Short news
June 19, 2017 Category Short news, Weekly
Automotive
- China is planning to draw up standards on smart, internet-connected vehicles as well as autonomous driving. By 2020, the country is expected to formulate at least 30 sets of standards which will basically be capable of supporting driving assistance and low-level autonomous driving, said the Ministry of Industry and Information Technology (MIIT). China is working to build a globally competitive automotive industry, with smart cars as one of its priorities. Last week, the China Industry Innovation Alliance for the Intelligent and Connected Vehicles was established in Beijing.
- Car-sharing platform Ponycar said it plans to launch up to 10,000 electric vehicles in China’s first-tier cities within a year. The Shenzhen-based company has already been offering services in Shenzhen and Guangzhou, with a total of over 2,000 EVs, mostly supplied by Zhidou Electric Vehicle Sales Co and BAIC Motor. Ponycar has so far established a partnership with more than 200 sites in Shenzhen for users to pick up and return the cars.
Finance
- The Ministry of Finance has announced that in the months to come, it will sell its first U.S. dollar denominated sovereign bonds since 2004, along with yuan bonds. The move would mark China’s first overseas issuance of national debt since Moody’s downgrade of the country’s sovereign credit rating in May. The bonds will be sold in Hong Kong to test international investors’ appetite for Chinese government debt.
- The International Monetary Fund (IMF) urged Beijing to resume progress towards a flexible exchange rate, in a subtle criticism of China’s recent interventions in support of the yuan currency. The IMF also said China should speed up reforms to ward off financial risks, after two weeks of discussions with Chinese officials during its annual review of the Chinese economy. David Lipton, First Deputy Managing Director, said that China should gradually strengthen its monetary policy framework, allowing the yuan to move more freely and improving the communication with markets.
- Banks in China lent surprisingly more in May while growth in the money supply slowed to a record low amid deleveraging taking place in the financial sector. New yuan loans totaled CNY1.1 trillion in May, CNY126.4 billion more than the same month last year, the People’s Bank of China (PBOC) said. M2 rose 9.6% year-on-year, the first single-digit gain on record. M2 growth slowed amid tighter regulation to prevent risks, the PBOC said in a statement.
- The Hong Kong Monetary Authority (HKMA) raised its base rate by 0.25 percentage points to 1.5% on June 15 following the U.S. Federal Reserve’s overnight move. Meanwhile, HKMA Chief Executive Norman Chan reiterated his warning to Hong Kong home buyers that mortgage rates will rise in the near future. The HKMA is obliged to follow U.S. interest rates as Hong Kong’s currency is pegged to the U.S. dollar. A number of Hong Kong banks had already raised their mortgage rates in advance of the Federal Reserve’s decision. But China does not need to follow suit by raising its interest rate, said Yu Yongding, former Member of the Monetary Policy Committee of the People’s Bank of China (PBOC).
- Led by China, the Asia-Pacific region (excluding Japan) will surpass Western Europe this year as the world’s second-largest wealth market behind North America, with wealth assets of about USD42.3 trillion by the end of 2017, according to the Boston Consulting Group. The United States and China have the most millionaire households in the world, nearly 7.1 million and 2.1 million respectively. Investors in China and the Asia-Pacific region put about 65% of their assets in cash and deposits with 12% in bonds and 23% in stocks.
- The European Central Bank (ECB) announced that it will diversify some of its foreign exchange reserves into the Chinese yuan. The ECB invested €500 million of its foreign reserves in renminbi assets during the first half of 2017. The ECB sold a small portion of its U.S. dollar holdings, which remain its largest portfolio, leaving the overall size of the ECB’s foreign reserves unchanged. The new investment only accounted for 1% of the ECB’s total €68 billion in foreign exchange reserves, but it is significant for the yuan’s internationalization. The National Bank of Belgium also announced it completed foreign reserve investments in yuan during the first half of 2017 as part of its diversification strategy, buying €200 million worth of yuan.
- Hong Kong, which just joined the Beijing-led Asian Infrastructure Investment Bank (AIIB), is now lobbying the bank to set up a regional office in the city, and is also seeking to have an alternate Governor on the bank’s board. Hong Kong agreed to pay USD155 million for a stake of less than 1% in the AIIB.
Foreign investment
- Shenzhen China Star Optoelectronics Technology Co, a major Chinese display panel manufacturer, started construction on a sixth-generation LTPS AMOLED display panel production line in Wuhan, Hubei province. The move aims to break the monopoly of South Korean companies in the area of flexible display panels for smartphones. At full production, the company will satisfy about 5% of the total global demand of the AMOLED smartphone panel industry. Samsung Electronics currently has a marketshare of around 90%.
- Foreign direct investment (FDI) in China dropped 3.7% year-on-year in May to CNY54.67 billion, extending a downward trend. In the first five months, FDI inflow shed 0.7% from the same period in 2016 to CNY341.08 billion, while 12,159 new foreign-funded enterprises were set up, up 11.9%. Despite a drop in the overall FDI, foreign investment in the service sector, especially in the high-tech and modern service industries, continued to grow steadily. In the first five months, the high-tech service sector attracted CNY48.64 billion of foreign capital, up 20.5% year-on-year. Investment from the European Union grew 6.2% in the January-May period.
Foreign trade
- The United States moved one step closer toward resuming its beef export to China after the U.S. Department of Agriculture said trade rules have been finalized, adding that it has reached agreements with China on final details of a protocol to allow it to export beef to China. China imposed a ban on U.S. beef in December 2003 after mad cow disease was found in U.S. cattle. Before the ban, the United States was China’s largest supplier of imported beef.
- China and Singapore will do their best to expedite talks on the Regional Comprehensive Economic Partnership (RCEP) agreement, Singapore Foreign Minister Vivian Balakrishnan said, calling the potential pact a statement on the importance of free trade, after U.S. President Donald Trump’s withdrawal of the U.S. from the rival Trans-Pacific Partnership (TPP) trade agreement, to which China is not party. RCEP is less comprehensive than TPP and the main focus is on reducing tariffs. Coverage of services is more modest than in the TPP.
- China plans to import two new varieties of genetically-modified crops from the United States, as it accelerates a review of biotech products. China’s Ministry of Agriculture gave permits to two U.S.-based agriculture companies, Monsanto and Dow AgroSciences, to ship their soybeans and corn to China from June 12. The Ministry said it also renewed import approvals for 14 other GMO crops.
Health
- In Shanghai the average number of hospital visits last year dropped by 30% among local residents who signed an agreement for general physician (GP) service, officials from the Shanghai Health and Family Planning Commission said. Shanghai started in 2015 to introduce its health reform system aimed at encouraging people to make more use of their local GPs. The system also allows patients to get medicines – normally only available at leading hospitals – at their neighborhood health centers.
IPR protection
- The Ivanka Trump brand has won approval for four more trademarks since April 20 despite repeated questions from lawmakers about whether she is using her position as a White House Adviser to help her company. Ivanka Trump Marks has at least 24 trademarks that were granted provisional or full approval in China, plus 43 pending marks and three invalid marks, according to the Trademark Office. The trademarks cover wedding dresses, jewelry, bags, spa services, real estate, financial services, construction, furniture, carpets and alcohol.
- Yiwu leads Chinese counties in trademark registrations for the 4th year. Companies in Yiwu have registered 91,919 trademarks, topping all county-level areas in China.
Macro-economy
- Two more provinces – Inner Mongolia and Jilin – have been found falsifying economic data, dealing a fresh blow to central government attempts to improve the credibility of China’s statistics. Inner Mongolia reported a 7.2% rise in its gross domestic product (GDP) last year, while Jilin said it grew 6.9%. Both beat the national average of 6.7% last year. Local government officials have been known to over-report economic growth and industrial output while under-reporting unemployment and accidents.
- Seven Chinese provinces and cities have increased their minimum wages this year, with wages in Shanghai, Shenzhen and Tianjin now exceeding CNY2,000 per month. Tianjin’s monthly minimum wage will be raised from CNY1,950 to CNY2,050 starting from July 1, and that of Shenzhen has gone up to CNY2,130 from June 1. In April, Shanghai increased its minimum wage from CNY2,190 to CNY2,300, the highest among the seven cities and provinces.
- China’s entertainment industry will be worth CNY1 trillion by 2020, almost triple last year’s valuation. Booming web dramas, online paid subscriptions, and new capital and companies entering the sector are behind the rapid financial growth, industry officials said during the Shanghai TV Festival.
- China’s value-added industrial output rose by 6.5% year-on-year in May, flat with April’s figure. Industrial output of state-owned enterprises (SOEs) rose 6.2% in May, that of joint stock enterprises grew 6.8%, while foreign and off-shore-investment enterprises posted a 5.9% increase. Retail sales rose 10.7% in May, flat with April’s. Fixed-asset investment (FAI) rose 8.6% year-on-year in the first five months. Investment by the private sector, which accounted for more than 60% of the total FAI, rose 6.8% annually.
- The International Monetary Fund (IMF) raised its forecast for China’s 2017 economic growth to 6.7%, its third increase this year, citing “policy support, especially expansionary credit and public investment”. China’s economy grew a faster-than-expected 6.9% in the first quarter of this year, well above the government’s target of around 6.5% for the full year.
- Sales of excavators in China surged 106% in May from a year ago and their annual sales continued to grow over the past nine months amid demand from the infrastructure and property sectors. More than 11,280 excavators were sold in China in May and 21 of the 26 main brands posted sales growth. China enjoyed annual sales growth of above 50% over the past nine months. Only 6.9% of the excavators sold were being exported last month. Investment in China’s infrastructure totaled CNY3 trillion over the first four months, up 23.3% from the same period a year ago.
- Alibaba Group Holding and Huawei Technologies have topped this year’s rankings of the most coveted employers for China’s university students. About 80,000 students from 110 universities participated in the annual online poll, which Sweden-based employer-branding company Universum has conducted in the country since 2006 to track the career aspirations of the domestic market’s future talent pool. The percentage of Chinese students who want to work for a start-up or build their own business after graduation has reached a historic high of 20% this year.
- Of the 70 or so economic indicators produced by various Chinese government agencies, three are particularly untrustworthy – the figures for the jobless rate, fixed asset investment (FAI) and personal income, according to a research note published by China International Capital Corporation (CICC).
Mergers & acquisitions
- Honghua Group, China’s largest onshore oil rigs exporter, is on its way back to profit after being integrated into the China Aerospace Science and Industry Corp (CASIC) – one of China’s two main state-owned aerospace and defense equipment makers. The previously privately-held company would now be able to secure orders from state oil and gas producers, which had shunned private sector suppliers in the last few years amid Beijing’s anti-corruption drive. Strategic cooperation agreements signed early this year by CASIC with China National Petroleum Corp and China Petrochemical Corp will help re-open doors for business in the domestic market, said Honghua Chairman Chen Yajun.
Real estate
- Soho China has launched its newest commercial complex in Shanghai’s Changning district. With a total gross floor area of around 170,000 square meters, Soho Tianshan Plaza comprises 74,000 square meters of Grade A offices and 17,000 sq m of high-end retail and hotel space.
Retail
- Chinese consumers’ spending on luxury goods is set to double to CNY1 trillion by 2025, or 37% of the overall global luxury market, McKinsey said in a report. Chinese consumers will account for most of this CNY2.7 trillion growth in value of the global luxury goods market. Around 7.6 million Chinese households spent an average of CNY71,000 on luxury goods per year, according to McKinsey.
Science & technology
- China launched its first X-ray space telescope on a Long March-4B rocket from the Jiuquan Satellite Launch Center in the Gobi desert. The 2.5-ton Hard X-ray Modulation Telescope (HXMT) was sent into an orbit of 550 kilometers above the earth to help scientists better understand the evolution of black holes, and the strong magnetic fields and the interiors of pulsars. It acts as a small observatory in space, carrying three detectors. Compared to other astronomical satellites, the HXMT has a larger detection area, energy range, and wider field of view.
Stock markets
- The Shanghai SE 50 Index, dubbed China’s “nifty 50” index, slumped 1.5% on May 14 in its worst day since mid-December, as investors took profits in blue-chips which had far outperformed the broader market in the past months, and dumped stocks partly owned by Anbang Insurance Group, after Chairman Wu Xiaohui was placed under investigation.
- Zhong An Online Property and Casualty Insurance, the first online-only insurer in China, could list its shares in Hong Kong as early as July or August, raising up to USD2 billion. If successful, Zhong An would be the first online insurance stock in Hong Kong. Major shareholders include Alibaba’s financial-services affiliate Ant Financial, which has a 16% stake, as well as Tencent, Ping An Insurance, China International Capital Corp (Hong Kong), Morgan Stanley and other private equity funds.
- The China Securities Regulatory Commission (CSRC) has imposed CNY6.14 billion of fines on rule violators in the first five months – a daily average of CNY40 million. The total is set to “again hit an all-time high” in 2017, said CSRC Deputy Chairman Jiang Yang. Total fines in the first five months were already 43% higher than those for all of 2016. In 2016, the CSRC issued 183 penalties for illegal market activities and fines totaling CNY4.28 billion.
Travel
- The local government of Tianjin has asked all employees in public sectors, including government departments, state-owned enterprises (SOEs), and affiliated organizations, to report any overseas trips, a sign of tightening regulations on government workers amid the ongoing anti-graft drive. It also stipulates that employees can only go abroad once a year. Other cities have also issued strict regulations on overseas travel for public servants.
- Beijing’s first mid-to low-speed magnetic levitation (maglev) railway line is preparing for its debut later this year. Services on Line S1 will run from Shimenying station in western Mentougou district to Pingguoyuan station in Shijingshan district, a transfer station for Line 1. The maglev line will have eight stations over 10.2 kilometers and will run at a maximum speed of 100 kilometers per hour.
- The C919, China’s first homegrown large passenger plane, received another 30 orders from Everbright Financial Leasing Co, a subsidiary of China Everbright Bank Co, lifting its total orders to 600 from 24 Chinese and overseas clients. China Eastern Airlines will be the first to take delivery of the plane, which made its maiden flight on May 5.
- A new high-speed railway will be built soon between Shanghai and Nanjing, Jiangsu province, linking up more cities in the Yangtze River Delta and shortening travel time in the area. The new 274- km line will link Nanjing and Taicang, where the new line will join another railway under construction to reach Shanghai. The new line could further shorten travel time between Shanghai and Nanjing to less than one hour.
- Hong Kong International Airport may be surpassed by Guangzhou’s airport in a few years in terms of passenger volume, according to Hang Seng Management College. Guangzhou’s Baiyun International Airport handled 60 million passengers last year, trailing Hong Kong’s 70 million passengers. But the passenger growth rates suggest it is only a matter of time before Guangzhou, which ranks 15th globally, overtakes Hong Kong in the No 8 spot.
- HNA Group said its shareholders will donate their stakes to the Hainan Province Cihang Foundation, a charity which currently already controls 22.75% of the company, and is already the largest shareholder. The statement came in response to a report published by the Financial Times on June 2, saying that HNA’s largest single shareholder is a “mysterious” businessman named Guan Jun, who was said to control 29% of the company. HNA responded by claiming that Guan is a “private investor” who does not work for the company. HNA said its largest shareholder is the Cihang Foundation, not Guan Jun, and no government officials or their relatives hold shares of the company.
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