Short news
April 18, 2017 Category Short news, Weekly
Expat corner
- 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.
Finance
- 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 investment
- 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.
Foreign trade
- 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.
Macro-economy
- 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.
Real estate
- 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.
Stock markets
- 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.
Travel
- 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.
VIP visits
- 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.
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