Short news
July 17, 2017 Category Short news, Weekly
Automotive
- Start-up Faraday Future said it would move production of its planned luxury electric SUV FF 91 to a new site, virtually scrapping a stalled USD1 billion Las Vegas factory amid deepening financial woes of key investor, Chinese entrepreneur Jia Yueting. Faraday is part of a network of young electric vehicle firms in China and the United States backed by Jia, who has said his company LeEco is facing a severe shortage of cash after expanding too fast and in too many sectors. Faraday had initially planned to open the Las Vegas factory late in 2017, with a product portfolio of seven models.
- Audi has traditionally held the premium crown in China, thanks to its early entry into the market. However, BMW and Mercedes-Benz have been rapidly catching up over the past few years. As such, the China-only 1 Series saloon is a key model. BMW is the first of Germany’s Big Three marques to produce a car only for the Chinese market. According to BMW, the car is aimed at fresh college graduates, but at a list price of CNY289,800, they would need to have rich parents to afford such a vehicle as their first car.
Finance
- Yang Xiaochao, Secretary General of the Central Commission for Discipline Inspection (CCDI), is expected to be appointed Chairman of the China Insurance Regulatory Commission (CIRC), a signal that China’s ongoing crackdown on irregular business practices in the financial industry may be set to intensify. The Chairman’s position has been vacant since April, when former Chairman Xiang Junbo was put under investigation for suspected “serious disciplinary violations”. Yang, a native of Nanjing, headed the Beijing Financial Affairs Bureau from 2008 to 2013, and has been the city’s Auditor and Vice Mayor.
- Monetary policies are expected to become relatively tight in the second half of this year, as fending off financial risks has become a greater challenge than stabilizing growth, said economists and analysts. This may mean less monetary liquidity in the market.
- China will maintain a tight grip on capital outflows despite foreign exchange reserves rising for a fifth straight month in June, analysts said. The hawkish stance of the U.S. Federal Reserve (FED) and huge financial risks at home will reinforce the belief that strict controls on capital flows are necessary to ensure economic stability, they said. China’s forex reserves rose to an eight-month high of USD3.06 trillion in June, up USD3 billion from a month earlier, the State Administration of Foreign Exchange said.
- Chinese President Xi Jinping’s administration is still facing “significant obstacles” in reining in credit growth and reducing financial risks, Standard & Poor’s has said, adding that Beijing was trying hard to “deleverage”, but the government’s goal of maintaining relatively fast growth, as well as the large state-owned sector, would continue to lead to credit expansion. Local governments were also demanding more credit, the report said. Standard & Poor’s has not changed its sovereign rating for China, but it kept a “negative” outlook on its credit worthiness.
- Demand for pension insurance in China will help turn the country into the world’s second largest insurance market by 2027, contributing a third of new global premiums generated during the next decade, Allianz said in a report. Gross premium income is expected to rise 14% annually between 2017 and 2027 in China, faster than the global growth of 5.9%. Allianz said China’s consumer demand and policy support on life insurance will drive premium growth in the sector to 16.7% annually in the next decade.
- With the potential USD1.5 billion initial public offer (IPO) by Zhong An Online Property & Casualty Insurance, China’s first online-only insurer, “insurtech” is rapidly becoming the new focus of venture capital funds, according to Qiming Venture Partners. Zhong An plans to leverage artificial intelligence technology and big data to bolster services. Since its inception in October 2013 through the end of 2016, Zhong An sold 7.2 billion insurance products and served more than 492 million customers.
- The People’s Bank of China (PBOC) said that CNY1.54 trillion in new loans was issued last month, up from CNY1.11 trillion in May. Of the June figure, CNY483 billion was for home mortgages, reflecting continuing property sales despite efforts by more than 50 cities to keep a lid on home price growth. China Merchants Bank Analyst Liu Dongliang said credit growth might lose steam over the rest of the year as slow savings growth and strict PBOC bank capital adequacy rules took their toll.
- Combined trust loans, entrusted loans and undiscounted bankers’ acceptances, which are common forms of shadow banking activity, dipped to CNY428.8 billion in the second quarter from CNY2.05 trillion in the first quarter, according to Reuters calculations.
- The M2 money supply grew 9.4% from a year earlier in June – a record low – after a 9.6% growth rate in May, compared with a 12% target for the broad money supply for the whole year. Still, credit grew at a proper level to support economic activities, Ruan Jianhong, Manager of the Survey and Statistics Department of the People’s Bank of China (PBOC) said. He added that the change was a natural result of deleveraging in the financial sector.
- Ping An Insurance (Group) is gearing up to take on China’s internet giants, while pursuing international expansion. “Our Chairman, Peter Ma, wants to transform the entire group into a technology company within 10 years,” Ericson Chan, Chief Executive at subsidiary Ping An Technology, told the South China Morning Post. Ping An Group has 138 million customers and operates 28 subsidiaries, including China Ping An Life Insurance – the country’s second-largest life insurer by premium size. Ping An Technology provides financial technology solutions and cloud computing services to the group, as well as about 150 external customers.
- China’s fiscal revenue recorded faster year-on-year growth in June, adding to signs of structural improvement. Fiscal revenue increased by 8.9% year-on-year to CNY1.7 trillion last month, accelerating from the 3.7% growth in May, according to the Finance Ministry. In the first six months, fiscal revenue increased by 9.8% year-on-year to CNY9.43 trillion.
Foreign investment
- China’s sovereign wealth fund China Investment Corp (CIC) posted a 6.22% return on its overseas investments last year, reversing a 2.96% loss in the previous year. The USD813.5 billion sovereign wealth fund reported a total net profit of USD75.3 billion last year, up from USD73.9 billion in the previous year. CIC is seeking to increase investments in international infrastructure projects, longterm assets such as property and private equity, and to tap into the opportunities generated by the Belt and Road Initiative. The U.S. remained the biggest investment destination for CIC, accounting for about 42% of its total overseas investment last year.
- The Australian local government has bought back 51.4% of a mining license issued for a huge Chinese-run coal mine near prime agricultural land. Chinese company Shenhua was granted the original exploration license for the AUD1.0 billion Watermark mine near Gunnedah in New South Wales state in 2008 by a previous Labor government. But the decision was challenged by local farmers and environmental activists, who said it was harmful to the region. Shenhua Australia Chairman Liu Xiang said his firm would ensure the project “meets the highest environmental standards”.
- China will establish an integrated digital business license registry, enabling one-stop registration for foreign and domestic enterprises within a given time frame. The government will also simplify work and residential permit application procedures for high-level foreign employees.
- ChIna attracted CNY100.45 billion in foreign direct investment (FDI) in June, posting 2.3% annual growth to end a two-month decline. In the first half, FDI inflow stood at CNY441.54 billion, down 0.1% year-on-year. The manufacturing sector attracted CNY128.6 billion of foreign investment in the first half, up 3% year-on-year and accounting for 29.1% of total FDI. Foreign investment in the service sector reached CNY309.99 billion, accounting for 70.2% of the total. A total of 2,894 foreign-funded enterprises opened for business in China last month.
Foreign trade
- U.S. President Donald Trump has nominated Dennis Shea, Vice Chairman of the U.S.-China Economic and Security Review Commission, which has been highly critical of China, as Deputy U.S. Trade Representative. The Commission recommended in November that U.S. lawmakers take action to ban China’s state-owned firms from acquiring U.S. companies.
- Exports in yuan terms rose 17.3% year-on-year to CNY1.35 trillion in June, compared with May’s 15.1% increase. Imports surged 23.1% to CNY1.05 trillion last month. The volume of foreign trade in the first six months grew 19.6% from a year earlier – the quickest growth since the second half of 2011 – to CNY13.14 trillion. Exports rose 15% while imports increased 25.7% with a trade surplus of CNY1.28 trillion in the first half, down 17.7% year-on-year. During the first six months, trade with the European Union jumped 17.4% year-on-year. Trade with the United States and ASEAN went up by 21.3% and 21.9%, respectively.
Health
- China reported 13 fatalities from H7N9 bird flu in June, taking the death toll since October to at least 281. There were 108 deaths in the March to May period, spurring further concern about the virus’s spread. Chinese disease control experts are warning the public to stay alert for H7N9 avian flu and stay away from live poultry. A program to vaccinate poultry against the H7N9 strain will be carried out nationwide from this autumn.
Macro-economy
- China surpassed the United States as the top producer of renewable energy in 2016, according to the latest BP Statistical Review of World Energy, with China contributing about 40% of global growth – more than the entire OECD. China also provided the main source of world growth for both hydro and nuclear power. The BP data showed carbon emissions in the world rose slightly by 0.1% in 2016, while in China, the emissions fell 0.7% from a year ago.
- Salaries in major cities in China have declined quarter-on-quarter for the first time since 2016, recruitment portal Zhaopin.com said in a report. The average salary in China’s 37 top cities was CNY7,376 by the end of the second quarter, a 3.8% drop from the first quarter. Micro and small sized companies led the decline as average salaries in these business dropped 31% quarter-on-quarter. The report attributed the decline to a salary-war among startups.
- China has fulfilled the year’s task of cutting steel capacity over the first six months, boosting the nation’s industrial upgrading, Shen Ying, Chief Accountant of the State-owned Assets Supervision and Administration Commission said. The nation has reduced steel overcapacity by 5.95 million tons during the first half year, “finishing the year’s task ahead of schedule”. China’s efforts to reduce capacity since the end of 2015 have boosted prices of steel and the profits of steel makers. China has also lowered coal capacity by 6.59 million tons.
- The National Development and Reform Commission (NDRC) said that by year’s end it will finish compiling a plan on the development of five interregional city clusters, including the Guangdong-Hong Kong-Macao Greater Bay Area, the Western Taiwan Straits Economic Zone, the Guanzhong Plain Urban Cluster, the Lanzhou-Xining Cluster, and the Hohhot-Baotou-Erdos-Yulin Cluster. The NDRC aims to finish plans for a total of 19 city clusters by 2020.
Mergers & acquisitions
- China hopes Germany and the EU will avoid sending confusing and negative signals when introducing new regulations after Germany tightened foreign takeover rules in key sectors, a Foreign Ministry Spokesman said. The new regulations will allow the German government to block takeovers if there is a risk of critical technology being transferred abroad. “Under the current global situation,” he said, “China is willing to work with Germany and the EU to promote trade liberalization and investment facilitation based on the principle of mutual benefit and common development,” the Spokesman added.
Real estate
- Sunac China Holdings is to pay CNY29.6 billion for a 91% stake in 13 Wanda projects, while CNY33.6 billion will be spent purchasing 76 Wanda hotels, including in Beijing and Wuhan. Wanda Chairman Wang Jianlin said the deal would cause debt at Wanda’s commercial property arm to “drop greatly.” The Sunac deal indicates that “Wanda is running out of options to raise funds through normal financing channels,” said Ivan Han, Shanghai-based Analyst with financial information provider Morning Whistle. The risks of asset management will be shifted to Sunac through this arrangement, while Wanda would earn loan interest income, which is less risky.
- Shanghai’s pre-owned housing index fell for the first time in four months amid continued sluggish sales, the Shanghai Existing House Index Office said. The index, which monitors month-on-month price changes in 130 areas around the city, lost 6 points, or 0.22%, from May to 4,001 points. The average cost of pre-occupied homes climbed in 55 areas, fell in 55 and was flat in the rest. In June, about 12,200 units of existing houses changed hands across the city, a month-on-month decrease of 16.6% and a year-on-year plunge of 49.9%, Shanghai Homelink Real Estate Agency said in an earlier report.
Retail
- Unmanned convenience stores, where customers use their mobile phones to scan barcodes and pay for items themselves, have been suffering from the high summer heat that melted some of the snacks inside. Two of the stores operating in Shanghai were forced to close temporarily as a result of poor air conditioning. Some of the stores are operated by technology start-up BingoBox. Prices are 5% lower than in traditional convenience stores. Wahaha plans to open 100,000 staff-less convenience stores with artificial intelligence within the next three years.
- Consumer confidence dropped in Shanghai in the second quarter amid a weaker real estate market. The Index of Consumer Confidence in Shanghai compiled by the Shanghai University of Finance and Economics, dipped 1.5 points from the first quarter to 117.6 in the April-June period. A reading above 100 points indicates optimism. The survey showed declining willingness to spend money among young and middle aged consumers worried about salary growth and high home prices. People’s intentions to buy homes dropped 4.4 points from the previous quarter to 56.6 and intentions to buy cars fell 2.1 points to 89.7.
- Supermarket chain Vanguard and Tesco’s data analysis firm Dunnhumby announced a 50-50 joint venture on data science. The joint venture, China Wisdom Dunnhumby, will help analyze data on shopping experience, consumer habits, multi-channel distribution networks and supply chains. Initially, it will cater to more than 3,000 Vanguard outlets and later expand into telecommunications, banking and other industries.
- Chinese demand for traditional home appliances such as washing machines, refrigerators and televisions may have peaked, say analysts, pointing to the persistently flat or negative growth of those products in the past two years. After three decades of breakneck economic growth, most of the mainland’s affluent households have already equipped themselves with sufficient home appliances. “The rebound in housing sales over the past 18 months or so has not given much of a boost to appliance demand,” wrote Ernan Cui from Hong Kong-based Gavekal Dragonomics in a recent note. Housing sales volume grew 7% in 2015 and 22% in 2016, while refrigerator sales have declined every year since 2014, and sales of washing machines and televisions only managed 2% growth by volume in 2016.
Science & technology
- Significant progress could be made on artificial sun technology by 2023 – and it could be used to generate clean energy for China in 50 to 60 years, Song Yuntao, lead scientist on the country’s largest fusion energy project, told the Science and Technology Daily. The scientists aim to keep extremely hot plasma for more than 1,000 seconds, at which point they expect the plasma to produce a self-sustainable nuclear chain reaction, an important step for power generation. That milestone would be less than six years away, based on Song’s estimate. China is a key contributor to the International Thermonuclear Experimental Reactor (ITER), the world’s largest fusion reactor, which is being built in southern France.
- A financial reward system for the publication of academic papers has been instrumental in raising China’s profile in the global scientific community. However, a new study has questioned whether it also has resulted in scientists becoming more concerned about earning money than the accuracy of their research. A study by Chen Bikun, Associate Professor at Nanjing University of Science and Technology’s School of Economics and Management, found that between 1999 and 2016, academics were paid between USD30 and USD165,000 for each paper published in an internationally recognized journal. The top figure equals about 20 times a professor’s annual salary.
Stock markets
- China’s stock markets will be more connected to the international market with MSCI’s incorporation of China’s A shares and the launch of the Bond Connect between the mainland and Hong Kong. The proportion of China’s A-shares in Morgan Stanley Capital International Emerging Market Index is expected to rise from 0.73% in August, 2018 to 20% in 2030, Citibank said.
Travel
- Shanghai Communist Party Secretary Han Zheng rode a bike from a bike-sharing company when inspecting walking and cycling paths along the Huangpu riverfront. His use of the bike is seen as a show of governmental support for bike-sharing companies such as Ofo and Mobike, which had worried that opposition from local authorities could obstruct their business.
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