China Business Briefs 23/12/13

ECONOMY

How Tighter Government Spending Contributed to China Rate Spike – China Real Time Report – WSJ The Chinese government usually draws down fiscal deposits — the amount of funds the government keeps in the financial system—more quickly in December, as it speeds up spending and fiscal disbursements before the end of the year, UBS economist Wang Tao said in a recent note.

That boost in government spending adds liquidity to the banking system, and the PBOC normally withdraws liquidity at the end of the year to offset the inflows. This time, though, the government’s tighter fiscal policy means year-end spending has been restrained, Ms. Wang said.

China Money Rates Surge as Banks Struggle to Meet Cash Demand – Bloomberg **Still climbing** The seven-day repurchase rate, a gauge of funding availability in the banking system, jumped 124 basis points today to 8.84 percent, the highest level since June 20, according to a daily fixing from the National Interbank Funding Center. The rate, which has more than doubled from 4.37 percent in the past week, touched a record 10.77 percent in June.

In China, Rates Soar, Stocks Fall, Businesses Fail – Forbes **Gordon Chang looking for signs of disaster** The Everbright offering, unfortunately for the bank, occurred in the wake of wide publicity of the November 29 bankruptcy filing of Liansheng Resources Group.  The failure of this coal miner, the biggest private company in inland Shanxi province, is even thought to threaten the Chinese banking system.

Why? It is not because Liansheng went down with debt of almost 30 billion yuan or because its creditor list included some of the best Chinese banks.  Liansheng, some think, could sink China’s shadow banking network, which could in turn expose the fragility of the state banks and trigger runs by depositors on those institutions.

Shanghai’s Cash Shortage Signals Stock Rebound: China Overnight – Businessweek Chinese stocks are poised to rebound from a one-month low as policy makers inject cash into the financial system to stem a surge in interbank lending rates, according to Oberweis Asset Management Inc.

Formula sellers face tighter rules – BUSINESS – Globaltimes.cn **About time. But auditing will be the key** Chinese consumers can seek compensation directly from baby formula retailers if they have bought milk powder with quality problems, signaling the country’s latest effort to guarantee food safety, experts said on Sunday.

After infant formula sellers compensate consumers, they can in turn ask for compensation from dairy producers if the producers are the source of the quality problem, China Food and Drug Administration (CFDA) said in a statement released on Wednesday.

No end in sight for bad-debt malaise at mainland Chinese banks | South China Morning Post **No indeed. This is a political problem. But the assumption that Beijing will simply solve it is a touch complacent** “Banks’ asset quality will continue to feel pressure next year, with both NPL balance and ratio expected to rise slightly,” said Luo Yi, an analyst at the brokerage. “But there’s no need to be too pessimistic because [Beijing] will gradually solve the local debt problem instead of letting it evolve into a crisis.

SDIC powers up cleaner energy |Companies |chinadaily.com.cn To contribute more to realizing the nation’s goal of building a beautiful China, the State Development and Investment Corp, a leading investment arm of the country in infrastructure and resources, has big plans for renewable and clean energy development in the coming years.

SDIC is investing 400 billion yuan ($65.57 billion) to build 21 hydropower stations along the Yalong River in Sichuan province. The development of the hydropower stations by the Yalongjiang Hydropower Development Co Ltd, a holding company of SDIC, is an important part of SDIC’s clean energy investment drive. When completed, the stations will have a combined generating capacity of 30 million kilowatts.

Japan Inc. rethinks China | McKinsey China **China now having to compete on quality, not just price, and losing more often. See below** My conversations with Japanese executives as usual focused largely on China. The sense I got from these was of a more purposeful intent to rebuild position, a shift away from the “nothing is going to work” attitude of earlier in the year. They are realising that the exchange rate shift has made a material difference in their competitiveness in China, and are becoming more specific on which market segments they can access and how.

Why One Chinese Textile Maker Sees His Future in the U.S. – China Real Time Report – WSJ Now, with labor and other costs rising at home, Chinese textile entrepreneurs are looking east over the Pacific and wondering whether it’s time to move back

“This industry doesn’t have a future in China,” said Zhu Shanqing, chairman of Keer Group. “It’s not just been difficult to grow, but it’s difficult to survive.”

China Mobile’s iPhone Factor – China Real Time Report – WSJ For China Mobile, the iPhone is a way to secure a large user base for its high-speed fourth-generation network, after the carrier has lost some of its market share over the past few years to smaller rivals China Unicom (Hong Kong) Ltd and China Telecom Corp. Both China Unicom and China Telecom already offer iPhones, and critics have also blamed China Mobile’s sluggish performance in part on its homegrown 3G mobile technology, which hasn’t been as popular as the 3G technology widely used around the world and also by China Mobile’s two rival carriers.

Plaudits in order as China slows economic growth | China Economic Review Not only are analysts unfazed by the moderation in some of China’s growth indicators, many welcome it as a jumping off point for real reform. “We think the strong growth rebound since July has run its course as the government shifts its focus from ‘stabilizing growth’ to ‘adjusting structure and promoting reform’ in 2014,” Barclays economists said in a note last week.

Global fund firms plot mainland China push | South China Morning Post Capital controls now ban such fund houses from selling products on the mainland but a mutual recognition agreement to be signed between Hong Kong and the mainland in the near future would allow cross-border selling. Hong Kong-domiciled funds with fund managers licensed by the Securities and Futures Commission would be allowed to be sold on the mainland, while mainland funds would be allowed to be sold in the city.

China Policy Institute Blog » GM-modified Corn, Protectionism and Normal China Why is China importing corn, or any other agricultural product for that matter? China has been a nation of farmers since before modernity. That it would need to import agricultural products—namely, rice, corn (and feed), cotton, soybeans—is surely news. The USDA reports that since 2008, China has used “price supports” to subsidize farmers, but its massive food inflation has benefitted American rather than  PRC farmers, since the discrepancy between Chinese domestic and global prices for agricultural products means farmers have been arbitraging all the way to the bank. US farmers may be trying to get MIR 162 corn past PRC customs, but PRC farmers are happy to have it to reduce cost and win market share.

Coal cooperation – BUSINESS – Globaltimes.cn China Taiyuan Coal Transaction Center is always crowded with people in December. The center hosts an annual year-end trade fair, and this year nearly 70,000 merchants arrived in Taiyuan, capital of coal-rich Shanxi Province in North China to attend the fair, which ran from December 12 to Thursday.

It was the second year for coal sellers and power utilities to negotiate prices themselves without government intervention, after China scrapped a regulation that capped spot thermal coal prices in December 2012.

Protection policies back in mainstream | South China Morning Post Pricing deregulation in the mainland’s insurance sector is set to force industry players to diversify from simple savings-type products to protection-oriented policies, AIA China chief executive John Cai says.

The insurance penetration rate on the mainland was very low, at 2 per cent, but the figure would keep rising, he said, driven by an increase in protection-type products.

A sweet Asian fruit tempts the troubled soft drink industry | Reuters An obscure melon once cultivated by Buddhist monks in China to sweeten tea could give the $8 billion U.S. diet soda industry a shot at winning back consumers concerned about artificial ingredients.

Japan store chain Lawson scales back expansion plans in China – FT.com **If your business plan depends on increased consumption, you’re probably not doing it right** Lawson, the Japanese convenience store chain, is slowing its expansion in China because it thinks the Chinese government has not done enough to spur consumption in the world’s second-largest economy.

COMPANIES

Fake Profit E-Mails at AgFeed’s Farms Back Fraud Claims – Bloomberg **Sounds like what happened with Longtop** The e-mails, which were translated from Chinese, and other documents obtained by Bloomberg News provide the first detailed glimpses behind what a U.S. Trustee in bankruptcy court called “massive fraud” in AgFeed’s Chinese operations. Managers in China openly discussed their methods for doctoring results, according to the e-mails. As evidence of irregularities began accumulating, executives and directors waited at least four months before disclosing any of it to investors, corporate documents show.

Apple, China Mobile sign long-awaited deal to sell iPhones | Reuters Apple Inc said it has signed a long-awaited agreement with China Mobile Ltd to sell iPhones through the world’s biggest network of mobile phone users.

In a deal that could add billions of dollars to its revenue, Apple said its smartphones will be available to China Mobile customers starting January 17. Pricing and availability details for the iPhone 5S and 5C lines will be disclosed at a later date, it said in a statement.

Hebei Iron may face closer watch | South China Morning Post Huge foreign investments made by Hebei Iron and Steel may face greater scrutiny by anti-graft investigators on the mainland and elsewhere after allegations of embezzlement and mismanagement at the company saw the sudden removal of its chairman, Wang Yifang.

Hundreds of millions of dollars were spent on Wang’s watch as he built the group into what the World Steel Association ranks as the world’s third-largest steel company, acquiring mines in Africa, Canada and the United States since taking charge in 2008. Even in the weeks before Communist Party bosses cut short his reign earlier this month, he was chasing new foreign partnerships.

China continues probe on Microsoft’s Nokia takeover – BUSINESS – Globaltimes.cn Such acquisitions usually get approval from China’s Ministry of Commerce after a 30-day first-phase investigation.

But currently, the deal has not been approved yet and is undergoing a second-phase anti-trust investigation, though regulators from some other countries and regions including the US have given the nod already, the report said, citing unnamed sources familiar with the matter.

Power giants work with a local touch – Headlines, features, photo and videos from ecns.cn|china|news|chinanews|ecns|cns **Smart move** Often criticized in the Western media for their role in Africa, Chinese companies have begun making changes to improve their image on the continent, increasingly creating jobs for local residents and offering educational opportunities to young Africans.

Sinohydro Corp Ltd, the international arm of the Power Construction Corp of China, is now seeing its first China-educated Angolan graduates working at different construction sites in their home country and abroad.

Qihoo Competitor iJinshan Claims 100 million Overseas Users Yesterday (December 22th, 2013), iJinshan announced that they stealthily released Clean Master, an Android storage management app, in English-language market about one year ago and had had more than 100 million users, at an event organized by local online news service Huxiu. Clean Master, in short, is for cleaning out Android phone storage and, at the same time, keeps your private information safe.

Schlumberger Limited. (SLB): Schlumberger: China & North America Focus For Next Year – Seeking Alpha Operationally, Schlumberger’s products and services have been able to increase productivity from the shale gas fields in the Ordos Basin. The Ordos basin is the second largest basin in China with a proven estimated reserve of around 10 billion tons. In the Ordos field, Schlumberger, in collaboration with PetroChina (PTR), has been able to increase the initial production, or IP, of wells by around 3.6 and 4.4 times at its two pilot wells. Recently, PetroChina discovered a vast amount of shale gas in the Sinchuan province. PetroChina has drilled around 20 wells in the region with an average of 10,000 cubic meters of gas per well per day. I expect Schlumberger to benefit from a collaboration with PetroChina.

China Technology News: Amazon taps into China’s cloud computing market China is the tenth country globally and the fourth  in Asia in which an Amazon data center will be built.

In the meantime, Amazon has signed a letter of intent with Beijing and  Ningxia to deliver the cities’ public services.

In addition to its partnership with Beijing and Ningxia, Amazon has also  formed an alliance with Sinnet and China Net Center. The two Chinese companies  will provide the necessary internet data center services (IDC) and an internet service provider (ISP) for Amazon’s public cloud computing services.

Leader to raise to 60,000 tonnes of steel products next year – Business News | The Star Online On its iron ore business, Leader Steel expects to sell about two million tonnes of iron ore and manganese to China by end-2014.

Tan said that the biggest shipment would be for China Railway Materials Company Ltd (CRM), China’s largest steel integrated trading and service provider.

Chinese aircraft producer makes export debut in Latin America – Xinhua | English.news.cn A Chinese aircraft manufacturer said Monday it has delivered two Y12E aircraft to Colombian airline Satena.

The delivery means the Y12 series aircraft has entered the civil aviation market in Latin America, according to the Harbin Aircraft Industry Group Co. Ltd. (HAIG), a subsidiary of Aviation Industry Corporation of China (AVIC).

Posted from Diigo.

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