Shanghai Daily Business
Updated: 16 min 26 sec ago
BANKS in Shanghai saw outstanding bad loans and non-performing loan ratio drop last year as lenders curtailed their loans to certain sectors such as property to control financial risks, the local banking regulator said yesterday.
The NPL ratio of lenders in Shanghai shed 0.23 percentage points from the beginning of last year to 0.68 percent at the end of December, when outstanding bad loans shrank 7.6 billion yuan (US$1.1 billion) to 40.4 billion yuan, the Shanghai Office of China Banking Regulatory Commission said in a report.
The improved loan quality was mainly due to “prevention of risks and strengthening of services,” the report said.
As Shanghai raised down payments for first-time buyers and tightened their eligibility for mortgages in November, banks in the city conducted a so-called “diversified credit policy” on mortgage applicants and squeezed credit in the property sector.
“The policy should be strictly carried out to curb speculative house buying frenzy to avoid risks,” the regulator emphasized.
Shanghai lenders grew their total assets by 11.3 percent to 14.42 trillion yuan last year, according to the report.
MICROSOFT Corp has opened its first accelerator base in Shanghai, the software giant said yesterday.
The company will use the accelerator base in Xuhui District, which will serve the first batch of 14 startups, to share advanced technologies, resources and experiences, and to help Shanghai develop into an international innovation and entrepreneurship platform, Microsoft said.
Programs the base runs focus on technologies like cloud computing, Big data, artificial intelligence and the Internet of Things, which bring new challenges and opportunities to every industry, said Hsiao-Wuen Hon, corporate vice president of Microsoft and chairman of Microsoft’s Asia-Pacific R&D Group.
SHANGHAI consumers lost confidence in the fourth quarter amid global political worries and a yuan depreciation, a survey showed yesterday.
The Index of Consumer Confidence in Shanghai, a quarterly gauge compiled by Shanghai University of Finance and Economics, fell 4.3 points from the third quarter to 111.9 in the October-December quarter.
A reading above 100 points indicates optimism.
Global political changes, delayed impact of an economic recovery, continued yuan depreciation and a weak stock market combined to hurt consumer confidence, said Xu Guoxiang, director of the university’s Applied Statistics Research Center.
“Changeable international political and economic conditions in the last quarter aroused a sense of crisis among consumers, hurting consumer confidence to some extent,” Xu said.
“The city’s economic indicators actually picked up, but it takes time to have an impact on the economy and consumers.”
The component indexes showed people’s intention to buy homes and cars rose by 9.5 points and 4.8 points respectively from the previous quarter, while their intention to buy durable goods fell 12.4 points. The city’s retail sales rose 8 percent to 1.09 trillion yuan (US$159 billion) last year, with online sales surging 15.8 percent to 125 billion yuan, Shanghai Statistics Bureau said last Friday.
Another index measuring the city’s consumer satisfaction dipped to 71.83 points in 2016 from the record high of 72.03 points in 2015.
The city’s GDP rose 6.8 percent last year, faster than the annual growth of China’s GDP for the first time since 2008.
DESPITE a continued economic slowdown, China’s job market remained stable last year with the urban unemployment rate well under control, a human resources official said yesterday.
The registered unemployment rate in Chinese cities stood at 4.02 percent at the end of 2016, down from 4.04 percent three months earlier, data from the Ministry of Human Resources and Social Security showed.
The figure was below the government’s target of 4.5 percent set in the start of last year.
China created 13.14 million new jobs for urban residents last year, exceeding the whole-year target of 10 million.
“China’s employment generally held steady,” ministry spokesperson Lu Aihong said at a press conference.
The government rolled out an array of pro-employment policies for college graduates, laid-off workers from glutted industries and migrant workers, while the country’s entrepreneurial wave has also helped job creation, Lu said, adding that China’s social security system has improved and benefited more people.
China’s economy grew 6.7 percent year on year in 2016, down from the 6.9 percent rise seen in 2015 and marking the weakest annual growth in 26 years, which, along with the ongoing industrial restructuring, added to concerns over job losses this year.
“The fundamentals for stable employment have not changed,” Lu said, citing favorable factors including China’s steady growth, advanced reform measures, urbanization, and strengthening innovation capacity.
But he admitted that a huge workforce, a supply-demand gap for skilled workers and laid-off workers will continue to put pressure on the job market.
To face the challenges, China will strive to ensure re-employment of workers made redundant during the country’s excess capacity cuts, help college graduates seek jobs, improve professional skill training, and support people to set up their own businesses.
SHANGHAI-BASED Mobike has joined hands with Foxconn to double the number of bikes it plans to make this year to 10 million, adding that the Taiwan-based manufacturing giant has also taken a stake in the bike-sharing startup.
Mobike, which is backed by Tencent and Warburg Pincus LLC, said that this year it will manufacture 5.6 million with Foxconn and the rest at its own plants with unspecified partners — a huge jump over 2016 when it made more than 400,000.
Terms of the deal with Foxconn, known formally as Hon Hai Precision Industry Co, were not disclosed.
Mobike, seen as one of the most aggressive Chinese firms that allows users to find and rent bicycles through a smartphone app, said it is hoping the move will help it expand faster by lowering the unit cost of each bicycle.
The startup raised at least US$315 million in two funding rounds since October and says it is open to further investment. It has not disclosed valuations.
Founded in 2015, Mobike now operates in 13 cities across China and has forged investor relationships with Huazhou Hotels Group and Chinese online travel site Ctrip.com International in a bid to reach travelers.
It also has international ambitions and has opened an office in Singapore.
The deal with Foxconn will see Mobike bicycles made in both new and existing Foxconn plants. Manufacturing bikes in the United States and Europe was also possible, Chief Executive Davis Wang said.
“Right now we are working with Foxconn to evaluate the possibilities,” he said, adding that the company plans to meet demand in different markets with local manufacturing.
Foxconn, which is one of China’s biggest employers and makes Apple’s iPhones among other products, said on Sunday that it may set up a display-making plant in the US in an investment that would exceed US$7 billion.
CHINA’S fiscal revenue grew slower last year due to tax cut measures and downward pressure on the economy while growth in fiscal spending continued to outpace revenue, data from the Ministry of Finance showed yesterday.
Fiscal revenue rose 4.5 percent year on year to 15.96 trillion yuan (US$2.3 trillion) in 2016, the ministry said. The growth, however, was nearly half of the 8.4 percent annual increase in 2015.
The slower growth was in line with the ministry’s expectation as it said in October that China would face a grim situation over fiscal revenue increases in the last quarter of the year, due to continued pressure on the economy.
The ministry attributed the slower revenue growth to tax cuts, impact from the economic slowdown and a high base in 2015.
China’s shift from a business tax system to value-added tax resulted in a cut of 500 billion yuan in tax income last year as the reform was expanded in May to cover all industries, the State Administration of Taxation estimated in December.
China’s fiscal spending grew 6.4 percent year on year to 18.78 trillion yuan last year.
CHINA’S three largest Bitcoin exchanges said they will charge trading fees effective today.
BTCC, Huobi and OkCoin said in separate statements that they will charge traders a flat fee of 0.2 percent per transaction.
Each of the statements said assessing fees will “further curb market manipulation and extreme volatility.”
The absence of trading fees has encouraged volumes and boosted demand at Chinese Bitcoin exchanges.
The Bitcoin price soared to near-record highs in the first week of this year, drawing attention from Chinese regulators. During 2016, the yuan fell 6.6 percent against the US dollar, its worst performance since 1994.
On January 11, the People’s Bank of China launched spot checks on BTCC, Huobi and OkCoin to look at a range of possible rule violations.
SALES in Shanghai’s new home market rebounded notably last week ahead of the national weeklong Spring Festival holiday that starts on Friday.
The area of new homes sold, excluding government-subsidized affordable housing, jumped 44.1 percent to 141,000 square meters during the seven-day period ended on Sunday, Shanghai Centaline Property Consultants Co said in a report yesterday.
The new houses sold for an average 50,128 yuan (US$7,317) per square meter, a week-on-week gain of 6.4 percent.
“The recovery was quite significant with improved momentum among both real estate developers and home buyers,” said Lu Wenxi, senior manager of research at Centaline. “Notably, three best-selling projects sold more than 100 units each while units in three medium to high-end projects in the top-10 list were sold at 60,000 yuan per square meter and above.”
A housing project in the city’s outlying Baoshan District sold 203 units last week for nearly 61,000 yuan per square meter on average, followed by a development in Xuhui District where 109 apartments were sold for an average 81,333 yuan per square meter, Centaline data showed.
Around 255,000 square meters of new homes in eight projects were released locally last week, the highest seven-day volume since October.
A former star fund manager has been sentenced to more than five years in prison for market manipulation, a court statement said yesterday.
Xu Xiang, the founder and general manager of Shanghai-based Zexi Investment, was given a prison term of five years and six months, the Qingdao Intermediate People’s Court said on its official microblog account.
Co-defendant Wang Wei was sentenced to three years in jail, and Zhu Yong received a two-year term with a three-year suspension.
The trio were also fined but the court didn’t specify the amount.
Between 2010 and 2015, Xu colluded with executives of 13 listed companies and fabricated non-public information either alone or together with Wang and Zhu to enrich themselves with huge profits, the court said in the statement.
It said the executives’ cases were being handled separately.
“The illegal activities sabotaged the normal order on securities trading, and posed bad influence and damage on the management system of securities transactions,” the statement said.
Xu, who was reported to have a personal wealth of over 4 billion yuan (US$584 million), was detained by police in November 2015, five months after China’s stock market crashed in the summer.
As the Shanghai Composite Index plunged 35 percent in three weeks during that period, five of Zexi’s fund products posted at least 20 percent growth in net asset value, listed firms’ quarterly reports and earlier reports of Caixin magazine said.
SHANGHAI shares rose to a two-week high yesterday, helped by a rebound in the nonferrous metal sector.
The Shanghai Composite Index added 0.44 percent to end at 3,136.77 points.
The China Nonferrous Metal Industry Association said in a report that the country’s nonferrous metal industry posted a better-than-expected rebound last year, “bolstered by a rally in demand” and reflected in infrastructure and transport industries.
Sichuan Western Resources Holding Co jumped by the daily limit of 10 percent to 10.40 yuan (US$1.52), and Jiangxi Copper Co gained 5.7 percent to 18.25 yuan.
The defense sector rose 1.3 percent, buoyed by news that President Xi Jinping will head a new commission for joint military and civilian development.
SAMSUNG Electronics said flaws in the design and production of batteries used in its Galaxy Note 7 smartphone, not its hardware or software, made it prone to catch fire.
Samsung said yesterday that it was responsible for not ensuring the design specifications given to its suppliers were failsafe but believed its investigation into the problem would help the entire industry counter overheating risks with lithium batteries. Analysts questioned if the world’s largest smartphone maker had really gotten to the bottom of the problem.
The South Korean company delayed the launch of its next Galaxy phone — the Galaxy S8, which usually would come in February. It also unveiled tighter quality controls and more rigorous testing to ensure safety.
During a two-hour press conference live-streamed in English, Chinese and Korean, Samsung said tests of more than 200,000 phones and 30,000 batteries showed different problems with each of the two kinds of batteries used in the Note 7.
Some experts had speculated that the phones’ ultra-thin design or water-resistant features could have made them prone to overheat. Koh Dong-jin, president of Samsung’s mobile division, said the investigation found no such problems.
The Galaxy Note 7 featured one of the biggest battery capacities so far for smartphones at 3,500mAh, or milliampere-hour, which gave it the highest energy density of all Samsung’s devices. But Koh said Samsung and outside inspectors found no evidence that the high energy density alone was to blame.
Samsung unveiled the Note 7 on August 2 and weeks later recalled the first batch after reports emerged the phones were overheating and in some cases exploding. After replacement phones also started catching fire, aviation authorities banned them on flights, and the firm dropped the product for good.
SHANGHAI'S residential sales market witnessed a notable rebound last week, just a few days before the kick-off of a week-long Spring Festival holiday that falls on Friday nationally.
The area of new residential properties sold, excluding government-subsidized affordable housing, jumped 44.1 percent to 141,000 square meters during the seven-day period ended on Sunday, Shanghai Centaline Property Consultants Co said in a report today.
The new houses sold for an average 50,128 yuan (US$7,261) per square meter, a week-on-week increase of 6.4 percent.
"The recovery was quite significant with improved momentum among both real estate developers and home buyers," said Lu Wenxi, senior manager of research at Centaline. "Notably, three best-selling projects managed to register weekly sales of more than 100 units each while medium- to high-end projects were also popular among buyers during the period with three developments in the Top 10 list costing 60,000 yuan per square meter and above."
Citywide, a housing project in outlying Baoshan District unloaded 203 units alone last week at an average price of nearly 61,000 yuan per square meter, followed by a development in downtown Xuhui District where 109 apartments were sold for an average price of 81,333 yuan per square meter, Centaline data showed.
On the supply side, meanwhile, some 255,000 square meters of new houses spanning eight projects were released into the local market last week, the highest seven-day volume since October.
Despite the recovery, Lu said he didn't expect the strength to extend in the market as the lunar New Year holiday is just around the corner while new supply over the past few weeks are not adequate enough to boost sales in a sustainable way.
CONSUMER confidence in Shanghai fell in the fourth quarter amid global political uncertainties and yuan depreciation, a survey showed today.
The Index of Consumer Confidence in Shanghai, a quarterly gauge compiled by Shanghai University of Finance and Economics, fell 4.3 points from the third quarter to 111.9 in the fourth quarter.
A reading above 100 points indicates optimism.
Xu Guoxiang, director of the university’s Applied Statistics Research Center, said a series of global political changes, delayed impacts of economic recovery, continued yuan depreciation and a weak stock market all hurt consumer confidence.
“Changeable international political and economic conditions last quater can arouse a sence of crisis among consumers, hurting consumer confidence to some extend,” Xu said. “The city’s economic indicators this quarter actually picked up, but it takes time to impact the economy and consumers.”
The component indexes showed people’s intention to purchase homes and cars rose by 9.5 points, 4.8 points respectively from the previous quarter, while their intention to buy durable goods fell 12.4 points.
SAMSUNG Electronics said Monday that faulty battery caused its flagship Galaxy Note 7 to catch fire after discontinuing the fire-prone device more than three months ago.
In a special press conference in its headquarters in Seoul, Samsung said the mix of thin battery design and other manufacturing issues caused the Note 7s to explode or set on fire, which led to property damages and injuries.
The findings are based on two investigations by U.S.-based firms UL and Exponent, which examined batteries and one supply-chain analysis by a German company TUV Rheinland.
The first group of the devices carried batteries with thin separators between the positive and negative layers that raise a possibility for internal short circuit, according to the UL's teardown examination.
Aggressively thin battery had been estimated by experts as one of the main reasons the flagship Samsung phone was overheated. Insufficient physical room can induce the positive and negative electrodes to touch and spark.
Sajeev Jesuda, one of the UL's executives, told reporters that higher energy density in batteries can exacerbate the severity of battery failure in "general" terms, falling short of the confirmation of one of reasons for explosions.
Deformation was found especially from the upper right corners of the batteries, weakening a protection capability from internal short circuit, the UL president said.
The second group of Note 7s was installed with batteries that have various manufacturing problems, including the missing insulation tape, irregular bumps and thin separators. Those factors led to internal short circuits.
According to the Exponent's analysis, no hardware and software issues have been discovered from the fire-prone devices.
The first group of phones showed deformation in upper corners of the defective batteries near a cathode tab. The second group had manufacturing issues, such as abnormally high bumps that can destroy an insulation tape and a separator.
Kevin White, a principal scientist at Exponent, told reporters that the first group suffered unintended damages to the cathode windings in the corner closest to the negative tab, saying it was caused by the pouch design.
The second group, he said, showed no deficiencies in the pouch, but welding defects in the positive electrode tab raised the short circuit possibility.
Meanwhile, no factor was found in the logistics and assembly processes that damage battery safety, according to the TUV Rheindland's investigations into factories in South Korea, China and Vietnam.
Holger Kunz, the German company's executive vice president, said its supply-chain analysis showed no specific defection of weakness, concern or obvious danger affecting battery safety integrity.
DESPITE a continued economic slowdown, China's job market remained stable last year with the urban unemployment rate well under control, a human resources official said.
The registered unemployment rate in Chinese cities stood at 4.02 percent at the end of 2016, down from 4.04 percent three months earlier, data from the Ministry of Human Resources and Social Security (MHRSS) said on Monday.
The figure was well below the government's target of 4.5 percent set in the beginning of last year.
China created 13.14 million new jobs for urban residents last year, exceeding the whole-year target of 10 million.
"China's employment generally held steady," MHRSS spokesperson Lu Aihong said at a press conference.
The government rolled out an array of pro-employment policies for college graduates, laid-off workers from glutted industries, and migrant workers, while the country's entrepreneurial wave has also helped job creation, Lu said.
Additionally, China's social security system has improved and benefited more people, according to the meeting.
China's economy expanded 6.7 percent year on year in 2016, down from the 6.9-percent increase registered in 2015 and marking the weakest annual growth in 26 years, which, along with the ongoing industrial restructuring, added to concerns over job losses this year.
"The fundamentals for stable employment have not changed," Lu said, citing favorable factors including China's steady growth, advanced reform measures, urbanization, and strengthening innovation capacity.
But he admitted that a huge workforce, a supply-demand gap for skilled workers and laid-off workers will continue to put pressure on the job market.
To face the challenges, China will strive to ensure re-employment of workers made redundant during the country's excess capacity cuts, help college graduates seek jobs, improve professional skill training, and support people to set up their own businesses.
THE registered unemployment rate in Chinese cities stood at 4.02 percent at the end of 2016, down from 4.04 percent three months earlier.
China created 13.14 million new jobs for urban residents last year, exceeding the official target, Lu Aihong, an official with the Ministry of Human Resources and Social Security, told a press conference on Monday.
The government has pledged to keep the whole-year registered unemployment rate below 4.5 percent and create at least 10 million jobs in 2016.
THE head of Taiwan’s tech giant Foxconn confirmed yesterday he is considering a US$7 billion investment to make flat panels in the United States in a joint project with Japan’s SoftBank.
US President Donald Trump had announced before taking office a US$50 billion deal with SoftBank which he said would generate 50,000 jobs.
Trump was speaking last month alongside SoftBank’s chief executive Masayoshi Son, who displayed a document which indicated Softbank and Foxconn would “commit to invest US$50bn + US$7bn in US, generate 50k + 50k new jobs in US in next four years.”
Foxconn, a major supplier to Apple, had earlier said it was in “preliminary discussions” with US officials about a potential investment but gave no details.
“I have discussed with my major clients about going to (the US) and they are also willing to invest, including Apple,” Terry Gou told reporters in Taipei after the company’s year-end party.
The firm is the world’s largest contract electronics maker and is best-known for assembling products for international brands such as Apple and Sony.
“Pennsylvania is active and I urge other states to act more quickly or I will sign the contract with Pennsylvania,” he said, adding that the investment could create 30,000-50,000 jobs.
Foxconn is still waiting to see the tax policies of the new US government and what incentives state authorities can offer, such as cheap land and electricity.
Foxconn, also known as Hon Hai, employs around a million workers at its factories across China and has operations in more than 10 countries.
Last year it took over the struggling Japanese electronics maker Sharp after acquiring a 66 percent stake for US$3.7 billion in a move Gou described as “really worth it.”
In the US, it has a plant in Virginia for packaging and engineering which employes over 400 people. It has also announced a US$40 million investment in a facility in Pennsylvania to build precision tools and develop a robotics program.
Gou said Foxconn aims to increase investment in China this year to try to boost Sharp’s market share in the country.
ENERGY ministers from OPEC and non-OPEC countries meeting in Vienna yesterday have struck a positive note regarding their agreement to cut oil output as a committee set to monitor compliance with the deal meets for the first time.
“I am satisfied, I am optimistic and, as I said, the markets are on their way to rebalance and it’s happening,” Saudi energy minister Khalid al-Falih said.
Compliance with the agreement, which calls for cuts to begin this month, had been “fantastic,” he said.
Kuwaiti oil minister Essam Al-Marzouq, who chairs the five-member compliance committee, said it would examine how to best monitor compliance and what level of compliance would be acceptable.
The other members of the committee represent Algeria, Venezuela, Russia and Oman. A deal reached on December 10 between members of the Organization of the Petroleum Exporting Countries and non-OPEC producers marked the first such pact since 2001.
Under it, producers will lower output by nearly 1.8 million barrels per day aiming to ease a global glut that has weighed on oil prices for more than two years.
“Usually non-OPEC would raise their production to compensate for voluntary cuts by OPEC. Now, we are seeing voluntary cuts by both sides,” Falih said.
Some 1.5 million bpd in crude production had already been taken out of the market.
“The other 300,000 bpd, for all I know, is still happening,” Falih said, adding he hoped for full compliance in February.
Venezuela has achieved more than half of its planned 95,000 bpd cut, Oil Minister Nelson Martinez told reporters. Full compliance could take global oil inventories back close to their five-year average by mid-2017, lowering oil in storage by around 300 million barrels.
SUN Hua, founder and director of Huaxin, a Shanghai-based reha-bilitation center for disabled children, gratefully met a group of volunteers who came with gifts for the children. They were there last June when they renovated the center with low-toxic paint. They were also at the center last year when they offered monthly translation help at its charity clinic.
“A lot of other people would like to care for us, but it was hard to find volunteers like this group who are both well-organized and professional,” said Sun who has operated the center for nearly 20 years.
The volunteers are from Celanese, a nearly 100-year-old US-based chemicals company. On arriving at Huaxin, Mark Oberle, Celanese’s senior vice president for Asia, recognized some of the children immediately. He gave a tablet he bought to a boy he promised to help realize his new-year dream. Receiving the gift, the boy, suffering from infantile autism, repaid with a smile.
Many of the volunteers like Oberle have been quite familiar with the rehabilitation center as they have visited the children several times. The volunteers paint the rooms or provide pro bono translation services monthly to help foreign doctors treating the children with their medical challenges.
“It’s not about improving superficially our brand image as a chemicals producer, but to entrench our employee engagement on the basis of giving back to the community where we work and live,” Oberle said.
Jessica, a marketing team member who also brought gifts that day, said she was glad to see children whom she helped become happy, and “it is the first time I take Celanese as a home deeply in (my) heart after working for it several years.”
The volunteering spirit has been ingrained in Celanese’s core value for long, which the corporation define as “improving the world.” Last year it specified the spirit by encouraging its workers to spend at least 100,000 hours a year to freely help people globally. In fact a total of 120,524 volunteer hours were finally achieved, with 784 Chinese employees contributing over 100 volunteering projects.
Service at Huaxin is a role model among Celanese’s activities as it combines caring for family, safety and primary education. These are the bedrock of the company’s position for volunteering work.
Being a world’s leading specialty chemicals maker in the Fortune 500 list, Celanese has found new ways to exert its influence to benefit the public. It’s not just a company which produces life-improving products but consists of people ready to serve the public.
The company has also brought an integrated online – offline platform to record the volunteer efforts and maximize benefits and impact.
Donating one hour on volunteering work, every volunteer is promised US$10 as fund for further online donation, which would “double or triple the benefits as they can further feed the money back to society,” Oberle said.
Since 2013 Celanese has set up a fund, run by its employees, to support volunteering. The fund has attracted people outside the company, as many of its customers, suppliers and some law firms have spontaneously donated capital “as they saw and thus trust we would put it to good use,” Oberle said.
Although no details about its scale and growth were unveiled, Celanese said that more than US$1 million were raised last year.
Apart from local services such as those for Huaxin, Celanese’s volunteering campaigns are now seen as a new perk for its employees.
Celanese International Impact Program dispatches two groups of professionals for two weeks every year at poverty-stricken areas to help local people address their needs. Participants who went to India in 2016 for the project found it “most rewarding experience and a highlight of my career journey.”
As a chemicals producer Celanese is continuously dedicated to make a positive and meaningful contribution to our society. “We leverage innovative products and technologies to reduce carbon emissions and improve the quality of people’s life, we empower and engage our talents to give back to our community.” Oberle said. “It’s our fundamental responsibility, and our value as a corporation heading to a sustainable future.”
Mark Oberle (left) and other Celanese volunteers claimed wishes from special kids.
SHANGHAI’S GDP growth exceeded the national level last year for the first time since 2008, powered by the services sector and new industries, Shanghai Statistics Bureau said yesterday.
It rose 6.8 percent year on year in 2016, faster than China’s 6.7 percent growth but slower than the city’s 6.9 percent growth in 2015, official figures showed.
Services accounted for 70.5 percent of Shanghai’s total economic output of 2.75 trillion yuan (US$400 billion).
The sector rose 9.5 percent last year, while manufacturing edged up 1.2 percent and agriculture fell 6.6 percent.
Tang Huihao, the bureau’s chief economist, said the growth was a hard-earned achievement as Shanghai was experiencing the pains of reform.
“The growth was within the reasonable range, meeting the official target of between 6.5 to 7 percent,” Tang said.
“The growth was relatively fast among Chinese cities at a similar development level with Shanghai,” he added.
Industrial production rose 0.8 percent to 3.1 trillion yuan, reversing a decline in 2015.
The output of strategic new manufacturing industries rose 1.5 percent to 830.8 billion yuan, with the proportion of new industries to total industrial output rising 0.7 percentage points to 26.7 percent.
Tang said slow growth in the financial and real estate sectors were major negative factors.
Trade volume at the Shanghai Stock Exchange tumbled 62.4 percent to 49.79 trillion yuan, and the contribution of the financial industry to GDP fell 13 percent from 2015.
Real estate investment rose 6.9 percent, 1.3 percentage points slower than in 2015, with the contribution of real estate industries falling 2.2 percent from 2015. Tang said the slowdown marked a correction, and was good for the city’s economy.
He said that Shanghai’s home prices had begun to decline after the government tightened the rules covering down payments and mortgages to control rising prices. New home prices edged down 0.1 percent month on month in November and further declined 0.2 percent in December, the figures showed.
The Consumer Price Index, a main gauge of inflation, rose 3.2 percent last year, 0.8 percentage points higher than in 2015.
Shanghai’s inflation has been higher than the national level for 36 consecutive months and above 3 percent for 10 consecutive months. Prices in the city were mainly driven by the cost of services, which rose 4.5 percent, Tang said, with food prices rising 2.5 percent.
Retail sales rose 8 percent to 1.09 trillion yuan, of which online sales were up 15.8 percent to 125 billion yuan.
The city’s imports increased 5.2 percent to 1.66 trillion yuan while exports dipped 0.5 percent to 1.21 trillion yuan.
SHANGHAI'S economic growth last year exceeded the national level for the first time since 2008 powered by the services sector and advanced new industries, the Shanghai Statistics Bureau said today.
The city's gross domestic product rose 6.8 percent year-on-year in 2016, faster than the China growth of 6.7 percent and comparing with the city's 6.9 percent growth in 2015, official data showed.
Faster growth in the fourth quarter lifted the city's economic expansion from 6.7 percent in the first three quarters.
Services, which accounted for 70.5 percent in the total economic output of 2.75 trillion yuan (US$400 billion), was the main driver of the GDP growth.
The sector rose 9.5 percent last year, while manufacturing edged up 1.2 percent and agriculture fell 6.6 percent, data showed.
Tang Huihao, chief economist of the bureau, said the growth was a hard-earned achievement as Shanghai was experiencing the pains of reform.
“The growth was within the reasonable range, meeting the official target of between 6.5 to 7 percent,” said Tang. “The growth was relatively fast among Chinese cities of similar development level with Shanghai.”
Consumer Price Index, a main gauge of inflation, rose 3.2 percent last year, 0.8 percentage points higher than 2015.
Shanghai's inflation has been warmer than the national level for 36 consecutive months and above 3 percent for 10 consecutive months.
The city's prices were mainly driven by rising costs of services, Tang said.
SHANGHAI'S economy grew 6.8 percent in 2016, the local statistics bureau announced Sunday.
It outpaced the country's 6.7 percent GDP growth but is slightly lower than the 6.9 percent increase in the previous year.
Shanghai's GDP reached 2.75 trillion yuan (US$400 billion) with continued expansion of the tertiary sector, which made up 70.5 percent of last year's gross domestic product, 2.7 percentage points more than in 2015.
Value added in primary industries dropped 6.6 percent to 11 billion yuan, while growth in secondary and tertiary industries were 1.2 percent and 9.5 percent, respectively.
SHANGHAI Municipality received US$18.5 billion of foreign investment in 2016, up 0.3 percent, official data showed on Saturday.
The figure has risen for 17 consecutive years, with European countries' investment a major factor in 2016, according to the Shanghai Municipal Commission of Commerce.
Investment from European countries including France, Britain and Germany reached US$1.86 billion, up 42.4 percent from 2015.
About US$16.3 billion, more than 88 percent of the total, went into the service sector, up 2.5 percent, said an official with the commission on Saturday.
More foreign investment in services will help the city's industrial transformation and upgrades, the official said.
CHINA’S GDP increased by 6.7 percent last year with growth in the fourth quarter stronger than expected at 6.8 percent, the National Bureau of Statistics said yesterday.
Though the annual growth of 6.7 percent was the slowest in 26 years, it was in line with the official target and market expectations.
The services sector led growth with an increase of 7.8 percent, outpacing the industrial sector’s 6.1 percent and the agricultural industries’ 3.3 percent.
Services made up a record 51.6 percent of the country’s 74.41 trillion yuan (US$10.82 trillion) GDP, up 1.4 percentage points from a year ago.
Industrial output expanded 6 percent year on year in 2016, largely due to strong performance in the high-tech industry, the bureau’s figures showed.
“Generally speaking, the economy was running within a reasonable range, the quality and efficiency of the economic growth improving, and new momentum growing,” bureau head Ning Jizhe said yesterday. “These are the main signs of the obvious characteristics of the new normal.”
HSBC economist Julia Wang said that the economy had finished strongly but challenges remained.
“2016 fourth-quarter GDP came in better than expected,” she said. “Reflation continued as nominal GDP growth recovered to a three-year high of 9.9 percent year on year on the back of infrastructure investment and the property market.”
But she said the housing market is set to slow this year under the government’s tightening policies, and the key challenge for policy-makers is to revive private business investment, which rose just 3.2 percent, lagging overall fixed-asset investment growth of 8.1 percent.
HSBC forecast that GDP would hit 6.5 percent this year.
Zhu Haibin, JP Morgan’s chief China economist, said the economy will be under pressure from weakness in the real estate and auto sectors this year while the US-China relationship is arguably the biggest external uncertainty for China, including bilateral issues as well as the rising wave of protectionism.
“Monetary policy faces a trade-off between growth, inflation, financial risks and capital outflow pressures,” Zhu said. “Maneuvering room for monetary policy is limited, and we expect the current neutral policy will continue in the near term, with a combination of stable policy rates and credit growth, tighter macro-prudential measures and a defensive foreign exchange policy.”
The bureau’s figures showed that the Consumer Price Index, a main gauge of consumer inflation, was up 2 percent last year, warming up from a six-year low of 1.6 percent in 2015.
The Producer Price Index, a measure of factory-gate inflation, fell 2 percent year on year.
Zhu said he expected PPI inflation to average about 5 percent in 2017.
Average CPI inflation should rise to just below 2.5 percent, Zhu added.
The bureau’s figures showed retail sales up 10.4 percent year on year, slightly lower than the 10.7 percent increase in 2015.
Online sales of real goods rose 25.6 percent to 4.19 trillion yuan, amounting to 12.6 percent of total retail sales. That was 1.8 percentage points higher than 2015.
Pakistan’s Finance Minister Ishaq Dar (right) presents a memento to Chinese Ambassador to Pakistan Sun Weidong to mark the share purchase agreement signing at the Pakistan Stock Exchange (PSX) in Karachi yesterday. A consortium has agreed to acquire a 40 percent stake in PSX, the country’s main bourse. The consortium comprises three Chinese exchanges — China Financial Futures Exchange, the Shanghai Stock Exchange and the Shenzhen Stock Exchange — and two local financial institutions, Pak-China Investment Co and Habib Bank. — AFP
A Chinese national flag flutters outside the headquarters of the People’s Bank of China in Beijing. The central bank has provided provisional liquidity support for several big commercial banks to meet rising cash demand ahead of the upcoming Spring Festival. The term of the operation is 28 days and interest rates are generally the same as similar open market liquidity facilities, the PBOC said yesterday in a statement. The move aims to ensure stability in the banking system and money market ahead of the Spring Festival, which falls on January 28. — Reuters
US movie studio Paramount said yesterday that it was partnering with two Chinese film companies in a deal that would reportedly see US$1 billion in cash injected into the Hollywood giant.
The deal is the latest move into Hollywood by deep-pocketed Chinese enterprises, following forays by China property-to-entertainment conglomerate Wanda and e-commerce leader Alibaba.
Paramount signed a three-year agreement with Shanghai Film Group (SFG) and Beijing-based Huahua Media to co-finance and co-produce all of the US studio’s films, Paramount said in a statement on China’s twitter-like Weibo platform.
It gave no figures, but US film-industry media outlets such as Variety reported that Paramount will receive US$1 billion in cash from its Chinese partners.
Paramount Chairman Brad Grey said in the statement that the tie-up was a “very natural and very powerful” one due to the market presence of its Chinese partners.
SFG’s listed movie arm Shanghai Film Co owns a cinema chain that operates 295 theaters across China with 2015 box office receipts at 3.15 billion yuan (US$458 million), according to its official website.
Huahua Media is a film marketing company that has already worked with Paramount to promote its films in China, including “Transformers: Age of Extinction” and “Star Trek III: The Search for Spock,” previous Huahua statements said.
SFG Chairman Wang Kefei was quoted in Paramount’s statement as saying the tie-up will help to promote Chinese film content abroad, giving no details.
Shanghai Film Co shares closed 2.98 percent higher on the city’s stock exchange yesterday, following the announcement.
Wanda, whose Chairman Wang Jianlin is one of China’s richest men, already owns US cinema chain AMC, Hollywood production company Legendary, and Dick Clark Productions, which runs the Golden Globe awards.
At the World Economic Forum in Davos this week, Wang reiterated his interest in buying one of the “big six” Hollywood studios.
Wanda announced a partnership with Sony Pictures in September to invest in China-themed films.
Alibaba recently bought a minority stake in acclaimed director Steven Spielberg’s studio Amblin Partners.
CHINA’S largest chipmaker has said it will invest US$30 billion to build a new semiconductor factory, as the world’s second-largest economy seeks to reduce its dependence on foreign technology.
The state-owned Tsinghua Unigroup will open the facility in Nanjing, capital of Jiangsu Province, where it will mainly produce chips used in consumer electronics such as cellphones, cameras and computers, said a statement posted on the company’s official website.
The project “is of great significance to the independent innovation, large-scale production, and marketization of China’s integrated circuit industry,” the statement said.
The announcement comes after attempts by the company to take over US chip makers Micron Technology and Sandisk were curbed by the Committee on Foreign Investment in the United States over national security concerns.
Its ambitions to acquire American technology thwarted, Tsinghua Unigroup has shifted its focus to building plants in China, launching a US$24 billion memory chip factory in Wuhan last month, according to online news site Sohu.
China was the largest market for semiconductors in the world in 2015. Its excessive dependence on imported chips has raised concern in Beijing over the country’s national security, according to a report by the US Department of Commerce.
In 2014, Chinese authorities pledged 100 billion yuan (US$14.6 billion) to support the industry, with the aim of building a “globally competitive semiconductor sector by 2030,” according to two statements by the Ministry of Industry and Information Technology in 2014 and 2015.
In a speech on cyber security in April, President Xi Jinping said China must gain control of “core” technology.
The drive by China to expand its role in the market, long dominated by US firms like Intel and Qualcomm, has raised concerns in Washington.
A report to US President Barack Obama by a presidential science panel last month warned that China is set to challenge US dominance in the industry.
AFFECTED by waning global market demand and excessive industry capacity, China’s shipbuilders witnessed declining new orders and profits last year.
Shipbuilding output in 2016 was 35.3 million deadweight tons, marking a drop of 15.6 percent from 2015, said the China Association of the National Shipbuilding Industry.
Orders for new ships fell 32.6 percent year on year to about 21.1 million DWT in 2016, the association said in a statement.
Ships built for export accounted for 94.7 percent and 77.2 percent of the accomplished shipbuilding output and new orders last year respectively, it said.
The combined business revenue of 1,459 large shipbuilders hit 697.6 billion yuan (US$101 billion) in the first 11 months of 2016, down 1.6 percent year on year, it added.
SHARES of Sealand Securities Co slumped yesterday after they resumed trading amid a bond scandal which may hurt its annual revenue.
The brokerage tumbled 7.75 percent to 6.43 yuan (94 US cents) in Shenzhen, after the company predicted that the scandal will slash its revenue by 56 million yuan in 2016, according to its notice filed to the Shenzhen Stock Exchange.
Its shares were suspended from trading on December 15 due to rising public concerns that two of its former employees were alleged to have signed unauthorized bond transaction agreements with banks by forging the brokerage’s seal.
The 16.78 billion yuan bond defaulted after a dive in bond prices, and caused a dispute between Sealand and counterparties involved.
Sealand said in the filing that the brokerage has completed talks and agreed with 24 counterparties to resolve the dispute. It will help the police investigate any illegal behavior linked to the deal.
SHANGHAI stocks rose yesterday as investors were buoyed by positive economic data for China.
The Shanghai Composite Index added 0.7 percent to 3,123.14 points. The gauge gained 0.3 percent for the week.
Investors were cheered by China’s GDP, which grew by a better-than-expected 6.8 percent year on year in the fourth quarter, the National Bureau of Statistics said.
“The A-share market has not seen any good news for some time, so the GDP data to some extent boosted sentiment,” said Ricky Huang, analyst at Lukfook Financial.
Yonyou Network Technology Co added 5.01 percent to 19.30 yuan (US$2.81), and G-bits Network Technology Xiamen Co surged by the daily limit of 10 percent to 220.68 yuan.
CHINA’S steel production grew last year, boosted by a rebound in price and supply amid a national campaign to cut overcapacity, the National Bureau of Statistics said yesterday.
Domestic crude steel output rose 1.2 percent from 2015 to 808.4 million tons in 2016, and output of steel products gained 2.3 percent to 113.8 million tons, the bureau said in a report.
Chinese steelmakers produced more last year as prices of steel rebar surged 77 percent, the China Iron and Steel Industry Association said, adding that a rebounding demand also added fuel to the fire.
But the result “doesn’t conflict with the fact that China has successfully trimmed steel capacity last year, as most of the cut in capacity came from the idle blast furnaces,” said Wang Guoqing, research director at Lgmi.com, a steel industry website.
China launched the supply-side reform in the industry to phase out low efficient steel mills, most of which have been on the edge of bankruptcy as they suspended production for a long time. The capacity of such entities accounted for 74 percent of the 45 million tons which China claimed to have cut last year, Lgmi.com said in a research report.
Domestic steel consumption was estimated at around 670 million tons last year, up 0.9 percent from 2015, the China Metallurgical Industry Planning and Research Institute reported last month.
Despite the government’s call to reduce overcapacity in the steel industry, the policies to encourage the development of industries such as automobile, real estate and infrastructure bolstered demand for steel, which is the main raw material for these industries.
The auto industry consumed 56 million tons of steel, 3.7 percent more than 2015, the institute said.
But the overcapacity in China’s steel industry still exists, and the National Development and Reform Commission, the country’s top economic planner, said: “While 2016 marked the year to cut steel overcapacity, 2017 will be the pivotal year to improve the supply-demand relation.”
CHINA’S per capita disposable income stood at 23,821 yuan (US$3,465) in 2016, up 6.3 percent annually in real terms, official data showed yesterday.
The increase was slower than the 7.4 percent rise in 2015, as China’s economy posted the slowest pace of growth in 26 years last year.
Urban and rural per capita disposable income reached 33,616 yuan and 12,363 yuan in 2016, up 5.6 percent and 6.2 percent in real terms, respectively, according to the National Bureau of Statistics.
China’s Gini coefficient, an index reflecting inequality where zero equals perfect equality, stood at 0.465 in 2016, bureau chief Ning Jizhe said.
The index edged up from 0.462 in 2015 after dropping for seven years in a row, but it remained lower than the reading of 0.474 in 2012, 0.473 in 2013 and 0.469 in 2014.
Ning attributed the higher index to slower pension growth for some urban groups and the negative effect of falling grain prices on farmers’ income.
He said the income gap was expected to narrow gradually as the government stepped up poverty relief and pursued the integrated development of urban and rural areas.
The per capita income of urban households was 2.72 times that of rural households, down from 2.73 times in 2015, data showed.
The average monthly income of rural migrant workers was 3,275 yuan, up 6.6 percent year on year, compared with a 7.2 percent rise in 2015.
China aims to double the per capita income of its urban and rural residents by 2020 from 2010 levels.
MEASURES imposed in major cities around the country proved effective to curb sentiment among buyers as new home sales continued to grow more slowly, data released yesterday by the National Bureau of Statistics showed.
New homes worth 9.9 trillion yuan (US$1.4 trillion), excluding government-funded affordable housing, were sold across the country in 2016, a year-on-year increase of 36.1 percent. The gain slowed from the 39.3 percent rise in the first 11 months of last year and a 42.6 percent jump between January and October.
The area of new homes sold during the 12-month period grew 22.4 percent from a year earlier to more than 1.37 billion square meters. The rise, however, slowed from the 24.5 percent gain in the first 11 months and the 27 percent increase in the first 10 months of last year, according to the bureau’s data.
“We expect the market to remain healthy this year,” said Ning Jizhe, the bureau chief, adding that the government will continue to support demand from end-users and crack down on speculators.
More than 20 cities, including four first-tier cities and major second-tier ones, have introduced tighter measures since late September to cool overheated housing markets where rapidly surging property prices are putting homes out of reach of ordinary people. The rising prices may trigger higher risks of asset bubbles that might pose a threat to the country’s real economy.
Between January and December, investment in housing developments rose 6.4 percent year on year to 6.87 trillion yuan, up 0.4 percentage points from the first 11 months, according to the bureau.
AT least two major Chinese private providers of home price data have stopped publishing the figures, at a time when economists are split whether the red-hot property market will remain a driver of the economy in 2017.
The China Index Academy, a unit of US-listed Fang Holdings, has stopped distributing monthly housing price index data for 100 cities that it usually issued at the start of the month.
The academy said yesterday that it had suspended distribution indefinitely, without giving a reason for the suspension.
“I don’t know who exactly is making the order, and it’s not mandatory,” said a source with knowledge of the matter, who declined to be identified as the topic is a sensitive one.
Home price data from private providers tend to show sharper increases than official data from the National Bureau of Statistics, which publishes monthly and annual percentage changes in 70 major cities.
New home prices grew the most last year since 2011, bureau data published yesterday showed. Growth moderated in December as 12 of 15 cities previously singled out by authorities as overheating saw price drops, an increase from November.
Since last summer, the government has levied curbs on buying and ownership to rein in soaring prices and limit asset bubble risks.
E-house China, another private real estate consultancy, has also indefinitely halted its monthly housing price index for 288 cities.
“Judged by current conditions, we won’t publish it in the future,” said Cherilyn Tsui, a public relations officer at CRIC, the consultancy’s real estate research branch.
“We stopped distributing prices data a few months ago. At first it was just no external distribution, but now even internally we don’t distribute any more,” she said.
“Housing prices are an extremely sensitive matter right now,” a second source with knowledge of the matter said on condition of anonymity.
E-house’s last data release in November said new home prices in Beijing and Shanghai rose 1.32 percent and 1.09 percent in October from a month earlier, respectively. The bureau reported a rise of 0.5 percent.
THE People’s Bank of China cut reserve ratios for big banks temporarily amid liquidity tightness, the central bank said today.
The PBOC has cut the reserve requirement ratio (RRR) for those big lenders by one percentage point, taking the ratio down to 16 percent in order to “guarantee the cash needs before holidays, promote the liquidity of interbank market and maintain a stable money market.”
The period of a lower RRR ratio, which refers to the amount of cash that banks must hold as reserves, will sustain for 28 days in each bank and will be adjust back to normal level later after in an appropriate time, PBOC said in a statement released Friday afternoon.
Caixin earlier reported that the move was posed on country’s five biggest lenders, which refers to Industrial and Commercial Bank of China Ltd (ICBC), China Construction Bank Corp (CCB), Bank of China, Bank of Communications Co (BoCom) and Agricultural Bank of China.
China International Capital Corp estimate that the move could effectively injects more than 600 billion yuan (US$87.3 billion) worth of long-term cash into the economy to fill in the needs on cash withdrawal, tax payment and reserve payment before the week-long Chinese Lunar New Year holiday starts next Thursday.
It is the first time PBOC lowers the RRR level to targeted banks in a fixed period of time and its first reduction in RRR since February, 2016. Short-term funding costs had spiked to their highest levels in nearly 10 years earlier this week on fears that liquidity was sharply tightening, sparking a jump in the yuan currency.
“The temporarily move could ease the pressing needs for cash,” CITIC Securities Co said in a comment released after the media report. “But in a long term, other tools like expanding the scope of other liquidity fulfillments are still needed.”
TIGHTENING measures implemented in major cities around the country proved effective to curb sentiment among buyers as new home purchases continued to grow by a slower pace, data released today by the National Bureau of Statistics showed.
New residential properties worth 9.9 trillion yuan (US$1.44 trillion), excluding government-funded affordable housing, were sold across the country in 2016, a year-over-year increase of 36.1 percent. That compared with a 39.3 percent gain in the first 11 months and a 42.6 percent jump between January and October last year.
By area, meanwhile, more than 1.37 billion square meters of new homes were sold during the 12-month period, an annual growth of 22.4 percent. The rise also decelerated from the 24.5 percent gain in the first 11 months and the 27 percent increase in the first 10 months of last year, according to the bureau's data.
"The country's real estate market went well in general last year with polarized performances continuing to be seen in different tiered cities," said Ning Jizhe, the bureau chief. "We expect the market to remain healthy this year."
The government will continue to support demand from end-users and crack down on speculators, he said.
More than 20 cities, including four first-tier cities and major second-tier ones, started to introduce rein-in policies since late September to cool down their overheated housing markets where rapidly surging property prices are preventing more people from owning a roof over their head and triggering higher risks at the same time of asset bubbles that might pose a threat to the country's real economy.
Between January and December, overall investment into residential development climbed 6.4 percent year on year to 6.87 trillion yuan, 0.4 percentage point higher than in the first 11 months, the bureau said.
CHINA'S per capita disposable income stood at 23,821 yuan (US$3,469) in 2016, up 6.3 percent year on year in real terms, official data showed Friday.
Separately, urban and rural per capita disposable income reached 33,616 yuan and 12,363 yuan in 2016, up 5.6 percent and 6.2 percent in real terms after deducting price factors, respectively, according to the National Bureau of Statistics (NBS).
CHINA'S industrial output expanded 6 percent year on year in 2016, largely due to strong performance in the high-tech industry, official data showed Friday.
The growth rate was the same as in the first three quarters, official figures showed.
Industrial output, officially called industrial value added, is used to measure the activity of designated large enterprises with annual turnover of at least 20 million yuan (about US$2.9 million).
In December, the total value added of the designated industrial enterprises was up by 6 percent year on year, or 0.46 percent month on month, the data showed.
CHINA'S retail sales of consumer goods grew 9.6 percent year on year in 2016 after deducting price factors, the same as that in the first three quarters, official data showed on Friday.
CHINA'S economy grew 6.7 percent year on year in 2016, the slowest pace of growth in 26 years, but well within the government's target range, official data showed Friday.
Growth in the fourth quarter came in at 6.8 percent, accelerating from the 6.7 percent in the third quarter, according to National Bureau of Statistics data (NBS).
The government target was 6.5 to 7 percent growth for 2016.
Gross domestic product totaled 74.41 trillion yuan (about US$10.83 trillion) in 2016, with the service sector accounting for 51.6 percent.
The data showed that major economic indicators softened last year, with industrial output growth slowing slightly to 6 percent from 6.1 percent in 2015.
Urban fixed-asset investment continued to cool, rising 8.1 percent year on year, compared with 10 percent in 2015. Retail sales rose 10.4 percent, down from 10.7 percent in 2015.
CHINA'S economy grew 6.7 percent year on year in 2016, the slowest pace of growth in 26 years but still within the government's target range set for the year, official data showed Friday.
Growth in the fourth quarter came in at 6.8 percent, accelerating from the 6.7-percent rise registered in the third quarter but still the slowest quarterly growth since the global financial crisis, according to data from the National Bureau of Statistics.
BYD Co plans to sell electric passenger cars in the United States in about two to three years, an executive said yesterday, as it races to be the first Chinese automaker to sell cars to American drivers.
BYD, backed by Warren Buffett’s Berkshire Hathaway Inc, specializes in electric and plug-in petrol-electric hybrid vehicles. At present, its US presence is limited to producing buses and selling fleet vehicles such as taxis.
Li Yunfei, BYD’s deputy general manager for branding and public relations, said its passenger car plan was not fixed as entering the US was a complicated process.
“It could be adjusted,” Li said at an event in Beijing. “Now we can only say roughly two to three years.”
China’s government has used a raft of policies, including billions of dollars in subsidies, to spur a boom in electric and plug-in hybrid sales since 2015.
BYD has had false starts in the US, with Chairman Wang Chuanfu previously saying the automaker would begin selling in the US in 2010. Other Chinese peers have also encountered delays in entering the market.
VOLKSWAGEN AG plans to make its first cars with China’s Anhui Jianghuai Automobile (JAC Motors) by 2018 and hopes the joint venture will get government approval in the first half of this year, its China CEO said yesterday.
Jochem Heizmann made the comments at a media briefing in Beijing. Volkswagen and JAC Motors signed a preliminary deal in September to explore making electric vehicles.
Heizmann also said Volkswagen saw the Chinese auto market to grow at a slower 5 percent in 2017, the same prediction made by China’s automakers association this month, as tax incentives for small-engine cars are rolled back.
Volkswagen delivered 3.98 million vehicles in China last year, up 12.2 percent from 2015, making it the biggest foreign automaker in the country. Heizmann said it will invest 4 billion euros (US$4.3 billion) in China this year via joint ventures.
MORE than 90 percent of Chinese mainland millionaires “are positive on the Chinese economy in the next two years,” according to a latest study.
It was higher than the previous year’s 80 percent.
The percentage of respondents “extremely confident” in the Chinese economy rose to 28 percent from 27 percent recorded a year earlier, the Hurun Chinese Luxury Consumer Survey 2017 showed yesterday.
A record high of 44.5 percent of respondents said they would not consider emigration, revealed the Huron Research Institute’s study, which surveyed 449 millionaires — individuals with a personal wealth of 10 million yuan (US$1.5 million) — in more than 40 mainland cities between September and December, with 60 percent of them in first-tier cities.
As high as 64 percent of respondents estimated a stable rise in housing prices in the next two years.
CHINA will cut the output of oil by 2020 and boost the domestic market for natural gas, the National Development and Reform Commission said.
The domestic annual production of oil is set to be around 200 million tons by 2020, down 6.5 percent from 214 million tons produced in 2015, the country’s top economic planner said in a five-year (2016-2020) plan on oil and natural gas development yesterday.
By contrast, the annual output of natural gas is expected to grow by an annual average of 8.9 percent in the coming years to 207 billion cubic meters in 2020, which “should be used to replace fuel oil in sectors such as automobile and shipping,” the NDRC said.
The cut in production will compel oil giants such as China National Petroleum Corp to expand overseas. Its crude business gained 4.3 percent last year from 2015 and the company will “stick to a ‘globalization strategy’ in the coming years and enhance global cooperation in exploitation and trading,” said Chairman Wang Yilin.
The proven reserves of crude oil are set to reach 42 billion tons by 2020, up 4.89 billion tons from 2015, while those of natural gas are seen to rise by 3 trillion cubic meters to 16 trillion cubic meters.
THE European Central Bank kept its super-easy monetary policy unchanged as expected yesterday and its President Mario Draghi told critics of his stimulus path to be patient and wait for the eurozone’s recovery to take firm hold.
With growth slowly picking up pace, the ECB kept its various rates at next to nothing or negative and asset buys at a record pace. It reaffirmed that rates would stay at their current or lower levels for an extended period and that it was also ready to increase or extend its bond purchases if the outlook worsens.
“The recovery of all of the eurozone is in the interests of everybody, including Germany,” Draghi told a news conference, responding to criticism, notably from Berlin, of his stimulus programme.
“German savers have benefited not only as savers but also as borrowers, as entrepreneurs, as workers, like all the other citizens of the eurozone. So we have to be patient. As (the) recovery will firm up, real rates will go up.”
Draghi described the current eurozone recovery as “dampened by the sluggish pace of structural reform” and insisted a “very substantial degree” of monetary policy stimulus was needed.
Draghi said that underlying inflationary pressures remained subdued and that, once the base effect of rising oil prices had been accounted for, there were still no real signs of a upward trend.
While Draghi warned that global risks to the eurozone economy were still slanted to the downside, he said it was too early to assess what impact Britain’s planned exit from the European Union and its single market would have.
The recovery still relies heavily on ECB stimulus and markets could become more volatile as the US Federal Reserve gradually raises rates, underscoring diverging policy paths between Europe and the US.
That said, inflation hit a three-year high last month, manufacturing activity is accelerating and confidence indicators are firming, all pointing to solid growth at the end of last year.
Indeed, eurozone business expansion was the fastest in more than five years in December, order books are surging on export demand, and consumption is holding up, despite increasing energy costs, all pointing to the sort of resilience not seen since before the bloc’s debt crisis.
But the underlying picture is mixed.
Inflation is still just half of the bank’s 2 percent target and the jump is mostly down to higher oil prices.
FORMER Volkswagen CEO Martin Winterkorn denied having had early knowledge of the company’s cheating on diesel emissions as he testified yesterday to a German parliamentary inquiry, his first major public appearance since he resigned.
The 69-year-old stepped down in September 2015, days after news of Volkswagen’s use of software to cheat on emissions emerged in the US, saying at the time that he was not aware of any wrongdoing on his part.
“As CEO I took political responsibility,” he told lawmakers. “Believe me, this step was the most difficult of my life.”
Winterkorn, flanked by two lawyers, told the panel in an opening statement “it is not the case” that he knew earlier than previously thought of the scandal, as some recent reports have suggested. He said he’s still seeking “satisfactory answers” as to what happened.
Winterkorn said he wouldn’t comment on details that are a matter for a criminal investigation by prosecutors in Braunschweig, Germany, and declined to answer questions on when exactly he knew what.
The former CEO said “love of detail” was his “trademark.”
“It is not comprehensible why I was not informed early and clearly about the measurement problems,” he said.
“Of course I ask myself if I missed signals or misread them,” he added. He wouldn’t elaborate on what those signals were, citing the ongoing probe — which centers on charges that top executives didn’t inform investors soon enough of the emissions-cheating scandal.
CHINA still has ample foreign exchange reserves despite continued declines, and fluctuations in the reserves are normal, the State Administration of Foreign Exchange said yesterday.
The forex reserves are strong enough to cover China’s import bills and external debts, and are able to safeguard the country’s economic and financial security, said SAFE spokeswoman Wang Chunying.
China’s forex reserves fell for the sixth straight month to US$3.01 trillion last month, US$41.08 billion lower from the November level, according to the central bank. For the whole of 2016, forex reserves shed US$319.84 billion.
The continued drop has stoked market concerns as the forex reserves have approached the US$3 trillion psychological mark, a level that China has stayed above for nearly six years.
But Wang said there is no need to “create excessive hype over a certain number.”
“It is normal to see upward or downward fluctuations in any financial indicator,” she said.
Wang explained that although there is no unified standard for forex reserve levels, traditionally, a country’s forex reserves should cover at least three months of imports and all of its short-term foreign debts.
For China, paying for three months of imports requires about US$400 billion if paid in foreign currencies. Meanwhile, short-term external debts stand between US$800 and US$900 billion, Wang said.
Forex reserves dropped in December as the central bank used them to balance the forex market and non-greenback currencies weakened against the US dollar, SAFE said in a previous statement.
Wang also mentioned that the domestic private sector’s growing appetite for foreign assets is part of the reason for the reserves’ decline. Despite recent drops, China is still home to the world’s largest forex reserves and enjoys forex inflows from its trade surplus and foreign direct investment.
Wang said China’s forex reserves are set to fluctuate within a reasonable range in the future, given the uncertain trend in the US dollar and China’s medium-high level of economic growth.
CHINA’S deficit in its foreign exchange settlement expanded in December, official data showed yesterday.
Chinese lenders bought US$128 billion worth of foreign currencies and sold US$174.3 billion, giving a deficit of US$46.3 billion in December, up from the November deficit of US$33.4 billion, State Administration of Foreign Exchange data showed.
The Chinese banks’ forex settlement deficit hit US$337.7 billion in 2016, the data showed.
On a quarterly basis, the banks’ forex settlement deficit fell from US$124.8 billion in the first quarter to US$49 billion in the second, US$69.6 billion in the third and US$94.3 billion in the fourth, according to the data.
“The figures show that the pressure of cross-border capital outflows has eased significantly compared with the start of 2016,” said SAFE spokeswoman Wang Chunying.
She said domestic enterprises had been less interested in purchasing forex in 2016 compared with the previous year because their financing needs increased.
Foreign-currency deposits became more popular among domestic enterprises and individuals in 2016, the data showed.
THE recent move by American computer hardware manufacturer Seagate Technology to shut a plant in China was a “normal business decision,” the Ministry of Commerce said yesterday.
“The closure of the Seagate factory in Suzhou, east China’s Jiangsu Province, was based on the company’s adjustment of its global operation strategies,” ministry spokesman Sun Jiwen said at a press conference.
Earlier this week, company officials said the Suzhou plant, one of two Seagate assembly factories in China, had been closed due to weak global demand for laptops, personal computers and corporate hard drives.
“We will continue to open up more and reduce restrictions on foreign investment in China,” Sun said, citing China’s latest measures to attract foreign investment and give investors easier access.
Foreign firms will face fewer curbs when entering service, manufacturing and mining sectors, according to a State Council document released Tuesday.
Entry controls will be relaxed for banks, securities brokerages, insurers and futures companies, among other moves, the document said.
THE Hong Kong stock exchange is proposing to launch a new listing venue that would allow companies with different voting rights to go public in the city, in a bid to remain a global listings powerhouse.
The proposal comes amid a long debate on Hong Kong’s attractiveness as a listing destination and on corporate governance norms, sparked by Chinese e-commerce giant Alibaba Group’s decision two years ago to make its record US$25 billion IPO in New York, much to Hong Kong’s disappointment.
Charles Li, CEO of Hong Kong Exchanges & Clearing Ltd (HKEx), unveiled the proposals at the exchange’s annual media lunch yesterday.
Li said HKEx is exploring a range of issues regarding a potential new board including different shareholding structures. “Is there any way for us to include those into Hong Kong, and if there is any way, how do we include that in the new structure?”
Li said the exchange has submitted a draft proposal for the third board to the authorities.
HKEx’s previous efforts to allow companies with different voting rights to list on its main board failed to get support from the city’s regulator, the Securities and Futures Commission.
But Li said that regardless of the outcome of the recent debate on the so-called weighted voting rights for stock listings in the city, he has never been explicitly told to keep anything off the table.
INTERNATIONAL Data Group, the owner of PCWorld magazine and market researcher IDC, yesterday said it is being acquired by China Oceanwide Holdings Group and IDG Capital, the investment management company run by IDG China executive Hugo Shong.
It is the latest technology and media asset to be sold to Chinese investors, following deals for US companies last year such as television producer Dick Clark Productions, and customer satisfaction firm JD Power and Associates.
Terms of the deal were not disclosed.
Previous reports said IDG had been in advanced talks to sell itself to a Chinese buyout group and was seeking US$500 million to US$1 billion.
Beijing-based conglomerate Oceanwide, founded by billionaire Lu Zhiqiang, pledged US$3.8 billion to take control of US insurer Genworth Financial Inc last year.
IDG will add to its media holdings in China including the Economic Observer, a business newspaper and a performance theater in Xi’an, Oceanwide director Brett Liu said.
IDG’s headquarters will remain in Boston.
Both Oceanwide and IDG Capital had initially bid separately for the entire company last April before IDG’s banker Goldman Sachs suggested they team up, IDG Chairman Walter Boyd said.
Oceanwide will now become the controlling shareholder in IDG’s operating businesses with IDG Capital taking a minority stake. IDG Capital will take the majority stake in the IDG venture businesses.
IDG’s venture arm has invested in some of China’s biggest Internet companies such as Baidu, Tencent and Ctrip.com International.
Shong, a close associate of late IDG founder Pat McGovern, formed one of China’s first venture capital firms in 1993, with IDG’s backing.
The companies said the deal has been cleared by the US Committee on Foreign Investment and will close in the first quarter.
CHINA’S richest man, Hollywood investor Wang Jianlin, has warned Donald Trump against dragging the entertainment industry into a trade war, saying millions of Chinese movie lovers are key to the future of cinema.
The billionaire joined a chorus of concern from international business chiefs gathered at the World Economic Forum in the Swiss resort of Davos this week over the protectionist leanings of the US president-elect, who takes office today.
Wang, whose Wanda conglomerate owns a US cinema chain, a Hollywood production company and the firm that runs the Golden Globe awards, said the US would be the bigger loser if the entertainment sector fell victim to a trade war.
“The main growth market of English-language films out of the US is actually China, not anywhere else,” Wang said, noting that China had the most movie screens in the world with 15,000 added in the past year alone.
“If China were to retaliate, it would be bad for both parties so I don’t wish to see that scenario materializing,” he said.
Chinese President Xi Jinping has led calls in Davos for an open global economy, warning earlier this week: “No one will emerge as a winner in a trade war.”
Last month, Wang said that the jobs of his 20,000 US employees would be on the line if the Trump administration mishandled Chinese investment.
The 62-year-old’s acquisitions include the US$2.6 billion purchase of cinema chain AMC in 2012 and Legendary Entertainment, the company behind the “Batman” trilogy, for US$3.5 billion last year.
Several US lawmakers have urged the government to examine the national security implications of such investments in Hollywood if such Chinese “soft power” is allowed to take root.
As China eyes a growing stake in US movie-making, e-commerce billionaire Jack Ma also expressed an interest in further Hollywood investment this week after his company Alibaba bought a stake in Steven Spielberg’s firm last year.
Wang, who has been talked of as a potential buyer of Paramount Pictures, reiterated his interest in buying one of the “big six” Hollywood companies. “These six companies are not in a selling mood,” he said, adding that if they were, “I would be a happy buyer.”
Wang said both China and the US would benefit from more joint movie productions, as these are exempt from China’s tight limits on the screening of foreign blockbusters.
Only 34 foreign films are allowed cinema releases on China’s mainland each year, limiting Hollywood studios’ ability to cash in on a massive potential audience. But “there’s no limit” on co-productions, Wang pointed out.
Legendary’s “The Great Wall,” a monster movie starring Matt Damon, has been billed as the first such blockbuster jointly made by China and the US.
Damon, in Davos to promote his water charity, told reporters he would work on another Chinese project “in a heartbeat.”
“I didn’t feel there was any propaganda to it at all,” he said of the concerns of some US politicians. “It was a good old-fashioned creature feature with a giant international crew, and that was a cool thing to be a part of.”
Given the growing clout of Chinese moviegoers, Wang advised Hollywood to start thinking more about the kind of movies his compatriots want to see.
“Chinese films tend to talk about emotions, relationships with people,” he said. “If Hollywood wants to take up a large market share, they need to learn to cater to Chinese tastes — not just these films about superheroes.”
With a robust 2016 in attracting foreign direct investment to support its economic growth, the Isle of Man is expected to facilitate the burgeoning outbound investment from China in 2017.
“Compared with other offshore centers, we are a location for international companies to set up to conduct real business and employ people,” said Steven Beevers, Head of Special Projects of the Department of Economic Development.
What’s more, the Isle of Man can also provide international companies with a gateway to the European markets in a tax neutral environment.
Laurence Skelly, Minister for the Isle of Man’s Department of Economic Development, said the Island has entered 2017 with newly defined foreign direct investment and a brand new strategy providing a clear picture of how to develop FDI for the Island and how better to support local industry.
The island has shown increasing interest in investment from China, where overseas direct investment in the first 11 months of 2016 stood at $161.7 billion. That growth rate is three times higher than for the same period the year before.
In 2016, the Isle of Man signed MOUs with Beijing and Shanghai to encourage Chinese companies, especially in the high-tech sector, to establish and develop business on the Island for Western markets.
CHINA needs to promote financial reforms and innovation to tackle domestic and international challenges this year, experts said at the recent Shanghai Finance Forum.
The slow global economic growth and populist insurrections in the west will be the external challenges for China while the domestic structural reforms will further impair economic momentum of the country, experts told the forum organized by the Shanghai Advanced Institute of Finance.
Wang Jiang, Mizuho Financial Group Professor at the Sloan School of Management, said China is transforming from priorities in size, government and investment to efficiency, market, and innovation.
Key to the transformation is a modern and open financial system, which is now lagging the development of the economy.
China needs to learn more from the global experience to solve the conflicts between reforms and maintaining economic growth, Wang added.
Robert Merton, Nobel laureate in economics and professor at Massachusetts Institute of Technology, said financial technology can improve efficiency and transparency in the financial system, helping China to thrive amid global market uncertainties.
He said it is possible to employ bitcoin technology to provide efficient non-centralized clearing and settling services.
New derivative products can be invented and used to efficiently transfer risks among global financial systems to improve integration and diversification.
Zhu Min, deputy managing director of the International Monetary Fund, said that structural reform, more efficient investment, and supportive monetary and fiscal policies can help China re-balance the economy.
He said structural reforms need to focus on enhance competitiveness of the product market, lift flexibility of the labor market, increase labor efficiency in services industries, and reform the pension and social security funds.
Investment can be more efficient in infrastructure projects, research and development, education, and healthcare systems.
High quality fiscal spending and monetary policies with clear targets are also essential to sustain China's economic growth, Zhu added.
VANGUARD, the world's largest mutual fund company, said it expected China GDP to increase 6.3 percent this year with monetary policies likely to be easier in the second half to support growth.
Wang Qian, chief Asia-Pacific economist of Vanguard, said a recovery of the traditional state-led industries helped stabilizing the China economy, but meanwhile delayed structural reforms.
The institute's GDP expectation was lower than market consensus for 6.5 percent.
The International Monetary Fund this week revised up its expectation for China GDP growth to 6.5 percent from 6.2 percent.
Vanguard said a recovery of the commodities and other cyclical industries are likely to extend into the first half this year as the industries restock inventory.
But downward pressure is likely to return in the second half as the momentum ebbed amid uncertainties of US trade policies towards China.
Monetary policies are likely to be tighter in the first half to meet authorities' goal in deleveraging and preventing financial risks, while easing up in the second half to support growth.
The yuan depreciation will accelerate this year on the prospect of US interest rate hikes, uncertain trade outlook, and increasing willingness among residents and companies to hold foreign exchanges.
China will likely continue to apply tight control on capital outflow to stabilize exchange rate market in stead of making a one-time yuan devaluation, Wang said.
CHINA saw the deficit in its foreign exchange settlement expand in December, official data showed Thursday.
Chinese lenders bought US$128 billion worth of foreign currency and sold US$174.3 billion, resulting in a deficit of US$46.3 billion (320.3 billion yuan) in December, up from the November deficit of US$33.4 billion, according to State Administration of Foreign Exchange (SAFE) data.
The Chinese banks' forex settlement deficit hit US$337.7 billion in 2016, the data showed.
On a quarterly basis, the banks' forex settlement deficit fell from US$124.8 billion in the first quarter to 49 billion dollars in the second, 69.6 billion dollars in the third and 94.3 billion dollars in the fourth, according to the data.
"The figures show that the pressure of cross-border capital outflows has eased significantly compared with the start of 2016," said SAFE spokesperson Wang Chunying.
He said that domestic enterprises had been less interested in purchasing forex in 2016 compared to the previous year because their financing needs increased.
Foreign-currency deposits became more popular among domestic enterprises and individuals in 2016, as the balance of forex deposits in Chinese banks rose US$60.4 billion in 2016, and the increase was 48.8 billion dollars more than that of the previous year, the data showed.
China's forex reserves fell for the sixth straight month in December, by US$41.1 billion to 3.01 trillion dollars, as the central bank used them to balance the forex market and currencies weakened against the dollar.
Despite recent drops, China is still home to the world's largest forex reserve and enjoys forex inflows from its trade surplus and foreign direct investment.
THE number of outbound cruise passengers in China topped 2 million for the first time in 2016, according to a report by China Cruise & Yacht Industry Association (CCYIA) Thursday.
A total of 2.12 million Chinese holiday-makers departed from China's 10 major port cities, including Tianjin, Dalian, Yantai, Shanghai, Guanghzou and Haikou, to travel overseas last year, up 91 percent year on year.
In the meantime, the number of overseas cruise tourists visiting the 10 Chinese ports rose 8 percent to 138,715 in 2016.
Shanghai, Tianjin and Guanghzou were the top three ports to welcome passengers last year, taking up 65 percent, 16.3 percent and 7.2 percent of total inbound and outbound travelers respectively, according to the report.
China has become the world's eighth biggest cruise market, with domestic tourists planning more diverse travel experiences in recent years.
"Amid the burgeoning cruise industry, issues such as poor service should also be highlighted," said Zheng Weihang, executive vice chairman and secretary general of CCYIA. "China will make more efforts in enhancing the manufacturing of cruise liners and improving the capacity and efficiency of its ports."
THE first China-to-Britain freight train arrived in London yesterday after a 12,000-kilometer journey, marking a milestone in China’s push to build commercial links across Europe and Asia.
The train pulled in to Barking, east London, after an 18-day journey from Yiwu, a wholesale market town in Zhejiang Province. It had passed through Kazakhstan, Russia, Belarus, Poland, Germany, Belgium and France, and crossing under the English Channel into Britain.
The consignment would have taken nearly twice as long to reach Britain by sea.
The train brought in a cargo of small commodities including household items, clothes, fabrics, bags and suitcases.
Run by Yiwu Timex Industrial Investment, the Yiwu-London freight service makes London the 15th European city to have a direct rail link with China after the 2013 unveiling of the Belt and Road initiative by President Xi Jinping.
Carsten Pottharst, managing director of Switzerland-based InterRail Group, the train’s operator, said he hoped there would be more such runs between China and Britain.
“This moment was important to show that we can run the train in less than 18 days to the UK,” he said.
“It depends also on how much cargo we can get from the UK to China — if we can manage to get more trains eastbound, then there could be more.”
Oscar Lin, general manager at OTT Logistics, the local UK booking office for the train, said there had been good interest in the service.
“We’ve already received a lot of enquiries ... 50 or 60 in just two weeks, without any marketing,” he said.
CHINESE regulators yesterday released revised rules on investment by central state-owned enterprises, introducing a “negative list” approach in the supervision of investment projects.
The State-owned Assets Supervision and Administration Commission of the State Council said it will release a negative list detailing two categories of investment projects — those that are off limits for entry and those that demand special regulation.
For projects that are not on the list, central SOEs may make investment decisions on their own.
The new rules also set stricter requirements for state firms’ overseas investment, stipulating such investment should focus on the firms’ main business.
In principle, central state firms are not allowed to conduct non-core business investment overseas, according to the regulation, which aims to enhance risk control for overseas assets.
SHANGHAI yesterday launched a pilot scheme to introduce employee stock ownership in listed state-owned enterprises as a market-oriented reform of SOEs deepens.
The city government will allow five to 10 SOEs to trial the program, the Shanghai State-owned Assets Supervision and Administration Commission said in a statement yesterday.
The scheme follows a guidance made by the Central Economic Work Conference last month to adopt a market-focused approach on SOE reforms and to re-emphasize mixed-ownership reform.
The guidance stipulates that the total stocks owned by private shareholders of the SOEs taking part in the pilot should be higher than 10 percent of a SOE’s share capital, and that the SOEs should have more than 90 percent of its revenue or profit generated from the market rather than rely on state subsidies.
Market insiders consider the ownership restructuring the most effective tool to promote SOE reforms in certain industries, instead of mergers and acquisitions.
“There have been various attempts on SOE reforms, but some of them aimed to improve the companies’ balance sheet instead of real restructuring,” said Sun Yu, head of China equity strategy at HSBC.
He mentioned merger of Baosteel and Wuhan Iron and Steel Corp as an example of M&A to improve the balance sheet.
He also said: “Cases so far showed consumer and raw material firms with a market valuation of 10 billion yuan (US$1.5 billion) to 20 billion yuan are the best fit for the employee stock ownership program.”
HSBC became the first major bank to detail plans to move jobs out of London after Brexit, saying it will relocate staff responsible for generating around a fifth of its UK-based trading revenue to Paris after Britain leaves the European Union.
Major financial firms warned for months before Britain’s referendum on European Union membership in June that they would move jobs out of the country if there was a vote to leave, but have set out few details since on how many will go or where to.
“We will move in about two years’ time when Brexit becomes effective,” Chief Executive Stuart Gulliver said yesterday at the annual meeting of the World Economic Forum in Davos, in a potentially damaging first blow to London’s status as Europe’s main financial center.
Other banks are expected to announce more concrete plans for how they will adapt to Brexit in the coming months after Prime Minister Theresa May confirmed in a speech on Tuesday that Britain would leave the European single market.
HSBC, Europe’s biggest bank, is at an advantage to its major US rivals as it already has a large subsidiary in Paris that holds most of the licenses needed by an investment bank, meaning Gulliver has been able to set out more detailed plans.
It is expected to move around 1,000 staff who are involved in trading products such as European stocks that are regulated by the EU. HSBC’s global banking and markets division that houses those roles made profits of US$384 million in the UK in 2015, according to a company filing.
NEW Zealand cherry producers are flying helicopters low over their orchards to dry off raindrops and protect thousands of tons of their product headed to China to feed rapidly growing demand from Chinese New Year revelers.
China’s mainland has grown to become the second-largest destination for New Zealand cherries after Taiwan in the past seven years. Together they take about 60 percent of cherry exports, which were worth about NZ$43 million (US$31 million) last year.
Last week, New Zealand exported 900 tons of cherries, the largest amount recorded in a one-week period. Exports are expected to grow to around NZ$50 million this season, according to Tim Jones, chairman of Summerfruit NZ, which represents growers.
“The demand is phenomenal,” said Tracey Burns, who handles international cherry sales at produce exporter Freshmax.
Singapore Airlines said it is redirecting four cargo flights from Auckland to Christchurch to pick up 300 tons of cherries to be shipped to cities in China’s mainland, Hong Kong and Taipei by today.
Exporters and growers said they received constant requests for as much fruit as they could grow during Chinese New Year.
“I had a woman recently calling me up from China wanting 500 tons. We only do probably 50 tons in our orchard maximum, so I think she was dreaming a little bit,” said Martin Milne, a grower in the town of Cromwell.
All harvesting and sales take place in a two-and-a-half-month season starting in December, but the timeframe for Chinese New Year is even tighter: growers have to deliver fruit by next Monday, the deadline set by Asian distributors.
Growers in Central Otago, a mountainous region well-known as a backdrop in the “Lord of the Rings” films, are paying thousands of dollars an hour to fly helicopters over trees to stop rainfall from cracking fruit.
To ensure the good quality sought by Chinese buyers, the choppers have been flying just one meter above the trees, operating like fans to blow away moisture left by recent rain.
“It’s a high-value, fast-moving crop which means it gets a lot less room for glitches like rain,” said Marie Dawkins, chief executive officer of Summerfruit NZ.
SHANGHAI stocks edged up yesterday as some industrial heavyweights forecast higher profits for 2016.
The Shanghai Composite Index added 0.14 percent to 3,113.01 points.
Baoshan Iron & Steel Co rose 2.3 percent after it said profit in 2016 soared about 770 percent from the previous year. Other steelmakers also benefited from government measures to cut overcapacity in the industry. Wuhan Iron & Steel added 4.11 percent.
Airlines also rose as there would be more traffic with the approach of the Spring Festival. Air China gained 2.27 percent, and Hainan Airlines rose 0.61 percent.
But the upcoming Spring Festival holiday has clouded investment sentiment and impacted turnover, China International Capital Corp said in a note yesterday.
SIX former employees of Huawei Technologies have been detained by the police because they were alleged to have leaked business secrets to domestic smartphone rivals.
The former employees of Huawei’s consumer business group allegedly leaked business and confidential materials to local rivals including LeEco and Coolpad for personal interests. If the allegations were true, they violated the law and the company’s policy, said Shenzhen-based Huawei, which reported the case to the local police.
LeEco and Coolpad didn’t comment on the issue yesterday. LeEco is the biggest shareholder of Hong Kong-listed Coolpad with a 28 percent stake.
Huawei is expected to sell 140 million smartphones in 2016, up from 100 million units in 2015. It was ranked one of the top-three vendors in China’s smartphone market along with Oppo and Vivo at the end of the third quarter, said researchers like IDC.
HOME prices in China’s first and second-tier cities stabilized again in December as the domestic housing market continued to cool, the National Bureau of Statistics said yesterday.
The average new home prices were flat last month in first-tier cities and gained 0.2 percent in second-tier ones, down from growth of 0.1 percent and 0.4 percent in November respectively, said the bureau, which monitors prices in new and pre-occupied home markets in 70 major cities.
New home prices in tertiary cities gained 0.4 percent from November, slowing from a rise of 0.8 percent, the bureau’s data showed.
“Generally speaking, we’ve seen continually positive changes in the country’s residential sales market in December,” said Liu Jianwei, the bureau’s senior statistician. “Various tightening policies implemented in 15 first and second-tier cities seemed to be very effective in curbing rapid growth in new home prices, with 12 of them seeing month-on-month drops of between 0.1 and 0.4 percent in December.”
New home prices in Tianjin and Hangzhou were flat last month while Guangzhou was the only one of the 15 cities to record a monthly rise of 0.7 percent, a slowdown from its gains of 0.9 percent in November, 1.3 percent in October and 3.1 percent in September.
New housing prices in the rest of the first-tier cities — Beijing, Shanghai and Shenzhen — fell 0.1 percent, 0.2 percent and 0.4 percent, respectively, from a month earlier, according to the bureau’s data.
Similar trends also showed up on an annual basis. Prices of new and pre-owned houses in first-tier cities both grew slowly for the third straight month while in second-tier ones, the average price of new homes fell from a year earlier while the pre-owned housing market posted slower annual price growth.
“Looking forward, home prices in major Chinese cities, particularly the 20 largest ones, are expected to remain stable in 2017 as I could see no big room for looser policies,” Eva Lee, head of China Real Estate Research at UBS, said last week in Shanghai.
MACAU recorded 30.95 million tourist arrivals in 2016, with overnight-stay visitors exceeding same-day visitors, the city’s tourism office said yesterday.
Macau’s total visitor arrivals in 2016 reached a record of 30.95 million, up by 0.8 percent from 2015.
Around 28 million visitor arrivals came from the Chinese mainland, Hong Kong and Taiwan, a slight increase of 0.1 percent from 2015, Maria Helena de Senna Fernandes, director of the Macau Government Tourism Office, said at a press conference.
According to MGTO data, Macau welcomed over 20 million mainland visitors last year, up by 0.2 percent, with 44 percent of them coming from neighboring Guangdong Province.
There was a record 9.56 million independent visitors from the mainland, accounting for 46 percent of total mainland visitor arrivals.
The Taiwan market posted a gain of 8.8 percent while the number of Hong Kong visitors fell by 1.8 percent from 2015.
International visitor arrivals also surged by 7.9 percent. South Korea still ranked the first, contributing more than 660,000 visitors to Macau last year, with a robust growth of nearly 20 percent.
Visitors from Thailand and Indonesia marked high growth rate of over 30 percent and 11.7 percent respectively. Japanese visitor arrivals increased by 6.5 percent, and the United States tourist arrivals grew by 4.6 percent.
The MGTO director said another upbeat statistic is that overnight-stay visitor arrivals exceeded same-day visitor arrivals in 2016 for the first time in the last 10 years.
Preliminary data showed the overnight-stay visitors in 2016 exceeded 15.7 million, up by 9.8 percent, accounting for 50.7 percent of total arrivals. The average length of stay of overnight-stay visitors stood at 2.1 days and that of visitors in general was 1.2 days.
Macau had 113 hotel establishments supplying a total of 37,634 rooms at the end of 2016, a year-on-year increase of nearly 14 percent.
Among them, there are 47 budget hotels with a total of 1,513 rooms.
The average occupancy rate in 2016 ranged from 82 percent to 84 percent, a year-on-year rise of 1-3 percentage points. The average room rate of three to five-star hotels was US$161 last year, down by 12.7 percent.
CHINA will establish 10 to 20 demonstration zones during the 13th Five-Year (2016-2020) Plan period to test ocean economy polices, the top economic planner said yesterday.
The zones will feature projects that aim to advance innovative development patterns for the ocean economy, coordinate development of ocean industries and protect marine ecosystem, according to a guideline released by the National Development and Reform Commission and the State Oceanic Administration.
Cities with a growth rate of over 10 percent in the added value of ocean industry in the previous year and industrial parks with an added value of ocean industry of over 15 percent growth will be chosen to establish the zones, according to the guideline.
By 2020, the growth rate of ocean economy in these zones will be higher than the local economic development level.
The seas and oceans are integral to China’s social-economic development, and the ocean economy has already become a powerful driver for the national economy.
During the 12th Five-Year (2011-2015) Plan period, the annual growth rate of the China Ocean Economic Development Index was 3.7 percent, suggesting good overall development of the ocean economy.
The index includes three sub-indexes — development level, efficiency and potential.
CONTINUED reforms in Shanghai’s financial system are high on the agenda as the city forges ahead with plans to become a global financial and commercial hub.
Those reform proposals include tariff reduction in the city’s pilot Free Trade Zone and tighter scrutiny over fraudulent Internet finance businesses.
The Shanghai Committee of the Chinese People's Political Consultative Conference met recently to refine its agenda for the way forward. Party Secretary Han Zheng and regulators like the Shanghai Municipal Financial Service Office responded to members’ questions, comments and proposals.
Member Wang Liang, deputy director of the conference’s economic committee, said he thinks other free trade zones in China, like the one in Shenzhen, are stealing a march on Shanghai by being bolder in their market-oriented reforms. The result, he said, is more business activity for them.
In response to that concern, Han said the Shanghai zone should really be designated as a “national test area,” not a local free trade zone.
“This relates to the re-creation rather than the reallocation of government functions,” Han said in the panel discussion on Sunday about future plans for the Shanghai pilot Free Trade Zone.
“If people in office don’t have enough revolutionary spirit to relinquish powers, then the reforms won't achieve any success in the end," Han said.
Member Tu Haiming, also president of Shanghai Hodoor Real Estate Development Co, said the Shanghai zone should accelerate deregulation of the customs process, allowing multinational companies to deliver goods to customers within 24 hours instead of current two to three days.
Committee member Fang Huaijin, vice president of the Shanghai International Port Group, suggested that Shanghai should implement a zero tariff policy for companies doing business in the zone and create preferential policies for industrial, manufacturing and shipping companies instead of applying various tax policies on different categories of companies.
Beyond the zone, committee members also expressed concerns about the monitoring of fraudulent online peer-to-peer lenders and the potential risks posed to the development of legitimate financial technology companies if hard-and-fast rules are implemented.
Last January, Shanghai halted registration of new Internet finance companies that used marketing terms like “investment, assets, capital, shares, finance management and lease financing.” Shanghai Daily earlier reported after seeing the document.
The registration squeeze was followed by a national raid of online Ponzi schemes that bilked elderly people of hundreds of millions of yuan of life savings in 2015 to 2016.
Such raids shouldn’t affect the normal business operations of smaller financial companies or venture capital firms, wrote committee member Hong Zhongxin, chief executive officer of K-Boxing Men's Wear Co, in a proposal.
“A large number of start-ups, especially privately owned companies that lack access to mainstream fundraising channels, find it harder to attract capital from venture funds,” Hong said. “That goes against the municipal government’s strategy of building Shanghai into an international financial hub.”
Xie Dong, vice director of Shanghai Municipal Financial Service Office, told Shanghai Daily that the duration of current national raids is governed by outcome and not a specific time period.
“How to control the financial risks posed by fraudulent loan companies remains the most difficult and crucial part of our work,” Xie said. “We have allocated funds for the education of investors to try to head off these scams, both in communities and campuses.”
During the five-day annual session of the consultative conference, committee members submitted 106 proposals related to the economy.
The session ended yesterday.
CHINA'S red-hot property market in major cities has continued to stabilize after authorities took a series of measures to contain prices, according to an official survey Wednesday.
Of 70 large and medium-sized cities surveyed, 46 saw prices for new residential housing climb month on month in December, down from 55 in November and 62 in October, according to the National Bureau of Statistics (NBS).
Signage is pictured on the front of the headquarters of British American Tobacco in central London yesterday. BAT has agreed a US$49.4 billion takeover of US rival Reynolds, creating the world’s biggest listed tobacco company after it raised an earlier offer by over US$2 billion. The deal, which values the whole of Reynolds at around US$86 billion, will mark the return of BAT to the lucrative and highly regulated US market after a 12-year absence, making it the only tobacco giant with a leading presence in American and global markets.
SHANGHAI stocks edged up yesterday after a five-day losing streak, as energy companies rose on an industry plan.
The Shanghai Composite Index closed 0.17 percent higher at 3,108.77 points yesterday.
Investors were buoyed by the five-year (2016-2020) plan for the energy sector, which was released by the National Development and Reform Commission yesterday and will encourage oil and gas reform, and increase financial support to promote advanced exploitation of oil and gas.
China Petroleum & Chemical Co added 0.5 percent to 5.99 yuan (87 US cents), PetroChina Co gained 0.23 percent to 8.54 yuan, and Anhui Province Natural Gas Development Co jumped 10 percent to 18.25 yuan.
CHINA is aiming for double-digit annual growth in software and IT service industries during the five-year period from 2016 to 2020, according to a government plan released yesterday.
The Ministry of Industry and Information Technology set a goal for 2020 of industry business revenue exceeding 8 trillion yuan (US$1.2 trillion), with average annual growth of over 13 percent from 2016 to 2020.
China also aims to boost sales revenue from information security products to 200 billion yuan in 2020 with average annual growth over 20 percent.
The government will support development of software and IT service companies, encouraging them to become influential and competitive industry leaders, MIIT said.
Chinese companies should acquire leading innovative abilities and significant advantages in key sectors such as artificial intelligence, virtual reality and cloud computing, MIIT said.
In a separate plan also released yesterday, MIIT said China will support exploration of the 5G standard and commercialize 5G technology by 2020.
China’s IT industry saw sales of 17.1 trillion yuan in 2015, double that in 2010, MIIT said.
CHINA aims to more than triple the scale of its Big Data industry by 2020 in a bid to foster new economic drivers, said a government plan released yesterday.
The country’s Big Data industry should increase its annual sales to 1 trillion yuan (US$146 billion) by 2020 from an estimated 280 billion yuan in 2015, said the plan released by the Ministry of Industry and Information Technology.
The government is targeting a compound annual growth rate of around 30 percent for the industry’s sales in the 2016-2020 period, according to the plan.
It also set goals to create 10 world-leading Big Data companies by 2020 and create 10-15 experimental zones to speed up the industry’s development.
Efforts to promote Big Data application and make traditional industries smarter can add new momentum to China’s economic transformation, the MIIT said.
The past few years have seen rapid growth of China’s information industry, it said.
AUDI will sell more electric car models in China and develop automated driving there, it said yesterday, deepening ties with local partner FAW Group to counter challengers Mercedes-Benz and BMW in its top market.
Volkswagen’s luxury division and other carmakers are under pressure to sell greener cars in China as the world’s biggest auto market tightens emissions rules and discourages the use of fossil-fueled cars in major cities to fight pollution.
Audi and FAW have agreed to produce five more electric car models in China over the next five years. Audi also plans to build the A6L e-tron plug-in hybrid in China this year and import the Q7 e-tron model to the country.
Future electric models will include purely battery-powered cars with a range of over 500 kilometers, Audi said. The brand now only imports the A3 e-tron to China, destination of almost a third of its record 1.87 million deliveries in 2016.
“We are starting the next phase of our joint growth path in China,” Audi sales chief Dietmar Voggenreiter said. “More than ever, our partnership is focusing on profitable, sustainable growth.”
An early entrant to China, Audi remains the best-selling premium car brand there, though it is losing ground to Mercedes-Benz.
THE number of international tourists rose by 4 percent worldwide to 1.2 billion in 2016 as Asians traveled more, but security fears hit visitor arrivals in Europe, the World Tourism Organization said yesterday.
This represents the seventh consecutive year of growth since 2009, when global tourism figures fell 4 percent as the financial crisis and an outbreak of swine flu saw cash-strapped people stay at home.
The number of people living in Asia and discovering both their own region and the rest of the world rose 8 percent compared with 2015, the Madrid-based body said.
The Asia-Pacific area proved a popular destination — the second-most visited region after Europe.
But the UN body cautioned that while still blessed with 620 million tourists last year, the growth in the number of visitors to Europe had slowed due to security concerns.
The organization’s chief Taleb Rifai said the results in Europe were “very mixed,” saying some destinations recorded “a double-digit growth rate and some others a flat rate.”
The Americas saw a growth of 4 percent in visitor numbers, the body said.
Africa recovered from a sharp drop in 2015 due to security fears, recording an 8 percent growth.
Tourism represents 10 percent of global gross domestic product, 7 percent of international trade and 30 percent of service exports, according to the organization.
CHINA will deepen reforms in the energy industry to improve energy consumption structure and cut carbon emissions in the years through 2020, the National Development and Reform Commission said yesterday.
By 2020, China expects an annual energy consumption of below 5 billion tons of coal equivalent, or TCE — a unit of energy generated by burning one metric ton of coal — from 4.3 billion TCE in 2015. This will ensure that the average annual growth rate is kept at below 3 percent in the coming years, the NDRC’s five-year (2016-2020) energy plan envisaged.
China’s energy consumption growth is set slower than the previous five years as “the main energy-using products such as steel and nonferrous metals will post negative growth” as the authorities promote advanced industries and green development, the report said.
But the domestic energy generation will be sufficient to ensure energy security. Of the 5 billion TCE, “at least 80 percent, or 4 billion, should be generated by domestic producers rather than by imports,” the report said.
Reduction of carbon emissions will be achieved by boosting the development of non-fossil fuels and enhancing energy consumption efficiency.
By 2020, the consumption of coal should be cut to below 58 percent of the total energy use from 64 percent in 2015, while the proportion of non-fossil fuels should rise above 15 percent from 12 percent in 2015. Natural gas should account for at least 10 percent of the energy consumption, the report added.
To enhance energy consumption efficiency, construction of scattered and smart distribution networks equipped with intelligent sensors will be encouraged, the report said.
“Upon completion, energy consumption per unit of GDP would drop 15 percent from 2015 while carbon emissions would be slashed by 18 percent,” the report said.
CHINA’S e-commerce, high-tech and financial sectors may hire more staff this year, recruitment firm Robert Walters said in its Global Salary Survey yesterday.
“The demand for professionals with relevant skills will continue to be key areas for employment,” said Matthew Bennett, managing director of Robert Walters in China.
Demand for technology professionals with e-commerce, digital, Big Data and online marketing skills will remain buoyant this year, the survey showed.
High-tech companies are also looking for mid-range finance professionals this year. Financial services firms are likely to recruit risk control, compliance and auditing professionals to strengthen middle and back office functions, according to the report.
The salaries of e-commerce and digital professionals are expected to increase by 15-20 percent compared with last year, the report said.
BAIDU has hired former Microsoft executive and artificial intelligence expert Lu Qi as president and chief operating officer to help the Chinese search engine tap emerging technologies.
The heads of Baidu’s technology, financial services and search units will all report to Lu as Baidu aims for a strong management team to drive the next phase of growth, the company said yesterday.
“To achieve our goals, especially in artificial intelligence, which is a key strategic focus for the next decade, we will need to continue attracting the best global talent,” Baidu Chairman and founder Robin Li said in a statement.
Lu’s appointment, with immediate effect, came a day after Baidu opened an augmented reality lab and followed an announcement in September of a US$200 million venture fund for emerging technologies.
CHINA’S Cabinet issued measures yesterday to further open the world’s second-largest economy to foreign investment, including easing limits on investment in banks and other financial institutions.
China will lower restrictions on foreign investment in banking, securities, investment management, futures, insurance, credit ratings and accounting sectors, the State Council said in a statement posted on its website.
No further details were provided, nor a timetable for their implementation.
The Cabinet had indicated at the end of last year that the government would take measures to relax foreign investment in certain sectors.
The measures come as President Xi Jinping seeks to project China as a world leader in fighting protectionism and defending globalization. China will keep its door wide open and not close it, Xi told the World Economic Forum in Davos, Switzerland.
The State Council also said foreign-invested companies would be allowed to list on the Shanghai and Shenzhen exchanges as well as the country’s biggest over-the-counter equity exchange.
It was the first time the government has made clear that foreign firms will be allowed to sell shares publicly on the Shanghai and Shenzhen exchanges, apparently overturning a previous plan for an international board in Shanghai.
Shanghai in 2010 started lobbying the central government to establish an international board in the city, allowing listings by multinationals such as HSBC Holdings Plc and Siemens AG. But the plan has never materialized.
Foreign-invested firms will also be allowed to issue various debt instruments in China including corporate bonds, enterprise bonds and convertible bonds, the Cabinet said.
The State Council said the measures were intended to create a “fair and competitive” environment that puts “domestic and foreign companies on an equal footing.”
“How the rules get implemented will be very important,” said Arthur Kroeber, partner of Gavekal Dragonomics.
Restrictions on foreign investment in telecommunications, the Internet, culture, education and transport sectors would be relaxed “in an orderly way,” the State Council said.
The measures will also cancel restrictions on foreign investment in the manufacture of rail equipment, motorbikes, fuel ethanol, and oils and fats processing, while easing restrictions on unconventional gas, including oil shale, oil sands, shale gas and mineral resources.
Foreign investment in oil and natural gas projects would shift from an approval-based system to a registration system, the statement said.
Foreign direct investment in the Chinese mainland kept growing steadily last year on the back of strong investment in the service industry.
FDI rose 4.1 percent year on year to 813 billion yuan (US$119 billion) in 2016.
AMERICAN computer hardware manufacturer Seagate Technology has closed one of its two assembly factories in China due to weak global demand for personal computers and corporate hard drives.
“The past year has been very challenging for Seagate, requiring many difficult decisions. We had to say goodbye to 14 percent of our colleagues at sites around the world as we have significantly reduced our global footprint,” said Mike Small, its vice president for tax and international trade administration.
Another company official based in China confirmed Seagate has terminated contracts with employees of its Suzhou plant in Jiangsu Province.
Seagate has raised investment in its plant in the nearby city of Wuxi.
Small said the Wuxi plant remains vital to the company’s global supply chain.
Seagate remains confident and committed to the Chinese market and will release new products on security surveillance, robotics, Internet of Things and cloud computing.
INVESTMENTS in China’s real estate market surged 52 percent to a record 209 billion yuan (US$31 billion) last year, with Shanghai still the top investment spot, global property services provider JLL said in a report yesterday.
Domestic investors were the main drivers, who raised their activity in key cities, including Shanghai and Beijing, in addition to their aggressive overseas investment, the report said.
“Shanghai continued to dominate the country’s property investment market in 2016, accounting for 48 percent of the total investment volume,” said Johnny Shao, head of capital markets for Shanghai and east China operations at JLL.
“Office, which accounted for 55 percent of total transactions, remained the most favorable investment, followed by retail malls’ 19 percent stake.”
Shanghai saw 100 billion yuan in total transactions last year while Beijing was second with 33 billion yuan, or 16 percent of the total. Shenzhen was third with a 10 percent share, according to JLL data.
Chinese investors took up over 86 percent of transactions last year, above the 75 percent registered in 2015.
A joint venture of ARA Asset Management and China Life Insurance acquired Shanghai Century Link, a premium office development in the Pudong New Area, for 20 billion yuan in the fourth quarter of last year.
SHANGHAI should strengthen financial sector cooperation with Hong Kong to improve the economies of both cities, Tse Yung Hoi, chairman of Bank of China International-Prudential Asset Management Ltd, said yesterday at the annual meeting of Shanghai Committee of the Chinese People’s Political Consultative Conference.
He said the two cities should set up a high-end talent pool to support the Shanghai-Hong Kong Connect share market and encourage financial institutions to develop index companies to meet the market’s needs.
“Shanghai and Hong Kong still have huge room for further financial cooperation,” he said. “We should determine potential breakthrough points to better serve the real economy and make our financial market more secure.”
The government should also monitor cross-border capital flows to ease stock market and foreign exchange volatility.
SHANGHAI should eliminate tariffs in the pilot free trade zone to improve trading and enhance the competitiveness of domestic companies, says Fang Huaijin, vice president of the Shanghai International Port Group.
“Tax cuts are the general practice of international free trade zones,” he wrote in a proposal to the session of CPPCC Shanghai Committee. “The tax policies in the Shanghai FTZ are less attractive compared to other FTZs in the world.”
Fang suggested that Shanghai should implement a zero tariff policy for companies doing business in the FTZ and set out beneficial policies for industrial, manufacturing, shipping companies.
THE Chinese are not thrilled about their entanglement with the US economy, any more than Donald Trump is, but like a quarreling couple, the two nations have kept dancing together out of mutual self-interest, according to a US expert.
Farok Contractor, a distinguished professor at Rutgers Business School, made the remarks in an article posted on his website last Saturday.
According to Professor Contractor’s research, adding up the numbers for exports as well as foreign direct investment (FDI) between China and the US, the maximum number of jobs created by such activities in China is between 17.79 and 17.99 million, while the number in the US is about 1.6 million.
Besides jobs, other consequences of the two nations’ intertwined economy are also too important to be neglected.
Many Americans blame the United States’ massive trade deficit on China. However, what will happen to the US consumers if the country replaces Chinese imports with US manufacturing?
Based on the two countries’ relative economic data of 2016, Contractor calculated that US consumers would pay an additional cost of US$295.17 billion, or US$2,380 per household, on consumption in 2016.
Furthermore, the above estimate is only for consumer products and does not include US imports of industrial output from China.
Policy shifts also have unforeseen consequences and knock-on effects, such as inflation — which has been quiescent for the past decade, but could be reignited by an additional burden of 295 billion US dollars.
The Chinese government plowed most of their surpluses back into US government Treasury bonds and securities, totaling US$1.2-1.8 trillion.
“It may not matter much, therefore, at least on a year-to-year basis, if the trade deficits suffered by the US against China, or the rest of the world, are compensated by foreigners plowing their trade surplus money back into US investments,” said Contractor.
Trump alleges that the loss of US jobs is “the greatest theft in the history of the world.” This assertion is misleading and true only in very small part.
For every one US job lost through international trade (1980-2016), informed analysts, such as the Wharton School, conclude that three or four jobs have been lost because of automation, robotics, information technology, and other productivity boosters.
If China did not exist on the planet, other low-wage nations, such as Vietnam, India, or Bangladesh, would fill its place. Hundreds of millions are willing to work for less than one dollar per hour in those countries.
Hence, the Trumpian proposal to bring jobs “back to the US” is feasible, but economically non-viable. Hundreds, perhaps thousands, of Chinese factories facing rising wages and a shortage of skilled workers (following China’s one-child population policy) have themselves already taken the initiative to shut down operations in China and have relocated to Vietnam, Bangladesh, or other nations.
Should a Trump administration actually carry out its threats to levy a 45 percent tariff on Chinese products, production is unlikely to return to the US to any significant degree. Other nations such as India, Lesotho, and Bangladesh, will fill the breach.
However, the resulting disruption of global value chains would add costs to the tune of hundreds of billions per year and increase prices for US buyers by hundreds of dollars per capita.
In recent years worries about Chinese investment in the US are raising as the amount increases rapidly.
Chinese companies invested a record US$45.6 billion in the US economy in 2016, which are triple the amount of 2015 and a tenfold increase of annual investment just five years ago, according to Rhodium Group.
Contractor believed that the Trump administration need not be greatly alarmed about this for two salient reasons.
Firstly, the single biggest Chinese investments were in innocuous sectors such as real estate, hospitality, and business and financial services where proprietary technology is not an issue.
Secondly, even in sensitive sectors such as computer technology and life sciences, the White House-guided Committee on Foreign Investment in the US (CFIUS) can, and has, embargoed foreign investment in sectors deemed sensitive or where the intelligence services or Commerce Department has indicated danger to the continued competitiveness of American firms.
In fact, the cumulative or historical dollar values show that US FDI value in China is at US$228 billion, compared with US$90-100 billion for the value of Chinese FDI investment in the US.
"American firms, as far as FDI is concerned, have much more to lose in the event of a commercial dispute between the two nations," he said.
On the Chinese front, for the past 25 years, the Chinese government has looked on the US as its principal foreign market, with up to 18 million of its workers directly or indirectly involved with US trade and FDI. And they have every incentive for keeping the US consumer happy and the US economy going strong: simply put, it is a matter of self-interest.
The two great nations, which account for 40 percent of world GDP and 23 percent of the world’s population, need each other, Contractor concluded.
CHINA'S real estate investment market closed with a record 209 billion yuan (US$30.18 billion) in transaction volume last year with Shanghai remaining the top investment destination, international property services provider JLL said in a report released today.
That represented a year-on-year surge of 52 percent and was mainly driven by domestic investors, who have stepped up their activity in key cities including Beijing and Shanghai in addition to their aggressive overseas investment.
"Shanghai continued to dominate the country's property investment market in 2016, accounting for 48 percent of the total investment volume," said Johnny Shao, head of capital markets for Shanghai and East China operation at JLL. "By asset types, office, which accounted for 55 percent of total transaction, remained the most favorable investment, trailed by retail space's 19 percent stake."
Total transaction volume reached 100 billion yuan in Shanghai last year while Beijing was the runner-up with 33 billion yuan, or 16 percent of the total. Shenzhen came the third with a 10 percent share, JLL data showed.
WHITE-COLLAR workers in Shanghai were less unhappy about their year-end bonus compared with the national average as more have received the payment compared with the previous year, a Zhaopin.com survey found.
The survey found 43.5 percent respondents said they have received year-end bonus by the end of last year, up from 14.9 percent of the previous year, the online recruitment portal said in a survey covering 1,061 white collar workers in Shanghai.
On the national level, nearly 40 percent respondents said they have received the year-end bonus, up from the previous year's 13.4 percent.
An index measuring Shanghai white-collar workers' satisfaction towards year-end bonus was 2.3 on a scale of zero to five, higher than the 2.18 reading for China as a whole.
The stable growth of China's GDP and a recovery of economic momentum contributed to better year-end income for white-collars, but overall satisfaction remained low against economic uncertainties.
The survey found nearly a third of respondents in Shanghai said their year-end bonus came below 5,000 yuan, while 22 percent said they have received more than 20,000 yuan.
More than 40 percent Shanghai respondents said they will consider changing jobs because of the unsatisfactory year-end bonus.
Nationally, the survey found white-collar workers in second-tier cities, state-owned companies, and the financial sector are the most happy about their year-end bonus.
E-COMMERCE, high-tech and financial sectors are expected to have a higher demand for talents in China this year, recruitment firm Robert Walters said in its Global Salary Survey today.
“It is anticipated that in 2017, with the growth of e-commerce and fintech, China will become more innovation-driven and technologically developed. The demand for professional with relevant skills will continue to be the key areas for employment,” said Matthew Bennett, managing director of Robert Walters China.
Demand for technology professionals will remain buoyant this year, especially for those talents with e-commerce, digital, big data and online marketing operation skills.
E-commerce and digital professionals are expected to command higher salaries in 2017. Salary of people who change their job in technology industry is going to increase by 15 to 20 percent compared with last year, according to the report.
Robert Walters said a migration trend of professionals from traditional institutions to new and non-traditional institutions like internet banking and peer-to-peer (P2P) lenders was also observed.
BAIDU has hired former Microsoft executive Lu Qi as president and chief operating officer, the latest effort by the Chinese search giant to step up corporate governance, according to an email statement today.
Every Baidu business unit head will report to Lu, with immediate effect, as Baidu seeks strong management to drive the next phase of growth.
“To achieve our goals, especially in artificial intelligence, which is a key strategic focus for the next decade, we will need to continue attracting the best global talent,” Baidu chairman and founder Robin Li said in Tuesday’s statement.
Lu holds a PhD in computer science and has over 40 US patents under his name and will report to Li.
AN official said Monday that China's macro tax burden had been lower than the world average for the past few years, responding to a recent World Bank report ranking China 12th in the world in terms of total tax rate.
Lou Jiwei, former finance minister and now head of the National Council for Social Security Fund, told Xinhua in an exclusive interview that the World Bank's micro methodology differed from common practices in terms of the scope of indicators and choices of data.
Lou said that using the World Bank's method to compare tax burdens among different countries did not make much sense.
The report jointly released late last year by the World Bank and accounting firm PricewaterhouseCoopers records taxes and mandatory contributions that a medium-size company must pay in a given year.
The report said China's total tax rate was 68 percent in 2016, much higher than the world average of 40.6 percent.
Lou said that when comparing tax burdens among countries, a key figure was the macro tax burden rate, or the ratio of a country's tax revenue to nominal GDP.
In both 2014 and 2015, the macro tax burden in China stood at only around 30 percent, lower than the world average, Lou said.
The Ministry of Finance said in December that more tax breaks and fewer administrative fees would be extended for businesses this year to lower costs for companies.
CHINA has mapped out a plan to improve the economy, standard of living and environmental conditions to a “new level” in its western regions by 2020, the country’s top economic planner said yesterday.
The State Council has released the plan setting goals for the country’s “go west” strategy for 2016-2020, according to the National Development and Reform Commission.
The government should complete the building of a moderately prosperous society in China’s west by 2020, the NDRC cited the plan as saying.
Specific targets include sustained and healthy economic development, stronger innovation, more progress in industrial upgrading and infrastructure construction, as well as better environment and public services.
Major projects will be implemented to strengthen environmental protection, conserve energy and resources and improve disaster prevention and relief, according to the plan.
Efforts will also be made to reduce poverty and promote the opening-up of regions along the Belt and Road.
The less developed west presents difficulties for China’s goals to eliminate poverty and achieve all-round moderate prosperity, but it also boasts huge potential for development, according to the NDRC.
China launched its “go west” strategy in 2000 to boost the economic development of 12 western provincial regions — Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Ningxia, Xinjiang, Inner Mongolia, Guangxi and Qinghai.
Under the strategy, western regions enjoy support in infrastructure construction, foreign investment, environmental protection, education and staff retention.
THE International Monetary Fund yesterday raised its forecast for China’s economic growth this year by 0.3 percentage points to 6.5 percent, on expectations of continued policy stimulus.
At the same time, it downgraded India’s growth outlook by 0.4 percentage points to 7.2 percent as consumption in Asia’s third-largest economy takes a hit from the government’s recent decision to abolish large currency notes.
China’s economy grew 6.7 percent over the first three quarters of 2016, in line with the country’s 6.5-7 percent growth target, but risks are also increasing with growth reliant on government spending, record lending by state banks and an overheating property market.
The IMF warned of the risks to China’s economy of a sharp slowdown or disruptive adjustment as the government has been slow to tackle high corporate debt, with capital outflows also potentially exacerbating pressures.
China’s corporate debt has climbed to 169 percent of gross domestic product, and international institutions have repeatedly urged Beijing to act quickly to tackle the problem in order to avoid a financial crisis.
The country’s leadership said China will focus on tackling financial risks this year, and the head of the state planning agency said China would cap the corporate debt ratio at current levels.
The IMF’s forecast for a 6.5 percent expansion this year is roughly in line with analysts and policy insiders who have said China is likely to target around 6.5 percent growth in 2017.
The IMF raised its forecast for China’s 2016 growth to 6.7 percent from 6.6 percent, but still expects China’s growth to slow to 6 percent in 2018.
The IMF maintained its forecast that global growth will pick up to 3.4 percent this year and 3.6 percent in 2018 from the 2016 estimate of 3.1 percent.
The institution cited China as a key factor driving a faster global recovery this year, but a slowdown in the world’s second-largest economy is also as one of the main downside risks to global growth.
India, which has recorded some of the world’s strongest recent growth, is experiencing a shock to consumption from the government’s decision in early November to withdraw larger currency notes from circulation to crack down on tax dodgers and counterfeiters.
Citing the blow to the cash-reliant economy, the IMF chopped a full percentage point off its fiscal 2016-17 growth outlook to 6.6 percent. The fiscal year ends on March 31.
SEVEN-DAY sales of new homes remained below the 100,000-square-meter threshold for the second straight week in Shanghai, further evidence of extended weakness in the traditional low season heading into the Spring Festival.
The area of new residential properties sold, excluding government-subsidized affordable housing, climbed 5 percent to 98,000 square meters last week, Shanghai Centaline Property Consultants Co said in a report yesterday.
Houses sold for an average 47,119 yuan (US$6,830) per square meter, a week-on-week increase of 16.3 percent.
“Extremely sluggish momentum among both home buyers and developers was registered across the city with the latter not launching a single unit of new house in the local market during the whole week,” said Lu Wenxi, senior manager of research at Centaline.
“As rein-in measures remained implemented and the approach of the Spring Festival holiday, the monthly transaction volume in January would not exceed 400,000 square meters if this pace of sales is maintained, which will probably be the lowest for the same period in about five years.”
An apartment project in Xuhui District sold 41 units last week for an average price of 81,481 yuan per square meter, making it the most popular development.
THE central bank’s yuan funds outstanding for foreign exchange declined again in December as capital outflow continued.
The funds declined 317.8 billion yuan (US$46.1 billion) in December month on month to 21.94 trillion yuan, data from the People’s Bank of China showed Monday. December was the 14th consecutive month of decline.
As the Chinese currency is not freely convertible under the capital account, the central bank has to purchase foreign currency generated by China’s trade surplus and foreign investment in the country, adding funds to the money market.
Such funds are an important indicator of cross-border foreign capital flow and domestic yuan liquidity. China’s forex reserves fell for the sixth straight month in December by US$41.1 billion to US$3.01 trillion, as the PBOC used them to balance the forex market and currencies weakened against the US dollar. Despite recent drops, China is still home to the world’s largest forex reserve.
Sunglasses from Ray Ban, a Luxottica-owned brand, are on display at a shop in Hanau, Germany. Italy’s Luxottica and France’s Essilor have agreed a 46 billion euro (US$49 billion) merger to create a global powerhouse in the eyewear industry, they said in a statement yesterday. The new company will have annual revenue of more than 15 billion euros.
SHANGHAI-BASED online finance service providers are expanding into inner and western parts of China as their economic development boosts demand for Big Data, online payments and other cyber finance services.
Four provincial areas — Henan, Sichuan, Hubei and Guangxi — are among the top-10 regions by trade volume, a sector once dominated by coastal regions, said Shanghai-based online lender PPDai.
Populous Henan and Sichuan had rapid growth in both user base and trade volume, said Zhang Jun, chief executive of PPDai.
Meanwhile, Peking University said the gap between online finance and digital economy, and between coastal regions such as Shanghai and areas in west China such as Chengdu, Guiyang and Tibet will narrow this year.
Shanghai-based ChinaPnR has signed a partnership agreement with Guizhou Bank recently on digital payment and value-added finance services.
ALIBABA Group said yesterday that it will team up with international brands and local authorities in an alliance to fight counterfeits after its Taobao unit was put back on the US “notorious markets” list last month.
By joining hands with brands, including Louis Vuitton and Samsung, Alibaba said it aims to pool resources to protect intellectual property rights.
Alibaba pledges to leverage its Big Data expertise to help members of the alliance block and bring down sites that infringe copyright.
The alliance also includes police and supervision bureaus in provinces such as Zhejiang, Hunan, Shandong and Henan.
This month, Alibaba launched suits against two merchants in Shenzhen for selling fake Swarovski products on Taobao.
CHINA’S non-financial outbound direct investment increased 44.1 percent year on year to US$170.11 billion in 2016, official data showed yesterday.
Chinese companies invested in 7,961 overseas enterprises in 164 countries and regions last year, according to the Ministry of Commerce.
The Belt and Road initiative — reviving the Silk Road on land and at sea — was a strong boost to cooperation between Chinese and foreign firms.
Outbound investment to countries involved in the initiative totaled US$14.53 billion last year, said Han Yong, an official with the commerce ministry.
Chinese companies have especially paid attention to the real economy and emerging industries for outbound investment, said Han.
Up to 18.3 percent of the ODI went to manufacturing in 2016, up from 12.1 percent in 2015. Meanwhile, Chinese companies carried out 197 overseas mergers and acquisitions in the manufacturing sector last year, accounting for 26.6 percent of the total.
In the same period, 12 percent of China’s total ODI was invested in information transmission, software and information technology services, and 109 overseas M&A deals related to the sector were announced.
Han said overseas M&A had facilitated China’s economic restructuring and industrial upgrading.
In December alone, the country’s ODI declined 39.4 percent from the same period of 2015 to US$8.41 billion, according to the ministry.
Regulators are also looking out for risks brought by “irrational tendencies” amid rapid outbound investment growth and are examining irregularities in such investments.
CHINESE search engine Baidu Inc yesterday launched an augmented reality lab in Beijing as part of a US$200 million effort to revitalize the company’s shrinking profits with cutting-edge technology.
The lab, which employs 55 people, will aim to drive revenue through AR marketing, although it will later explore health care and education.
“AR marketing is taking off,” said Andrew Ng, the scientist overseeing Baidu’s artificial intelligence, AR and deep learning projects.
“There are few content formats where the content is evergreen — AR will be like that.”
Popularized in 2016 by Nintendo Co’s Pokemon Go game, AR involves rendering virtual images over real life settings viewed on a smartphone, headset or other devices. In marketing, the software can be used to animate a product or a branded space.
Baidu’s AR launch comes as the company gears up to report full-year earnings next month. It has forecast a revenue drop of around 4.6 percent as it grapples with the aftermath of new government curbs on medical advertising.
Those curbs have eaten into the profits of its core search business and saw ad customers drop 16 percent in the quarter ended in September.
The company injected US$200 million into its AI and AR unit in September to kick start growth, followed by the announcement of a US$3 billion investment fund focusing on mid-to-late stage startups.
The company is working with AR in China with Yum! Brands Inc’s KFC, BMW and L’Oreal SA’s Lancome.