China Business Briefs 13/11/13

China is modeling itself after the wrong part of the American economy. The money, the rhetoric and the policies are all focused on trying to replicate America’s lead in high-technology and innovation. Instead, China would be long-term much better off and its citizens enjoy immediate higher living standards if it copied something far more mundane from the US,  its distribution and logistics.  If China’s $9 trillion economy has an Achilles Heel, this is it. It simply costs too much to get things into consumers’ hands.

Wholesale layer is piled onto wholesale layer, with margin and fees extracted at every step. Fixers, expediters, overlookers all take a cut. Trucks are too small, tolls too high, warehouses too small, and road traffic too congested in major cities. Commercial and retail rents are high, relative to per capita income level. In China, there is enough “friction” in every retail transaction to start a bonfire.

This week’s plenum hinted that bland rhetoric could be a precursor to bold action, leading to far-reaching reforms. In particular, analysts pointed to the creation of a leadership group to spearhead reforms. The body will probably be headed by either Mr Xi or Mr Li and rank above ministries, allowing it to direct and co-ordinate policies.

While China’s growth record since the early 1980s is a testament to the success of earlier moves to shift towards a more market-driven economy, Mr Li has previously observed that the reform process has “entered deep waters”, an allusion to powerful vested interests that are opposed to far-reaching reforms.

The losers at this plenum were the reformers—and that includes Xi Jinping.

Plenums are not supposed to be only about economics, and there were signs in the summer that this would be a plenum that could feature politics and ideology on the agenda for debate. When the economic indicators began to go positive, it appeared less likely that major reforms would suddenly bust out at the plenum.

And that’s what happened.

There’s precious little in the plenum communiqué about Party reform, and just a brief nod to Xi’s anti-corruption crusade. Reformers’ hope for the plenum to issue a clarion call to expand the cleanup campaign into more innovative ways to regulating cadre conduct—if not asset disclosure, then some new measures of accountability (in Chinese) – appear to have come to naught.

The prices of farm produce in 36 major Chinese cities dropped slightly in the week ending Nov.10 compared with the previous week, a Ministry of Commerce statement said.The average wholesale prices of 18 kinds of vegetables shed 1.2 percent from a week earlier with the prices of celery and cabbage dropping 8.8 percent and 8.4 percent.

China elevated the role of markets in the nation’s economic strategy after President Xi Jinping oversaw a gathering of Communist Party leaders to chart a course for his decade in office.

China will deepen “reform” and give markets a “decisive” role in allocating resources, the official Xinhua News Agency reported today, citing a communique from the third full meeting, or plenum, of the party’s 18th Central Committee. Leaders signaled changes to the fiscal system and income distribution, state radio reported.

Companies

BEIJING/SAN FRANCISCO, Nov 13 (Reuters) – Chinese Internet company Sina Corp saw record revenue in the thirdquarter, as profit more than doubled from a year ago due to strong earnings growth from its Weibo microblogging service anda partnership with Alibaba Group Holding Ltd .

Advertising revenue from Sina Weibo, China’s biggest microblogging service with 54 million daily active users, surged125 percent year-on-year to $43.7 million, reflecting Chinese companies’ embrace of social media as a marketing tool.

Social media’s expanding share of China’s 28.8 billion yuan($4.73 billion) online advertising market is favouring SinaWeibo over rivals such as Youku Tudou Inc’s Internet video platforms and Tencent Holding’s hugely popular mobile messaging app WeChat.

“The vast majority of the (earnings) growth should come from Weibo,” Sina chief executive Charles Chao said in a call withanalysts on Wednesday. He said Alibaba advertising also “played a very important role in Weibo’s advertising growth.”

CALGARY—The Canadian subsidiary of Chinese state-owned energy giant Cnooc Ltd. has been awarded exclusive rights to proceed with a proposed terminal to export liquefied natural gas from Canada’s Pacific coast, local government and company officials said Tuesday.

Known as Aurora LNG, the project is one of nearly a dozen proposals for plants to export surplus natural gas from British Columbia, none of which have been formally approved yet by their corporate sponsors. In addition to Calgary-based Nexen Inc., a wholly owned…

HONG KONG, Nov. 12, 2013 /PRNewswire/ — CNOOC Limited (the “Company”, NYSE: CEO, SEHK: 00883, TSX: CNU) announced today that its wholly-owned subsidiary Nexen Energy ULC (Nexen), has entered into an exclusive agreement with the Government of British Columbia, Canada to examine the viability of constructing a liquefied natural gas (LNG) plant and export terminal at Grassy Point near Prince Rupert, British Columbia, Canada.

The agreement with the Government of British Columbia, represented by the Ministry of Forests, Lands and Natural Resource Operations, grants Nexen and its joint venture partners INPEX Corporation and JGC Corporation, the exclusive right to pursue long-term access to Crown land at Grassy Point.

China’s banking system is mostly state-owned. The biggest lenders, led by Industrial & Commercial Bank of China Ltd., tripled the amount of bad loans written off in the first half of 2013. The country’s banking regulator has called on financial firms to purge such loans from their books to prepare for more defaults. Nonperforming loans at the top four banks rose 4 percent in the third quarter, the biggest jump since 2010.

Unipec, the trading arm of Sinopec, is looking at selling to Tanzania, Mozambique and Zimbabwe, the sources said, despite challenges to entering this market from well-established trading companies in Africa such as Trafigura.

African diesel imports are running at about 673,000 bpd and could grow to 766,000 bpd by 2015, analysts say.

Noble’s Q3 profit plunges 70% on Yancoal losses | TODAYonline

SINGAPORE – Commodities trader Noble Group said on Tuesday its net profit in the third quarter tumbled 70 per cent, largely due to losses at Yancoal Australia, a coal producer in which it is a key shareholder.

Singapore-listed Noble reported a net profit of US$22.9 million (S$28.6 million) for the three months ended in September, down from US$75.2 million a year earlier. This was the fourth straight quarter of profit decline for the company. But after adjusting for losses in associates, its core net profit was US$113 million, the highest since the third quarter of 2010.

Revenue rose 13 per cent to US$24.6 billion in the period.

Tencent: WeChat now has 271.9 million monthly active users around the world

Chinese web giant Tencent (HKG:0700) revealed its Q3 2013 earnings report this evening. The figure that everyone is looking for pertains to WeChat: it now has 271.9 million monthly active users in Q3. That’s up 15.3 percent from Q2, and up 124.3 percent from the same time a year ago. That combines its Chinese and overseas users. The messaging app has 100 million registered users outside of China, the company said in August.

Chinese clothing e-tailer Vancl, which sells Muji/Uniqlo-esque cheap yet funky clothing on the web, has wrapped up its seventh round of venture capital funding. The newest tranche is worth $100 million, Vancl vice president Xu Xiaohui revealed to China’s Economic Observer newspaper. No further details were given.

Vancl’s previous round in May 2011 saw it raise $230 million. It was expected that this round would be worth $200 million.

Posted from Diigo.

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