China Business Briefs 31/12/13

ECONOMY

Renminbi strengthens to new high against greenback|Finance|Business|WantChinaTimes.com The renminbi, or yuan, marched to a new record high against the US dollar on Tuesday.

The yuan strengthened 55 basis points to reach 6.0969 per US dollar, the strongest since July 2005, when the country launched reforms of the exchange rate mechanism, according to the China Foreign Exchange Trading System.

China to Unveil Property Tax Law in 2014: Official-Caijing **Big news, if true – illicit properties to be paid for** China will introduce a property law in 2014, as part of its broader efforts to reform the country’s fiscal and taxation system, a government official said.

Laws on environment protection tax and futures are also on agenda to make in the coming year, Wei Dale, a section chief at the National Development and Reform Commission, told a financial and tax forum in Beijing.

Exclusive: China may raise Iran oil imports with new contract: sources | Reuters China may buy more Iranian oil next year as a state trader is negotiating a new light crude contract that could raise imports from Tehran to levels not seen since tough Western sanctions were imposed in 2012, running the risk of upsetting Washington.

An increase would go against the spirit of November’s breakthrough agreement relaxing some of the stringent measures slapped on Iran two years ago over its nuclear program.

Xi Faces Test Over China’s Local Debt – WSJ.com Reining in local-government projects has been tricky for Beijing. China is dotted with vacant or underutilized housing developments, industrial parks, business districts and even entire cities, the product of overambitious plans by local governments. In the short term, the construction of empty buildings helped boost output. But longer term, many of those projects have become a financial burden, soaking up money to repay lenders and leaving many local governments short of funds for social spending, which in turn creates the potential for local unrest.

China still plays game of kick the debt can: WSJ – MarketWatch **Which causes banks to lose market confidence** A Moody’s survey found that only about half of local-government financing vehicles had the cash on hand to meet debt payments this year. Yet defaults are rare, as lenders roll over loans.

In the meantime, however, the most likely scenario is for lenders to continue with their practice of loan forbearance. More than 20% of the local-government debt counted in the audit came due this year. Another 40% is due in the next two years. While rolling debt prevents a short-term issue, it has costs: The practice weighs bank balance sheets with unproductive lending and spares debtors the consequences of poor decisions.

China confident it aced local debt audit exam – FT.com **Interesting perspective** For those disinclined to trust Chinese economic data, the audit has not led to a change of heart. Instead, it has provoked more scepticism: if the government is fessing up to this much debt, the true hole must be enormous.

Yet in Beijing, the belief is that this debt audit – the third in three years – is the most detailed and accurate measure of the problem. Ma Xiaofang, vice head of the department leading the government debt audit, noted that 50,000 officials had worked over the past half year, with higher levels of government checking on lower levels. “This system ensured that our audit did not encounter interference, that our audit figures are real and reliable,” he told state broadcaster CCTV.

Data Illustrate Poor State of China’s Soil – WSJ.com **Grim indeed** Figures released by the Ministry of Land and Resources on Monday in Beijing indicated as much as 2.5% of China’s soil could be too contaminated by heavy metals and other pollutants to farm. Meanwhile, the share of China’s land that is arable fell by a fifth of a percent during the three years ended in 2009, a reminder of the fine balance the government faces in protecting farmland as it sustains policies like urbanizing its population..

In its report, the first on land conditions made public since 1996, the ministry described the trends as worrisome and said the nation’s land situation remains “grim.” It said China’s stock of arable land has fallen in recent years and is less than half the world average per capita.

Chinese Hedge Funds Take Cover – WSJ.com Chinese funds focused on the nation’s domestic stocks are increasingly looking to hedge their bets.

While short selling, or betting that a stock’s price will fall, remains uncommon in China because of the high cost of borrowing stocks, hedge funds are using CSI-300 index futures and other methods to limit their risk. And fund managers say they expect regulators to roll out more products that will allow them to better hedge in the future.

Optimism running high for Chinese shares next year | South China Morning Post At 9.3 times forward 12-month earnings, the MSCI China is trading at a chunky discount to its 10-year median and at its widest gap to the MSCI Asia ex-Japan since the 2008 financial crisis.

And the Chinese market is trading at a 40 per cent discount to MSCI India on a forward price–earnings basis, according to Thomson Reuters I/B/E/S data.

Chinese companies end the year as Asia’s top borrowers | South China Morning Post **New area of major concern** Syndicated loans raised on the mainland by Chinese borrowers reached a record, equivalent to US$116.9 billion, helping push total loan market volume in Asia-Pacific excluding Japan to US$461.9 billion – up a massive 51 per cent, according to data from Thomson Reuters LPC, the industry’s benchmark data provider.

Overcapacity still a problem: MIIT – BUSINESS – Globaltimes.cn China’s industrial enterprises still face the problem of overcapacity, the country’s industry watchdog said Monday, noting that domestic demand will face downward pressure in 2014.

Since 2012, the overcapacity concern has started spreading from traditional industries – including iron, steel and chemicals – to emerging ones such as carbon fiber and solar power, and capacity utilization is less than 75 percent in some sectors, according to a report posted by the Ministry of Industry and Information Technology (MIIT) on Monday.

China to subsidize high-tech clusters |Industries |chinadaily.com.cn Each cluster will receive government subsidiaries of up to 100 million yuan ($16.4 million) and policy preferences, it added, citing officials from the Ministry of Science and Technology.

A total of 100 clusters are scheduled to be covered by the end of 2015, according to the ministry.

Plunging gold hasn’t lost shine in Chinese consumers’ eyes – People’s Daily Online **Nice and tangible** Gold prices are down this year, breaking a 13 year winning streak in China.

But instead of worrying Chinese consumers, lower prices mean they’re buying more of the yellow metal as the country has already become the world’s largest for gold trade.

China Regulator Gives IPO Green Light to First Five Companies -Caijing Five Chinese companies are ready to launch their initial public offering in early January as the first batch to be approved to raise funds from the country’s stock markets after a year-long moratorium.

Three of them choose to be listed on ChiNext, China’s Nasdaq while the other two are going for the over-the-counter stock exchange and the Shanghai Stock Exchange respectively.

China’s December New Home Prices Rise Most in 2013, SouFun Says – Bloomberg **This won’t end until bank savers can get over inflation** The average price rose 12 percent from a year earlier to 10,833 yuan ($1,789) per square meter (10.76 square feet), SouFun Holdings Ltd., the nation’s biggest real estate website owner, said in an e-mailed statement based on a survey of 100 cities. Prices climbed 0.7 percent from November.

China Moves Slowly Toward State Sector Overhaul – China Real Time Report – WSJ China’s government holding company – the state-owned Assets Supervision and Administration Commission – earlier this month said it would push forward with the transformation of state-owned enterprises into joint stock companies and encourage private sector investment in some areas. SASAC, which holds controlling shares of 113 companies, says the government would retain 100%  ownership in sectors which are “vital to national security” or “the lifeblood of the economy.”

Chinese Women ‘Name and Shame’ Companies They Say Discriminate – NYTimes.com **Good on ’em** Eight young Chinese women, most of them university students facing a tight job market, have “named and shamed” dozens of Chinese companies they say are illegally specifying that only men can apply for certain positions. They have mailed their complaints to government human resource departments in the cities of Beijing, Guangzhou and Nanjing, and in Yunnan and Henan Provinces.

Asia’s Worst Performer of 2013 – Shanghai – China Real Time Report – WSJ **Down 66% since 2007** Down 7.5% in early trading in the last session of the year, the Shanghai Composite is one of only two regional markets to suffer losses this year. Indonesia, a country now widely shunned by investors due to concerns over the health of its economy, is down 1%.

This is the fourth consecutive year that the market has produced a lackluster performance, and is down 36% since the end of 2009. Last trading at 2103.67, the depressed level of the market is a far cry from the peak of around 6000 points it reached in 2007, when the Chinese economy was white hot and investors piled into stocks.

China Considers Newly Proposed Free Trade Zones | China Briefing News Southern Weekend, a news agency in China, reported that there have been 13 regions of China showing interest in building regional FTZs since the Shanghai FTZ launched in September, and at least four of them have submitted applications to the State Council or other relevant government departments, including Guangdong, Tianjin, Qingdao and the Liangjiang New Area of Chongqing. According to Southern Urban Daily, an affiliated news agency of Southern Weekend, there may even be a batch of FTZs receiving approval next year.

Graphics: For Property Market, a New Year Told the Same Story – All but one of the 70 cities monitored by the National Bureau of Statistics reported that housing prices in November were higher than in the same month last year, new data shows. The monthly growth rates of 26 cities were above 10 percent.

A report by the property research institute China Index Academy examined the market from different perspectives, but it also found soaring prices for apartments.

Views: Housing Bubble? – Real estate has been a hot topic in China for at least a decade. Prices continued to climb last year, despite price control policies enacted by both central and local levels of governments. Caixin spoke to experts about the prospects for the real estate industry in 2014 and whether or not a bubble exists.

Yearender–Xinhua Insight: China’s urbanization puts people at center – Xinhua | English.news.cn **Story disproves title** China’s new approach to urbanization has made the year 2013 a turning point, especially for the 260 million migrant workers who await the benefits of the change.

China’s hukou system ties public services such as health care and education to residential status. Those without local hukou are usually barred from sending children to public schools and many, particularly migrants, are left with few choices but to send children to schools back home. Those without local hukou also face tougher restrictions on housing and car purchases.

Regional Variations of the Urge to Splurge in China – Businessweek It’s no simple task to design advertising campaigns meant to appeal to 1.3 billion people living in diverse circumstances across China. A new study (PDF) by consumer researcher GroupM (WPP:LN) in Shanghai maps the geography of China’s luxury and high-end consumers, teasing out regional variations of the urge to splurge.

Broadly speaking, shoppers in China’s less developed central and southwestern regions tend to be more pragmatic and price-conscious, even those with extra cash to spend on luxury goods. Meanwhile, those in northern and eastern China, who often have longer exposure to brands, are more sensitive to what the study calls “emotional influences,” including brand loyalty, product packaging, and advertising campaigns.

COMPANIES

ICBC fell from top spot as world’s biggest lender – Headlines, features, photo and videos from ecns.cn|china|news|chinanews|ecns|cns The Industrial & Commercial Bank of China, with a market value of 213.7 billion U.S. dollars ending Monday, fell to the fourth place from the previous top spot, trailing behind Berkshire Hathaway Inc (291.1 billion), Wells Fargo Bank (239.7 billion) and JPMorgan Chase (236.4 billion), according to Bloomberg calculations.

The Chinese lender surpassed Citigroup in July 2007 to become the world’s biggest bank. Its six-year reign had been interrupted only once when it was eclipsed by HSBC Holdings PLC in September 2008, if not taking into account of recent ups and downs since June this year.

Initial Apple iPhone orders on China Mobile underwhelming AAPL CHL – Investors.com **Didn’t think this would be the panacea some hoped. There was a hint of desperation** Apple investors cheered the company’s long-awaited distribution deal with China Mobile, the world’s largest wireless carrier, after it was announced Dec. 22. But early reports show China Mobile iPhone orders lagging what other carriers experienced when they began selling Apple’s latest smartphone, Wedge Partners analyst Jun Zhang said.

China Mobile Expands 4G Lineup as Samsung to Sony Add Handsets – Bloomberg China Mobile Ltd. (941) is selling 13 handsets for its fourth-generation network, up from four devices at the start of service three weeks ago, as market leader Samsung Electronics Co. (005930) and rivals vie for early adopters.

Samsung’s Note 3 is available for 5,399 yuan ($892) before subsidy at China Mobile’s store at the carrier’s Beijing headquarters, in addition to the Note 2 that went on sale earlier this month. The Note 3, the most costly device offered on the 4G network, is available free with China Mobile’s most expensive monthly service plan of 488 yuan.

Late Start May Be Tempering China Mobile’s iPhone Preorders – John Paczkowski – Mobile – AllThingsD How is it that China Mobile, which currently provides cell service to over 763 million customers, is pulling in fewer iPhone preorders than its smaller rivals? One thing to keep in mind: It’s still early and this is only a single estimate. Another: The 5s and 5c are two months old now, and China Mobile isn’t doing much to differentiate them on its network. According to Wedge, its subsidies are similar to China Telecom’s and slightly higher than China Unicom’s.

How Baidu Beat the Market in 2013 This year in many ways represented a reversing of fortunes for Baidu. After being driven down over the past 18 months as the result of several emerging threats to its core search business, Baidu defied the doubters this year by posting several impressive quarterly performances

Baidu, QVOD fined 250,000 yuan each for video copyright violations – BUSINESS – Globaltimes.cn **Barely a rap on the knuckles** Baidu Inc, China’s largest search engine company, and Shenzhen-based software company QVOD Technology were identified as the top two violators of copyrighted video content for 2013 and have both been ordered to stop the copyright infringement and slapped with a penalty of 250,000 yuan ($41,225) each, an official with the National Copyright Administration said Monday.

Tech in China: WeChat Still Rules Chinese IM Industry, Rivals Mull to Catch Up **WeChat over double the # of Twitter users** The users of IM tools recorded metric growth this year led by WeChat which now registered more than 600 million users, with more than 100 million overseas and 271.9 million monthly active users in Q3 2013.

Location-based social app Momo has registered 80 million users and 13 million daily active users after two years and three months of development.

Xiaomi aims to double phone sales to 40 million in 2014 We’re hours away from the start of 2014, but the founder and CEO of young Chinese phone-maker Xiaomi is already thinking ahead to the end of next year. In a post on his Weibo page, Lei Jun says the company is aiming to ship 40 million phones in 2014.

Delivery firm cancels IPO |Companies |chinadaily.com.cn **Nice euphemism** China Postal Express and Logistics Co Ltd, the State-owned express courier company, has withdrawn its application to go public amid strong competition from domestic rivals in the 198 billion yuan ($32.7 billion) express delivery market.

The State-backed firm, known as EMS, cited “strategic adjustment” issues as the major reason behind the IPO pullout, according to a company statement.

Building Capacity — Beijing Review “Huawei is now the largest ICT service provider in Africa,” said Gao, “Alcatel-Lucent and Ericsson now lag far behind us.”

The same thing happened to the Chinese Civil Engineering Construction Corp. (CCECC) Nig. Ltd. When CCECC first set foot on the continent, German companies controlled the lion’s share of the construction trade. The company tried valiantly but struggled to gain a foothold. Decades of hard work finally paid off though, and CCECC is now the leading construction company and contractor in Nigeria.

New Ford Transit models recalled in China – People’s Daily Online **Who does the QC?! Looks awful for Chinese manufacturers** Chinese automaker Jiangling Motors Co., Ltd.began recall of 8,638 New Ford Transit vehicles on Monday, according to China’s quality watchdog.

The recall involves New Ford Transit models manufactured between June 17, 2012 and Feb. 20, 2013, the General Administration of Quality Supervision, Inspection and Quarantine said in a statement.

Baotou Steel Plans $4.9 Billion Share Issue to Buy Assets – Bloomberg Inner Mongolian Baotou Steel Union Co. (600010), a Chinese steelmaker, will raise as much as 29.8 billion yuan ($4.9 billion) in a private share placement to buy assets from its parent and replenish working capital. The stock jumped.

The board approved a plan to sell as many as 8.26 billion shares in Shanghai at 3.61 yuan apiece, the Baotou, Inner Mongolia-based company said today in a statement. That compares to the 3.92 yuan the stock last traded at on Oct. 31.

China Everbright in HanKore Water Agreement Plans Majority Stake – Bloomberg China Everbright International Ltd., a developer of water and environmental protection projects, plans to inject all water-industry investments into HanKore Environment Tech Group Ltd. (BIOT) in exchange for a majority stake in the company, according to a Hong Kong exchange filing.

China Everbright signed a framework agreement with Singapore-listed HanKore, which will issue consideration shares at S$0.0703 each and become a subsidiary on completion of the accord, according to the statement. Terms will be finalized following due diligence and the signing of a definitive agreement, China Everbright said.

Carlsberg plans $250 million expansion in China – MarketWatch **Smart move – big market, poor quality** Carlsberg said Monday it is buying 100% of Chongqing Beer Group Assets Management, a holding company that owns eight breweries in three different provinces of China. Chongqing Beer Group’s breweries primarily sell brands licensed from Chongqing Brewery Company Co. Ltd, majority-owned by Carlsberg, as well as the brand Tianmuhu.

BOC, AVIC, Samsung Jointly Tap Mainland Insurance Market | 4-Traders BOC Insurance wholly owned by Bank of China Limited (BOC, SEHK: 3988 and SHSE: 601988), China Aviation Industry Corporation (AVIC) and Samsung Life Insurance inked agreement for shareholding in Samsung Air China Life Insurance to jointly promote mainland service.

BOC will put additional investment in Samsung Air China Life Insurance through BOC Insurance and the target company will have capital base of KRW 144 billion or CNY 830 million.

China Mobile Ltd. : China Mobile 100G Backbone Network Procurement in Price War | 4-Traders Following centralized procurement in early 2013 and additional procurement in September for 100G optical transport network (OTN) equipment, China Mobile Ltd. (SEHK: 0941 and NYSE: CHL) started a new round of centralized procurement for national backbone network in early December. Dividing into three bid sections respectively for northeast, east and west regions, the procurement covers more than 80% provinces, municipalities and autonomous regions.

Beijing Auto | Beijing’s BJ40 SUV Hits The Market at 146,800RMB and Rising | China Car Times – China Auto News The BJ40 was first announced in late 2009 and aired in 2010 at the Shanghai Auto Show where it wowed both the media and the public at large. Over the past few weeks the BJ40 was rumored to be launching with a 200,000RMB price tag which was considered extremely steep for a Chinese branded two door SUV, instead Beijing has come back with a low cost price tag of 146,800RMB rising to 186,800RMB over a three model range.

Posted from Diigo.

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