Short news
July 31, 2017 Category Short news, Weekly
Automotive
- Shares of Great Wall Motor, China’s biggest maker of sports utility vehicles (SUVs), suffered their biggest intraday decline in four months of 7.1%, after the company’s first-half net profit fell by 49.4% to CNY2.5 billion. To attract buyers, the Hebei-based carmaker spent CNY1 billion in March offering discounts to promote its Haval brand of SUVs. The carmaker is counting on its new Haval H6, as well as its premium SUV brand WEY to be the growth drivers for the rest of the year.
- The Haval H6 from Baoding-based Great Wall Motors was the best-selling SUV model in the first half of this year, with sales of 226,500 vehicles. Statistics from the China Association of Automobile Manufacturers showed that 4.5 million SUVs were sold in China over the period, 2.7 million of which were Chinese brands. Eight of the 10 best-selling SUV models were Chinese brands. Tiguan from Volkswagen and Envision from Buick were the only two foreign models in the top 10.
Finance
- The New Development Bank (NDB), founded by the BRICS countries, plans to put about two-thirds of its loans into sustainable infrastructure development in the next five years, Sergio Suchodolski, NDB Director General of strategy and partnerships, said during his address to the 2017 BRICS Youth Forum in Beijing. The NDB intends to approve at least USD32 billion in loans, including 15 projects in 2017 and up to 50 in 2021. The ninth BRICS Leaders’ Meeting will be held in Xiamen, Fujian province, in September.
- The Ministry of Public Security launched a campaign against financial schemes that raise money from the public, including pyramid schemes, in a bid to safeguard economic security and social stability. The action comes on the heels of a series of pyramid scams and other financial crimes that resulted in great financial losses and sparked demonstrations. Recently, Chinese police cracked down on Shanxinhui, a fake charity, accusing the company of operating a pyramid scheme and cheating people out of money in the name of raising funds to help the poor.
- China’s debt risks are under control as enhanced supervision has taken effect, but regulatory bodies need to enhance coordination to tackle risk points, Li Yang, Director General of the National Institute for Finance and Development with the Chinese Academy of Social Sciences (CASS) said. Central government debt in 2016 stayed the same compared to the previous year, while local government and household debt went up by 9 percentage points and 5 percentage points respectively, compared to 2015.
- China’s top leaders decided at a key financial work conference earlier this month to create the Financial Stability and Development Committee to coordinate the work of the financial supervisory bodies and address growing financial threats. Analysts are still guessing who will head the new committee, but are betting on the Premier or a Vice Premier. Ma Kai, one of four Vice Premiers, is in charge of the finance sector.
Foreign trade
- Deutsche Post DHL, Europe’s biggest mail and express company, is looking to partner with a Chinese delivery counterpart to help cope with the surging volume of European goods shipped into China due to the growth in online shopping. DHL’s interest in a local tie-up follows the creation of a joint venture in May between United Parcel Services (UPS) and SF Holdings, parent of Shanghai-listed SF Express. According to AliResearch, China’s cross-border e-commerce market is expected to hit CNY12 trillion by 2020.
- Shanghai will deepen reforms in the free trade zone (FTZ) and accelerate construction of a technology and innovation center, Mayor Ying Yong said. The free trade zone will be a trial zone for reforms that combine opening-up and innovation to become a test zone for risks within an open economy, and a pilot zone to enhance government capabilities, Ying said. The free trade zone is also a frontier for companies to expand overseas as part of China’s One Belt One Road initiative.
- The American companies most at risk in a trade war with China are reported to be Hollywood studios, who are lobbying for a higher quota of foreign films to be allowed on the Chinese market; Boeing, which may lose out to Airbus in the biggest single aviation market in the world; Apple, which may be boycotted in favor of Chinese brands Huawei, Oppo, Vivo and Xiaomi; Starbucks, which had hoped to double the number of outlets in China over the next five years, but which could face a consumer backlash; and carmakers General Motors, Ford and Chrysler, which have all heavily invested in China, but are also vulnerable to a boycott. Finally, Walmart operates 20 outlets in the country, and was planning to open 40 new stores over five years in Guangdong province alone.
Health
- Shanghai United Imaging Healthcare Co is investing CNY2.2 billion in three phases to build the world’s largest medical imaging equipment manufacturing plant in the Guian New Area in Guizhou province by 2020. According to Firestone Inventing, 402 Chinese companies produce medical imaging equipment, accounting for only 10% of the Chinese market, which is forecast to grow to CNY600 billion to CNY800 billion by 2020.
- China is on track to lead the world in organ transplants by 2020 following its abandonment of using organs from executed prisoners, Huang Jiefu, Chairman of the China Organ Donation and Transplantation Committee, said. Voluntary civilian organ donations had risen from 30 in 2010, the first year of a pilot program, to more than 5,500 this year. That will allow around 15,000 people to receive transplants this year, Huang said. China is hosting a major conference on transplantation in Kunming in August.
- The number of cigarettes sold in Beijing last year decreased by 8% year-on-year, the biggest decline in recent years. Among people 15 or older in Beijing, the percentage who smoke decreased to 22.3% last year, a drop of 4.7% from 2014. The total number of smokers decreased by about 200,000. The number of cigarettes sold in Beijing last year reached 93.8 billion. Beijing adopted one of the strictest tobacco control regulations in China in June 2015.
IPR protection
- The Administrative Measures for Priority Examination of Patent Applications will come into force on August 1 and are set to reduce patent filers’ burdens and improve the efficiency of related administrative services. Besides invention patent filings, the new regulation will also cover utility models and industrial designs. China has ranked No 1 in invention patent filings worldwide for six consecutive years. The number reached 565,000 in the first half of this year, an increase of 6.1% year-on-year. Some 209,000 invention patents were granted during the same period, including roughly 160,000 to Chinese filers. The average ownership of invention patents in China has increased to 8.9 per 10,000 people.
Macro-economy
- The International Monetary Fund (IMF) has revised up its forecasts for China’s economic growth in 2017 and 2018, the third time it has raised its outlook for the country this year. The IMF said it expected China’s economy to grow by 6.7% this year, up from the previously anticipated 6.6%. It also said growth in 2018 was on track for 6.4%, compared to its previous estimate of 6.2%. The announcement came as China’s leaders pledged to make shutting down “zombie companies” and stabilizing the property market top priorities. The IMF also warned China to rein in excessive credit growth, which “could result in an abrupt growth slowdown”.
- There were 1.11 vacancies per applicant at job centers in 95 cities across China in the last quarter, Ministry of Human Resources and Social Securities data show, down slightly from 1.13 in the prior quarter. Labor demand in the commercial and leasing sector soared while financial sector demand declined. The ratio edged down in the wealthier eastern region, while demand intensified in western regions. Beijing was the most competitive big city for high-end jobs, followed by Shenzhen, Shanghai and Chengdu.
- Zhaopin data show that white-collar salaries in 37 major cities dropped to a monthly average of CNY7,376, the first quarter-over-quarter decline on record. Wages at the smallest companies fell 31%, which means “startups using high salaries to lure talent is a memory”, Zhaopin said in a recent report. Professional services such as finance, accounting, law and consulting were the highest-paying sectors, with an average monthly salary of CNY10,165. Wage growth for migrant workers slowed to 6.3% compared to more than 20% in 2011.
- China will strengthen the coordination of financial regulation, stabilize the property market and prevent systemic financial risks. “Financial disorder will be tackled thoroughly, financial coordination will be strengthened, and the efficiency and level of financial sectors supporting the real economy will be improved,” according to a statement released after a meeting of the Political Bureau of the Communist Party of China, presided over by General Secretary Xi Jinping. “Policymakers will take more coordinated steps to fend off potential financial risks,” said Gao Haihong, Economist of the Chinese Academy of Social Sciences (CASS).
- Chongqing continued to lead China’s economic growth, with a double-digit expansion in the first half of the year. The city recorded growth of 10.5% in the period, the highest figure among the 25 provinces that have released first-half figures. The success was achieved despite the dismissal of two Party Secretaries, Bo Xilai, who is serving a life sentence for corruption, and Sun Zhengcai, who was placed under investigation earlier this month. The rust-belt province of Liaoning continued to see the slowest growth at 2.1%.
- Chinese policymakers would be willing to sacrifice some short-term economic growth in order to deal with systemic risks, according to Yang Weimin, Vice Chairman of the Office of the Central Leading Group on Financial and Economic Affairs. China is trying to contain rising debt and defuse property bubbles amid fears such risks could derail the economy if not handled well.
Mergers & acquisitions
- State-owned China Merchant Port Holdings is investing up to a USD1.12 billion to develop, manage and operate Sri Lanka’s Hambantota Port. China Merchant said it will take a 80% stake in Hambantota International Port Group with the rest held by the Sri Lanka Ports Authority. China Merchant is also the largest foreign investor in the port of Colombo.
- The China Securities Journal reported that 62 state-controlled listed firms had suspended trading as of July 21 because they were in the process of selling a stake in the company to private or foreign firms as part of ownership restructuring. But some analysts said the restructuring would be dictated by the government rather than market-driven reform.
- A USD416 million investment in U.S.-based Global Eagle Entertainment by Beijing Shareco Technologies, a unit of Chinese conglomerate HNA Group, has been canceled, as the deal did not receive regulatory approval from the Committee on Foreign Investment in the United States (CFIUS) by the agreed date. Shareco had planned to acquire up to 34.9% of the U.S. firm for around USD416 million and become its single largest shareholder. Both companies also planned to form a Chinese joint venture focused on in-flight entertainment and connectivity (IFEC).
- Starbucks is buying the rest of its East China joint venture in a USD1.3 billion transaction. The Seattle-based coffee chain will acquire the remaining 50% of the business from partners President Chain Store Corp and Uni-President Enterprises Corp. Starbucks also is divesting its 50% stake in a separate joint venture in Taiwan. Starbucks plans to operate 5,000 cafes in China by 2021, up from 2,800 locations at present. The deal gives Starbucks 100% ownership of about 1,300 cafes in Shanghai and in Jiangsu and Zhejiang provinces.
- Beijing Sanyuan Foods Co and Chinese conglomerate Fosun Group are buying French margarine maker St Hubert for €625 million. They signed an agreement with European private equity firm Montagu to acquire Brassica Top Co and PPN Management, which are controlling shareholders of St Hubert. Montagu acquired St Hubert from Dairy Crest for €430 million in 2012. Set up in 1904, St Hubert reported consolidated net turnover of €129 million in the 2016 financial year and has 213 employees. It has a more than 40% market share in France and almost 70% in Italy.
Real estate
- Dalian Wanda Group has abandoned its bid for the property portion of the Kuala Lumpur-Singapore high-speed rail project, the biggest of its kind in Malaysia, only three months after being considered a front runner. Wanda was not included among the list of nine candidates – seven Chinese and two Japanese firms – that had submitted proposals to Malaysian authorities. Wanda declined to comment on the status of its bid for Bandar Malaysia.
- Overseas real estate investment by large Chinese companies is likely to stay muted this year, amid tightened regulatory scrutiny, although smaller players may still be active, according to Knight Frank Executive Director Paul Hart. Non-financial outbound direct investment by Chinese companies fell 45.8% year-on-year to USD48.19 billion in the first half. In June alone, outbound investment dropped 11.3% from a year earlier to USD13.6 billion. Chinese foreign investment in industries like property, hotels, cinemas and entertainment has dropped 82.5% year-on-year.
- Just 1% of Hongkongers considered it a good time to buy property in the second quarter of this year, according to the latest Citibank survey. Based on opinions collected by The University of Hong Kong, 79% of the 500 respondents thought the second quarter of this year was a bad time to buy – a record high for the quarterly survey since 2010. 13% of respondents now think property prices will drop in the next 12 months, up from 9% in the second quarter last year, ending a four-quarter consecutive slide.
- Small and medium-sized apartments again dominated Shanghai’s pre-owned housing market in the first half of this year while nearly two-thirds of the homes sold during the period cost below CNY3 million. Nearly 73% of pre-owned houses that changed hands in Shanghai between January and June were no larger than 90 square meters and homes priced at below CNY3 million accounted for almost 65% of total transactions, according to Shanghai Homelink Real Estate Co.
Retail
- Sales of fast moving consumer goods (FMCG) in China in the second quarter rebounded from a sluggish performance in previous quarters to 3.2% from a year ago, as retailers sought to diversify shopping channels. Overall spending on household consumer goods added just 3% in 2016, the lowest level in five years, and just 1.7% annually in the first quarter of the year. Sun Art Retail Group, which operates the Auchan and RT brands, remains the leader with an 8.2% market share, followed by Vanguard Group’s 6.3% and Walmart’s 5.1%. E-commerce spending surged 28.2% from a year ago and contributed 6.9% of the overall FMCG market in the second quarter.
- China’s home-grown brands continue to gain ground in China’s smartphone market, pushing aside Apple and Samsung Electronics with their offerings of sophisticated models at reasonable prices. Huawei Technologies shipped 23 million smartphones in China in the three months ended June, becoming the country’s best-selling brand for the second quarter in a row, according to Canalys. Huawei has a 20.2% marketshare, Guangdong Oppo Electronics has 18.8%, and Vivo 17%. Xiaomi came in fourth and Apple fifth, although the company has not released smartphone shipment figures for the quarter.
Science & technology
- Hong Kong start-up Origami Labs has released an innovative new wearable product Orii this month. Orii is a voice-activated ring that uses bone conduction technology to channel smartphone sounds into a user’s ear. It is the world’s first voice-powered smart ring, basically turning your finger into a voice-enabled smartphone. The company says it is part of the screen-free revolution.
- Chinese scientists have created the largest virtual universe on Sunway TaihuLight, the world’s fastest computer. Researchers hope that within three years the country will be leading the way in making new findings about the birth of the cosmos.
Stock markets
- Chinese stocks fell from a three-month high, as Huaxin Cement and China Molybdenum led the decline of raw-material producers, the best-performing industry over the past two months. “The market is selling the outperformers for profit-taking,” said Wang Zheng, Chief Investment Officer at Jingxi Investment Management in Shanghai. The Shanghai Composite Index slid 0.2%, or 6.91 points, to 3,243.69 at the close on July 25. Hong Kong stocks finished the day little changed.
Travel
- Didi Chuxing is teaming up with Japan’s Softbank to invest USD2 billion in a round of financing in Southeast Asia’s ride-hailing firm Grab, as Didi looks toward internationalizing its business outside of China. Other investors are expected to invest about USD500 million. The investment round pushes Grab’s valuation to over USD6 billion. The new funds will be used to strengthen Grab’s leading position in the region as well as invest in GrabPay, the company’s mobile payments platform. The Singapore-headquartered company said it has a Southeast Asia market share of 95% in third-party taxi-hailing and 71% in private vehicle hailing.
- China’s Foreign Minister Wang Yi said in Bangkok that he hoped construction of a new Thai railway could start immediately to give Thailand better access to Chinese markets. The joint Thai-Chinese plan for a new USD5.3 billion railway from Bangkok to the northeast has been repeatedly delayed, largely over differences about financing, but last month Thai Prime Minister Prayuth Chan-ocha issued a special order to expedite construction. The railroad is part of China’s belt and road infrastructure project.
- Passengers using the West Kowloon station of the new high-speed railway linking Hong Kong to the mainland, will have to pass through two port areas on four levels of the building to reach the platform. China’s immigration and customs services will have a 105,000 square meter leased area patrolled by mainland police officers. Passengers will first go through Hong Kong border control before entering the mainland area for passport or ID checks for arrival in mainland China. Passengers on board a moving train on the line will be subject to mainland laws. For arriving passengers, the process will be similar but in the opposite direction.
- Chinese rail car manufacturer CRRC Qingdao Sifang has unveiled the prototype of a mounted monorail train with a maximum operating speed of 70 kilometers per hour. Driven by a high-efficiency magnet motor, the experimental train runs along an overhead monorail. The train has three or five cars, with a passenger capacity of 300 to 510 people. It is suitable for use in mountainous areas. It costs only about one-third of what a subway costs.
- China has surpassed the United States to become the world’s largest market of Airbus Helicopters in terms of annual bookings. The market grows around 20% a year. Airbus Helicopters is the leader in the global civil helicopter market, with 47% of the market. Last year, it delivered 35 civil helicopters to China. In the next 10 years, China is expected to acquire about 100 aircraft for forest firefighting. About half of these will be medium-heavy helicopters that can carry water buckets and operate in highland regions. In May this year, Airbus Helicopters broke ground on its H135 final assembly line in Qingdao.
- China’s railway investment rose in the first half year and is set to hit a new high in 2017. In the first half year, fixed asset investment (FAI) on railways hit CNY312.5 billion, up 1.9% year-on-year, according to the China Railway Corp. Scheduled progress has been made in 27 major projects.
- Ofo, the world’s first and largest “station-free” bike-sharing platform, announced a global partnership with Adyen, the payments platform choice for the world’s leading companies. The collaboration will allow customers around the world to pay using their preferred local currencies and payment methods. Users registered in Singapore, for example, can use ofo’s services while visiting China with no extra effort to pay in the local currency. The company plans to offer its bikes in 200 cities across 20 countries by the end of this year. Currently, ofo processes more than 25 million transactions daily.
- Some bullet trains between Beijing and Shanghai will be even faster in just over a month, but it could mean fewer available seats as some trains will continue to operate at 300 km/h, requiring the reduction of the number of trains on the line. When the new Fuxing trains go into service in September they will be operating at the speed they were designed to travel at: 350 km per hour. Running the trains 50 km/h faster would increase operating costs by one-third, according to an industry estimate. At the new speed, the journey between Beijing and Shanghai will take 4½ hours – nearly an hour faster than it takes now.
- The cities of Beijing and Tianjin, along with Hebei province, will allow 144-hour visa-free entry for nationals from certain countries and regions by the end of 2017, Beijing Vice Mayor Cheng Hong announced. Currently, the maximum stay in Beijing and Tianjin is 72 hours. In 2016, Shanghai, joined by Jiangsu and Zhejiang provinces, took the lead in permitting 144-hour visa-free entry to visitors from 51 countries.
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