CHINA will work to further reduce financing cost of micro and small enterprises, with an aim to increase outstanding loans offered by five large state-owned commercial banks to MSEs by more than 30 percent this year comparing with 2018, the State Council executive meeting chaired by Premier Li Keqiang decided yesterday.
Premier Li pointed out repeatedly that it is imperative to take a multi-pronged approach to significantly ease the financing woes MSEs face, and set out clear goals for cutting their financing cost. “Lowering the MSEs’ financing cost is a prominent issue in our economy today,” Li said. “Our prudent monetary policy should be eased or tightened to the right degree to keep liquidity reasonably sufficient. We need to exercise well-timed regulation, rather than flood the economy with stimulus measures.”
It was decided at the meeting that the government must make flexible use of various monetary policy instruments. The scale of re-lending and rediscount will be expanded and more targeted cuts in the required reserve ratio for small and medium-sized banks will be made. A policy framework for applying a fairly low RRR for small and medium-sized banks will be established, as was urged at the meeting. Funds that are newly freed up from these measures will be used for lending to private companies and MSEs.
Bond financing support instruments will be promoted to see that the scale of both bond financing by private firms and special bonds issued by financial institutions for MSEs exceed the 2018 level.
Banks need to improve the evaluation and incentive mechanism to strengthen their confidence, readiness and capacity lending to MSEs, the meeting urged. The government will support banks in formulating inclusive finance plans dedicated to MSEs and guide banks toward proper pricing of lending.
CHINA’S economy remained stable in the first quarter, with the gross domestic production posting a faster-than-expected growth year on year, as industrial production jumped sharply and consumer demand showed signs of improvement.
The GDP rose from a year earlier to 21.34 trillion yuan (US$3.19 trillion) in the first three months, up 6.4 percent, which was unchanged from the fourth quarter of 2018 and higher than the expected 6.3 percent, according to the National Bureau of Statistics.
On a month-on-month basis, the GDP grew 1.4 percent in the first quarter as expected, retreating slightly from the 1.5 percent growth posted in the previous quarter — a new low since the first quarter of 2018.
The bureau said the market expectations have markedly improved and confidence in development had increased.
China’s economy operated within a reasonable range in the first quarter. The positive factors gradually increased, laying a good foundation for steady economic development throughout the year, said Mao Shengyong, spokesperson for the NBS.
However, the acute structural imbalance and downward pressure still exist, Mao said, adding that greater efforts should be made in further promoting reforms.
China has rolled out many policies to support growth — the key is to implement them, Mao said.
The value-added industrial output of designated large enterprises — with an annual turnover of at least 20 million yuan — grew 6.5 percent year on year in the first quarter, dipping 0.3 percentage points from the same period last year.
The figure was up 1.2 percentage points compared with the January-February figure, and was 0.8 percentage points faster than the fourth quarter last year.
Share markets and most currencies in Asia rose in relief. The yuan rose 0.4 percent to a 7-week high, Reuters reported yesterday.
For March, the value-added industrial output of major enterprises grew 8.5 percent year on year, 3.2 percentage points faster than the January-February period, and rose 1 percent from the previous month.
The March year-on-year pickup was mainly driven by the mining and manufacturing sectors, according to Nomura, where industrial output growth rose to 4.6 percent year on year and 9.0 percent, respectively, in March from 0.3 percent and 5.6 percent in the January-February period.
Industrial output growth in the utilities sector also rose last month, albeit less significantly, to 7.7 percent from 6.8 percent in the first two months.
By industry, output in the mining sector grew 2.2 percent year on year in the first quarter, that in the utility sector rose 7.1 percent and the manufacturing sector rose by 7.2 percent.
Of note, the industrial high-tech sectors jumped 7.8 percent in the first three months from the same period last year, 1.3 percentage points faster than the overall figure for the industrial production of major enterprises.
The emerging industrial sectors also rose at a 0.2-percentage-point faster pace than the headline industrial output figure, rising 6.7 percent from a year earlier.
The service sector expanded steadily by 7 percent year on year in January-March to 12.23 trillion yuan.
Among them, the leasing and business service sector increased by 8.3 percent year on year, the financial sector up 7 percent, the accommodation and catering sector grew 6 percent, and wholesale and retail sales advanced by 5.8 percent, all higher than the pace in the fourth quarter of last year.
The information transmission, software and information technology service industry extended its rapid growth, jumping 21.2 percent.
Fixed-asset investment grew by 6.3 percent year on year in the first quarter, an acceleration of 0.2 percentage points compared with January-February, but fell from the 7.5 percent year-on-year growth in the first quarter last year.
Retail sales growth ticked up to a stronger-than-expected 8.7 percent year on year in March from 8.2 percent in January-February. However, passenger car sales growth was deep in the negative category, dropping by 11.7 percent in March from a year earlier, against the 9.7 percent year-on-year decline in January-February.
Sales growth of property-related products rose broadly, mainly led by home-use electronics and furniture sales, growth of which jumped to 15.2 percent year on year and 12.8 percent, respectively, in March from 3.3 percent and 0.7 percent in January-February.
“The improved sales of property-related products was largely due to the ongoing recovery of the property sector in big cities, although we believe it is likely to be moderate and short-lived,” Nomura said in a note.
“We remain cautious on property markets of lower-tier cities, as downside pressures still loom, especially from tapering pledged supplementary lending, contracting land sales and rising bond repayment pressures amid mounting outstanding debt for developers. This does not bode well for consumption growth in upstream and downstream industries of the property sector in coming quarters,” said Lu Ting, chief China economist of Nomura.
“As the growth momentum of the Chinese economy picks up, we believe that policymakers will re-assess the need for further stimulus. The government will maintain a counter-cyclical stance, which will primarily be expressed through measures that support structural transformation,” according to the Australia and New Zealand Banking Group.
The ANZ Group expected a recovery in the second quarter to be largely domestically stimulated, with investment being the first sector to signal a rising trend. They also revise their GDP forecast to 6.4 percent for full-year 2019, from 6.3 percent previously.
The National Development and Reform Commission had approved 800 billion yuan of FAI projects in December 2018, equivalent to the amount of all projects approved in January-November 2018. Local governments have also started intensive issuance of special local government bonds amounting to 539 billion yuan in the first quarter of 2019.
“Despite the limited room for easing, Beijing might still need to continue its easing stance for a while. We expect Beijing to especially push forward its non-conventional policy easing measures, such as providing special support to the private sector, cutting taxes and deregulating the property markets in big cities,” Nomura’s Lu said.
Auto parts suppliers are optimistic about the Chinese car market, as well as new opportunities created by advances in e-mobility and autonomous driving, industry representatives said at the ongoing Shanghai International Automobile Industry Exhibition.German automotive and industrial supplier Schaeffler expects its China business to double in the next five to seven years and has been readying itself for a transformation in transportation and mobility services. Matthias Zink, CEO of Automotive OEM at Schaeffler, told reporters the company expects to prepare for the technology shift by offering bottom-up upgrades and solutions and addressing safety concerns in autonomous driving. Schaeffler China President Zhang Yilin said half its China business comes from local automakers and while the market saw a dip last year, it has not reached its peak. Strong trend to e-mobilitySchaeffler is presenting an extensive range of products for application in various types of powertrains at the exhibition.It also announced the start of production of axles for electric SUVs at its plant in Taicang, eastern Jiangsu Province. Germany’s leading mechatronics provider, Brose, is eying an investment of at least 300 million euros (US$339 million) in the next three years to expand production capacity and strengthen R&D. Kurt Sauernheimer, CEO of Brose Group, said last year China sales grew 5 percent against an overall drop in the market. “We expect China to represent 30 percent of our global business very soon and we will grow our customer portfolio in Asia, and especially China,” he said. The trend toward e-mobility will bring new opportunities for Brose’s mechatronics offerings, said Brose China President Jenny Xiang in an interview. Brose also noted increasing local demand for comfortable, functional and tailor-made interiors and it will continue to roll out localized product offerings for the domestic market.The China Association of Automobile Manufacturers estimates that new-energy vehicle sales in the country are set to reach 1.6 million units this year.NEV sales in China are soaring as the overall market falls, surging 85.4 percent year on year in March, compared with a 6.9 percent decrease in total sales.Faurecia, another leading automotive technology supplier, plans to double its sales in China over the next four to five years, thanks to growing demand for sustainable mobility and personalized on-board experiences.“China is one of Faurecia’s key and strategic markets, and represented about 15 percent of the group’s sales last year,” Li Jingcheng, vice president of strategy and development at Faurecia, told Shanghai Daily. “We expect this figure to exceed 20 percent within the next four to five years.”Meanwhile, parts giant Continental will invest heavily in new Chinese production sites in coming years, including a “sharp expansion” in powertrain production capacity in Tianjin and Changzhou. It expects “diversified demands” from the Chinese market, despite the recent slump.
US electronics giant Intel has said it was withdrawing from the 5G smartphone modem business, hours after Apple and American microchip manufacturer Qualcomm announced they had clinched an agreement to end a battle over royalty payments.Smartphone modems were at the center of the battle between Apple and Qualcomm.Intel said on Tuesday it will “complete an assessment of the opportunities for 4G and 5G modems in PCs, Internet of Things devices and other data-centric devices,” while pursuing investment opportunities in its 5G network infrastructure business.“5G continues to be a strategic priority across Intel, and our team has developed a valuable portfolio of wireless products and intellectual property,” CEO Bob Swan said in a statement. “We are assessing our options to realize the value we have created, including the opportunities in a wide variety of data-centric platforms and devices in a 5G world.”Intel will meet commitments to customers for its 4G smartphone modem products, though it has no plans to launch 5G smartphone modem products, including those previously set to premiere in 2020.
PRICES in China’s urban housing markets were mixed last month, official data released yesterday showed.
Prices of both new and pre-occupied homes in all-tiered cities in China rose at a mild pace from a month earlier, as policies to either cool speculation or promote the healthy development of the industry remained consistent, according to the National Bureau of Statistics, which monitors home prices in 70 major cities.
New home prices in the four first-tier cities climbed an average of 0.2 percent, easing from 0.3 percent growth in February. Prices gained 0.4 percent and 0.8 percent in Beijing and Guangzhou, and lost 0.1 percent and 0.3 percent, respectively, in Shanghai and Shenzhen.
In the existing housing market, prices in the four cities edged up 0.3 percent month on month, compared with a 0.1 percent increase in February. They were up 0.4 percent, 0.3 percent and 0.7 percent in Beijing, Shanghai and Shenzhen, and shed 0.5 percent in Guangzhou, the bureau said.
In 31 second-tier cities, new home prices rose an average of 0.6 percent last month, compared with 0.7 percent in February. Prices of existing homes jumped 1.2 percent, compared with a 0.2 percent slip in February.
New home prices in 35 third-tier cities advanced 0.7 percent on average last month, accelerating from 0.4 percent growth in February. In the pre-occupied housing market, prices gained by an average of 0.5 percent, compared with a 0.2 percent rise in February.
New home prices in Dandong, in northeastern Liaoning Province, registered the biggest month-on-month increase of 1.9 percent.
On a year-on-year basis, prices of new homes in all-tiered cities also increased in March. They climbed 4.2 percent, 12.2 percent and 11.4 percent, respectively, in first-, second- and third-tier cities. In the pre-occupied residential market, they climbed 0.5 percent, 8.2 percent and 8.4 percent from the same period a year ago.
THE Commercial Aircraft Corporation of China unveiled its first CBJ business jet at the opening of the Asian Business Aviation Conference & Exhibition at Hongqiao Airport yesterday.
The CBJ aircraft is one of the ARJ21 serial products and follows the same production as China’s first home-developed regional jet.
COMAC is taking part in the exhibition for the first time this year and displaying a model and drawings of the CBJ, which is expected to compete with foreign rivals.
The CBJ business jet features more cabin space than rivals in the same class. It can be configured with 12 to 29 seats, a separate VIP bedroom, lounge, meeting room, sitting room and dining section, depending on the demands of the customer.
The domestically made jet also has better soundproofing, cutting engine noise to 55 decibels — quieter than that on a busy street. With a range of 5,500 kilometers, it can adapt to a wide variety of flying conditions, from extreme temperatures to high altitudes and strong crosswinds.
COMAC said it will introduce the development of its business aviation sector and negotiate with potential clients during the exhibition.
The annual business aviation exhibition has been dominated by foreign manufacturers since it began in 2012.
This year, more than 30 of the world’s most advanced business aircraft from Airbus, Embraer, Dassault, Textron and Bombardier were showcased on the tarmac at Hongqiao as part of the exhibition which ends tomorrow.
The ARJ21 began commercial flights on June 28, 2016, with mass production starting from September 2017.
Currently, Chengdu Airlines operates 11 ARJ21s to 20 Chinese cities. The jet has also been delivered to its second operator, the newly established Genghis Khan Airlines based in Inner Mongolia.
The ARJ21 fleet has transported about 320,000 passengers since 2016, COMAC said yesterday.
More than 100 ARJ21s will be delivered in the next five years, as COMAC takes on the regional jets market leaders Bombardier and Embraer.
SHANGHAI’S existing housing index rose last month for the first time in over a year as sales rebounded.
The index, which tracks month-over-month price changes in 130 areas across the city, gained 0.52 percent, or 22 points, to 3,905 in March, the Shanghai Existing Housing Index Office said in its latest report.
Citywide, about 25,930 pre-occupied homes changed hands, an increase of 167.1 percent from February and 50.1 percent from the same period a year ago, the office's data showed.
Pre-owned homes costing less than 3 million yuan (US$447,020) accounted for 66.6 percent of the total. Those worth 5 million yuan or more made up 10.5 percent. Prices of pre-occupied homes climbed in 95 areas, fell in 16 and were flat in 19.
Pujiang in Minhang District, Sanlin and Shangnan in the Pudong New Area were the three most sought-after areas in March, with sales of 660, 634 and 567 pre-used homes.
Last week saw Chinese and EU leaders come together at a summit which saw discussions at the highest levels about how flows of goods, services and capital between the two economic superpowers could deliver mutual benefit.This included a joint declaration to avoid forced transfer of technology as well as a commitment toward “non-discriminatory” market access, both of which are now enshrined in China’s new Foreign Investment Law.These discussions touched on subjects against the backdrop of US-China trade talks, coupled with European governments’ increased scrutiny of investments into strategically sensitive sectors.China’s recent passing of the new Foreign Investment Law, aimed at liberalizing capital flows into the country, signals a watershed moment not only for the Chinese economy, but also for Europe and the rest of the world. The new law is expected to bring in an additional US$1.5 trillion of inbound mergers and acquisitions (M&A) over the next decade.China’s move up the value chain has been supported by a program of outbound investment into foreign assets. That strategy, dented somewhat by increasing concerns in the US and Europe surrounding investments into sensitive sectors such as technology and infrastructure, is now being supported by the liberalization of inbound investment into the country. This creates an alternative route toward an even more sophisticated industrial base, and one over which the Chinese government has more control.In parallel to this emerging middle class is a significant demographic shift. The number of Chinese people over the age of 60 is projected to grow to nearly a quarter of the population in the next 10 years. That will drive significant demand in less-developed sectors such as health care, pensions and life insurance. And despite the aging population, more than 200 million Chinese people are expected to start families in the same period, driving huge growth in the real estate, automotive and education sectors.Alongside these shifting demographics is the launch of initiatives reflecting the country’s desire to move up the value chain and transition toward being a high-end manufacturer. China is already the world’s largest investor in industrial R&D, as well as the most prolific writer of scientific papers.The automotive industry provides an illustration of the complexity of inbound M&A in China. The sector has evolved to incorporate a complex ecosystem of businesses working in subsectors such as electric and autonomous vehicles across a much wider range of size, maturity and structure typical in other developed economies. The potential investment routes are correspondingly wide, including everything from full acquisition, partial investment, joint venture, consortia, incubation, commercial contracts, raising money on capital markets. Finding the right advice and insight to navigate these options will not be easy for outsiders and crucial to any deal’s success will be bringing the right partners together with the right structure.In relation to differing norms of disclosure, the quality of information provided to acquirers and investors along with the timing of a deal process can vary widely in markets like China cautiously opening up to foreign investors. They will have to work harder and more diligently to ensure that information is presented in an organized, accurate and transparent way, drawing on every ounce of their international deal experience.Macro-factors such as the US-China trade talks will likely have an impact on the ability of inbound investment deals into China, particularly given the new Foreign Investment Law’s language on allowing China to take measures against countries that discriminate against Chinese investment. To succeed, dealmakers will need to be smarter and pay much more attention to restrictions being placed on other foreign investment deals than before. To supplement this, they should also become adept at convening networks of senior local businesspeople, policymakers and other stakeholders to ensure continuous dialogue and understanding about the mutual benefits of investment into China.Last week’s summit, along with China’s new Foreign Investment Law, presented an extraordinary opportunity for dealmakers, but making this a reality will take time, trust and a good deal of hard work. However, the result is the unlocking of increased prosperity between China and Europe and is a goal worth pursuing.
Asia’s Internet firms are challenging the region’s traditional banks for consumer finances, tapping their massive user networks for business and following a trail blazed in China by tech giants Alibaba and Tencent.The push into banking by companies better known for their messaging apps, cute emojis and online holiday bookings comes as regulators across Asia open up their banking sectors to a new breed of digital players.The shift is in its infancy but contrasts sharply with the banking markets of Europe and North America, where change is slower and such startups tend to be backed by venture capital funds and financial sector incumbents, not tech firms.Asia’s tech entrants see their advantage in the way they can seamlessly integrate banking services with their users’ regular online activities and the efficiency that comes from their technology.“If you want to open a bank account (in Hong Kong) you need to go to a branch, answer questions for an hour, and you still won’t get the account opened without followup calls,” said Wayne Xu, president of ZhongAn International, a unit of Chinese online insurer ZhongAn, setting up a virtual bank. “However, all the information needed at the counter can already be collected on a mobile phone.”Hong Kong’s banking regulator last month issued one of four so-called “virtual banking licenses” to ZhongAn in what could be the biggest shake-up in years in a city dominated by HSBC and Standard Chartered. Last week, the regulator said on it was making progress on four additional applications.In South Korea, authorities have issued two online only bank licenses, one of them to Kakao Bank in 2017, which is operated by the company behind the country’s largest chat app.“The 45 million monthly average users of our messaging app Kakao Talk is a huge plus for us when advertising our bank,” a spokesman for Kakao Bank said. He added the bank uses Kakao’s artificial intelligence technology for its automated customer support systems. The bank had 8.9 million users as of March.Other Asian markets set to approve online-only banks include Taiwan — where a group led by a unit of Japanese messaging app operator Line Corp has applied for a license — and Malaysia, which plans guidelines by the end of the year. Bank of Thailand Governor Veerathai Santiprabhob said the central bank was exploring the issue.“Large technology companies are seeing this as a land-grab opportunity where they can build out new sets of financial services that can be cross-sold to their existing users,” said Jeff Galvin, a Hong Kong-based partner at McKinsey.Digital AsiaDriving the shift in Asia is mobile technology’s deep penetration across all aspects of consumer life.Such trends were forged by Alibaba and Tencent in China where the two upended financial services and drove a revolution in the cashless economy with their digital payment applications.In contrast, US tech giants such as Amazon and Alphabet Inc’s Google have focused their financial industry efforts on providing tech and consulting services to incumbents.Asian consumers are far more willing to bank with tech firms than elsewhere in the world.More than 90 percent of consumers under 35 in China and India would bank with a technology firm, according to Bain research, compared to 75 percent in the United States and just 51 percent in France.The online-only banks in Hong Kong plan to start-off by offering services such as savings accounts, credit cards, personal loans and travel insurance.“What we are seeing in Asia is technology companies moving sideways into finance, inspired by or even threatened by the examples of Alibaba and Tencent,” said James Lloyd, partner and APAC fintech leader at consultancy EY.In Asia, the emergence of tech gains in the banking sector comes at a difficult time for the region’s incumbents who have begun reassessing the vast branch networks that, until recently, were seen as their competitive advantage.The number of bank branches in Hong Kong, Japan, Malaysia, South Korea and Thailand has declined in the last couple of years, dropping by between 1 percent and 7 percent in 2017 from 2015, according to the International Monetary Fund. That compares with growth of as much as 8 percent a decade ago.To be sure, legacy banks in Asia have their own plans to stay relevant in the changing space with some tying up with new rivals.Among the new Hong Kong digital banking licensees is a joint venture between StanChart, Chinese holiday booking giant Ctrip and local telco PCCW.“We think that the ecosystem we can build together will be a great integration of lifestyle into banking,” Mary Huen chief executive of StanChart Hong Kong, and chairman of the new virtual bank, said at a press conference.
China’s fiscal revenue rose 6.2 percent year on year to over 5.36 trillion yuan (US$800 billion) in the first quarter, new data showed yesterday.The central government collected about 2.53 trillion yuan in fiscal revenue during the period, up 5.4 percent year on year, while local governments saw fiscal revenue rise 6.8 percent to around 2.83 trillion yuan, according to statistics from the Ministry of Finance.Tax revenue climbed 5.4 percent to 4.67 trillion yuan, but growth continued to slow, dropping 11.9 percentage points year on year. The slide was attributed to newly revised tax exemption and deduction policies.Revenue from individual income tax plunged 29.7 percent year on year to 323.9 billion yuan.Revenue from stock trading stamp duty dipped 4.2 percent over the same period last year to 39.7 billion yuan, while that from tariffs dropped 4.8 percent.China’s fiscal spending expanded 15 percent year on year to more than 5.86 trillion yuan in Q1, the ministry said.Social security, employment and education took the lion’s share of fiscal spending, while expenditure on transport, energy conservation and environmental protection maintained a fast-growing pace.China will implement an employment-first policy this year, aiming to create more than 11 million new urban jobs, according to the government work report delivered to the annual session of China’s top legislature on March 5.The country will maintain a proactive fiscal policy stance in 2019, with a higher deficit-to-GDP ratio to leave policy space to address potential risks.From April 1, China started to slash value-added taxes in multiple industries, including manufacturing, transportation and construction, which will affect revenue growth.But the reforms will ease the burden on business, stimulate market vitality and strengthen the stability of the macro-economic growth, said the MOF, adding China will meet its annual revenue growth target.In 2018, taxes and fees levied on enterprises and individuals were reduced by around 1.3 trillion yuan as a result of multiple tax-reduction policies.
Swedish telecom giant Ericsson said yesterday that China’s market regulator was investigating the company over licensing issues as countries and regions around the world prepare to roll out the next generation of mobile networks.China’s State Administration of Market Regulation is investigating the firm due to complaints against its intellectual property rights licensing in China, a spokesperson for Ericsson said.The telecom gear maker earns about 7 percent of its revenue in China, according to its 2018 annual report.Twenty investigators dispatched by China’s market regulator visited Ericsson’s Beijing office on Friday, the Wall Street Journal reported earlier.“Ericsson is fully cooperating with the investigation,” a spokesperson for the company said, without making further comments.Ericsson and its US-based competitor Qualcomm own a large portion of patents connected to 3G and 4G mobile networks and devices and have come under fire for their high licensing royalties.Qualcomm in 2015 agreed to pay a 6.1-billion-yuan (US$$1-billion) fine and said it would modify its business practices in China to end an official anti-trust investigation triggered after it was accused by unnamed industry players of abusing its market dominance to charge high prices.“At Ericsson, we license our industry-leading patent portfolio on FRAND (Fair, Reasonable and Non-Discriminatory) terms and conditions and have always been committed to these FRAND principles,” a spokesperson said.
China’s centrally administered state-owned enterprises reported steady profit growth in the first quarter of 2019, official data showed yesterday.The combined profits of central SOEs saw a year-on-year increase of 13.1 percent to 426.5 billion yuan (US$63.6 billion), according to the State-owned Assets Supervision and Administration Commission.In March alone, profits of central SOEs were 188.28 billion yuan, up 10.8 percent from a year earlier. Sectors such as mining and construction outperformed the others.Fixed-asset investments at petroleum and petrochemical companies surged 39.3 percent in the quarter, said SASAC spokesman Peng Huagang, adding that investments in the steel and coal sectors fell.Central SOEs reported combined Q1 revenue of 6.8 trillion yuan, up 6.3 percent from a year earlier.They made 384.02 billion yuan of fixed-asset investment in Q1, up 9.7 percent from a year earlier.The debt-to-asset ratio continued to fall as regulators took measures to contain debt in the sector. At end-March, the average ratio stood at 65.7 percent, down 0.2 percentage points,.Their average ratio of interest-bearing liability to assets stood at 40.2 percent, a fall of 0.3 percentage points from a year earlier.As central authorities have made curbing financial risks an economic priority, SASAC has put the capital structure, financing leverage, investment and risk of central SOEs under greater scrutiny in recent years.The country has set a timetable for SOEs deleveraging as part of its efforts to defuse financial risks.
China’s A-share markets bounced back from early losses yesterday, lifted by strong performances from communications companies and financial institutions.The Shanghai Composite Index jumped 2.39 percent or 75.81 points to close at 3,253.60. The smaller Shenzhen Component Index added 2.33 percent to end at 10,287.64 points. The two bourses opened lower, but recovered thanks to a rally in banking and brokerage-house stocks.The ChiNext Index gained 1.84 percent to finish at 1,697.53 points.Combined turnover came to 791.0 billion yuan (US$117.7 billion), up from 775.7 billion yuan the previous trading day.5G-related companies led the day’s gains, with ZTE Corporation, a Shenzhen-based leader in telecommunications and information technology, surging by the daily maximum 10 percent to end at 33.55 yuan.Yang Hai, a senior strategist at Kaiyuan Securities, was quoted by Caixin.com as saying that countries and regions throughout the world are competing fiercely in 5G, fueling big gains in the sector.The recovery in stocks also came amid signs of resilience in the property market. Home prices in 70 major cities edged higher in March, according to the latest data from the National Bureau of Statistics.
Artificial intelligence and 5G mobile technologies — set to transform the global car market and change our daily lives — were showcased at the Shanghai auto show yesterday.Features at this year’s show, the industry’s biggest marketing event in China of the year, range from AI driver assistance to driverless trucks and buses.In addition to bringing together leading local and international automakers, the show also attracted other big names such as Huawei, China Mobile, Bosch, ZF and local startup Westwell.The media had a sneak preview of the Shanghai International Automobile Industry Exhibition offerings before it opens to professional visitors tomorrow and the public on Saturday.Huawei, attending for the first time, displayed its intelligent driving computing platform with self-developed AI chips and 5G-related infrastructure. It supports a “smooth upgrade” from L2 (vehicles with smart features) to L5 (fully self-driving).Bosch, the world’s leading auto parts vendor, showed off a concept self-driving bus which it says will “shape the future of electrified, connected, automated and personalized mobility.”Bosch’s advanced driver assistance systems saw business in China grow 30 percent in 2018 year on year and the company is looking for Chinese partners to help shape a new ecosystem for its mobility services.Shanghai-based AI startup Westwell displayed its self-driving new-energy truck, which uses AI technologies in visual recognition, environment-detection and extreme precision positioning.The truck, with an AI-featured chip developed by Westwell, is expected to be used in ports and mining operations, including in Belt and Road countries and regions, from later this year. It can be fully charged within two hours. Its Q-Truck is a totally “new AI device” to meet special demands in various areas, said Westwell CEO Tan Limin.German car parts maker ZF made the world debut of its AI driver assistance system, coPILOT.“We’re pursuing strategies that resonate with China’s goal of clean, safe and affordable transportation solutions and we’ll continue to help improve the safety and experience of the daily commute,” said CEO Wolf-Henning Scheider. “China is at the forefront of adopting innovation on a fast and broad scale and we’re confident of seeing a prosperous automotive and mobility market here for many years to come.”Based on its AI platform for semi-autonomous driving and chipmaker NVIDIA’s auto solutions, coPILOT will be ready for volume production from 2021.Scheider expects the Asia Pacific region to contribute 30 percent of global sales in the future through localizing its production and R&D capacity.Last year China accounted for about 17 percent of ZF’s global revenue. Expansion projects for four plants for chassis and transmission components are expected to be completed within 18 months.
Luxury carmakers were upbeat about the Chinese market and were also embracing new industry trends as they showcased their latest technologies and car models at the Shanghai International Automobile Industry Exhibition.The fair opens to professional visitors tomorrow and the public on Saturday.“We expect continued growth with a new product pipeline and the expansion of our dealer network and showrooms which will further improve our share in this key region,” said Aston Martin Executive Vice President and Chief Creative Officer Marek Reichman.Last year, the UK luxury vehicle maker’s sales in China grew 31 percent, compared with a sharp slowdown of growth in the overall auto sales.Its first all-electric production car model, the Lagonda Rapide E, made its worldwide debut yesterday at the Shanghai auto show.“The two biggest growth factors in our industry in the coming decade will be SUVs and electrification,” Reichman said. The limited model is expected go into production in 2022 in Wales. Chief Executive Officer of Rolls-Royce Torsten Muller-Otvos expected China to become the company’s biggest market in the “not too distant” future. China is already the BMW subsidiary’s second-largest market. “China plays a significant role in our global success and is also our youngest market, and it’s set on continuous growth pace,” he said. Catering to consumersLincoln, the luxury automotive brand of Ford Motor Company, will accelerate the introduction of its products according to the needs of Chinese customers and incorporate more Chinese elements into its products. Between 2019 and 2021, Lincoln plans to launch seven new models in China while introducing at least two limited edition models each year, according to Mao Jingbo, president of Lincoln China.“Lincoln aims to fully develop its ‘China’s first, customer first’ strategy and complete the upgrading of its products, customer experience and brand in 2019,” Mao said at the China debut of Lincoln Aviator, the first Lincoln to offer a plug-in hybrid option. “Fully considering the needs of Chinese customers, Lincoln will achieve ‘China speed’ in the highly competitive luxury car segment to brace for a breakthrough,” Mao said.Automobili Lamborghini Chairman and CEO Stefano Domenicali said it is a “delight” to see Lamborghini gain popularity worldwide, especially in China. In 2018, Lamborghini’s global sales increased 51 percent from 3,815 to 5,750 units.
It took one 330-kilometer trip from Chongqing to Chengdu in his Nio ES8, a seven-seater all-electric SUV, for its owner Wang Haichun to be consumed with buyer’s remorse.Despite being billed as capable of going 335 kilometers on a single full charge, the ES8 didn’t get anywhere near that when driving on freeways at speeds above 100 kilometers an hour, he said, adding that after 180 kilometers, there was only 50 kilometers of range left.“We had to recharge the car once and drove with a high level of anxiety throughout, constantly having to keep an eye on the range meter,” the 44-year-old manager of a property firm said. Toward the end of the trip, he shut off the air conditioner and audio system.Nio Inc said in a statement the ES8 can travel more than 200 kilometers when constantly driven at 100 kilometers an hour and that battery swap stations are available for quick recharging. It did not address Nio’s advertising of 335 kilometers on a single full charge.In real world conditions, all-electric cars can sometimes fall far short of advertised ranges, car engineers say. That’s particularly so when driving at length on freeways or hilly terrain and in hot or cold weather.The problem adds to drawbacks which have hindered wider acceptance — EVs have shorter driving ranges than gasoline vehicles, are more expensive and take a long time to recharge.China, Europe and California have set ambitious requirements for automakers to dramatically increase EV sales over the next five to 10 years, but those goals are at risk unless EVs can come close to matching gasoline engine cars in cost and ease of use.In China, some of the industry’s biggest names believe pure battery electric cars will be as cheap as gasoline counterparts by 2025. Those making that prediction include Ouyang Minggao, executive vice president of the EV100 forum.“The turning point is coming. We believe that around 2025, the price of pure electric vehicles will achieve a big breakthrough,” he said.Ouyang cited a reduction in battery costs to US$100 per kilowatt hours from US$150-US$200 and a tightening of emissions rules in China. But others in the EV industry are less optimistic.“Sure, there’s an EV boom but hybrids and plug-in hybrids will be needed as bridging technologies,” said a veteran EV engineer at Honda Motor Co.
China’s leading heavy equipment manufacturers expect to report significant profit growth in the first quarter of 2019, mirroring the country’s improving economic fundamentals.Profit of Sany Heavy Industry Co Ltd is expected to surge by 100 to 120 percent, the company said yesterday.XCMG Construction Machinery Co Ltd forecast its Q1 profit at between 950 million yuan (US$141.6 million) and 1.15 billion yuan, up by 83-121 percent, while Zoomlion Heavy Industry Science and Technology Co Ltd forecast a profit surge of 126 to 179 percent.Companies attributed the robust Q1 performance to the upturn of the construction machinery industry.XCMG expects steady expansion of revenue in Q1 from the same period last year thanks to strong market demand.Sany also said factors including the rising demand from infrastructure construction and equipment replacement contributed to the rapid growth of the construction machinery industry in Q1.Sales for China’s major excavator producers, an indicator of the vitality of an economy, also posted notable growth in Q1.The country’s 25 leading excavator makers sold 74,779 units in the first three months, climbing 24.5 percent from the previous year, data from the China Construction Machinery Association showed.Founder Securities forecast that leading construction machinery enterprises would maintain rapid growth of net profit in 2019 due to continuous demand growth of equipment replacement and export.The growth of China’s construction machinery industry was in line with the upward trend of the country’s infrastructure investment, which grew 4.3 percent year on year in January-February, up 0.5 percentage points from 2018.The country planned to boost infrastructure investment for areas including intercity transportation, logistics and civil and general aviation, investing 800 billion yuan in railway construction and 1.8 trillion yuan in road construction and waterway projects, according to the 2019 government work report.Recent data also showed more signs of an improving economic outlook for the world’s second-largest economy. China’s purchasing managers’ index for the manufacturing sector saw its first acceleration in months in March, indicating expansion of factory activity.Consumer prices rebounded solidly in March, while producer prices picked up for the first time in nine months, easing market fears over deflation.
New home sales remained subdued in Shanghai last week amid a comparative slowdown in supply, the latest weekly survey shows.Excluding government-subsidized affordable housing, sales remained unchanged at about 168,000 square meters during the seven days to Sunday, Centaline Property Consultants Co’s weekly report showed yesterday.“Robust performances registered in outer areas such as the former Nanhui District and western Qingpu District enabled weekly sales to stay above the 150,000-square-meter threshold,” said Lu Wenxi, Centaline’s senior research manager. “The average price, as a result, was dragged down a bit as medium to low-end projects dominated the top 10 list.”The former Nanhui District, part of the Pudong New Area now, recorded sales of 31,000 square meters, a week-on-week surge of 158.3 percent. Qingpu recorded sales of 24,000 square meters, up 26.3 percent, followed by Pudong — excluding Nanhui — which dropped 25 percent to about 18,000 square meters.Citywide, new homes sold for an average 51,642 yuan (US$7,695) per square meter, a week-on-week decrease of 8.7 percent.In the top 10 by transaction area, six projects sold for less than 40,000 yuan per square meter. The remaining four sold for more than 50,000 yuan.A project in Nanhui was the most sought-after development, selling 18,060 square meters, or 205 units, for an average 27,534 yuan per square meter, followed by a project in Fengxian District, which unloaded 9,353 square meters, or 83 apartments, for an average 35,665 yuan per square meter.A total of 114,000 square meters over three projects were released into the market last week, a week-on-week increase of 5.1 percent — but below the weekly average so far this year.Around the country, major property developers saw sales pick up in March as the market in first- and second-tier cities warmed up. A survey by researcher Cric China showed March was markedly better than the previous two months.
Shanghai’s Grade-A office market recorded mixed results in the first quarter, amid rising competition brought by abundant supply, industry data released by international real estate consultancies show.“Leasing demand in the traditional CBDs moderated in the first three months while that in emerging business districts remained strong,” said Anny Zhang, head of markets for JLL China. “Emerging CBDs such as Qiantan and Xuhui Bund have attracted strong interest particularly from health care, TMT (technology, media and telecom) and manufacturing companies seeking cost savings and expansion opportunities.”Grade-A office rents in Pudong CBD fell 1.4 percent quarter on quarter and those in Puxi CBD declined 0.5 percent.A separate report by Savills also found that vacancy rates at Grade-A buildings in core and decentralized areas of Shanghai both headed south during the quarter amid mounting pressure from new supply.Vacancy rates increased 0.1 percentage points to 12.5 percent in core markets while those in decentralized areas added 1.9 percentage points quarter on quarter to 33.9 percent.
New Zealand dairy company Fonterra Co-operative Group is launching a new product in China this month — Anchor fresh milk from its farm in Tangshan in Hebei Province, one of its three farms in China. Anchor fresh milk will be available through major supermarkets and online channels such as an official storefront on Tmall and on-demand delivery platform Daily Fresh.“We’ve seen positive feedback since we started to offer small batches of pasteurized fresh milk to Alibaba’s Freshippo supermarket a year ago,” Chester Cao, vice president of consumer brands for Fonterra China, told Shanghai Daily.Cao said the company’s previous experience in Anchor-branded consumer goods helped it better understand market trends and tap into consumer demand for better nutrition and taste when choosing fresh milk. “Sales of Fonterra’s products, including butter, cheese and powdered milk, have seen more than 50 percent growth each year in the past five years in China,” he said. Anchor pasteurized milk — at 23.90 yuan (US$3.50) for a 900-milliliter package — is roughly on par with its largest local competitor, Bright Dairy’s mid-end brand “Zhi You.”Market researcher Euromonitor expects China to become the world’s largest dairy market by 2022 and sales of dairy products are expected to grow 5.3 percent annually over the next three years.The New Zealand dairy company said last year it aims to triple sales of its Anchor-branded products in China in three years. Fonterra also plans to double its exhibition space at the second China International Import Expo later this year.
The Shanghai International Automobile Industry Exhibition begins on Thursday for professional visitors, with the debut of many new technologies and car models.This year’s event is set to include more than 1,000 exhibitors, including many of the world’s largest car manufacturers, many of whom will be showcasing their latest models as well as innovations in new-energy vehicles and autonomous driving.Major exhibitors include BMW, Nissan, Volkswagen and Audi, as well as domestic automakers such as SAIC Group, FAW, Dongfeng Motor, Changan Automobile, BAIC Motor and GAC Group. Over 140 new vehicle models will premiere at the weeklong event, including four never-before-seen vehicles from BMW.There will also be concept and luxury vehicles from Bentley, Lamborghini and Rolls-Royce.Leading parts firms such as Bosch, Continental and Schaeffler will also display their latest products. Huawei and iFlytek will join the show for the first time this year too, with the former displaying its latest breakthroughs in 5G technology.The theme of this year’s show is “Create a Better Life,” focusing on how cars can improve quality of life. The show will be at the National Exhibition and Convention Center in Qingpu District and cover 360,000 square meters.Despite slowing sales and uncertain macro-economic conditions, China remains one of the world’s most important and dynamic auto markets.It holds great potential for Rolls-Royce, with some owners under the age of 40, Torsten Muller-Otvos, Rolls-Royce’s CEO, told Shanghai Daily yesterday.Rolls-Royce also opened a boutique store in downtown Shanghai last month, the first of its kind in China.Xu Heyi, chairman of BAIC Group, said the boundaries of the auto industry have broadened to merge with sectors such as communication, art and entertainment. This trend has created space for further industry growth.Domestic and international automakers have also seen strengthened design cooperation, making many new models like BAIC’s Arcfox competitive in the global market, Xu said. Last month, Chinese passenger car sales totaled 2.02 million units, down 6.9 percent from a year earlier, but moderating from the 13.7 percent decrease recorded in the first quarter as a whole, according to the China Association of Automobile Manufacturers.Sales fell for the first time in more than two decades last year.CAAM forecast this year that total sales will remain flat at around 28 million.New-energy vehicles, sport-utility vehicles and autonomous driving are expected to be highlights of the show.The technologies behind them will shape the future of the industry and reflect the effort by carmakers to meet changing consumer tastes, analysts say.Carmakers will display a range of NEVs as well as plans for future clean-emission production. Despite the slack performance in the overall market, NEVs remain the bright spot.The electric vehicle market will continue to boom in the second quarter of 2019, despite subsidy cuts, Fitch Ratings said recently. In March, NEV car sales jumped 85.4 percent year on year. In the first quarter, they grew 109.7 percent, according to CAAM.Sport-utility vehicles also remain popular. Autonomous driving and driverless cars, despite growing pains in some overseas markets, are tipped as another highlight of the show.Thursday and Friday are professional days. From Saturday to next Thursday, the event will be open to the public.Nine halls will feature passenger vehicles (1H, 2H, 4.1H, 5.1H, 6.1H, 7.1H, 7.2H, 8.1H, 8.2H); one hall is for commercial vehicles and future mobility (3H); two halls are for parts manufacturers (5.2H, 6.2H). The admission for the public is 50 yuan (US$7.45) on weekdays and 100 yuan on weekends.
China’s A-share markets reversed their gains yesterday, with the three major indexes all retreating into negative territory, despite data showing strong credit growth for March.The Shanghai Composite Index fell 0.34 percent, or 10.84 points, to finish at 3,177.79, after gaining more than 2 percent during morning trading.Sentiment was largely lifted by the better-than-expected credit data released by the central bank on Friday.The Shenzhen Component Index slumped 0.78 percent to end at 10,053.76 points, while the ChiNext Index was down 1.70 percent at 1,666.90 points. The combined turnover of Shanghai and Shenzhen was 775.7 billion yuan (US$115 billion), up from 657.1 billion yuan on Friday.In March, China’s newly added social financing, a broad measure of credit and liquidity in the economy, increased to 2.86 trillion yuan, up 1.28 trillion yuan year on year. The main surprises were a significant pickup in new bank loans and a revival of shadow credit, said Wang Tao, chief economist at UBS Securities.Carmakers led the losses. State-owned Jiangling Motors shed 9.98 percent to 27.95 yuan. Agricultural and communication companies were also big losers.Zhu Bin, a senior strategist at Southwest Securities, forecast the world’s second-largest economy will see a higher economic growth in the first half before slowing in the second, Caixin.com reported. The credit data confirmed a strong real economy, he said. The government introduced a new round of credit-easing in October.
Prosecutors in the German city of Braunschweig said yesterday they were pressing criminal charges against former Volkswagen Chief Executive Martin Winterkorn in connection with the carmaker’s manipulation of diesel emissions testing.Four other executives are being charged, the prosecutor’s office said in a statement, without giving their names.VW was caught using illegal engine control software to cheat US pollution tests in 2015, triggering a global backlash against diesel that has so far cost it 29 billion euros (US$32.8 billion).Prosecutors said Winterkorn was accused of a particularly serious case of fraud, breach of trust and breaching competition laws because he had not acted — despite having a special responsibility to do so as the company’s CEO — after it became clear on May 25, 2014 that diesel engines had been manipulated.He neglected to inform authorities in Europe and the US as well as customers of the illegal software and he also did not prevent the continued installation of such software, the prosecutors said.They added that this had resulted in Volkswagen being slapped with much higher fines in Germany and the United States than would have been the case had he acted. VW said it would not comment because the company was not a party to the proceedings.About a year ago, the US filed criminal charges against Winterkorn, accusing him of conspiring to cover up the cheating. Winterkorn remains in Germany, which does not typically extradite its citizens for prosecution in US courts.
Toyota Motor Corp has agreed to sell electric car technology to Singulato, its first deal with a Chinese electric vehicle startup, allowing the fledgling firm to speed up development of a planned mini EV.In return, Toyota will have preferential rights to purchase green-car credits that Singulato will generate under China’s new quota system for all-electric and plug-in hybrid vehicles.It will also gain a bird’s-eye view into how Chinese EV startups operate and the strategies they pursue in a fast-changing marketplace, said Singulato Chief Executive Shen Haiyin and two sources at the Japanese automaker.Singulato will acquire a license to use the design of Toyota’s eQ — a battery electric microcar. The deal is due to be announced today at the Shanghai auto show, where Singulato will unveil a concept car based on the eQ. Singulato plans to redesign the car, tailoring it to local tastes to come up with a model by early 2021.(Reuters)
SHANGHAI’S two airports handled fewer business jets in 2018 as the industry entered a “steady development stage,” a senior official with Shanghai Airport Authority said yesterday.
A total of 6,366 business jets took off and landed at the Hongqiao and Pudong airports last year, a 4.5 percent decline on the year, Lu Xun said ahead of the 2019 Asian Business Aviation Conference & Exhibition that opens today.
“Though the industry has entered a steady development stage, it still has great potential,” Lu told a press conference ahead of the exhibition yesterday.
“The industrial focus has shifted to quality and the prosperity of the whole industrial chain, from merely the increase of quantity,” he said.
Over 30 of the world’s most advanced business jets and helicopters will be on display at Shanghai Hongqiao International Airport as part of the annual exhibition which runs until Thursday.
Some of the top business aircraft makers and operators, including Airbus, Embraer and Bombardier, are displaying their latest products.
China’s business aviation industry started around 2010 and has gone through the rapid expanding and increasing periods, Lu said.
Business aviation facilities at the two airports were now fully sufficient to meet demand. The Hongqiao business aviation center, for example, is designed to handle 6,000 business jets annually but served a total of 3,850 last year, according to the airport authority.
China has some 230 operating general aviation airports with over 3,000 general aviation aircraft, which include business and private jets as well as those used for agriculture, construction, medical services, disaster relief and other fields. The number has tripled that of 2010, Lu said.
The Chinese mainland is operating the largest business jet fleet in the Asia-Pacific region of 338 jets in 2018, followed by Australia and India, according to Asia Sky Group, which releases business jets reports annually.
However, both the mainland and Hong Kong saw a slowdown in their fleet growth last year, Jeffery Lowe, managing director of the group, said yesterday.
The exhibition, which has been held for eight years, offers potential buyers the chance to experience the jets and a platform for industry leaders to discuss the emerging Chinese business jet market.
As one of the first deals made at the exhibition this year, Bombardier announced that Hong Kong aircraft management company HK Bellawings Jet Ltd firmed up an order for four Global 7500 business jets, the newest jet from the Canadian maker that will be making its debut at the exhibition.
One of the most eye-catching aircraft at the exhibition, it has a range of 7,700 nautical miles (14,000 kilometers) which could allow it to connect the cities of Beijing, Shanghai and Hong Kong to New York, London or Milan non-stop. The jet has a kitchen and a master suite with a permanent bed and shower.
Thousands of participants are expected to take part in the Shanghai exhibition this year, making it the largest business aviation show in Asia, according to Ed Bolen, president and chief executive of the US National Business Aviation Association, which organizes the annual event with Shanghai Airport Authority.
THE Shanghai Auto Show this year highlights the global industry’s race to make electric cars that Chinese drivers want to buy as Beijing winds down subsidies that promoted sales.
The Chinese government is imposing mandatory sales targets for electric cars.
Chinese purchases of pure-electric and hybrid sedans and SUVs soared 60 percent last year to 1.3 million — half the global total — but overall auto sales shrank 4.1 percent to 23.7 million.
Buyers of electrics were lured with subsidies of up to 50,000 yuan (US$7,400) per car, but that support was cut by half in January and ends next year.
“Competition is getting more fierce,” said industry analyst Paul Gong of UBS.
Authorities have been promoting electrics for 15 years in hopes of cleaning Chinese cities and gaining an early lead in a promising industry.
General Motors, Volkswagen, Nissan and other global majors are developing models to suit Chinese tastes. They have money and technology, but local rivals have experience: Brands including BYD Auto and BAIC Group have been selling low-priced electrics for a decade.
At the Shanghai show, which opens to the public on Saturday, automakers plan to display dozens of electrics, from luxury SUVs to micro-compacts priced under US$10,000. They aim to compete with gasoline-powered models on performance, cost and looks.
By the end of next year, “it will be very difficult for a customer to decide against an electric car,” said the CEO of Volkswagen AG, Herbert Diess.
“The cars will offer roominess, space, fast charging,” Diess said during a January visit to Beijing. “They will look exciting.”
Automakers are looking to China, their biggest global market, to drive revenue growth at a time when US and European demand is flat or declining. That gives them an incentive to cooperate with China’s campaign to promote electrics.
This week, General Motors is unveiling the first all-electric model in Buick’s China-only Velite range, which includes a hybrid based on the Chevrolet Volt. VW will display a concept SUV as part of plans to launch 50 electric models by 2025.
Nissan Motor and its Chinese partner will display the Sylphy Zero Emission, an all-electric model designed for China that went on sale in August. BYD Auto will display an all-electric sedan with an advertised range of 400 kilometers on one charge.
Pressure to shift to electrics is “more an opportunity than a threat” to Chinese automakers, said UBS’s Gong.
Low-priced Chinese brands
Latecomers to gasoline-powered vehicles, Chinese brands account for just 10 percent of global sales, mostly in low-price tiers, Gong said. But they account for 50 percent of electric sales worldwide.
“In the EV world, Chinese companies started earlier and reacted faster,” said Gong.
The government has spent billions of dollars on research and incentives to buyers.
Power companies have blanketed China with 730,000 charging stations, a vastly larger network than any other country.
Meanwhile, automakers are struggling to revive sales of traditional SUVs, minivans and sedans that fell last year for the first time in three decades.
A tariff dispute with Washington and weakening economic growth made consumers reluctant to commit to big purchases. That skid worsened this year. First-quarter sales shrank 13.7 percent from a year earlier.
Despite that, people in the industry say Chinese sales could top 30 million vehicles a year by 2025. Ford relaunched its China operation this year after 2018 sales plunged 37 percent. The company blamed an aging product lineup.
Global brands are linking up with Chinese partners with experience at low-cost production.
Ford has an electric venture with Zotye Auto. GM and its Chinese partners plan 10 electric models by next year. Mercedes Benz launched the Denza brand with BYD. VW’s electric joint venture, SOL, started selling an SUV last year.
Under the new system, automakers must earn credits for sales of electrics equal to at least 10 percent of purchases this year and 12 percent in 2020. Automakers that fall short can buy credits from competitors that exceed their targets. Regulators say targets will rise later.
An electric’s sticker price in China still is higher than a gasoline model. But charging and maintenance cost less. Industry analysts say owners who drive at least 16,000 kilometers a year save money in the long run.
China’s biggest SUV brand, Great Wall Motors, has responded to the sale quotas by launching an electric brand, Ola. Its R1 compact, while looks like a toy beside Great Wall’s hulking SUVs, went on sale in December priced as low as 59,800 yuan after the subsidy.
In a move to spur competition, China lifted ownership restrictions on electric automakers last year.
Tesla Ltd responded by announcing plans to build its first factory outside the United States in Shanghai.
Official ambitions clash with the Chinese public’s love of bulky SUVs, seen as the safest option on crowded streets. But sentiments are shifting.
A UBS survey found 71 percent of Chinese buyers are willing to try an electric, up from 58 percent a year ago. The rate for the United States and Europe was below 20 percent. “Customer willingness is always higher in China,” said Gong.
VOLKSWAGEN plans to build a fully electric sports utility vehicle for China from 2021, taking on the Chinese market leader Tesla’s Model X as the German carmaker ramps up production of zero emissions vehicles.
The planned new SUV is the latest move in Volkswagen’s aggressive growth strategy in China, where electric cars are given preferential treatment by authorities.
VW said its ID ROOMZZ, which it presented in Shanghai yesterday, will have three rows of seats and an operating range of up to 450km. The concept car is capable of a “level 4 autonomous driving,” VW said.
VW Chief Executive Herbert Diess said the ID ROOMZ will be the flagship electric car to be launched by Volkswagen in China.
“We plan to produce more than 22 million electric cars in the next 10 years,” Diess said, adding that around half of VW’s engineers were working on products destined for China.
Diess said the ID ROOMZ would eventually be rolled out to other markets.
The world’s largest aircraft took off over the Mojave Desert in California on Saturday, the first flight for the carbon-composite plane built by Stratolaunch Systems Corp, started by late Microsoft co-founder Paul Allen, as the company enters the private space market.The white airplane called Roc, which has a 117-meter wingspan and is powered by six engines on a twin fuselage, took to the air shortly before 7am and stayed aloft for more than two hours before landing safely back at the Mojave Air and Space Port as a crowd of hundreds of people cheered.“What a fantastic first flight,” Stratolaunch CEO Jean Floyd said in a statement posted on the company’s website.“Today’s flight furthers our mission to provide a flexible alternative to ground-launched systems,” Floyd said. “We are incredibly proud of the Stratolaunch team, today’s flight crew, our partners at Northrop Grumman’s Scaled Composites and the Mojave Air and Space Port.”The plane is designed to drop rockets and other space vehicles weighing up to 225 tons at an altitude of 10,670 meters and has been billed by the company as making satellite deployment as “easy as booking an airline flight.”Saturday’s flight, which saw the plane reach a maximum speed of 306 kilometers an hour and altitudes of 5,200 meters, was meant to test its performance and handling qualities, according to Stratolaunch.Allen, who co-founded Microsoft with Bill Gates in 1975, announced in 2011 that he had formed the privately funded Stratolaunch.The company seeks to cash in on higher demand in coming years for vessels that can put satellites in orbit, competing in the United States with other space entrepreneurs and industry stalwarts such as Telsa chief Elon Musk’s SpaceX and United Launch Alliance — a partnership between Boeing and Lockheed Martin.Stratolaunch plans to launch its first rockets from the Roc in 2020 at the earliest.
The 125th China Import and Export Fair, also known as the Canton Fair, China’s largest trade fair, opens today in Guangzhou, capital of southern Guangdong Province.The spring session of the biannual fair will be held in three phases. The export section will have 51 exhibition areas with 59,651 booths booked by 24,800 domestic enterprises. The first phase of the export exhibition from today to Friday will mainly showcase mechanical and electrical equipment, hardware, and building materials. The second phase, from April 23 to 27, will showcase consumer goods and gifts. The third phase from May 1 to 5 will display textiles and clothing, luggage, culture and sports, food, medical supplies and medical health products.The import exhibition will be held in the first and third phases, with 1,000 booths booked by 650 enterprises from 38 countries and regions.The first phase of the import exhibition has 616 booths displaying electronics and home appliances, building materials and hardware and mechanical equipment. There will be 384 booths in the third phase, mainly displaying food and beverage products, household goods, fabrics and home textiles.Xu Bing, a spokesperson for the Canton Fair, said yesterday that the 124th fair received exhibitors from 10 countries and regions. Xu said a chamber of commerce official from Istanbul said the fair had helped many Turkish firms explore the global market.“Design for Trade” will be a highlight this year. About 100 design companies and institutions from 15 countries and regions, including the US, Germany, France, Italy, South Korea and Japan, have registered.
China will further expand the opening-up of its financial sector “in a systemic manner at the institutional level,” the deputy governor of the central bank said in a statement released on Saturday.Chen Yulu said Beijing is working toward treating Chinese and foreign-funded financial institutions “equally in a way that is more transparent and consistent with best international practices.”Chen made the statement at the ministerial meeting of the 39th meeting of the International Monetary and Financial Committee.The committee is the policy-setting body of the International Monetary Fund.“The Chinese government continues to implement the high-level opening-up strategy, through measures such as tariff cuts,” he said.“The market access for the agricultural, manufacturing and service sectors has been relaxed and the negative list for foreign access has been shortened substantially.”In addition to enhancing the two-pillar framework of monetary and macro-prudential policies, Chen said China will accelerate the development of its financial market infrastructures, and the resolution mechanism for distressed financial institutions will be improved.With respect to policies related to the exchange rate of China’s currency, Chen said: “China will continue to improve the exchange rate mechanism and keep the yuan exchange rate in line with fundamentals at an adaptive equilibrium level.”China, Chen said, will continue to improve its business environment, promote opening-up at a high level and across the board, and further expand sectors for opening-up, so as to deepen reform in a comprehensive manner.Highlighting the passage of the Foreign Investment Law at the National People’s Congress last month, the deputy chief of the People’s Bank of China said that subsequently, relevant laws and regulations will be revised in line with the principle of competitive neutrality.“Policies and measures that hamper the growth of private businesses or fail to treat domestic and foreign investors as equals will be overhauled,” he said.Noting that a fair competition review system will be implemented across all levels of government this year, Chen said, such a system will review all business-related policies, rules and measures.“And mechanisms for filing complaints and third-party evaluations will be established to forestall and redress any action that may preclude or constrain competition,” Chen said.
China is willing to deepen its cooperation with the World Bank on lending programs and knowledge sharing, finance minister Liu Kun said at a meeting with World Bank President David Malpass.The meeting was held on the sidelines of the 99th Meeting of the Development Committee launched by the World Bank and the International Monetary Fund on Friday and Saturday.There is great potential for China, the world’s largest developing country and an important partner of the World Bank, to cooperate with the international lender in the future, Liu said, according to a statement released by the Chinese Ministry of Finance.Liu said he hopes other developing countries can learn from China’s experience in successfully alleviating poverty.China expects to work with the World Bank on improving the innovation in lending programs and added value, he addedChina also looks forward to cooperating with the World Bank in such areas as improving the business environment and establishing a high-standard multilateral financing cooperation center, the minister said.Malpass said the World Bank and China share a great responsibility in combating poverty and spurring global development, noting China’s achievements in alleviating poverty.
Shanghai should cultivate local brands and offer more customer-centered, innovative products, an industry conference held by Shanghai Daily heard yesterday.“Heritage and Innovation: Chinese Brands in Global Landscape” attracted industry insiders from many multinational corporations and consultancies.Chen Qiwei, general manager of the Shanghai United Media Group, said adapting to changes and making constant innovations are key drivers for companies’ sustainable growth.As Chinese enterprises increasingly go global, they should upgrade their brands in a comprehensive way to enhance their competitiveness in international markets.From pens to cosmetics to musical instruments, time-honored Shanghai brands that have survived the tumultuous 20th century live on today and never seem to fall out of favor.“Time-honored” is an official title awarded by the Ministry of Commerce to enterprises that existed before 1956, sell products, techniques or services passed down through generations and have distinct cultural characteristics.Hero fountain pens and ink, a brand born in the 1930s, is witness to social and economic growth. Another brand, Warrior shoes (since 1927), China’s first home-grown athletic shoes at an affordable price made with thin, flexible soles and a light canvas body, have tramped through the ages. Other brands include soap maker Bee & Flower, Phoenix bicycle, Baixin stationery, men’s wear Baromon and Wang Bao He hairy crab.Pu Shaohua, chairman of Bright Dairy and Food, said at the conference: “The company has built a strong and reliable brand over the past few decades by pursuing high-quality development and providing fresh dairy products.”To better meet the changing tastes of customers, the Shanghai-based time-honored firm transformed its product innovation model from manufacturer-led to client-centered.It also launched the country’s first high-end U Best fresh milk in 2006 by adopting leading technologies, which was well received by the consumers.“Strategic transformation is essential for the brands to keep taking the lead,” said Zhou Lan, director of the market system construction department of the city’s Commission of Commerce.She said the city’s nearly century-old Warrior is an “excellent example” of brand transformation.With three strategic transformations since 2000, the traditional shoes manufacturer has revived its glory by integrating its brand culture with latest fashion elements and technologies. Warrior shoes have been showcased at the New York Fashion Week and become a fashionable brand for the young generation.Xiao Dan, head of integrated communications at lighting company Signify, shared that the practices for building and promoting a company’s image have evolved from “what we deliver” to a higher value-driven thinking.She said their company now defines itself more as one that “cares about people.”As for Shanghai’s ambition to promote its four brands, namely manufacturing, service, shopping and culture, Guo Min, editor-in-chief of Kantar, a world’s leading research, data and insight firm, said local government should spend more effort on building brands in addition to making high-quality goods.As the birthplace of China’s modern national industry, Shanghai has given birth to China’s first factories for gourmet powder, light bulbs, toothpaste, batteries, towels, cloth dyeing, enamel ware, clock, art paint and as well as the nation’s first pharmaceutical plant.Shanghai is home to 180 of the nation’s total of 1,128 time-honored brands.
Chinese stocks had a major setback yesterday with most sectors falling substantially.The Shanghai Composite Index fell 1.6 percent to close at 3,189.96 points after an intraday low of 3,185.55 points.It was the first time in six trading days that it fell below 3,200 points.The Shenzhen Component Index fell 2.65 percent to 10,158.4 points and the ChiNext lost 2.06 percent to 1,691.1 points.Turnover on the two bourses dropped to 817.3 billion yuan (US$121.67 billion) from Wednesday’s 899 billion yuan.Liquor and pharmaceutical makers — which were among the major gainers in previous trading days — led the day’s decliners.Jiugui Liquor Co plunged 9.3 percent, Wuliangye Yibin Co dived 6.73 percent and Kweichow Moutai Co dropped 2.4 percent, but remained above 900 yuan for the fourth straight day. Pharmaceutical companies fell an average 2.76 percent with Tonghua Golden-Horse Pharmaceutical Industry Co and Zhejiang Tianyu Pharmaceutical Co both losing more than 8 percent.Bucking the downward trend, automakers extended their rally for another day.The sector gained 3.28 percent following a rise of 3.58 percent on Wednesday with several companies, including Dongfeng Motor Corp, Anhui Jianghuai Automobile Co and Tianjin Faw Xiali Automobile Co hitting the 10 percent daily cap.March car sales jumped more than 48 percent month on month to 1.74 million vehicles, indicating the decline in the world’s largest auto market is turning around.Livestock- and poultry-raising firms also stayed in positive territory, gaining 0.62 percent on average, as the official consumer price index for March was released yesterday.The CPI rose 2.3 percent year on year in March.That was an increase from 1.5 percent in February.And the highest since November 2018, the National Bureau of Statistics said yesterday.Prices of pork and poultry rose 5.1 percent and 4 percent, respectively, from the same time a year ago, according to the bureau.
Shanghai has the world’s largest concentration of major global retailers after Dubai, Vice Mayor Xu Kunlin said yesterday.Xu was speaking at the China International Retail Innovation Summit, where more than 100 executives from China and over 20 other countries and regions, including the United States, Italy, France, Germany and Japan, along with other experts and scholars are discussing innovation and development in the retail sector. Xu told the conference Shanghai is working hard to promote the “Shanghai Shopping” brand. Retail sales of consumer goods are over 1 trillion yuan (US$148.83 billion) and 90 percent of the world’s well-known high-end brands have a presence here.In 2018, more than 3,000 international and domestic brands launched new products in Shanghai, and 835 new high-end international stores opened, accounting for about half of the first stores of international brands opened in China.Massimo Volpe, chairman of the Federation of International Retail Associations, said that China has made great achievements in retail innovation, especially mobile payment.Overseas retail companies can learn from China’s success and Chinese companies can also learn from advances overseas, Volpe said.
Despite slower growth in energy demand, China will remain the world’s leading energy consumer until at least 2040, accounting for 22 percent of the global market, British Petroleum’s latest energy outlook shows.Out to 2040, the country’s annual growth in energy demand will slow to an average 1.1 percent from 5.9 percent over the past 22 years, according to the annual report.Globally, energy demand is forecast to increase by around a third by 2040, driven by improvements in living standards, particularly in India, China and across Asia.In addition, China will be the world’s largest source of growth in energy production out to 2040, boosted by rapid growth in renewables and nuclear power.Between 2017 and 2040, energy production in China is set to increase 29 percent, slightly lower than the global average of 32 percent.As the country continues to adjust to a more sustainable pattern of economic growth, China’s share of coal use will decline sharply over the outlook period, falling from 60 percent in 2017 to around 35 percent in 2040.
The number of Americans filing applications for unemployment benefits dropped to a 49-and-a-half-year low last week, pointing to sustained labor market strength that could temper expectations of a sharp slowdown in economic growth.Other data yesterday showed producer prices increased by the most in five months in March amid a surge in the cost of gasoline. But underlying producer prices remained soft, the latest indication of tame inflationary pressures that strengthen the Federal Reserve’s decision to suspend further interest rate increases this year despite tight labor market conditions.Initial claims for state unemployment benefits fell 8,000 to a seasonally adjusted 196,000 for the week ended April 6, the lowest level since early October 1969, the Labor Department said. Claims have now declined for four straight weeks.Economists polled by Reuters had forecast claims would rise to 211,000 in the latest week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 7,000 to 207,000 last week, the lowest level since early December 1969.The labor market is the main pillar of support for the economy, which appears to have lost momentum in the first quarter as the stimulus from a US$1.5 trillion tax cut package fades and a trade war between China and the United States and softening global demand hurt exports.Nonfarm payrolls increased by 196,000 jobs in March, well above the roughly 100,000 needed per month to keep up with growth in the working-age population. The unemployment rate is at 3.8 percent, close to the 3.7 percent Federal Reserve officials project it will be by the end of the year.US stock index futures pared gains slightly after the data while Treasury yields rose. The US dollar gained against a basket of currencies.In a second report yesterday, the Labor Department said its producer price index for final demand rose 0.6 percent in March, the largest increase since last October. The PPI edged up 0.1 percent in February.In the 12 months through March, the PPI rose 2.2 percent after advancing 1.9 percent in the 12 months through February. Economists polled by Reuters had forecast the PPI would climb 0.3 percent in March and increase 1.9 percent on a year-on-year basis.A key gauge of underlying producer price pressures that excludes food, energy and trade services was unchanged last month after ticking up 0.1 percent in February. The so-called core PPI increased 2.0 percent in the 12 months through March. That was the smallest annual increase since August 2017 and followed a 2.3 percent rise in February.Data on Wednesday showed consumer prices rose by the most in 14 months in March, driven by more expensive gasoline.But core inflation remained muted amid a plunge in the cost of apparel.Slowing domestic and global growth are keeping inflation contained. Wage inflation has also been moderate despite a tight labor market.
Uber is seeking to raise about US$10 billion in what would be the largest stock offering of the year, with details coming this week, the Wall Street Journal has reported.The global ride-hailing giant is seeking a valuation close to US$100 billion — an impressive figure but below some earlier estimates amid an ebbing of enthusiasm on growth and profitability, the report said.The Journal said the market debut was expected in May.The IPO comes after a mixed response to the market debut for Lyft, the main US rival of Uber.Lyft shares rose on the first day of trading and then lost ground. On Wednesday, shares were trading down more than 10 percent from the US$72 offering price.The Journal, citing unnamed sources, said Uber recently provided documents showing a potential price range of between US$48 and US$55 a share, implying a valuation of between US$90 billion and US$100 billion. These figures could change ahead of the IPO but would be below the estimated US$120 billion suggested by some investment bankers.
CHINA’S consumer inflation quickened last month, coming in at a five-month high, while factory-gate inflation picked up for the first time in nine months.
The Consumer Price Index, a main gauge of inflation, grew 2.3 percent in March from a year earlier, 0.8 percentage points faster than the previous month, the National Bureau of Statistics said yesterday.
The March figure was the highest since October and rebounded beyond 2 percent for the first time since December.
Pork prices rose in March for the first time after falling for 25 consecutive months, leading to higher food prices and boosting the CPI growth.
Pork prices jumped 5.1 percent year on year, reversing the 4.8 percent decline in February. It led to a 0.12-percentage-point increase in overall CPI growth.
On a month-on-month basis, the pork price moderately went up 1.2 percent nationwide as outbreaks of African swine fever were gradually contained, according to the statistics bureau.
Financial service group Nomura paid particular attention to the pork prices in its analysis.
“Pork prices are set to become a major source of CPI inflation this year as the stock of hog stocks and breeding sows have fallen to historically low levels,” said the Nomura.
Food prices jumped 4.1 percent year on year last month, contributing to a 0.82-percentage-point rise in the overall CPI growth.
The pace of increase was also much faster than the 0.7 percent recorded in February.
The prices of vegetables and fruits surged 16.2 percent and 7.7 percent year on year, respectively.
The sharp increase of vegetable prices can be attributed to low yields in spring and cold rainy weather.
Non-food prices posted an increase of 1.8 percent year on year last month, contributing to a 1.46-percentage-point increase in the overall CPI growth.
On a month-on-month basis, the CPI dipped 0.4 percent in March, compared with the 1 percent growth in February, with food prices down 0.9 percent and non-food prices shedding 0.2 percent.
Prices of eggs, aquatic products and vegetables declined after the Spring Festival by 6 percent, 3.6 percent and 2.6 percent respectively.
Beef, lamb and chicken prices also fell by 1.8 percent, 1.7 percent and 1.6 percent from a month earlier.
Among non-food sectors, with the shrinking number of travelers after the Spring Festival, the prices of air tickets, travel agency charges and hotel accommodation dropped by 15.9 percent, 11.1 percent and 1.5 percent respectively.
Prices for vehicle repair and maintenance, housekeeping services and haircuts fell 5.3 percent, 4.1 percent and 3.9 percent respectively, with workers returning to the cities.
The Producer Price Index, which measures costs of goods at the factory gate, rose 0.4 percent year on year in March, 0.3 percentage points faster than the previous month.
This marked the first acceleration in PPI growth since June, with the market fear over deflation risks largely abated, according to an analysis of the Bank of Communications.
Despite the high base a year earlier, the prices of mining-related products rose 4.2 percent in March, the highest since November. The prices of raw materials also improved from a 1.5 percent drop in February to rise 0.6 percent in March.
The trend is consistent with the jump in the factory output index in the manufacturing Purchasing Managers’ Index, the Australia and New Zealand Banking Group said. Prices of the hot-rolled coil have also breached 4,000 yuan (US$595) per ton as producers responded to rising iron ore prices due to Brazilian supply disruptions, according to the ANZ Group.
“China’s inflation data for March indicate that the supply shocks faced on the consumer and producer fronts have helped to mitigate deflationary risks,” said Raymond Yeung, chief China economist of the ANZ Group.
“Both CPI and PPI are unlikely to retreat in the second quarter, in our view,” Yeung said.
Analysts with the CITIC Securities Co expected the PPI to continue expanding in April on the low-base effect.
Considering the high producer price base last year and China’s reducing value-added tax rates, however, the PPI may contract in May and June of 2019, they said.
CHINA yesterday expressed the hope for smooth progress in negotiations on free trade zone with Japan and South Korea.
The 15th round of negotiations on China-Japan-South Korea Free Trade Zone is being held in Tokyo from Tuesday to today, Foreign Ministry spokesman Lu Kang said yesterday, expecting positive results that will lay a solid foundation for a comprehensive, high-level and mutually beneficial agreement.
Since the seventh China-Japan-South Korea leaders’ meeting in May, cooperation among the three countries has steadily advanced and has shown a good momentum of development, Lu said.
China, Japan and South Korea have firmly stood for free trade and actively promoted regional economic integration. This round of FTZ negotiations shows the common resolve of the three countries to maintain the multilateral trading system and oppose protectionism and unilateralism, he added.
Noting this year marks the 20th anniversary of the China-Japan-South Korea cooperation, Lu said the three countries are facing new development opportunities.
As the chairman of China-Japan-South Korea cooperation in 2019, China is willing to work with Japan and South Korea to successfully hold a series of important meetings and activities including the leaders’ meeting, open a new chapter in cooperation of the three countries at a new historical starting point, and open up a new dimension in East Asian cooperation, said the spokesman.
CHINA’S Ministry of Commerce will push forward the formation of more replicable practices in the country’s free trade zones, a ministry spokesman said yesterday.
“Currently, the ministry has sorted out a new batch of experiences from pilot FTZs, which will be released to the public at a proper time,” spokesman Gao Feng said at a press conference.
Since the first pilot FTZ was established in Shanghai in 2013, China has set up 12 pilot FTZs nationwide, resulting in a total of 153 successful practices that have been replicated in other parts of the country.
Such practices have played a positive role in lightening the corporate burden, stimulating the vitality of market entities, optimizing the business environment and sharing the benefits from reform and opening-up, Gao said.
The ministry is also working with Shanghai on the planning for a new area of the Shanghai FTZ, he added.
THE US stock market has closely followed developments of China-US trade talks, and investors and traders have priced in the fact that the dispute would be cracked step by step, veteran analysts have said.
However, although Wall Street rallies on “each little bit of headway” the two sides make, “we’ve come to grip with the fact that this is not going to be over in one day,” cautioned Matthew Cheslock, a veteran trader at the New York Stock Exchange.
Since last year, US-China trade issues have been a key influencer on the three major US indexes, with investors keeping a close eye on the world’s two largest economies.
“With all the discussions about what is moving the market, the China story ... is one of the most significant things affecting the market over the last year,” said Peter Tuchman, a senior trader at Quattro Securities.
He noted that individual stocks that have big Chinese exposure, such as US industrial manufacturing giant Caterpillar, are the so-called “big market movers,” which respond instantly to news regarding China-US trade talks. For example, US stocks extended gains last week, buoyed by investor optimism thanks to fresh progress made in the ninth round of US-China trade talks in Washington.
The two sides have discussed the agreement text on a series of subjects and achieved new progress, and decided to continue consultations through various effective means.
“Over the last six months, we’ve seen the market go up and down all around the information that we get. How much tariffs are gonna be?” said Tuchman. “How are things going to go forward?”
To many Wall Street observers, market participants are optimistic on the outlook for China-US bilateral talks, but also aware of the obvious uncertainty, which calls for caution.
“I think there’s going to be enough anticipation about people expecting a positive result. That’s why the markets have acted like they will,” said Cheslock, who is with Virtu Financial, a US high-frequency trading firm.
“But it’s not gonna happen in one day,” he added. “We’re gonna get this (in) little bits and pieces. But it’s important that they keep discussing and keep getting this negotiation done.”
Such cautious optimism was echoed by Mark Otto, an experienced trader at US electronic market maker GTS. “The market is telling us that it anticipates a positive outcome from the trade negotiations between China and the US,” he said. “There’s possibility that extended timelines would be needed regarding sensitive areas of discussion.”
Tuchman struck a more cautious tone, saying that the narrative on China-US trade talks have changed many times since October, making it hard to predict what is being etched in stone. “The discussion and the narrative with the White House that we have now are very indecisive,” he said. “So the discussion changes on a day-to-day basis, and the market responds accordingly.”
In a March report titled “The impact of the 2018 trade war on US prices and welfare,” economists from Columbia University, Princeton University and the New York Federal Reserve found that US consumers have borne the brunt. “The full incidence of the tariff falls on domestic consumers, with a reduction in US real income of US$1.4 billion per month by the end of 2018,” the economists said.
US consumer prices increased by the most in more than a year in March, but underlying inflation remained benign against the backdrop of slowing domestic and global economic growth.The Labor Department said yesterday its Consumer Price Index rose 0.4 percent, boosted by increases in the costs of food, gasoline and rents. That was the biggest advance since January 2018 and followed a 0.2 percent gain in February.In the 12 months through March, the CPI increased 1.9 percent. The CPI gained 1.5 percent in February, which was the smallest rise since September 2016. Economists polled by Reuters had forecast the CPI climbing 0.3 percent in March and accelerating 1.8 percent year on year.Inflation has remained muted, with wage growth increasing moderately despite tightening labor market conditions. The tame inflation environment, together with slowing economic activity, support the Federal Reserve’s decision last month to suspend its three-year campaign to raise interest rates.The US central bank dropped projections for any rate hikes this year after increasing borrowing costs four times in 2018.Excluding the volatile food and energy components, the CPI nudged up 0.1 percent, matching February’s gain.In the 12 months through March, the core CPI increased 2.0 percent, the smallest increase since February 2018. The core CPI rose 2.1 percent year on year in February.The Fed, which has a 2 percent inflation target, tracks a different measure, the core personal consumption expenditures price index, for monetary policy.The core PCE index increased 1.8 percent on a year-on-year basis in January after a rising 2.0 percent in December. It hit the Fed’s 2 percent inflation target in March last year for the first time since April 2012.The February and March PCE price data will be released on April 29. The February data was delayed by a 35-day partial shutdown of the federal government that ended on January 25.Energy prices jumped 3.5 percent in March, accounting for about 60 percent of the increase in the CPI last month, after gaining 0.4 percent in February. Gasoline prices surged 6.5 percent after rising 1.5 percent in February.Food prices gained 0.3 percent after accelerating 0.4 percent in February. Food consumed at home increased 0.4 percent. Consumers also paid more for rent. Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3 percent in March after a similar gain in February.Health-care costs rebounded 0.3 percent after slipping 0.2 percent in February. Apparel prices fell 1.9 percent, the biggest drop since January 1949, after two straight monthly gains. There were decreases in the price of used motor vehicles and trucks, airline fares and motor vehicle insurance.
Frenchman Guillaume Faury took over as CEO of European aerospace giant Airbus yesterday, looking to benefit from the current troubles of rival Boeing and limit potential disruption from Brexit and US President Donald Trump’s trade threats.The 51-year-old replaced Tom Enders, who is stepping down after five years leading the France-based group whose 129,000 employees manufacture airliners, helicopters and satellites.Enders oversaw further expansion of the group, but his rein was clouded by a recent decision to scrap the loss-making A380 super-jumbo range of planes as well as multiple probes into suspect payments.The German’s retirement package — worth 37 million euros (US$41 million) including pension and stocks — has sparked controversy in France and a pledge from the government that it will legislate to limit huge corporate payoffs.Faury will inherit a financially sound, highly profitable business with an order book of 7,350 passenger planes, which would be enough to keep factories running for a decade at current production rates.Analysts see Airbus as having an opportunity to profit from the booming airline market, particularly in Asia, and from the global grounding of Boeing’s 737 MAX plane after two recent deadly crashes involving the popular new airliner.“They simply need to use this window of Boeing weakness to hoover up orders in Asia, if they can,” said aerospace analyst Neil Wilson at Markets.com, an online financial trading platform.According to industry body IATA, Asia will account for most of growth in the industry over the next 20 years, with more than half of the new passenger traffic coming from the region.But Faury will also have several tricky issues in his inbox, including handling the fall-out from Britain’s decision to leave the European Union, which threatens to disrupt the company’s long and complicated supply chains.“Brexit could well mean a complete rethink of long-term manufacturing strategy for Airbus and brave decisions may need to be made unless a satisfactory outcome can be agreed by UK and Brussels,” said independent aviation analyst Howard Wheeldon.The US is another source of worry after Trump lashed out again at the EU this week, vowing to impose fresh tariffs over Airbus subsidies.
A NEW market service center for high-tech companies in the Yangtze River Delta region officially started operations yesterday.The center, established in November in the Pudong New Area, is an incubator aimed at helping emerging tech startups in the region go public on a new local science and technology innovation board.Since its establishment, the center has organized talks and seminars to assess science and innovation enterprises in the delta, including their plans to go public.For those qualified to list on the new board, which has simpler requirements than the main exchange, the center offers a range of services related to listing, equity investment, financing, fundraising and risk management.So far, 57 companies have applied to list on the board, which has not set a launch date. The board will be managed by the Shanghai Stock Exchange.Twelve cities in the delta from Jiangsu, Zhejiang and Anhui provinces, as well as a number of legal and accounting firms, have signed agreements to participate in the center.
Chinese stocks closed mixed again yesterday with the three major indexes continuing to correct.The Shanghai Composite Index edged up 0.07 percent to 3,241.93 points.The Shenzhen Component Index slipped 0.01 percent to finish at 10,435.08 points. The ChiNext fell 0.83 percent to 1,726.64 points.Turnover on the Shanghai and Shenzhen bourses rebounded moderately to 899 billion yuan (US$133.76 billion) from Tuesday’s 840 billion yuan.Consumption-related industries including pharmaceuticals, food and beverage and liquor firms were among the day’s major gainers as the government cuts taxes and fees to boost consumer spending.Jiangsu Lianhuan Pharmaceutical Co, Hunan Jiudian Pharmaceutical Co and Chongqing Fuan Pharmaceutical Co were among the stocks that hit the 10 percent daily cap. Luzhou Laojiao and Kweichow Moutai Co jumped 5.23 percent and 4.75 percent — with the latter staying above 900 yuan for the third day.Automakers recorded the strongest performance, gaining 3.58 percent. Everbright Securities says market momentum is expected to remain at the current high level with optimism among investors continuing for some time.
Venezuela’s oil output sank to a new long-term low last month due to US sanctions and blackouts, the country told OPEC, deepening the impact of a global production curb and further tightening supplies.Supply cuts by OPEC and partners led by Russia, plus involuntary reductions in Venezuela and Iran, have helped drive a 32 percent rally in crude prices this year, prompting pressure from US President Donald Trump for the group to ease its market-supporting efforts. In a monthly report released yesterday, the Organization of the Petroleum Exporting Countries said Venezuela told the group that it pumped 960,000 barrels per day in March, a drop of almost 500,000 bpd from February.The figures could add to a debate within the so-called OPEC+ group of producers on whether to maintain oil supply cuts beyond June.A Russian official indicated this week Moscow wanted to pump more, although OPEC has been saying the curbs must remain.OPEC, Russia and other non-member producers are reducing output by 1.2 million bpd for six months from January 1. The producers are due to meet on June 25-26 to decide whether to extend the reduction.One of the key Russian officials to foster the pact with OPEC, Kirill Dmitriev, signalled on Monday that Russia wanted to raise output when it meets OPEC in June because of improving market conditions and falling stockpiles. OPEC+ returned to supply cuts in 2019 out of concern that slowing economic growth and demand would lead to a new supply glut. OPEC’s report lowered its estimate of global growth in demand by 30,000 bpd to 1.21 million bpd, citing a slowdown in developed economies.In a development that will ease OPEC concern about a new supply glut, the report also said oil inventories in developed economies fell in February,.
Volkswagen AG is exploring purchasing a big stake in its Chinese electric vehicle joint venture partner, JAC Motors, and has tapped Goldman Sachs as an adviser on the plan, people with direct knowledge of the matter said.The move by VW, the largest foreign automaker in China, to buy into Anhui Jianghuai Automobile Group (JAC Motors) is the latest by foreign automakers to boost ownership in the world’s biggest car market since China relaxed rules last year.Rival German automaker BMW agreed in October to buy control of its main joint venture in the country for 3.6 billion euros (US$4.05 billion). And Daimler AG also plans to increase its stake in local partner BAIC Motor.The stake purchase shows that JAC would be a key player in VW’s big global bet on EVs and on strong Chinese demand for such vehicles. VW plans to shift a large part of its planned EV production in China to JAC if it ends up getting control of JAC, said one of the sources.Foreigners were previously prevented from controlling any Chinese automaker or joint venture. China last year removed such caps for firms making fully electric and plug-in hybrid vehicles. Limits on commercial vehicle makers ease in 2020 and by 2022 for the wider car market.VW, which has a market capitalization of nearly US$85 billion, does not currently own shares in Shanghai-listed JAC, which has a market value of more than US$1.7 billion, according to Refinitiv data.The German car giant’s plans are at an early stage but it is keen to take a big stake, said three of the people. Two of them said it will seek to buy shares from JAC’s major shareholders, which, Refinitiv data showed, are mainly state-backed firms owning over 40 percent.JAC’s parent, Anhui Jianghuai Automobile Group Holding, holds a 24 percent stake and is fully controlled by the local government.“We are carefully watching what the implications are for our business and for our joint venture partners,” VW said.“In this regard we will explore all possible options together with all stakeholders to secure long-term success in China.”JAC and its parent didn’t respond to requests for comment. Goldman declined to comment. The sources declined to be identified as the matter was confidential.JAC is trading at a price-to-book ratio of 0.93, which means VW would have to pay a premium for shares since JAC’s state shareholders cannot sell shares for less than their book value.The Chinese automaker’s shares jumped and hit the daily 10 percent maximum increase limit yesterday. VW shares were slightly lower in early trading.“The news shows the bargaining power of companies like JAC and BAIC is stronger, and Volkswagen’s and Daimler’s determination to cooperate with Chinese partners in the long-term is also firm,” said Patrick Yuan, a Hong Kong-based analyst at Jefferies.Wolfsburg-based VW delivered 4.21 million cars on Chinese mainland and Hong Kong last year.It has operated in China for decades. Besides JAC, it has joint ventures with state-owned FAW Group and SAIC Motor.
French retailer Carrefour is teaming up with Gome Retail Holdings in a deal that will see the latter open “shops-within-shops” in more than 200 Carrefour hypermarkets in China by the end of July, according to a joint statement.Gome’s offerings in Carrefour stores will include bestselling home appliances, smart devices and other consumer electronics.Thierry Garnier, president of Carrefour Asia, told reporters yesterday that the partnership is expected to enhance its new business and the company will continue to experiment with innovations for the local market.“We will keep an open mindset and will be seeking more collaborators in areas where other players have more capability and expertise while we stay focused on the food and fresh goods categories,” he said. Gome will specialize in big-ticket appliance and consumer electronics, logistics and customer services while Carrefour will add in product promotion and marketing.
Two out of three hotel websites inadvertently leak guests’ booking details and personal data to third-party sites, including advertisers and analytics companies, according to Symantec Corp.The study released yesterday, which looked at more than 1,500 hotel websites in 54 countries and regions that ranged from two-star to five-star properties, comes several months after Marriott International disclosed one of the worst data breaches in history. Marriott was not included in the study.Compromised personal information includes full names, e-mail addresses, credit card details and passport numbers that could be used by cybercriminals who are increasingly interested in the movements of influential business professionals and government employees.“While it’s no secret that advertisers are tracking users’ browsing habits, in this case the information shared could allow these third-party services to log into a reservation, view personal details and even cancel the booking altogether,” said Candid Wueest, the primary researcher on the study.The research showed compromises usually occur when a hotel site sends confirmation e-mails with a link that has direct booking information. The reference code attached to the link could be shared with more than 30 different service providers, including social networks, search engines and advertising and analytics services.Wueest said 25 percent of data privacy officers at the affected hotel sites did not reply within six weeks when notified of the issue, and those who did took an average of 10 days.
Let’s say, an older man suddenly feels dizzy in a Shanghai stadium. His vital signs are automatically reported to a medical organization and, if necessary, the stadium’s management can locate him and ask for an ambulance to be dispatched. While being transported, the patient’s medical data can be accessed and a real-time video activated through next-generation mobile networks. Surgical facilities can be set up, and the patient’s family is involved online in any decision-making.This is the medical care of the future, as envisioned by Shanghai General Hospital and China Mobile, which recently announced a partnership on the new technology.“Patient information transmission and communication betweem ambulance doctor and hospital can be seamlessly conducted on 5G,” said Zheng Xingdong, president of Shanghai General Hospital.China’s first 5G trial was held at the end of last month in Shanghai. It has 1 gigabyte broadband, among the fastest Internet in the world. The next-generation mobile technology offers 20 to 50 times mobile Internet access. Shanghai has accelerated its pace of development and testing of 5G services covering medical, industrial, manufacturing and entertainment applications. According to the hospital and Shanghai Mobile, 5G may be the deciding factor between life and death. The duo has announced plans to establish a 5G technology-based treatment center.The faster connection is “gold time” in emergency medical treatment. For example, a patient’s heart and brain could be forever damaged by more than an 8-minute lapse in treatment of urgent cerebral-cardio vascular diseases like stroke and heart attack.The new technology can greatly improve the efficacy of first aid, in-hospital services and follow-up treatment management. In addition to saving time and providing timely data, 5G also can streamline the use of artificial intelligence and augmented reality technologies in hospitals, the partners said. In a stadium in the Hongkou District last month, Shanghai Vice Mayor Wu Qing made the first 5G video call. The city’s trial is also testing various 5G applications, from industry and sports to those who help government authorities carry out their work.After the trial, the city will roll out 10,000 5G stations in some industrial zones and other trial areas, when China begins issuing 5G licenses. The vastly faster speed it brings is expected to be a dramatic boost for industry and consumers — for everything from health care and manufacturing to smart driving, high-definition streaming and urban management, according to the Shanghai Economic and Informatization Commission. By 2021, Shanghai is forecast to have 30,000 5G stations, with the commission as the local industry regulator.5G brings a totally new meaning for ultra-high-definition video transmission, with a high speed and mobility features. It brings market opportunities to firms like the Shanghai Uhdvision Technology Co, a local startup producing HD video cameras and related software. The company has upgraded technologies and products to make devices that support 5G networks, said Zhao Weishi, general manager of Uhdvision.Shanghai will support 100 5G-related innovation companies such as Uhdvision to boost the development and ecosystem of the new technology, said the commission.Various 5G applications are being demonstrated in Shanghai, covering electronics manufacturing and urban management. Consumers will one day have access to the network with their current SIM card and number. But they will have to buy new 5G phones, which are expected to stimulate the saturated smartphone market in China. The new 5G medical center will connect 40 hospitals in the Yangtze River Delta for long-distance surgery education services, said the local hospital.
Rising consumer credit in China has increased the number of credit cards in circulation and also nudged up the bad loan ratio in the sector. Nationwide, China had an aggregate 686 million cards in use, including credit cards and debit cards. That figure rose nearly 17 percent last year, according to the People’s Bank of China, the nation’s central bank. Statistically, there was one bank card for every two people in China.The Agricultural Bank of China topped the list of newly issued credit cards, with 18 million last year. That ranked it first among the nation’s 13 listed major banks that have so far published their annual reports, said the MaDai Institute, a Shanghai-based wealth management research body. The report covered China’s top six state-owned lenders and seven joint-stock commercial banks. China CITIC Bank, Shanghai Pudong Development Bank and several other institutions reported credit card issuance exceeding 1 million in 2018, the report said.In terms of cumulative numbers, the Big Four lenders dominated the market. Industrial and Commercial Bank of China had 151 million cards issued at the end of 2018, followed by China Construction Bank with 121 million. Bank of China had 110 million cards, and Agricultural Bank 103 million. China Merchants Bank, a pioneer in the credit card business and Ping An Bank, which is betting big on the lucrative segment, said their credit cards in circulation stood at 84.3 million and 51.5 million, respectively. The research firm noted that smaller competitors, such as Shanghai Pudong Development Bank, China Everbright Bank and China CITIC Bank, are catching up fast, with their businesses growing at over 30 percent year on year. In terms of credit-card transactions, Shenzhen-based China Merchants Bank, which specializes in retail banking, came in first, with its credit-card holders charging 379 million yuan (US$56.4 million), followed by Bank of Communications at 307 million yuan. Booming with risksMeanwhile, the overdraft balance of credit cards of both the Industrial and Commercial Bank of China and China Construction Bank exceeded 600 billion yuan. China Merchants Bank and Bank of Communications both exceeded 500 billion yuan, according to the MaDai Institute’s study. For many of the banks, the overdraft balance accounted for more than 30 percent of loans extended to individuals. At two Beijing-based joint-stock banks, China Everbright Bank’s balance accounted for 38 percent of loans, while China Minsheng Bank came in at 32 percent.China Zheshang Bank, which ranked last in terms of card issuance and overdraft balance, recorded a much faster expansion rate than the other banks. The Hangzhou-based lender’s credit-card usage jumped 176 percent last year, while its overdraft balance rose 165 percent. A central bank report said the overall credit extended through bank cards jumped by nearly a quarter last year to 15.4 trillion yuan.However, the booming credit card sector is not without risks. Excessive credit limits and consumers borrowing from multiple sources contributed to a soaring non-performing loan rate.China Minsheng Bank’s credit card bad loan ratio rose to 2.15 percent in 2018, while CITIC Bank’s rose to 1.85 and Pudong Bank’s increased to 1.81 percent.The MaDai Institute said the rising bad loan ratio didn’t just happen overnight. Some joint-stock banks, it noted, have adopted aggressive development strategies in the past two years in an effort to grab a larger share of the market.As risk-control policies loosened, customers with poorer credit records gained access to credit cards. To address the problem, some banks have pared back lines of credit and tightened limits on riskier cardholders. Several established players have slowed their rate of expansion. One of them, the Industrial and Commercial Bank, added only 8 million new credit cards in 2018.The MaDai Institute predicted that China’s credit card market will continue to expand this year, but at a slower pace. To keep credit-card business sustainable, the report advises banks to strengthen use of financial technologies and improve operational efficiency.
Chinese stocks closed mixed yesterday with the benchmark Shanghai Composite Index falling for a second day, but Shenzhen rising.The index dipped 0.16 percent to 3,239.66 points after touching an intraday low of 3,215.70. The Shenzhen Component Index rose 0.82 percent to 10,436.62 points. The ChiNext finished 0.09 percent higher at 1,741.17 points.Turnover for Shanghai and Shenzhen bourses shrank to around 840 billion yuan (US$125 billion) from Monday’s 1.07 trillion yuan.Hotels, catering and telecommunications outperformed all other sectors to lead the day’s gainers on the Shanghai bourse, both gaining 2.2 percent.Xi’an Catering Co jumped 5.67 percent to 6.71 yuan, Shanghai Jin Jiang International Hotels Development Co gained 2.91 percent to close at 29.67 yuan, and Nanjing Panda Electronics Co surged by the daily 10 percent cap to 12.95 yuan. In contrast, chemical product makers, which were among Monday’s biggest winners, fell 2.08 percent.Real estate developers also registered a strong performance with a 1.9 percent overall increase. China Vanke Co, a leading home builder, jumped 6.15 percent to 33.48 yuan and China Fortune Land Development Co surged 8.73 percent to 34.14 yuan. Liquor-maker Kweichow Moutai finished above 900 yuan for a second day.While brokerage firms remain generally upbeat, Minsheng Securities analyst Yang Liu advised investors to look at banks, construction companies, petrochemical firms and automakers.
A DEFIANT Carlos Ghosn accused “backstabbing” former colleagues of conspiring to oust him as Nissan chairman and threatening the Japanese automaker’s future, in a video marking his first public address since his arrest last year.Prosecutors took the highly unusual step of re-arresting Ghosn last Thursday on fresh allegations that he used company funds to enrich himself by US$5 million. The once-feted executive, who had been out on US$9 million bail for 30 days, recorded the video the day before he went back to jail.In the video, shown to reporters by his lawyers in Tokyo, the former Nissan Motor Co chairman said he was the victim of selfish rivals bent on derailing a closer alliance between the automaker and French partner Renault.“This is not about greed or dictatorship, this is about a plot, this is about a conspiracy, this is about a backstabbing,” Ghosn said. “I am innocent of all the charges that have been brought against me,” he said, without explaining.Wearing a dark jacket and a white shirt, Ghosn sat at a desk as he looked into the camera and spoke in a calm voice. His hair appeared grayer and his face thinner than before his arrest in November.The video, and comments by his lawyer Junichiro Hironaka alleging harsh treatment by prosecutors against Ghosn and his wife, Carole, cast Ghosn as the victim of internal rivalries and a Japanese judicial system bent on forcing a confession.The seven-minute clip was, however, edited by his legal team to remove the names of people Ghosn accused of treachery due to legal concerns.The conspiracy, Ghosn said, was born out of fear that he would bring Nissan closer to Renault, also its top shareholder.“There was fear that the next step of the alliance in terms of convergence and in terms of moving toward a merger, would in a certain way threaten some people or eventually threaten the autonomy of Nissan,” he said.Ghosn also took aim at Nissan’s current management, blaming them for three profit warnings and a domestic scandal involving improper vehicle inspections since his departure as CEO in 2017.
The global number of ultra-wealthy people is predicted to increase by 22 percent to nearly 250,000 by 2023, with Asian markets seeing the third-largest growth, according to an annual wealth report released yesterday by global property consultancy Knight Frank.“Despite softening momentum in the region’s economy, growth prospects in Asia remain favorable in the medium term,” said Nicholas Holt, head of research for Asia-Pacific at Knight Frank. “While China’s economy is expected to slow, emerging markets such as India and the Philippines will deliver some of the strongest growth over the coming years.”In particular, India will lead with a 39 percent rise in the number of ultra-high-net-wealth individuals over the next five years. The Philippines is forecast to grow 38 percent and the Chinese mainland 35 percent.Ultra-high-net-worth individuals are those with US$30 million or more in net assets, excluding their main home.While the forecast for long-term wealth creation remains positive, the super-rich in the region seem less optimistic about growing their wealth in 2019 compared with their global counterparts.Factors including the uncertainty around US-China trade tensions, China’s economic slowdown and Brexit are dampening their sentiment for the next 12 months, said the report, citing a survey interviewing 600 private bankers and wealth advisers in the world.
The International Monetary Fund yesterday cut its global economic growth forecasts for 2019 and warned growth could slow further due to trade tensions and a potentially disorderly British exit from the European Union.In its third downgrade since October, the global lender said some major economies, including China and Germany, might need to take short-term action to prop up growth.The global lender said it still expects that a sharp slowdown in Europe and some emerging market economies will give way to a general re-acceleration in the second half of 2019.“However, the possibility of further downward revisions is high, and the balance of risks remains skewed to the downside.”The Fund said in its World Economic Outlook report for the IMF and World Bank Spring Meetings in Washington this week.The global economy will likely grow 3.3 percent this year, its slowest expansion since 2016, the IMF said in a forecast that cut 0.2 percentage point from its January outlook.The projected growth rate for next year was unchanged at 3.6 percent.More than two-thirds of the expected slowdown in 2019 owes to trouble in rich nations.“In this context, avoiding policy missteps that could harm economic activity should be the main priority,” the IMF said.One potential misstep lies in Britain’s indecision over how to leave the European Union. Despite looming deadlines, London hasn’t decided how it will try to shield its economy during the exit process. The IMF’s new forecast assumes an orderly Brexit but the Fund said a chaotic process could shave more than 0.2 percentage points from global growth in 2019.The IMF said the Bank of England should be “cautious” on interest rate policy, an apparent tip to wait before hiking.Europe’s economic growth is already slowing substantially and it accounted for much of the reduction in the global growth forecast.Germany’s outlook suffered from weaker demand for its exports, softer consumer spending and new emissions standards which have depressed car sales.Germany may have to quickly turn to fiscal stimulus measures, the IMF said, also calling on the European Central Bank to keep stimulating the regional economy. The IMF also cut Japan’s growth outlook following a string of natural disasters.The US economy, while seen outperforming other rich nations, also got a downgrade on signs that a fiscal stimulus fueled by tax cuts was producing less activity than previously expected.The IMF said it supported the US Federal Reserve’s decision to pause its rate-hiking cycle, which the global lender said would support the US and world economies this year by easing financial conditions. The IMF raised its forecast for US growth in 2020 by a tenth of a percentage point to 1.9 percent.The Fund said it was slightly boosting its outlook for Chinese growth this year — to 6.3 percent — in part because it had expected an escalation in US-China trade tensions which did not materialize.
Orders for Saudi Aramco’s debut international bond topped US$100 billion yesterday, a record-breaking vote of market confidence for the oil giant which has faced investor concerns about government influence over the company.State-owned Aramco is expected to raise more than US$10 billion from the deal.The bond issue is seen as a gauge of potential investor interest in the Saudi company’s eventual initial public offering.Before the six-part bond deal was marketed on Monday, Saudi Energy Minister Khalid al-Falih said initial indications of interest for the paper were over US$30 billion.Demand appeared to be the largest ever for emerging markets bonds, fund managers said, surpassing orderbook value of more than US$52 billion for Qatar’s US$12 billion deal last year, US$67 billion for Saudi Arabia’s inaugural issue in 2016 and US$69 billion orders for Argentina’s US$16.5 billion trade that year.“Purely on figures, it is a fantastic credit,” said Damien Buchet, CIO of the EM Total Return Strategy, Finisterre Capital.“The thing is, they are part of Saudi Arabia, they are a government arm.“For equity investors this is always going to be an issue, more so than for bond investors.”The Aramco bond has attracted interest from a wide range of investors, as the oil producer’s vast profits would put its debt rating — if unconstrained by its sovereign links — in the same league as independent oil majors such as Exxon Mobil and Shell.But for some investors, Riyadh’s control over the oil giant is an issue as its state ownership means decisions will ultimately be for the benefit of the government rather than investors.“Aramco is more transparent, has stronger credit metrics and is on an improving ESG (environmental, social and governance) trajectory whereas the government is more complex,” said Mohieddine Kronfol, chief investment officer of Global Sukuk and MENA Fixed Income at Franklin Templeton Investments.
The United States wants to put tariffs on US$11.2 billion worth of EU goods — from airplanes to Gouda cheese and olives — to offset what it says are unfair European subsidies for plane maker Airbus.While the size of the tariffs is small compared with the hundreds of billions the US and China are taxing amid their trade tensions, it suggests a breakdown in talks with the European Union over trade at a time when the economy is already slowing sharply.The US and EU have been negotiating since last year about how to avoid tariffs that US President Donald Trump has wanted to impose to reduce a trade deficit with countries like Germany. But experts warn that tariffs lead to higher consumer prices in countries that impose them and can hurt overall economic growth.The US Trade Representative’s office released late Monday a list of EU products it would tax in anticipation of a ruling by the World Trade Organization this summer.The US in 2004 complained to the WTO, which sets the rules for trade and settles disputes, that the EU was providing unfair support to Airbus. The WTO ruled in May last year that the EU had in fact provided some illegal subsidies to Airbus, hurting US manufacturer Boeing.The US expects the WTO will say this northern summer that it can take countermeasures to offset the EU subsidies. It will now start a consultation with industry representatives on the list of EU goods it wants to tax so that it can have a ready list.“The EU has taken advantage of the US on trade for many years. It will soon stop!” Trump tweeted yesterday.The US move, while following international trade rules, appears to reflect broader US frustration at the slow pace of talks on trade with the EU.Trump in June last year imposed tariffs of 25 percent on steel imports and 10 percent on imported aluminum from the EU in a move that seems aimed at helping the US industry but has also raised costs for many businesses that import these products.The EU responded with tariffs on about 2.8 billion euros (US$3.4 billion) of US steel, agricultural and other products, from Harley Davidson bikes to orange juice.The US and the EU have since July been in talks to scale back the tariffs, with Trump holding out the bigger threat of slapping tariffs on European cars — a huge industry in the region — should the negotiations not yield a result. US officials have repeatedly expressed frustration at the slow pace of the talks.The EU responded yesterday to the US’ latest call for new tariffs by noting that it was based on its own estimate, not anything it had been awarded by the WTO. It also said the EU is preparing its own retaliation based on a separate WTO case, in which Boeing was found to have received illegal support from the state of Washington. It did not say how big that retaliation might be.The US attempt to tax Airbus jets comes just as Boeing is facing challenges over the global grounding of its 737 MAX.
Market observers are seeing more upside than expected in China’s economy with more signs of stabilizing in the first quarter and the consumption driver revving up.While official data including trade and inflation of March are yet to be released for this week, market sentiment has already been buoyed by positive indicators that are playing down concerns over uncertainties in the world’s second-largest economy.Snapshots of the January-February period pointed to a pickup in investment, stable consumer spending and optimized industrial structure, and more obvious recovery has been identified in March with steady factory and service sector activities.Consumption, a locomotive of China’s economic growth, is picked by many analysts as one of the bright spots of recovering fundamentals.Swiss global financial services company UBS said China’s consumption may stay more resilient than forecast as tax cuts, credit easing and confidence improving help to offset the not-so-strong headwinds of labor market weakness and property slowdown.“Personal income tax cuts and value-added tax cuts should be positive for consumption,” UBS economist Wang Tao said. “PIT cuts are expected to be over 300 billion yuan (US$44.6 billion) in 2019.”“Some of the VAT cuts should be passed through to consumers as final goods prices are lowered, and this can help encourage more demand,” he said. “Moreover, import tariffs and VAT have been lowered, including that for cross-border-e-commerce businesses, to reduce the price for domestic consumers.”The UBS said the improvement in domestic demand may have underpinned China’s import growth, predicting an improvement in import growth for March despite a high base last year.Investment banking firm CICC also believes there are reasons to become incrementally more optimistic on overall consumption growth in China, especially compared with last year.A marked downturn in retail sales may have spooked some market watchers, but worries for a continuous slowdown could be overblown.“Leading indicators point to a potential stabilization of nominal growth in China, which is supportive to overall discretionary consumption growth,” the CICC said.
The global Purchasing Managers’ Index for the manufacturing sector inched up in March, lifted by robust manufacturing activities in China and the United States, an official report said.The reading came in at 51.7 in March, up 0.2 points from February, according to data released by the China Federation of Logistics & Purchasing.Asia’s manufacturing PMI reversed a six-month downward trend to stand at 50.5, with the data for China rising 1.3 points to 50.5 in March, mainly due to growing orders and production.Meanwhile, the PMI index for America picked up 0.6 points to 54.5, boosted by the continued rally of US manufacturing activities.Australia and Africa both saw their manufacturing activity expand at a slower pace — 51 and 50.7. But the PMI reading for Europe suffered a four-month losing streak and fell below the 50-point boom-bust line to 49.9, extending intensified downward pressure.The global economy will be unlikely to see a rapid decline, partly as major economies are slowing their pace of raising interest rates.
China will lower the tax rates on a range of goods brought or mailed by individuals into the country, including food, medicines, textiles and information technology products, the Customs Tariff Commission of the State Council announced yesterday.From today, the tax on inbound articles included on the No. 1 taxable item list, which includes books, computers, food, furniture and medicines, will be reduced to 13 percent from the previous 15 percent, the commission said in an online statement.Some medicines subject to a 3-percent import value-added tax, including anti-cancer drugs and medicines for rare diseases, will enjoy favorable tax rate. The rate on No. 2 items, including some sporting goods, textiles and electronic appliances, will be cut to 20 percent from 25 percent. The move was aimed at expanding imports and boosting domestic consumption.
Korean Air’s chairman, whose leadership included scandals such as his daughter’s infamous incident of “nut rage,” has died due to illness, the company said yesterday.Cho Yang-ho had been indicted on multiple charges, including embezzlement and tax evasion, and his death came two weeks after shareholders voted to remove the 70-year-old from the company’s board over a series of scandals surrounding his family. Cho’s death will likely force a court to dismiss his criminal case.The company said in a statement that Cho died at a hospital in Los Angeles but did not specify his illness or provide other details. Cho had remained chairman, which is a non-board role, even after shareholders ousted him from the board. He had expressed his intent to continue participating in management.A senior Korean Air executive said Cho had been receiving treatment for an unspecified lung illness since late last year and that his condition “worsened rapidly” following the shareholder vote, apparently because of shock and stress. The executive didn’t want to be named, citing office rules.Korean Air’s corporate flag and the South Korean flag were flown half-staff at the company’s headquarters in downtown Seoul.Cho’s eldest daughter, Cho Hyun-ah, formerly the head of the airline’s cabin service, received worldwide notoriety in 2014 after she ordered a Korean Air flight to return to New York because she was angry that the crew served her macadamia nuts in a bag instead of on a plate.
Shanghai’s consumers and investors are increasingly confident about the city’s economy, buoyed by authorities’ focus on development and cuts in taxes and fees, a new survey shows.The Index of Consumer Confidence in Shanghai grew 4.8 points from the fourth quarter of 2018 to 124.5 points in the January-March period this year, according to the survey released yesterday by the Shanghai University of Finance and Economics. That was up 6.3 points from a year earlier.The Index of Investor Confidence bounced back strongly, reversing five quarters of falls.It grew 11.89 points from the fourth quarter to 113.12 points for the first quarter of this year. But it remained flat on a yearly basis. An index reading above 100 indicates optimism, while one below 100 points to pessimism.The increasing consumer confidence in Shanghai’s economy was attributed to Shanghai’s Two Sessions held in January 2019 — the second meeting of the 13th Chinese People’s Political Consultative Conference Shanghai Committee and the second session of the 15th Shanghai People’s Congress — during which the city’s authorities focused on promoting the steady development of the economy, said Xu Guoxiang, director of the university’s Applied Statistics Research Center.The government also began cutting taxes and fees from the start of this year, reducing the burden on companies and putting more money into consumers’ pockets, boosting consumer expectations on income and higher purchase intentions, Xu said.A capital market rally also lifted consumer confidence.
New home sales fell in Shanghai during the first week of April, partly due to the three-day Qingming holiday, the latest market figures show.The area of new residential properties sales, excluding government-subsidized affordable housing, fell 32.6 percent to around 168,000 square meters during the seven days to Sunday, Shanghai Centaline Property Consultants Co said in their latest weekly analysis.“Last week’s withdrawal was unsurprising as sales figures usually jump at the month-end as developers gear up to boost performances, while the Qingming break also left some buyers on the sideline,” said Lu Wenxi, Centaline’s senior research manager.“We expect the momentum to continue to pick up over the next couple of weeks with outlying districts remaining popular among buyers.”The Pudong New Area and Fengxian and Qingpu districts registered robust sales last week, selling about 24,000 square meters, 22,000 square meters and 17,000 square meters of new homes. Xuhui District registered more than 10,000 square meters of new houses, a figure considered quite high for a downtown area.Citywide, new homes sold for an average of 56,554 yuan (US$8,412) per square meter, representing a week-on-week increase of 2 percent.In the top 10 in terms of transaction area, three projects cost between 80,000 yuan and 100,000 yuan per square meter. Six commanded less than 60,000 yuan per square meter, including one asking for less than 21,000 yuan per square meter.A COFCO project in Fengxian emerged as the most sought-after development after selling 12,047 square meters, or 126 units, of new homes for an average price of 35,067 yuan per square meter.It was followed by a luxury residential project in Xuhui, which unloaded 7,138 square meters, or 21 units, for an average of 94,846 yuan per square meter.A total of 108,000 square meters of new housing hit the market last week, representing a week-over-week dive of 39.5 percent, according to the Centaline data.Over the Qingming holiday, which began last Friday, sales totaled around 52,000 square meters, a considerable increase from the roughly 20,000 square meters sold in Shanghai during the same period last year.
Chinese stocks retreated yesterday as the benchmark Shanghai Composite Index snapped a five-day winning streak.The Shanghai index shed 0.05 percent to close at 3,244.81 points after an intraday low of 3,210.52 points, and the smaller Shenzhen Component Index fell 0.61 percent to 10,351.87 points. The ChiNext, China’s Nasdaq-style growth enterprises board, fell 2.12 percent to 1,739.66 points.Steelmakers and chemical product makers were among the day’s major winners, gaining 4.64 percent and 3.38 percent. Companies hitting the 10 percent daily cap included Liuzhou Iron and Steel Co, Hunan Valin Steel Co, Danhua Technology and Anhui Liuguo Chemical Co.Kweichow Moutai Co closed above 900 yuan (US$134) for the first time following the release of better-than-expected first-quarter results. The liquor company said in a filing to the Shanghai Stock Exchange on Friday that profit attributable to shareholders jumped about 30 percent year on year in the first three months. Its shares rose 4.07 percent to close at a record 900.2 yuan after hitting an intraday high of 908.
CHINA has unveiled a guideline to facilitate the sound development of small and medium-sized enterprises.
As a major impetus for economic and social development, SMEs make contributions to increasing employment, improving people’s livelihood, and promoting entrepreneurship and innovation.
Boeing has announced it would cut the production schedule of its 737 aircraft line following the two recent crashes that have seen the 737 MAX grounded worldwide.The aerospace giant plans to trim production to 42 planes per month, down from 52, starting from mid-April.Boeing also announced it was establishing an advisory panel to review its company-wide policies for designing and developing planes.The Federal Aviation Administration earlier last week said more work was needed before the aerospace giant could even submit a proposed fix to an issue that is believed to be a factor in the disasters. Chief Executive Dennis Muilenburg described the production cut as temporary.And it said it would not affect current employment levels for the 737 and related programs.“We are coordinating closely with our customers as we work through plans to mitigate the impact of this adjustment,” Muilenburg said in a statement.“We will also work directly with our suppliers on their production plans to minimize operational disruption and financial impact of the production rate change.”Boeing has continued to manufacture 737s since the March 10 Ethiopian Airlines crash killed 157 people, the second deadly crash in five months after an October 2018 Lion Air crash killed 189 people in Indonesia. But, Boeing has been unable to make deliveries of the planes to customers, a key stoppage that will dent revenues. Boeing is scheduled to report first-quarter results on April 24.On Thursday, an initial report by the Ethiopia Transport Ministry found the crew of the doomed plane repeatedly followed procedures recommended by Boeing, confirming concerns about the flight control system on the plane, especially its anti-stall system suspected of being a factor in the crashes.Boeing said the new advisory panel will be led by retired US Navy Admiral Edmund Giambastiani, former vice chairman of the US Joint Chiefs of Staff.
The wife of former Nissan boss Carlos Ghosn has left Japan and flown to Paris to appeal to the French government to do more to help him.Japanese prosecutors arrested Ghosn for a fourth time on Thursday on suspicion he had tried to enrich himself at the automaker’s expense, in another dramatic twist that his lawyers said was an attempt to muzzle him.“I think the French government should do more for him. I don’t think he’s had enough support and he’s calling for assistance. As a French citizen, it should be a right,” Carole Ghosn told the Financial Times in an interview before boarding a flight out of Japan.Carlos Ghosn, who holds French, Lebanese and Brazilian citizenship, has denied charges against him and also called on the French government for help.France, which holds a 15 percent stake in Nissan’s alliance partner Renault, said it was monitoring the situation.“We fully exercise consular protection. The French ambassador is in regular contact,” an official from French President Emmanuel Macron’s office said yesterday.“The wife of Carlos Ghosn has been received by the (Elysee) Secretary General during his (Ghosn) previous incarceration.”A different personCarole Ghosn said her husband’s previous 108-day imprisonment had left him “a different person” and that normal life under bail conditions had been impossible.Tokyo prosecutors, Ghosn’s lawyer and his spokesperson were not immediately available for comment.Public broadcaster NHK said yesterday that prosecutors suspected Ghosn siphoned off payments through a company where his wife is an executive to purchase a yacht and a boat.The prosecutors asked her to meet them for voluntary questioning as an unsworn witness, but the request was turned down, which prompted them to ask judges to question her on their behalf, the broadcaster said.Such a request gives judges the power to question on a mandatory basis witnesses who refuse to testify, according to NHK.Ghosn’s lead lawyer, Junichiro Hironaka, said on Thursday that prosecutors confiscated Ghosn’s mobile phone, documents, notebooks and diaries, along with his wife’s passport and mobile phone.The FT said prosecutors had confiscated his wife’s Lebanese passport in a dawn raid on their apartment in central Tokyo on Thursday morning, but did not discover her US passport.Under Japanese law, prosecutors will be able to hold Ghosn for up to 22 days without charging him. The fresh arrest opens up the possibility he will be questioned again without his lawyer, as is the norm in Japan.
Chen Jiuxiao puts on virtual reality goggles and is immediately transported to a snow-covered ski slope, down which she slaloms without ever leaving Shanghai.“I felt weightless skiing down the mountain,” Chen, 25, gushed after re-emerging in the material world. “The scenery around me was so authentic.”Chen, a hospitality worker, said she ventured into one of Shanghai’s VR arcades due to word of mouth from her tech-savvy friends.China had an estimated 3,000 VR arcades in 2016, and the market was forecast to grow 13-fold between then and 2021 to about 5.25 billion yuan (US$782 million), according to a joint report by iResearch Consulting Group and Greenlight Insights.Add in the profits to be made from headsets, equipment, games and other products, and it’s little wonder that augmented reality and virtual reality industries are excited about China. “Chinese growth in the next five years could see it dominate AR/VR long-term — and not by a small margin,” Silicon Valley consultancy Digi-Capital said in a report last year.“China has the potential to take more than US$1 of every US$5 spent” in the industry globally by 2022.One key factor is China’s government. Tens of millions of Chinese have become obsessive players of mobile video games, causing concern that China was raising a generation of myopic youngsters addicted to battle games.Authorities imposed curbs last year on the number of new game releases and playing time for youths, rattling the industry and shaving billions off the market value of big players including gaming giant Tencent.But the government is pushing hard for China to become a world leader in next-generation technologies including artificial intelligence and autonomous vehicles. VR has been lumped into that favored class, benefitting from a slew of preferential policies.Chen Wei, manager of Shanghai VR arcade Machouse, said VR was likely to avoid the fate of mobile video games in China.He cites the relatively high cost of arcade play up to 70 yuan or more for a 15-minute game — and of setting up home systems.“It’s hard for minors to get addicted,” he said.The nascent VR games industry suffers from a shortage of high-quality games, however. At Shanghai’s VR+ Amusement Park, a new game lands only once every three months, officials there said.Firms such as Tencent remain hesitant to dive into the arcade scene until the sector reaches critical mass, analysts say.But the company, along with fellow Chinese giants Alibaba and Baidu, is investing in virtual online shopping and VR entertainment, all of which could trickle down into gaming.Already several towns and cities in China have declared themselves incubator zones that are integrating VR into research, manufacturing, education and other spheres, luring in capital.Seekers VR, based in the city of Wenzhou in Zhejiang Province with a franchised chain of 200 arcades in more than 70 cities across China, is working with the Wenzhou government to establish a college focused on educating students about VR and using the technology in lessons.“There is no dominant competitor in the VR industry since it is so immature, and we will bring more and more opportunities,” said Seekers VR’s CEO Belle Chen.The wide-scale adoption in China of ultra-fast 5G networks is expected to further boost VR development, and foster growth in areas such as education and training, said the Shanghai arcade Machouse’s manager Chen Wei.“There is no better way to learn skills, and at a lower cost, than VR. Even though VR is still educating users about what it is, it could explode someday,” he said.
China’s foreign exchange reserves rose for a fifth straight month in March, with the increase exceeding expectations, as growing optimism about the prospects for a US-China trade deal offset concerns over slowing economic growth.Chinese reserves, the world’s largest, rose by nearly US$9 billion in March to US$3.099 trillion, its highest since August last year, central bank data showed yesterday.Economists polled by Reuters had expected reserves in the world’s second-largest economy would rise US$5 billion to US$3.095 trillion.“The US dollar index strengthened slightly in March due to China-US trade talks, the revised policy outlooks of central banks in Europe and America as well as uncertainty over Brexit,” China’s forex regulator said after the data release.“China’s forex reserves expanded marginally.”The State Administration of Foreign Exchange added that with the economy expected to maintain reasonable growth and improved flexibility in the yuan exchange rate, the country’s forex reserves will remain stable.The yuan fell 5.3 percent against the dollar last year as trade relations with the United States deteriorated and the Chinese economy slowed. But it has rebounded over 2 percent so far in 2019 on hopes Washington and Beijing will reach an agreement to end their trade tension.In March, the yuan fell 0.3 percent against the dollar due to the strength of the greenback. The dollar was up 1 percent against a basket of major currencies.US and Chinese negotiators wrapped up their latest round of trade talks on Friday and were scheduled to resume discussions this week to try to secure a pact that would end a tit-for-tat tariff battle that has roiled global markets.But the outlook for the dollar is expected to remain soft after the Federal Reserve last month abandoned projections for further interest rate hikes this year on signs of an economic slowdown in the United States.Assuming continued dollar weakness and progress in trade talks, the yuan will likely hold on to its recent gains and appreciate modestly over the coming year, according to analysts in a new Reuters poll.US President Donald Trump said on Thursday a trade deal could be announced in the next four weeks.But the US trade office said on Saturday that significant work remains to be done.The value of China’s gold reserves fell slightly to US$78.525 billion from US$79.498 billion at the end of February.For much of last year, global investors worried about the risk of capital flight from China as the economy cooled.More recently, with the dollar on the backfoot, attention has turned to how much upward pressure Chinese policy-makers will be comfortable with, as foreign inflows into the country’s financial markets look set to boost the currency.Chinese stocks have rallied more than 20 percent this year on trade deal hopes, while some Chinese bonds were added on April 1 to the Bloomberg Barclays Global Aggregate Index, one of the most widely tracked fixed income benchmarks.
More than six months after the United States, Mexico and Canada agreed a new deal to govern more than US$1 trillion in regional trade, the chances of the countries ratifying the pact this year are receding.The three countries struck the United States-Mexico-Canada agreement on September 30, ending a year of difficult negotiations after US President Donald Trump demanded the preceding trade pact be renegotiated or scrapped.But the deal has not ended trade tensions in North America. If ratification is delayed much longer, it could become hostage to electoral politics.The United States has its next presidential contest in 2020, and Canada holds a federal election in October.The delay means businesses are still uncertain about the framework that will govern future investments in the region.“The USMCA is in trouble,” said Andres Rozental, a former Mexican deputy foreign minister for North America.Although he believed the deal would ultimately be approved, Rozental said opposition from US Democrats and unions to labor provisions in the deal, as well as bickering over tariffs, made its passage in the next few months highly unlikely.Canada’s Parliament must also ratify the treaty and officials say the timetable is very tight. Current legislators only have a few weeks work left before the start of the summer recess in June, and members of the new Parliament would have little chance to address ratification until 2020.