Short news
May 22, 2017 Category Short news, Weekly
Belt and Road Forum
- U.S. construction and engineering companies have been largely silent on the One Belt, One Road initiative, according to the South China Morning Post. Part of the reluctance might be a result of conflicting technical standards.“In addition to increasing economic interdependence between China and the region, the initiative could create new barriers to U.S. exports and investment by exporting Chinese standards,” the Brookings Institution said in a report. “For instance, OBOR’s development of high-speed rail connections across South-east Asia comes with a willingness to accept Chinese high-speed rail standards, creating barriers to competing U.S. technologies.”
- Wang Jianlin, China’s richest man and Chairman of Dalian Wanda Group, has revealed plans to build gigantic theme parks whose scale could rival Disneyland, in countries along the Belt and Road route. The company has already signed contracts to open two Wanda City theme parks in Paris and New Delhi, but Wang did not specify in which two “major countries” along the Belt and Road route the remaining Wanda City parks would be constructed.
- The European Union is actively pushing China to speed up talks over an investment agreement, and to take concrete action to cut its huge overcapacity in steel, according to European Commission Vice President Jyrki Katainen. He took up the issues when meeting Vice Premier Ma Kai on the margins of the Belt and Road Forum.
- President Xi Jinping told Myanmar State Counselor Aung San Suu Kyi that China would continue to help the country achieve peace and called for both sides to maintain stability on their shared border. The two leaders met following China’s Belt and Road Forum. Premier Li Keqiang called for steady progress in the development of oil pipelines, ports, and economic zones.
- China is likely to incorporate the Arctic Circle into its Belt and Road Initiative, and change it to ‘One Belt, One Road, One Circle’. The Arctic holds an estimated 30% of the world’s undiscovered natural gas and 13% of its undiscovered oil, according to the United States Geological Survey. During his visit to Finland in April, Chinese President Xi Jinping said that China and Finland would “seize the opportunity of Finland’s rotating chairmanship of the Arctic Council to enhance cooperation in Arctic affairs and promote environmental protection and sustainable development of the Arctic”.
Automotive
- Audi, a unit of Volkswagen, has resolved a dispute with its dealers that could have disrupted the carmaker’s business in China. The dealers objected to Audi’s plans to cooperate with SAiC Motor Corp, China’s largest automaker, as the dealers currently sell Audi cars imported from Germany as well as Chinese-made vehicles from Audi’s existing joint venture with FAW.They said the partnership would cause current dealers to lose out to SAiC on access to key future products, affecting their sales and profitability. Audi decided to distribute its models from a potential partnership with SaiC via its existing sales network in China.
Finance
- China increased its holdings of U.S. Treasuries by the most in two years by USD27.9 billion to USD1.09 trillion in March. China remains the second-largest foreign holder of American debt. Adding the USD3.7 billion surge in Belgium’s ownership, which is often seen as a home to China’s custodial accounts, the total increase was the biggest since 2014. Japan, the largest non-U.S. holder of government debt, increased its total to USD1.12 trillion, up USD3.4 billion from a month earlier.
- Toshihiro Nikai, Secretary General of Japan’s Liberal Democratic Party (LDP), has told Chinese President Xi Jinping that Japan was interested in joining the Asian Infrastructure Investment Bank (AIIB), providing that outstanding questions over the governance of the bank were resolved. Japanese Chief Cabinet Secretary Yoshihide Suga said the Japanese government was still carefully monitoring the AIIB’s operations.
- The People’s Bank of China (PBOC) has set up a fintech committee to enhance research, planning and coordination of work on financial technology. Its impact on monetary policy, financial markets, financial stability, payment and clearing will be studied. “Fintech, or technology-driven financial innovation, has both injected vitality into financial development and brought new challenges to financial security,” the PBOC said on its website.
- The China Insurance Regulatory Commission (CIRC) plans to conduct inspections to rectify market irregularities and protect consumer interests. From June to mid-October, local insurance authorities will conduct on-site investigations in 46 branches of 16 insurance entities. The inspections will focus on violations including fraudulent sales practices, fake or absent customer information, and failure to pay small insurance claims efficiently.
- Ant Financial has postponed its planned IPO to the end of next year to focus on defending and regaining marketshare from Tencent’s WeChat. Ant Financial’s Alipay held 55% of China’s mobile payments market in 2016, down from 68% just a year earlier, according to iResearch Consulting Group. Tencent’s marketshare climbed from 21% to 37% from 2015 to 2016.
- Alastair Wilson, Moody’s Investor Services’ Director of Global Sovereign Rating, said the Agency was confident that China’s economy is well geared to withstand financial shocks, despite the nation’s high debt levels. Speaking at Moody’s annual Emerging Markets Forum in London, Wilson said China’s fiscal strength, its partially closed capital account, and high foreign exchange reserves are all helping it absorb shocks, if necessary, and dissipate them over time. Moody’s current sovereign rating for China is Aa3, which is classified as investment grade.
- Shanghai will further regulate illegal fundraising operations and cross-border transactions through leasing companies amid the national crackdown on financial risks, the city government said. All domestic and foreign leasing companies registered in Shanghai will be targeted. Shanghai had 1,216 leasing firms at the end of 2015, nearly a third of the national number. The campaign will last till June 24.
Foreign investment
- Foreign direct investment (FDI) between the U.S. and China surpassed USD60 billion in 2016, a historic high, according to a report by the Rhodium Group and the National Committee on U.S.-China Relations. “What used to be a one-way street – with money flowing predominantly from the United States to China – is now a two-way highway with tens of billions of dollars in annual FDI flowing in each direction,” the report said. The cumulative value of U.S. FDI transactions in China was over USD240 billion, and the cumulative Chinese FDI in the U.S. totaled USD110 billion by the end of 2016.
- Shanghai was second only to London in 2015 as a preferred investment site for foreign money, according to a KPMG report, and the city aims to keep its high profile after attracting 15% of foreign funds invested in China last year. But foreign direct investment (FDI) in Shanghai in the first quarter of this year declined for the first time in 17 years.
Macro-economy
- More than 30,000 Chinese companies and institutions – including several major firms in Hong Kong – were affected by the WannaCry ransomware cyber-attack. More than 4,300 educational institutions were infected by the malware, according to Qihoo 360’s Threat Intelligence Center. Over 20,000 petrol stations went offline, suspending on-line payments. More than 20% of all personal computers in China are still running the Windows XP operating system, which is the most vulnerable to the attack.
- The Chinese government plans to cut annual corporate costs by CNY120 billion through measures such as lowering logistics costs and cutting business fees. Railway freight rates will also be lowered, as well as electricity transmission and distribution rates. A government meeting chaired by Premier Li Keqiang also called for more efforts to implement the “Made in China 2025” plan.
- The National Development and Reform Commission (NDRC) has approved 12 fixed-asset investment projects worth a total of CNY141.6 billion in April, mainly in energy, water conservation and transport. China’s investment in fixed assets increased 8.9% year-on-year in the first four months of 2017.
- Chinese authorities have unveiled a reform plan for the country’s oil and gas industry to improve efficiency, giving more play to the market. China’s oil and gas sector is dominated by three state-owned heavyweights: China National Petroleum Corp (CNPC), China Petrochemical Corp (Sinopec) and China National Offshore Oil Corp (CNOOC). The reform calls for the participation of eligible enterprises in prospecting and developing oil and gas resources which used to be dominated by state-owned companies.
Mergers & acquisitions
- Two of China’s biggest foam and mattress makers Mlily and King Koil are competing to acquire the United Kingdom’s biggest bed retailer Dreams with bids expected in the range of GBP400 million. They are also up against UK bed maker Silentnight, owned by HIG Capital. Dreams was founded in 1986 under the name Sofa Bed Center in Uxbridge, West London, by Mike and Carol Clare. Mike Clare joined the ranks of the UK’s wealthiest people when he sold the company for GBP200 million to UK-based private equity firm Exponent in 2008. In 2016, Dreams posted pretax profits of GBP32 million, up 136%.
- The Shanghai municipal government announced a fresh round of reform and restructuring of local state-owned enterprises (SOEs). As part of the reform, Bright Food (Group) Co will absorb Shanghai Fisheries Group Co, which will become a wholly-owned subsidiary of Bright Food.
Real estate
- Henderson Land Development has bought the world’s most expensive commercial land plot in Hong Kong’s Central district, beating eight rival bids. Henderson Land will pay a record HKD23.28 billion for the government’s Murray Road commercial plot. The plot, which can be developed into a commercial building with 465,005 square feet of total gross floor area, translates to HKD50,064 per square foot, way above market expectations and professional valuations.
- Growth in new home sales continued to slow across China in the first four months of this year as restraint measures were strictly enforced. More than CNY2.79 trillion of new homes, excluding government-funded affordable housing, were sold between January and April, a year-on-year rise of 16.1%, the National Bureau of Statistics (NBS) said. The area of new homes sold during the four-month period climbed 13% from a year earlier to 365.25 million square meters.
- An auction of nine plots of land to be held on May 22 in Jiaxing, a city about an hour’s drive from Shanghai, attracted at least 425 bidders. The authorities had to change the venue of the auction from a conference room to the city’s 1,400-seat “grand theatre” to accommodate the representatives from property developers. The starting prices of the land on sale range from CNY2,790 to CNY12,100 per square meter, just a fraction of that in the larger neighboring cities of Shanghai and Hangzhou. The city also announced a lock-up period to curb speculation. Homebuyers must hold on to properties for at least two years before putting them up for sale.
Retail
- China’s 100 leading catering businesses last year saw a quicker growth pace in business revenue and robust profit expansion. Combined business revenues of top restaurant chains rose 7.4% year-on-year in 2016 to CNY218 billion, up 5 percentage points from that in 2015, according to the China Cuisine Association. Combined net profits surged 28.8% in 2016 from 2015. Most top restaurant chains were located in Shanghai, Beijing and Chongqing, with the business revenues in these three cities accounting for 67% of the total from the 100 industry leaders last year. The operating income of the Chinese catering industry nationwide was CNY919.6 billion in the first quarter of 2017, up 10.8% year-on-year.
Science & technology
- A survey of 6,217 students who plan to study abroad, or their parents, found that the United States remains the top choice, with 50% preferring the U.S., up from 46% last year. It is the third consecutive year the country ranked No 1 in the annual Report on Chinese Students’ Overseas Study. The UK was the second-most popular destination, as it has been for three years. The survey, by Vision Overseas Consulting Co and Kantar Millward Brown, was conducted in over 40 cities in February and March.
- China is stepping up research and development (R&D) of the Tianhe-3 supercomputer, which aims to be 10 times faster than the current world leader. The Tianhe-3 is designed as the world’s first prototype exascale supercomputer, which means it can make a quintillion calculations per second. The supercomputer will be used in such fields as the analysis of smog distribution, airplane design, oil surveying, and the development of artificial intelligence.
Stock markets
- The China Securities Regulatory Commission (CSRC) announced it is enforcing penalties on Sealand Securities Co, a mid-sized securities firm, over the bond trading scandal involving up to CNY16.5 billion that emerged last December. The regulator will suspend Sealand Securities’ registration of asset management products and will ban the firm from opening new securities accounts for its clients. The penalties also included suspension of its bond underwriting business. The penalties are to last for one year.
Travel
- Visitor numbers to Taiwan fell by 10% to 2.54 million in the first quarter of this year, dragged down by a 42% drop in arrivals from the Chinese mainland to 659,575 from 1.14 million. Mainland visitors accounted for about 33% of the total in 2016, the biggest group.
VIP visits
- China will for the first time host a meeting of the group overseeing management of the Antarctic as the country is seeking to bolster its presence in both polar regions. Some 400 delegates, from more than 40 countries and international organizations, will attend the annual meeting of the Antarctic Treaty, which begins on May 22 and ends on June 1. China’s top diplomat, Yang Jiechi, and Vice Premier Zhang Gaoli are representing China. The meeting will cover administration of the treaty, climate change, tourism and other management issues. The treaty has 53 members, 29 of which are consultative parties with voting rights, including China, which joined in 1983.
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