China Business Briefs 30/12/13


Chinese local government debt balloons – **Promotion for Chinese officials often from most indebted provinces. Incentive only to borrow** In an announcement posted on the auditor’s website, the NAO said local government debts had increased almost 70 per cent since its last audit at the end of 2010, which then put the stockpile at Rmb10.7tn.

It added that government debt levels were generally “under control”, but identified “potential risks in some places”.

China’s Local Debt Swells to 17.9 Trillion Yuan in Audit – Bloomberg Regional governments set up more than 10,000 local financing units to fund construction projects after they were barred from directly issuing bonds under a 1994 budget law. The State Council in July ordered a nationwide review of local-government debt.

Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong, said today that the numbers in the latest audit were “manageable” and “should be positively received by markets.” Wang Tao, chief China economist at UBS AG in Hong Kong, echoed that view of a manageable debt, adding that the pace of accumulation in recent years has been “too fast and is not sustainable.”

China bourse investigates brokerages for foreigner investor trades – report – Yahoo Singapore Finance The Shanghai Stock Exchange has criticized four Chinese securities brokerages for late trades on behalf of foreign investors that caused a sudden tumble in several blue-chip stocks two weeks ago, state media reported on Monday.

The large-cap stocks, including China Construction Bank, CITIC Bank and Great Wall Motor, suffered big falls in the closing two minutes of trade on December 20 after orders from the investors were executed. The share prices quickly recovered the next trading day.

Loan Sharks Smell Blood in China Waters – In the past five years, borrowing by businesses and households as a percentage of gross domestic product rose nearly 60% in China, according to Goldman Sachs Group Inc. From 2010 to 2012, shadow lending doubled to 36 trillion yuan, according to analysts at J.P. Morgan Chase & Co. Bank loans totaled just 53% of all lending in China in the first 10 months of 2013, down from 72% in 2010 and 92% in 2002, according to figures from the People’s Bank of China, the country’s central bank.

Beijing sets 2014 GDP growth target – Xinhua | Beijing set its Gross Domestic Product (GDP) growth target for 2014 at around 7.5 percent at the Third Plenary Session of the Eleventh CPC Beijing Municipal Committee held from Dec. 22 to 23, 2013, Beijing Daily reported.

The growth rate is slightly lower than that of 2013 because Beijing aims to promote structural adjustments and prevent risk.

Shenzhen to Hike Minimum Wage Levels | China Briefing News **Decent rise, still less than US$3/hr**  Shenzhen human resource officials announced last week that the city will raise its monthly minimum wage level by 13 percent to RMB1,808 from February 1, 2014, while its hourly minimum wage will be adjusted from RMB14.5 to RMB16.5.

Chinese players spend 83 bln yuan on games in 2013 – Xinhua | **China leads the way in in-game monetization** Game subscribers in China hit 490 million in 2013, with sales topping 83.17 billion yuan (13.6 billion U.S. dollars), the 2013 China Game Industry Annual Conference heard.

The number of subscribers rose 20.6 percent from a year previously and sales revenue surged 38 percent year-on-year, according to Sunday’s report.

Low Bordeaux winery prices attract Chinese buyers|Markets|Business| **French wine uncompetitive with New World. Chinese owners might provide kick up the arse** Seventy-two wineries in the French city of Bordeaux were sold over the last two years, with over half of them, or 44, having been sold to Chinese buyers, according to some estimates.

The frenzy is partly the result of the fact that prices of vineyards and wineries in Bordeaux have reached historic lows, attracting deep-pocketed Chinese enterprises and billionaires, including Hao Lin, who bought Chateau de la Riviere for a record €30 million (US$41 million).

China economy to keep steady growth: premier – MarketWatch **How to say nothing** The premier, speaking on a visit to Tianjin on Sunday, said that there would be reasonable growth in credit with consumer prices basically stable.

China parents count cost of sending children to overseas universities – **Chinese friends have told me their parents demand they do well, to provide for their parents’ old age** The number of Chinese studying overseas has more than tripled in the past decade and continues to shoot up. The rise has been particularly dramatic among lower-middle-class families: according to a report from the Chinese Academy of Social Sciences, up to the end of 2009 students from such families made up only 2 per cent of all those who studied overseas, but by the end of 2010 the proportion had risen to 34 per cent.

For many Chinese families with children overseas, money is no object. But many lower middle-class and working-class families are counting on their only child to support them in their old age.

Venezuela Says It Receives $5 Billion Promised by China – **WSJ sniffy about Venezuela having nerve to trade** Venezuelan President Nicolás Maduro said China has given his country $5 billion in credits under a deal reached in September.

Mr. Maduro said on Saturday that the money will be used in areas such as housing, transportation, satellite technology and the military.

Venezuela’s leftist government has received roughly $36 billion from China since 2008 and is paying for it with petroleum exports.

China Talent War is On and Growing – SME’s Can Still Win “…Trying to get a good fit in all aspects is unrealistic. ”  That is where SME’s are getting beat especially.  SME’s need talent and cannot always give time to develop local talent. I counsel my customers beyond good placements. They need to hire for values foremost and get as much talent as they can under that base line of character. Then they sometimes lean on our experience to fill the gaps and get better. Hires with the right values develop quickly and stay longer.  With the right support, often from us, they do game changing work even though their resume may not always be ideal.

Tianjin Port throughput surpasses 500m tonnes|Markets|Business| Tianjin Port announced Sunday that its annual cargo throughput crossed the 500 million tonnes mark for the first time, while remaining as the world’s fourth-largest harbor by cargo throughput.

Located on the coast of the Bohai Sea, the Tianjin Port follows the Ningbo-Zhoushan Port, the Port of Shanghai — both in east China — and the Port of Singapore in terms of cargo throughput volume.

Private firms in China find it difficult to invest in gov’t projects|Policy|Business| **Guanxi…** Yan Xiaodong, head of the investment department at the Guangdong Provincial Development and Reform Commission, said that all profitable highways are open to investment from private companies. However, Ding Li, a researcher at the Guangdong Academy of Social Science, claims that private firms still cannot invest in the nation’s profitable highways, adding that even if the government has opened the door, highways projects such as the one in the Pearl River Delta have been mostly constructed by state-controlled firms.

Opportunity glimmers through China’s toxic smog | Reuters As China’s smog levels crept past record highs in early December, the phone lines at pollution-busting kit maker Broad Group lit up with Chinese customers worried about hazardous pollution levels that have gripped China this year.

China’s government is struggling to meet pollution reduction targets and has pledged to spend over 3 trillion yuan ($494 billion) to tackle the problem, creating a growing market for companies that can help boost energy efficiency and lower emissions.

Chinese Investors Flee Stock Markets Ahead of IPO Resumption-Caijing The country’s A-share markets together have seen capital outflow of  110billion yuan for the first 27 days in December, which is 87.16 percent higher  than that of November and compared with a net inflow of 727.9billion  yuan during the same period of last year, the Chinese Securities Journal  reported.

Investors are pulling their money out of China’s stock markets ahead of  January’s IPO resumption which is expected to unleash Chinese companies’  fund-raising appetites which have been held back for a year

China arable land area above food security red-line – Xinhua | **Land management is a major problem for Chinese government, politically and economically** According to the results of the second national land survey released on Monday, China’s arable land totaled 2.03 billion mu (about 135.4 million hectares) at the end of 2012, 227 million mu more than the “bottom line” set by the government to ensure food security.

Britain, China boost biz ties[1]- **Government liked Cameron’s obsequiousness** Since 2009, China’s investment in the UK, including direct investment and mergers and acquisitions, has maintained strong momentum and has reached $12.4 billion in total, with project investments being the main beneficiary.

This year, Chinese companies have invested or planned to invest in more than 10 big projects in Britain worth nearly $5 billion, according to data from the Chinese embassy in the UK.

China’s e-commerce goes mobile in 2014 **Amazing figures** While m-commerce in China was seemingly non-existent just two years ago, shopping through mobile devices such as smartphones and tablets has quickly gained acceptance among Chinese digital consumers. Amazon China announced on December 11 that the percentage of its sales coming from mobile devices increased by 142 percent in 2013. The top five most popular product categories for these Amazon China mobile shoppers are watches, phones and accessories, personal care and health items, jewelry, and automotive accessories.

Shanghai’s shipping industry raises doubts over snubbing in new Free Trade Zone | South China Morning Post Beijing has yet to unveil detailed operating guidelines covering the trial run of the FTZ, which was officially launched at the end of September, and until now all eyes have been on what financial institutions registered in the zone may be allowed to do.

But Xiong and other shipping industry officials have already envisioned huge business opportunities arising from loosened custom intervention, and they believe the shipping sector should be among the top beneficiaries of the zone.

Mainland insurers poised for plum premium-income growth in 2014 | South China Morning Post The China Insurance Regulatory Commission (CIRC) in August announced a removal of the 2.5 per cent cap on predetermined rates for standard life insurance products, allowing insurers to offer higher returns to policyholders.

The move, which marked a step towards pricing deregulation under the country’s financial reforms, had stirred up competition, but it would encourage life insurers to launch more new products to maintain their share in the market, Zhu said.

Does China’s trust industry pose a systemic risk to the financial system? | McKinsey China **If there’s a question in the title, the answer is “no”** In this podcast, Nick Leung discusses this topic with Stephan Binder and Xu Jun. Stephan and Jun are Partners in Shanghai who have recently published a report on China’s trust industry, prepared in collaboration with Ping An Trust. Nick is the managing partner of McKinsey’s Greater China Practice.

3 top trades for 2014 – Jeff Reeves’s Strength in Numbers – MarketWatch **Hmm….** China stocks are trading for a huge discount compared to the S&P 500. Right now, Shanghai stocks have an average price-to-earnings ratio of around 11, vs. a current P/E of around 20 for the S&P 500.

And China just projected its GDP likely grew at 7.6% in 2013 — above the 7.5% forecast set in March, and down only 0.1 percentage points from 2012 GDP.


80% China’s bank shares fall below net asset value|Finance|Business| **Wow, this is remarkable. But question is, how real are these assets? Market value might be a mirage** Although the banking industry is one of the most profitable sectors in China, investors have suffered losses in the stock market as more than 80% of banks’ shares listed in China A-shares closed at prices that were lower than their net asset value on exchange on Thursday.

On Dec. 26, banks listed on the A-share market, such as the Industrial and Commercial Bank of China (ICBC), the Bank of China, the Agricultural Bank of China and the China Construction Bank had seen stock prices drop by more than 1%.

China SOEs Lead in Market Capitalization Loss this Year-Caijing **Government rotates leadership of SOEs with central and provincial officials to prevent any power bases building up. Does not help market confidence in SOEs** The SOEs, all run by the central government, lost a combined 1.3 trillion  yuan this year at the end of December 23, with PetroChina (SSE:601857), China  Shenhua Energy (SSE: 601088), Industrial and Commercial Bank of China (SSE:  601398) and China Life Insurance (SSE:601628) paring over 100 billion yuan, Wind data showed.

How Baidu battled to diversify and stay relevant in 2013 Many Chinese tech giants continued to diversify beyond their flagship products in 2013, and Baidu (NASDAQ:BIDU), best known for its search engine, was no exception to this trend. While the company acted more conservatively than some of its peers in China, by the end of the year, it became crystal clear that Baidu was no longer just a “search company,” though it’s not yet obvious what type of company it has transitioned to.

Mega-ton coal liquefaction project approved in Inner Mongolia – BUSINESS – An indirect coal-to-liquid (CTL) project with a yearly output of 2 million tonnes in north China has been approved by the central government, showing the country’s determination to scale up the CTL industry and optimize its energy mix.

According to the website of Yitai Coal Co., Ltd. in Inner Mongolia Autonomous Region, the company has the support of the National Development and Reform Commission (NDRC) and has started preparatory work for the project.

Honda China output rockets 222% in Nov According to Honda Motor Co its auto output in China hit 85,644 units in Nov this year, reflecting a year on year increase of 222.1 percent.

In the first eleven months of this year, the Japanese company saw its auto output in China amount to 699,475 units, 22.0 percent more than it realized in the corresponding period of last year.

7 Days founder talks budget hotels in China | China Economic Review In the second part of an interview with China Economic Review, Mr. Lee talks about chasing the middle class, ponders the difficulties currently being faced by the big luxury hotel groups and gives his thoughts on why marketplace services like Airbnb will take time to take off in China.

Li Ka-shing invests in bitcoin payment processor BitPay|Economy|News| The 85-year-old Hong Kong business magnate, the world’s eighth richest man based on Forbes’ latest rich list with net assets of US$31 billion, invested in BitPay through his venture capital company Horizon Ventures, which has previously made early investments Facebook and Skype. A spokesperson for Horizons Ventures said the group would not comment on the details of the investment.

Bitcoin Trading Platform Okcoin Launches Poll for Commission Rate Bitcoin trading platform Okcoin launched today a poll asking clients to determine the commission rate for their future services. Xu Mingxing, CEO of the company, claimed in an announcement that it is the ubiquitous decision of the whole industry to charge fixed commissions in a bid to fend against profiteering.

However, another bitcoin trading platform Huobi continued to provide free services and its turnover once surpassed leading services like Okcoin and BTC China.

Spy Shots | Citroen’s DS 5LS Gets Caught Naked – At a Highway Toll | China Car Times – China Auto News Citroen’s flagship China sedan was aired at in Paris earlier this month with a promised launch time of early 2014 in only the Chinese market, with production happening at Changan PSA’s Shenzhen factory. The new model hasn’t been officially aired in the Chinese market, but that doesn’t really matter now as the car was caught going through a Shenzhen highway toll.

Moody’s assigns Prime-1 to Shagang’s USD commercial paper Moody’s Investors Service has assigned a definitive Prime-1 rating  to the USD commercial paper (CP) notes to be issued by Shagang South-Asia  (Hong Kong) Trading Co., Limited (unrated) through its USD200  million fully supported commercial paper program.

Posted from Diigo.


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