China Business Briefs 6/1/14

ECONOMY

China draws up new rules to curb shadow banking risks – FT.com The draft regulations, a copy of which was obtained by the Financial Times, mark an attempt by the government to better co-ordinate regulation of the country’s shadow banks, but also indicate a more permissive official stance than many observers had anticipated.

China approves pilot plan to set up 3-5 private banks | Reuters China has approved a pilot scheme allowing the setting up of three to five private banks, the regulator said on Monday, in a step to boost financial support for cash-starved smaller firm

Chinese leaders have pledged to open up the banking sector, now dominated by big state-owned lenders, to private investors to help boost competition and increase lending to small firms, who are often neglected by the big banks.

Diverse ownership to boost SOE reforms – Headlines, features, photo and videos from ecns.cn|china|news|chinanews|ecns|cns Ding Yifan, deputy director of the Institute of World Development under the State Council’s Development Research Center, said a communique, issued after a key meeting of the Communist Party of China (CPC) Central Committee, set diverse ownership as the future development direction.

The move is a result of complaints about SOEs’ low efficiency and them receiving too many favors from government, said Ding in a program on Chinese reforms aired on Sunday on China Xinhua News Agency Network Co. Ltd. (CNC).

The three big listing themes in 2014 | South China Morning Post While Hong Kong’s equity market may have yet to shake off its holiday lethargy, IPO Watch is casting a glance back into 2013 to explore three important issues that may serve as a guide for stock picking among this year’s listing hopefuls. At least one of the trends is likely to emerge as the defining issue of the city’s listing market in 2014.

China to strengthen delisting rules – Business – Chinadaily.com.cn More issues need to be made clearer concerning the legal basis for delisting in such cases, the definition of a major violation, and the approach for delisting, Monday’s Shanghai Securities News quoted Xiao Gang, chairman of the China Securities Regulatory Commission, as saying.

Half of delistings in recent years in China were voluntary due to companies’ strategic restructuring or privatization, according to Xiao. He added that delisting will become a neutral mechanism, under which rule breaking or legal violations will not be tolerated.

China’s “Big Four” Banks Extend New Loans of CNY180B in December-Caijing China’s biggest four banks extended 180 billion yuan of new loans in December, while new deposits attracted by the state-owned banks surged 1.2 trillion yuan in the same month, reported by the Shanghai Securities News.

With money supply well above target, there is a good chance that banks are cautious in extending loans as planned, said Lu Zhengwei, chief economist with Industrial Bank. Chinese banks all together lent 8.4 trillion yuan in the first 11 months of this year, leaving 600 billion for December if they follow strictly of the full year target of 9 trillion yuan.

China Wages Seen Jumping in 2014 Amid Shift to Services: – Bloomberg Lu Ting, a Hong Kong-based economist for Bank of America, said in an e-mail that he sees wage growth of 11 percent this year after an estimated 10.7 percent gain in 2013. JPMorgan Chase & Co. and Mizuho Securities Asia Ltd. analysts said in interviews that they predict 10 percent to 15 percent increases.

China’s ruling Communist Party is pushing for pay increases to retain public support and to accelerate the nation’s shift away from polluting and capital-intensive manufacturing to a more services-driven economy. In minimum-wage increases so far announced for 2014, workers in Shenzhen in Guangdong province get a 13 percent boost and the gain for those in Yangzhou, Jiangsu province, is 15.6 percent.

Govt campaign to ensure migrant workers’ wages – Business – Chinadaily.com.cn The Ministry of Human Resources and Social Security said in a statement that five working teams will be sent to eight provinces including Zhejiang and Hubei to inspect employers’ salary payments to migrant workers as well as local governments’ related supervisory work.

The statement said that the campaign will urge local authorities to take effective measures to ensure migrant workers get paid in full before the Spring Festival, which falls on Jan 31.

Regional Conflicts in the South China Sea Could Rival the Middle East One Day The South China Sea reportedly holds 11 billion barrels of oil and 190 trillion cubic feet of natural gas. That might actually only tell half of the story as the US Geological Survey estimates that as much as 22 billion barrels of oil could lie underneath the seabed. Unfortunately, there’s no clear way to define who “owns” these resources, as China, Vietnam, Malaysia, Taiwan, the Philippines, Indonesia and Brunei all believe some, or all, of these resources belong to them.

This is in fact one reason why nearly a third of all global crude oil passes through the South China Sea each year. The combination of potentially disputed oil underneath the sea, as well as its importance in the global oil trade makes this region a potential future hotbed for conflict. Clearly, peace in the South China Sea is vital to maintain regional stability.

Futures market records major increase |Markets |chinadaily.com.cn Combined trading volumes in the futures market in 2013 jumped to 2.06 billion contracts, 42.15 percent year-on-year growth, the CFA said.

China’s Financial Futures Exchange’s trading volume jumped to 190 million contracts in 2013, an 84.22 percent increase with trading value of 141 trillion yuan, representing an 85.92 percent year-on-year increase.

Rising home prices send China’s ‘Rat Race’ scurrying underground | Reuters That’s pushing more and more newly arrived urbanites underground. Of the estimated 7.7 million migrants living in Beijing, nearly a fifth live either at their workplace or underground, according to state news agency Xinhua. Beijing’s housing authority refuted this statistic, saying in an email to Reuters that a government survey last year found only about 280,000 migrants living in basements and that only a small percentage of Beijing’s basements were being used as dwellings.

Foreign Banks Are Optimistic on China Reform, Ernst & Young Says – Businessweek “With gradual and successive financial reforms taking place in China, foreign banks are optimistic about their future in China,” Ernst & Young said in a statement in Shanghai today after surveying 38 overseas lenders. Respondents expect a “modest improvement” in their performance over the next three years, the New York-based accounting firm said.

Foreign lenders are struggling to expand their market share of less than 2 percent in the world’s second-largest economy, where banking assets more than doubled since 2008 to 147 trillion yuan ($24 trillion) as of Sept. 30. Global banks face government restrictions on adding branches and offering products as local rivals churn out record profits.

China’s domestic and outbound tourism to keep growing in 2014|Economy|News|WantChinaTimes.com The report made a positive prediction for 2014, forecasting that both the number of tourists and their spending will increase. The number of people traveling abroad may reach as high as 114 million, a 16% hike from 2013, and their spending will increase by at least 18%, according to the report. In terms of country-wide travel, the number of domestic tourists is estimated to reach 3.58 billion, while they are forecast to spend 3.2 trillion (US$528.8 billion).

Luxury cigarette prices fall after Beijing ban|Economy|News|WantChinaTimes.com Prices of luxury cigarettes have been slashed in Beijing following the Chinese government’s ban on extravagant official spending, reports the Beijing Youth Daily, the official newspaper of the Communist Youth League in Beijing.

Taobao lures Russian shoppers – Business – Chinadaily.com.cn Russians, especially young people, have increasingly been buying goods from China. Taobao data showed about $2 million worth of goods were sent to Russia in February. The figure doubled in May.

China’s Leaders Move to Rein In Steel Mecca – WSJ.com In the past two months, the local government in Hebei, a province roughly the size of Oklahoma that produces a quarter of China’s steel, has orchestrated a parade of furnace shutdowns. The head of its top steelmaker has resigned. Mills are scrambling to switch to more fuel-efficient material.

Chinese leaders are telling the province that its measures aren’t enough. Spurred in part by severe pollution that drifts from Hebei to next-door Beijing, the central government has set a goal of lopping off nearly a quarter of the province’s steelmaking capacity.

China to open tech niches to foreign investors – MarketWatch China will open information services and data storage services to foreign investment in the free trade zone, according to a notice posted on the website of the Ministry of Industry and Information Technology. Foreign ownership cannot exceed 50%.

Online data processing will be opened to foreign investment, but foreign ownership cannot exceed 55%. So will virtual private networks, though foreign ownership in these will be limited to 50%.

The 2014 Outlook for the People’s Bank of China – China Real Time Report – WSJ China’s central bank needs to get a mix of offense and defense right in 2014. On the offense, People’s Bank of China Gov. Zhou Xiaochuan was brought back for a third term by China’s top leaders, despite Mr. Zhou having reached the bank’s retirement age of 65. Mr. Zhou’s mission: to put in place a reform agenda that stalled under China’s former leaders.

On defense, the PBOC must decide how to slow China’s escalating debt, which has grown so rapidly over the past five years that it reminds Chinese and foreign economists alike of the credit bubbles that eventually burst in the U.S., Europe and other parts of Asia. First, the PBOC must decide what to do. Boost interest rates? More tightly regulate so-called shadow lenders, such as trust companies and informal lenders, which work out complicated deals with the banks to hide risky loans?

China’s growth is a contradiction, but that’s how we like it | China Economic Review China Economic Review has compiled a list of the best predictions for 2014 while also assuring readers that the world will look at China with awe, antipathy, disgust and envy all at once this year.

Private businessmen crimes rise – BUSINESS – Globaltimes.cn Private entrepreneurs were found guilty of, or had allegedly committed three-quarters of 357 publicly reported entrepreneurial crimes in the country over the past year, the results of an annual Chinese entrepreneur crime report showed over the weekend.

China Evaluating Tax on Foreign Exchange & Capital Flows | China Briefing News China’s State Administration of Foreign Exchange (SAFE) – the regulatory body that oversees all movements of capital out of, and into the country has called for an “in depth study” on the potential imposition of a so-called “Tobin Tax” – a tax on all spot conversions of one currency into another. Named after the Nobel Prize winning economist James Tobin, the tax was originally meant to be used for curbing short term round trip excursions into another currency to prevent deliberate destabilization of national currencies being wrought by market traders.  China however seems to be evaluating its use as a means to control currency flows even as the Chinese RMB is being liberalized.

What’s Trust in China Got To Do With Our Success? Integrity and caring build trust in China. We should be doing that with our workers in China, but we should also insure or direct reports and other important positions have that. Trust in China is worth big money. It makes teams go and must come from top leaders.

China IP infringement As China lawyers, we are all too frequently contacted by our clients who need help dealing with IP infringement in China. As a first step, we analyze the situation and propose a course of action.  The following is an amalgamation of memoranda, done so as to convey both what goes on out there and how to deal with it.  Most importantly, however, it is intended to provide a path towards preventing IP infringement through proactive trademark and copyright registrations.

Video: Ice Festival preparations hot up in Harbin, China – Telegraph According to organisers, the festival is one of the largest in the world stretching to 6,458,400 square feet.

COMPANIES

China Railway Group chairman dies – Headlines, features, photo and videos from ecns.cn|china|news|chinanews|ecns|cns The chairman of China Railway Group Ltd Bai Zhongren died at his home Saturday, Securities Times reported Sunday.

The company’s spokesperson has confirmed the information, but said the company’s operations were normal, the report said. The report also said that Bai had been suffering depression for years, without disclosing the reason why he died.

China Railway Group President Bai Zhongren’s Death From An Unspecified Accident Might Be A Suicide: Local Media However, China Business News, a local newspaper, citing unidentified sources, said that the 53-year-old jumped to his death from a fourth-story window at his home, after suffering from depression in recent months due to his company’s mounting debt.

China Railway Shares Plunge After Company President’s Death – Wall Street Journal – WSJ.com The shares of China’s second-largest construction contractor by revenue after China Railway Construction Corp. fell as much as 7.2% in Hong Kong on Monday, then recouped some of the losses, to end 4.1% lower at 3.75 Hong Kong dollars (US$0.48) per share. It was the lowest close since July 15.

China Harbin Bank Seeks to Raise $1 Billion Via Hong Kong IPO – WSJ.com If it gets listing approval from Hong Kong’s stock exchange, Harbin Bank would be the fourth Chinese bank to go public in Hong Kong since a wave of offerings kicked off in November. Chinese banks have been raising money through Hong Kong IPOs as a way of replenishing their capital amid tighter regulatory requirements, and as bad loans increase while the economy slows.

In December, Hong Kong was home to a $3 billion offering by China Everbright Bank, the country’s 11th largest bank by assets, in what was the city’s biggest IPO of 2013. Everbright Bank’s IPO came just weeks after two smaller Chinese banks, Huishang Bank Corp. and Bank of Chongqing, raised about $2 billion in total in November.

In China you can now hail a cab and pay the driver on WeChat That was fast – just days after Chinese tech giant Tencent (HKG:0700) threw some cash into the massive series C funding round for taxi-hailing app Didi Dache, WeChat, Tencent’s behemoth messaging app, has added a feature that lets users hail a taxi on-demand using Didi’s network.

Alibaba and Sina Weibo partner up to bring Weibo Wallet to mobile The introductory splash-screen for the updated Sina Weibo app – now at v4.2 – tells users they can make payments within Weibo for any product that someone shares or links to within the app. It promises that “paying online is just a tap away.” A “Wallet” section now appears in the “Me” area of the Sina Weibo app. However, it’s poorly implemented right now, and there’s no explanation of how to connect this new Weibo Wallet to any e-payment service or bank card.

Oil Tycoon Denies Hu Yaobang’s Family Is Linked to His Business – Oil tycoon Wang Letian says that the family of former Communist Party general secretary Hu Yaobang was not linked to his deals for oilfields.

Wang bought several fields in 2008 in the northwestern province of Shaanxi from state-owned China National Petroleum Corp. (CNPC) via an intermediary, Zhou Bin, the son of a former top leader. Zhou is currently embroiled in a corruption investigation.

Wang said that he paid for the oil fields and buying them through an intermediary was a choice he made only reluctantly because private oil companies had no access to productive reserves.

China Mobile Probes Loss-Making Exit From Hong Kong TV – Bloomberg China Mobile Communications Corp., the parent of the world’s largest phone company, is probing a decision by its Hong Kong unit to exit the territory’s television market at a loss one year after introducing service.

China Mobile is investigating whether the transaction meets its internal guidelines as well as regulations of China’s State-owned Assets Supervision and Administration Commission, the company said in an e-mail today. The sale involved a unit that owned spectrum to broadcast mobile television service in Hong Kong, the company said, without identifying the buyer.

CNOOC to close new energy unit – BUSINESS – Globaltimes.cn China’s third-largest national oil company decided to end one of its renewable energy subsidiaries, according to media reports, as the country’s lackluster new energy market continues to struggle with limited demand and high production costs, analysts said Sunday.

China National Offshore Oil Corp (CNOOC) plans to dissolve its subsidiary CNOOC New Energy Investment Co, a Beijing-based firm which mainly explores and produces several forms of renewable energy including wind power, coal-based clean energy and biomass energy, the Beijing-based Economic Observer newspaper reported Friday.

Dalian Wanda building theme park to rival Shanghai Disney Resort|WantChinaTimes.com China’s richest man, Wang Jianlin, plans to spend 30 billion yuan (US$5 billion) to build a theme park to rival the Shanghai Disney Resort as he explores possibilities for the future of his property development company, reports the Beijing News.

“I’m targeting Disney. I never have blind faith in foreigners. I will prove that a tourism project built by the Chinese can compete with the so-called famous brands from the United States,” Wang said.

Shenhua Energy Co. Ltd., Energy Corp. of America plan Marcellus wells – Pittsburgh Business Times The biggest coal company in the world, China’s state-owned Shenhua Energy Co. Ltd., is making a big commitment to drilling for natural gas in southwestern Pennsylvania.

Shenhua is making a $90 million investment in a joint venture with Energy Corporation of America to drill for natural gas in Greene County.

SINOPEC Engineering Group Co Ltd : Sinopec plans to build $3.1bn plant | 4-Traders Sinopec Engineering Group said it has entered into a deal to build a $3.1 billion plant in northern China to turn coal into petrochemicals, as China seeks to reduce its reliance on petrochemical imports.

Sinopec Engineering will be responsible for engineering, procurement and construction of the 18.67 billion-yuan project in Inner Mongolia, which it said would be the largest of its kind in the world.

Taking off – BUSINESS – Globaltimes.cn Cathay Pacific Services Ltd, a wholly owned subsidiary of Cathay Pacific Airways, is one of several companies betting on a sharp increase in air freight in coming years.

The company spent HK$5.9 billion ($760 million) in 2013 to build a new cargo terminal at Hong Kong International Airport. It now has the capacity to deal with 2.6 million tons of goods annually, taking the total annual freight capacity at Hong Kong International Airport to 7.4 million tons.

Qunar Jumps on Mobile User Growth as Ctrip Tumbles – Bloomberg Qunar, based in Beijing, rallied 11 percent on Jan. 3 to the highest level since its U.S. debut in November. The Bloomberg China-US Equity Index of the most traded Chinese stocks in New York slid 1.5 percent, capping a 2.5 percent slump last week. Ctrip.com, China’s biggest online travel agency, led declines on the gauge with a 7.9 percent retreat.

In China, Crowd-Funded Concerts Are Catching On With Fans – China Real Time Report – WSJ On a recent weeknight in Beijing, about 800 people gathered at a club in downtown Beijing to watch a performance by pop singer Li Quan and Li Daimo, a singer made popular by the “Voice of China” TV show. At home, several hundred more participants were tuning into the concert live from their computers or smartphones.

The concert was organized by Xiami, a Hangzhou-based online music portal owned by e-commerce giant Alibaba Group, in its first such initiative using crowd-sourced funding via Alibaba’s Taobao online shopping platform.

China,Germany,Japan,United Kingdom : CHINA launches SHANGHAI INSTITUTE OF MARINE INSURANCE | 4-Traders China launches its first marine insurance association called the Shanghai Institute of Marine Insurance.

The association s members include Chinese insurers Ping An Insurance (PAI), People’s Insurance Company of China (PICC) and China Pacific Insurance Company (CPIC).

Foreign companies, including Lloyd’s, Sumitomo Mitsui and Allianz are also members.

Honda says Dec China auto sales up 60 pct y/y | Reuters Honda Motor Co Ltd and its two local joint ventures sold a record 101,465 automobiles in China in December, up 60.4 percent from a year earlier, the Japanese automaker said on Monday.

AMEC plc : Amec Gets 6-Year Nexen Petroleum UK EPC Contract | 4-Traders AMEC PLC, an international engineering and project management company, said Monday it has been appointed by Nexen Petroleum U.K. Ltd., a wholly-owned subsidiary of CNOOC Ltd., to provide engineering, procurement and construction services for their North Sea offshore assets.

Li Ka-shing to spin off Hong Kong electricity distribution unit – FT.com Li Ka-shing’s power generation and supply group will set up the first test of Hong Kong’s equity markets for 2014 when it begins marketing the spin-off of its local electricity distribution business to investors on Monday.

It is the biggest listing in the city since AIA’s $20.5bn sale in 2010 and the largest anywhere in Asia since Japan Airlines’ $8.5bn deal in September 2012, according to Dealogic.

Apple Inc. (NASDAQ:AAPL) Used This Strategy to Win Over China Mobile Ltd. (ADR) (NYSE:CHL) Apple Inc. (NASDAQ:AAPL) employs a tactical marketing strategy that always helps the company to succeed even when it was expected to fail. While entering a new market which presents both challenges and opportunities the company does rush to cut deals with market leaders. Instead, it actually goes for the smaller players.

Minsheng uses aircraft business to expand overseas | South China Morning Post While many of the big names in mainland banking have expanded overseas by opening branches or acquiring foreign assets, China Minsheng Bank has adopted a different approach and is building its brand through aircraft leasing.

Its Minsheng Financial Leasing unit, one of the first five mainland financial leasing companies with a banking background to be approved by the China Banking Regulatory Commission, has recently expanded its private jet leasing to commercial aircraft after setting up Minsheng Commercial Aviation in Hong Kong.

Interview: Innovation key to success of Lenovo – Xinhua | English.news.cn “Lenovo’s innovation lies in its technology, products, business model and cultural management. Its name, which was changed from Legend in 2003, is a combination of ‘legend’ and ‘novo’, a Latin word meaning new,” Yang told Xinhua during an interview.

In 2013, Lenovo ranked first in the PC market taking 17.7 percent of market share worldwide. It is welcoming the post-PC era with 4G technology, Internet development and multiple terminal devices, said Liu.

Firms’ Acquisition Fight Shows How Rules for Overseas Investments Are Changing – A recent acquisition battle between two Chinese companies over a Cayman-registered semiconductor firm has shed light into the China’s changing overseas investment approval system.

Why NEXON’s BNB Failed to Accuse Tencent’s “QQ堂” of Copyright Infringement? | Bridge IP Law Commentary In recent years, there is serious plagiarism in the field of online games. Considering that online game acts as computer software, however, laws protect its “code” other than game mode and method. The case in today’s post will disclose this principle for us.

Posted from Diigo.

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