China Business Briefs 2/1/14

ECONOMY

China gives local governments go-ahead to roll over debt – FT.com **Had to happen** Faced with a mountain of maturing loans this year, China has given local governments the go-ahead to issue bonds as a way of rolling over their debt to avoid defaults.

The announcement by the National Development and Reform Commission, a top central planning authority, is the most explicit official endorsement of a massive debt refinancing operation that has become unavoidable and is already under way, analysts said.

China to modernize agriculture in new reform bid – Xinhua | English.news.cn **Key being method of financing** A central rural work conference in December set out a series of reform measures aimed at protecting farmland and farmers’ rights, and building a safety net for agricultural financing.

China’s huge population means the task of simply feeding the people remains a high priority. China must rely on itself and pursue a national food security strategy of maintaining agricultural productivity, importing moderately, and employing science and technology, a statement after the conference said.

China Manufacturing Index Falls as Xi Grapples With Growth Risks – Bloomberg **No more 10% growth** Swelling local-government debt, surging property prices in some cities and volatility in money-market rates are risks as Xi embarks on reforms intended to lay the foundations for more sustainable long-term growth. The Chinese economy may have expanded 7.6 percent in 2013, the slowest pace in 14 years, according to a State Council report last week.

“The Chinese leadership has made it clear that they want stable growth this year — neither a sharp fall nor a quick rebound,” said Zhu Haibin, Hong Kong-based chief China economist at JPMorgan Chase & Co. “The central bank will remain neutral in its policy operations.”

Economists React: China’s Manufacturing Sector Runs Into Trouble – China Real Time Report – WSJ All isn’t well with China’s manufacturing industry, long the economy’s major engine. The HSBC China manufacturing purchasing managers’ index, published Thursday, fell to 50.5 in December from 50.8 in November—just a whisker above the 50-mark that separates expansion from contraction. That echoes the signal from the government’s own PMI, released a day earlier, which dropped to 51.0 from 51.4.

Here, economists weigh in on the latest numbers (edited slightly for style and clarity):

China tycoon wants New York Times | South China Morning Post **Expect US consternation and hand-wringing** Jiangsu-based Chen said on Tuesday he had been contemplating buying the media company for more than two years and expected to discuss the matter on Sunday with a “leading shareholder” in New York. “There’s nothing that can’t be bought for the right price,” he said.

With its status, The New York Times is an occasional target among the wealthy. Flamboyant property tycoon Donald Trump had tried to figure out a way to buy the Times early last year, New York magazine reported.

Burgeoning Delivery Industry Grapples with Poisoning Death – **”Begun refusing”…!** Also, in an effort to reduce costs, many chemical companies use courier companies to deliver samples, even of dangerous chemicals. The State Post Bureau, which regulates the postal and delivery industry, issued an emergency notice on December 22 requiring stricter examination of parcels. Major industry players including SF Express, ZTO Express, Yunda Express and YTO Express have tightened controls on parcel reception and begun refusing to accept packages containing chemical products.

But human inspection is highly unreliable. To bring the courier industry up to the level of the aviation industry in scrutinizing packages would require couriers to buy huge quantities of screening equipment. That would be a hard pill to swallow for the industry, which sports profit margins of only about 4 percent.

Chinese iron trade fuels port clash with Mexican drug cartel | Reuters **Great story** The Knights Templar cartel, steadily diversifying into other businesses, became so successful at exporting iron ore to China that the Mexican Navy in November had to move in and take over the port in Lazaro Cardenas, a city that has become one of the gang’s main cash generators.

Mexico’s biggest producer of iron ore, Michoacan state is a magnet for Chinese traders feeding demand for steel in their homeland. But the mines also created an opportunity for criminal gangs, such as the Knights Templar, looking to broaden their revenue base into more legitimate businesses.

Beijing’s land transfer fees hit record high – Xinhua | English.news.cn The red-hot property market in 2013 pushed Beijing’s land transfer fees to a record high of 182.18 billion yuan ($30 billion), 2.8 times that for 2012.

Land prices soared as real estate developers flocked into top-tier cities to compete in developing land, as they remained bullish on the prospect of first-tier cities and bearish on the growth potential of third and fourth-tier cities.

Gen Y’s motto: Show me the money[1]- Chinadaily.com.cn **Taking their lead from the top** In a survey by global human resources firm Hays, by far the most important metric of career success for China’s Generation Y (aged 18 to 30) is creating personal wealth, as 64 percent of the 1,000 young people surveyed listed it as their top priority.

In other surveyed countries, job satisfaction and enjoyment of work were the top priorities. But China’s Generation Y workers are less likely than those in other countries to look for work flexibility — and far more likely to be driven by the potential to earn a bonus.

China’s House Prices up for 19th Straight Month in December: CIA-Caijing Newly built houses in 100 monitored cities were up 0.70 percent in December from the previous month, compared with a monthly increase of 0.68 in November, the CIA said. On a yearly basis, the prices rose for the 13th straight month, expanding by 11.51 percent from the same month a year ago.

The Year of the Horse **Michael Pettis** Whether or not the reforms succeed, analysts who predict that China is about to embark on a decade of 7 percent growth or more will almost certainly be proven wrong. Broadly speaking, either Beijing will successfully implement the reforms over the next two to three years, or political opposition will prevent it from doing so. If Beijing does not succeed, and if China’s growth relies on the same mechanisms that have driven it over the past few years, China’s economy will continue to grow at roughly 7-8 percent annually for perhaps two or three more years. During this time, however, debt levels will surge, and the risk of a financial crisis will ultimately cause growth rates to collapse. If China does not control its surge in debt, in other words, it will probably face either a financial crisis or a decade of economic stagnation well before 2020.

CNPC security incidents due to aging pipelines: report|Companies|Business|WantChinaTimes.com China National Petroleum Corporation (CNPC) — China’s largest oil and gas producer and supplier — has seen seven security incidents over the past four years, including an oil tanker and pipeline explosion, with experts naming problems such as the firm’s aging northeastern crude oil pipeline networks, low degree of automation, and backward communication facilities, reports the Beijing-based Securities Daily.

On Nov. 22, CNPC’s Donghuang oil pipeline exploded after catching fire in Qingdao in eastern China’s Shandong province, killing 62 people and injuring 136. The State Council, the country’s cabinet, swiftly issued an emergency notice, requesting security checks of the whole country’s oil and gas pipelines by the end of March 2014.

Did Chinese dama lose big on gold? |Markets |chinadaily.com.cn The bargain-hunting middle-aged Chinese women known as “dama”, have exerted the influence of the rising Chinese middle class in the gold market this year. As 2013 ends as a bleak year for gold, how do their gold investments look now?

Throughout 2013, the global gold market has risen and fallen in line with expectations that the Federal Reserve would withdraw its quantitative easing (QE) stimulus. Gold has fallen 29 percent in 2013, and is heading for the biggest annual loss in 32 years.

Beijing plans crackdown on illegal sales of rural housing|Policy|Business|WantChinaTimes.com The government intends to tear down illegal units, investigate other violations, and punish those found to be in violation of the law in order to stop all ongoing illegal projects that are being built or sold and stem the increase in the number of new illegal units, an official with the Ministry of Land and Resources stated.

However, the newspaper pointed out that neither the central government’s nor Beijing’s announcement mentioned the already existing rural housing units, which account for 40% of the Chinese capital’s residential units in the market, and up to 50%-70% of such units in Shenzhen.

China to open high speed rail link to North Korean border in 2015 | Reuters China will open a high-speed rail line to the North Korean border next year, state media said on Thursday, in a sign that China remains committed to boosting trade and economic ties with the isolated, nuclear-armed state.

The line, under construction since 2010, will run 207 km (127 miles) from Shenyang to the border city of Dandong, which faces North Korea across the Yalu River, and will shorten the train journey from 3 1/2 hours to one hour, the official Xinhua news agency said.

PBOC’s liquidity injections fell in 2013 |Economy |chinadaily.com.cn The central bank adjusted liquidity levels on China’s money market mostly via the issuance of central bank bills as well as repurchase agreements, known as repos, and reverse repos. Analysts said that it’s becoming clearer that the central bank is taking a more prudent position. The PBOC is urging lenders to avoid shadow-banking activities, cooling some overheated sectors such as real estate, and curbing local governments’ infrastructure programs, analysts added.

China’s Hidden Pension Debt Could Exceed CNY20Trl: Expert-Caijing **Yikes** Zheng Bingwen, director of social security center with the Chinese Academy of Social Sciences, drew the conclusion based on his assumption that China’s pension reserves could only fund the system for a year and a half at the end of 2012.

Zheng said inefficient operation had actually devalued the pension funds, which are already in shortage. Unlike most countries, China parks the majority of its pension funds in banks, where annual returns are typically less than 2 percent, compared with an annual inflation of 2.47 percent in the past 11 years.

Macau 2013 gambling revenue hits $45.2 billion – MarketWatch Gambling revenue in Macau rose 19% last year to 360.7 billion patacas ($45.2 billion) — or around seven times that of the Las Vegas Strip.

The Chinese territory finished the year on a high–earning 33.46 billion patacas in December, a 19% on-year rise and Macau’s second-highest monthly total, according to data from the Gaming Inspection and Coordination Bureau released on Thursday.

In high-speed rail, the world’s loss is China’s gain | China Economic Review **Start with infrastructure, move on to high tech and finance** It seems like just yesterday that foreign companies from Japan, Germany and France crammed into Chinese boardrooms to bid on high-speed rail projects. Yet, today, it’s Chinese state firms that are bidding on – and winning – similar projects abroad, such as the ones secured late last year in Central and Eastern Europe.

The development doesn’t just epitomize the Chinese government’s vigorous “going out” policy, which has pushed state-backed companies and private enterprises alike onto the international stage. The quick turnaround time demonstrates China’s vast exploits after more than 10 years of mandatory technology transfers for many foreign companies wishing to manufacture on the mainland.

What a Bitcoin is really worth in India and China – Outside the Box – MarketWatch Last week, Indian regulators joined the fray. Preferring ominous warnings to outright prohibition, the Reserve Bank of India issued a public advisory on the dangers of Bitcoin. The meaning was clear enough. India’s largest exchange was promptly shut down, and its operator raided by local authorities.

Why the crackdown? The People’s Bank of China explained that Bitcoin isn’t a currency “in the real meaning of the word,” and cited the risk of money laundering. India’s central bank objected to Bitcoin’s volatility and its lack of “backing assets.”

China levies consumption tax on biodiesel, kerosene imports China started levying a consumption tax on imported biodiesel and some types of kerosene from the start of the new year, the customs office said, a move aimed at curbing imports of the fuels that have taken market share from state refiners.

The tax could create a supply gap for diesel in the world’s second largest oil consumer that would force state refiners to scale back exports. That would support Asian processing margins, which have been recently boosted by a refinery outage in Taiwan.

In-depth Research and Development Trend of China Film Market, 2013 – PR Newswire – The Sacramento Bee “In-depth Research and Development Trend of China Film Market, 2013” firstly reviewed the development state of global film industry in 2012; secondly, it conducted in-depth analysis on the policy development and investment economic environment of the film industry; thirdly, it summarized and analyzed the development characteristics of China’s film industry in 2012 and H1 of 2013, at the same time, it also conducted in-depth discussion on industrial major problems as well as competitive landscape; finally, this report carried out professional analysis on the financing environment and development trend of China’s film industry, which can provide you with decision-making reference.

COMPANIES

WeChat to face tougher competition in 2014|Companies|Business|WantChinaTimes.com One of the chief rivals is the Alibaba Group. An employee of the e-commerce business leader told the newspaper that the company was planning to target WeChat in four areas — telecom services, its own IM app Laiwang, vendors on its online platforms, and through the celebrities using the Sina Weibo microblogging service.

Sohu probes source of billionaire Chen Guangbiao’s wealth|WantChinaTimes.com Citing a report published by the China Business Journal in May 2011, Sohu stated that Chen’s company, Jiangsu Huangpu Recycling Resources, posted losses of around 4.3 million yuan (US$710,000) in 2008 and around 17 million yuan (US$2.8 million) in 2009. However, in a report published by Guangzhou’s Southern Metropolitan Daily, Chen was quoted as saying in 2010 that his company recorded sales of 10.3 billion yuan (US$1.7 billion) and net profit of over 400 million yuan (US$66.1 million).

Weibo users tweet a record 800k posts in 1st minute of 2014 **Sina Weibo seems a bit old-hat now…** The first minute of 2014 brought with it a surge of posts on China’s Twitter-like Sina Weibo. A whopping 808,298 posts surpassed last year’s record of 729,521, according to an official Sina account. It also beats out last year’s Chinese New Year record of 731,102.

Tencent tips in $100 million investment for Chinese taxi app Citic PE is leading the series C funding round with a contribution of $60 million, while tech giant Tencent (HKG: 0700) follows with an investment of $30 million. In May 2013, Tencent gave $15 million in funding to the company.

In addition to the usual horse-race suspense, Chinese taxi-hailing apps also have attracted media attention because on-demand taxi-rides could be the perfect gateway to get China’s smartphone users hooked on online-to-offline payments – a competitive space in the country. If Tencent’s investment sees WeChat integration with Didi Dache, the company will gain easy access to the messaging app’s 270 million monthly active users, and WeChat can get its users in the habit of paying for things using a messaging app.

Wal-Mart recalls donkey meat in China – MarketWatch Wal-Mart Stores Inc. is recalling donkey meat sold at some of its China stores after government tests showed the meat contained the DNA of other animals.

The Bentonville, Ark.-based retailer will provide 50 yuan, or roughly $8.25, compensation to customers who bought the “Five Spice” donkey meat, and it is boosting its own DNA testing for meat products sold in its China stores, a company spokeswoman said Thursday. Authorities in China’s eastern Shandong province announced in late December that the retailer’s product contained fox meat.

Daily Sales of Group Buying Site Meituan Surpass 100 Million Yuan The daily sales of group purchasing site Meituan hit more than 100 million yuan ($16.52 million), according to a Weibo post by Wang Xing, CEO of the company as well as a serial entrepreneur who gave birth to Renren.

Wang previously claimed that Meituan has had a 50% market share of Chinese group buying sector. According to statistics released by Meituan, the company’s sales from film ticket group buying businesses account for around 10% of total domestic box office revenue, while its sales for hotel reservation business account for 70% of the group buying industry.

China Construction Bank Corporation : Boy tears up over 3k yuan cash, bank tapes together in 3 hours | 4-Traders Nobody knows turning your back on a small child can cost you better than a mother in Xi’an, Shaanxi Province, whose child happily ripped up a pile of cash worth 3,585 yuan ($591.88) as she cleaned the house.

A woman surnamed Yang brought in the shredded cash into the local branch of China Construction Bank on December 30, 2013, where five employees spent three hours taping together 39 bills after her four-year-old son ripped up the small fortune, portal hsw.cn reported.

Jiangxi opens private rail line |Industries |chinadaily.com.cn The 3.89-kilometer-long line, approved in 2010, cost 130 million yuan ($21 million) and connects Yugan county’s industrial zone with the Beijing-Kowloon line.

Jiangxi Mingri Group were the main investors. Based in Yugan, the group’s business spans silk products, mineral water and petroleum.

Penang saw the good, bad and ugly | theSundaily Everyone agrees traffic congestion in Penang is bad. What is not agreed is how to go about solving the problem. For some, improving public transport is the way forward but for the state government, a RM6.3 billion package of three road projects and an undersea tunnel is seen as the answer.

Consortium Zenith BUCG Sdn Bhd, a joint-venture between Zenith Construction Sdn Bhd and China Railway Construction Co Ltd, together with Beijing Urban Construction Group, Sri Tinggi Sdn Bhd and Juteras Sdn Bhd, was awarded the projects in October.

Resource Generation Limited (via noodls) / Further funding achieved Resource Generation has signed a binding term sheet for a US$65 million loan facility, with Noble Resources International Pte Ltd, a wholly owned subsidiary of the Noble Group (Noble), which together with existing cash resources will be used for construction of the mine buildings and infrastructure at the Boikarabelo mine.

The loan is on normal commercial terms and is able to be drawn down from 1 January 2014 until 31 December 2015.

Posted from Diigo.

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