Short news
August 16, 2017 Category Short news, Weekly
Automotive
- As retail giants Suning and Gome foray into car sales, most analysts and auto industry insiders wonder if such alternative channels could succeed. Luo Lei, Deputy Secretary General of the China Automobile Dealers Association, said car supplies could be a problem, as mainstream carmakers would not deliver to Suning, ignoring their traditional sales network. Suning would also face difficulties offering after-sales services like traditional dealers do.
Finance
- From September 1, banks are required to report all cash withdrawals abroad on a daily basis, as well as card transactions worth more than CNY1,000 at overseas brick-and-mortar and online stores, according to the State Administration of Foreign Exchange (SAFE). Bank cards have become the main tool for overseas payment for Chinese, with overseas transactions by domestic individual card holders exceeding USD120 billion in 2016. Individuals in China are allowed to change the equivalent of up to USD50,000 from yuan to foreign currencies every year under the current quota system.
- China’s foreign exchange reserves rose in July for the sixth consecutive month to a nine-month high as cross-border capital flows were more balanced. The reserves rose USD23.9 billion month-on-month to USD3.08 trillion at the end of July. “Since the beginning of the year, China’s economy has extended a steady and improving development trend, and more positive factors are supporting improvement of economic development quality,” the State Administration of Foreign Exchange (SAFE) said in a statement.
- China’s central bank said it will strengthen regulation of companies engaged in financial technologies or fintech in a bid to prevent risks. The People’s Bank of China (PBOC) said some financial products offered through internet channels by fintech companies are “systemically important” and hence will be included in its macro-prudential assessment (MPA). Big players in the third-party payment services market and the peer-to-peer (P2P) lending market are likely to be included first.
- China is likely to slightly loosen its credit policy in the second half of the year. This will help contain risks that could emerge during the process of economic deleveraging and disposing of loss-making “zombie” companies, analysts said. Li Xunlei, Chief Economist at Zhongtai Securities Co, said that the monetary authority will likely guide more on-balance sheet bank loans into the markets to ensure sufficient credit supply after the regulators moved to contain surging risky off-balance sheet financing by banks.
- Chinese banks’ asset quality will likely improve as a profitable first half of the year would encourage corporate borrowers to repay loans, experts said. Industrial companies’ profit increased by 19.1% year-on-year in the January-June period, compared to single-digit growth in 2016 and a decline in 2015. Banks’ asset quality will improve also because of the regulators’ firm efforts to address the problem of overleveraged companies, according to a Moody’s report.
- China Everbright Bank will relocate its European business to Luxembourg after the United Kingdom leaves the European Union. The bank received approval from regulators to set up an office in Luxembourg as it puts together contingency plans in the wake of Brexit. China Everbright Bank is following six other Chinese lenders that have moved to Luxembourg: Agricultural Bank of China (ABC), Bank of China (BOC), Bank of Communications (BoCom), China Construction Bank (CCB), China Merchants Bank (CMB), and Industrial and Commercial Bank of China (ICBC). Shanghai Pudong Development Bank (SPDB) has also made an application to open a subsidiary in Luxembourg.
- The government’s tighter controls on China’s internet finance industry is likely to be good news for the country’s state-owned players, but could be a death knell for smaller private firms, analysts said. In recent years, companies involved in peer-to-peer lending, crowdfunding and online fund platforms have thrived in what effectively was an unregulated space. For a while, the government allowed a grey area to exist as it wanted to encourage innovation and bring about change within the state-dominated financial sector. Burt now, the People’s Bank of China (PBOC) plans to tighten controls and plug regulatory holes in the sector, including building an information disclosure platform.
- The yuan strengthened against the dollar on August 9 to its highest level in 10 months, reversing its depreciation trend. The exchange rate closed at 6.68. On January 2, the first trading day of the year, it was at 6.94. Better-than-expected economic recovery and efforts to open up the domestic capital market to foreign investors will probably push the yuan further up against the dollar in the short term, experts said.
- China’s banking asset management sector will almost double in size by 2021 on rising demand for investment products and banks’ drive to expand fee-based income, despite a recent decline caused by tighter regulatory scrutiny, McKinsey said. The sector is expected to grow by a compound annual growth rate of 15% to reach almost CNY60 trillion by 2021, or nearly double the size in 2016.
- Ping An Bank will allocate more resources to support businesses in five key industries: healthcare, electronic information, high-end equipment manufacturing, tourism and education. “Those sectors are closely linked to people’s lives and are highly related to our business,” said Xie Yonglin, Chairman of the Shenzhen-based bank.
- A national campaign against pyramid schemes has been launched to try to prevent the public from being duped. Pyramid schemes have led to four deaths since the beginning of July. The gangs often lure job seekers under the guise of regular job recruitment and force them to solicit money from friends and family.
Foreign trade
- China’s foreign trade rose more slowly than expected in July partly due to weather conditions, currency appreciation and a higher base. Exports in yuan-denominated terms rose 11.2% year-on-year to CNY1.32 trillion in July, slower than June’s 17.3% increase. Imports rose 14.7% to CNY1 trillion, slower than June’s 23.1% growth. The monthly trade surplus stood at CNY321.2 billion in July, up 1.4% year-on-year. For the first seven months of 2017, exports increased 14.4% year-on-year, while imports rose 24%.
- China Xiongan Construction & Investment Group Co was set up in the Xiongan New Area to invest in and construct local infrastructure and other facilities, marking another major step toward creating the new economic zone in the area. The company was set up on July 18 in Rongcheng county, Hebei province, with a registered capital of CNY10 billion. The Hebei provincial government is the only shareholder of the company. China announced its intention in April to set up the Xiongan New Area, a planned new economic zone of national significance to help phase out some non-capital functions from Beijing.
- The Shanghai free trade zone (FTZ) plans to further introduce offshore tax arrangements, turn two of its existing bonded warehouses into free ports by 2020, and enhance its financing service to help Chinese companies enter other overseas markets, according to the latest reform plan.
- Ports in Tianjin and Hebei province neighboring Beijing will accelerate the pace of their integrated development in maritime transport to support the coordinated development of the Beijing-Tianjin-Hebei region. There are four major ports in the region – Tianjin Port, and Hebei’s ports of Qinhuangdao, Tangshan and Huanghua. The coordinated development will save costs, improve efficiency and ease competition among all the ports.
- Complying with United Nations sanctions, China has prohibited imports of coal, iron, iron ore, lead and seafood from North Korea. China’s total imports from the DPRK have already seen a drastic drop from March to June.
IPR protection
- More efforts are needed to protect online images in China, experts said at a workshop in Beijing hosted by the Copyright Society of China. Online pictures are often “stolen” on popular services such as WeChat and Weibo, and those who post the images usually do not know they are violating copyright rules, experts said. Yang Dejia, Judge from the Beijing Haidian District People’s Court, said the court had tried more than 2,800 cases related to online image copyright infringement so far this year.
Macro-economy
- Chinese household confidence rebounded to a two-year-high on economic recovery and the strong real estate market in smaller cities. The China Wealth Index, compiled every two months by the Bank of Communications (BoCom) and research firm Nielsen, rose to 140 in July from May’s 135, which was the second highest on record. A sub-index measuring people’s willingness to invest in real estate rose for the first time in eight months along with strong home sales in June.
- Growth in China’s industrial output, retail sales and fixed-asset investment (FAI) slowed slightly in July with the economy remaining in good shape while supply-side reform deepened, the National Bureau of Statistics (NBS) said. Value-added industrial output expanded 6.4% year-on-year in July. Retail sales rose 10.4% and fixed-asset investment (FAI) 8.3%. Investment by the private sector, which accounted for more than 60% of total FAI, rose 6.9% year-on-year.
Mergers & acquisitions
- China’s largest coal miner Shenhua Group and energy producer China Guodian Corp, which are mulling a merger, have extended suspension of trading in their shares for the fifth time, now till September 4. The planned merger will likely create an energy giant with combined assets estimated to be in the range of CNY1.73 trillion to more than CNY1.8 trillion. The merged entity, which will be temporarily named National Energy Investment Corp, will likely have a debt ratio of more than 60%.
- A unit of China’s Fosun Group and Shanghai Pharmaceuticals Holding Co are among bidders for a stake in U.S. speciality drugmaker Arbor Pharmaceuticals. Fosun Pharma said its Hong Kong unit will begin conducting due diligence to determine further steps. Arbor has appointed Bank of America Merrill Lynch to manage the sales process, which has attracted around half a dozen preliminary bids.
Science & technology
- Nearly 70% of Chinese overseas returnees are not satisfied with their current salaries, said a report on Chinese returnees’ employment and entrepreneurship in 2017, jointly released by the Beijing-based Center for China and Globalization and zhaopin.com. A total of 432,500 students came back to China after graduating from overseas universities in 2016, the report said, adding that by the end 2016, China had a total of 2.65 million returnees. More than 14% of these returnees are from Beijing, ranking top in terms of the returnees’ birthplace, followed by Shanghai with almost 6%. More than 90% of the returnees found jobs within half a year after they came back to China, but 68.9% said their current monthly salary was lower than expected.
Stock markets
- Wanda Hotel Development requested a suspension of trading in its shares on the Hong Kong stock exchange, pending the release of a possible asset restructuring. The company may be looking to sell some of its overseas assets to repay debt. The conglomerate last month announced the sale of the majority of its domestic hotel and theme park assets for USD9.4 billion in order to raise funds to repay loans. Separately, the group’s Wanda Film Holding Co unit has been suspended from trading since early July, pending a restructuring of the company.
Travel
- China will support the country’s booming car-sharing industry and standardize its development, according to new official guidelines. Companies are also encouraged to use new energy vehicles as shared-cars, with support given for charging facilities of NEVs. The guidelines followed the release of similar rules on bike-sharing services. The country’s sharing economy witnessed a total transaction volume of CNY3.45 trillion last year, more than doubling that of 2015.
- Alibaba Group has set up a joint venture with hotel group Marriott International to tap the booming leisure travel market. The two parties will jointly operate the official webpage and Marriott’s online flagship store on Alibaba’s online travel unit Fliggy. The joint venture seeks to better leverage Alibaba and Marriott’s platform to tap the two parties’ expertise in technology and services.
- By 2020, Pudong’s Metro network will extend a further 100 kilometers, with 11 cross-river lines. Pudong district will also open six tunnels under the Huangpu river. The city government’s plan aims to make public transport account for 55% of the downtown area’s total transport system, and 60% of all public transport traffic will be on the Metro system.
- Passengers with an Android phone in Beijing can now swipe their phones to board the subway. Currently, the function is limited to around 160 Android phone models with the near field communication (NFC) function enabled, which is not available on Apple’s iPhone.
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