China’s crude oil futures contracts have been widely considered a success, yet the market still has a long way to go to catch up with mature international crude benchmarks, say analysts. The trading volume of the yuan-denominated crude oil futures contracts at the Shanghai International Energy Exchange hit 65,000 lots per day and 3.5 million lots in total as of June 8, with daily transactions reaching 30 billion yuan (US$4.7 billion). The yuan-denominated crude oil futures contracts were launched in March this year, the first of its kind that opens to overseas investors, setting a crude oil pricing benchmark that insiders believe better reflects the supply and demand in China and Asia.
China Securities Regulatory Commission, China Banking Insurance Regulatory Commission and National Association of Financial Market Institutional Investors will conduct a strict investigation and supervision exercise starting from June 25 over the securities rating industry, according to Chinese media. The action aims to improve the quality and efficiency of the rating agencies.
The Chinese regulator has given state-owned banks additional loan quotas aimed towards the nonfinancial sector. The new quotas will be implemented by the end of this month, allocating more money to ease the funding crunch due to the relatively tight monetary environment, according to Chinese media. According to data from the People’s Bank of China, Chinese lenders disbursed 1.15 trillion yuan (US$180 billion) of loans in May.
The launch of Bond Connect has led RMB internationalization to a new phase, where international financial institutions can begin to use RMB to manage their balance sheet, according to Charles Li, Chief Executive at Hong Kong Exchanges and Clearing Limited (HKEX), speaking at HKEX’s 5th Annual RMB Fixed Income and Currency Conference. He says that cross-border trading in RMB through Stock Connect has been a key catalyst to increase the use of RMB as an investment currency.
In order to deepen the financial reform and further open up the Chinese market, the State Administration of Foreign Exchange (SAFE) and People’s Bank of China (PBoC) issued new regulations on the Qualified Foreign Institutional Investors (QFII) and Renminbi Qualified Foreign Institutional Investors (RQFII) programs. The regulation cancels several restrictions on foreign investors under the two programs including the lockup period (one year) of principle investment and the 20% ceiling on outward remittances of capital. Foreign exchange hedging is also allowed under the two programs, according to the new regulation.
The National Development and Reform Commission (NDRC) and China Construction Bank (CCB) will form a cooperation mechanism to support the development of the emerging industries. The two parties will set up a national fund in this context aiming to raise 300 billion yuan (US$ 47 billion). The fund will be invested in companies in sectors including IT, new material, biology, new energy automotive and environment protection.
China Securities Regulatory Commission (CSRC) has revealed on its website that Chinese technology giant, Xiaomi, has submitted its application of listing under the newly opened Chinese Depositary Receipts (CDR) structure, a channel for overseas-listed Chinese companies to list on the A-share market. As Xiaomi has already applied to list in Hong Kong, the company will possibly be the first one to listed under both H-share and the CDR structure.
China Securities Regulatory Commission (CSRC) has issued regulations on Chinese Depositary Receipts (CDRs), a channel for overseas-listed Chinese companies to list on the A-share market. Shenzhen Stock Exchange will roll out detailed listing rules of CDR structure. CSRC will strictly screen the CDR applications, according to Li Chao, the vice chairman of CSRC, noting that the regulator will support the innovative enterprises either with a sophisticated track of record in operation or with core technology and clear prospects. A venture capital investment fund will also be set up to support qualified enterprises.
China will set up a special-purpose loan under the Shanghai Cooperation Organization (SCO) Interbank Association, according to Chinese President Xi speaking at the 2018 SCO Summit. The loan is an equivalent loan worth 30 billion yuan (US$4.68 billion), which is similar to a fund, according to Chinese analysts. The loan will be used to support the infrastructure and industrial construction of the members of the SCO.
China and Russia have signed an agreement to set up a new investment to support the two countries’ financial and industrial projects. With an initial asset under management (AUM) of 1.5 billion yuan (US$234 million), the fund aims to manage 5 billion yuan.
The supervision on Chinese internet finance sector has appeared to be successful and the ICO business has been reduced by 57%, according to PBoC, noting that most of the onshore bitcoin trading platforms are closed. This will help curb the possible risk in this industry, says the regulator. China will also take dedicate measures to regulate the bitcoin, according to PBoC.
The Chinese regulator will include all the loans overdue for more than 90 days as non-performing loans (NPL), according to a source speaking to Securities Times. There are currently some loans overdue for more than 90 days which have not be counted as NPL in some of the Chinese banks. In this context, Chinese regulator has required the state-owned banks and joint-stock commercial banks under the direct supervision of China Banking Insurance Regulatory Commission (CBIRC) to include all these kind of loans as NPL by end June 30. Banks under the supervision of local regulatory bodies are required to do so by next year.
China has started a pilot program of tax-deferred commercial pension products, with China Pacific Life Insurance rolling out the first product under this category. Last month, China’s Banking Insurance Regulatory Commission (CBIRC) has issued draft regulations on this kind of pension products, setting the thresholds for the insurance companies planning to launch such products regarding registered asset, solvency, industry track record and staffing. China Life Insurance, Taikang Life Insurance and PingAn Insurance will also launch this kind of product soon.
China Securities Regulatory Commission (CSRC) has released issuance and trading regulations on the Chinese Depositary Receipts (CDRs). Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. The application to list under the CDR structure is open for applications starting today. The regulator also starting to recognize the variable interest entities (VIE) structure which was not allowed in the A-share market.
The five qualified unicorn companies to list under the CDR structure, namely Xiaomi, Baidu, Alibaba, JD.com and NetEase, are expected to issue 136 billion yuan to 220 billion yuan of CDRs, according to a CSC Financial report. Xiaomi is probably the first to issue the CDRs, says the report.
China and Kyrgyzstan agreed to establish a comprehensive strategic partnership following recent talks between Chinese President Xi Jinping and visiting Kyrgyz President Sooronbay Jeenbekov in Beijing. Noting that Kyrgyzstan was one of the first countries to support and participate into the Belt and Road Initiative and related construction, Xi said China would like to make joint efforts with Kyrgyzstan to open minds and explore potentials to lift bilateral cooperation to a new level.
PICC Group, one of the world’s biggest insurance groups, has gotten the approval from regulators to list in China’s A-share market. It has been six years since PICC Group listed in Hong Kong. With its return to the A-share market, more insurance companies are expected to follow PICC Group’s move.
Listed companies in China foresee higher profits in 2018 benefiting from market growth. More than 1,100 companies released their interim result forecasts as of June 5, 769 of those companies expect higher profits; 153 of those companies forecast their profits will double in the first half of this year. This is attributed to the expansion of their main businesses, economic recovery and restructuring of the industry.
Chinese companies are expected to invest up to US$10 billion in Peru in sectors including energy and mines, telecommunications, construction and financing over the next three years, according to Jia Guide, China’s ambassador to Peru. Last week, China’s state-owned Aluminum Corp of China started work on a US$1.3 billion expansion of its Toromocho copper mine in central Peru. China COSCO Shipping Corp plans to build and operate a US$2 billion port on Peru’s Pacific coast.
China Banking and Insurance Regulatory Commission (CBIRC) has issued a draft regulation on the real-name registration system for the country’s insurance company. Each policyholder will have only one insurance account registered under the person’s real name. The new regulation will enhance the protection element of insurance products, improve the regulation on the insurance industry, and make the industry serving the real economy, according to Chinese media.
As of May 30, 2018 a total of 287 overseas institutions have received quotas amounting to US$99.46 billion under China’s Qualified Foreign Institutional Investors (QFII) program to move money into the country’s capital account, according to data from the State Administration of Foreign Exchange. The quota in the RMB Qualified Foreign Institutional Investors (RQFII) program was around 616 billion yuan (US$96 billion). First introduced in 2003 and 2011 respectively, the QFII and RQFII programs are currently open to countries and regions including Hong Kong, UK, Singapore, France, South Korea, Germany, Qatar, Canada, Australia and Luxembourg.
The Haikou Jiangdong New District of China (Hainan) Pilot Free Trade Zone, was established on June 3, 2018 to promote the development of the free trade zone (FTZ) of Hainan Island. China has decided to turn the whole of Hainan Island into an FTZ gradually, making it the largest FTZ in the country. The New District covers 298 square kilometers on the east coast of Haikou, the provincial capital, including a national wetland nature reserve and areas for industrial and urban purposes.
Chinese railway construction bonds, or the railway bonds, have come back to the market after years of absence, according to a newly issued notice by the Shanghai and Shenzhen Stock Exchange. The first tranche of a railway bond which worth 20 billion yuan will be issued in Shenzhen in June. The bonds are open to public investors and qualified investors.
Zhu Harbin, chief china economist and head of China equity strategy at J.P. Morgan thinks the inflow into A-share market is limited in the short run. “China is not a perfect market yet, especially in terms of the percentage of suspended stocks, the tax treatment, the CNY and CNH settlement, and the number of public holidays,” says Zhu, noting that more than 10% of the trading days are closed for Stock Connect, as it is only available when both mainland China and Hong Kong markets are opened. In addition, mainland China’s trading hours are fewer than in Hong Kong. Charles Li, Hong Kong Exchanges and Clearing (HKEX) chief executive, sees little chance to solve the issues over the trading days, but interested parties are discussing this.
In response to the upcoming MSCI inclusion, J.P. Morgan Securities seeks to increase its headcount in A-share equity research by 50%, according to Karen Li, head of China equity research at J.P. Morgan Securities, noting that the increase is mainly about senior hires, who will be looking into sectors including industrials, consumer, IT and financials.
After the MSCI inclusion, Industrials, healthcare, real estate, consumer discretionary, materials, diversified financials. consumer staples and utilities will increase in weightings. IT, banks, telecom, energy and insurance will decline. The weighing of the existing ten H-share banks will decrease from 14.8% to 13.8%, according to Haibin Zhu, head of China equity strategy at J.P. Morgan Securities.
China’s Banking Insurance Regulatory Commission (CBIRC) has released draft regulations on foreign-invested insurance companies in China. The foreign sharing holdings in a joint venture insurance company cannot exceed 51%. A foreign-funded insurance company should at least have one major shareholder with normal operation in the insurance business. In addition, the major shareholder of a foreign-funded insurance company should not transfer its holdings within five years after the acquisition of the shares.
In addition to the financial and automotive sectors, China will loosen the restriction on foreign investor participation in energy, infrastructure, transportation, and trading sectors. The Chinese regulator will reveal the detailed opening up plan in the new negative list of foreign investors, which will be implemented by June 30. The negative list includes areas that are not open to foreign investors.
BYD announced that it would inject 800 million yuan (US$125 million) into its equally owned joint venture with Daimler AG, Shenzhen BYD Daimler New Technology Co., Ltd., trading as Denza. The company is specialized in luxury electric cars.
Founded in 1995, BYD is listed on Shenzhen Stock Exchange and Hong Kong Stock Exchange. With 30 industrial parks globally, the company engages in IT industry mainly related to rechargeable battery business, handset and computer components and assembly services, as well as automobile business including traditional fuel-powered vehicles and new energy vehicles. It is also developing other new energy products such as rail transit, solar farm, energy storage station, electric vehicles, LED and electric forklift.
Zhejiang Province has announced its plan to build a world class bay area by 2022. The area’s GDP is expected to reach 600 billion yuan (US$94 billion). Digital economy growth is expected to contribute 50% of the total economic growth. The high and new technology industry will take up over 47% in terms of industry value added. The Guangdong-Hong Kong-Macau Greater Bay Area recorded a GDP of 10 trillion yuan in 2017 and is expected to become the world’s largest bay area in five years.
The first product under the Shanghai-London Stock Connect is expected to be rolled out this year, according to Fang Xinghai, vice chairman of China Securities Regulatory Commission (CSRC). Financial institutions from Europe and Asia are consulting interested parties on expanding their business after the Shanghai-London Stock Connect was reported to be launched this year, according to Chinese media.
The U.S. House of Representatives has passed a policy bill to prohibit the country from purchasing surveillance cameras made in China. Digital surveillance provider Hangzhou Hikvision Digital Technology is among the list of banned Chinese companies. Hikvision’s equipment is widely used in the US, according to Chinese media. The new policy bill “was made without a complete account of the facts and with no evidence to justify the claims of its sponsors,” according to a spokesperson of Hikvision.
Founded in 2001, Hikvision was officially listed on the Small and Medium Enterprise Board in Shenzhen Stock Exchange in 2010. As of end March 2018, 39.6% of the company’s stocks are held by China Electronics Technology HIK Group, a wholly-owned subsidiary of the state-owned China Electronics Technology Group.
China will soon establish the first industrial base for the two-dimensional bar codes, otherwise known as QR codes, which are widely used in areas ranging from social media to mobile payments. As companies are tapping opportunities relating to this technology, China Electronics Chamber of Commerce (CECC) has signed agreements with Beijing E-hualu Information Technology Company and a tourism resort in Changchun, the capital city of China’s Jilin province, to build an industrial base for QR codes. With a total investment of 3 billion yuan (US$470 million), the project will contain a data center, a research area, an experience zone, and an incubator, all aiming to standardize, research & development and sales of QR code services.
China is demanding more imports as the country speeds up its consumption upgrade, according to a recent report by Ministry of Commerce (MOC). About 24.4% of the total sales of Chinese enterprises are imported goods, among which automobiles and home furnishing products take a large share. About 51.1% of the total sales of automobile products in China are imported, and about 34.6% of the total sales of home furnishings products are imported.
China’s Hainan authorities and Ping An Insurance are aiming to collaborate on development of the island’s free trade zone (FTZ). Hainan Island aims to become the largest FTZ in China. Ping An Insurance will cooperate with the local government, investing in areas including infrastructure, poverty relief, and smart city construction.
Ping An Insurance is a Chinese holding conglomerate whose subsidiaries mainly deal with insurance, banking, and financial services. Being one of the top 50 companies in the Shanghai Stock Exchange, Ping An is also a component of Hang Seng Index in the Hong Kong Stock Exchange.
Foreign holdings of Chinese bonds in the interbank market surged to 1.15 trillion yuan (US$179.95 billion) during the first four months this year, recording a y-o-y increase of 49.34%, according to data from China Central Depository and Clearing. Rising foreign investment in China’s vast domestic bond market is driving policymakers to consider how to further facilitate entry into the onshore bond market, including simplification of approval procedures, according to Ma Jun, former central bank chief economist. This could attract more foreign funds and offset capital outflows if the Chinese yuan weakens, according to Ma, noting that this is an inevitable process.
The Guangdong free trade zone (FTZ) is making institutional innovations, introducing new systems every three days on average, according to the provincial FTZ office. Since being established three years ago, the FTZ has made 385 institutional innovations to explore new systems in the open economy, build an opening-up gateway and deepening cooperation in the Guangdong-Hong Kong-Macao Greater Bay Area, according to the office. As of December 2017, a total of 210,000 new enterprises have settled in the FTZ including 9,639 foreign-invested enterprises.
China has decided to turn the whole of Hainan Island into a free trade zone (FTZ), making it the largest FTZ in the country. Hainan Province authorities will form a new fiscal system to support the construction of its FTZ. The authorities will support the cooperation among corporates, institutions and regulators in setting up investment funds for the FTZ. The authorities also plan to set an alert mechanism to prevent possible risks arising from local government debts.
The import tax on more than 100 tariff codes of automotives imported to China will be reduced starting from July, according to Ministry of Finance (MOF). The import tax on assembled cars, which used to be 25%, will be reduced to 15%. The import tax on the vehicle components which used to stand at 8%, 10%, 15%, 20%, and 25%, will be reduced to 6%
China's regulatory authorities have selected five financial institutions, namely CITIC Group, Ant Financial, Everbright Group, China Merchants, and Suning Group, as the first batch of pilot companies under a dedicated supervision project for financial holdings groups, according to Chinese media. The project will be expanded to 20 companies.
China Banking Insurance Regulatory Commission (CBIRC) has issued draft regulations on the tax-deferred commercial pension products, indicating that such products will be able to roll out soon. The draft rules set the thresholds for the insurance companies planning to launch such products regarding registered asset, solvency, industry track record and staffing. According to the draft rules, the returns on the funds of a tax-deferred pension scheme during its contribution period may be determinate, guaranteed, or floating, corresponding to product type A, B, or C.
China’s Hainan Island has launched a 100-day event starting on May 20 to attract global investment to engage in its plan of becoming an international free trade zone. The event aims to attract the world’s top 500 companies, leading industrial conglomerates and internationally well-known enterprises to start projects on the island or establish headquarters or regional headquarters in cities of Hainan. Haikou, capital of Hainan, and Sanya, a holiday resort city of the Island, are among the list of these cities.
State-owned Assets Supervision and Administration Commission of the State Council (SASAC), Ministry of Finance and China Banking Insurance Regulatory Commission have jointed issued a new regulation on the state-owned shareholdings of listed companies. State-owned shareholdings in local listed companies will be supervised by local regulatory bodies of SASAC. As Chinese state-owned shareholdings are expected to reform on a large scale, the new rules will help to control the possible impact on China’s stock market amid reform, according to SASAC. With the regulations on state-owned shareholdings in non-listed companies issued in 2016, China has formed a comprehensive system for the management of state-owned shareholdings.
More new economy companies are expected to apply for public listing on Hong Kong Stock Exchange (HKEX), according to Charles Li, chief executive of HKEX. The bourse has recently announced new rules that allow listing under dual-class share structure, or the weighted voting rights (WVR) structure. The listing applications under this structure will be effective after August, according to Li, noting that many of the new economy companies need time to prepare for their respective listings.
China steps forward regarding going green by issuing preferential policies in the northwest China’s Xinjiang Uygur autonomous region for mining enterprises with exemplary records for implementing environmental standards.
Companies that are labeled by authorities as green mining enterprises will enjoy preferential policies on mining rights, land use, as well as tax breaks and financial support over the next three years, according to a guideline issued by the regional government. The companies will also enjoy the priority status for the transfer of mining or exploitation rights when they expire.
Chinese small-to-medium size banks have been replacing the guaranteed return products with structured deposits, or the yield enhancement products, which is a combination of deposit and derivatives, in order to avoid the possible impact caused by the recently issued new regulations on asset management. According to a source talking to cnstock.com, Chinese regulators are calling to a stop of the guaranteed return products, noting that such products are playing around with the regulations, aiming to increase the interest rate of deposit products
China’s fiscal revenue recorded 11% growth y-o-y in April due to steadily increasing tax income, according to the country’s Ministry of Finance (MOF). The tax revenue increased by 14.6% y-o-y during the same period, reaching 1.66 trillion yuan, according to MOF. The country’s fiscal revenue in the first four months of the year recorded a y-o-y growth of 12.9%, reaching 6.9 trillion yuan.
The Shanghai government has announced new measures to further open up its finance market in a bid to develop into an international finance center. Sectors including banking, securities, and insurance will be further opened up.
Foreign-funded banks will be encouraged to set up branches and subsidiaries in Shanghai. The city will also support the establishment of securities, fund, and futures companies with majority ownership by foreign capital. Overseas innovative enterprises will be allowed to issue Chinese Depository Receipt in Shanghai.
China will issue new regulations on insurance companies regarding their information disclosure. Compared the version rolled out in 2010, the new rules require Chinese insurers to disclose relevant information of the company’s actual controller. This move aims to curb the risk arising from the unclear shareholding structure of some insurance companies, according to Chinese media.
The money market fund Yu’e Bao has recently released two new money market funds after the issuance of China’s new regulations on the asset management industry. It is predicted by Chinese analysts that Chinese online asset managers will begin updating their products in response to the new rules. Yu’e Bao used to be dominated by a money market fund managed by Tianhong Asset Management. With a total asset under management of 1.58 trillion yuan, Yu’e Bao is the biggest money market fund in China.
The detailed plan for the Greater Bay Area will be issued the middle of this month, according to cnstock.com. The plan is being reviewed by China’s State Council, according to the media. The Greater Bay Area, which connects Hong Kong, Macao, and cities from mainland China, aims to become one of the world’s largest bay areas, according to Chinese media.
China will set up a committee dedicated to the operating standards for blockchain, according to Economic Information Daily. Relevant rules and code of practices will be rolled out next year, according to the media. The operating standards will mark the formation of a standardized system for blockchain usage in China.
Chinese media has reported that deputy governor Pan Gongsheng of the People’s Bank of China (PBOC) said that China’s central bank would steadily advance the convertibility of the RMB capital account. The PBOC also stated that China's cross-border renminbi business continued to advance steadily in 2017 with the opening up of financial markets and the increased monetary cooperation among central banks.
Chinese smartphone producer Xiaomi saw its market valuation drop from US$100 billion to US$60-70 billion as it disclosed its listing financial documents. The company, which is planning to IPO in Hong Kong, is expected to be one of the spotlight equity trades of the year. Xiaomi’s prospectus confirmed that its mobile phone was not profitable and promises that the comprehensive net profit margin of its hardware will not exceed 5% in the future.
China’s imports from countries along the Belt and Road (B&R) outpaced its exports in 2017 for the first time, according to the State Information Center, a think tank of the country’s State Council. With a total amount of US$666 billion, the import recorded an increase of 20% y-o-y, accounting for 39% of China’s total imports value, according to the report. However, in the same year, China’s exports along the B&R recorded a rise of 8.5% percent y-o-y. But with a total amount of US$774.26 billion, the exports were still overall larger than imports.
Chinese regulators have recently announced that the rules and methods for Chinese Depositary Receipts (CDRs) are open for public consultations. The new rules will be possibly launched in the second half of this year. Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. The regulation reveals the qualification of the companies that apply either through IPOs or CDRs. China’s Securities Regulatory Commission issued pilot regulations on CDRs in early April.
China’s Ministry of Finance (MOF) has issued a notice on Chinese insurance companies. Those who submitted their payment to insurance protection fund in accordance with the laws can be spared from corporate income tax. Insurance companies can utilize the protection scheme until 31 December, 2020.
Chinese regulators are discussing to set up an institution to regulate Chinese Real Estate Investment Trusts (REITs) market, according to cnstock.com. Interested parties have been suggesting China set up a regulatory body similar to National Association of Real Estate Investment Trusts (Nareit) of the US, according to the media. But whether Chinese regulators will set up an association or a new regulatory department is still under discussion, says the media.
The Chinese Intelligent Medicine Association, a national association, was set up recently to promote the integration of artificial intelligence (AI) technology with medical care industries. The new association will provide a platform for research, exchange and cooperation in intelligent medicine. While promoting the use of AI in medicine, the association will assist the government in formulating standards and regulations for the development of intelligent medicine.
The first mainland-Taiwan-joint-venture consumer finance company has recently been established in Xiamen. The company (厦门金美信消费金融有限公司) is jointly set up by Xiamen Jinyuan Investment Group, CTBC Bank and other companies. With a registered asset of 500 million yuan, the company’s business includes online and offline consumer credit business.
Ministry of Finance and some other regulatory bodies are drafting new guidance for a further tax cut. They expect the new tax regime can reduce a total amount of 60 billion yuan tax to the whole market. China Banking and Insurance Commission also stated in a press conference that they are also drafting new rules to reduce the interest rate to SMEs.
Shanghai Pudong Development Bank (SPDB) is the only bank with a decline in net profit among 26 listed banks. One of the main reasons is its huge fine of 462 million yuan in 2017. In 2016, SPDB recorded a decline of 1.09% in its net profit. SPDB, China Merchants Bank and Industrial Bank are the three most profitable joint stock commercial banks in China.
According to Shenzhen Stock Exchange, two directors of Gree, the leading electronics manufacturer, have increased their shares of the company. While the stock price of Gree started to drop since January, a few large institutional investors including National Social Security Fund still increased their shareholdings in Gree. Currently, the founder Mingzhu Dong, is no longer in the top ten shareholder list.
Since China further announced its plan to open its financial market to foreign players in 2018, Chinese regulators have received a few applications from new participants. People's Bank of China received an application of payment license from World First a few days ago while China Banking and Insurance Commission received an asset management application from ICBC Credit Suisse Asset Management. PBoC also received a credit rating agency application from UK based Experian.
A-share listed banks have all released their annual reports. According to Chinese media, the total net profits of listed banks is 1.39 trillion yuan, 4.91% up from 2016. In terms of net profit, ICBC ranked top with a net profit of 286 billion yuan. In terms of growth, Chengdu Bank recorded a net profit growth of 51.64%, ranking the first while Huaxia Bank's growth is just 0.72%, ranking the lowest.
According to East Money, among 30 listed securities firms in China, only 8 have seen net profit growth in 2018 Q1. Citic Securities still ranked top with a net profit of 2.69 billion yuan. Guotai Junan Securities ranked second with a net profit of 2.26 billion yuan, which declined 11.85% YOY. According to Chinese media, brokerage business accounted for less than 50% of most securities companies.
According to Securities & Futures Commission of Hong Kong, the total amount of securities margin lending was 26.3 billion US dollar in 2017, 9 times of the amount in 2006. HK SFC also discovered that the risk of the margin is also increasing, noting that 30% of the margin came from loans collateralized by equities. As a result, the Hong Kong regulators are trying to raise the awareness of securities brokers towards risk management.
People's Bank of China (PBoC) has issued the final version of the tightened asset management regulations, forbidding guarantee of investment products’ fixed-yield returns and limiting leverage levels to curb potential financial risks. The market is allowed to adapt to the new rules until end 2020. This will ensure sufficient preparation for financial institutions and avoid market vulnerability, according to PBoC. Compared to the proposal released in November last year, the final version eases restrictions on the assessment method of invested financial asset value, allowing certain institutions to maintain the previous method. The tightened the rules will restrict banks from investing in high-risk and short-term funding vehicles, while preventing unexpected risks including the liquidity risk, according to Chinese media.
China Securities Regulatory Commission (CSRC) has issued the new regulation on the foreign investors of Chinese securities companies. The shareholding cap of a single foreign investor in Chinese securities companies, which used to be controlled below 30%, is removed, according to the new rules. Qualified foreign investors are allowed to submit their applications for changing shareholdings or setting up joint ventures.
The government-backed National Integrated Circuit Investment Fund (NICIF) of China has finished its second phase of fundraising, attracting 120 billion yuan (US$19 billion), according to China media. Recently, the US has barred Chinese tech company ZTE from buying American technology amid the Sino-US trade dispute. The NICIF is said to set up a new fund to support domestic players of the integrated circuit business, according to a source talking to Chinese media.
China is expected to become the world’s largest insurance market by 2028, according to an Allianz report. With 1.1 trillion euros (US$1.33 trillion), representing over 30 percent of global premium income, the United States, currently is the world’s largest insurance market, but it will lose its rank to China next decade, according to the report, predicting “a historic change of guard.”
The Ministry of Industry and Information Technology is currently rolling out a directive to support the country’s smart car sector. The ministry calls for an establishment of an inter-ministry coordination mechanism and is in the process of making a strategic plan, according to a source talking to Economic Information Daily. The next step for the ministry is to announce directives on how to integrate the smart car sector, the smart transportation sector and the telecommunication sector, according to the source.
China Banking Insurance Regulatory Commission (CBIRC) is said to tighten supervision on the Internet insurance companies. It has issued a notice on the possible risk of the company’s Internet insurance industry. The regulator warns policy holders about the fraud in this industry, especially with those products promising high returns. The regulator also states that it will take measures to curb the risk in this the industry.
Ministry of Finance (MOF) is discussing with interested parties on rolling out new measures to expand the country’s import. The import tariff on products including cars and certain consumer goods will be reduced. The regulators are considering reducing the import tariff on passenger cars from 25% to 15% or 10%, according to a source speaking to Chinese media. MOF also mentions that the first China International Import Expo to be held in November this year also aims to expand China’s import.
China looks to issue stricter asset management regulations by this weekend, which would restrict banks from investing in high-risk and short-term funding vehicles and further ease financial vulnerability, according to a source talking to Chinese media. Chinese policymakers are cautious due to the proliferation of asset management products, accounting for 29.54 trillion yuan (US$4.68 trillion) of bank-issued wealth management products as of end 2017, according to the source.
China’s State Administration of Foreign Exchange (SAFE) has widened the quotas of two outbound investment schemes, namely qualified domestic limited partner (QDLP) and qualified domestic investment enterprise (QDIE), to US$5 billion each. Launched in Shanghai and Shenzhen in 2013, the two schemes will better serve China’s opening up strategy with the quota expansion. Relevant rules will be adjusted according to China's balance of payments, according to SAFE.
China’s Ministry of Finance (MOF) issued a notice, stating that tariffs on 28 drug imports will be removed taking effect from 1 May. Most imported drugs, especially anticancer drugs, are set to enjoy zero tariffs, according to MOF.
China’s Internet copyright industry was worth 636.5 billion yuan (US$101 billion) in 2017, recording a 27% increase from 2016, according to a recent report. The Internet copyright industry contributed 0.77% to China’s GDP last year, according to the report. This figure has tripled since 2013.
More efforts are needed to further integrate big data, artificial intelligence, and the Internet with the real economy, this will inject new impetus into China’s economic growth, says the Ministry of Industry and Information Technology (MIIT) in a recent statement. The digital economy, which is particularly driven by the big data sector, is increasingly driving China’s economy growth. China’s digital economy was worth 27.2 trillion yuan (US$4.31 trillion) in 2017, accounting for 32.9% of the nation’s gross domestic product, according to a recent report.
Chinese central state-owned enterprises (SOEs) in 2018 are predicted to see more mergers and acquisitions in three major sectors, namely pioneering strategic industries, environmental protection, and common technology platforms, according to a recent report by the research center of China’s State-owned Assets Supervision and Administration Commission of the State Council. The restructuring aims to elevate central SOEs’ domestic and international competitiveness, with steady progress expected within the sectors of equipment manufacturing, coal, electricity, communication, and the chemical industry, the report said.
The National Equities Exchange and Quotations (NEEQ) and HKEX have signed a memorandum of understanding regarding the "New Third Board+H" listing mode. NEEQ board, or the “New Third Board”, is used for trading shares of the public limited company that not listed in the two stock exchanges of mainland China. Qualified companies can be listed both on the NEEQ board and in Hong Kong. NEEQ-listed companies used to need to delist from NEEQ before they can be listed in Hong Kong.
The US Secretary of the Treasury expresses the intention to visit China for trade issues. In response, China’s Ministry of Commerce (MOC) spokesperson states that Beijing welcomes the US to do so. Yi Gang, governor of People's Bank of China, says on the G20 Finance Ministers and Central Bank Governors Meeting that China will further open up due to the uncertainty generated by the trade dispute.
HKEX is reported to be in talks with the mainland’s regulators about the "New Third Board+H" listing mode. The National Equities Exchange and Quotations (NEEQ) board, or the “New Third Board”, is used for trading shares of public limited company that not listed in the two stock exchanges of mainland China. “The New Third Board has its own rules, while HKEX also welcomes the companies listed there to undergo IPO in Hong Kong if they fulfill the listing requirements here,” says Charles Li, chief executive of HKEX.
HKEX will release next week the result of the consultation regarding rolling out dual-class share structure, or the weighted voting rights (WVR) structure, in Hong Kong. The application of listing under dual-class share structure will open on April 30. The dual-class share structure, enables companies to issue different classes of shares, granting different weighted voting rights to shareholders. Chinese technology companies such as Alibaba had listed on the New York Stock Exchange because mainland Chinese stock exchanges didn’t support this structure. HKEX is confident that Chinese tech companies such as Xiaomi and Ant financial will come to list in Hong Kong, according to Charles Li, chief executive of HKEX.
China will roll out new rules regarding improving the infrastructure of the new energy automobile industry, promoting relevant innovations, according to a source talking to Economic Information Daily. This will help to reduce the cost of manufacturing new energy cars and increase the quality of the production of such vehicles, according to Chinese media.
China has seen the number of unicorn companies steadily grow in the first quarter of this year, according to a recent report. Thirty three unicorn companies, valued at US$1 billion or more and not yet listed, were added to the unicorn list in the first quarter in China, according to the report. The total number of unicorn companies in China has reached 151 as of end March 2018. The majority of the 33 companies are in the internet services, culture and entertainment or automobile sectors.
China will continue to take strong measures with Russia to optimize the bilateral trade structure, actively expanding the scale of trade in electromechanical and high-tech products, according to China's Ministry of Commerce (MOC). The two parties will expand the import and export of agricultural products mutually, and develop new types of cross-border e-commerce, according to MOC. In 2017, Sino-Russian trade volume reached US$84.07 billion, an increase of 20.8% y-o-y. In the first quarter of this year, bilateral trade volume has increased by nearly 30% y-o-y, and is expected to exceed US$100 billion end of 2018.
China will implement a new negative list for foreign direct investment (FDI) by the end of the first half of this year, according to State Administration of Foreign Exchange (SAFE). The new list aims to provide better facilitation to the foreign investors, supporting the further opening up of China. The country will also reform in QFII, RQFII, QDII and QDLP (qualified domestic limited partnership) schemes, according to SAFE.
Hainan island has taken its first step towards further opening up by developing its tourism industry. Chinese media has revealed that the island has open visa-free access for tourists from 59 countries. The Chinese government has recently announced the opening up strategy for Hainan Province, aiming to turn the island into an international center of consumption and tourism. The new policy will take effect next month.
China will continue integrating healthcare services with the Internet Plus Initiative to improve the quality and efficiency of the sector under a new guideline approved by the State Council last week. A service system will be established to promote integration in areas such as public health, privately contracted doctors, medical supplies and medical insurance reimbursement settlement, according to the guideline. Relevant supportive policies will be issued soon, according to the State Council.
The shareholding cap for foreign investors of Chinese enterprises in shipbuilding and aircraft manufacturing will be removed, according to the country’s National Development and Reform Commission (NDRC). Chinese regulators will also take steps to remove the cap of the foreign shareholding of Chinese automobile manufacturers in five years. These are part of China’s strategy of further opening up the manufacturing industry.
China plans to build a 525-MW hydropower station on the Wujiang River, a tributary of the Yangtze River, in Southwest China’s Chongqing municipality. This project is expected to involve an investment of 10.2 billion yuan (US$1.6 billion). It has gotten the green light from the National Development and Reform Commission, according to the Chongqing Municipal Commission of Development and Reform, marking the completion of a cascade of hydropower stations on the section of the Wujiang River in Chongqing.
Qualified Chinese Internet companies will be supported to enhance their business through Chinese capital market, including the mainboard, SMEs board, GEM, NEEQ, regional equity market, and bond market, according to CSRC. The regulator will improve relevant regulation, increasing its compatibility and flexibility, according to CSRC.
China will turn the whole Hainan island into a free trade zone (FTZ), making the island the largest FTZ in China, according to the country’s State Council. Horse racing and new sports lotteries will be allowed on the island. Chinese analysts say that the government will also focus on the development of sectors including ecological agriculture and tourism. The Hong Kong Jockey Club says “there has not been any discussion” so far with the Hainan authorities, but it would be pleased to exchange views on the promotion of equine sports there, if invited, according to Hong Kong media.
China’s Jilin Provincial Government, Chinese technology giant Tencent, and Chinese state-owned automotive manufacturing company FAW Group, have recently signed a cooperation framework, aiming to revitalize the traditional industrial zone in the northern part of China, also known as the country’s rust belt. Tencent will take the opportunities in China’s strategy of revitalizing the rust belt and support the digitalization of Jilin Province, according to the governor of Jilin. Tencent will seek further cooperation and support the development of Jilin Province and FAW Group, according to Ma Huateng, CEO of Tencent.
China’s overseas M&A deals in economies along the Belt and Road (B&R) Initiative achieved a record high of US$48.2 billion in 2017, recording a y-o-y growth of 81%, according to a recent report by EY. China’s outbound direct investment (ODI) dropped by 32% y-o-y end of last year. The investments in B&R economies increased despite this. The nonfinancial ODI of China reached US$14.4 billion, covering 59 B&R economies, accounting for 12% of the country’s total nonfinancial ODI, according to the report.
Chinese regulators will roll out regulations and measures regarding industrial clusters and the regional development of manufacturing industry. A guidance paper on constructing an international industrial cluster in the Yangtze River Economic Zone will be released within this year. Setting up regional industrial clusters has become a trend in China’s manufacturing industry. With the support from the regulators, China will form several international industrial clusters, enhancing the competitiveness of Chinese manufacturing industry and ensuring the high-quality economic growth of the country.
China Construction Bank (CCB) has recently set up a self-service branch in Shanghai. This branch is equipped with technology including robotics, bio-identification, VR and AR, becoming the first self-service bank in China. This branch was opened on April 9.
China’s State Administration of Foreign Exchange has issued a notice regarding the reform of the Qualified Domestic Institutional Investor (QDII) scheme. The regulator invites interested departments to seek additional quota under the QDII scheme, according to Chinese media. This marks the reopening of QDII quota application after two years. The quota will be allocated according to aspects including institution type, asset under management, and the evaluation of the regulators, according to the media.
Hainan Island will roll out new regulations in favor of further opening up, according to a source talking to cnstock.com. The island will possibly set up a free trade zone, according to the source, noting that the government will focus on the development of sectors including ecological agriculture and tourism.
China’s recent announcement of further opening up is irrelevant to the current trade dispute between China and the US, according to Geng Shuang, spokesperson of China’s Ministry of Foreign Affairs. The announcement is in line with China’s own schedule and roadmap of opening up, according to Geng, noting that opening up has always been China’s position. China will strike back “forcefully without hesitation” if the US makes further moves that hurt China’s interest, according to Geng.
China Securities Regulatory Commission (CSRC) and Hong Kong’s Securities and Futures Commission (SFC) have agreed to expand the daily quota of the Shanghai/Shenzhen Stock Connect. The daily quota of northbound trading through the two schemes has increased to 52 billion yuan respectively; the southbound trading 42 billion yuan respectively.
“More international indexes will include China's A-share. This will be a trend,” says Sally Wong, chief executive officer of Hong Kong Investment Funds Association. “The quota of the Stock Connect is sufficient for now, but in the long run, it will never be sufficient with the increasingly growing demand from international investors.”
China’s import tariff on automobiles will be decreased to less than 10%, according to a source talking to Chinese Business News. The country’s current import tariff on automobiles is 25%. During the second half of last year, China decided to decrease the import tariff on automobiles within the free trade zones to 12.5%.
National Development and Reform Commission, Ministry of Finance, Ministry of Commerce, People's Bank of China, China Banking Insurance Regulatory Commission and China Securities Regulatory Commission have jointly issued a position paper on the country’s outbound investment funds. Qualified outbound investment funds will be supported to do fundraising in and out of mainland China.
The paper also encourages cooperation with international institutions such as the World Bank, Asian Infrastructure Investment Bank, the New Development Bank, and Asian Development Bank, increasing their investment in Chinese outbound investment funds. This will also support the Belt and Road Initiative, according to the paper.
China Life Insurance’s draft prospectus was published on CSRC’s website yesterday. The company will be listed in Shanghai, and will become the 5th insurance company that is listed both on A-share and H-share. The company will issue up to 4.599 billion shares, taking up to 9.78% of the total shares of the company. The company has been reported to consider listing on the A-share market since 2008. Last year in May, the company first announced that it will apply to list in Shanghai.
China Banking Insurance Regulatory Commission (CBIRC) has issued a notice on rolling out four regulations on financing guarantee companies. The regulations will cover aspect including licensing, asset allocation, and cooperation with financial institutions. The regulations will improve market order, regulate the business operation of financing guarantee companies, control risks, maintain sufficient solvency, and better serve the small-to-micro-size companies.
Steps in encouraging the free flow of talent, goods, capital and information will be sped up as the general planning of the Greater Bay Area to be released soon, according to the governor of Guangdong province, speaking at the Boao Forum for Asia Annual Conference 2018. Guangdong will enhance cooperation with Hong Kong, says the governor. Carrie Lam Cheng Yuet-ngor, chief executive of the Hong Kong Special Administrative Region, says Hong Kong can make contributions to the Area in creativity and connections.
Ministry of Industry and Information Technology released a report on the mobile phone industry in China in the first quarter of 2018. The total shipment volume has dropped in the first three months, down by 26.1% YOY. Chinese brands account for over 90% of total shipment. In particular, Huawei, OPPO, VIVO, Xiaomi and Apple are the five largest players in China.
According to Chinese media, HNA group has sold 26 overseas projects, equivalent to 60 billion yuan, in the past nine months. Most of the overseas projects are in the real estate sector and some of the assets are even recently acquired by HNA. It is expected that HNA will focus on its main business, the airline business and continue to reduce its debt level by selling assets.
Chinese AI startup Sense Time recently announced a new round of financing led by Alibaba Group. According to Chinese media, Alibaba has invested five AI companies over the past two years. Currently, China's BAT are all investing heavily in AI.
Ministry of Commerce and Ministry of Foreign Affairs reiterated its strong standpoint on the trade war on Friday. The two regulatory bodies said that China will retaliate again if the United States implements additional tariffs. According to the two regulatory bodies, China will continue to open its market and promote international trade.
Have experienced a few years of lower profit growth, China's banking industry has seen a higher growth in net profit in 2017, especially for state owned banks. The big five banks recorded an average of over 4% net profit growth in 2017. Apart from state owned banks, joint stock commercial banks are improving. China Merchants Bank increased its net profit by 13% in 2017.
According to Chinese media, a dedicated fintech risk management regulator in China has issued a guidance on the online asset management platforms. Unlicensed asset management platforms and those doing illegal fund raising activities will be clamped down. Large internet companies such as Alibaba, Tencent and Baidu are unlikely to be affected as their already obtain fund distributor license.
China’s Insurance Security Fund will inject 60.8 billion yuan into Anbang Insurance Group who was recently taken over by Chinese regulators. This was approved by the newly set-up China Banking Insurance Regulatory Commission (CBIRC). The registered assets of this insurer will be increased to 61.9 billion yuan. The Insurance Security Fund serves to provide bailout fund for non-governmental institutions. The Fund will take steps to transfer its shares in AnBang Insurance, making sure the company is private-owned.
China’s third-party mobile payment market maintained its strong developing momentum and expanded 27.9% quarter-on-quarter in Q4 2017, according to a recent research. The value of third-party mobile payment transactions during the Q4 2017 totaled 37.7 trillion yuan (US$6 trillion), according to the research. Alipay, operated by Alibaba affiliate Ant Financial, together with WeChat, operated by Tencent, dominated the market, with market shares of 54.26% and 38.15%, respectively, according to the research.
Chinese President Xi Jinping and the Zimbabwean counterpart Emmerson Mnangagwa agreed to establish a comprehensive strategic partnership of cooperation between the two countries. The two sides signed bilateral documents on economic and technology cooperation, agriculture, science and technology and human resources, aiming to enhance exchanges of views on state governance and expand cooperation in areas including trade, investment, technology, telecommunication, infrastructure, etc.
China Securities Regulatory Commission (CSRC) will revise the regulation on IPOs this year, according to Chang Depeng, spokesperson of the CSRC. The regulator will revise 32 regulations this year, says Chang. In addition to IPOs, these regulations cover aspects including private investment fund and sharing holdings of the securities companies.
China Securities Regulatory Commission (CSRC) has issued pilot regulations on China concept stocks and Chinese unicorns coming back to A-share market, stating that qualified companies can come back to the A-share market through IPO or Chinese Depository Receipts (CDR). Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. The regulation reveals the qualification of the companies that apply either to IPO or to CDR. Chinese analysts say that the issuance of the regulation will not cause obvious liquidity crises.
The Greater Bay Area will be among the world’s four largest bay areas, following the New York Bay, New York Bay and Tokyo Bay, according to a recent Chinese report. Detailed developing plans are expected to issue this year, focus on investment opportunities on including infrastructure, finance, trading, IT and tourism.
Tianjin Economic and Technological Development Area (TEDA) has signed a contract to build an offshore wind power station to power its petrochemical industries. TEDA signed the contract with China Three Gorges New Energy Co., Ltd on a 18-billion-yuan power base with an annual generation capacity around 2.4 billion kilowatt-hours, enough to power ten medium-sized petrochemical factories. The project requires approval from the central planners and construction is expected to begin in 2020.
National Development and Reform Commission (NDRC) will advance the debt-to-equity swap and equity financing of the country’s central stated-owned enterprises (SOEs). Over 70% of China’s state-owned asset will be listed by 2020, according to NDRC. NDRC has been encouraging central SOEs to increase its capital strength by debt-to-equity swap and equity financing. In order to deleverage and control the risks, NDRC has set up warning lines of enterprises’ debt-to-assets ratio. The debt-to-asset ratio of industrial enterprises should not exceed 70%, non-industrial enterprise 75% and research and development enterprises 65%.
China will set up a fund for financing guarantees, according to China’s Premier Li Keqiang. This will ease the pain points of small-to-micro enterprises and rural enterprises in their fundraising process, according to State Council. The fund aims to raise 500 billion yuan in three years, supporting the one-fourth of the total financing guarantees business in China.
The newly revised regulation on the information disclosure of insurance companies will be implemented in July this year. This is the revised version of the same regulation issued in 2010.
The new regulation requires insurance companies to disclose more detailed information, adding new items requiring information on the actual controller of an insurance company. The regulator is closing the gap between the information disclosure standard of unlisted companies and public companies.
China and Morocco signed a Memorandum of Understanding (MoU) for the establishment of the Silk Road business council yesterday. This council aims to serve as a platform for the industrial and commercial sectors of the two countries. It will provide information on investment opportunities and help solve problems that hinder commercial cooperation at the international level. Permanent exchanges of updated information on the economic situation of the two countries, the regulatory evolution, commercial data, and industrial and commercial policies will also be available on this platform.
There are 31 IPO applications being suspended since March this year. Many securities companies, especially the small-to-medium size companies, are influenced by this, according to Chinese media. Fifty-six companies’ IPO applications were suspended in 2018 so far. More than 10 applications were canceled within one day on March 22.
China will roll out a list of pilot enterprises to transfer the state-owned asset into National Social Security Fund (NSSF). The list includes about five central state-owned enterprises. Interested departments including MOF and SASAC are working on the plan, noting that the plan does not equal to selling the state-owned asset.
In order to build a new international economic order and safeguard the interests of developing countries, China and India will further enhance their trade and economic cooperation
The trade volume between China and India reached a record high of US$84.4 billion in 2017, up 20.3% from the previous year, according to China’s Commerce Minister Zhong Shan, adding that China has remained as India’s largest trading partner. The accumulated investment in India by Chinese enterprises amounted to over US$8 billion while India’s investment in China rose an average of 18.5% annually over the past three years.
Guangdong Province has recently announced its plan of boosting the AI industry. The total asset of the core business of AI will exceed 150 billion yuan by 2050, according to the plan, noting that China’s AI industry will be located in the high-end of the global value chain.
This news boosted the stock value of several technology companies. Chinese fintech company, Hundsun Technologies increased by its daily limit of 10% today. Hundsun Technologies provides software products and services, especially fintech related service, such as providing financial data for financial institutions.
The company's customers include brokers, future companies, public funds, trust companies, insurance companies, banks, exchanges, and private equity funds. The company is also engaged in the provision of wealth management tools for individual investors. The company distributes its products within domestic markets and to overseas markets.
China’s first yuan-denominated oil futures is officially launched though Shanghai Futures Exchange (ShFE) today. This innovation is also one of China’s measures of further opening up, according to Fang Xinghai, the vice-chairman of China Securities Regulatory Commission (CSRC), talking to CCTV News. CSRC will roll out more measures similar to this, according to Fang, noting that these measures will help international pricing standards better reflect the supply and demand of Chinese market.
China’s electricity consumption this year will grow about 5.5%, provided there are no extreme weather conditions on a large scale, according to China Electricity Council. The council sees a general surplus in power supply this year, noting that short supply will only be seen in some regions during peak hours. There will be a generally loose environment for power supply and demand, as the supply capability will continue to rise, according to the council. The predicted growth in 2018 is slower than the 6.6% in 2017 and 13.3% for the first two months of this year.
China will deepen the integration of Internet, big data, AI and manufacturing, according to Ministry of Industry and Information Technology (MIIT). Chinese AI leader iFlytek’s stock value on A-share market increased by about 4% today. Founded in 1999, iFlytek is a Chinese information technology company listed in Shenzhen. The company creates voice recognition software and other voice-based internet or mobile products covering education, communication, music, intelligent toys industries. China Mobile holds 12.9% of iFlytek’s shares as of end September 2017. The total asset of China’s AI industry has reached 70 billion yuan in 2017, according to a recent report on Chinese IT industry, noting that the figure will increase to 160 billion yuan by 2020.
JD.com’s finance arm, JD Finance, launches a new product called “The Big Dipper” (北斗七星) to improve the efficiency of small-to-medium Chinese banks in their retail credit business. The product has on-boarded about 30 Chinese banks including Jiangsu Bank, Nanjing Bank, and Baoshang Bank. The new product aims to help each client increase the retail credit lending by 10 billion yuan within one year, according to JD Finance.
The total asset of China’s AI industry has reached 70 billion yuan in 2017, according to a recent report on Chinese IT industry. This figure will increase to 160 billion yuan by 2020, according to the report. Ministry of Industry and Information Technology (MIIT) released 97 pilot projects in AI. The regulator also aims to set up 202 new projects in intelligent manufacturing, serving the upgrading of Chinese enterprises.
China’s electric utility monopoly, State Grid, will invest 21 billion yuan over the next three years until 2020 for the construction of power grid in poverty areas. The investment within this year will amount to 6.6 billion yuan. The construction projects cover more than 12100 Chinese villages in poverty, mostly in Tibet, Sichuan, Yunnan, and Gansu.
In order to speed up the development of the digital economy, China will roll out policy papers with regulations and guidance on the country’s national strategy, “Internet Plus (互联网+)”, according to National Development and Reform Commission (NDRC). The “Internet Plus” strategy will be implemented in sectors including manufacturing, agriculture, healthcare, and education. A summit regarding the digital economy of China will be held this April. Major players in the technology industry including Tencent, Huawei, Meituan.com and iFlytek will be attending the summit.
China will roll out a project aiming to enhance the outward foreign investment, according to the country’s Ministry of Commerce. “MOC will foster a batch of multinational corporations (MNCs) with reputation and influence on a global scale,” according to Han Yong, an official with the MOC. This is in line with the country’s strategy of upgrading Chinese enterprises, according to an analyst with the MOC, noting that the number of Chinese MNCs will keep increasing in the future.
Many Chinese securities companies have received a notice of inspection regarding IPO, according to Chinese media, noting that a new round of IPO probing has started.
Regulators rolled out new rules in this probing. Companies with aggregate net profit under 100 million yuan over the last three years, or companies with net profit under 50 million yuan last year, will have to cancel their IPO application or receive on-site inspections.
The ports in Liaoning, a province in north China, will be integrated into a company, aiming to build a port and shipping center for Northeast Asia. Supported by China Merchants Group, the integration will start with the merger of Dalian Port and Yingkou Port. The integrated shipping center might also include companies from the aviation industry in the future, according to Chinese media.
Several Chinese P2P platforms have released notices, stating that some banks have close their online payment channels. This might be in line with tightened regulation on third-party payment, according to Chinese analyst. The online payment channels will be closed for the moment, and whether they will be opened is unknown, according to Agricultural Bank of China speaking to Guangzhou Daily. People's Bank of China released a notice on regulating the innovative payment methods in December last year.
By the end of the first half of 2018, China will roll out the third batch of state-owned enterprises (SOEs) to conduct the mixed-ownership reform, according to Xiao Yaqing Chairman of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC). The reform aims at introducing private capital to invest in the SOEs. There are 31 enterprises on the new list of SOEs, according to Xiao.
China will shorten the blacklist of foreign investors, further to loosen admission into the Chinese market, according to Li Keqiang, China’s Premier. The restriction on market admission will be relaxed over the next few years, says Li. The shareholding ceiling of foreign investment will be lifted or abolished, Li adds, especially in sectors including healthcare, education, aged care, and finance.
China will soon release a series of reform plans regarding the opening up of the country’s market, according to Yi Gang, the newly appointed governor of the People’s Bank of China (PBoC). In addition to this, Yi says that he will focus on the implementation of a prudent monetary policy, making sure that China’s financial industry is stable.
Shanghai Stock Exchange (SSE) will set up a special department, revising and approving the application of issuing the Belt and Road (B&R) bonds. The B&R bonds include government bonds issued by governmental institutions from countries along the B&R, corporate bonds issued by enterprises and financial institutions from countries along the B&R, and corporate bonds with fundraising for the construction of B&R projects. SSE will support and boost the financing and investment of B&R related projects, according to a notice by the bourse. SSE has talked to several B&R countries regarding this, according to the notice.
Interested Chinese government agencies are discussing a new regulation on Chinese Depository Receipts. Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. So far, the two bourses in mainland China have expressed their intentions to support new economy companies. In addition to the CDRs structure, overseas-listed new economy companies can also delist from overseas bourse and do reverse merger or IPO, according to Chinese media.
Foreign direct investment (FDI) into mainland China from Singapore, South Korea and the United States increased 62.9%, 171.9% and 56.8% y-o-y respectively during the first two months of 2018, according to the Ministry of Commerce (MOC). The total FDI rose 0.5% y-o-y, reaching US$22.1 billion during the same period. The non-financial outbound direct investment (ODI) increased by 25.2%, reaching US$16.8 billion during the same period. This ODI is boosted by the investment in the countries along the Belt and Road Initiative.
Shanghai plans to expand its free trade zone, including more seaside areas. Local authorities in Shanghai have already submitted their proposed plan for this. So far, more than 10 provinces and municipalities in China have applied for building or expanding free trade zones, including Zhejiang, Guangdong, Tianjin, Fujian and Hainan.
Shanghai Stock Exchange (SSE) will expand the financing channels for the construction along China’s Belt and Road Initiative (B&R), boosting the cooperation among the interested capital markets. Pilot projects of D-shares business will be advanced, according to SSE. The bourse will also improve the issuance mechanism of Panda bonds. Interested institutions and qualified enterprises in the countries along the B&R will be supported to issue RMB bonds in SSE.
In order to pave the way for overseas listed new economy companies to come back to A-share market, China Securities Regulatory Commission (CSRC) will soon announce the revised regulations on Chinese Depository Receipts (CDRs), according to Yan Qingmin, deputy chairman of CSRC.
Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. “We will pick a batch of new economy companies and several unicorn companies. They will soon be on the list of qualified companies for the CDRs scheme,” says Yan, noting that the unicorn companies will be selected by interested departments with specific metrics.
Chinese power giant, State Grid Corporation of China, is building an energy-services company to promote the distribution of clean energy. This is part of State Grid’s efforts to restructure China’s energy consumption, according to Shu Yinbiao, the company’s chairman. The company is also supporting rural households in northern China to use electricity as a heating source.
The public offering of new economy companies will be supported and encouraged, according to the State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government. In order to boost the state-owned enterprises, the Commission plans to deepen the mixed-ownership reforms of state-owned enterprises (SOEs), introducing private capital to invest in the SOEs. Certain SOEs, or the core business of certain SOEs, will be encouraged to go public, according to the Commission.
The 15th China-ASEAN Expo is scheduled to be held from Sept 12 to 15 in Nanning, capital of South China’s Guangxi Province, according to the organizer's announcement today. With Cambodia being the country of honor, the theme of this year's expo is “Jointly building the 21st Century Maritime Silk Road and the China-ASEAN community of innovation.” More countries along the Belt and Road Initiative will be invited for more corporations in business, according to the organizer.
China Securities Regulatory Commission (CSRC) has come up with a reform plan for new economy companies to list on the A-share market, according to a source talking to yicai.com. The regulators have reached an agreement regarding overseas-listed companies coming back to the A-share market through Chinese Depository Receipts (CDRs). Issued by Chinese banks, CDRs are a type of depositary receipts that allow overseas-listed companies to deposit their foreign equity with Chinese banks so that the equity can be traded in the A-share market. How the investors of the new economy companies could be protected is a topic that needs to be discussed states Chinese media.
China’s pension fund, the National Social Security Fund (NSSF), is currently managed by the country’s National Council for Social Security Fund. The Council, which has been under the control of the State Council, will start to be managed by the country’s Ministry of Finance (MOF). This move aims to strengthen the management and supervision of the pension fund, according to the National People's Congress. The asset management ability of the Council will be enhanced.
China Banking Regulatory Commission (CBRC) has issued a guidance to support the innovation in capital instruments. Chinese commercial banks are encouraged to integrate domestic and overseas resources, expanding the issuance of capital instruments. The regulations relating to preference shares and eligible Tier-2 capital instruments will be revised according to commercial banks’ experience.
China Securities Regulatory Commission (CSRC) is consulting the public in revising the regulation on foreign capital investing in securities companies. The regulator has issued a draft regulation further opening up the market. The shareholding ceiling of foreign investors in a Chinese securities company is loosened to 51%. This draft regulation is a follow-up of the consensus from the meeting between China and the US last year in November.
Investors of the delisted companies still enjoy the same rights as common investors do, according to Jiang Yang, the vice chairman of China Securities Regulatory Commission (CSRC), during a seminar at the “Two Sessions”. The country will issue more rules to protect the rights of investors, Yang adds. CSRC calls for institutions in the market to support the advance of investor protection, according to Yang.
The law on e-commerce and the law on securities has already passed the second reading of the Standing Committee of the National People’s Congress (NPC), according to NPC. Chinese regulators are also discussing establishing a registration system for the public offerings, according to NPC.
There are no technical obstacles in opening the southbound trading of the Bond Connect, according to Yi Gang, deputy governor of the People's Bank of China (PBoC), noting that it can be implemented whenever it is needed. The Bond Connect is a pilot scheme that connects China’s interbank bond market with international investors through Hong Kong Stock Exchange (HKEX). The northbound trading was launched in July last year, giving international investors northbound access to trade bonds on the China Foreign Exchange Trading System (CFETS). HKEX has been calling for the implementation of northbound trading.
A new regulation on financial holdings companies is under discussion, according to Pan Gongsheng, deputy governor of the People's Bank of China (PBoC). There are regulatory gaps in the supervision of financial holdings companies, according to Pan. The new regulation will focus on questions including the supervision of connected transaction.
Xiongan New Area will be introduced to the global community this year, according to Wang Yi, China’s Foreign Minister. Xiongan New Area is a state-level new area in the Baoding area of Hebei, China. Established in April 2017, the area is located about 100 km southwest of Beijing. “Projects from the world over that can meet high-quality requirements are welcome (to Xiongan Area),” says He Lifeng, minister of the National Development and Reform Commission.
Shenzhen Stock Exchange (SZSE) will reform the growth enterprise market (GEM) and improve the market system to attract leading innovative companies to list in Shenzhen, according to Wang Jianjun, general manager of SZSE. “We do not want to miss the new economy companies anymore. The SZSE is equipped with abilities to embrace these companies,” says Wang.
China will issue a guideline for the operation of local state owned assets investment platforms this year, according to Xiao Yaqing, chairman and deputy secretary of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC). There are three channels of state-owned assets investment: through the Chinese government, through institutions authorized by the Chinese government, and through state-owned enterprises (SOEs). Local state owned assets investment platforms are the second channel. Through investment and financing, these platforms manage state-owned assets, aiming to inject power into this sector.
China Insurance Regulatory Commission (CIRC) has issued regulations on the shareholding of insurance companies, setting standards for the potential investors and shareholders of an insurance company. Asset management and trust products are allowed to invest in listed insurance companies, according to the rules, noting that one single product can hold as much as 5% of stake in an insurance company. Controlling shareholders are not allowed to transfer the holdings within five years after the investment; strategic shareholders are prohibited to transfer within three years.
Kweichow Moutai overtook China Ping An Insurance in February, ranking the first in terms of the trading volume through Shanghai Stock Exchange, according to HKEX. Listed in Shanghai, Kweichow Moutai Co., Ltd. is a partial state-owned enterprise in China, specializing in the production and sales of Moutai liquor, together with the production and sale of beverage, food and packaging material, development of anti-counterfeiting technology, and research and development of relevant IT products.
Another Chinese liquor producer, Wuliangye, also ranked the first in February in terms of the trading volume through Shenzhen Stock Exchange, according to HKEX. Founded in 1997, Wuliangye Yibin Company Limited went public in Shenzhen a year after its establishment.
China will deepen the reform on the country’s stock exchanges, according to Jiang Yang, the vice chairman of China Securities Regulatory Commission (CSRC). Jiang calls for a more inclusive listing mechanism. Regulations relating to IPOs will be reformed, with support for companies in new economy sectors including biotechnology, cloud computing, AI, and high-end manufacturing.
CSRC recently gave the green light to Foxconn's IPO by significantly speeding up the submission procedure.
Foreign enterprises can enjoy preferential national policy when relocating to northeastern China, according to China’s National Development and Reform Commission (NDRC). The regulator says that the industrial output of foreign enterprises have taken about one-fourth of the country’s total industrial output, according to NDRC, noting that foreign enterprises play an important role in China’s economic development. The innovations in the free trade zones will be implemented across the country, according to the regulator.
A detailed construction plan with timeline and roadmap for the Greater Bay Area will be rolled out soon this year, according to Ma Xingrui, governor of Guangdong Province. The infrastructure that improves the connectivity of mainland China, Hong Kong and Macao is the crucial part of the plan, according to Ma.
China has set its GDP growth target at around 6.5 percent for 2018, unchanged from that for 2017, according to the country’s Government Work Report released today. China slightly lowered its fiscal deficit target to 2.6% of GDP for this year. It aims to maintain inflation level at around 3% and create over 11 million new urban jobs in 2018. The country will strengthen the fundamental role of consumption in driving economic growth while promoting effective investment this year, according to the report. Financial risk prevention will continue to be a tough task this year, requiring joint efforts to hold the bottom line, especially by controlling the money supply and keeping an eye on property bubbles, according to Yang Weimin, deputy head of the Office of the Central Leading Group on Financial and Economic Affairs.
China will open the manufacturing sector with all measures, according to the country’s Premier Li Keqiang. The country will further open up sectors including telecommunication, healthcare, education, aged care, and new energy car, according to Li.
China will set up a guaranteed fund to support the fundraising of qualified innovative companies, according to the country’s Premier Li Keqiang. The preferential tax policy for venture capital investment and angel investment will be introduced to more pilot cities, according to Li.
Beijing Gehua CATV Network will collaborate with Tencent and China’s state media, People’s Daily Online and set up a new joint venture. The new company will focus on livestreaming and short video production.
Founded in 1999, Beijing Gehua CATV Network Co., Ltd. is a China-based company principally engaged in the construction, development, operation, management and maintenance of cable radio and television networks. The company listed in Shanghai in 2001, becoming the first cable television network to go public in China.
China’s sharing economy market transaction volume increased by 47.2% y-o-y last year, reaching 4.92 trillion yuan (US $778 billion), according to a report by the State Information Center and an industrial association. The booming sharing sector also drew growing investment, with an increase of 25.7% y-o-y in the funding volume last year, reaching 216 billion yuan. The report expected China’s sharing economy to grow by 30% annually in the next five years, with shared services to emerge in the agriculture, education, medical and aged care sectors.
China’s all-important annual “two sessions” will start tomorrow. The 13th National People’s Congress (NPC) and the 13th National Committee of the Chinese People’s Political Consultative Conference (CPPCC) will discuss and revise some of the framework regulations. Key points to be discussed includes the economic growth target, reform and opening-up, and poverty alleviation.
Ye Jianming, chairman and executive director of CEFC China Energy Company Limited is reported to be under investigation by the Chinese government today.
CEFC China Energy is a private enterprise with major business in energy and finance. The company has been active in overseas acquisitions and China’s ambitious Belt and Road Initiative. Last year, the company has tapped into markets in Europe and the Middle East. One of the biggest deals was in September last year, when it acquired 14.16% stake in Russian oil giant Rosneft, becoming the third largest shareholder following the Government of Russia and BP.
Born in 1977, Ye ranked No. 2 on the Fortune 40 Under 40 list in 2016.
China Energy Fund Committee, a Hong Kong NGO sponsored by CEFC China Energy, was also in trouble from late last year, when Patrick Ho Chi-ping, former deputy chairman and secretary general of China Energy Fund Committee and Hong Kong’s former home affairs secretary, was first reported of being under investigation. Ho is now in jail for bribing the president of Chad and the foreign minister of Uganda in exchange for oil rights in the two countries, according to US prosecutors.
China will launch the second phase of a fund for the country’s integrated circuit industry. Chinese media says the second phase aims to attract a total investment of 150 billion yuan to 200 billion yuan within this year. China’s central government, the state-owned enterprises and local governments will invest in the fund. The first phase of the fund has attracted 20 companies including ZTE and Semiconductor Manufacturing International Corporation (SMIC).
Suning.com has announced its financial performance in 2017. With a net profit of 4.2 billion yuan, the company scored at nearly 500% growth compared to that of 2016. The revenue of the company reached 187.9 billion yuan in 2017, marking an increase of 26% y-o-y.
Founded in 1996, Suning Commerce Group is one of the largest non-government retailers in China, headquartered in Nanjing, Jiangsu Province. The Group has more than 1600 stores covering over 700 cities of China (including Hong Kong) and Japan. Its e-commerce platform, Suning.com ranks among top three Chinese B2C companies.
Taiwan enterprises will be treated the same as Chinese private enterprises when it comes to participating in the state-owned enterprise's reform, according to new rules issued by the Taiwan Affairs Office, National Development and Reform Commission and other 27 interested departments. The supportive regulations relating to China’s strategy of “Made in China 2025” are also applicable to Taiwan enterprises, according to the rules. Taiwan enterprises are also encouraged to relocate to central, western and northeastern parts of mainland China. The financial cooperation between Taiwan and mainland China regarding small amount payment, credit investigation and syndicated loan is encouraged.
Qihoo 360, a major player in Chinese Internet security industry, officially listed on Shanghai Stock Exchange today, becoming the first Chinese company to complete the transformation from a foreign private enterprise into a Chinese A-share company. Founded in 2005, Qihoo 360 Technology Co. Ltd., is known for its software including antivirus software, web browser, and mobile application store. In 2011, the company went public in New York. In 2015, the company started its privatization and completed the process in 2016, when Qihoo 360 delisted from New York Stock Exchange. The current biggest shareholder of Qihoo 360 is Tianjin Qixin Zhicheng Technology Co., Ltd, with 48.74% of the company’s share in hand. Qihoo 360’s founder and CEO, Zhou Hongwei, holds 12.14%, being the second largest shareholder.
Hangzhou Robam Appliances has announced their financial performance during the past year. With a revenue of more than 6.99 billion yuan, the company scored a growth of 21% y-o-y in 2017. The net profit increased by 20% last year, hitting 1.45 billion yuan. These figures are relatively weak compared to the yearly growth rates of net profit during 2012-2016, when Robam scored a growth of more than 25% in each of these four years.
Founded in 2000, Hangzhou Robam Appliances Co., Ltd. is one of China’s major players in the manufacture and sales of small kitchen appliances. Its products are mainly used in kitchen operations such as cooking and sterilization. The products include range hood, gas stoves, disinfection cabinet, electric pressure cooker, induction cooker, electric kettle, electric juicer, food processing machine, etc.
China will deepen the reform in the railway industry by increasing the pilot companies in this industry for state-owned enterprises’ mixed-ownership reform. China Railway Corporation, the country’s national railway operator, says it will speed up its reform with new company operating schemes and the introduction of qualified private investment. The results of the reform in the railway industry has been positive, according to Chinese state-owned media. The rail freight capacity has increased by more than 10% y-o-y in 2017, reaching 3.69 billion yuan (US $585 million).
The industry of baijiu (白酒, Chinese white wine) has entered a new stage of development, according to Yuan Renguo, Kweichow Moutai’s chairman. The market will recover and speed up its development, Yuan says. He estimates that the market size will exceed 1 trillion yuan (about US $158 billion) in five years. Meanwhile, Chinese analysts have been positive on baijiu-related stocks.
Listed in Shanghai, Kweichow Moutai Co., Ltd. is a partial state-owned enterprise in China, specializing in the production and sales of Moutai liquor, together with the production and sale of beverage, food and packaging material, development of anti-counterfeiting technology, and research and development of relevant IT products.
China Banking Regulatory Commission (CBRC) has revised the regulations on the administrative licensing for foreign-funded banks. The revised regulations call off the approval procedure of foreign-funded banks’ certain business, including securities investment fund custody business, overseas financial management services on behalf of clients and overseas financial management services for clients and corresponding custody services. Following the regulators’ move in last month when a unified market admission code of conduct for foreign-funded banks was rolled out, the revised regulations this time will further open up China’s banking industry, according to CBRC.
China may unveil new asset management rules soon based on statements from the central bank earlier this month, according to the country’s state media. The People’s Bank of China says it has been improving the draft of the new asset management rules and will submit it to the State Council for approval. The new rules might retain provisions such as restricting “non-standard asset” investments and eliminating multi-layer nesting to guard against risks and make the financial sector better serve the real economy, according to China’s state media.
China has been conducting mixed-ownership reforms among state-owned enterprises (SOEs), introducing investment from private companies in SOEs. A special fund for this purpose will be launched during the first half of 2018, according to cnstock.com. The shareholding structure of the fund consists of private and state-owned assets, with state-owned assets taking a large share of 40% to 50%. The total asset under management of this fund will be 950 billion yuan (approx. US$150 billion).
China Banking Regulatory Commission (CBRC) will issue guidance on insurance fraud this April. The guidance aims to bring standardized supervision to the industry and promote anti-fraud technologies. The responsibilities of insurance companies in this context will be clarified, according to CBRC. The guidance will also explain the obligation of regulators and interested institutions in regulating insurance fraud, according to CBRC.
Anbang Insurance Group is to be taken over by China Banking Regulatory Commission (CBRC) for one year and its former chairman Wu Xiaohui to be prosecuted for economic crimes. After being married to the granddaughter of China’s former leader, Deng Xiaoping, Wu founded Anbang Insurance in 2004. In June last year, Wu was reported as being detained. China has been tightening its supervision of the insurance industry since last year when CBRC’s former chairman Xiang Junbo was accused of "serious regulatory violations".
China’s Ministry of Agriculture has been investigating the safety of genetically modified crops. Beijing Dabeinong Technology Group and other six companies were reprimanded for violating industry rules. All seven companies failed to report problems in testing on genetically modified corn.
Beijing Dabeinong Technology Group Co is one of the two agricultural companies on the list for MSCI’s inclusion of the 222 A-share stocks. Founded in 1994, the company engages in the livestock science and technology, planting technology, and agricultural internet businesses. It produces animal feed products; animal health insurance products for the aquaculture industry; biotechnology products and solutions; and corn, rice, and other crop seeds.
China exported 2.2 million tonnes of scrap steel last year, compared to only around 1,000 tonnes in 2016, according to the China Iron and Steel Association. China phased out the production of 140 million tonnes of “ditiaogang” (substandard steel) last year as part of efforts to reduce excess capacity in the steel sector. As a result, scrap steel exports soared in 2017 as domestic demand was dampened. Most exports went to Southeast Asian nations such as Indonesia, Thailand and Vietnam. The biggest sources of exports were eastern and southern coastal provinces including Guangdong, Jiangsu, Zhejiang, Fujian and Hainan.
China’s local state‑owned assets investment platforms will play a more important role in 2018, according to Chinese state-owned media.
There are three channels of state-owned assets investment: through the Chinese government, through institutions authorized by the Chinese government, and through state-owned enterprises (SOEs). Local state‑owned assets investment platforms are the second channel. Through investment and financing, these platforms manage state-owned assets, aiming to inject power into this sector.
Since last year, China has been emphasizing the management of state-owned assets. Before that, the country used to focus more on the supervision of SOEs’ corporate governance.
The senior executives of major Chinese display screen producer BOE have been increasing their shareholding in the company’s stocks on Shenzhen Stock Exchange. Founded in April 1993, BOE Technology Group Co., Ltd. is a major Chinese supplier of the Internet of Things technologies, products, and services. In Q3 2017, the company ranked first in terms of the global market share for large-size screens. With an estimated net profit of 7.5 billion (US$1.18 billion) to 7.8 billion yuan in 2017, the company performed well last year. Senior executives of the company have increased their investments by 768,000 shares in total this month, accounting for a total investment of 4.26 million yuan.
Hong Kong’s stock market will be very active in 2018, with better connectivity with the international community including mainland China, according to HKEX chief executive Charles Li, speaking on the first trading day of the Chinese lunar Year of Dog. Investors have been worrying about the impact of US stock market and geopolitical issues, but the Hong Kong stock market will continue to develop its competitiveness in valuation, according to Li.
HKEX also launched the new Connect Hall yesterday, marking the transformation of the trading hall first opened in 1986. “It is a centrally-located venue at the heart of our financial hub that will help us to better serve our local community through investor education initiatives, exhibits and public seminars,” says Li.
Private capital investment recorded an increase of 2.8% y-o-y in 2017, reaching 3.815 billion yuan (approx. US$601 million), according to National Bureau of Statistics of China (NBS). The country’s private investment has been recovering since March last year, with the implementation of the regulations vitalizing private capital, according to NBS. The growth rate of private investment is catching up with the country’s total investment growth rate, according to NBS.
The Greater Bay Area, which connects and integrates the industries in Guangdong, Hong Kong and Macau, will make efforts to curb the offshore pollution. Guangdong has around 4,114 kilometers of coastline and much of that offshore area is heavily polluted, according to the Guangdong department of environmental protection. Environmental protection institutions will share environment data in the area, actively monitoring risks. According to the plans of the environmental protection authorities, new sewage outlets are banned in protected areas. Nature reserves and scenic areas of Guangdong and the discharge of pollutants will aim to be greatly reduced in heavily polluted areas.
China’s housing rental market was estimated at 1.3 trillion yuan (about $205 billion) in terms of revenue last year, according to Liu Zhifeng, head of China Real Estate Association. The country has been supporting rental market to cool down the housing price and stabilize the real estate sector. Chinese authorities now aim for a long-term mechanism for real estate regulation and a housing system that ensures supply through multiple sources including both housing purchases and rentals. Problems such as unbalanced supply and demand and insufficient regulation still exist, according to the Association, calling for detailed regulations on housing rental and improved standards for management of the sector.
China Insurance Regulatory Commission (CIRC) will tighten its supervision over innovations and reforms in insurance funds investment. So-called “innovations” aiming to elude regulators will be cracked down, according to the regulator. Insurance funds should be invested in projects serving the real economy and national strategy, the regulator emphasizes, encouraging insurance funds to invest in fixed income products.
Ministry of Commerce released the Foreign Direct Investment (FDI) data in January. According to MOFCOM, 5197 new foreign-invested companies were set up in January 2018, 158.6% up from the same period last year. The investments were majority in the technology sector and primarily from Singapore, Taiwan and the US.
JD.com announced that its subsidiary JD Logistics completed a $2.5 billion fund raising. Investors include Hillhouse Capital, Sequoia Capital, China Merchants Group, Tencent and China Life. The deal marks the largest single fund raising in China's logistics industry. Upon the completion of the fund raising, JD.com will still hold 81.4% of JD Logistics.
China Securities Regulatory Commission recently released Foxconn's IPO prospectus. Once the application is approved, Foxconn will become the largest global electronic devices manufacturer listed in China. Chinese analysts believe that the IPO will be approved within six months and Foxconn related stocks will benefit from the IPO.
According to Chinese media, the stock pledging business of Chinese securities companies have been declining recently due to the recent sell-off. To mitigate the potential risk, some Chinese securities companies started to raise the borrowing cost of stock pledging by 50 bps. Some Chinese analysts also attributed the rising borrowing cost of stock pledging to rising onshore financing cost.
Ministry of Finance issued a guidance on the subsidy of new energy vehicles. The guidance set higher standards and qualification of new energy vehicles eligible for subsidy. The guidance also specifies relevant regulatory bodies for setting up the regulatory framework for new energy vehicles. The new guidance was effective on Feb 12 of this year.
The National Development and Reform Commission issued an official list of sensitive industries in terms of outbound investment. In addition to industries which have been restricted including real estate and hotels, weapon equipment, water resource, the media are now listed as sensitive industries. In addition, investment in these companies require investors to disclose the ultimate controller. The new list will be effective on March 1st of this year.
Kweichow Moutai general manager Baofang Li expects the demand and supply disequilibrium will become the norm in China. The company is still looking for the best price of the wine to cater to the market needs. Li said that reaching the sales target of 90 billion yuan in 2018 is not a difficult task.
Although Chinese regulators have already banned bitcoin trading in China, Chinese media has still found bitcoins platforms which facilitate bitcoins trading. Users will be able to use Alipay to make payments. Currently, there are still at least 21 bitcoin platforms running in China, the servers of which are all overseas.
China plans to conduct its mixed-ownership reform in state-owned enterprises (SOEs) in seven areas including power, petroleum, natural gas, railway, aviation, telecommunication and defense. Central SOEs such as PetroChina, China North Industries Group Corporation, China Electronics Technology Group Corporation, China Minmetals, State Grid Corporation of China, Power Construction China, China Energy Investment, China Huadian Corporation, State Power Investment Corporation and Ansteel Group have announced their reform plans. The reform in power industry is a major focus in 2018, according to Chinese media.
China has seen robust growth in imports and exports of goods in January, while its trade surplus with the United States shrank amid rising China-US trade tensions, according to the country’s the General Administration of Customs (GAC). The country’s imports surged by 30.2% y-o-y to 1.19 trillion yuan last month. Its exports increased by 6% to 1.32 trillion yuan, according to the GAC. China’s robust export indicates steady global demand momentum, according to Chinese media.
China’s producer price index (PPI), which measures costs for goods at the factory gate, rose 4.3% y-o-y in January, according to the National Bureau of Statistics says today. The index is down from a growth of 4.9% recorded in December, according to the bureau.
China and the Netherlands yesterday agreed to carry out more mutually beneficial cooperation through joint implementation of the Belt and Road (B&R) Initiative in 2018. China’s President Xi Jinping suggested the two sides carry out more mutually beneficial cooperation through the Belt and Road construction. Dutch King Willem-Alexander said the Netherlands is willing to participate in the first China International Import Expo, which is to be held in Shanghai from Nov 5 to 10 this year.
China has formed an overarching framework for the country’s next round of opening-up, according to the country’s state-owned media. Banking, securities and insurance will be the key focus of the opening up of the country’s financial sector. The opening-up might exceed market expectations, according to the media. China’s stock market and the bond market will be further opened up. The mechanism of the Bond Connect will be improved; the discussion over Shanghai – London Connect will be carried forward.
Three Chinese telecom operators, namely China Mobile, China Unicom, and China Telecommunications Corporation, is planning and testing 5G projects. China Mobile plans to set up 500 stations for 5G in major cities such as Beijing, Shanghai, Shenzhen, etc. In addition to the operators, telecommunications equipment and system company, ZTE, launched a fundraising last week for researching and developing the 5G technology. Local government such as Beijing, plan to advance their smart city construction, and are testing on 5G technologies.
China has been promoting the housing rental industry recently. The country's National Development and Reform Commission (NDRC) has recently announced that it will support professional and institutional companies in the housing rental industry. Long-term housing rental loans will be encouraged, according to NDRC. Chinese banks, including Bank of China, China Construction Bank and Industrial and Commercial Bank of China, have been issuing housing rental loans or providing relevant services.
Some of the companies listed in A-share market have been giving irrational reasons in their statement for their declining performance, according to China Securities Regulatory Commission (CSRC). The regulator says they will follow up on such practice to protect the investors. The supervision of China’s listed companies will be enhanced, according to the regulator.
National Internet Finance Association (NIFA) has signed a memorandum with a UK association, Innovate Finance, to enhance the cooperation between the two parties in financial innovations. The technology and resource of UK’s Internet finance sector will help Chinese companies going overseas, according to NIFA. The two parties will meet regularly, holding events and training programs.
Agricultural Development Bank of China (ADBC) plans to lend about 100 billion yuan ($15.9 billion) by 2020 to support the maritime economy. The financing will mainly go to modern fisheries, strategic and emerging maritime sectors such as maritime medicine and renewable energy, as well as infrastructure and public services, according to guidelines issued by the State Oceanic Administration and ADBC. This announcement came about 10 days after the country’s central bank and other government agencies decided to strengthen financial support for China’s maritime economy by increasing bank loans and diversifying financing channels.
China will crack down on the illegal practices in forex this year. State Administration of Foreign Exchange (SAFE) says it will pay particular attention to those illegal practices in the name of innovation. But legal innovation will continue to be supported, according to SAFE. The regulator will also enhance its cooperation with Ministry of Public Security in supervising the forex market.
China’s official new rules on asset management will be issued soon, according to a source talking to yicai.com, noting that it will be possibly issued before the annual plenary session of the National People's Congress (NPC) in March. A draft regulation on asset management was issued last year. The official regulation will be more rigorous, according to the source.
The Asian Infrastructure Investment Bank (AIIB) will enhance cooperation with Hong Kong in boosting the Belt and Road (B&R) Initiative, said Jin Liqun, the bank’s president. “We are willing to strengthen cooperation with the Hong Kong officials, financial institutions, relevant agencies and enterprises to further promote the initiative, thus contributing to economic expansion in Asia, as well as the global economy,” said Jin. Key areas of cooperation will include commerce and trade, industrial development, science and technology, according to the bank.
China has announced that it has allowed direct trading between the renminbi and the Thai baht on its interbank foreign exchange market beginning today (February 5). The move aims to boost bilateral trade and investment, facilitate the use of the two currencies in trade and investment settlement, and reduce exchange costs for market players, said the China Foreign Exchange Trade System (CFETS) in a statement. Previously, trading between the yuan and the baht was only allowed in regional interbank markets.
Shanghai International Group, together with three former executives from Credit Suisse, have set up a European buyout fund on February 2. The fund will be managed by an equity investment management company in Shanghai (上海美丽境界股权投资管理有限公司). The fund plans to raise 3 billion yuan in the first tranche, investing in medium size in Europe, especially those can serve the manufacturing upgrading of China. The second tranche (3 billion yuan) of the fund will be launched during the second half of this year.
Since LeEco's stock resumed trading in January, its stock price has been dropping by 10%; reaching the daily price drop limit for eight consecutive days. According to Chinese media, the management of LeEco has been going through the relevant bad debt. The significant price drop raised concerns over the switch of control of LeEco, as the founder Yueting Jia's holdings in the company can be liquidated as a result of margin cut.
A public note from China State Shipbuilding Corporation (CSSC) draws market attention towards the possible merger of CSSC and China Shipbuilding Industry Corporation. According to CSSC, it is expecting to receive an approval letter from State Asset Supervision and Administration Commission in February. CSSC has seen profit decline in 2016 and is likely to see a further decline in its 2017 financial report.
China National Nuclear Power Co has merged with China Nuclear Engineering Group Co., marking the third restricting project since China started its central state-owned enterprise (SOE) reforms. This is also the first central SOE to reform in 2018. The number of central SOEs under the control of State-owned Assets Supervision and Administration Commission of the State Council (SASAC) has been reduced to 97 so far. Chinese regulators have disclosed the third batch of pilot projects in the SOE reforms, including 10 central SOEs and 21 SOEs, whose reform plans are under discussion.
China Development Bank (CDB) will implement a special purpose loan of 250 billion yuan this year, serving the construction along the Belt and Road (B&R) Initiative, according to Zheng Zhijie, Vice Chairman and President of CDB. In addition, CDB has signed a memorandum with Standard Chartered, promoting the cooperation of the two parties in the B&R projects. The two parties agreed to conduct a cooperation worth 10 billion yuan in the next five year. This will boost the internationalization of the renminbi, according to CDB.
Tencent has signed an agreement with Xi’an local governments in setting up a town for mass entrepreneurship and innovation in Xi’an. With a total investment of 16 billion yuan, the project will integrate functions including research and development, hatching, industrialization, training, attracting investment, etc. Cloud computing, Internet plus and other 9 industries will be the major focuses of the project which plans to attract more than 500 enterprises. At least 10 of these enterprises will be listed companies.
Some of the Chinese banks have stopped lending to property developers, according to a source speaking to cs.com.cn. Regulations in the real estate sector have been increasingly tightened, according to the source, noting that this sector is one the major focus of China’s regulation and control targets. “Trust companies have done a lot of real estate financing business last year. But now, companies are becoming more cautious,” says the source.
A Memorandum of Understanding was signed between China Railway Corporation (CR) and the Hong Kong Special Administrative Region (HKSAR) government, to arrange the key work during the trial operation of the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail. Hong Kong section of the Rail will be in operation in the third quarter of this year, according to HKSAR Chief Executive Lam Cheng Yuet-ngor
An index tracking China’s entrepreneurial environment increased in recent years, indicating a more mature ecosystem for innovation, according to a report from Tsinghua University. The aggregate index for entrepreneurial environment climbed from 2.87 in 2010 to 3.1 during the survey period from 2016 to 2017.
Entrepreneurs surveyed reported significant improvements in financial and policy support as well as better social and cultural standards. Young entrepreneurs aged 18 to 34 were the most active innovators, accounting for 44.4 percent of the total.
“China’s financial system is seriously distorted,” says Lou Jiwei, chair of the National Council for Social Security Fund (NSSF). The possibility of a financial systematic risk breaking out in China is very high, according to Lou. China’s financial market is complex, with interbank financing, cash pooling, universal life insurance products, P2P loans, and payday loan adding to the risk of the market, according to Lou.
China’s annual plenary session of the National People's Congress (NPC) will start on March 5. Held in Beijing, the member of the NPC will discuss and decide framework policies of China and elect the officials of state institutions.
The Agricultural Development Bank of China (ADBC), one of the country’s three policy lenders has offered loans of over 859 billion yuan last year for agricultural and rural infrastructure development, according to a recent statement by the bank.
The loans covered major fields in rural infrastructure sector including shantytown transformation, water conservancy, and road and environmental protection projects. Housing renovation in the rural area took about half of the overall lending, with a total loan of 427.4 billion yuan.
Listed companies in China reported rapid profit growth in 2017 as the country’s supply-side structural reform began to bear results, according to state-owned Xinhua News Agency. So far, over half of the listed companies on the country’s two major exchanges have reported their 2017 performance, and nearly 70% of them saw profit gains, according to Shanghai Securities News. Most companies in traditional sectors such as coal and steel showed strong growth on the back of the country’s economic restructuring and business environment improvement, according to Xinhua, noting that 19 out of 20 companies in the coal sector saw profit growth.
Ministry of Finance (MOF) has recently established a fund for the development of the agricultural industry with a proposed 50 billion yuan in asset. MOF has already invested 8 billion yuan in the fund. The fund will attract private capital, according to the regulator.
People's Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission and State Oceanic Administration have jointly issued a guidance to boost the financial service in the marine economy. Qualified companies in the marine related sector will be encouraged to list on the main board; banks are encouraged to set up financial departments serving the marine economy; the insurance funds are welcomed to invest marine economy related projects.
The regulators will enhance the financial services in the marine economy, guiding the sector to form a developing mode of quality oriented efficiency.
The National Development and Reform Commission (NDRC), People's Bank of China and Ministry of Finance have jointly issued a notice on banks’ debt-to-equity swap. Qualified institutions are allowed to set up private equity funds to marketize the debt-to-equity swap; listed companies or unlisted public companies are allowed to issue equity financing tools to marketize the debt-to-equity swap, according to the notice. Relevant innovations are also encouraged, according to the notice.
Hong Kong Exchanges and Clearing (HKEx) hopes to implement the London-Hong Kong stock connect next year, according to Charles Li chief executive of HKEx Group. Plans for the stock connect started in 2015 but was put on hold in 2016 due to uncertainties around Brexit. According to Li, the discussions will hope be restart after March 2019.
China’s Ministry of Commerce, People's Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission have jointly issued a draft regulation to supervise the overseas investment of Chinese companies. A much-tightened supervision over the overseas investment will be deployed out. Regulators will focus on investment over 300 million yuan, according to the regulation.
Guangdong plans to implement several projects relating to the Greater Bay Area. The Guangdong government is seeking to set up free trading ports. Several projects of transportation construction will be deployed this year.
China Banking Regulatory Commission (CBRC) emphasizes again that it will further crackdown on illegal practices in the financial sector. Corporate governance and shareholding will be one of the regulator’s focus points. “Some of the shareholders are establishing illegal financial groups and turning banks into their ATM machines by violating the regulations,” says Guo Shuqing, chairman of CBRC. The regulator will supervise the market with stricter penalties, protecting consumers’ rights. The financial sector will be boosted in order to provide better services to the real economy.
China’s financial and manufacturing sectors will be further opened up, according to Liu He, general office director of the Central Leading Group for Financial and Economic Affairs, speaking on the World Economic Forum held in Switzerland. China welcomes enterprises from Switzerland to invest in China, according to Liu. China also seeks deeper cooperation with Switzerland in customs, cross-border e-commerce, and financial sectors.
China’s State Council has issued a proposal to enhance the collaboration between the e-commerce and logistics sectors. The country will improve the infrastructure of the two sectors, according to the proposal. Technologies in big data, cloud computing and robotization will be more widely used in the two sectors, according to the proposal, noting that information sharing will be encouraged.
China’s private sector has been significant to the country’s economic growth, according to China’s President Xi Jinping. There are 65.79 million individually-owned businesses and more than 27.26 million private enterprises which employ 341 million people as of the end of 2017. The private sector is expected to make a greater contribution to the country’s economy with new regulations expected to come out soon. The business environment of this sector will be improved with better administration services and lower fees and taxes, according to Chinese Premier Li Keqiang.
China’s central government’s annual “No. 1 Document” will focus on the revitalization of the rural regions and supply-side reform in the agriculture industry, according to a source talking to cnstock.com. Green agricultural products are highlighted, according to the source. An improved financial system serving the rural regions and agriculture industry will be deployed, and relevant financial innovations are encouraged, according to Chinese regulators previously.
China will advance the mixed-ownership reforms in the traditional industrial zone in north-eastern parts of the country, according to National Development and Reform Commission (NDRC). Pilot reform projects will be rolled out in this region and the investment environment will be improved, according to the regulator. The investment environment rankings of major cities in this region range from the 20th to 30th among all the cities in China, according to Chinese media.
Chinese regulators are discussing a development strategy for the intelligent car industry, according to National Development and Reform Commission (NDRC). Interested institutions and enterprises are encouraged to innovate and cooperate in this field. An innovation platform for the intelligent car industry will be established, according to NDRC, noting that enterprises from automotive, IT, Internet, and financial sectors should collaborate to ensure the implementation of the intelligent car development strategy.
Inner Mongolia autonomous region will set up a fund of 30 billion yuan for upgrading state-owned enterprises (SOEs), according to Xinhua News Agency. The fund is invested in by the government of Inner Mongolia and four other institutions, according to the local office of State-owned Assets Supervision and Administration Commission of the State Council.
The Shenzhen Stock Exchange will continue to reform in the Growth Enterprise Market. Qualified innovative and start-up companies are encouraged to do Initial Public Offerings (IPOs), according to Shenzhen Stock Exchange. Companies with businesses that comply with China’s development strategy will be supported. Fintech innovation will be one the major focus, according to the bourse.
The total value of the logistics industry in China is predicted to reach 280 trillion yuan in 2018, an increase of 6.5% y-o-y, according to a report by Chinese Academy of Sciences. The total revenue of the logistics industry is expected to exceed 9 trillion yuan in 2018, according to the report. Investments in transportation, warehousing and postal industry will maintain a growth of 10% in 2018, according to the report. The development in the high-end manufacturing industry and the consumption boom is driving the demand for logistics services, according to report.
China’s economy has grown by 6.9% in 2017, according to the country’s State Council. This marks the first time during the past seven years that the country’s economic growth rate has picked up, according to Xinhua News Agency. The country’s GDP totaled 82.7 trillion yuan (about $13 trillion) in 2017.
China will soon shift its SOE reform plan to the defense industry, according to Chinese media. Major Chinese regulators including the National Development and Reform Commission (NDRC), Ministry of Education and Ministry of Science and Technology have jointly issued a notice to advance the mixed-ownership reforms in the country’s defense industry. The notice also encourages the cooperation and innovation in integrating the state-owned defense companies and private enterprises. Defense companies should share their advanced technology, and private companies should share their corporate governance experience, according to the notice.
SAFE (State Administration of Foreign Exchange) will encourage enterprises to improve their risk management systems in 2018, promoting the reforms in exchange rate formation mechanism. SAFE will also diversify the products and participants of the forex market and expand the transaction scope. The regulator will further open up the market, improving the service and competitiveness of China’s forex market.
The Chinese government will continue to reduce the subsidies of new cars this year, according to a source talking to China Daily. The plan of cutting new energy car subsidies was raised last year. It was not until recently that interested parties including the Ministry of Finance and Ministry of Industry and Information Technology reached an agreement, according to the source. The subsidies is expected to be eliminated since 2020, the source adds.
National Development and Reform Commission (NDRC) encourages central state-owned enterprises (SOEs) to increase its capital strength by equity financing and debt-to-equity swap. In order to deleverage and control the risks, NDRC has set up warning lines of enterprises’ debt-to-assets ratio. The debt-to-asset ratio of industrial enterprises should not exceed 70%, non-industrial enterprise 75% and research and development enterprises 65%.
China will continue to curb the real estate bubbles, according to Guo Shuqing, chairman of China Banking Regulatory Commission (CBRC). The regulators’ attitude towards real estate is certain, according to Ministry of Housing and Urban-Rural Development, emphasizing again that houses are not for speculation. The regulators aim to form a virtuous cycle among real economy, financial sector and real estate sector, according to Guo.
China’s Liaoning Province and Shandong Province are planning to establish free trade port, according to Economic Information Daily. The local government of Liaoning has already submitted the application of setting up a free trade port in its coastal city of Dalian; Shandong is planning to locate the port at Qingdao, according to the media. China has been encouraging setting up free trade ports since last year. Applications from Shanghai, Zhejiang, Liaoning, Shandong, Fujian and Guangdong are being processed.
Hong Kong Exchanges and Clearing (HKEx) hopes to launch derivative products of A-shares this year, according to chief executive Charles Li Xiaojia. “The trading volume through the stock connects has increased from 2016’s HK $68 billion to last year’s HK $88 billion. With A shares to be included in MSCI in the middle of this year, 2018 is a good time for HKEx to launch A-share derivatives,” says Li.
Qualified companies operating in regions with high poverty will enjoy favorable regulations when doing initial public offerings (IPOs), according to a guidance issued by People's Bank of China (PBoC) and interested departments. Faster processing of IPO applications from these particular companies are expected. This will boost the financial institutions' lending to the poverty regions, according to Chinese media, noting that China aims to establish a credit system covering all the poverty regions by 2020.
China’s State Grid plans to establish an electric vehicle network of 120,000 public charging piles for electric cars by 2020. The network will cover the Beijing, Tianjin, Hebei, Shandong and Yangtze River Delta cities, together with major cities in other regions, says State Grid Corporation of China. China has the world’s largest new energy auto industry with an estimated sales volume of 577,000 units last year. “Starting 2020, electric cars are likely to go beyond their nature as vehicles, and become a basic unit of the energy system,” says Jiang Bing, chairman of the company.
China’s largest LCD glass substrates producer, Dongxu Optoelectronic Technology has signed a cooperation agreements with institutions from Japan, Thailand, Malaysia, Indonesia and Mongolia in constructing smart cities. Dongxu Optoelectronic Technology will initiate a managing platform based on the Internet of things (IoT) for smart cities. The platform will include technologies such as big data, cloud computing, graphene and new energy car.
Founded in 1992, Dongxu Optoelectronic Technology Co., Ltd. is the world’s fourth largest LCD glass substrates producer. The company also taps into new sectors including new energy car and technologies relating to smart city construction.
China’s Silicon Valley, Beijing’s Zhongguancun Science Park, has made 4.2 trillion yuan of revenue during the first 11 months of 2017, recording a growth of 14.2% y-o-y, according to Beijing Municipal Bureau of Statistics. This is driven by the growth of companies in areas including electronics and information, bioengineering and medicine, advanced manufacturing, environmental protection, and energy-saving. The research and development investment of Zhongguancun grew nearly 18% y-o-y during the same period, reaching 144 billion yuan.
China will be releasing its 4Q and 2017 full year GDP this week. The country’s Premier Li Keqiang recently disclosed that economic performance has surpassed expectations with 6.9% growth in 2017. According to Chinese Academy of Social Sciences, the expectation of GDP growth for this year will be 6.7%. But early this month, the country’s Inner Mongolia Autonomous Region has announced that it has inflated its industrial data by 40% and fiscal revenue by 26% in 2016. Tianjin Binhai New Area, a special economic zone, has also revised its 2016 GDP down 33.4% to 665.4 billion yuan. They are not the first Chinese local governments that admit cooking its GDP data. In January 2017, Liaoning Province admitted that it inflated its GDP figures during 2011 to 2014.
The past year has seen a 14.2% increase in China’s total export and import volume, putting an end to the consecutive decrease during the previous two years, according to China Customs. One of the major drivers is the country’s increasing export and import volume with the countries along the Belt and Road Initiative, according to China Customs. However, the double-digit growth momentum will be difficult to maintain in 2018 according to China Customs.
National Development and Reform Commission (NDRC) says that some of the Chinese central state-owned enterprises (SOEs) are violating rules by making short-term loans and providing external guarantees. Some of central SOEs’ subsidiaries are carrying out illegal trade financing, according to NDRC. The regulator also points out that some of the SOEs fail to integrate its subsidiaries, causing the overlap of management and horizontal competition. NDRC will strengthen the supervision of SOEs with a focus on the issues mentioned.
SANY Heavy Industry has announced that the company's largest shareholder, SANY Group, and its persons acting in concert, have reduced 75 million shares in the secondary market, accounting for a reduction of 5.24%. This has not impact the valuation of SANY Heavy Industry’s stock too much, according to Chinese media.
Sany Heavy Industry is a Chinese multinational heavy machinery manufacturing company headquartered in Changsha, Hunan Province. Founded in 1989, SANY has now become the sixth-largest heavy equipment manufacturer in the world.
Chinese electronics and software company Xiaomi Inc. has been talking to investment banks in Hong Kong and will soon announce its underwriters for listing in Hong Kong, according to a source talking to yicai.com. Headquartered in Beijing, Xiaomi designs, develops, and sells smartphones, mobile apps, laptops and related consumer electronics. The company will be among the first batch of companies that will go public under Hong Kong’s weighted voting rights structure, according to yicai.com. In 2017, the number of the newly listed companies on Hong Kong Stock Exchange was 174, up 38% compared to 126 in 2016.
China will establish a mechanism of industrial Internet by 2020, according to Ministry of Industry and Information Technology (MIIT). The mechanism will include about 10 multi-industry platforms supporting the digitalization, networking and intelligent production of Chinese enterprises. The mechanism will also support Chinese industrial enterprises to develop software applications.
Chinese AI leader iFlytek has announced its cooperation with China’s largest national home improvement and furniture retail platform Red Star Macalline. Robots with biometric recognition functions will be deployed to Red Star Macalline’s stores as shopping guides. Founded in 1999, iFlytek is a Chinese information technology company listed in Shenzhen. The company creates voice recognition software and other voice-based internet or mobile products covering education, communication, music, intelligent toys industries. China Mobile holds 12.9% of iFlytek’s shares as of end September 2017.
China is considering giving the ok to high-quality companies involved in the Belt and Road Initiative to raise funds through yuan-denominated initial public offerings (IPOs) in Hong Kong's stock market. This move would strengthen Hong Kong’s role as a renminbi offshore hub, according to Chinese media. The Chinese government plans to select certain companies and facilitate their fundraising in the offshore market, but the detailed timeline for the plan remains under discussion.
The number and the value of initial public offerings (IPOs) on China’s two bourses hit a record high in 2017. A total of 438 companies launched IPOs on the Shanghai and Shenzhen stock exchanges in 2017, up 93% from 2016, according to Chinese financial information services company Wind. The value of IPOs last year was 230 billion yuan, up 56% y-o-y.
Oriental Pearl Group has announced today that it will cooperate with China Unicom in areas including content, channel, hardware and service, promoting the “Entertainment plus” strategy. The two parties will innovate in areas such as home entertainment. The two parties will also cooperate in terms of capital and equity, jointly investing in new business and innovation projects.
Founded in 1992, Oriental Pearl Group is a cultural company engaged in touring, radio and TV transmission service, media investments, advertising, video game console manufacturing, software developing, and real estate investments. Based in Shanghai, the company is listed as one of the 50 pivotal large-scale enterprises by the Shanghai government.
China Insurance Regulatory Commission (CIRC) has recently drafted new rules regarding the cashing out of insurance policies. The new regulation allows pilot insurers to offer cashing out business. Policyholders needing emergency funds can sell their life insurance policies to investors through certain institutions. The draft regulation prohibits reselling the sold policies.
China has recently issued a new guidance on the mixed ownership reforms of the country’s state-owned enterprises. This year will be a breakout year for these reforms, according to Chinese media, noting that the coal industry will speed up its reforms.
Eleven coal related enterprises including China Shenhua, China Coal, China Guodian Corporation, SDIC, and China Poly are said to be active in these reforms this year, according to Chinese media.
Investment and consumption will be the two engines to drive China’s economic growth in 2018, according to a recent report by Economic Information Daily. Driven by the manufacturing and the primary sectors, fixed-asset investment is projected to grow at around 6.5% while consumption is expected to reach 10% this year boosted by increasing residential income, says the report.
People's Bank of China (PBoC) says recently that higher interest rates will help squeeze asset bubbles and restrain debt expansion. “There is room for an increase in interest rates in the short term as industrial product prices and enterprises’ profitability have improved since last year,” Ji Min, deputy head of the PBoC’s research bureau. Inflation and foreign exchange rates also have to be factored in before adjusting interest rates, Ji said.
China has recently established an open financial cooperation mechanism to help revitalize the traditional industrial zone in northeastern China which is also known as the rust belt. More than 40 financial institutions, including the China Development Bank and the State Development and Investment Corp, are involved in the newly set-up system. It aims to bridge government agencies, financial institutions and local governments and enterprises in northeast China to help boost the rust belt.
Wuliangye, the well-known Chinese liquor-producer in Sichuan province has become a shareholder of a carmaker. Push Group, a subsidiary of Wuliangye Group Co in Sichuan. The comapny has acquired a 0.5% stake in Cowin Auto, a brand of Chery Automobile. The acquisition was part of a deal package in which Chery sold a 51% stake for 2.49 billion yuan, according to Chery’s statement.
Founded in 1998, Wuliangye distributes its products mainly in the domestic market.
China Banking Regulatory Commission (CBRC) has issued new regulations on foreign banks’ admission into Chinese market. The new rules set a clear standard for foreign banks getting approvals from Chinese regulators. This move will help to further open up China’s financial market, says CBRC, noting that the new regulations simplify relevant administration processes.
Some Chinese banks are suspending their public-private partnership (PPP) funding projects, according to 21jingji.com. Many of the suspended projects are postponed to March of this year, according to the media. Chinese regulators have not made any official announcement to this.
China’s Insurance Regulatory Commission (CIRC) has issued new regulations to curb implicit public debts of Chinese local governments. Insurance companies are prohibited to promise explicit returns when setting up equity investment plans. The regulations also clarify that insurers are forbidden to participate in the shadow banking system.
Chinese pharmaceutical company Beijing Tongrentang Co., Ltd opens its first store in Switzerland. Located in Geneva, the new store offers traditional Chinese traditional treatments including acupuncture, cupping, and massage.
Founded in 1669, Beijing Tongrentang is a brand known for manufacturing and selling traditional Chinese medicine. Beijing Tongrentang Co., Ltd operates a hospital in Beijing. Headquartered in Beijing, the company operates about 130 stores in 26 countries and regions globally.
China’s banking system will go through a number of reforms in an effort to further open up. The change will focus on supply-side structural reforms, China Banking Regulatory Commission (CBRC) says during the annual Central Economic Work Conference which sets the economic policy tone for the coming year. The regulator also warns about possible risks in the sector including the debt risks of local governments and risks in the real estate sector.
China’s Belt and Road Initiative will roll out four major rail projects simultaneously in 2018, accounting for a total investment of US$40.27 billion (164 billion ringgit). These projects include the 50 billion to 60 billion ringgit Kuala Lumpur to Singapore high-speed rail (HSR), 55 billion ringgit East Coast Rail Line (ECRL), 40 billion ringgit Mass Rapid Transit 3 (Circle Line), and the 8.9 billion ringgit Gemas to Johor Baru electrified rail double tracking.
China Development Bank (CDB) has issued a specialized bond for the Belt and Road (B&R) initiatives. The bond is a five-year fixed rate bond worth US$ 350 million, listed on Hong Kong Stock Exchange. This is the first specialized bond for B&R issued by CDB. The money raised will be used to support projects along B&R, marking an innovative cooperation with Hong Kong’s financial market, according to Chinese media.
The government is likely to maintain a neutral monetary policy in 2018 and will not become more stringent than this year in order to stem a slide in economic growth, according to researchers of Chinese Academy of Social Sciences, a leading think tank advising the government. China needs to deepen its reforms in financial sectors, says Xu Zhong, Director General, Research Bureau of the People's Bank of China. “The financial security will be generated from reforms rather than maintenance,” says Xu.
The annual Central Economic Work Conference which sets the economic policy tone for the coming year has recently concluded. Key takeaways from the event include the maintenance the sustainable development of the financial and real estate sectors. Avoiding unexpected risks will be China’s economic policy priorities next year. These measures are seen as key objectives to safeguarding China’s economic stability, according to Chinese media.
Zhong De Securities, a joint venture securities company set up by Deutsche Bank and Shanxi Securities, has faced difficulties in their IPO business. Over the past two months, four IPOs sponsored by Zhong De Securities were rejected by the China Securities Regulatory Commission (CSRC). Since the new IPO review committee was appointed two months ago, the approval rate has been low. Only 47 out of 79 companies have received approval from the CSRC.
The Chinese ride hailing leader Didi successfully acquired a payment license in China through purchase of a payment company. Didi is now the only ride hailing company with a payments license. It is expected that apart from the traditional ride hailing business, Didi will enter the financial services market in the future.
According to Chinese media, the Asset Management Association of China (AMAC) will no longer disclose the money market fund size information and will not include the size of money market fund into asset management companies’ AUM. Market analysts believe that it shows authorities have started to emphasize the active management capability of Chinese asset management companies. Data from AMAC shows that the AUM of money market funds almost doubled in first ten months. It is likely that asset management companies with large money funds such as Tianhong AMC and ICBC credit Suisse will be largely affected.
Qingdao Haier plans to inject capital into one of its overseas subsidiaries, Haier US Appliance Solutions, Inc. Qingdao Haier indirectly holds 100% of shares in US Solutions. This percentage will be maintained after the injection.
Qingdao Haier a subsidiary of Haier Group, was established in 1989. It has a total asset of 131 billion yuan as of end 2016. Founded in 1984, Haier Group is the world’s leading brand of major household appliances.
The mixed-ownership reform of Chinese state-owned enterprises (SOEs) is speeding up, according to State-owned Assets Supervision and Administration Commission of the State Council (SASAC). Central SOEs’ reforms are all approved, says the regulator, noting that 87 central SOEs have set up boards of directors.
National Development and Reform Commission (NDRC) is to issue a code of conduct for state-owned enterprises making outbound investments. China has been tightening its control of outbound investment. The code is seen as one of the measures to protect the nation’s financial security, according to Chinese observers. Private enterprises are encouraged to invest overseas, but risks still exist, according to the NDRC, noting that a code of conduct for private companies regarding outbound investment will also be issued.
China will further tighten its supervision on insurance companies in order to reduce the risk in the sector, according to China Insurance Regulatory Commission (CIRC). Insurance companies will be rated from A to D by CIRC based on their ability to ensure the matching of maturity, cash flow and cost on both sides of their balance sheets. Companies with the rating of D which is the lowest will be banned from applying to launch new products within a certain period. Salaries of the top management of these firms will also be restricted.
China will set up funds totaling 50 billion yuan to invest in the Belt and Road (B&R) infrastructure and industrial projects in Southern China’s Guangxi region and ASEAN countries. The funds will be established by an investment arm of China Development Bank (CDB) and Guangxi Investment Group, according to the CDB. China Minsheng Bank estimates that infrastructure financing demand along the B&R will amount to US$10 trillion in the next five years.
China will set up a model area for sharing economy, according to National Development and Reform Commission (NDRC). The regulator has issued a new notice on this, noting that the area will focus on fields including innovative sharing and productivity sharing. Qualified industries will be supported, according to the notice.
Hong Kong has signed a new agreement with Beijing regarding the Belt and Road (B&R) Initiative. Mainland will support “relevant parties” to use Hong Kong as a financing platform for infrastructure construction along B&R; the green bond market in Hong Kong will be further boosted; Hong Kong’s position as the global renminbi offshore market will be strengthened, according to the agreement. Hong Kong and mainland will also further cooperate in areas including airports, ports, railways and roads, according to the agreement.
Hong Kong government today has revealed its plan for the next five years on upgrading Hong Kong into a smart city. Next year, Hong Kong will focus on developing a “fast payment system”. Virtual banks will also be introduced as a new financial service channel.
The People’s Bank of China will not shrink the balance sheet and nor will it increase the benchmark interest rates on deposits and loans, according to Sheng Songcheng, an adviser to the PBoC. “There is no such thing as shrinking balance sheet for China,” says Sheng, noting that China’s interest rate is now “very high”. Sheng thinks that China’s monetary policy should be steady. According to Chinese economists, the country will tighten its monetary policy next year while increasing policy flexibility to ensure sufficient credit supply.
China’s Internet giant Tencent has signed an agreement with the Zhuhai government in its cooperation with the Zhuhai Hengqin District. The two parties will seek to innovate in areas including smart cities, transportation and healthcare. They also plan to use technologies including AI, cloud computing, big data and mobile payment.
Tencent has confirmed that it would buy 5% of Yonghui Superstores’ shares. Tencent also plans to inject capital in Yonghui Yunchuang Technology, a subsidiary of Yonghui in supply chain. Tencent will hold a 15% stake in the company afterwards. Detailed plans are subject to further discussion between the two parties.
Founded in 1995, Yonghui Superstores operates a chain of supermarket stores in China. The largest shareholder of the company is The Dairy Farm Company.
China Banking Regulatory Commission (CBRC) says that the limit on foreign shareholdings of Chinese banks and asset management companies (AMC) will be loosened. The banking sector will be further opened up, according to CBRC. Foreign banks business in China will be expanded; the restrictions on foreign banks’ retail deposit business will be relaxed; foreign banks are encouraged to get evolved in the financial system, according to the regulator.
Alibaba Cloud, the cloud computing arm of Alibaba Group has recently launched a "regional economy brain" to help the government analyze the operation of enterprises through technologies including big data, cloud computing and AI. Jiangsu Suzhou's Gaoxin District is the first area that is implementing the project.
Under the guidance of the People's Bank of China, the country's national bankcard association, China UnionPay has launched a mobile payment application jointly with more than 30 commercial banks and payment platforms, in an effort to enhance its competitiveness against mobile payment providers such as Alibaba and Tencent.
China UnionPay's new mobile payment gateway, Cloud Quick Pass, will become the third-largest Chinese mobile payment platform, following Alipay of Alibaba and Tenpay of Tencent.
China’s top power distributor, State Grid, will seek market expansion in countries involved in the One Belt One Road Initiative (OBOR). The power investment demand along OBOR will reach $1.5 trillion in the next five years, according to State Grid’s chairman, highlighting the strong demand from the 1 billion people without access to electricity in Africa/South Asia and the need to upgrade facilities in Central and Eastern Europe and Western Asia.
Midea Group is planning an IPO for its subsidiary in the real estate business, Guangdong Midea Property Co. With a total asset of about 77.6 billion yuan as of end June this year, the property company plans to go public in Hong Kong. Founded in 1968, Midea Group is a Chinese electrical appliance manufacturer, headquartered in Foshan, Guangdong. Being one of the world’s largest appliance producers, the Group ranks No. 450 on the 2017 Fortune 500 list.
China is to hold its annual Central Economic Work Conference in the coming few weeks according to sources talking to Chinese media. The meeting will set the country’s GDP goal at around 6.5%, according to an officer at Chinese Academy of Social Sciences. The meeting will set policy priorities according to China’s economic status. The country is said to focus on economic liberalization and structural reforms, according to Chinese media.
China Insurance Regulatory Commission (CIRC) will revise the regulations on insurance fund management. In order to further control the liquidity risk, the new rules reduce the amount of liquidity support that an insurance company can apply for. The draft regulation is completed and CIRC is taking advice from the industry.
Suning Commerce Group has sold 5.5 million shares in Alibaba Group Holding, about a fifth of it’s holding in the internet giant, and 0.22% of Alibaba's total issued shares. Founded in 1990, Suning is one of the largest non-government retailers in China, headquartered in Nanjing, Jiangsu Province. The Shenzhen-listed Group’s net gain from this sale is expected to be about 3.25 billion yuan. Suning’s shares in Alibaba were reduced to 0.81% after the sale.
The online to offline model of Alibaba is applying to China Unicom's offline branches. As Alibaba and China Unicom deepened the collaboration in AI technology, the two conglomerate will open their first smart retail store based on AI, AR and big data. Popular products sold on Tmall will be available in the smart store, which will be opened as early as December 12, another shopping festival established by Alibaba.
Data from Wind shows that as of December 2017, 1088 listed companies have bought wealth management products (WMP), up from 778 companies in the same period last year. The total AUM of the WMP bought by listed companies have exceeded one trillion yuan, 47% up from same period in 2016. The large demand from listed companies shows that there were a lot of idle cash within listed companies.
The announcement of new investors in Yonghui Superstores has triggered strong investors' interest in its A-shares. According to Chinese media, inflows from the Shanghai-Hong Kong Stock connect into Yonghui Superstore was 18.3 million from mostly Chinese investors last Friday. Yonghui Superstores announced on December 8 that there will be new strategic investment into Yonghui's Super Species, a retail store brand under Yonghui Superstores. Founded in 1995, Yonghui Superstores operates a chain of supermarket stores in China. The largest shareholder of the company is The Dairy Farm Company.
China’s monetary policy will be further tightened, aiming to curb the soaring debt growth especially in state-owned enterprises and local governments, according to Li Yang, director of the National Institution for Finance and Development and a former member of the monetary policy committee of the People’s Bank of China. “China is wise and capable of tackling risks and challenges even if the financial sector enters into a phase of risk explosion, said Li.
The Chinese economy is likely to achieve higher than 7% growth next year, supported by a likely rebound in private investment that has remained sluggish for months, according to Li Daokui, economist and director of the Center for China in the World Economy at Tsinghua University. UBS predicts that China’s economy will grow by 6.4% next year. ICBC (Asia) sees a 6.9% growth for China’s GDP next year.
Tencent is said to invest heavily in Yonghui Superstores, which is listed on the Shanghai Stock Exchange, according to finance.sina.com.cn. The share price of Yonghui Superstore hit its stock price limit today as a result of the announcement. Founded in 1995, Yonghui Superstores operates a chain of supermarket stores in China. The largest shareholder of the company is The Dairy Farm Company.
China’s information consumption will reach 6 trillion yuan by 2020, inducing relevant productions to increase to 15 trillion yuan, according to an officer of the country’s Ministry of Industry and Information Technology (MIIT). The information economy representing by e-commerce has become the new driver for economic growth.
Senior executives of multinational companies attending the Fortune Global Forum in Guangzhou are optimistic regarding China’s rising role as a strong advocate for globalization and innovation in international trade. This year’s Fortune Global Forum is held in Guangzhou from December 6 to 8. China’s President Xi Jinping’s congratulatory letter to the Forum indicates China will adhere to its reform and opening up policies to promote globalization in the years to come.
China’s state-owned investment fund, the Silk Road Fund has signed up with 17 projects so far, promising to invest about US$7 billion, according to a senior officer at the Fund talking to China News Service. The projects supported by the Fund include a total investment of US$80 billion. The officer says that the Fund’s investment emphases on the real economy. The fund will eye on the projects that can support the host country’s real economy and improve its sustainable development capacity.
China will continue to regulate financial markets and crack down on illegal financial activities, says China Banking Regulatory Commission (CBRC), noting that market irregularities and imprudent operations will receive tougher punishment. “Despite progress in the ongoing financial scrutiny, the market is still prone to risks both currently and for the future period, which should not be taken lightly,” said Wang Zhaoxing, vice chairman of CBRC.
China Banking Regulatory Commission (CBRC) has issued a draft regulation on the governing of the liquidity risk of Chinese commercial banks. The new rules have three quantitative indexes to measure the liquidity risks, providing a more efficient method of risk management. The regulation also improves the supervision system of liquidity risks, optimizing some of the measuring methods.
China’s Internet finance (ITFIN) alliance for small and medium banks launches today. The alliance is initiated by Ping An Insurance (Group) Company of China and several small and medium banks in China. With 230 members onboard, the alliance now has a total asset of more than 35 trillion yuan.
China’s State Council has issued a circular stating that the country will promote integration between military and civilian sectors in the defense technology industry. Private capital will be allowed to participate in the shareholding reform of defense industry companies. Qualified defense industry enterprises are encouraged to go public or invest in public companies. Defense industry enterprises should deepen its cooperation with civilian companies, transfer more military technologies into civilian use. China will implement a batch of major projects for military-civil integration, says the State Council.
China Insurance Regulatory Commission (CIRC) encourages foreign capital to participate in China’s liability insurance, health insurance, and pension insurance market. This will help to improve the professionalism of China’s insurance industry. CIRC also calls for collaboration with Central and Eastern European countries in innovation regarding coinsurance and reinsurance, providing protection against the risks in the "Belt and Road" construction.
National Development and Reform Commission (NDRC) will innovate in the supervision mechanism of the corporate bond market, deepening the reforms in this context. The regulator will strengthen the guidance function of corporate bonds and manage the risks in this market. The credit system for bond market will also be strengthened, according to the regulator.
Oriental Pearl Group has joined an alliance for AI and big data. Microsoft, Foxconn and Chinese internet giant Baidu, Alibaba and Tencent, are also members of the alliance. Founded in 1992, Oriental Pearl Group engages in the culture and entertainment, media, advertising, property, and investment businesses primarily in Shanghai. With a total asset of 35 billion as of Q3 2017, the Group’s 45.04 % of shares are held by SMG. China Securities Finance Corporation Limited is the Group’s second largest shareholder with 4.99% in hand.
iFlyTek, a Chinese information technology company specializing in speech intelligence and artificial intelligence (AI), will expand its business in new areas such as education and medical care. Its intelligent robot, iFlyTek Smart Doctor Assistant, has recently become the first AI robot to pass the Chinese qualification exam for licensed doctors. The company was founded in 1999. With China Mobile being its largest shareholder, iFlyTek has seen its shares more than double this year in Shenzhen Stock Exchange, outpacing the 3% gain in the Shenzhen Composite Index.
China Banking Regulatory Commission (CBRC) says that the detailed regulations on the banks’ wealth management business will be issued soon. The regulator says that it will listen to the market’s voice when making the new rules. CBRC will ensure the smooth transition from the existing rules to the new rules.
China Securities Regulatory Commission (CSRC) says it will promote the development and application of fintech. Meanwhile, the regulator will focus more on protecting the rights and interests of the investors, taking precautions against risks. The regulator is also innovating in applying new technologies including big data and AI to supervision.
China will further increase its competitiveness and international influence by opening up its financial market, says CSRC. Qualified foreign financial institutions are welcomed to provide securities and futures services in China, says the regulator. Relevant market admission will be further loosened.
LUXSHARE-ICT, one of the major suppliers for Apple’s wireless earphone AirPod, is predicted to overtake Inventec and become the largest supplier next year. Founded in 2004, LUXSHARE-ICT is a manufacturing company with business in cable and connector for 3C (computer, communications and consumer electronics), automobile and medical. The valuation of LUXSHARE-ICT’s A-share has raised to a record high at the end of October due to the release of iPhone X.
China Banking Regulatory Commission (CBRC) says regulations on online micro-loans will be issued soon. The regulator will stop giving approvals for setting up new online lending companies. Small to micro loans companies are not allowed to set up new cross-province business.
National Development and Reform Commission (NDRC) has issued a notice to further support private capital participating in the public-private partnership (PPP). The notice prohibits irrational restrictions on private capital coming into PPP projects.
National Development and Reform Commission (NDRC) says it will support the overseas investment of Chinese corporates, noting that regulations will be more supportive. China’s overseas investment will leverage on the Belt and Road Initiative, promoting global collaboration on production capacity. Meanwhile, NDRC will control and guide the development of Chinese enterprises’ overseas investment.
The new 21 rules regarding fintech will soon be rolled out in Shenzhen Qianhai, according to Chinese media. The new rules will deepen the cooperation between Shenzhen and Hong Kong and open up the financial system. The new rules will relax the restrictions in the admission of Hong Kong and Macau financial institutions, supporting Hong Kong to establish the Offshore RMB Center.
China’s air logistics are faced with challenges including lack of resource, underperformed airport service and poor market competitiveness, according to Chinese media. Mixed-ownership reforms have been conducting among Chinese air logistics companies. Civil Aviation Administration of China will issue a guidance to boost this sector, according to Chinese media.
Dongxu Optoelectronic Technology has recently announced that it will set up a production base for new energy cars. This sector has been benefitting from China’s regulations recently. New rules will be implemented to support the technology innovation in this sector soon, according to a source talking to Chinese media. Founded in 1992, Dongxu Optoelectronic Technology Co., Ltd. is China’s largest LCD glass substrates producer, ranking the fourth globally. In addition to this, the company also taps into new sectors including new energy car and technologies relating to smart city construction. With an investment of more than three billion yuan, the new production base plans to produce ten thousand new energy bus and 30 thousand new energy logistic vehicles.
China Insurance Regulatory Commission (CIRC) will issue regulations on the management of Chinese insurance companies. The new rules require insurance companies to conduct due diligence before appointing a new senior executive. Senior executives who have been penalized twice within five years should not be recruited.
National Development and Reform Commission (NDRC) has recently issued a draft regulation on the budgetary investment of the country’s central government. A new supervision system will be formed. This will improve the utilization efficiency of the investment, according to the regulator.
China’s Premier Li Keqiang yesterday announced the establishment of the China-CEEC Inter-Bank Association and the second phase of China-Central and Eastern Europe (China-CEE) Investment Cooperation Fund. The China Development Bank will provide an equivalent amount of two billion euros as development-oriented financial cooperation loans to the association, while the second phase of the fund that totaled $1 billion will be mainly invested in Central and Eastern Europe. China will encourage its enterprises to make more investment in Central and Eastern European countries, says Li.
Major Chinese display screen producer BOE has overtaken Korea’s LG Display for the first time, ranking first in global market share of large-size screens in Q3 2017. Chinese media says that BOE is likely to become the screen supplier for Apple’s iPhone XI to be released next year, providing foldable OLED screens. Founded in April 1993, BOE Technology Group Co., Ltd. is a major Chinese supplier of the Internet of things technologies, products, and services. BOE’s share price has had a huge increase during the past two months. But after the company’s two major shareholders reduced their holding-shares last week “according to their business plans”, the valuation of BOE’s A-share slumped.
China’s draft legislation on e-commerce is nearing finalization. Chinese media say that the finalized laws will be rolled out next year. The new laws will focus on protecting the rights and interests of consumers, according to Chinese media, adding that intellectual property protection is also a major topic.
The World’s largest coal supplier, Shenhua Group, has merged with power producer China Guodian Corporation. The new company, National Power Group, was officially set up today. With total assets of 1.8 trillion yuan (US$270 billion), the new power giant ranks fourth among China’s largest energy enterprises.
China’s Premier Li Keqiang yesterday announced the establishment of the China-CEEC Inter-Bank Association and the second phase of China-Central and Eastern Europe Investment Co-operation Fund.
The China Development Bank will provide two billion euros-equivalent (US$2.38 billion) as development-oriented financial co-operation loans to the association, while the second phase of the fund, that totals US$1 billion, will be mainly invested in Central and Eastern Europe. China will encourage its enterprises to make more investments in Central and Eastern European countries, according to Li.
BOE Technology Group Co Ltd.’s two major shareholders reduced their shareholdings last week. The valuation of BOE’s A share has been falling for four consecutive days. It has fallen by 20% accumulatively. BOE was founded in April 1993. It is a major supplier of the internet of things technologies, products, and services in China. The share price of the company has seen a huge increase during the past two months.
State-owned Assets Supervision and Administration Commission (SASAC) has issued a notice stating that the Chinese state-owned enterprises (SOEs) should manage the risks of public-private partnership (PPP) business. This notice requires SOEs to tighten the admission of this business, strictly controlling the scale of it. SOEs should prevent their debt ratios from going up when doing PPP business, says the notice, noting that the SOEs with debt ratio exceeding 85% are prohibited to invest in PPP projects individually.
China will take further steps to issue more regulations regarding the supervision and risk management of the country’s financial market, says Financial News, a state-owned media under the People’s Bank of China (PBoC). The country will further regulate online financial institutions to reduce systematic risks. The overall supervision of the financial sector will be tightened, says the state-owned media.
National Internet Finance Association of China (NIFA) suggests that the unqualified lending institutions should stop their illegal lending business. Online micro-loans has been developing at a fast speed in China, says NIFA, noting that some of the lending institutions have been attracting the clients with exaggerated advertising. Qualified lending institutions also need to do self-checks, says NIFA.
China’s State Council has issued a notice stating that the application for setting up national model areas leveraging the “Made in China 2025” strategy is now open. Chinese cities are encouraged to set up in such areas to form ecosystems for the manufacturing industry. The regulator supports the new areas to utilize “Internet plus”, entrepreneurship and innovation, renovating the traditional industries.
The People's Bank of China (PBoC) and China Banking Regulatory Commission (CBRC) has met with local regulators to discuss the supervision on online micro-loans. The new regulations on this sector will be issued next week, according to an officer talking to The Beijing News. The officer says that the supervision will focus on forming a more stable financial system, noting that the online micro-loans will not be banned in China.
Ministry of Finance (MOF) will further reduce the import tax on certain consumer goods starting December 1, 2017. The average tax on certain imported goods including food and beverage, medicine, home appliance, recreational products, general merchandise, etc., will be reduced from 17.3% to 7.7%.
China is planning to set up a 100 billion yuan fund for mixed-ownership reform by June next year. Major central state-owned enterprises (SOEs) and private capital will invest in this fund. The shareholding of SOEs will be about 50%. More than 50 SOEs are about to conduct mixed-ownership reforms, according to Chinese media.
China will implement new rules to support technology innovation in the new energy car sector, according to a source talking to cnstock.com. The new rules will focus on supporting the high-tech innovations and will benefit the leading companies in this industry, according to the source. Smaller players will be washed out of this market in the long run, says the source, noting that the new rules will take effect by the end of this year.
China’s Ministry of Finance (MOF) has planned to issue a total of 14 billion yuan national debt in Hong Kong this year, half of which has been issued earlier in June. Another 7 billion national debt will be issued next Monday, says MOF. The debt will be issued through Hong Kong’s Central Moneymarkets Unit (CMU) to institutional investors, foreign central banks, and regional monetary authorities. It plans to be listed on HKEX.
The People's Bank of China (PBoC) and China Banking Regulatory Commission (CBRC) will meet with the local financial regulators to discuss the supervision of online microloans, according to Chinese media. Regulators from seventeen provinces and cities including Guangdong, Chongqing, and Zhejiang will attend this meeting.
China’s Insurance Regulatory Commission (CIRC) says that currently most of the country’s supervision on the insurance industry is about daily practices, while the regulation on risks is “gravely insufficient”. The use of capital is lack of efficient management, leading to “serious risks” in some insurance companies. The watchdog promotes that regulations need to shift to risk supervision and management.
China’s National Development and Reform Commission (NDRC) says that more projects will be rolled out on the basis of the country’s One Belt One Road Initiative. In order to further open up, attracting foreign investment and overseas investment will be the major focuses of China. This requires advancing the legislative process of laws on overseas investment.
People's Bank of China (PBoC) might be determined to carry out exchange rate reform, says an expert from Chinese Academy of Social Sciences talking to finance.sina.com.cn, noting that China is “ready to reform and PBoC’s preparation is sufficient”. The expert says that Minsky Moment is unlikely to happen in China, adding that the issues regarding China’s capital flight have been controlled with tightened supervision.
The People's Bank of China (PBoC) will implement a steady and neutral monetary policy, according to the central bank’s recent report. China’s economy has been turning from high-speed growth to high-quality growth, says the report. Chinese regulators will continue to focus on structural reforms, deleverage and risk management, says the report, noting that the supervision in China’s finance sector needs innovation.
Ministry of Industry and Information Technology and other interested parties have jointly issued a guidance on China’s private capital, promoting innovations in Chinese private enterprises. The guidance supports the vitalization of private capital, and encourages private enterprises to reform in terms of industry structure, service orientation, and internationalization.
China has proposed building an economic corridor with Myanmar to further enhance bilateral cooperation between the two countries. The deal was announced by Chinese Foreign Minister Wang Yi during a joint press conference with Myanmar’s State Counsellor and Foreign Minister Aung San Suu Kyi after their meeting in Myanmar’s capital Naypyitaw yesterday. The economic corridor will start in the northern Chinese province of Yunnan and go down south to the central Myanmar city of Mandalay, and further extend east to the new city of Yangon and west to the Kyaukpyu special economic zone, forming a three-pillar giant cooperation pattern, Wang explained.
People's Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission have jointly issued a draft guidance on the governing of asset management services of financial institutions. According to the draft guidance, the investment in one single asset from multiple asset management products of one financial institution should not exceed 30 billion yuan; the risk reserve should be equivalent to 10% of the income from the management fee. The draft guidance also states that the common practice of bailouts in Chinese asset management industry should be eliminated fundamentally.
The first direct bank in China officially opened on November 18. The new bank, AiBank, is launched by the China’s internet giant Baidu and one of the country’s largest lenders, China CITIC Bank, after two years of preparation. AiBank is supervised by China Banking Regulatory Commission (CBRC) in accordance with the general regulations of China’s commercial banks, says CBRC.
Alibaba’s Ant Financial, Alibaba-backed complete online insurer ZhongAn, and Ant Financial-backed Qudian rank the top three among 100 leading fintech innovators globally, according to a joint report by KPMG and fintech investment firm H2 Ventures. Chinese fintech companies account for five of the top 10, according to the report.
Chinese state-owned enterprises (SOEs) will seek to establish a mechanism for preferred stocks and golden shares that are managed by the central government, the country’s State Council has said. Chinese SOEs still need to improve shareholding structures and corporate governance, says the government. Central SOE reforms will be completed by the end of this year, according to the State Council, noting that the pace of mixed-ownership reforms will be accelerated.
China will implement a property tax “soon”, says Huang Qifan, deputy chairman of the economic and finance committee under the National People’s Congress. He notes that the property tax complies with international conventions, and will help to control speculation in real estate sector. China will issue relevant regulations in the next few years, Huang says.
Bank of China (BoC) has signed an agreement to underwrite the Government of the Philippines’ first panda bonds in China. The issuance is equivalent to US$200 million. BoC will be the sole bookrunner and lead underwriter in the deal. BoC will assist the Philippines to register in China's interbank market.
In order to further open up its markets, China is revising laws regarding the market admission for foreign investors, according to a senior official at People's Bank of China talking to cnstock.com, noting that non-financial payment industry is the only financial sector that has not yet opened up.
The restrictions on market admission and the shareholding ceiling for foreign investors will be adjusted in the revised laws. China is determined to further open up its financial market to attract more foreign investments.
China’s Ministry of Science and Technology has officially launched the new office for promoting AI and announced the first batch of companies that are listed on national innovation platform for AI. Chinese Internet giant Baidu, Alibaba and Tencent (BAT) are on the list. The Chinese government will deepen international co-operation in developing AI.
China Banking Regulatory Commission (CBRC) has issued a draft regulation on governing the shareholding structure of Chinese commercial banks, stating that each investor and its affiliated parties can be major shareholders of two commercial banks at most; each investor and its affiliated parties can control only one commercial bank. The shareholders of a commercial bank are prohibited either to entrust their shares to other parties or to be entrusted.
The National Development and Reform Commission (NDRC) says that it has given approvals for 16 fixed investment projects in October, amounting to a total investment of 66.6 billion yuan (US$10.04 billion). The approved projects include investments in infrastructure, high-tech, energy, IT, and social undertakings.
China’s Ministry of Finance (MOF) has issued a notice, stating that interested institutions should study international conventions regarding consumption tax legislation and provide advice for the legislation and implementation of China’s consumption tax laws. The draft law plans are to be issued before June 30 next year.
China Banking Regulatory Commission (CBRC) is promoting the reform of China’s policy banks, namely China Development Bank, Exim Bank of China, and Agricultural Development Bank of China. CBRC says that the three banks should stick to their responsibilities for financing economic and trade developments and state-invested projects. Meanwhile, the three banks are required to improve their supervision, forming a capital constraint mechanism based on the capital adequacy ratio (CAR).
The State Council recently released a circular approving the establishment of an inter-department joint conference system on market supervision. Led by the State Administration of Industry and Commerce, the new conference system will be composed of 35 departments including the National Development and Reform Commission, the Ministry of Commerce, and the General Administration of Customs. The move targets strengthening the coordination in market supervision during the 13th Five-Year Plan period, according to Chinese media.
China’s National Bureau of Statistics says that the country will maintain a stable growth in its economic development according to the market expectation so far. The Bureau emphasizes that China’s economic growth will focus on quality rather than the quantity next year. The economy is expected to undergo reforms, says the Bureau.
WeChat, Chinese social media mobile application software developed by Tencent, which used to offer credit card payment service free of charge, will start to charge its clients by 0.1% per month in this service. Each month, WeChat users can enjoy accumulatively 5,000 yuan of credit card payment free of charge. During March last year, WeChat started to charge its users a fee of 0.1% when they transferred money from the app's built-in digital wallet to their personal bank account.
Tencent Cloud recently launched BaaS (Blockchain as a Service), a new fintech solution that combines blockchain with insurance. In cooperation with Aixin Life Insurance, this new initiative is based on Tencent’s Financial Cloud. The new solution offers blockchain service regarding smart contracts, mutual insurance, big data, supply chain finance and cross-border trading.
Hong Kong recently signed a free trade agreement with ASEAN countries. The agreement will provide more attractive market admissions for the product and service trading in Hong Kong. This will boost the economic development of Hong Kong. The agreement will not take effect until January 1, 2019 at the earliest.
China regulators say that online trading platforms for forex and precious metal are illegal. These kinds of online trades are subject to high risks, but some domestic institutions are doing these trades via online channels such as the Internet and mobile apps, says the regulators. The regulators also warn that the investment activities in such trades are not protected by laws.
China’s Ministry of Finance has recently issued a notice about the taxation on corporate income, stating that the tax on accredited enterprises using advanced technology will be reduced to 15%. The accreditations will be conducted by provincial regulators. This move will further strengthen Chinese enterprises’ advantages in technology innovations, says Chinese media.
China will open up its financial market “significantly”, says China’s official media, Xinhua News Agency. The market admission of banking, securities and insurance will be loosened; the shareholding ceiling of foreign investors in financial institution JVs in China will be further relaxed. Foreign investors are now able to hold 51% of securities companies, fund management companies and futures companies, says China’s Ministry of Finance, noting that the limit used to be 49%. In addition, the limit on foreign holdings in Chinese banks and financial asset management companies will no longer hold.
The tariff on US car imports will be reduced in steps. China will also roll out pilot projects in the free trade areas to relax on the restrictions of the shareholding of foreign capital regarding enterprises producing new energy vehicles and special-purpose motor vehicles.
The newly established financial stability committee will strengthen the supervision on financial holding companies, says Financial News, a media under the People’s Bank of China (PBoC). Headed by China’s Vice-Premier Ma Kai, the new committee is higher than PBoC, China Securities Regulatory Commission, China Insurance Regulatory Commission, and China Banking Regulatory Commission. This enables the new committee to serve better in terms of regulatory coordination. The overarching development scheme and regulations will be made by the committee, says Financial News.
China’s state-owned investment fund, the Silk Road Fund sets up an infrastructure investment platform with General Electric (GE), says the country’s State Administration of Foreign Exchange (SAFE). The new platform will focus on investing in countries along China’s “One Belt One Road” regarding the infrastructure of the power grid, new energy, oil and gas.
Tencent has signed an agreement with China Merchants Bank (CMBC) and Funde Insurance Holding in promoting fintech cooperation. Tencent and CMBC will cooperate in anti-fraud using technologies including big data and AI. This will enable CMBC to perform better in identifying fraud in financial service. The cooperation between Tencent and Funde will focus on new innovations in the insurance industry.
JD Finance and Bank of Dalian has agreed to cooperate in blockchain, AI, big data risk management and client operation. Bank of Dalian’s new direct bank App “壹伴客” was launched yesterday. Being one of the results from the cooperation of the two sides, this App targets young clients, providing services including wealth management and consumer credit services.
China’s Ministry of Commerce says that China will import more than US$10 trillion of products and services from the US. China and the US enterprises have signed cooperation contracts worth US$253.4 billion during US President Trump's visit to China. China sees the economics and trade relations between China and the US as the cornerstone of the Sino-US bilateral relation. China’s President Xi Jinping welcomes enterprises from the US to participate in the Belt and Road Initiative.
People's Bank of China (PBoC) and China Banking Regulatory Commission (CBRC) has revised the regulations on car loans. In order to support the green industry, loans for new energy automobile were relaxed up to 85% of the total purchase. Traditional vehicle loans can take up to 80% of the total purchase.
A national committee for overseeing financial stability and development is officially set up under the administration of China’s State Council. The new Cabinet-level regulatory body will help the country better cope with potential financial risks, says Chinese analysts. China’s Vice-Premier Ma Kai heads the new committee.
China National Petroleum Corporation (CNPC) starts to sell electricity by setting up a new company, CNPC Electric Power Company. Founded yesterday, the new company was formerly Daqing Electric Power Group. This move marks the success of Daqing Electric Power Group’s reform. The new company plans to conduct a mixed-ownership reform and go public.
China’s Insurance Regulatory Commission (CIRC) will deploy a real-name registration scheme. A draft regulation on this is in progress and is taking advice from the country’s insurance industry. The new regulation requires that insurance companies, intermediaries and third-party platforms need to check the identity documents of policyholders and beneficiaries that need to register accordingly.
China will deepen its reforms in the financial sector and improve the inclusive financial system, says China’s Premier Li Keqiang. The financial services focusing on small and micro enterprises should be promoted, says Li, highlighting the importance of forming a more stable interactive relation between banks and enterprises. Li says that innovations and supportive regulations will help to vitalize small and micro enterprises.
China Securities Regulatory Commission (CIRC) has signed an agreement with the Australian Securities and Investments Commission on sharing fintech information. The two sides agreed to exchange information on the development and regulations of fintech. This move will serve to deepen the cooperation between the two countries, says Chinese media.
China’s National Development and Reform Commission (NDRC) recently issued new regulations on pricing. Taking effect in 2018, the new regulations emphasize the supervision and examination of costs – no pricing should be done without this process. From 2013 to 2016, NDRC and interested departments have finished nearly 24,000 projects of cost supervision and examination and found 800 billion yuan that should not have been included as cost when pricing.
China will crack down on the financial crimes, especially in terms of Internet finance (ITFIN), says Ministry of Public Security. Ministry of Public Security says that China’s financial industry is facing various risks. Illegal fund-raising is one of the targets of Chinese regulators. Securities and futures market also needs strict supervision, says the regulator.
Setting up a legal digital currency is the cornerstone of developing the digital economy, according to an officer at the People’s Bank of China (PBoC). A legal digital currency can serve to reduce risk and improve the macro-control of the digital economy, says the officer, adding that this will support anti-money laundering, counter-terrorist financing, and anti-tax avoidance. Internet should be further combined with real economy, says the officer.
The 2nd China International Intelligence Connected Vehicle Forum was held in Shanghai today. The “Shanghai Declaration” is issued by China’s Ministry of Industry and Information Technology and Shanghai Government during the forum, stating that the government will provide a open market and a cooperation platform to attract world’s major automobile enterprises. Relevant regulations will be improved and deployed; technologies including big data and innovation on intelligence connected vehicles will be supported.
China’s Ministry of Finance and State Administration of Taxation have issued a notice regarding the taxation of financial institutions. From December 1 this year to the end of 2019, financial institutions’ interest income from issuing small amounts of loans to rural households, individual businesses and small and micro enterprises are exempt from value-added tax (VAT). From the beginning of next year to the end of 2020, financial institutions’ loan contracts with small and micro enterprises are free of stamp duty.
Being suspended for issuing offshore USD bonds for over half year, Chinese LGFVs are now coming back to the offshore market. Yunnan Energy Investment Overseas Finance Company, a triple B rated LGFV, is about to issue a reg-S senior unsecured USD bond. The issue amount is undisclosed and the roadshow will be held in Singapore and Hong Kong on Sep 3. Sources have told The Asset that NDRC has relaxed the restriction on LGFV offshore bonds.
Chinese regulators plan to shut down illegal companies providing micro-credit loans, according to a source talking to sina.com. Driven by online lenders, China’s micro-credit loans which are similar to payday loans have developed rapidly. These type of loans lend money based purely on the borrowers’ credit and has raised concerns regarding sub-standard loans among non-creditworthy borrowers. Relevant regulations are said to roll out soon, states Chinese media.
China Insurance Regulatory Commission (CIRC) will deploy new rules regarding the independent directors of insurance companies, according to a source speaking to cnstock.com. It is said that CIRC will revise relevant regulations and require insurance companies to increase the number of their independent directors. The independent directors should be completely independent from major shareholders and actual controllers. The independent directors might be entitled to certain unique functions, according to the source.
Chinese regulators including the People's Bank of China (PBoC) and CBRC (China Banking Regulatory Commission) and Chinese official media have been warning the risk of Internet finance (ITFIN) recently. They have been emphasizing that no financial institutions should operate without licenses. There will soon be a crackdown on ITFIN companies without licenses, according to Chinese media. Many of Chinese Internet companies are involved in financial business, but only a few of them are holding licenses for all of their business.
China has become the number one economy for the consumption of renewable energy, says the country’s National Energy Administration (NEA). China will improve its energy utilization, says NEA, noting that the regulator will roll out rules regarding green certificates that put a restriction on energy-related trades.
China will deepen its reforms in the free trade areas, says China’s President Xi Jinping during the 19th Party Congress. Shanghai being earmarked to be the first to construct a free trade port, Tianjin and Ningbo are expected to follow Shanghai’s path. There are 11 cities in China that have free trade areas. Tianjin, Ningbo, Shenzhen, and Guangzhou standing out among their peers with their large capacity and geographical advantage.
China will focus on forming a system for trading electricity and deepen the supply-side structural reform of the power market, says National Energy Administration. In terms of private capital entering certain areas of the power market, there are a lot of interests but obstacles regarding bidding and shareholding structure still lie ahead, according to a source talking to the Economic Information Daily.
The government of Shanghai has submitted their plan for constructing a free trade port. The plan is awaiting approval and has been consistently revised now, says an official. This plan will serve to improve the function of Shanghai as being an international shipping center.
Ministry of Human Resources and Social Security (MHRSS) says that the investment of China’s retirement funds has started. The country’s nine provinces have signed investment contracts with the National Council for Social Security Fund, accounting for a total investment of 430 billion yuan. More than 40% of it has already been put into investment.
A new batch of pilot projects for mixed-ownership reform of Chinese state-owned enterprises (SOEs) has been rolled out. Forty SOEs have suspended the trading of their shares, indicating that they are about to announce major news which can possibly be related to reforms, said Chinese media. The next two months will see a wave of SOE reforms, says a source talking to cnstock.com.
China hopes to cooperate with the US in clean energy, says Xie Zhenhua, special representative for Climate Change Affairs of China. China will live up to its international obligations in accordance with the country's ability and its development phase, says Xie.
China Insurance Regulatory Commission (CIRC) has been tightening its regulations since 2015. So far, 157 Chinese insurance companies have been penalized, accounting for a total fine of 25.407 million yuan. CIRC says it will further monitor the insurance industry and warn policyholders of possible risks by publicizing illegal cases.
China Banking Regulatory Commission (CBRC) says that fintech should be regulated via high-tech means. A regulating system leveraging innovative technology is under construction, says CBRC. A platform for sharing fintech information will be deployed, says the regulator. Technologies such as big data will be used to supervise the inclusive finance, says CBRC.
Regulators from China’s National Equities Exchange and Quotations (NEEQ), or the “New Third Board”, says that NEEQ-listed private placement firms who are registered as private securities fund managers are not allowed to raise funds through NEEQ. Interested firms should report to regulators by November 11 this year. Those who violate relevant rules will be delisted.
The GDP of China’s provinces and municipalities will be investigated and calculated by the country’s National Bureau of Statistics. It used to be calculated by local statistics organs. Some provinces, such as Liaoning, had in the past falsified their GDP reports. Liaoning had reported that its GDP was up by 23% from 2011 to 2014. This new rule will serve to make better macro policies. It will be deployed next year.
Driven by online lenders, China’s micro-credit loans which lend money based purely on the borrowers’ credit has been experiencing recent growth. This type of loans is similar to the payday loan, and has raised concerns about substandard loans among non-creditworthy borrowers. Relevant regulations are said to roll out soon states Chinese media.
China’s Insurance Regulatory Commission (CIRC) has been tightening its supervision on the corporate governance of Chinese insurers. The regulator’s attitude has gone from providing guidance to deploying restriction. More than 15 Chinese insurers have been required to revise its business in accord with relevant corporate governance rules. Some of these companies are banned from trading in related areas.
China Banking Regulatory Commission (CBRC) will focus on proactive preventions on systemic financial risk. The illegal actions in the banking industry will stopped, says CBRC, adding that the supervision of CBRC will be further improved. CBRC promises to prevent partial risks from developing into systemic financial risks.
The overseas asset of China’s central state-owned enterprises (SOEs) has amounted to 6 trillion yuan, according to the State-owned Assets Supervision and Administration Commission (SASAC). Chinese central SOEs’ overseas business consists of sectors in infrastructure, resource, nuclear power, power grid, telecommunication etc. The assets in found in 185 countries. Forty-seven central SOEs have been cooperating with countries relating to the Belt and Road Initiative, running 1,676 projects.
China will stop to seek high-speed growth and focus more on the quality of the economic growth, says Yang Weimin, the deputy director of the country’s Leading Group for Financial and Economic Affairs. The country will deepen the supply-side structural reform and further open up its market, says Yang. The mixed-ownership reform of Chinese state-owned enterprises will be reinforced after 19th Party Congress, says Yang.
China Insurance Regulatory Commission (CIRC) warns that Chinese online insurer Zhongan’s distribution mode may generate risks. One regional insurance agency has been cooperating with Zhongan to distribute the company’s product. However, this violates China’s regulations on Internet trading, according to CIRC, adding that the two parties are suspected of operating beyond their business scope.
China’s foreign capital related laws need to be revised thoroughly, says Ministry of Commerce (MOC) during the 19th Party Congress. Made at the beginning of China’s reform and opening-up process, these laws are not adequate for the country’s market today, says MOC. A draft bill on foreign investment has been made and is now open for the public’s input, says MOC.
China’s efforts in reducing the overcapacity in the coal industry is making much progress. During the past five years, 2,802 coal enterprises have been shut down, according to China National Coal Association. More than 1,000 mines were scheduled to be closed in 2017 YTD. By the end of 2016, there are 5,067 coal companies left in China.
China's Ministry of Finance (MOF) has said that it will issue a sovereign bond worth US$2 billion in Hong Kong. China has sufficient foreign exchange reserves, and the major purpose of this move is not a fundraising move, says MOF. The bond includes a 5-year tranche of US$1 billion and a 10-year tranche of US$1 billion. The release date is to be announced. This is China’s first sovereign bond to international investors since its last issuance in 2004.
During the first nine months of this year, China’s issuance of labeled green bonds reached 134 billion yuan, accounting for 24% of the world’s total issuance, says Yang Weimin, the deputy director of the country’s Leading Group for Financial and Economic Affairs. This makes China one of the leaders in this context, says Yang. The country has “great potential” in sustainable development, with green finance being one of the spotlights, says Yang. Yang also sees the possibility of mainland China cooperating with Hong Kong in green financing.
Eco-environment has become one issue in China’s development, says Yang Weimin, the deputy director of the country’s Leading Group for Financial and Economic Affairs, noting that the price system of natural resource needs improvement. Interested parties are driving the reforms in resource tax and mining rights, says Yang.
China is committed to providing technical and financial support to Jordan, says China's Deputy Minister of Commerce Qian Keming. The two sides have signed the Program for Development, Economic and Technical Cooperation for the years 2018-2020 and agree to start meetings to draw a draft concerning the cooperation under China’s Belt and Road Initiative. From 1999 to 2016, China had provided Jordan with grants and loans worth a total of 225 million dollars.
People's Bank of China (PBoC) and China Banking Regulatory Commission (CBRC) have been investigating and discussing with interested parties for advice in terms of China’s financial market opening, according to a source speaking to 21jingji.com. CBRC says that a plan for further open up China’s financial market is under discussion.
Chinese regulators have been encouraging private investment and promoting the public-private partnership. Local regulators recently issued new rules in this context, according to Chinese media. Regulators of Heilongjiang, Shandong, Hubei, Guizhou, Sha’anxi, and Xinjiang have rolled out PPP projects with investment volumes of more than 100 billion yuan respectively. China has deployed 144 PPP projects during the first nine months of this year, attracting a total investment of 183.65 billion yuan.
China Insurance Regulatory Commission (CIRC) has set the benchmark for China's Risk Oriented Solvency System (C-CROSS) in a draft regulation on the solvency of Chinese insurance companies. Core solvency ratio should be more than 50%. Detailed rules will be issued at the end of this year.
China’s cross-border capital flows will be stable in general, says State Administration of Foreign Exchange (SAFE), noting that this trend will not be influenced by the US Federal Reserve shrinking its balance sheet. The first three quarters of this year have seen a steady trend in China’s cross-border capital flows, with a general balance between the supply and demand of the foreign exchange, says SAFE.
“China has no problem to overcome the middle-income trap,” says Lou Jiwei, chair of China’s National Council for Social Security Fund and former Minister of Finance, during a discussion meeting of the 19th Party Congress. In 2015, Lou said that more than 50% of China’s population would be troubled by the middle-income trap and the country needed reforms. China has done “a lot” during the past two years, says Lou, explaining the reason of him changing the outlook for this issue.
Baidu Peng Huan Investment LLP, a subsidiary of Chinese Internet giant Baidu, has become the owner of a Chinese insurance company and completed its capital increase. Interested party from Baidu confirmed that this move had been approved by the regulator. The three major Chinese Internet companies have all tapped into the country’s insurance industry by now, says Chinese media.
Chinese regulators will become “stricter” in supervising the country’s finance industry, says Guo Shuqing, the chairman of the China Banking Regulatory Commission (CBRC), during a discussion meeting of the 19th Party Congress. Banks’ wealth management service and interbank business will be the main focus of regulators, says Guo. The tightened regulation will cover aspects including shadow banking and real estate bubbles, which will create limited influence on the real economy, says Guo.
The market share of foreign banks in China has shrunk during the past 5 years, according to China Banking Regulatory Commission (CBRC). Guo Shuqing, the chairman of CBRC says that this situation is unfavorable to market competition and structural optimization. China needs to further open up to foreign banks in terms of the shareholding structure and business scope, says Guo, adding that private investment should be introduced to the banking industry gradually.
According to the performance of China’s macro economy in September, the country’s GDP is projected to grow by 6.9%, says the State Council of China. The investment in infrastructure and real estate maintained steady growth in September, which indicates a stable momentum till the end of 2017, says the State Council. The decreasing growth of the private investment during the first nine months this year will be put to an end, with more supportive regulations being deployed, says the State Council.
China’s National Party Congress (NPC) says that China will continue to further open up its market. The country has been deploying new rules in this context. The total amount of the country’s import and export during the first nine months of 2017 recorded a y-o-y growth of 16.6%, according to Ministry of Commerce (MOC). China’s exports recorded an increase of 12.4% and imports 22.3%, reducing the trade surplus to 17.7%.
China has been cracking down on the irrational foreign investment and tightening on capital controls. During the first three quarters of 2017, Chinese investors’ new non-financial outbound direct investment towards 5,159 foreign enterprises of 154 countries recorded a total amount of USD 78.03 billion, marking a decline of 41.9% y-o-y. During the same period, the new foreign investment in projects relating to the Belt and Road Initiative amounted to USD 9.6 billion. This took a share of 12.3% of the total foreign investment from China.
New channels to use the renminbi in an international scope will be explored, according to a recent report by People's Bank of China (PBoC). The bank says that the renminbi will become a more widely used international currency, efficiently serving the real economy and simplify trades and investment. The PBoC will enhance the flexibility of the renminbi’s exchange rate preserve to stability in the international system.
China’s Ministry of Land and Resources has recently been conducting a study on the country’s housing inventory. The organization hopes to form a sharing system of housing information in China. Chinese media says that the system development will start at the end of this year.
Chinese regulators tightened the rules relating to the import of scrap copper, making the imports barely possible, said Chinese media. This move, which will take effect early next year is seen as China’s efforts to cut pollution from heavy industries. This also indicates that China’s refined copper import will boom, says Chinese analysts.
Shanghai Stock Exchange (SSE) has been China’s first comprehensive trading platform that covers markets ranging from stocks to derivatives. SSE ranks second in the world in terms of the funding amount of IPOs, according to World Federation of Exchanges (WFE). SSE’s market capitalization moreover is fourth in the world. SSE will be built into a sophisticated world-class bourse, says an officer from the SSE.
Regulators will start to issue new regulations to further relax barriers around private investments. After months of consecutive growth, the private investment rate of China dropped by 3% in August, according to China’s National Bureau of Statistics. In order to drive the vitality in private investments, the new regulations will loosen the market admission and lower the cost of private investment, encouraging the money to flow into the mixed-ownership reform of China’s state-owned enterprises (SOEs) and Public-Private Partnership (PPP).
In order to supervise the money flow of consumption loans and to prevent lending from being abused in the housing market, Chinese regulators have sought to tighten controls. Banks in Beijing for example require relevant documents when a customer applies for a consumption loan that exceeds 200,000 yuan. Chinese media says that some banks are asking their customers to provide relevant documents when they are applying for a loan that exceeds 10,000 yuan.
China Securities Regulatory Commission (CSRC) says it will crack down on the illegal reduction of shareholdings. Some of the major shareholders of listed companies will violate the law by reducing their shareholdings, says CSRC. This move looks to stabilize China’s financial markets in the run up to China’s 19th Party Congress, says Chinese analysts.
The direct cross-border exchange between the Chinese renminbi and Vietnamese dong has been rolled out through Chinese and Vietnam banks, according to China’s official media. This marks a new milestone in the internationalization of the renminbi. A branch of Agricultural Bank of China located in Móng Cái, a city that borders China has started to offer this service.
Chinese regulators have been supportive in the new energy automobile industry. This industry recorded a historical high sales volume of nearly 400,000 million vehicles in September. The related industries including finished automobile, automobile parts, and automotive battery are expected to grow as well predicts Chinese media.
China’s trading volume with the regions involved in Belt and Road Initiatives increased by 20% in the first three quarters of 2017, according to General Administration of Customs of China (GACC). This is 3.5% higher than the import and export growth during the same period. The structure and the quality of China’s import and export during the first three quarters of this year are constantly improving, says GACC.
China Insurance Regulatory Commission (CIRC) has accused Bohai Life Insurance of violating regulations, in regards to various transactions as well as shareholdings structuring. For the next six months, Bohai Life is required to cut off its connection with HNA Group and interested parties in terms of trading and financial support, according to CIRC’s announcement. HNA has been aggressive in expanding its business and conducted several major overseas acquisitions last year. Bohai Life must respond and report to CIRC by November 30 this year.
Shanghai’s minimum wage for 2017 is 2,300 yuan per month, ranking the highest in China. The country’s average minimum wage has raised significantly in 2017, says Chinese state-owned media. So far, at least 17 cities have reported an increase in their minimum wages, with minimum wages of Shanghai, Shenzhen, Tianjin, and Beijing exceeding 2,000 yuan per month. In 2016, 9 cities recorded an increase in their minimum wages.
Foreign insurance companies in China are required to modify their business in terms of corporate governance, according to a source close to Chinese regulators talking to cnstock.com. This move will the focus to 16 aspects including shareholding, business operation, administrative management, and information disclosure. Chinese regulators have been tightening the supervision of insurance industry since late last year.
China’s National Development and Reform Commission (NDRC) will continue to promote the reform of the corporate bond issuance regulation system, the regulator has said in a recent announcement. The industrial guidance function of corporate bonds will be reinforced. NDRC will also emphases on building the credit system in the bond market. The bond issuance in China has increased from 1987’s 10 billion yuan to 2016’s 700 billion yuan, says the NDRC.
China's Ministry of Finance (MOF) has said that it will issue a sovereign bond of US$2 billion in Hong Kong. The bond includes a 5-year tranche of US$1 billion and a 10-year tranche of US$1 billion. The release date is to be announced.
Risk management companies are forbidden to provide services to individuals in derivativea trading, says China Futures Association (CFA). Interested companies should conduct self-checks and report to CFA before October 15 this year. This move indicates regulators determination in controlling speculative risks, says Chinese analysts.
A “timely” long-term solution for China’s overheated real estate market is under discussion, according to the National Development and Reform Commission (NDRC). Chinese regulators have been effective in destocking its real estate inventories, says the NDRC. Over the past year, the country has reduced 100 million square metres of real estate inventories, most of which are located in third- and fourth-tier cities.
Hong Kong’s Securities and Futures Commission (SFC) will roll out a real-name registration scheme next year for the Shenzhen/Shanghai – HK Stock Connect. Currently, 6% of the trading volume on HKEx is via the Stock Connect, but this will likely increase in the future, says the SFC. The upcoming scheme will serve as a precaution against international market manipulation and fraud via the HKEx.
China’s GDP grew at an average annual rate of 7.2% during 2013 to 2016, 2.6% higher than the average annual growth rate of the world’s developing economies during the same period, according to the country’s National Bureau of Statistics. During the first half of this year, China’s GDP recorded an annualized growth of 6.9%. Chinese analysts predict that the country’s annual GDP growth for 2017 will be 6.8%.
China’s Purchasing Managers' Index (PMI) recorded 50.6 in September, the lowest it has been since January 2016. The figure, released by Markit and Caixin, is lower than the PMI of 54.4 recorded by China’s National Bureau of Statistics. However, both figures indicate flat growth in China’s employment in the service industry. A figure under 50 would represent a contraction.
As of September 30, China Securities Regulatory Commission (CSRC) received IPO applications from 405 companies, 328 of which were approved and 53 rejected. The pass rate has fallen to 80.99%, recording a nearly 10% decrease compared to the same period last year. China’s jammed IPO applications will be eliminated in about one year, say Chinese analysts.
The 4th China Smart City International Expo was held in Shenyang, Liaoning. Two national innovation centres on big data were launched in the city. Big data transactions will be rolled out in Shenyang by the end of this year.
China will continue reducing the leverage ratio of state-owned enterprises (SOEs) through reforms, according to an official from National Development and Reform Commission (NDRC) talking to Xinhua News Agency. NDRC will focus on reducing the leverage ratio of SOEs and set up different warming lines according to the characteristics of different industries.
China’s One Belt One Road (OBOR) Initiative contains promising opportunities such as huge funding demand in infrastructure projects, said Chen Siqing, Chairman of the Board at Bank of China. Due to the long life cycle and the large investment, many of the OBOR related projects have difficulties in funding, Chen added, noting that interested financial institutions should innovate in service and products and form a system of financial protection.
The total market value of China’s National Equities Exchange and Quotations (NEEQ), or the “New Third Board”, has reached 524.52 billion yuan in 2017, with 11,594 companies listed on NEEQ. More than 2,000 NEEQ-listed companies issued stocks in 2017 YTD and the amount of the stocks accounts for 97.985 billion yuan.
China’s Purchasing Managers' Index (PMI) for September increased to 52.4%, recording a growth of 0.7% compared to August, based on information from China’s National Bureau of Statistics. This marks the highest PMI since May 2015. The GDP growth of the third quarter of 2017 is predicted to be 6.8%, according to several Chinese analysts talking to yicai.com.
Cargo train services between Chengdu, capital of Southwest China's Sichuan province, and Czech capital Prague started service recently. This marks the seventh international cargo service from Chengdu, following Lodz, Nuremberg, Tilburg, Almaty, Minsk and Moscow. This train service cuts the delivery between the two destinations to 13 days, adding to the geographical advantage of Chengdu.
Interested parties of China’s government and major companies in China’s liquor industry have been promoting Chinese liquor “baijiu” go international. Baijiu brands plan to enter overseas market leveraging China’s One Belt One Road Initiative, said Chinese media. Baijiu’s production currently takes one-third of the world’s liquor production, while the sales volume accounts for less than 1%.
In order to support financial institutions in their financial inclusion efforts, the People's Bank of China will cut certain commercial banks’ reserve requirement ratio (RRR) by 50 basis points to 100 basis points next year. This move will benefit those qualified banks that lend to small to micro companies or agriculture-related businesses. Yet the central bank’s prudent monetary policy will be maintained in order to control risk and serve the country’s deleveraging scheme.
The sharing economy is estimated to maintain a 40% annual growth rate, accounting for 10% of China’s GDP by 2020. China will continue to boost the development of the digital economy. Regulators will respect the market discipline, said National Development and Reform Commission (NDRC), noting the importance of government’s guidance. The regulators will maintain a prudential supervision and decentralize some of its power to the market, according to the NDRC.
China Banking Regulatory Commission (CBRC) will regulate the activities of financial institutions lending to the Chinese local governments. This will serve to reduce the implicit debt. In order to control the risk of the real estate bubble, the CBRC will further tighten its supervision on cash loans. The regulator has also taken steps in controlling the risk from the shadow banking system.
China’s State Council has issued guidance on anti-money laundering, counter-terrorist financing, and anti-tax avoidance. The guidance highlights more than 20 measures needed to improve the legal environment and to help control the financial risks to China’s economy.
Hong Kong Monetary Authority (HKMA) will take a series of measures to support digital innovations in the banking industry. HKMA will roll out a payment system which enables banks and payment platforms to participate. The regulator will cooperate with the banks in simplifying ‘irrational’ regulations. HKMA will also support innovations in cross-region cooperation with fintechs.
China plans to set up a state-owned natural gas pipeline company. The first plan for this may be issued next year, according to an official from PetroChina. National Development and Reform Commission (NDRC) is discussing this issue with PetroChina and Sinopec, Chinese media have said.
China’s natural gas long-distance transportation system is now mainly run by PetroChina, Sinopec and CNOOC, with PetroChina taking up 70% of long-distance transportation and 90% of the underground gas storage.
Foreign capitals are welcomed to participate in mixed-ownership reforms of Chinese state-owned enterprises (SOEs), said Xiao Yaqing, the director of the State owned Assets Supervision and Administration Commission (SASAC), at a press conference today. China hopes that countries including the US can open up to Chinese capital, said Xiao, noting that Chinese central SOEs should be evaluated with proper, objective and comprehensive criteria.
The cross-border capital flow of mainland China has remained balanced in August, said the State Administration of Foreign Exchange (SAFE). Domestic entities’ foreign trades have also remained stable during the same period. The capital inflows through major channels including trading and investment increased. Regulations on foreign exchange are consistent, said SAFE, noting that legal overseas investments are encouraged.
The central state-owned enterprises (SOEs) of China’s steel and coal industries have exceeded their goals of reducing overcapacity, said the State owned Assets Supervision and Administration Commission (SASAC). During the first eight months of this year, central SOEs has reduced 1,614 tons of steel and 5,510 tons of coal. Last year, Chinese SOEs reduced 80% of the national production of steel and 73% of national production of coal.
The accumulated profit of the SOEs during the first eight months of this year increased by 17.3% y-o-y to 976.6 billion yuan.
Industrial and Commercial Bank of China, COFCO, CRRC, State Grid and three other central state-owned enterprises signed a cooperation framework agreement today on forming a supply chain alliance for funding. The alliance will serve to integrate resource in clients, market, channels, data, and technology. The alliance will promote the innovations in fintech including big data, Internet of things, and blockchain.
China plans to set up a general system of technology transfer and form an interconnected technology market by 2020, according to a recent plan by the country’s State Council. The plan focuses on technology innovations, noting that the country supports the technology transfer between different regions and countries. Technology transfer between defense and civil entities is also encouraged. The plan aims to form a sophisticated national scheme of technology transfer by 2025.
China’s first and biggest bitcoin trading platform, BTCChina, has stopped accepting renminbi and digital asset deposits today at 4:00 AM (UTC). The platform will completely shut down its exchange businesses at the end of this month. The service of withdrawing renminbi and digital assets will stop on October 31. Chinese regulators called for a halt to the rapidly developing initial coin offerings (ICOs) early this month, and hinted to close all the virtual currency trading platforms in the country.
Central state-owned China Unicom’s mixed-ownership reform plan is awaiting approval from China’s Securities Regulatory Commission (CSRC), explained China Unicom in a recent statement. China Unicom highlighted that this would be the last step in its reform strategy. The company is expected to get CSRC approval in about one month.
China plans to set up a centralized financial company to manage the 2 trillion yuan worth of funds held by the finance units of the country's state-owned enterprises (SOEs), according to a source familiar with the matter.
China hopes the US could give equal treatment to Chinese enterprises, and increase high-tech products’ export to China, said Chinese Premier Li Keqiang during his meeting with US Commerce Secretary Wilbur Ross on Sept 25 in Beijing. Based on the principles of mutual respect and win-win cooperation, China is aiming to expand commodity and service trade, and deal with disputes and divergences through dialogues, said Li.
The US welcomes China’s accelerating opening-up steps, and is glad to expand trade and investment cooperation with China, said Ross.
China’s economic growth for next year is estimated to reach 6.4%, according to a recent report from Asian Development Bank (ADB). This indicates a 2% increase compared to the prediction made by ADB in April this year.
The outlook for Asia’s economic growth is positive, said Yasuyuki Sawada, ADB’s Chief Economist. This is fueled by the recovery of global trades and the momentum of China’s economy, Sawada added.
ADB predicts that China’s economic growth for 2017 will reach 6.7%.
China Securities Regulatory Commission issued a modified regulation on M&A disclosures. The new regulation requires fewer items to be disclosed in the M&A applications to shorten the trade suspension period of involved listed companies. In order to avoid insider trading, the new regulation requires the companies to disclose the share reduction plan of large shareholders and some concert parties.
The number of unprocessed A-share IPO applications have been dropping significantly. As of Sep 15, there were only 497 pending A-share IPO applications compared to 780 applications the same period last year. According to Chinese media, over 300 A-share applications have been approved in the first nine months of 2017. It is expected that the Shanghai Stock Exchange will exceed Hong Kong Exchange to be the second largest stock exchange in terms of no. of new IPOs only behind the New York Stock Exchange.
According to Chinese media, asset under management (AUM) by Chinese securities companies continued to shrink in the third quarter due to China's recent efforts to clamp down on the shadow banking sector. As of Sep 10, the total AUM of asset management business of securities companies have declined to 17.67 trillion yuan from 18.1 trillion yuan in the second quarter of 2017. Chinese analysts said that the shadow banking business does not effectively bring more profits to Chinese securities companies.
Following the recent forms of China’s central state-owned enterprises, Guangdong Province is planning to have a wave of reforms among its state-owned enterprises (SOEs), explained Chinese media. They noted that Guangdong's 36 SOEs will be soon conducting M&As in the near future. The total asset of Guangdong’s SOEs is seven trillion yuan, said Chinese media. After the reforms, each enterprise on average will have an estimated asset of 800 billion yuan.
The rating agency, S&P Global Ratings, lowered China’s sovereign rating by one notch to A+ from AA- yesterday. China’s Ministry of Finance (MOF) called this “a wrong decision”. MOF said that S&P focused on issues such as China’s soaring debt, but ignore the characteristics of the country’s financial market and the financial support from the Chinese government. China will further open up and restructure the economy, said MOF, highlighting that the country will maintain proper money and credit growth.
China supports eligible enterprises to participate in the construction of overseas development zones, said Ning Jizhe, deputy director of China’s National Development and Reform Commission (NDRC). These zones will serve as major platforms for overseas investment. Meanwhile, China promotes the innovation and reform of the country’s domestic development zones. This will help to form a more compelling market to attract foreign investors.
Central state-owned power juggernaut State Grid Corporation of China is studying whether to acquire electricity distribution subsidiaries that will be sold by Brazil’s state-owned Centrais Elétricas Brasileiras by the end of this year, according to an executive at State Grid talking to Reuters. State Grid announced its plan of corporate governance reform early this month. This reform is scheduled to be completed by the end of this year.
China Insurance Regulatory Commission (CIRC) supports insurers to invest in community services for aged care. By the end of June, there were eight major insurers in China investing in 29 aged care communities, according to the CIRC. The estimated investment has reached 67.8 billion yuan. Some of the communities have already been put into operation.
China’s State Council extended the time to comply with the new regulation on cross-border e-commerce by one year. The transitional policy will be valid until the end of next year. China will continue to support the development of cross-border e-commerce, said the Chinese State Council. Chinese cities relating to the One Belt One Road Initiative are encouraged to construct cross-border e-commerce facilities.
China wishes to align its One Belt One Road Initiative to Singapore’s development strategies, said China's Premier Li Keqiang. This will improve the trading and investment between China and Singapore. Li welcomes more Singapore enterprises to invest in China and hope that Singapore can support Chinese enterprises participating in the Kuala Lumpur-Singapore High Speed Rail construction project. Singapore wishes to collaborate with China in improving the China – Singapore Free Trade Agreement, said Lee Hsien Loong, Prime Minister of Singapore.
The new regulation on life insurance will take effect this October. This regulation calls for the halting of universal life products. Experts see this as China Insurance Regulatory Commission’s (CIRC) strictest regulation. Some insurers have been trying to design new products that hope to circumnavigate the new regulations, said Chinese media. The CIRC has become notably stricter on approving newer insurance projects.
China has recently deregistered 24 payment platforms that violated relevant regulations. Licenses for running online payment platforms has become scarcer in China, explained Chinese media. An online payment license normally costs 600 million yuan, said a source talking to china.com.cn, noting that some licenses can cost more than 2 billion yuan.
Agricultural Bank of China (ABC) has been promoting its financial support for the mixed-ownership reform in China. There will be more reforms in energy and steel sector in the second half of this year according to the Chinese media. ABC has signed contracts with 43 clients in providing services in such reforms. The bank also offers integrated service solutions for 99 clients and provides 83.4 billion yuan in supporting the funding of 31 companies.
China’s Insurance Regulatory Commission (CIRC) issued a notice in April this year reaffirming its determination in regulating the insurance market. Currently insurance companies found 1,131 irregularities through self-examination, accounting for 98.2 billion yuan; the regulators discovered 2,300 problems in the insurance market, accounting for 1 billion yuan, according to the CIRC. There has not been any irrational overseas investment in China’s insurance market during the first half of 2017, said the CIRC.
China Banking Regulatory Commission (CBRC) recently issued a draft regulation on China Development Bank Corporation (CDB) clarifying the function of this policy bank. CDB plays a key role in China’s ambitious One Belt and One Road initiative. The bank enjoys the advantages as a policy bank but conducts commercial banking business. This differs CDB from the other two policy banks, the Export-Import Bank of China and Agricultural Development Bank of China.
Eight China central state-owned enterprises were selected as the next mixed-ownership pilot enterprises, according to Chinese media. In addition to COFCO Capital and China National Gold Group Gold Jewellery Co., Ltd, these list of companies might also include Huaneng Capital Services Corporation Ltd. and China National Salt Industry Corporation, reported Chinese media.
China’s State Council recently issued the guiding opinions on guiding Chinese private investment. The country will further open up in areas including infrastructure and public utility. Private investments are encouraged to participate in the PPP (public-private partnership) projects in such areas. Chinese analysts said that the money invested in these projects has been increasing, the first three quarters of 2017 has maintained a growth rate of 50%.
Hui Ka Yan, Chairman of the Board of China Evergrande Real Estate Group Limited, has become the new richest individual in China and the second richest person in Asia.
As one of the largest property developers in China, Evergrande Group’s stock price has been on the rise. The 58-year-old Hui recorded a new net worth of 39.1 billion according to the recent figures from Forbes.
China will set up a fund of over 100 billion yuan to support the mixed-ownership reform of Chinese central stated-owned enterprises (SOEs), said Chinese media. The fund is still waiting for the approval from China’s State Council.
The shareholders of this fund will include influential Chinese private enterprises with solid backgrounds in finance and real estate in addition to central SOEs and SOEs, said Chinese media. The fund has also drawn attention from Chinese internet juggernauts such as Alibaba, Baidu and Tencent.
The National Development and Reform Commission (NDRC) recently announced that China's would further ease restrictions on foreign investment admissions. The NDRC highlights that there will be favorable rules in areas including finance and new energy vehicles during the second half of 2017.
China has eliminated about 30% of the existing foreign investment admissions restrictions in July this year, said the NDRC. The foreign investment negative list, which has been used in China’s 11 free trade zones (FTZs) will be deployed nationwide. Foreign investors off this list will not be prohibited from entering China’s market.
China Banking Regulatory Commission (CBRC) issued a draft regulation on the supervision of China’s Development Bank (CDB), regulating the bank’s management and prudential supervision. CDB plays a key role in China’s ambitious One Belt and One Road initiative. This regulation serves to clarify the function of CDB forming a mechanism for areas including corporate governance, capital restraint, and risk management. The draft regulation is open for the public’s advice.
Central state-owned China Railway Corporation, the country’s national railway operator started its reform early in September, said Chinese media. The reform aims to separate state-owned enterprises from the government.
After the reform, the company’s 18 subsidiaries which used to serve as railways bureaus will be renamed by November this year and operated under new management from next year.
There will be no layoffs resulting from the reform, said Chinese media, noting that the reform will enhance the company’s commercial viability.
China’s overseas investment has turned to be more rational. According to the Chinese Ministry of Commerce (MOC) Chinese investors invested in 4789 overseas non-financial companies in 152 countries during the first eight months of 2017. Amounting to US $68.72 billion this represents a decline of 41.8% y-o-y of overseas Chinese investments. There were no new investments in overseas real estate, sports, and entertainment projects.
China’s Ministry of Commerce (MOC) is cooperating with interested departments in expanding renminbi settlement business in cross-border trades and overseas investment. This will help Chinese enterprises in dealing with exchange rate risks.
MOC will adhere to the mission of seeking stable development and serve to reduce the external risks for foreign trades.
Chinese state bodies have issued an implementation plan today promoting the production of ethanol. The plan states the country’s 2020 targets for nationwide ethanol gasoline use. Ethanol related Chinese concept stocks are expected to rise, say Chinese analysts.
China has been promoting ethanol gasoline since 2001, with 11 cities are now using ethanol, accounting for 20% of the country’s total volume of automotive fuel.
The announcement was issued by China’s National Development and Reform Commission (NDRC), the National Energy Administration, and the Ministry of Finance, along with some other interested departments.
Chinese regulators are shutting down virtual currency trading platforms, according to a source close to the regulators talking to cnstock.com. Regulators are talking with relevant platforms, says the source.
The rapid growth of virtual currency in China, such as Bitcoin, challenges the regulators in tackling money laundering and managing capital flows, says Sheng Songcheng, counsellor to the People's Bank of China (PBoC). PBoC will maintain its dominating position in the monetary market even when China develops into a cashless society in the future.
China Securities Regulatory Commission (CSRC) is to issue regulations on home rental Real Estate Investment Trusts (REITs). China has been promoting the housing rental market, and REITs are expected to be at the top of the priority list for Chinese regulators.
The funding of Asset-Backed Securitization (ABS) and REITs is suitable for the Chinese market, say Chinese analysts, noting that the two channels are expected to play a major role in the funding of home rental companies. This market in China is expected to be promising, say the analysts.
China Securities Regulatory Commission (CSRC) is to join the Organization for Economic Co-operation and Development (OECD) Corporate Governance Committee. The move will require CSRC to amend existing government regulations to comply with international conventions.
"With the approval of China’s State Council, CSRC is willing to accept the invitation of joining the Corporate Governance Committee of the OECD,” says Liu Shiyu, chairman of CSRC. China will become an active participator in implementing the G20 / OECD Corporate Governance Guidance, says Liu.
Chinese regulators issued a notice in early September defining initial coin offerings (ICOs) as an illegal form of fundraising. Since then, Chinese ICO platforms have been cleaning up their businesses. So far, several platforms have completely removed their ICO related services. 30 platforms are providing investors with services of refunding and repurchasing. Fifty platforms have issued notices of cleaning up their businesses.
The Shanghai and Shenzhen Stock Exchanges jointly issued draft guidelines on September 8 for securities companies on the risk management of stock-pledged repurchase transactions.
For a single transaction, the maximum proportion of the outstanding shares that can be pledged as collateral is set to be 50%, according to the guidance.
As of September 11, the Shanghai and Shenzhen exchanges have 122 listings with pledged collateral exceeding 50%. Companies with listings exceeding 50% will be effected by the new rules, according to Chinese analysts, who say that these companies might cope with the rules by setting up funds or loaning on credit.
Hong Kong will sign an agreement with mainland China which will let Hong Kong further benefit from the Belt Road initiative, according to Hong Kong Chief Executive Carrie Lam. The new agreement will cover the funding of infrastructure projects, promoting trade and investment, and sharing project information. This agreement is another major agreement following the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) signed in 2003, says Lam. As a free trade agreement, CEPA allowed qualifying products, companies and residents of Hong Kong preferential access to the mainland Chinese market.
Mainland China will support Hong Kong to explore the green bonds market and green credit policy, says Ning Jizhe, deputy director of China’s National Development and Reform Commission (NDRC). As a mature capital market, Hong Kong can use its geographical advantage to develop into a central hub on the Maritime Silk Road. Through Hong Kong, mainland China will continue to internationalize the renminbi and seek new funding channels such as Public-Private Partnership (PPP), says the NDRC.
The first half of 2017 has seen the explosive growth of initial coin offerings (ICOs) in China. After China tightened its regulations on ICOs, the country is to shut down all Bitcoin trading platforms, says an unnamed government source talking to the Wall Street Journal. Hong Kong regulators recently also decided to improve ICO rules, saying that the existing Securities and Futures Ordinance (SFO) fails to supervise fintech sufficiently.
The National Development and Reform Commission (NDRC) said it would encourage steel enterprises to conduct cross-region M&As especially mixed-ownership reform, to improve an effective supply of steel and avoid major fluctuations in the market. China has been cutting the excess and backward capacity in the steel industry.
At the start of 2017, the Chinese government hoped to reduce 50 million tons of steel by yearend. Around 85% of that target had been already met by May this year according to the NDRC.
The public offering of fund has become a crucial part of China’s retirement pension system, said Li Chao, Vice Chairman of the China Securities Regulatory Commission (CSRC). During a recent speech, Li highlighted that it is an important for Chinese regulators to build a sufficient framework for the country’s pension scheme. Chinese pension funds have been faced with a financial sustainability crisis due to a rapidly aging population. Li said that the mutual fund sector should play a major role in supporting retirement schemes.
The applications for fund raising of over 80 public offering FOFs (fund of funds) in China have been accepted and are being processed, that’s according to China’s Securities Regulatory Commission (CIRC). Chinese media has reported that six FOFs recently got their approvals, with four being in Beijing and one in both Shanghai and Shenzhen.
Over the past several years China has been ramping up its mixed-ownership economy by diversifying the shareholding structure of its state-owned enterprises (SOEs). Today, trading in the shares of central state-owned China National Building Material Group (CNBM) and several of its listed affiliated companies were suspended. This indicates that CNBM is about to announce some major news which can possibly be related to reforms, said Chinese media.
Early this year, CNBM said it had been discussing plans to enhance the integration of its 15 listed companies.
Chinese industry insiders are calling for relaxed measures on stock index futures. Economic Information Daily, a Chinese official media organized by Xinhua News Agency, said today that policies for China’s stock index futures need some moderate relaxation.
Currently the market is somewhat stable and investors are slowly regaining confidence said Chinese media, indicating that now is a good time to reform the regulations and policies. China Securities Regulatory Commission is aware of this demand, CSRC Vice-Chairman Fang Xinghai said today.
China’s Ministry of Industry and Information Technology (MIIT), together with relevant regulators and institutions, will promote the development of AI by deploying regulations and policies, said Chinese media.
Smaller enterprises and start-ups will benefit from favorable financial and tax policies. Regulators will promote the development of AI innovations by setting up innovation bases. In order to cope with the possible legal and ethical issues, regulators will improve relevant legislations.
China’s Insurance Regulatory Commission (CIRC) recently issued a notice to Chinese insurers saying that cases and statistics relating to fraudulent transactions within the trade credit insurance sector shall be reported to CIRC by the 15th of this month. Information collected will contribute to finding effective measures to cope with the fraudulent transactions. Relevant cases have happened in sectors including short-term export credit insurance and domestic trade credit insurance.
China’s Insurance Regulatory Commission (CIRC) will further open up the Chinese insurance market. In terms of the existing foreign insurers in China, regulators will improve the supervisory environment for them and encourage them to develop their business in health, pension, and catastrophe insurance sectors.
China will also improve policies of foreign investment admissions to attract more excellent foreign insurance institutions.
HSBC Bank (China) became the first foreign bank to provide facial recognition payments in China. In addition to the existing dynamic verifiable code service, this new technology will help to improve the security of mobile payments. China’s leading mobile payment platform, Alipay, debuted its facial recognition payments service early this year. The service received a mixed reaction in terms of its necessity.
Chinese media said that the People's Bank of China (PBoC) recently issued a notice, requiring banks and payment institutions to stop the services for cryptocurrency token issuance and transactions platforms. The services include opening accounts, registration, trading, clearing, etc. Banks and payment institutions are also required to investigate existing accounts suspected of fundraising through tokens. Such accounts shall be monitored and reported to regulators.
China’s Banking Regulatory Commission (CBRC) has been recently tapped to become the financial supervisor for financial licensing entities such as leasing, factoring, and pawn companies, according to Chinese media.
After this possible reform, the supervisory mode will be similar to that of micro-credit and P2P online loans companies, said an officer from a local regulatory institution. CBRC will guide the supervision, along with the local Financial Service Offices in implementing the regulations. The task could be challenging for regulators as there are more than 20,000 relevant financial institutions within China.
China Securities Regulatory Commission (CSRC) recently said that some of China’s money market funds with a large amount of assets need to be supervised with special regulations to mitigate domestic systemic risk. “Everyone knows what I am referring to and there is no need to point it out,” said Li Chao, Vice Chairman of CSRC. Yu’e Bao (余额宝), managed by Tianhong Asset Management, is an investment product of Alibaba’s payment affiliate Ant Financial. It has become the world’s largest money market fund, with a total amount of 1.43 trillion yuan as of June 30 this year, surpassing China Merchants Bank’s deposit of 1.3 trillion yuan.
A recent report on China’s energy finance development shows that the country’s energy finance, especially the clean energy sector, will experience explosive growth during the 13th Five-Year Period (2016-2020). The report was published by Central University of Finance and Economics and revealed that the investment demand of China’s clean energy finance, including nuclear power sector will amount to about 3.1 trillion yuan. Solar energy on its own will need a total of 1 trillion yuan of investments by 2020.
The Leading Group for Implement Special Rectification Work on Internet Finance Risks recently issued a notice defining ICOs (initial coin offerings) as illegal fund raisings. New ICOs projects are prohibited to be issued, and finished projects will be judged case by case. ICOs platforms will suspend operations and report to local regulators, said an officer from a blockchain platform. According to the Leading Group’s draft list there are 60 existing ICOs companies within China.
China’s Securities Regulatory Commission (CSRC) recently said that there might be more reform plans in terms of bourses’ function and investors’ claim settlement. CSRC is giving up some of its supervisory power and more of its resources will be used to protect investors and clamp down on illegal activities. Chinese analysts said that the Shanghai and Shenzhen exchange would aim to have additional autonomy in rule making. Moreover, both exchanges will have greater authority to act upon unusual trading activities.
China has been promoting a mixed-ownership economy by diversifying the shareholding structure of its state-owned enterprises (SOEs). Following China Unicom’s recent announcement of its reform plans, national railway operator, China Railway Corporation (CR) yesterday said that it had invited several companies including Alibaba, Tencent and state-owned FAW Group to participate in its mixed-ownership reform. Highlighting that there has always been good cooperation between the two companies, SF Express also said it will be an active participator for CR’s reform. In the first half of this year, CR had a total net loss of 2.968 billion yuan and its debt increased to 4.77 trillion yuan.
The People's Bank of China (PBoC) yesterday announced that commercial banks are no longer allowed to issue new interbank negotiable certificates of deposit (NCDs) with a tenor longer than one year. The new regulation takes effect from today.
This move was seen as improving the debt ratio assessment of the banking industry and reducing interbank risk, say Chinese analysts, noting that the new regulation might put smaller players under new pressure. But a PBoC official said that the change in regulation would not have much impact on the interbank lending market according to their results from a simulation.
A source close to regulators said that China Banking Regulatory Commission (CBRC) might become the regulator for the country’s funding leasing business, according to the China Business Journal. Recent years have seen the rapid growth in China’s funding leasing market. This sector has been regulated by the Ministry of Commerce (MoC) and CBRC only has supervising responsibilities. This move complies with the Financial Stability Board’s requirements, said the source, highlighting that there have not been any officially issued documents. MoC and CBRC have not responded to the news yet.
In order to set up a unified national trust registration system, China’s Banking Regulatory Commission (CBRC) recently issued regulations on the process of trust registration, highlighting the registration shall be protected by law.
China Trust Registration Co., Ltd, which was established in late December last year, will be in charge of relevant registration procedures, and the registration is free of charge. The regulations will take effect from tomorrow, but relevant institutions can have three months to comply with it. This will help strengthen market discipline and transparency, and will reduce the risks in this industry, said Chinese analysts.
China’s State Council recently issued an interim regulation on private investment funds, listing several detailed prohibitions on private investment funds’ managers and custodians. The regulation, which is said to be the strictest so far, says that those with net assets less than 50% of their paid-in capital and those with debt over 50% of their net assets are not allowed to be a private investment fund’s managers, major shareholders or partners. Private investment funds are required to reveal sufficient information on investment risks to the investors and are prohibited to promise any minimum profits, according to the regulation.
The first half of this year has seen China’s explosive growth of initial coin offerings (ICOs), a crowdfunding product using cryptocurrency. But due to its high risks, Chinese media recently has been discussing whether ICOs should be supervised, and regulators are also having meetings on this issue.
Sources say that regulations might be issued at the end of this year and ICOs in Beijing might be regulated in advance, according to eeo.com.cn. National Internet Finance Association of China (NIFA) yesterday also warned the risks of ICOs, highlighting that some institutions have misled investors to raise funds through ICOs, being suspected of illegal fundraising.
Postal Savings Bank of China, which executed the largest IPO on the Hong Kong Stock Exchange in 2016, recently announced its upcoming Shanghai IPO plan. The initial IPO size will be 5.172 billion shares at par value of one yuan per share. According to the official announcement, the proceeds from the IPO will be support PSBC's capital base.
According to Chinese media, Chinese regulators are now considering letting the social security fund hold some state-owned assets that are not part of listed SOEs. It is expected that over a trillion yuan of state-owned assets will be shifted out from non-listed SOEs to the social security fund. Currently, the social security fund is running over 2.5 trillion yuan of pension funds with an annual return of 8.37%.
Following the growth of the bike sharing industry in China, large Chinese conglomerates are now eyeing the automobile sharing industry. According to Chinese media, Alibaba, BMW, HNA and Vanke are all investing in this new market. As of 2016, there were 360 million license holders but only 140 million cars in China. Currently, there are over 6300 car renting companies. While there is market potential in China, experts are questioning whether automobile sharing companies can easily break even due to a higher operating cost of such activities.
China’s State-owned Assets Supervision & Administration Commission (SASAC) yesterday, announced that world’s largest coal supplier, Shenhua Group had merged with power producing giant, China Guodian Corporation. The M&A of these two central state-owned enterprises has created a 1.8 trillion yuan energy supermajor, ranking the fourth among China’s largest energy enterprises. The M&A was seen positively with experts believe that the deal will reduce over-capacity and “influence the landscape of the industry”, said Chinese media. Sources from the power industry indicated that China’s National Nuclear may soon merge with China Nuclear E&C Group. Moreover, China Huaneng Group might merge with State Power Investment Corporation.
Mainland China users of Apple’s App Store and Apple Music can now pay through Tencent Holdings' mobile payment platform, WeChat Pay. The payment method is supported by iOS 10.3 or later versions. WeChat Pay and Alibaba’s Alipay have been dominating China’s cashless payment system. Apple’s App Store users have been growing rapidly since November last year when the App Store announced that it would accept Alipay transactions. Apple CFO Luca Maestri said early this month that users for the paid service of App Store and iTunes increased by 12% to 185 million during the past three months, highlighting the significant contribution from accepting more payment methods such as Alipay.
The first half of this year has seen an explosive growth of initial coin offerings (ICOs) in China. A crowdfunding product thought the use of cryptocurrency, ICOs have been the subject of much debate on whether they are illegal or not. According to Chinese media, the People's Bank of China (PBoC), China Securities Regulatory Commission (CSRC) and China Banking Regulatory Commission (CBRC) had a meeting on ICOs this month. Due to their high risk, ICOs are certain to be regulated in the long run, said a CSRC official. Chinese analysts said that some companies might move their ICO activities overseas if the regulations are too strict.
China’s Banking Regulatory Commission (CBRC) recently issued a guidance on online lenders stating that within the first five working days of every month, online lending platforms should disclose information to government. This includes the amount and volume of online loans that are 90 days or more past due.
This sets a clear standard for online lenders on assessing overdue loans. The guidance indicates that online lending business will be regulated with the same risk assessment standard of the banking industry highlights Chinese analysts. Online lending platforms will have six-months to comply with the new regulation.
Chinese IPO has been growing significantly since the second half of 2016. During the first half of this year, 308 companies raised 155.4 billion yuan from IPO activities with nearly 10% capital being paid to intermediaries such as investment banks. Chinese analysts said about 60% to 90% of IPO relevant fees were paid to investment banks for their underwriting services.
China currently has no regulations or standards for the allocation of intermediary fees resulting in a huge discrepancy among different institutions. China Merchants Securities received the highest underwriting fee of 157 million yuan from a single IPO project in late July becoming the biggest intermediary winner for the first half of 2017.
As a precaution against international market manipulation and fraud via the HKEx, China’s Securities Regulatory Commission (CSRC) has sought to implement a real-name registration scheme. With further integration planned between the HKEx and mainland market there are fears that international financial predators would be able to trade A shares and investment in products such as ETFs and futures directly under the Shenzhen/Shanghai – HK Stock Connect.
HKEx and regulators of mainland China and Hong Kong will meet soon to discuss relevant schemes including a legal entity identifier (LEI) system reported local Hong Kong media.
According to the National Development and Reform Commission (NDRC), China will focus on promoting and speeding up the mergers and acquisition (M&A) of steel enterprises in major regions within the country.
Officials China’s Iron and Steel Association hope that M&A activities within China's steel industry will push the sector’s debt ratio to under 60% in the next three to five years.
China's market will further open up to foreign investment by relaxing additional restrictions.
Accord to China’s State Council, banking, securities, and insurance industries will reduce the constraints on the proportion of foreign shares and lines of business, Areas including new energy vehicles, ship design, and international maritime transportation will also see the relaxation on foreign share ownership.
China Unicom, who recently announced its mixed-ownership reform, today started to set up an alliance among Chinese corporates to create an Internet of things (IoT) ecosystem. In addition to China Unicom, the alliance has 30 members including internet giants Baidu, Alibaba, and Tencent (BAT), Chinese mobile device companies ZTE, Huawei, and Ericsson, and state-owned China Aerospace Science & Industry Corporation. China Unicom said such business innovations will be one of the company's core strategies after the corporate reform.
As China starts to implement the Common Reporting Standard (CRS), Chinese high net worth individuals (HNWIs) are seeking new approaches to hide their private wealth. Overseas private trust companies, different from family offices have become popular vehicles for Chinese HNWIs. Private trust companies usually adopt a model where a special purpose vehicle, which has no beneficiary, acts as the shareholder of the trust companies. As a result, regulators are unable to find the information of the investors through tracking the beneficiaries. According to Chinese media, the current CRS in China does not either include property assets into the reporting scope. Therefore, some wealth managers tried to promote their property solutions to their clients.
In order to reduce the debt ratio of the central state-owned enterprises, China’s State Council recently proposed to set a strict debt ratio warning lines sector by sector. Chinese analysts predicted that the warning lines for coal as well as iron and steel industry would be relatively high.
Those enterprises with debt ratios exceeding the warning lines will have a higher weight in the debt ratio assessment during their annual performance assessment, said the State Council, highlighting that investment projects with possibilities to increase the debt ratio will be prohibited.
China's Ministry of Commerce (MOC) recently said that China would focus on the supervision of overseas investments’ authenticity. China has been encouraging rational overseas investments. The bogus and irrational investments will be strictly curbed, said MOC. The supervision for overseas investments will be reinforced and the filing system will be improved. The legislation overseas investment will also be promoted, according to MOC.
China has sped up the central state-owned enterprises’ mixed-ownership reform by diversifying their shareholding structure after this year’s “Two Sessions”. State owned Assets Supervision and Administration Commission of the State Council (SASAC) yesterday announced the reform plan for central state-owned China Poly Group Corporation, stating that two other central state-owned enterprises, Sinolight Corporation and China National Arts and Craft (Group) Corp., will be merged into China Poly, becoming China Poly’s wholly-owned subsidiaries. These two companies will no longer under SASAC’s direct supervision.
China’s Ministry of Commerce (MOC) yesterday expressed its strong discontent with the United States' move on Friday to initiate an investigation under Section 301 of Trade Act of 1974, saying that the US neglected the World Trade Organization's rules and conducted unilateral and trade protectionism acts. China will take appropriate measures to defend the country's lawful interests. The investigation was an act of “unilateral protectionism” and sent the wrong message to the world, said the MOC. Chinese analysts said that the US was unlikely to ease its pressure on China.
The State Council recently issued regulations on financing guarantee companies. The regulations highlighted that China would boost financing guarantee services for small and micro businesses. At the same time strict rules were established to supervise the industry. Upon the establishment of a financing guarantee company, the company must have registered capital of at least 20 million yuan. If a financing guarantee company plans to set up branches in different provinces, it must have a registered capital of no less than 1 billion yuan. Outstanding liabilities guaranteed by a company should not exceed 10 times of its net assets. The regulation will take effect on Oct 1, 2017.
China Securities Regulatory Commission (CSRC) has officially approved the ownership reform of China Unicom in its recent press release. When China Unicom announced the mixed-ownership reform last week, some market experts believed that the reform did not comply with the new refinancing regulation issued early this year. Under current refinancing regulation, listed companies should not issue more than 20% of its outstanding shares in its private placement program. However, China Unicom issued new shares equivalent to 36.67% of total shares. According to the CSRC, China Unicom's mixed-ownership reform is a blueprint to the SOE reform so the CSRC will treat it as a special case and give a green light to that.
China’s State Council recently issued a guidance, stating its restrictions on certain overseas investments. Domestic enterprises are prohibited to participate in overseas investments that contradict China’s policy of diplomacy, economic opening up and macro control.
Overseas investment in sports clubs, film and television studios, as well as real estate, hospitality, and entertainment industries, are restricted. Unapproved export of core technologies and products from military entities are prohibited. The guidance also prohibited overseas investments in industries such as gambling.
The National Development and Reform Commission (NDRC) recently released an article on the development and construction of the Xiong’an New Area of Hebei Province. Railways between Beijing and Xiong’an are under construction and will be put into operation in 2019. It will take about 30 mins to travel between these two cities, according to Chinese media.The demand for green investment in the Xiong'an New Area will amount to about 1 trillion yuan in the next five years, said Ma Jun, Chief Economist at the Peoples Bank of China (PBoC).
China’s National Development and Reform Commission (NDRC) decided to issue policies to promote private investment and improve business environment. NDRC will promote the innovation of public-private partnerships (PPP) to boost the overall liquidity of the assets. Investment-return (I&R) mechanism will also be enhanced to attract private investment.
In a press conference of China’s Insurance Regulatory Commission, Sinosure, a state-owned insurance company focused on trade insurance, and said that they would provide insurance support to Chinese corporates going abroad. The company will especially focus on ventures to One Belt One Road (OBOR) countries. As of the first half of 2017, Sinosure has provided insurance services for $ 3.1 trillion trade activities and helped 240 banks raise 2.8 trillion yuan for their exporting clients.
In a notice issued by NDRC, financial innovations were encouraged in the OBOR Initiative. Financial institutions such as policy banks and Silk Road Funds will play a larger role in providing funds to the projects. In addition, the NDRC encourages the collaboration of Chinese and overseas corporates through direct investment and M&A.
China has been promoting a mixed-ownership economy by diversifying the shareholding structure of state-owned enterprises (SOEs). In its transition towards a joint-stock company, central state-owned telecommunications operator, China Unicom, recently announced its plan of issuing shares to raise 78 billion yuan of capital. Private enterprises such as Baidu, Alibaba, and Tencent (BAT), together with central state-owned China Life Insurance Company and CRRC, will be its strategic investors. The 14 investors will subscribe 35.19% of China Unicom’s A Shares, with China Unicom itself holding 36.67%.
China’s State Council recently issued a circular on attracting foreign investments, stating that China's market will further open up and the restrictions on foreign investment admissions will be loosened. The circular highlighted industries including banking, insurance, and security.
The foreign investment negative list, which has been used in China’s 11 free trade zones (FTZs), will soon be deployed nationwide to form an open and transparent investment environment. In addition, preferential tax policies are provided if foreign investors’ profit coming from Chinese resident enterprise is invested directly in projects under the encouraged category, according to the circular.
China's State Council recently issued opinions on the expanding logistics enterprises’ financing channels, highlighting that eligible state-owned enterprises (SOEs), financial institutions, large logistics enterprise should set up investment funds to support logistics enterprises.Banking industry is encouraged to cooperate with logistic enterprises in terms of developing electronic systems. The opinions also said that financial institutions in banking are encouraged to develop the supply chain financial products and financing solutions to provide comprehensive financial services such as crediting rating and systematic risks managing.
US President Donald Trump recently signed a memorandum to direct US Trade Representative (USTR) Robert Lighthizer to examine China's intellectual property practices. Chinese media said that this may lead to the US imposing new tariffs on imports from China, and the US would possibly take actions under Section 301 of the Trade Act of 1974, which might impact on China's high-tech industries.
But the US will not “easily provoke a trade war" and Sino-US trade will not be affected in the short term, as relevant investigation and negotiations will take longer than six months to one year, according to Chinese analysts.
By the end of July, China’s commercial housing inventory decreased by 20.8% YoY, to 341.81 million square meters, according to National Bureau of Statistics of China. This was the lowest level recorded in the past 33 months, China’s commercial housing inventory is now back to 2012 levels.
The numbers indicate that China has almost achieved its target of destocking the unsold houses after 20 months of efforts. A nationwide moderately tightened financial policy will be deployed soon, especially in the country’s three or four tier cities state Chinese analysts.
In order to support One Belt, One Road (OBOR) initiative and other development strategies, the National Development and Reform Commission (NDRC) recently issued a notice stating that relevant departments should offer priority support to OBOR projects through the application and issuance of bonds.
As for major regional development projects such as Xiongan New Area, the NDRC said relevant departments should encourage the qualified issuance of corporate bonds and provide support in reducing the costs for issuing such bonds.
As of the end of June this year, the assets of Chinese money market funds (MMF) amounted to 5.11 trillion yuan. This represents an increase of 18.09% in value compared to the end of 2016. Chinese media said new regulations will be issued in order to supervise the rapidly growing money market funds.
A more strict regulatory will reduce the risk in this market, but consequently, the return from MMF will get hurt as well, according to Chinese analysts.
The Government of Macau SARG plans to build a smart city as part of its major 2020 plan. The Government will collaborate with Alibaba in relevant areas including constructing a cloud computing center.
Macau’s government is estimated to have already invested MOP$500 million in the territory’s technology sector for 2017. For the next two years, Macau will increase around MOP$200 million in its government budget per year focusing on the smart city plan.
China’s Banking Regulatory Commission (CBRC) recently issued a proposed regulation for institutions conducting corporates' debt/equity swaps. China Construction Bank (CCB) has already established itself as a debt/equity swap institution, with relevant asset of companies signed with this bank amounting to 544.20 billion yuan.
Industrial and Commercial Bank of China, Agricultural Bank of China, and Bank of China are preparing for such institutions with approvals. Chinese analysts said the total asset of companies signed with the five state-owned banks had exceeded one trillion yuan, noting that the outlook of Chinese corporates' debt/equity swap to be a positive move.
The People’s Bank of China (PBoC) recently released the 2017 China’s Regional Financial Operation Report, highlighting that the speculative investments in real estate market would be strictly curbed. Over the past four months banks issuing illegal loans to property developers or individuals have been punished by the PBoC with the highest fine being 16.7 million yuan.
In Q2 2017, the growth rate of China’s housing mortgage loans decelerated by the end of June. The trading volume of China’s real estate market may fall; housing prices may edge down but remain stable, according to PBoC.
In the light of curbing excess industrial capacity, National Development and Reform Commission (NDRC) and 16 relevant ministries announced that 33 construction projects in coal power industry from 10 provinces had been suspended; 61 projects of 20 provinces were postponed. Central state-owned enterprises including China Shenhua Energy Company Limited and China Coal Energy were involved.
The People’s Bank of China (PBoC) also called an end to the financial support towards outdated industrial capacity, according to its "2017 China’s Regional Financial Operation Report".
Looking to instill liquidity management in financial institutions, the People’s Bank of China (PBoC) said in a recent report that certain interbank deposits issued by banks with assets over 500 billion yuan should be assessed under the macro prudential assessment (MPA). The measure plans to start from the first quarter of 2018.
Chinese analysts said that this action would not make too much difference in the short term, but regulators’ attitudes have indicated that policies might be deployed to improve the Chinese supervision system.
People’s Government of Jiangsu Provincial has submitted an application to relevant departments in order to set up a national demonstration zone on sustainable development. In the light of the eco-friendly development, Jiangsu plans to set up this demonstration zone with cities including Xuzhou, Huai’an, Yancheng, Suqian, and Lianyungang. According to Jiangsu’s plan, by the end of 2020, each of the cities mentioned will have at least one industry park with eco-friendly factories.
People's Bank of China (PBoC) will issue regulations on the integration of financial institutions and industrial enterprises. State-owned Assets Supervision and Administration Commission (SASAC) also plans to issue special regulations towards central state-owned financial holdings. Relevant instructions and policies on aspects such as controlling risks and debt-to-equity swap are expected to be issued during the second half of 2017. Chinese central SOEs including China Merchants Group and Power Construction Corporation of China are carrying out deleverage solutions, which will hopefully take effect during the second half of 2017.
State Administration of Foreign Exchange (SAFE) recently released statistics showing that during the second quarter of 2017, the inflow of foreign direct investment on China's domestic financial institutions mounted to 23.30 billion yuan, outflow of 9.02 billion yuan and net inflow of 14.27 billion yuan. The outflow of China's domestic financial institutions’ direct overseas investment mounted to 17.99 billion yuan, inflow the 14.87 billion yuan, net outflow of 3.12 billion yuan.
The Supreme People's Court (SPC) issued a supreme guidance on August 9th to regulate misconducts and violations in finance industry especially fintech sector. The guidance points out that fraud fund raising activities or unauthorized fund raising activities in the name of financial innovation will be regarded as illegal. The guidance also states that it will implement a stringent disciplinary actions towards fintech crime. In addition, the SPC guidance also set requirement on key issues such as shadow banking and zombie companies.
For the full guidance, please go to http://www.court.gov.cn/zixun-xiangqing-55642.html
In a bid to further broaden the financing avenues of infrastructure projects from Chinese enterprises, the National Development and Reform Commission issued a new guidance that introduces new classes of enterprise bonds. The new classes of enterprise bonds are sector specific and the proceeds of the bonds can only be used for the projects within the specific sector. For example, enterprises issuing a health sector enterprise bond can only use the proceeds for health sector infrastructure projects. The principal and interest of the bond will be paid by the future cash flow generated from the infrastructure projects. The guidance also encourages third party guarantee as a credit enhancement mechanism.
China’s Banking Regulatory Commission (CBRC) recently issued a regulation on online loans from private commercial bank, noting that private commercial banks need to submit applications before operating online loans business. Private commercial banks are more likely to cooperate with traditional banks to provide syndicated loans, due to their limited capability of attracting deposits. Under this new regulation, this common collaboration may be restricted, because institutions without licenses issued by CBRC are unqualified to operate online loans business. Consequently, whether syndicated loans with participation of platforms such as JD Finance and VIPS are legal or not are still under discussion by Chinese authorities.
According to China’s National Development and Reform Commission (NDRC), the deleveraging process has so far achieved good results in terms of reducing the financial leverage of Chinese corporates. Zombie companies with weak financials are being disposed by the market itself. Since 2016, over 3000 bankruptcy applications have been received by courts. For the first five months in 2017, 3086 M&As with a total amount of 710.75 billion yuan from listed companies have been completed. NDRC states that it will make consistent efforts to reduce the overall debt level by encouraging financially weak companies to go into bankruptcy or to be acquired by companies with higher profitability.
Alipay and Wechat have been recently promoting their own payment platforms with a slogan of "promoting a cashless society". However, a state media started to criticize those payment companies for misusing "cashless" in their marketing activities. The Chinese media pointed out that cash will never disappear and will still play an important role in China. In addition, the media highlighted that it is illegal to reject cash payment for business transactions within China.
According to Chinese media, VISA is applying for a clearing license from People's Bank of China (PBoC), which marks first foreign participant to apply for a bank clearing license in China. The Chinese State Council opened the Chinese banking clearing market back in 2014, which has long been dominated by UnionPay. On June 6, 2017 PBoC issued a guidance that sets the eligibility and application procedures to companies that are interested in clearing business in China. According to Chinese analysts, foreign card issuers such as VISA will be allowed issue renminbi credit cards in China, which offers an alternative to Chinese retail customers.
Based on the data from the Chinese Ministry of Finance, the average debt ratio of Chinese SOEs stood at 65.6% as of the end of June 2017. According to Chinese media, the high debt ratio of Chinese SOEs is a major hurdle in deleveraging the overall market. Historically, Chinese financial institutions were some of the first entities to finance SOEs and evidentially have significant systemic risk exposure to the industry segment.
A government official at China’s State-owned Asset Supervision and Administration Commission (SASAC) said that it was adjusting the capital structure of SOEs through IPOs, private placement, ABS and debt-to-equity swap program. The actions hope to reduce the debt level of SOEs
In an interview with Chinese media, a spokesperson of China’s Banking Regulatory Commission highly commended the positive changes that fintech brings to the financial market. The official also at the same time highlighted the lack of proper regulation of the fintech industry and the rise to risks in the current financial system.
Decentralization and financial disintermediation emerging from fintech solutions has made it difficult for financial regulators to detect risks. The CBRC plans to keep up with the recent wave of fintech and studies into the cooperative models of fintech and traditional financial institutions. Moreover, the CBRC will maintain a balance between promoting fintech development and risk management.
State-owned investment company China Xiongan Construction Investment Group, set up in late July 2017 has recently propelled the stock price of 101 related A-share companies. The spike in interest is due to the company’s key position in getting financing for infrastructure projects in Xiong'an Special Economic Zone. In terms of sourcing financing, the company will apply multiple vehicles such as PPP and project funds.
An official circular from the People’s Bank of China (PBoC) was recently distributed to Chinese banks and third party payment platforms. The new document requires that all third party platforms connect with Wang'lian (网联), (a clearing company set up by PBoC). According to a government official at the Chinese State Council, Wang’lian will weaken the bargaining power of third-party payment platforms in China. The new model will allow banks to gain access to user data and even transaction data which was absent during the old regime.
China’s Insurance Regulatory Commission (CIRC) issued a circular on interbank deposits to Chinese insurance companies. In the new circular, insurance companies should now report monthly the amount of interbank deposits pledged for financing. According to Chinese analysts, the new ruling will better regulate the financing activities of Chinese insurance companies.
In a bid to clamp down money laundering activities and illegal cross border transactions, Hong Kong’s Monetary Authority (HKMA) issued a notice to Hong Kong banks. In the notice, banks are now required to report all ATM withdrawals from UnionPay cards issued in mainland China within the first half of 2017. It is the first time that HKMA has collected data on ATM withdrawals. Neighboring Macau likewise has also ramped up its efforts in reducing money laundering activities. The government recently announced that it would embed all ATMs with a face recognition technology and a KYC (know your client) capabilities.
In a recent press conference held by the China Insurance Regulatory Commission (CIRC) and China Taiping Insurance Company, CIRC recognized China Taiping's contributions to the Belt Road initiative.
According to Ruohan Zhang, a spokesperson for China Taiping, the company provided insurance products for Belt-Road participants and indirectly invested in the projects through their offshore investment arms. China Taiping also set up project funds and invested in project bonds with respect to the Belt Road initiative.
FAW Group Corporation and China South Industries Group Corporation, two leading Chinese state-owned automobile manufacturers, both announced the appointment of their new chairmen.
The chairman of FAW Group Corporation will switch with the chairman of China South Industries Group Corporation. While Chinese media regard it as a signal of a possible merger of the two companies, an official statement from the State-owned Asset Supervision and Administration told Chinese media that the exchange of the two chairmen does not mean that the two companies will be merged.
According to Chinese media, as China further relaxes the restrictions on foreign ownership in automobile joint ventures, improving Chinese local automobile companies via M&As will become more feasible.
An unofficial document from China Banking Regulatory Commission (CBRC) is being circulated among Chinese P2P companies and banks. The document requires Chinese P2P companies to only work with authorized banking institutions registered under CBRC when providing loans to borrowers.
Over the past two years, P2P platforms have been working with various financial institutions such as banks, consumer finance companies and some other financial services companies to provide loans to their customers. Chinese analysts believe that the new circular will have a large impact on non-banking institutions and is conducive to the success of the financial markets.
The Ministry of Finance (MOF) has issued guidance that allows provincial governments to issue municipal project bonds on a pilot basis. The underlying assets of the municipal project bonds will be the projects themselves. The proceeds from the projects should be used for interest and principal payments.
In a recent press conference, Xiaorong He, director of the Supreme People's Court's (SPC) reform division said that letting zombie companies go bankrupt is the perfect way to clear debt issues in the whole supply chain.
According to He, letting companies go bankrupt can fully solve systemic risk. In addition, He stated that the ease of letting a company go bankrupt reflects the maturity of an economy. SPC encouraged authorities to deal with financially weak companies through the bankruptcy process.
Just as when internet companies started disrupting financial industries, online platforms are now gradually taking market share from banks in fund distribution. For many years in China, East Money has been the largest online fund distributor. As of the end of June, 77.77% of mutual funds are available in East Money while 65.89% of all mutual funds are available in Ant Financial. Currently, Alipay has over 350 million monthly active users while East Money only has 15 million.
At a conference held by Ministry of Finance, vice minister Yaobin Shi said that some local governments treat PPP (public-private-partnership) projects as a financing tool, which increases their debt and gives rise to potential risks for local governments.
According to Shi, some local governments promised to buy back shares from private investors to facilitate PPP projects. In a bid to reduce the local governments' participation in the PPP projects, Shi reiterated that local governments should not contribute more than 10% of their budget to PPP projects.
According to Chinese media, to date 43 IPO applications from 26 securities companies have been rejected by the China Securities Regulatory Commission (CSRC). The total potential funds which could have been raised from the rejected IPOs stands at 14.4 billion yuan.
Chinese media estimate that securities companies lost around 864 million yuan in underwriting fees. Guangfa Securities had 21 IPOs approved and five rejected, making it the highest in both categories among all underwriters. China Securities has 42 IPOs pending with the CSRC – the most among its peers.
Sate Administration of Foreign Exchange (SAFE) recently issued 43 disciplinary notices to banks, companies and individuals. Nine banks, including Industrial Bank, Minsheng Bank and China Construction Bank, are on the list.
The major violations among the banks are the lack of proper due diligence and KYC (know your client) procedures when processing cross-border transactions for their clients. The main violations among companies concern fake trades with the intention of illegally moving money out of China.
The People's Bank of China has conducted an investigation into the interbank accounts of Chinese banks between September 2016 and January 2017. The report, which was published in July, shows that 40 banks, including Bank of China, China Construction Bank and Agricultural Bank of China, violated the rules on interbank account management. PBoC issued disciplinary fines to those banks and instructed them to address PBoC’s concerns within three to six months. The banks have been suspended from interbank account related business until PBoC’s concerns have been addressed.
After one year of research and development, WeBank, Wanxiang Blockchain Labs and ENTVIR have jointly launched the first Chinese open-source blockchain platform called BCOS. Currently, Postal Savings Bank of China, China Merchants Bank, Everbright Bank and WeBank have launched their own services in custody, cross-border clearing and syndicated loans, based on blockchain technology.
The Securities Association of China has recently released its report on Chinese securities companies. The report points out that in 2016 net profits of all Chinese securities companies was at 123.4 billion yuan, down 49.57% from 2015. The brokerage business declined significantly while the investment banking business saw positive growth. In the overseas market, Chinese securities companies are also seeking opportunities. Twenty-one percent and 14% of total revenue came from overseas operations for Citic Securities and Haitong Securities, respectively.
During the first half of 2017, China's outbound direct investment was 331.1 billion yuan, 42.9% down from the same period in 2016, Keming Qian, a spokesperson at the Ministry of Commerce, has said in a press conference. However, trade activity grew significantly with Belt-Road countries. Trade activities with Asean countries, India and Russia increased by 21.9%, 30.4% and 33.1%, respectively. According to Qian, ‘unreasonable’ outbound investment has slowed in the first half of 2017.
In a China Banking Regulatory Commission (CBRC) meeting over the last weekend, Shuqing Guo, chairman of CBRC, said that in the second half of 2017 cutting overcapacity and deleveraging the market are still key focuses for the CBRC. Specifically, CBRC will strictly enforce regulations which restrict bank loans to property developers and local governments. According to Guo, CBRC will increase private ownership in the Chinese banking system in a gradual manner.
July saw a record number of mutual funds going into liquidation. Fourteen mutual funds went into liquidation in July and since the start of this year, 32 funds have been liquidated. Among the 14 liquidated funds, most of them had seen large redemptions in the first half of 2017, and the assets under management (AUM) for those funds became relatively small thereafter. As of end of June, there were 260 mutual funds with AUM of less than 50 million yuan.
China Insurance Regulatory Commission (CIRC) has issued new regulations on liability management for insurance companies. According to a spokesperson from CIRC, under the regulations the CIRC will estimate each insurance company's liability management capability. The companies with stronger liability management capabilities will be authorized to sell more innovative products and receive financial support from CIRC. Those with weaker capabilities will be restricted from making investments and issuing short-term insurance products. According to CIRC, the regulations aim to direct capital to the real economy instead of the financial sector.
As China speeds up deleveraging its financial markets, China Banking Regulatory Commission is conducting an examination of interbank loans. According to Chinese media, more disciplinary fine letters will be issued by CBRC to banks violating the rules of interbank loans. Chinese analysts suggest that China's efforts to deleverage the market by cleaning up the shadow banking sector have worked. Banks are cutting their shadow banking businesses and focusing on their core deposit and loan businesses.
The State Council issued an official notice on July 27 encouraging Chinese businesses to innovate. The notice points out that large corporations should take the lead in bringing more innovative solutions to the market. The notice also highlights that financial institutions have to support the real economy sector. Internet plus and Artificial Intelligence were also highlighted as key focuses for China's future economic development.
In an interview with state media, Gang Li, deputy director of China Securities Regulatory Commission (CSRC), said that some members of the media misinterpreted CSRC's statement on direct financing.
Li emphasized that ‘speeding up’ direct financing does not equate to ‘speeding up’ IPOs. But at the same time, CSRC is restricting refinancing and restricting shareholders from selling their stocks, in a bid to move financing to the IPO market. According to Li, the number of IPOs has stabilized and 10 IPOs will be approved each week on average.
Hongling Capital, the P2P platform with largest trading volume in China, announced that it will exit the P2P market within three years. In 2016 the company incurred a loss of 180 million yuan. Shiping Zhou, chairman of Hongling Capital explained that they are not specialized enough in the P2P business, and P2P will no longer be a business line because it is not profitable for them. The company's NPL ratio was only 3% in 2015 while Zhou said that in 2016 the company suffered a large loss from a single loan default.
Chinese investors have been eyeing investment opportunities in Southeast Asia, especially in the TMT sector. In Indonesia, there are fewer than 100 VCs while there are thousands of VCs in China. To Chinese VCs, Baidu, Tencent, Alibaba, JD.com and Didi are their major competitors in Southeast Asia as these technology companies are also aggressively looking for overseas partners in order to be more international.
According to Chinese media, Southeast Asia has recently seen an increasing number of technology talents with overseas education coming back to local markets and starting their own businesses, which makes Southeast Asia a market with large potential growth in the technology space.
Data from China Securities Depository and Clearing Corporation show that 3,253 out of around 3,300 A-share listed companies have pledged outstanding shares as collateral for borrowing. Securities firms estimate that over 50% of share pledging services are provided by securities companies. In the face of the increasing risks arising from share pledging services, securities companies reduced the average funds provided to companies applying for share pledging. For example, ChiNext companies are only able to get around 30% of the value of the collateral, down from 40%.
According to Chinese media, as an important tool to deleverage the financial markets, the debt-to-equity swap programme is likely to speed up in the second half of the year. Data from Ministry of Finance show that as of the end of June, SOE debt stood at 94 trillion yuan, up 11.4% from last June. In addition, SOE ABS and mixed ownership reforms are also likely to gain momentum in the second half of 2017.
Guangdong province has released its economic data for the first half year of 2017. In the first half of 2017, Guangdong province still remained the most productive province in China, with a GDP of 4.19 trillion yuan. Noticeably, it is the first time when both Shenzhen and Guangzhou surpassed Beijing and Shanghai, in terms of incremental GDP. Chinese analysts believe that the high GDP growth of the two cities is driven by increasing exports and increasing project investments with respect to the Guangdong Free Trade Zone.
China Securities Regulatory Commission has said at the Financial Work Meeting that it will speed up improving the infrastructure of China's capital markets, especially for direct financing. Currently, compared to bank loans, the volume of direct financing is still small. The Chinese media estimate that in the first half of 2017 A-share listed companies raised 1.3 trillion yuan through direct financing.
657 companies listed in ChiNext of the Shenzhen Stock Exchange have released their semi-annual profit results. According to Chinese media, the profit growth in H1 2017 slowed significantly compared to 2016 because there have been fewer M&As. The total volume of M&A activities by ChiNext companies grew from 40.4 billion yuan to 214.5 billion yuan from 2013 to 2015. It is expected that M&A activities will continue to slow down in the H2 2017 due to tighter supervision.
Since 2017 there have been more than 10 changes in senior executives at Chinese trust companies, from restructuring of duties, dismissal due to violations, and appointment by other companies. As China is striving to deleverage the financial markets and clamp down the shadow banking sector, trust companies are suffering as they constitute a large part of the shadow banking sector. As of the end of 2016, assets under management of Chinese trust companies amounted to 20.22 trillion yuan.
SOEs have started to speed up the deleveraging process as well as their debt-to-equity swap programmes, according to Chinese media. Currently, 12 central SOEs have signed debt-to-equity agreements with their counterparties, which includes banks and corporates.
High debt has long been a problem for China's SOEs. Since last October China has issued several notices to address the high levels of debt in China's non-financial institutions.
Although China Telecom has denied the participation of Baidu, Alibaba, Tencent and JD.com (BATJ) in their mixed ownership reforms, many Chinese media pundits still believe they will be included in the future. The big four Chinese technology companies have already started cooperating with China Unicom in mobile phone sim cards.
Sources told the Chinese media that the big four technology companies will make equity investments in China Unicom of a total value of up to US$11.8 billion.
Data from Wind show that among 24 steel companies listed in the A-share market, 21 of them recorded higher-than-expected profits. It is believed that the financial performance of the steel companies is attributed to the increasing price of steel. Market analysts believe that with China's continuous efforts to cut overcapacity, high steel prices will still be sustainable.
China Insurance Regulatory Commission (CIRC) has issued temporary regulations for credit insurance products. The regulations forbid certain activities, including selling insurance products where the underlying assets are privately sold bonds or public sold bonds rated below AA+. The regulations also forbid insurance companies from providing guarantees for unqualified P2P companies. For further details (in Chinese), please see: www.circ.gov.cn/web/site0/tab5168/info4076391.htm
The State Council has issued a circular on AI development, which demonstrates China's determination to develop its AI (Artificial Intelligence) capability. The circular requires that by 2030, China's AI technology capability has to be one of the top in the world and that core AI products should exceed one trillion yuan in total value. Since 2016, Chinese technology companies such as Baidu and Alibaba, have begun implementing AI labs.
Since April, when the People's Bank of China (PBoC) required third-party payment companies to deposit reserves, it has accumulated 84.1 billion yuan in reserves from third-party payment companies. Chinese media estimate that third-party payment companies will lose 300 million yuan in profit due to the large reserve requirements. Alibaba and Tencent, the two largest payment platform owners, will lose 40 million yuan and 29 million yuan, respectively, according to estimations in the Chinese media.
In a press conference held by the State Administration of Foreign Exchange (SAFE), Yingchun Wang, spokesperson for SAFE, echoed a recent statement from the National Development and Reform Commission and the Ministry of Commerce. SAFE will collaborate with other authorities to monitor 'unreasonable' outbound activities while still encouraging 'reasonable' M&As. Wang also said that China will continue to open its financial markets and push friendlier policies for overseas businesses in the future.
According to Chinese media, central SOEs (SOEs owned by the Central State Owned Assets Supervision and Administration Commission) will be divided into three types – industrial groups, investment companies and operational companies.
The operational companies will adopt a Temasek model (a fund management model developed by Singapore’s sovereign wealth fund) to maintain the assets of the companies, while the investment companies will be responsible for exploring new industries. The industrial groups will consolidate within strategically critical industries such as power and gas. The number of central SOEs will be reduced from 101 to less than 90.
The Ministry of Housing and Urban-Rural Development and other eight authorities jointly issued a circular on the rental apartment market. The circular requires 12 cities with large population inflows, including Guangzhou, Shenzhen and Nanjing, to develop the rental apartment market on a pilot basis. The circular encourages those cities to construct new apartments for rental use. In addition, banking institutions are required to provide financial support for the construction of rental apartments.
In a press conference of the National Development and Reform Commission (NDRC), Pengcheng Yan, a spokesperson for NDRC stated that it will continue to keep an eye on unreasonable outbound investment in real estate, hotels, movie cinemas, entertainment and football clubs. According to Yan, NDRC supports corporates with real expansion needs to do outbound acquisitions. It particularly supports projects under the Belt Road initiative. NDRC said it will keep an eye on non-manufacturing outbound M&As.
The Guangzhou government has issued new regulations for the city's housing market. The regulations state that the renters of an apartment will enjoy the same ownership benefits as the apartment owner. The children of renters will have the same right to go to nearby schools. Guangzhou becomes the first city in China to implement this reform. Chinese analysts believe that once more cities start to follow Guangzhou, the housing price will significantly drop while the house renting market will benefit greatly.
China's technology leader, Tencent, further expanded its footprint in financial market. Taiwan's Fubon Financial Holding Group announced on July 19 that it will partner with Tencent in selling their insurance products. A joint venture of the two groups will be set up in Shenzhen while a business licence is pending at the Chinese regulators. In 2013, Alibaba, Tencent and Ping'An Group jointly set up an internet insurance company, the first insuretech company in China.
In the financial work meeting last week, a new regulatory committee was set up under the state council. The new regulatory committee is called the Financial Stability Committee. As the name suggests, the committee will be responsible for the stability of China's financial markets and for improving the regulatory environment.
Chinese analysts believe that senior officials from People's Bank of China, China Securities Regulatory Commission, China Banking Regulatory Commission, China Insurance Regulatory Commission and Ministry of Finance will sit on the new committee. It is also believed by analysts that the new committee may be equally as important as the five existing regulatory bodies.
China's A-share market has been criticized for attracting a lot of companies but lacking a good house-cleaning system. Data from Wind show that since 2001 only 60 companies have been delisted from the A-share market. Shenzhen Century Plaza Hotel was the first and only stock delisted from A-share market in 2017. So few companies are delisted because unprofitable companies are still attractive as backdoor listing targets.
Amid a difficult banking environment, a Chinese bank called WeBank stood out in 2016 with a ten-fold growth in revenue. WeBank is an internet bank registered at the China Banking Regulatory Commission and backed by Tencent. The bank has no physical branch. Eighty percent of the bank’s revenue comes from online micro and small loans. Its main internet banking competitor, MyBank, set up by Alibaba, has a larger asset base and more outstanding loans.
China's trade activities have picked up in the first half of 2017. According to Songping Huang, spokesperson of General Administration of Customs, in H1 2017 China exported 7.21 trillion yuan worth of goods, up 15% from H1 2016, while imports totalled 5.93 trillion yuan, up 25.7% from the same period last year. Huang said that trade activities will continue to grow in the second half, despite some uncertainty in international trade.
Over the past few years, Yuebao has been the only money fund sold on Ant Financial's platform. Now the big four banks in China are all allowed to sell their own money market funds in Ant Financial, with an average annual return of 4.5%-4.9%, slightly higher than Yuebao. It is expected that the big four banks will challenge the leading position of Yuebao in the money market.
On Wednesday, July 12, Jiang Yang, vice chairman of the China Securities Regulatory Commission (CSRC) said that China will strengthen its supervision on the securities market as it aims to keep it fair, open, and impartial. Reforms will improve the capital market, making it more open to foreign investors to better serve the economy. “Chinese regulators will continue cracking down on violations of securities laws and regulations, including insider trading and market manipulation,” said Jiang.
Since the Bond Connect was launched, offshore investors have shown great interest in onshore bonds. New bonds issued by Agricultural Development Bank of China received ten times oversubscription while a number of other larger issuers also received at least two times oversubscription. The growing interest, as Chinese media explained, is attributed to the rising yields of renminbi bonds, which is in line with the increase in global yields.
Chinese state media under the People's Bank of China published an article on China's renminbi reform. The article expected that the future direction of the renminbi reform will be to widen the floating range of the currency, while at the same time the currency will remain at a relatively stable level. The article also said that the government should try their best to reduce their intervention in the FX market.
Chinese property developers have difficulties in getting financing in the onshore market. According to Chinese media, Sunac China Holdings Limited's 10-billion-yuan enterprise bonds were rejected by the Shanghai Stock Exchange. As of July 6, 13 property developers have been rejected by the China Securities Regulatory Commission. Some Chinese property developers turn to trust companies for financing, although the cost of financing is higher than bank loans and bonds.
China's Bay Area Economic Plan, focusing on the development of Guangdong, Hong Kong and Macau, has been submitted to the National Development and Reform Commission. The new Bay Area is expected to compete with Bay Areas in New York, San Francisco and Tokyo. According to government officials, the construction of the Bay Area is expected to be completed by 2020. By 2030, officials estimate that China’s Bay Area will become the most productive Bay Area in the world.
Since the National Internet Finance Association was launched, 24 P2P companies have joined the association as of July 10. Due to tighter regulation of China's P2P companies, the quality of existing companies has improved. Seventy percent of the 24 member companies have reported profits in 2016, while Hongling Capital and Dianrong, two leading P2P member companies, have recorded losses of 183 million yuan and 179 million yuan, respectively.
According to Chinese media, the China Banking Regulatory Commission has issued 744 disciplinary fine letters to commercial banks and asset management companies. Sources told Chinese media that regulators do not accept any type appeal process in relation to fines: once the letter is issued, those companies will have to pay the bill. Among all violations, misconduct in credit businesses are the most common.
China Securities Regulatory Commission (CSRC) issued amended regulations for Chinese securities companies on July 7. The new regulations update and address some issues that could add or deduct marks to the securities companies in terms of ratings. CSRC releases the annual review in mid-July every year. In 2016, over 60% of securities companies were downgraded by CSRC.
After years of expansion, Chinese commercial banks are now in a stage of restructuring. In the first half of 2017, Beijing saw 38 local branches shut by banks such as Bohai Bank, Shanghai Pudong Development Bank and Everbright Bank. According to Chinese analysts, these local branches do not adopt a sophisticated business model and are not profitable.
As China continues to tighten regulations, CSRC has intensively cracked-down on violations such as insider trading over the past few years. Since 2014, CSRC has initiated 99 insider trading investigations and submitted 83 cases to police, in relation to sums amounting to 80 billion yuan. As of May 2017, 25 asset managers received criminal convictions and 15 employees of securities companies were disqualified from the market.
China's mutual fund industry reached a milestone in the first half of 2017 when market size exceeded 10 trillion yuan. Money market funds now total 5.12 trillion yuan and account for half of the mutual fund market. Currently, Tianhong Asset Management, ICBC Credit Suisse and Efunds are the top three asset management companies in China in terms of AUM. Noticeably, Bank of China Investment Management has fallen out of the top ten.
Sources confirmed to Chinese media that the financial work meeting, held every five years, will commence in mid-July. The financial work meeting discusses possible significant reforms in the financial market. The market believes that the meeting this year will mainly focus on financial risk and regulatory frameworks. The much-discussed consolidation of PBoC, CSRC, CBRC and CIRC, is not likely to happen soon. Chinese analysts believe that the main obstacle to the consolidation is from the objection from current government officials whose responsibilities and power will be affected.
On Thursday, July 6, Liu Qibao, a member of the Political Bureau of the CPC Central Committee, called for the integration of culture in economic development. Liu urged China to seek deeper international cultural exchanges, showcasing Chinese culture as part of the Belt and Road initiative. According to Liu, cultural development is crucial to economic development and poverty alleviation.
According to an official statement on Wednesday, July 5, the Chinese government aims to ensure that both domestic and foreign companies registered in China have equal legal footing. Regulations and policies will be improved to further stimulate market vitality, and high-quality assets will be used to attract investments through public-private partnerships in order to create a fair legal environment. These improvements will make China more desirable for foreign investors.
Along with the shift in the Chinese market from a producer model to household consumption, the country’s outbound investments are also experiencing a shift from energy and commodities to brands and technology.
In 2014, China’s outbound merger and acquisition (M&A) activity in technology-related sectors, including relating to the internet and software, amounted to the same as traditional energy investments. In 2016, China’s outbound M&A in internet and software reached US$26.7 billion, while outbound M&A in energy dropped to just US$2.8 billion from US$30 billion in 2012.
China Securities Regulatory Commission (CSRC) has sped-up processing time for M&A activities for A-share companies. According to Chinese media, 24 M&A applications were approved in June, the most in 2017. This compares to 9 in January, 5 in February, 13 in March, 11 in April, and 10 in May. In a bid to crack-down on violations in M&A activities, CSRC issued new regulation for M&A activities last September.
As China begins to deleverage the financial market, Chinese banks have started to redeem their investment in funds of asset management companies. Specifically, ICBC-Credit Suisse has seen over 10 billion units of redemption in their two mutual funds from banks in the second quarter. According to a banker working at a Chinese bank, the main reason for the large redemption is that banks have to fulfill the liquidity requirement of PBoC. The other reason is that the domestic bond market performed poorly in the first half of 2017 and banks need to find other investment opportunities with higher return.
As China’s population continues to age there is a growing need for accelerating the development of commercial pension insurance. The Chinese State Council recently released a guideline to speed up the development of commercial pension insurance. It will not only become the largest source of increment in the insurance market, but will also form a strong foundation for stabilizing the domestic capital market.
Chinese President Xi Jinping encourages the development of an open world economy. Xi said the world economy still faces daunting challenges despite “further consolidation of growth momentum… in both developed and emerging economies,” as such, he noted that “the G20 needs to stay committed to open development, support the multilateral trading regime with the WTO at its heart, and enable trade and investment to continue to drive global economic growth.”
People's Bank of China issued a regulation on rating agencies in China’s Interbank Bond Market. The regulation requires that foreign rating agencies have to register at the PBoC provincial branch. Moreover, foreign rating agencies have to comply with PBoC regulations and be monitored by the PBoC. The regulation also sets up qualification requirement and specifies a list of violations. For the whole regulation, please go to (in Chinese):
Textile is one of the most important industries in China, accounting for 5% of all 30 sectors in the manufacturing industry. In the face of large volatility of the cotton yarn price, China Securities Regulatory Commission (CSRC) recently approved cotton yarn future trading in Zhengzhou’s Commodity Exchange. According to the CSRC, the cotton yarn future can help manufacturers hedge their exposure and help with price discovery. The official launch time will be announced soon.
China's SOE reform has entered the final stretch. In a recent meeting of the Chinese State Council, a deadline was proposed that SOE reform has to be mostly completed by the end of this year. According to Chinese media, 92% of central SOEs have started their reform while the number of provincial SOEs is 90%. Apart from the ownership structure, other key areas of the reform will tackle corporate structure and board of directors appointees.
The Ministry of Commerce of the People's Republic of China recently released a report on the development of retail industry (2016/2017). According to the report, by the end of 2016, there are 1.81 million of retailing units in China, this represents an increase by 5.2% compared to 2016.
According to Tencent, its superstar mobile phone game, King of Glory, has achieved a revenue of 6 billion yuan during the first quarter of 2017, with a monthly turnover of 3 billion yuan. The revenue of this unprecedentedly successful game was even higher than 3079 A-share listed companies. The game has over 200 million registered users and 50 million daily active users. Around 120 million users are still in primary school.
As of the end of June, Yuebao, China's largest money market fund sold on Ant Financial’s platform, has reached a size of 1.43 trillion yuan. The fund exceeded the size of personal deposits of China Merchants Bank, only slightly behind Bank of China. Yuebao is also the world largest money market fund. As of the end of 2017Q1, the fund has reached a market share of 12%.
China Insurance Regulatory Commission issued a regulation on China's insurance companies. The regulation allows insurance companies to participate in the Shenzhen-Hong Kong Stock Connect. The regulation also specifies the requirement of eligible companies and investable stocks. Chinese insurance companies could invest in Hong Kong stocks only through the QDII program, third party agencies or their offshore investment subsidiaries.
Trial operation of Northbound Trading on the Bond Connect commenced today. Agricultural Development Bank of China and China Development Bank will issue policies on bonds to foreign and domestic investors for the first time on 3 July and 4 July respectively. According to a Chinese Economist, Bond Connect is a new milestone for the opening up of China’s capital market to foreign countries. Deutsche Bank predicts that US$700 to US$800 billion of foreign capital will flow into onshore renminbi bond market in the next five years.
According to Chinese media, Citi will include China into its World Government Bond Index – Extended / WGBI-Extended from July. At the same time, Citi also announced to launch two bond index, Citi Chinese (Onshore CNY) Broad Bond Index and The Citi Chinese (Onshore CNY) Broad Bond Index - Interbank). The new indexes will enrich the coverage of Citi's bond index portfolio.
Chinese media learned from the State-owned Asset Supervision and Administration Commission that another M&A between two central SOEs has been completed. China High-Tech Group Corporation was acquired by China National Machinery Industry Corporation, a state-owned manufacturing group. As a result, the number of central SOEs decreased to 101.
China’s Hushen 300 index futures opened lower on Friday, June 30, with the contract for settlement in July down 0.37% to finish at 3,632 points. Similarly in August, September, and December contracts opened lower at 0.03%, 0.35%, and 0.43% respectively. The China Financial Futures Exchange (CFFEX) has set the base value for all the four contracts at 3,399 points.
According to the National Bureau of Statistics on Friday, June 30, China’s manufacturing sector has expanded for eleven straight months stretching back to May 2016. China’s purchasing managers’ index (PMI) came in with a reading of 51.7% recorded for June. A reading over 50% indicates expansion, while a reading below indicates contraction.
Foreign investors have high hopes for bond connect, a trading link for bonds between mainland China and Hong Kong. This program has the chance to increase overseas ownership of bonds in China where it is currently less than 2%. On Thursday, June 29 , Li Xiaojia, chief executive of Hong Kong Exchanges & Clearing (HKEx) remarked that bond connect is “technically ready” at the moment. James O’Sullvian, the head of securities services at Standard Chartered Bank in Hong Kong noted that the trading mechanism, known for its simplified application process and automated trading will satisfy international investors.
Guoqiang Ma, the chairman of China Baowu Steel Group Corporation, said in a forum that people generally have a misunderstanding of SOEs. According to Ma, from historical statistics, most technological innovations were introduced by SOEs. But Ma also committed that in terms of business models, POEs are more innovative and flexible than SOEs.
According to Chinese media, during the first half of 2017, the China Securities Regulatory Commission approved 224 IPOs with a pass rate of 84.8%. Thirty-seven companies have been rejected by CSRC. The rejection rate of NEEQ (National Equities Exchange and Quotations) is much higher than the overall rate. The tightened supervision by CSRC is regarded as the main reason for the higher rejection rate.
At the World Economic Forum in Dalian on Wednesday, June 28th, Premier Li Keqiang promised foreign companies easier market access and a level playing field. The country plans to enact reforms to allow greater participation of foreign capital and companies. Li said, “China’s reform has always run parallel with opening up. We invite foreign firms to come to China and participate in corporate reorganization to foster new growth engines.”
The first round of regulations aimed at protecting investors in the securities and futures market will be put into force on 1 July. The new regulation has positive and far reaching impact on development on China’s capital market. It also protects the right and interests of medium and small investors. The selling of products and services to new clients and higher risk products to old clients by securities and futures intermediates are now regulated. Under new regulations, investors of low risk tolerance can also invest in high-risk products after a confirmation process.
Since MSCI included Chinese A-shares into its emerging market index, the trading volume of CSOP FTSE China A50 ETF, the largest A-share ETF, has increased significantly. On June 27, the fund gained 1.5 billion yuan in subscriptions from long-only investors and some speculative investors. It is the first time where a large volume of international funds have entered into the A-share market since the MSCI inclusion.
Chinese premier Li Keqiang said in a recent speech that China encourages foreign companies to keep their profits in China and invest in China. On the other hand, Li said that foreign companies, if their profits are generated in China, can also freely remit them out without any restriction. Some sources have confirmed to Chinese media that cross border flows have started to become easier on the back of the country’s rising FX reserve.
China’s major industrial firms registered double-digit profit growth in May 2017, reporting 2.9 trillion yuan in profits, a 22.7% increase from the previous year. This profit growth came despite moderated prices of industrial goods. This has led researchers from China Merchants Securities to believe that the “tightened financial regulation will have limited impact on the real economy”. In the 2017 Summer Davos Summit, Premier Li Keqiang said that with the steady economic transition, China is capable of delivering the year’s major growth targets.
People's Bank of China announced on June 26 that it did not extend third party payment licenses to 9 companies. Currently, licenses from 20 third party payment companies have been revoked 2017. Chinese analysts believe that as the payment market becomes larger in China, Mainland financial regulators are redoubling their efforts in monitoring the market. Extension of third party payment licenses are also increasingly becoming difficult for companies.
According to Chinese media, banks and exchanges are ready for the Bond Connect system with reports stating that the scheme can be launched as early as July 3rd. The market expects favorable policies towards Hong Kong as Chinese President Xi Jinping visits territory on June 29.
China Central Depository & Clearing Co (CCDC) released a custodian regulation in addition to PBoC's regulation last week. The additional regulation specifies the roles and responsibilities of CCDC and Central Moneymarkets Unit (CMU).
For the whole regulation (in Chinese), please visit:
The National Audit Office released an auditing report of 20 central SOEs focusing on their activities over the past several years. The report pointed out that 18 central SOEs have exaggerated their profits by 200 billion yuan through the adjustment of their balance sheet. One of the most common violations is undisciplined procurement and sales. Five central SOEs are involved in manipulating their procurement and sales figures.
Henry Fernandez, CEO of MSCI told Chinese media that the MSCI has pitched to over 150 investment entities including pension funds, asset managers and other investment agencies. According to Henry, overseas investors recognized that the two stock connect schemes were more helpful than the QFII/RQFII programmes. On the other hand, overseas investors share concerns around the suspension of stocks and the current investment quota. Fernandez also said that MSCI is considering including an additional 195 mid-cap A-shares to its index in the future.
Investment in local provinces will likely speed up in 2017. Since the second quarter of 2017, a couple of provinces including Inner Mongolia, Guizhou and Sichuan have announced their investment plans in Q2 2017. Unlike previous years, the investment is mainly in new economy projects instead of infrastructure projects. Data from the National Bureau of Statistics also shows that for the first five months of the year, the investment growth in high tech sector is faster than other sectors.
On June 23, Zhang Shaochun, vice minister of finance, announced on his State Council report to the Standing Committee of the National People’s Congress (NPC) that China’s government debt risk is “largely controllable”. According to official data, in 2016, the combined debt of China was 27.3 trillion yuan, with a debt-to-GDP ratio at 36.7%. The central government has continued to hold its officials accountable for illegal financing activities, and “Fresh steps have been taken to better manage China’s local government debt, with strengthened supervision efforts… and risk prevention schemes,” Zhang said.
The bike sharing industry in China is reaching an infection point. Following the first bankruptcy in the bike sharing industry a first M&A is likely to be completed soon. According to Chinese media, the industry leader Mobike will complete its acquisition of UniBike in a few days. After the completion, Mobike will continue to focus on higher tier cities while UniBike will stay in the lower tier cities.
Xinghai Fang, vice chairman of China Securities Regulatory Commission recently said that the CSRC will speed up the opening of government bond futures market to commercial banks. A source told the Chinese media that new regulations will come out as early as this year. According to Chinese analysts, the futures market will significantly affect the pricing in the spot market and can also offer a hedging option to the participants.
Data from the Ministry of Human Resource and Social Security shows that for the first five months, the pension fund has seen an inflow of 1.57 trillion yuan and an outflow of 1.35 trillion yuan. Despite a net inflow in the pension fund balance, there is an imbalance among different provinces. According to the Ministry of Human Resource and Social Security, the balance in eastern provinces is much larger than western provinces. In northeast China, there is even a deficit in the pension fund account.
On Wednesday, the Chinese State Council declared its support for the development of the sharing economy. China will aid by improving tax and welfare policies and providing support for those self-employed in the sharing economy. Premier Li Keqiang announced that China is adapting to the latest technology to facilitate supply-side structural reform, which will reduce overcapacity and lower costs to generate sustainable long-term growth. Li also said that there would be no WeChat if the government interrupted the development of the technological innovation in the past.
As technology grows in importance, Chinese commercial banks have started to partner with leading technology companies. Currently, Huaxia Bank has partnered with Tencent, while ICBC has partnered with JD.com. ABC signed a partnership agreement with Baidu, and CCB partnered with Ant Financial.
The competitive landscape of China's financial industry has become more complicated as technology companies obtain financial licenses while at the same time collaborating with traditional financial players.
Baidu, Alibaba and Tencent have started to shake old labels by putting forward their new strategic positions. Instead of position itself as an e-commerce company, Alibaba emphasized that it is an infrastructure provider that empowers e-commerce companies. Tencent says internally that it is a technology company rather than a social media or entertainment company. Tencent has been investing a lot in AI technology, and Baidu says that it will become an AI company instead of a technology company. It becomes clear that Chinese technology leaders are upgrading themselves by heading towards high-end technology services.
A study from Chinese Enterprise-employee Matching Research shows that the average net profit margin of Chinese enterprises is 3.3% on average. The average net profit margin of POEs is 3.9%, higher than the number of SOEs (2.2%) and foreign owned enterprises (2.1%). Enterprise mangers say that there has been increased adoption of machines or automatic devices to replace human employees to save on labor costs. The study also finds that the numbers of employees in Guangdong and Hubei provinces have dropped, mostly labor intensive positions.
A People’s Bank of China (PBoC) survey reveals that domestic entrepreneur confidence is on the rise. The PBoC’s entrepreneur index rose for the fifth straight quarter despite the tightening of financial supervision from regulators. The index rose from 61.5 to 65.4 compared to the previous quarter. Similarly, bankers’ confidence in the Chinese economy increased from 64.9 to 67.8 from the first quarter of 2017.
Driven by innovation and transition of the cities, China's "Bay Area" consisting of Guangdong, Hong Kong and Macau, is expected to compete with New York’s Bay Area, San Francisco’s Bay Area and Tokyo’s Bay Area. A source told Chinese media that China's Bay Area will focus on internet, cloud computation and AI and the potential market size will grow to trillions of yuan. Pony Ma, chairman and CEO of Tencent, believes that there is large potential in the Bay Area because there are already a number of innovative firms in the area.
During the sixth annual dialogue in Beijing hosted by the US Chamber of Commerce and China Centre for International Economic Exchanges, premier Li Keqiang encouraged US firms to invest in China to advance the development of bilateral ties. Both countries are anticipated to benefit from joint economic and trade cooperation.
The PBoC published an article on their website saying that digital currencies in China are not legal because they are not issued or authorized by the central bank. The government entity also says that only digital currencies issued by PBoC are regarded as legal currencies. In 2013, the central bank defined bitcoins as virtual goods, rather than currency.
The rapid increase of third-party electronic payments is responsible for improving China’s online consumer market. The growth is seen as favourable to the Chinese economy as it supports the country’s economic rebalancing and boosts consumption and employment. Though e-payments are projected to increase, the banking sector is predicted to not be greatly affected as retail business payments make up only a small portion of Chinese banks’ revenue.
China Eastern Airlines recently became the first central SOE to complete its mixed ownership reform. Eastern Air Logistics, originally owned by China Eastern Airlines, has been spun off with 45% shares owned by China Eastern Airlines, 25% owned by Lenovo, 10% owned by Global Logistic Properties, 5% owned by Deppon, 5% owned by Greenland and 10% owned by Eastern Airline's core employees. According to China Eastern Airlines, Lenovo, Global Logistic Properties and Deppon are strategic investors while Greenland is its financial investor. In addition, China Eastern Airlines intentionally chose to give up an absolute control over the Eastern Air Logistics, which has demonstrated the central SOE's determination to push ahead with reform policies.
Xiaochuan Zhou, Governor of People's Bank of China, stated in a speech in Shanghai that The Cross-Border Interbank Payment System (CIPS) will open an operation in Shanghai to better serve Renminbi internationalization and One Belt One Road. According to Zhou, the set up of CIPS in Shanghai will further support the city’s position as an international financial center. Zhou also said that Shanghai has the ambition to become a top international financial hub by 2020.
On June 18th, the world largest coal company Shenhua Group made an official asset restructuring announcement. According to the announcement, the company's stock will be suspended until early July. The market expects that a new conglomerate with around 2 trillion yuan worth of total assets will be formed in early July. The size of the new company will become larger than all previously merged SOEs including Baowu Group, China Minmetals Corporation, CRRC Corporation and China COSCO Shipping Corporation.