016. The area of new homes sold during the two-month period rose 23.7% from a year earlier to 124.39 million sq m. The rise accelerated from the 22.4% gain last year, according to the Bureau’s data. China’s investment in property development grew 8.9% year-on-year in the first two months of this year, 2 percentage points faster than the overall growth rate of 2016. For residential properties, investment rose 9% year-on-year, and the floor space of new housing construction grew 14.8% from a year ago.
- February home prices in China’s 70 largest cities jumped 12.4% from a year ago. Compared to a month earlier, February prices rose 0.4% after seasonal adjustments by Goldman Sachs, based on data released by the National Bureau of Statistics (NBS). Sanya, the tourism city in Hainan province, attracted the most buying interest, with February prices gaining 1.3%, while Hefei, the provincial capital of Anhui, reported a 40.5% annual gain in prices.
- Since March 15, Beijing, Qingdao, Nanjing and Ningbo have stepped up their home-purchase restriction policies. Nationally, home sales by volume for the first two months of this year were up 26% year-on-year, reflecting a slowdown from 34.8% growth for 2016, according to the National Bureau of Statistics (NBS).
Science & technology
- China is developing a system to recover parts of rockets used in space launches to bring down costs and make its space program more commercially competitive. The parachute system would bring the rocket engine and booster safely back to the ground so they can be reused in future launches. The recovery system is under development at the China Academy of Launch Vehicle Technology in Beijing.
Travel
- An airline in Inner Mongolia is offering an all-you-can-take “subscription” service on its new flight route for CNY500 a month. The flight from Urad Middle Banner to Baotou was inaugurated last week. Previously, the only way to travel between the two places was by car or a three-hour bus ride. The flight cuts the travel time down to just 50 minutes. The Cessna 208 Caravan used on the route can take only 8 passengers at a time.
- Boeing and Chinese plane manufacturer Commercial Aircraft Corp of China (COMAC) will start to build a Boeing 737 completion center in Zhoushan at the end of March, set to make its first delivery in 2018. This is Boeing’s first overseas facility as part of its 737 production system, and aimed to deliver 100 Boeing 737 planes a year.
- It is estimated that more than 280,000 rental bikes are in service in Shanghai, with the number expected to reach 500,000 by June, according to Guo Jianrong, Secretary General of the Shanghai Bicycle Association. Shanghai is the first city to issue draft guidelines to regulate the bike-sharing industry.
- Train and rail equipment manufacturer China Railway Rolling Stock Corp made a major breakthrough in overseas markets in 2016. Its total value of orders from abroad surged by 40% year-on-year to USD8.1 billion in 2016. Exports reached 102 countries and regions and about 83% of countries with railroads are using CRRC products.
- Chinese railcar manufacturer CRRC Sifang America broke ground in Chicago at a USD100 million plant that will build railcars for the city’s transit authority and become the company’s North American hub for the assembly of railcars. CRRC Sifang will supply more than 840 new railcars to replace approximately half of the agency’s fleet.
VIP visits
- Chinese Vice Premier Wang Yang paid a four-day official visit to the Philippines, where he attended the opening ceremony of the China-ASEAN Year of Tourism and the China-Philippines Economic and Trade Forum. Chinese companies signed agreements with their Philippine counterparts to purchase USD1.7 billion worth of fruit and other products. As many as 73 trade deals were signed in Manila, also regarding lumber, copper cathodes and nickel ore. Philippine President Rodrigo Duterte plans to attend the Belt and Road Forum for International Cooperation in Beijing in May.
- The Chinese government encourages more companies to invest in Rwanda’s major infrastructure construction projects in such areas as transportation and energy, President Xi Jinping said while meeting with Rwandan President Paul Kagame. Xi added that China would like to support Rwanda’s construction of special economic zones. He added that China’s policies toward Africa will not change and the steps to push forward China-Africa cooperation will not slow down.
- Premier Li Keqiang will make official visits to Australia and New Zealand this week to boost economic ties with the two countries. The visits will be the first to the two countries by a Chinese Premier since 2006. In 2008, New Zealand was the first developed economy to sign a free-trade agreement (FTA) with China.
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