EXPLOSIVE growth of new energy vehicles in China will pose a great challenge to battery recycling, a downstream industry that has not kept up with the sharp expansion of plug-in autos.
China’s new energy vehicle market recorded another year of rapid growth in 2017 as the government continued its strong push for green transport. New energy vehicles refer to vehicles powered by non-traditional fuel, for example, electric and hybrid vehicles.
A total of 777,000 new energy vehicles were sold in the Chinese market last year, up 53.3 percent year on year, according to the China Association of Automobile Manufacturers.
The growth was 0.3 percentage points faster than in 2016, when China sold more new energy vehicles than anywhere else for a second year.
New energy vehicle output jumped 53.8 percent to 794,000 units last year, according to CAAM. The stock of new energy vehicles is the world’s largest, with 1.53 million by the end of 2017.
According to Shenzhen Gaogong Industry Research Co Ltd, in 2016, there were about 12,000 tons of car batteries that needed recycling, and the figure is expected to jump to 248,000 tons by 2020.
“The number of batteries that need to be recycled will climb very fast after 2018,” said Bai Min, an assistant researcher at the Center For International Economic and Technological Cooperation.
Lithium batteries, commonly used by new energy vehicles, pose less hazard to the environment compared with lead-acid cells. Copper, cobalt and nickel in the batteries also have high recycling value.
“Lithium is in high demand, and for example can be used for rechargeable laptops and mobile phones. There is money to be made from a used battery,” Bai said.
While the new energy cars’ environmental benefits are clear, they come with certain challenges.
Zhang Zheming, assistant researcher with Shenzhen Institutes of Advanced Technology, warned that the used batteries pose hazards if mishandled.
“If car batteries are not properly handled they may explode. Acidic substances that are needed to process the batteries are also hazardous to humans and may pollute air and soil,” Zhang said.
But China’s battery recycling industry has not developed in tandem with the auto industry, said Zhang Changling, senior engineer of China Automotive Technology And Research Center.
“Many recycling companies are still using old ways, like taking down the parts manually, which have great safety and environment risks,” Zhang Changling said. “Certified recyclers are still lacking.”
CHINA’S moderately well-off families are optimistic about the Chinese economy in the future as the Climate Index of China’s Wealth rose in January amid steady economic growth, a Bank of Communications report said yesterday.
The bimonthly index hit 140 points in January, up 3 percentage points from two months before and was 6 percentage points higher than that in January 2017, said the report released by BoCom.
A reading above 100 means growth in wealth, while that below 100 signals retreat.
All three main sub-indices rose, with that for income growth up markedly by 5 percentage points to 155. The economy climate index added 1 percentage point to 137, and the investment intention index gained 2 percentage points.
“The growth of these indices showed that well-off families are optimistic about the Chinese economy in the future,” said Zhou Kunping, deputy general manager of the research and development department at BoCom.
China is working hard to drive its economy into one of high quality development, with the gross domestic product exceeding 80 trillion yuan (US$12.8 trillion) for the first time in 2017. This boosted people’s confidence in the economy, and helped lift the overall climate index of China's wealth, the report said.
“The 5-percentage-point rise of the sub-index for income growth was to some extent due to the improved household finances,” Zhou said. "Also, the strong performance of stocks in the beginning of the year buoyed returns on investment.”
The investment willingness index rose amid people’s intention to invest in current assets, confident their investment would be protected by stricter rules, the report said.
BoCom surveyed 1,800 well-off families with annual after-tax incomes above 120,000 yuan in Beijing, Shanghai, Guangzhou and Shenzhen, those with incomes over 100,000 yuan in Chengdu and over 80,000 yuan in 21 other cities.
CHINA’S central bank said yesterday it would improve the framework of regulation underpinned by monetary policy and macro-prudential policy in 2018.
The improvements will be made partly by stepping up supervision over shadow banking and real estate finance to fend off financial risks, according to a statement of the work conference of the People’s Bank of China.
Such a regulation, known as a “two-pillar” policy framework, was established in 2017 to better dissolve systemic risk and ensure financial stability.
Under the system, liquidity has becomes more stable, cross-border capital flow more balanced and off-balance sheet wealth management products better supervised.
The PBOC also said it would keep a prudent and neutral monetary policy, and direct more capital into key economic areas, such as rural vitalization and poverty relief.
More efforts will be made to improve disposal of bond defaults, and unify rules on approval and information disclosure of corporate credit bond issuance.
The central bank also listed financial services in home rentals, establishment and improvement of a long-term mechanism on supervision over online finance and on risk prevention, and opening up of the bond market as important tasks this year.
ONLINE courses covering language learning, psychology, photography, design and those that help prepare candidates to sit for civil service examinations are booming in China, Shanghai-based online education platform Hujiang said yesterday.
In 2019, China’s online education market is set to generate 272.7 billion yuan (US$43.5 billion) in revenue, up from 194.1 billion yuan in 2017, according to research firm iResearch.
More than 30,000 “cyber teachers” have opened online courses on Hujiang’s platform which serves around 10 million users now. About 20 percent of the teachers — some working part-time — are able to earn over 100,000 yuan annually, according to a Hujiang report.
Hujiang, which used to focus on online language learning, found a “huge market potential” for non-language courses. On Hujiang’s platform CCTalk, courses on Korean, Japanese and children’s English now take up less than half of the total courses, said Fu Cairui, CEO and chairman.
A collective sigh of relief swept across global trading floors yesterday as bargain hunters swooped on Wall Street stocks, stemming a hemorrhage that had been spreading panic among investors.
With Asian and European equity markets plunging, New York stocks started their trading day with another jaw-dropping fall as the Dow index dived nearly 3 percent, adding to Monday’s record-breaking loss.
But within minutes a fierce battle seemed to be playing out between those betting on a further downturn and those who thought that the market correction had gone too far, leading to some wild price swings.
“Traders don’t know which way to turn as uncertainty is running high,” said David Madden, market analyst at CMC. “The colossal range on the US indexes sum up how irrational equity traders are at the moment, and while some go bargain hunting, others are fearful we could see another leg lower.”
Even as the Dow index gyrated in and out of positive territory, the feeling spread that the worst of the a brutal downturn was over.
“Dow up! Panic over, as you were everyone,” tweeted James Hughes, chief market analyst at AxiTrader.
Jasper Lawler, head of research at London Capital Group tweeted “Trader’s paradise out there right now”, in a reference to volatility which boosts brokers’ earnings.
European stock markets were helped off the day’s worst levels by the Wall Street recovery, but remained deeply in the red at the close.
The sell-off began last Friday when bright US non-farm payrolls data sparked fears that inflation will surge this year — and that the Federal Reserve will be forced to raise borrowing costs more quickly than anticipated.
Earlier yesterday, Tokyo stocks led a collapse throughout Asia, briefly diving almost 7 percent before closing down 4.7 percent.
The Shanghai Composite Index fell 3.35 percent to close at 3,370.65 points.
Hong Kong lost more than 5 percent in its worst day since summer 2015, while Sydney and Singapore each sank 3 percent.
New York’s Dow Jones Industrial Average saw its steepest ever one-day point drop on Monday, shedding a total of 1,175.20 points or a hefty 4.6 percent in value, while the S&P 500 sank 4.1 percent and 10-year US Treasury yields set four-year peaks. The last fall of that size came in August 2011 when investors were fretting over Europe’s debt crisis and the debt ceiling impasse in Washington that prompted a US credit rating downgrade.
The downturn was so rapid that some investors wondered whether they were headed for a crash, but others welcomed what they saw as a reality check for an overbought market.
“It’s not doom and gloom, and it’s not financial markets Armageddon; it’s just a much needed and much overdue correction,” said AxiTrader’s Hughes.
Analyst Naeem Aslam at trading firm ThinkMarkets said: “Markets usually grind to the upside, but fall like a rock.
“Traders have been looking at the market for the past year moving in one direction which was skewed to the upside. Now, it’s time for the bears to take their revenge.”
Prior to this week’s chaotic sell-off, Wall Street had enjoyed an impressive record-breaking run ever since Donald Trump’s 2016 election on hopes over the US president’s pro-business tax-cutting policies.
Asia and Europe had meanwhile reaped bumper gains from the improving economic outlook.
“If investors had been waiting for an opportunity to take profits, the prospect of higher than expected inflation and tightening by the Fed provided just that,” said Richard Hunter, head of markets at online stockbroker Interactive Investor.
“Rising interest rates, whilst potentially good news for savers, increase the cost of borrowing and the possibility of loan defaults,” he added.
“Mixed in with that, higher bond yields could increase the attractiveness of bonds as an investment destination, some of which will be at the expense of equities.”
On currency markets the yen, considered a go-to unit in times of turmoil and uncertainty, climbed against the dollar.
Bitcoin continued its spiral downward after some banks banned their customers from buying it with credit cards. The news is the latest to hit the cryptocurrency after recent crackdowns by authorities in China, India, South Korea and Russia.
THE Commercial Aircraft Corp of China Ltd yesterday said it was aiming to make the first delivery of its C919 single-aisle jet in 2021, despite delays in flight testing.
Lu Zheng, COMAC’s deputy general manager of sales and marketing, said on the sidelines of the Singapore Airshow that the company expected Chinese certification to take three to four years. COMAC also has been speaking to US authorities.
“It should not have any impact” on the delivery time to the jet’s launch customer, China Eastern Airlines, he said. “We’re striving for 2021.”
The C919, which hopes to compete with Boeing Co’s 737 and the Airbus SE A320, is a symbol of China’s civil aerospace ambitions and President Xi Jinping’s push to upgrade manufacturing capabilities.
There was an almost five month-gap between the C919’s first and second flight, far longer than that of other new aircraft, which had raised concerns that COMAC’s plans to deliver the aircraft were running behind schedule. The plane has since undergone multiple tests, including a long-distance flight.
Lu expects US and European certification to come after it wins approval from Chinese regulators. Europe’s aviation safety regulator has started the certification process, but its US counterpart has not, he said.
He described recent partnerships between Airbus and Bombardier, as well as Boeing and Embraer as “normal,” but said that they would affect the markets its C919 and ARJ21 planes want to compete in.
“It will have an impact but they’ve also been impacted by us,” he said. “We will work hard to become, from a follower, to be a competitor, and in future, if we have the opportunity, to become a leader. But it’s a long road.”
The company does not plan to announce any orders at the Singapore Airshow, he added. But it planned to speak to potential customers from Southeast Asia.
The company, which is also co-developing a new wide-body jetliner with Russia, said in a statement that it had asked engine makers for proposals to supply the C929 jet’s propulsion system on December 21.
Russian officials have said the two countries expect to develop their own engine for the project.
THE Shanghai government has worked hard to improve the business operating climate for enterprises by unveiling targeted policies and measures, improving its work efficiency and providing accurate services, local officials said yesterday.
To speed up project completion has always been a key task for the local administrative examination and approval office. The authority has carried out four rounds of reforms to optimize the investment system and reduce approval management issues for construction projects, Jin Yueming, deputy director of the Shanghai Office of Agency and Staffing Committee said.
Meanwhile, the government has been exploring new and innovative initiatives to quicken project completion by implementing special reform pilot programs in the original comprehensive bonded zone, the Expo park, chemical industry zones and Fengxian District, and then promote and replicate successful experiences to other areas in the city.
In 2017, Shanghai revised and optimized its project administrative examination and approval processes and introduced a new administration program for enterprises that invest in technology transformation projects.
Through those reforms, the time for administrative examination and the approval of industrial projects has been trimmed by one third compared with the stipulated time, with the time required for some projects reduced by as much as half.
In the past year, the city also made reforms to boost its work efficiency by providing spot responsive servicing. The policy requires that administrative departments should help resolve problems from the public on the spot, as long as they can make a quick decision.
So far, over 20,000 requests have received spot responses, the government said.
BOEING Co has presented a plan to Brazil’s government that would give it an 80 to 90 percent stake in a new venture encompassing Embraer SA’s commercial jet business, a Brazilian newspaper said yesterday.
The plan Boeing presented to the government on Thursday would let it take over Embraer’s commercial operations via the creation of a new company, with defense operations remaining under the Brazilian planemaker’s control in order to meet government demands, Valor Economico reported, without citing a source.
Reuters previously reported on Friday that Boeing was seeking approval in Brasilia for a plan creating a new joint company excluding defense operations.
Valor reported that under the proposal Boeing would pay Embraer in cash when the commercial assets are transferred to the new company, with most of the proceeds then distributed to shareholders as dividends.
Boeing’s tie-up with Embraer, the world’s third-largest planemaker, would give it a leading share of the 70- to 130-seat market, meaning stiffer competition for Bombardier Inc and Airbus SE’s joint CSeries program.
Embraer would retain the defense business that generates almost nothing in earnings before interest, taxes, depreciation and amortization. Shareholders would also have 10 to 20 percent of the commercial activities transferred to the new company and be entitled to dividends.
The deal would maintain the government’s so-called golden share in Embraer, a former state enterprise, giving it veto power over certain strategic decisions, including Boeing’s current push for a tie-up.
The plan — if supported by the government and Embraer — could be presented to shareholders for approval as soon as the second quarter, the newspaper said. Further meetings between Boeing and the government will not occur until after the Carnival holiday, which ends next week, it reported.
Boeing and Embraer did not immediately respond to requests for comment.
CHINA’S sales of fast moving consumer goods, such as packaged food, beverage and cosmetics, recorded the highest annual growth in three years in 2017 at 4.3 percent, with online sales volume rising 29 percent, according to Kantar Worldpanel.
Retailers are adopting new methods to catch up with the digital transformation, with the combined sales volume of hypermarket, supermarket and convenience stores rising 2.6 percent, from 1.6 percent growth a year ago.
Most multinational and local retailers have strengthened their foothold with new store openings or business formats through tie-ins with Internet companies.
Sun Art Retail Group, which runs Auchan and RT Mart malls, remains the biggest player by sales, lifting its market share to 8.4 percent from 8.1 percent a year ago.
Yonghui recorded the fastest growth with new formats such as Super Species and community stores. It overtook Carrefour as the fourth largest retailer, with a market share of 3.3 percent.
About 60 percent of Chinese families have purchased fast moving consumer goods online, and in Beijing, Shanghai, Guangzhou and Chengdu, that figure is nearly 70 percent.
SALES of elevators in China will rise by 15 percent in 2018 from a year ago because of a rally in the real estate industry two years ago, Nomura predicted yesterday.
“Sales of elevators are normally met two years after homes are constructed, thus indicating a rebound this year as there was a rally in the realty market in 2016,” said Patrick Xu, Nomura’s industrial analyst. He expected the homes to be completed in two years.
China sold 1.57 billion square meters of homes in 2016, up 22.5 percent annually, while its gross floor area added 7.59 billion square meters, 3.2 percent higher from 2015, according to the National Bureau of Statistics.
STOCK markets are expected to get off to a bouncing start in the Year of the Dog but investors might want to sniff around for value a bit later, Hong Kong brokerage CLSA said in its astrological predictions for the 2018 lunar year.
CLSA’s Feng Shui Index, a tongue-in-cheek financial forecast for the Year of the Dog which begins on February 16, forecasts “a most auspicious day” on February 28, although it warns of a “summer of discontent.”
The CLSA report, which cautions investors not to “bite off more than they can chew,” draws on findings from a Hong Kong feng shui master, who looks at the five elements in Chinese astrology: wood, metal, earth, fire and water.
“It’s not a year for metals to bark so don’t expect much more than a whimper from banks and financials — we expect both to underperform from the previous two years,” CLSA said.
“There’s just enough earth in the charts to keep property and renewables anchored,” it added — in Chinese astrology 2018 is the year of the Earth Dog.
September is a good time to hound down smart investments, with sectors such as health care and consumer, seen as wood-related, among the top picks for the year. A lack of metal element this year may see auto and machinery stocks underperform.
CLSA advises against taking bets on casino or transport stocks in March, when the market is likely to take a tumble, although these sectors should get a leg up in October.
Construction and resources stocks are expected to bloom from spring to mid-summer, but investors are told to be wary of banking and financials.
The Hang Seng Index is expected to close on a high at the end of the year, it says.
Hong Kong got off to a strong start of the calendar year, scaling a series of record highs, although the past few trading sessions have been volatile, tracking moves in global equities.
The financial hub’s benchmark index has risen around 7 percent so far this year after surging 36 percent in 2017.
CHINA plans to stamp out all remaining cryptocurrency trading in the country by blocking access to overseas-based websites and removing related applications from app stores.
The moves were outlined in a report on Sunday by Financial News, a publication under the People’s Bank of China, which said the aim was to snuff out the “dying cinders” of cryptocurrency trading and initial coin offerings “which are glowing once more.”
Faced with Chinese citizens who continue to trade cryptocurrency on platforms operated beyond the country’s reach, or take part in initial coin offerings, authorities will “ratchet up oversight in a sustained manner,” the report said.
After launching a campaign last year, authorities eliminated most cryptocurrency trading in the country. China’s share of trading plummeted from 90 percent of the world to below one percent, the report said.
That crackdown sent Chinese cryptocurrency traders to overseas platforms operated in Hong Kong and Japan. The latest regulatory moves aim to cut off access to them.
Financial regulators will work with telecommunications regulators to shut down websites and mobile apps offering trading in illegal initial coin offerings, the report said.
Regulators will also take unspecified action against websites of foreign and domestic cryptocurrency trading platforms.
The PBOC has also ordered operators of payment systems to launch a “rectification” campaign and ensure their tools were not being used to funnel money into cryptocurrency trading.
The report added a warning to any companies within China providing services to ease trading. “This is not in line with what is stipulated in the current policies,” it said.
The international value of Bitcoin and other cryptocurrencies have plunged this year amid fears of a crackdown in Asia and concerns that many currencies’ rapid rise in value last year could reflect an bubble.
FORMER investment banker Jerome “Jay” Powell was sworn yesterday as the 16th leader of the US Federal Reserve, taking a key role in overseeing the world’s largest economy.
Perhaps the wealthiest Fed chair ever, Powell, 65, takes the reins of monetary policy just as a decade of economic recovery has begun to crest, and as analysts are pointing to challenges on the horizon.
Powell said he was committed to explaining the Fed’s policy moves, a signal likely to be welcomed by conservative lawmakers who have called for the central bank to follow strict formulas in setting interest rates — a requirement Fed officials have opposed.
Powell also said the banking reforms enacted since the 2008 crisis made the financial sector stronger.
“We intend to keep it that way,” he said in comments after taking the oath of office.
But he struck a note of balance, perhaps a nod to the Trump administration priority to reduce regulatory burdens in the economy.
“We will also work hard to make sure that our regulation and supervision are efficient as well as effective,” Powell said.
“At the Federal Reserve, we know that our decisions matter for American households and businesses.”
Powell joined the Fed as a governor appointed by then-President Barack Obama in 2012, the year the Fed adopted a two percent target for annual inflation.
Inflation has run below target since then, allowing former Chair Janet Yellen to leave the post amid low price pressures, steady growth and rising employment.
Despite her solid record, Yellen, the first woman to lead the Fed, became the first Fed chief in four decades not to be reappointed to a second term.
Powell, who is not an economist, takes over just as fears arise about fiscal pressures following December’s massive tax cut and concerns inflation may finally be poised to heat up.
The new Fed chief is likely to make the first of regular public appearances in the usual semi-annual testimony before Congress later this month, followed by his first press conference after the March policy meeting.
The Fed said in December it expects to raise the benchmark interest rate three times this year, and the first move is widely set to come in March.
NEW home purchases fell notably in Shanghai last week as the weeklong Spring Festival holiday is just around the corner.
The area of new homes sold, excluding government-subsidized affordable housing, plunged 37.5 percent from the previous seven-day period to 127,000 square meters, Shanghai Centaline Property Consultants Co said in a report released yesterday.
The remote Chongming District emerged as the best performer with transactions almost tripling amid abundant supply. Around 37,000 square meters of new homes were sold in the island district, a week-over-week surge of 184.6 percent. It was most closely trailed by Nanhui in Pudong New Area where new home sales hit 18,000 square meters.
The average cost of new homes added 2.9 percent from the previous week to 40,322 yuan (US$6,383) per square meter, according to Centaline data.
“The clock is ticking down as the lunar new year holiday is falling in less than two weeks,” said Lu Wenxi, senior manager of research at Centaline. “Sentiment among both buyers and real estate developers will continue to cool probably through the end of this month.”
A newly launched residential development in Chongming’s Changxing Island released 299 apartments, or 30,291 square meters of new homes in total, during the seven-day period ended Sunday.
A unit in the most sought-after project of the week costs about 27,562 yuan per square meter.
BANKS in Britain and the United States have banned the use of credit cards to buy Bitcoin and other “cryptocurrencies”, fearing a plunge in their value will leave customers unable to repay their debts.
An LBG spokesman said the ban was across its Lloyd Bank, Bank of Scotland, Halifax and MBNA branded credit cards.
In a brief statement, he said LBG does “not accept credit card transactions involving the purchase of cryptocurrencies.”
Over the past few days, Bank of America, Citigroup and JPMorgan each introduced the same ban.
There is a concern that customers who bought Bitcoin late last year when crytocurrencies in general surged in value have been left with big losses following massive declines in recent weeks.
Yesterday, the price of Bitcoin tumbled to US$7,950, two months after breaking through the US$20,000 mark.
SAMSUNG heir Lee Jae-yong was freed yesterday after a South Korean appeals court gave him a 2 1/2-year suspended jail sentence for corruption in connection with a scandal that toppled the country’s president.
The Seoul High Court softened the original ruling against Lee, rejecting most of the bribery charges leveled against Lee by prosecutors who sought a 12-year prison term.
While the ruling clears the way for the Samsung vice chairman to resume his role at the helm of the industrial giant founded by his grandfather after a year in prison, he faces a slew of challenges outside prison.
Chief among them will be winning trust that he is capable of running South Korea’s biggest company, and assuaging public anger among those who viewed the court’s surprise decision as a setback in the war on corruption.
“The past year was a precious time for personal reflection,” Lee told reporters waiting outside the gates of a detention center in southern Seoul.
Lee’s first stop from the prison was a Samsung hospital where his father has been hospitalized after suffering a heart attack in 2014.
Lee was charged with offering US$38 million in bribes to former President Park Geun-hye and her confidant Choi Soon-sil, embezzling Samsung funds, hiding assets overseas, concealing proceeds from criminal activities and perjury.
The appeals court said Lee was unable to reject the then-president’s request to financially support her confidante and was coerced into making the payments.
FIRMER client demand boosted China’s services activity which expanded in January at the quickest pace since May 2012, a private report showed yesterday.
The Caixin China General Service PMI rose to 54.7 at the beginning of the year from 53.9 in December, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media.
A reading above 50 signals growth while one below 50 means contraction.
The report said new business increased for service providers during the opening month of the year amid reports of firmer client demand.
New order growth accelerated to a 32-month record across the service sector, and headcount continued to rise for the 17th consecutive month.
Released last week, the Caixin manufacturing PMI for January was flat at 51.5, as in December.
The Caixin Composite PMI, which covers both manufacturing and services, rose to a seven-year high of 53.7 from December’s 53, to indicate a solid pace of expansion.
“Caixin PMI readings in January showed that the Chinese economy had a good start to 2018,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group. “Looking forward, we should watch for stability of demand in the manufacturing industry and the impact of growing costs on the profitability of service providers.”
He added that the input prices sub-index hit the highest since April 2012, due to the impact of rising labor costs and crude oil prices.
Meanwhile, the official general PMI, released last week for the first time to track both the manufacturing and services sectors, was flat at 54.6. As data showed, the December reading would have been the same.
The manufacturing PMI dipped to 51.3 in January, the lowest since May last year, while the non-manufacturing PMI rose for the third straight month to 55.3.
The official PMI survey covers thousands of large and small companies, while the Caixin service PMI measures several hundred.
The services sector contributed to over half of China’s gross domestic product in recent years as its economy is being turned from investment-driven to consumption-driven.
CHINA’S mobile phone vendors face a tough market environment as sales declined and cost of components rose but Nomura Securities said they may face a “turning point” in March.
China’s mobile phone sales fell 27.1 percent last year as the market became saturated after experiencing several years of rapid growth, according to the China Academy of Information and Communications Technology, a research arm of the Ministry of Industry and Information Technology.
Oppo and Vivo cut their orders for flagship models in 2017. Even Apple’s iPhone X sales in December in China were at only half of expected sales.
Meanwhile, the cost of advanced components for memory, sensor and screen, especially in high-end models with the latest technologies, has jumped . But upgrading hardware such as bigger memory may not impress consumers so much, and these two factors put huge pressure on vendors and down-stream suppliers, said Donnie Teng, a Nomura analyst.
But the “turning point” may appear in March when domestic brands are slated to launch new models. The most promising ones are under-screen fingerprint recognition and 3D sensing developed by Huawei and Xiaomi, he said.
GROWTH for small and medium Chinese enterprises slowed in January, Standard Chartered said, adding that they are slated to face more obstacles in the near future.
The Small and Medium Enterprise Confidence Index, released by the UK-based bank, fell to 53.8 points in January from 55.3 points in December 2017, while the SME growth momentum index also reversed from 11.2 points to 9.8 points.
The present situation index and expectation index also dipped, indicating that SMEs were likely to confront a weaker growth trend in the first quarter, the bank said in a report.
“The decrease in demand is dragging on production, and the willingness of SMEs to invest remains low,” Shen Lan, economist of Standard Chartered China, said.
“The first quarter of 2018 is expected to see more obstacles including the decline of investment and production while stricter regulations will lead to slower growth in (China’s) gross domestic product,” Shen said.
Chinese born between 1970 and 1979 continued to be the main contributors to consumption, according to a report on the latest trend of domestic consumption done by China Unionpay and JD Finance, the financial arm of major e-commerce behemoth JD.com.The survey, which randomly selected 400,000 active users of the two companies and tracked their behavior of consumption during the past three years, revealed that those born in the 1970s contributed nearly half of the total daily consumption of the 1970s, 1980s and 1990s in the past three years.Those born between 1980 and 1999 saw a rapid growth of spending during the three years, doubling the spending of people born in the 1970s. The survey also showed that money spent through mobile and Internet channels took up over half of their daily consumption expenditure.
ALIBABA Group said yesterday it has joined Shanghai-listed TV and film production firm Cultural Investment Holdings Co to acquire a 12.77 percent stake in Wanda Film Holding for 7.8 billion yuan (US$1.2 billion).
Alibaba will pay 4.68 billion yuan for 7.6 percent of Wanda Film at 51.96 yuan per share, becoming Wanda Film’s second largest shareholder.
Cultural Investment Holdings is slated to take a 5.1 percent stake in Wanda Film.
Wanda Group will remain the film unit’s biggest shareholder with 48 percent after the stake acquisition by the two companies.
Wanda Group said in an official posting yesterday that the stake acquisition helped introduce valuable strategic investors.
“We believe the introduction of two strategic investors would complement Wanda Film’s current operation and benefit its long-term development,” it said.
Wanda Film said in a stock exchange filing it would collaborate with Alibaba Group in film distribution, production, and online ticketing.
JAPANESE automaker Nissan Motor and its Chinese joint venture partner announced yesterday a US$9.5 billion investment plan in China to increase annual sales by one million vehicles and boost electric car production.
Dongfeng Motor Company is the latest Sino-foreign car company to splash out as China rolls out new regulations to limit gas vehicles and boost production of electric cars in coming years.
Nissan’s high-end brand, Infiniti, will go all electric in China by 2025 under the plan.
The company provided few specifics on the investment plan, saying the money would go into several areas, from manufacturing to human resources.
The automaker sold 1.5 million vehicles in China last year, and said it plans to sell 2.6 million vehicles by 2022, when revenue is slated at 300 billion yuan (US$47.6 billion).
The expansion plan calls for 20 new vehicle models, with 30 percent of its total sales to be made up of electric vehicles and new energy vehicles.
China will implement a complex quota system in 2019 requiring makers to produce a minimum number of electric cars.
AFTER decades of speedy advances, China is shifting its economic focus to high-quality development, with “developing a modernized economy” high on the agenda.
Now an economic catchphrase, the idea provides a blueprint for the world’s second largest economy during the next five years and beyond.
It will be embodied in innovation-driven industries with coordinated development, an open and fair market, efficient and fair income distribution, coordinated urban-rural and regional development, energy conservation and environmental friendliness, and an open economy with higher standards.
Efforts will be made to give full play to the role of the market, while the government is expected to play a better part.
The real economy, once outshone by rampant real estate prices and financial speculation, has again gained traction.
President Xi Jinping has described the real economy as the foundation of the modernized economy, advocating the use of new technology including the Internet, big data and artificial intelligence to boost traditional industries.
To develop a modernized economy, China should channel more energy into improving the quality of supply and grow into a manufacturing powerhouse, said Wang Yiming, deputy director of the Development Research Center of the State Council.
The government has rolled out an array of measures such as “Made in China 2025” and “Internet Plus” strategies.
Funds that used to flow into the virtual economy due to high yields are returning to factories that produce tangible goods. New loans in the real economy rose 11.34 percent to 13.84 trillion yuan (US$2.2 trillion) last year.
Thanks to rising investment, innovators sprouting up across the country are injecting new vitality into the economy. More homegrown tech firms are transforming from followers to leaders in the international tech community.
Technology is playing a bigger role in driving the economy. Tech is estimated to have contributed 57.5 percent to economic growth last year, up from 56.2 percent in 2016, according to Wang Zhigang, vice minister of science and technology.
Xi also called for a diverse, balanced, secure and efficient system for opening up on all fronts, with better use of global resources and markets and promotion of international cooperation under the Belt and Road Initiative.
As 2018 is the 40th anniversary of China’s reform and opening up policy, the country’s door to the world will only become more open.
DESPITE rising food and oil prices, China’s inflation growth was likely to ease in January due to a high base a year ago, the Bank of Communications said in a report.
BoCom predicted the consumer price index, a main gauge of inflation, will dip to 1.4 percent year on year in January from the 1.8 percent growth in December.
Food prices grew markedly from a month ago as rain and snow across the country dampened the output of vegetables and other farm produce, according to the report.
Meanwhile, price spikes in domestic refined oil drove up the CPI’s non-food sub-index as global crude prices hit the highest level in nearly three years last month.
But January’s CPI will still moderate year on year as the price rises were offset by a high base in the same period of 2017, when consumer prices picked up by the fastest pace in two and a half years.
China’s inflation has stayed subdued since last February, mainly due to stable food prices, with the full-year growth at only 1.6 percent, below the government’s annual inflation target of around 3 percent.
BOCOM sees consumer prices to continue the mild trend this year, up 2 percent.
APPLE will offer free repairs to owners of iPhone 7 models which show “no service” connection problems, the US technology giant said on its website during the weekend.
It’s the latest quality problem facing Apple. The glitch is due to a faulty component on the model’s main logic board, media reported.
A “small percent” of iPhone 7s sold globally, including on the Chinese mainland, Hong Kong, Macau and the United States, may face the problem, Apple admitted. Owners of these iPhones may see “no service” displayed on their screens when in fact service is available.
The problem phones were made between September 2016 and February 2018. Three model numbers are eligible for the free repair. In China, owners of model numbers A1660 and A1780, which are printed on the back of phone, can have free repairs in Apple Stores.
LESHI Internet Information and Technology, the listed arm of technology company LeEco, expects 5.62 billion yuan (US$893.7 million) of debts to mature this year.
The debts were only a part of the company’s total unpaid liabilities from financing and loans worth 9.29 billion yuan as of the end of last year, said a Leshi statement.
“If the company’s business volume fails to rebound to the previous level, the cash flow will tighten further, which will put us under pressure to repay the debts,” Leshi said.
TOYOTA will recall 181,797 vehicles over an air bag defect in China.
The recall was filed by GAC Toyota Motor and Tianjin FAW Toyota Motor to the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ).
Starting Saturday, Toyota will recall 73,084 New Highlander vehicles manufactured between May 5, 2015 and February 4, 2016, and 98,218 Levin models produced between May 4, 2015 and February 4, 2016, as well as 5,804 Levin hybrid cars produced between October 11, 2015 and February 4, 2016, according to the AQSIQ.
The recall also includes 4,691 Corolla hybrid cars made by Tianjin FAW Toyota Motor between November 21, 2015 and February 2, 2016.
There are concerns that flawed acceleration transducer parts in the air bags of affected vehicles may cause air bags to malfunction, which could pose a threat to safety, the statement said.
CHINA’S first LED (light emitting diode) cinema screen debuted yesterday in Shanghai to draw Chinese movie-goers who spend over 50 billion yuan (US$769 million) annually.
The new LED cinema screen is the first of its kind in China. The screen is used in the Wujiaochang outlet of Wanda Cinema, China’s biggest cinema brand by audienceship.
The new LED screen offers advanced contrast, brightness, and spectrum of color, according to market watchers.
CHINA’S banking regulator has imposed a fine of 52.5 million yuan (US$8.33 million) on 19 banking institutions involved in a pledge loan fraud case in Shaanxi and Henan provinces.
These lenders, including local branches of the Industrial and Commercial Bank of China, were punished for granting loans of up to 19 billion yuan to criminals who illegally used low-purity gold as pledges, the China Banking Regulatory Commission said.
The loan fraud case has exposed “numerous defects” in the internal controls and management of these institutions, which sought business expansion aggressively and blindly, “creating loopholes that criminals can exploit,” the regulator said in a statement.
A total of 104 employees in the banking institutions were also punished, while 35 criminals involved in the case have been arrested, the CBRC said.
China has been intensifying regulatory scrutiny on lending activities to rein in financial risks. Only a week ago, 12 banks were fined 295 million yuan.
Tian Zengbiao, an impoverished farmer from Xinshengcun Village in the Ningxia Hui Autonomous Region, never dreamed of living in a nice, well-furnished house. His fortunes, however, took a turn for the better after the Postal Savings Bank of China initiated a “credit village program” aimed at improving living standards in remote rural areas. The bank also helped Tian build four new sheep sheds, each 24 meters long.It’s all part of China’s ambitious plan to lift the estimated 30.4 million people out of poverty, an endemic problem in rural areas where 576 million reside. To do that, rural finance, the weakest link in the nation’s financial services, needs upgrading. So-called “inclusive financing,” of which rural finance is one part, has become a national strategy. That is defined as the range of banking products and financial services made available to poor populations, where low incomes lock people out of the conventional banking system.Traditional banks haven’t seen rural financing as profitable in the past, according to a recent report by Ernst & Young. However, advances in technology are reducing the cost of serving low-income customers. Ernest & Young predicts that Chinese bank revenue from “inclusive financing” will grow by US$63.4 billion in 2020. With loans to the capital-thirsty agricultural industry standing at just 1 percent of commercial banking credit, there’s ample scope for expansion.Farmers’ access to conventional bank loans has been limited by a lack of credit data. Many are forced to borrow from “shadow banking” lenders, the report noted.To boost commercial bank lending to smaller companies, startups, agricultural communities, impoverished groups and students, the People’s Bank of China last year announced a targeted cut in its reserve requirement ratio, available only to lenders in those sectors. It came into effect on January 25.Banks with “inclusive financing” loans accounting for more than 1.5 percent of total lending receive a 0.5-percentage-point cut in the conventional benchmark reserve ratio. If relevant loans exceed 10 percent, lenders will get an additional 1 percentage point cut in the ratio.The new policy should increase loans to the listed cash-strapped sectors and should especially spur more lending by smaller banks, said Zhao Yarui, a senior researcher at the Bank of Communications. But, she said, the impact may take some time to manifest itself on the bottom line. At the prodding of the nation’s banking regulator, China’s five big state-owned banks have established “inclusive financing” divisions.The Postal Savings Bank, a leading retail lender with the nation’s largest distribution network, set up a business unit in 2016 dedicated to serving rural areas. In the past five years, the bank reported, credit extended to individually owned businesses in rural areas topped hit 2 trillion yuan (US$320 billion). The outstanding balance of those loans as of last September 30 exceeded 1 trillion yuan.New business modelBanks are now working to develop rural business models that produce profits, minimize risk and shoulder social responsibility for the public good.The Ningxia branch of the Postal Savings Bank initiated a special business model by designating 143 “credit villages” in poor mountainous areas. That has given farmers there access to funds for activities such as crop planting and livestock breeding. Bank of Communications’ Zhao said big data technology should help lenders manage risk in rural lending. Jack Chan, China financial service managing partner for Ernst & Young, told Shanghai Daily that banks should shift their traditional practice of extending loans on a one-by-one basis to designating target borrowing groups and developing easy-to-follow standards for the groups. Ant Financial Services Group, an online service provider affiliated to e-commerce giant Alibaba Group, has created “acquaintance-based” loan services for rural applicants with little or no conventional credit history. It assesses applicants’ creditworthiness by talking to their business partners, customers and fellow villagers.Ant entered rural financing two years ago, believing that low net-worth individuals in aggregate represent a market potential valued in the billions of yuan. In the rural sector as of last September, the group said it had 178 million people using its payments services, 152 million purchasing insurance products and 65.3 million taking out micro-loans. Among the users, more than 2 million rural businesses gained access to Ant Financial services. New players emergeQianhai Zhengxin, a unit of Ping An Insurance Group, now gives individuals and small companies lacking credit data equal access to its financial services. As one of the eight firms approved by the central bank in 2015 to develop credit-scoring systems, the company has adopted a set of standards to evaluate creditworthiness. Rural finance is now attracting new players, like Lufax or the Shanghai Lujiazui International Financial Asset Exchange Co, a major online wealth management platform. Lufax said that four-fifths of its funds come from first- and second-tier cities, while 80 percent of demand for loans comes from third- and fourth-tier cities, especially in underdeveloped areas in central and western regions of China. China UnionPay, an association of bankcard issuers, has established a business unit to help improve payments systems in rural areas. One of its member companies, China UnionPay Merchant Services Co, launched a tailor-made, mobile application for rural populations in 2016. Under the system, users can publish farm-product trading information on the platform and undertake financing transactions. Smaller finance industry players seem the most poised to understand and connect with smaller communities in rural China. The Shanghai Rural Commercial Bank extends about 30 percent of its loans to the countryside. At the end of last June, it had committed 62.7 billion yuan to rural borrowers. It has also signed an agreement with the Shanghai Agriculture Commission for a 30 billion yuan line of credit to support 42 local agricultural projects.
A major breakthrough is needed in the renegotiations of the North American Free Trade Agreement in order to keep the pact alive, says a Canadian trade expert.“There has to be some type of announcement related to an agreement within a major sector,” said Michael Manjuris, a professor of economics and trade at Ryerson University in Toronto. “Maybe it will be the automotive sector because that seems to be the one we’re all talking about.”Trade ministers from Canada, Mexico and the US have completed the sixth round of NAFTA negotiations in Montreal, with lead officials noting that some progress was made, but adding that tough challenges remain ahead of a new deal.Something like a breakthrough in the auto sector “will have to come out in the next round to show that there is real progress and we’re not going to turn to a political fight in having (NAFTA) cancelled,” Manjuris said.US Trade Representative Robert Lighthizer in his closing remarks after the weekend meeting said they took a step forward in this latest round, but he also criticized Canada for its recent launch of a challenge against US trade practices with the WTO.He called the complaint “unprecedented” and a “massive attack on all of our trade laws,” according to Canadian news reports.Canada’s government in December launched the wide-ranging 32-page complaint to the WTO, accusing the US of imposing unfair anti-dumping and anti-subsidy duties against Canadian products.Canada said US broke the WTO’s Anti-Dumping Agreement, the Agreement on Subsidies and Countervailing Measures, the General Agreement on Tariffs and Trade, and the Understanding on Rules and Procedures Governing the Settlement of Disputes.Manjuris said the complaint will have certainly sparked interest from other nations around world.At the World Economic Forum in Davos, US President Donald Trump claimed success for his first year in office and said America remains open for business, resisting his apparent urge to exclaim his America-first protectionist rhetoric he has often repeated on US soil.As for NAFTA, Manjuris said the negotiators are now getting into the tough elements of bargaining such as the auto sector, dispute settlement and rules of origin.“The fact that they’re still talking tells me that both sides have been putting forward positions that are in some way trying to move them closer to an agreement,” he said.The next round of talks will likely be held in Mexico in late February.“Think about what they’re saying. They’re cautiously optimistic because they’re going to talk again,” Manjuris said. “That’s a pretty low bar.”But there remains reason for optimism, he added, noting that several American business people, members of Congress and senators attended the Montreal meeting.“They’re trying to push the idea that NAFTA is good for the Americans,” he said. “We’ve actually seen the participants in the agreement come forward and say this is important to us and we need to keep it.”“At least they’re putting forth proposals to each other trying to get to move to some middle ground. That is a good sign,” he said. “It’s from now forward that we’re going to see the reality of whether NAFTA will be modernized and redeveloped, or whether it will be cancelled.”
Chinese e-commerce company Alibaba Group Holding Ltd has made debut a global marketing campaign outside China for the first time, the company said last week, with the release of Olympic advertisements focusing on underdog stories in countries such as the United States, Britain, South Korea and Japan.The international advertising push, which includes videos featuring the Kenyan ice hockey team, comes as the US$525 billion company looks for growth abroad to maintain investor expectations while the broader online retail market in its home market in China has become more saturated.Centered on the motto “to the greatness of small,” Alibaba will run a billboard campaign in South Korea, the host country for the February 9 to 25 Pyeongchang Winter Games, as well as social media ads in the United States, Britain and Japan. TV commercials and billboards will also appear in China.It is the first time the company has launched a global branding campaign for the parent company, instead of for one of its business units, Chief Marketing Officer Chris Tung said in an interview. The international ads will appear on YouTube, Facebook, Instagram, Twitter and Linkedin.“Our advertising will help introduce our brand and what Alibaba stands for to audiences beyond China,” Tung said, adding that these are “critical strategically important markets.”Underdog storiesAlibaba’s Tmall and Taobao shopping platforms dominate online retail in China. But it is not well known in many parts of the world, including in the United States where Amazon.com Inc is the e-commerce leader. It has previously said it would bring one million small US businesses to its platform to sell to Chinese customers over five years.The ads focus on underdog stories, which capture the spirit of Alibaba, Tung said, and are in line with a small and medium size business push that Alibaba’s founder and executive chairman Jack Ma has been championing. Ma, a schoolteacher in China who went on to become the country’s richest man, has said he founded his company to help small businesses.Alibaba faces a crowded and changing Olympics advertising landscape. Many brands, even some focused only on technology, are competing for attention, while global TV ratings for the Olympics have not been growing.One of the ads features the Kenyan ice hockey team. Another vignette is of Australia’s Bobby Pearce, who stopped during an Olympic rowing race in 1928 to make way for a family of ducks. The videos, produced by advertising agency BBDO, will run in English, Chinese, and Japanese. Alibaba will not be sponsoring individual athletes as part of its campaign. As a new long-term Olympic sponsor, Tung said he has been getting many calls from chief marketing officers about how to work with the company.
WANTED: two consultants 60 years or older. No degree or previous work history required, but applicants must have at least one year of experience shopping online.
What’s this? A job advert targeted exclusively at the older generation in an age when so much emphasis is on young consumers.
Yes. It’s an attempt by Alibaba, China’s largest e-commerce operator, to recruit elderly advisers to help it design and promote a customized platform for older shoppers on its Taobao e-retail site.
The hiring notice has drawn a lot of comment. Some call it a crass marketing gimmick. Others say its overdue attention paid to the growing number of senior citizens in China and their often ignored spending potential.
The campaign comes as traditional online shopping has hit a peak and is slowing. So Alibaba is turning its attention to a generation that often gets sidelined in marketing strategy. For one thing, the company has announced it is upgrading its software to better suit seniors by simplifying the login process and making the purchasing process easier on Taobao.
The hiring notice offered annual salaries of as much as 400,000 yuan (US$62,500). It also said preference would be given to people who have good communication skills and are movers and shakers in their local neighborhoods. In other words, it helps to have community influence.
Since the recruitment announcement was unveiled in mid-January, some 3,000 people have applied. Last week, 10 candidates gathered at the Alibaba campus in Hangzhou to discuss with Taobao workers how to make online shopping more accessible and pleasant for the older generation.
Li Lu, who at 83 is the eldest of the 10 and a graduate of Tsinghua University in Beijing, spoke to the needs of older Chinese shoppers.
“We care about product quality,” she said, “and we exchange shopping experiences in WeChat groups. The opinions of friends and family matter in our shopping.”
Li has been using a computer since 1995, so she doesn’t have any trouble navigating the net. She said she started shopping on Taobao about three years ago.
“Although we didn’t trust online shopping at first because we couldn’t touch the merchandise to size it up before buying, family members persuaded many of us to take the first step,” she said. “I’ve since built up trust toward online shopping.”
Zhang Zhonglin, 71, a native of Sichuan Province, guessed that only about one of 10 of his peers can manage online shopping without problems.
After moving to Hangzhou to be closer to his son several years ago, Zhang gradually began logging into Taobao to purchase Sichuan spices. Many of his friends ask him to place Taobao orders on their behalf, he said.
“Who doesn’t want to get their daily necessities delivered to the door in cold or rainy weather?” he said. “But for many, online shopping and digital wallets require too many complicated passwords or authorization codes, causing people to get stuck at the very beginning of the process.”
Tmall and Taobao boast nearly 30 million registered elderly shoppers, with 75 percent of them aged between 50 and 59, according to Alibaba in a statement last October.
In the first nine months in 2017, shoppers 50 years or older spent an average 5,000 yuan on Tmall and Taobao, with each buyer purchasing an average 44 items on the sites.
Elderly shoppers indeed seem eager to have their voices heard, for example, in what kind of features they want to see on a special edition of Taobao’s smartphone application. Among their suggestions are tailor-made modules focused on services and products most commonly used by senior citizens.
Duan Manting, Taobao’s product manager, admitted that Taobao is eager to tap the purchasing power of senior citizens and draw on their wealth of experience in finding ways to improve the company’s services.
The Alibaba jobs on offer involve organizing offline discussion groups, distributing questionnaires to elderly shoppers to get feedback and advising the product team on how to satisfy the needs of the silver-haired set. Obviously, wide social connections in local communities are a recruitment plus.
“The aging population is an inevitable trend in China,” said Rebecca Liu, chief marketing officer of Saatchi & Saatchi China. “The same goes for the ever increasing trend of digitalization in our everyday lives. Digital services providers need to invest time and money in the elderly shopping segment.”
Her company provides communication solutions for international and local brands, including Porsche, Mead Johnson and Mondelez.
“Many elderly citizens have safety concerns when using digital payment systems, and service providers should be more aware of that concern and help them gradually build trust, such as giving out free digital coupons at the initial stage,” she said. “Also, special functions such as voice service, slower processing times and bigger icons would help elderly customers to benefit from new technologies.”
A survey by e-retailer JD.com and Southern Metropolis Daily last year found that JD shoppers 56 years or older increased 50 percent a year from 2015 to 2017, and their spending power jumped 86 percent last year alone.
The product categories most patronized by older shoppers include electronic appliances and home decorative items. Some 64 percent of them, the survey found, shopped via smartphones or WeChat/QQ channels in 2017, double the percentage in 2015.
As many as 43.5 percent of respondents spent an average 500-1,499 yuan a month on e-commerce sites.
But old habits die hard.
A 63-year-yold Nanjing resident surnamed Jiang, who lives with her husband and daughter, said she still prefers to shop by walking through a door, where she can examine and handle merchandise before paying for it.
“Although my daughter purchases our daily provisions online and even though using mobile payments for offline shopping is easy enough, I still want to go into shopping malls or grocery stores for myself,” she said.
Internet infrastructure has improved considerably in recent years and many elderly people have no trouble using smartphones, according to Simon Sun, a partner with PwC Strategy&.
Indeed, about 80 percent of the 230 million people in China 60 years or older use mobile phones, according to the Ministry of Civil Affairs.
“Internet companies need to recognize that the elderly consumer group will definitely enjoy higher-than-average growth in the coming years and there’s a huge market opportunity there,” Sun said, noting the general lack of services now tailored to older shoppers.
Consumer electronics and daily necessities such as food and clothing would be an ideal place to start to build up trust with senior shoppers and get them in the habit of buying online, Sun added.
AT the beginning of the new year, more and more European leaders are eager to learn about China.
French President Emmanuel Macron became the first foreign head of state to visit China in 2018, followed by British Prime Minister Theresa May who came last week, with Dutch King Willem-Alexander arriving on February 7.
Also in January, parliamentary leaders of Nordic and Baltic countries visited China and met with President Xi Jinping, hoping for more high-level communication and deeper cooperation.
The exchanges with Europe have become a highlight of China’s diplomacy recently. Analysts believe closer China-Europe interaction signals that Europe values China’s influence on global affairs and longs for closer cooperation with it.
“European countries, which are currently undergoing a number of internal and external problems, urgently need Chinese wisdom in approaching regional and world affairs,” said Cui Hongjian, director of the China Institute of International Studies.
In his report to the 19th National Congress of the Communist Party of China, Xi said the country will foster a new type of international relations and build a community with a shared future for mankind.
By in-depth communication with Chinese leaders, European countries could get more insights on China’s policies, seek broader cooperation opportunities, and control differences on regional and global affairs, analysts said.
During Macron’s meeting with Xi in Beijing, both leaders called for the integration of their development strategies, and cooperation on combating climate change, terrorism and cyber security.
“For Britain, May seeks to bolster her country’s political links with China and maximize its benefits from China’s economic opening amid its contentious divorce with the European Union,” said Wang Yiwei, an expert on Europe with Renmin University of China.
May also took the opportunity to discuss a wide range of regional and global issues with her Chinese interlocutors, ranging from climate change and global governance to the Korean Peninsula nuclear issue and fighting terrorism, according to Wang.
“London also has high expectations on the China-proposed Belt and Road Initiative, an infrastructure and trade network connecting Asia with Europe and Africa,” Wang said.
Experts believe that with more and more cooperative projects under the Belt and Road framework, Europe has increasingly accepted Chinese wisdom.
“The successful establishment of the Asian Infrastructure Investment Bank convinced Europe that China can take the lead in providing solutions to world problems,” Wang said.
Macron expressed the willingness to strengthen coordination between France and China, both permanent members of the UN Security Council, saying that they needed to shoulder major responsibilities in global security.
Furthermore, experts believe both China and Europe are natural partners in defending the multilateral trade system.
“With US persistent moves on trade protectionism, China-Europe ties have a chance to record a new high as both sides remained committed to free trade and globalization,” said Feng Zhongping, vice president of the China Institute of Contemporary International Relations.
Senior Chinese official Liu He’s speech at this year’s World Economic Forum annual meeting in January outlined how China would open wider to the world, further integrate with international trade rules and ease market access.
“It is an inevitable choice for Europe to look to China for cooperation of mutual benefit and a win-win result,” Wang said.
The logo of carmaker Ferrari is pictured at the Ferrari Museum in this file photo. The Italian luxury carmaker Ferrari reported yesterday another new record year in 2017 as its net profit jumped by 34 percent to 537 million euros (US$668 million) last year, outpacing analysts’ expectations. It plans to further increase its profitability and production while reducing its debt.
FACEBOOK Inc offered reassurances to investors on Wednesday that its digital ad business would remain highly profitable, despite a dip in usage on the social media network and an overhaul of its flagship News Feed.
The company said in an earnings report that quarterly revenue jumped 47 percent from a year earlier, and executives said on a conference call that they saw more chances to make money even if people spend less time on Facebook.
Analysts had wondered about the resilience of the world’s largest social media network, which is making changes to its products to deter foreign influence campaigns like ones that it says Russia has carried out and to stem the spread of sensationalism.
Facebook added to jitters after the bell on Wednesday when, in its earnings report, it said that at the end of last year time spent by users had fallen by about 50 million hours a day.
Shortly afterward, though, Facebook executives expressed optimism on the call with analysts, saying the changes they were making in response to criticism would be healthy for the business in the long term and might not even hurt much in the short term.
“I want to be clear: The most important driver of our business has never been time spent by itself. It’s the quality of the conversations and connections,” Chief Executive Mark Zuckerberg said on the call.
Facebook management “acknowledged things that maybe most investors weren’t thinking about before — the reduction of users and usage — but at the same time they pointed to a lot of positive trends on their other platforms,” Pivotal Research Group analyst Brian Wieser said.
Although Facebook usage is down, he said, “One shouldn’t be reflectively negative on this.”
Chief Operating Officer Sheryl Sandberg told analysts that recent changes to reduce disinformation on Facebook could create “more monetization opportunities.”
Sandberg said she was optimistic about potential revenue from ads on “stories” on Facebook and Instagram, while Chief Financial Officer David Wehner said the average price per ad increased 43 percent in quarter.
“They said average revenue per ad was up a lot, that quality of ads has improved, and that the engagement declines were not meaningful,” Wedbush analyst Michael Pachter said.
“In other words, better quality engagement and better ability to target ads. The street probably likes that,” he said.
Facebook said that time spent was falling at the end of last year by about 50 million hours a day due to changes that it said reduced viral videos, even before the company announced a series of changes to the News Feed that may further reduce user engagement.
Facebook’s 1.4 billion daily active users was up 14 percent from a year earlier, but below analysts’ estimate of 1.41 billion for the fourth quarter, according to financial data and analytics firm FactSet.
The number of daily users in the US and Canada fell for the first time in Facebook’s history.
BITCOIN, the world’s largest cryptocurrency, skidded almost 10 percent yesterday to its lowest since late November, as a Facebook ban on cryptocurrency advertisements and a growing regulatory backlash against the nascent market frightened investors.
Yesterday’s drop to as low as US$9,165.40 on the Luxembourg-based Bitstamp exchange left bitcoin trading at less than half the peak of almost US$20,000 it reached in December. It slid more than 26 percent last month, in its worst monthly performance since January 2015.
Other cryptocurrencies, including Ripple, the third-largest by market value, and Bitcoin Cash, have also fallen by at least 10 percent in the last 24 hours of trading, according to Coinmarketcap.com. Ethereum was up slightly on the day.
Last year’s explosive rise in the value of digital coins and the flood of new retail investors drawn to the market have rattled global regulators nervous about a sector used largely for speculation.
Facebook said in a post on its website this week that it was banning all advertising that “promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency.”
It was not clear whether the ban would affect all cryptocurrency adverts on the social media site. Facebook could not immediately be reached for comment.
India’s finance minister vowed yesterday to eliminate the use of cryptocurrencies.
A US$530 million hack of Japanese cryptocurrency exchange Coincheck late last week has also weighed on the market, along with a subpoena US regulators sent to two of the world’s biggest cryptocurrency players, Bitfinex and Tether .
“Sentiment towards cryptocurrencies is turning sour with negative headlines pouring out from left, right and center,” said Fawad Razaqzada, an analyst at FOREX.com
CHINA has made steady progress in advancing mixed-ownership reform among state-owned enterprises in a bid to enhance competitiveness and improve financial performance.
More than two-thirds of China’s centrally administered SOEs and their subsidiaries have introduced outside investors, registered new firms, restructured or gone public.
Seven of the 19 SOEs, the first two groups of SOEs to implement ownership reform, have introduced more than 40 investors, injecting over 90 billion yuan (US$14.29 billion), said Gao Zhiyu, an official with the State-owned Assets Supervision and Administration Commission.
In 2017, centrally administered SOEs had set up over 700 new mixed-ownership companies, attracting above 338.6 billion yuan from the capital market.
Most of the mixed-ownership enterprises were in property development, construction, building materials, telecommunications and mining.
SASAC designated another 31 SOEs as a third group of companies to pilot the reform last year, with 10 centrally and 21 locally administered SOEs. Currently, these enterprises are working on rolling out plans, Gao said.
The listed central SOEs will be the main entities undertaking the reform. Their gross capital and profits took up 63.7 percent and 84.8 percent, respectively, of the total for all central SOEs, he added.
LENOVO Group Ltd, which lost its leading position in the world’s PC market to HP in 2017, posted a surprising loss of US$289 million in the quarter ended in December, the company said yesterday.
Lenovo attributed the loss to a one-time tax charge of about US$400 million related to the US tax reform. But the Trump administration’s tax reform may see the company pay a lower tax rate for its US operations “in the longer term,” market observers said.
In the quarter ended on December 31, Lenovo’s loss came to US$289 million, compared with a profit forecast of between US$124.5 million and US$128 million based on analysts’ estimates. A year ago, Lenovo posted a net profit of US$98 million.
The company’s revenue totaled US$13 billion in the quarter, up 6 percent from a year ago.
The global market for personal computers grew slightly during the quarter amid sluggish demand. Hewlett-Packard has overtaken Lenovo as the world’s No. 1 PC maker, said International Data Corp.
ALIBABA’S quarterly profit jumped 35 percent to 24.07 billion yuan (US$3.7 billion) as the company tapped booming e-commerce sales and other initiatives.
The company also said yesterday it would buy a 33 percent stake in its payment affiliate Ant Financial in exchange for certain intellectual property rights owned by the e-commerce giant.
The purchase is a “significant step for Alibaba to enhance our long-term strategic relationship” with the payment affiliate, in exchange for intellectual property rights, said Alibaba CEO Daniel Zhang.
“Importantly, an equity stake in Ant Financial enables Alibaba and our shareholders to participate in the future growth of the financial technology sector, as well as the benefits of user growth and improved customer experience,” he said.
E-commerce income jumped 57 percent to US$11.3 billion in the three months ended December last year and total year-on-year revenue growth surged 56 percent to US$12.8 billion, Alibaba said.
Gross merchandise volume of physical goods sold on the business-to-consumer site Tmall jumped 43 percent from a year ago, as major consumer goods, electronics and luxury brands have established flagship stores on the site.
Alibaba is also increasing its 2018 fiscal year revenue guidance to 55-56 percent, up from its previous estimate of 53 percent annual increase.
“Our core business generated significant cash flow of US$7.1 billion during the quarter, enabling us to invest in new retail, cloud computing, digital entertainment and globalization,” said Chief Financial Officer Maggie Wu.
Alibaba has also been expanding to offline retail in a bid to synergize business to combat rival Tencent Corp. Alibaba and an affiliate invested in a 36 percent stake in Sun Art Group Ltd in November to accelerate expansion of its new retail initiative nationwide.
CHINA’S central bank injected 495.5 billion yuan (US$78.8 billion) into the market via various tools in January to maintain liquidity.
The People’s Bank of China said 398 billion yuan were added via the medium-term lending facility to keep interbank liquidity stable. The funds will mature in one year at an interest rate of 3.25 percent.
The injection brought total outstanding MLF loans to 4.63 trillion yuan at the end of January.
The MLF tool was introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank using securities as collateral.
The PBOC increasingly relies on open-market operations, rather than changes in interest rates or reserve requirement ratios, to manage liquidity in a more flexible and targeted manner.
In January, the PBOC also injected 72 billion yuan of funds through pledged supplementary lending to China Development Bank, the Agricultural Development Bank of China, and The Export-Import Bank of China.
Last month, the PBOC also granted 25.45 billion yuan to financial institutions through the standing lending facility tool to meet provisional liquidity demand.
The PBOC open market operations are closely watched by the market as they have become major tools for the central bank in pursuing its monetary policy.
China has decided to keep a prudent and neutral monetary policy in 2018 as it seeks to balance growth and risk prevention.
SHANGHAI has cut the time and paperwork needed for newly registered firms to start operation as the tax authorities bid to improve business and create an innovative environment.
Domestic and foreign companies now need a day to complete procedures, down from the previous minimum of three days. The number of forms to be submitted has been slashed from 10 to one, officials of the city's tax bureau said yesterday at a briefing. Companies can either apply online or at service halls of the tax bureau.
The move, which covers 10 areas including business information and the category of tax and fees the company should pay, aims to shorten the time needed for new companies to start operation and lower costs for them, Li Junshen, chief accountant with the Shanghai Bureau of Local Taxation, said.
Official data showed the bureau handled tax issues for over 235,000 newly registered firms.
The bureau has streamlined its internal system to link with other government departments.
CHINA’S manufacturing sector sustained growth as production accelerated in January, according to a private survey released by Caixin yesterday.
The Caixin General China Manufacturing Purchasing Managers’ Index, an indicator of manufacturing activity, was 51.5 in January, flat from December last year, the survey done by financial information service provider Markit and sponsored by Caixin Media Co showed.
The PMI — a reading above 50 signals growth while one below 50 means contraction — is a composite indicator that provides a snapshot of operating conditions in the manufacturing sector.
“The Caixin PMI suggested that operating conditions continued to improve at a modest pace in January. The manufacturing industry had a good start to 2018. Going forward, we should keep a close eye on the stability of the demand side,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.
The manufacturing sector was supported by strong production in January.
Chinese manufacturing output accelerated in January to notch the strongest growth rate since December 2016. Improving demand conditions and rising new orders led companies to raise their output at the start of this year.
“The sub-indices of output and employment continued to rise, reflecting improving production conditions,” Zhong said.
The higher output spurred manufacturers in China to raise their purchasing activity last month, Caixin said.
Total new orders increased for the 19th consecutive month, but at a moderate pace that was weaker than in December last year.
The Caixin PMI data are in contrast with the official manufacturing PMI reading of 51.3 in January, which was the slowest growth in eight months.
The official PMI samples 3,000 manufacturing enterprises in China.
The Caixin PMI covers about 500 manufacturers and is relatively volatile due to its small sample size and the dominance of small and private firms.
CHINA’S tax revenue growth accelerated in 2017, official data showed yesterday.
China collected 12.6 trillion yuan (US$2 trillion) in taxes last year, up 8.7 percent year on year, compared with 4.8 percent growth in 2016, said the country’s top taxation authority.
The tertiary sector was again the biggest tax contributor, with its tax revenue rising 9.9 percent year on year and accounting for 56.1 percent of total taxation.
The Internet and related services industry saw its tax revenue surge 55.1 percent year on year.
The high-end manufacturing sector also saw strong rise in tax revenue. General purpose and telecom equipment firms saw their tax revenue up 23.5 percent and 21.6 percent annually, respectively.
Flags of Siemens are seen ahead of the annual shareholder’s meeting in Munich yesterday. Germany’s Siemens said yesterday that profits jumped in the fiscal first quarter, driven by rising demand for its products ranging from renewable energy and trains to industrial robots.
JAPAN’S Fujifilm Holdings is set to take over Xerox Corp in a US$6.1 billion deal, combining the US company into their existing joint venture to gain scale and cut costs amid declining demand for office printing.
The acquisition announced yesterday comes as Xerox has been under pressure to find new sources of growth as it struggles to reinvent its legacy business amid waning demand for office printing. Fujifilm is also trying to streamline its copier business with a larger focus on document solutions services.
Consolidation of R&D, procurement and other operations would enable Fuji Xerox to deliver at least US$1.7 billion in total cost savings by 2022, the two companies said.
Fujifilm now owns 75 percent of Fuji Xerox, the joint venture going back more than 50 years which sells photocopying products and services in the Asia-Pacific region.
The two companies said that Fuji Xerox will buy back that stake from Fujifilm for around US$6.1 billion, using bank debt. Fujifilm will use those proceeds to purchase 50.1 percent of new Xerox shares. Plans were for the deal to be completed around July-August, they added.
The combined company will keep the Fuji Xerox name and become a subsidiary of Fujifilm, with dual headquarters in the United States and Japan, and listed in New York. It will be led by Xerox CEO Jeff Jacobson, while Fujifilm CEO Shigetaka Komori will serve as chairman.
The joint venture accounts for nearly half of Fujifilm’s sales and operating profit.
Both companies have struggled with slow sales of photocopy products, as businesses increasingly go paperless. Fujifilm yesterday reported a 29.4 percent drop in operating profit at its document solutions operations, which includes Fuji Xerox, for the third quarter, underperforming its imaging and information segments. Overall, the company reported a 3.4 percent increase in operating profit for the quarter.
Xerox reported a net loss from continuing operations of US$196 million in the fourth quarter, mainly due to a one-off US$400 million charge as it sought to take advantage of changes to US tax law but also reflecting the steady decline in office printing.
“This has been a speedy decision, but I believe it’s a creative one,” Fujifilm CEO Komori said at a briefing. “The new structure will leverage the strengths of our three companies.”
As part of its own restructuring, Fujifilm said it was cutting 10,000 jobs at Fuji Xerox, more than a fifth of its workforce at the joint venture, in the Asia Pacific region.
Sluggish performance at Xerox had prompted investors to call on the US company, which had owned 25 percent of the joint venture, to explore strategic options.
Xerox has been targeted by activist investor Carl Icahn and shareholder Darwin Deason, who joined forces last week to push Xerox to explore strategic options, oust its “old guard”, including its CEO, and negotiate better terms for its decades-long deal with Fujifilm. Icahn is Xerox’s biggest shareholder, with a 9.72 percent stake.
Xerox’s CEO said the combined company would gain an increased edge in new technologies, along with higher revenues and cost synergies, while Xerox shareholders would also benefit from a US$2.5 billion special cash dividend resulting from the deal.
The takeover deal comes less than a year after Fujifilm admitted improper accounting standards at Fuji Xerox.
THE craze for smartphones, social media and universal connectivity is generating immense wealth but also deep unease in South Korea, source of a large share of the computer chips that make them work.
Soaring demand for microchips used in smartphones, computer servers and data centers is driving profits for chip and smartphone maker Samsung Electronics and its smaller rival SK Hynix sky high, helping sustain growth in Asia’s fourth largest economy.
Samsung reported yesterday that its annual net profit rose 84 percent to a record 41.3 trillion won (US$38.6 billion) in 2017 on annual sales of 239.6 trillion won, up 19 percent from the previous year.
But pressures are building as youth unemployment approaches 10 percent and many elderly Koreans scrimp and scavenge to get by.
Combined, Samsung and SK Hynix control about three quarters of the global market for DRAM semiconductors, used in devices that help gadgets and data centers run more programs and data faster. They hold about half the market for NANDs, which store pictures and other digital data.
In 2017, Samsung and SK Hynix had combined revenues of 270 trillion won, equivalent to about 17 percent of South Korea’s GDP.
The chip boom reflects South Korea’s success in adapting to changing times, but such a heavy reliance on one sector of the economy, which one economist likened to Saudi Arabia’s oil-driven wealth, is a mixed blessing.
“I see a huge risk. It’s not a time to be rejoicing over South Korea’s 3 percent growth,” Yoo Seung-min, an opposition lawmaker and economist said in an interview. “Except for the semiconductor illusion, there is nothing to be relieved about.”
Led by robust exports of computer chips, the South Korean economy in 2017 expanded at its fastest rate in three years and is forecast to grow 3 percent this year.
BOEING Co yesterday forecast full-year profit well above Wall Street estimates as it expects its busiest year ever for plane deliveries, sending its shares up more than 5 percent in pre-market trading.
The world’s biggest planemaker said it aims to ship between 810 and 815 commercial aircraft in 2018, as much as 6.8 percent more than the industry-record 763 jets it delivered in 2017, putting it ahead of European rival Airbus.
Helped by the strong demand for jets, Boeing forecast core profit would rise to US$13.80 to US$14.00 a share in 2018, ahead of analysts’ average estimate of US$11.96, according to Thomson Reuters.
For the fourth quarter ended December 31, Boeing’s core earnings nearly doubled to US$4.80 per share from US$2.47 a year earlier, buoyed by rising plane output and a gain from changes to the US tax law.
It booked a one-time tax gain of US$1.74 a share due to the lower US corporate tax rate signed into law last month slashing its deferred tax liabilities in the future.
Excluding the gain, Boeing’s earnings were US$3.06 a share. On that basis, Wall Street had been eying US$2.89 a share.
Boeing forecast operating cash flow, a key measure of its financial performance, will rise to US$15 billion in 2018, up from US$13.34 billion last year.
NINTENDO raised its annual net profit forecast by over 40 percent yesterday after its popular Switch console flew off the shelves during the holiday season, fueled by a cheaper yen.
The Kyoto-based video game giant said it now expects annual net profit of 120 billion yen (US$1.1 billion), a 41.2-percent rise from a forecast last October when it nearly doubled its previous net profit projection.
Nintendo now expects to sell 15 million Switch units by March, up one million from the previous forecast — which was already an upgrade from an earlier projection of as many as 10 million units.
“For the nine months ended December 31, 2017, the Nintendo Switch hardware sold well following the launch and sales volume rose substantially during the holiday season,” the company said in a brief statement.
Nintendo now expects annual sales of 1.02 trillion yen and an operating profit of 160 billion yen, again marking sizable increases from earlier estimates.
Analysts were quick to praise the firm, which gave the world Super Mario and Pokemon.
“Switch is in excellent shape. Its demand remained strong during the Christmas season,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, before the latest figures were announced.
“Nintendo has been back in full force,” he said.
CHINA National Nuclear Corp, China’s No. 2 nuclear power producer, will take over the country’s top nuclear power plant builder to create a company worth almost US$100 billion, the latest marriage in the nation’s vast power sector.
The deal has been in works for almost a year as Beijing has pushed to streamline its bloated state-owned enterprise sector, tackle rising corporate debt and make businesses more profitable through mergers, reductions in excess capacity and the closure of “zombie” firms.
Approval for the tie-up between CNNC and China Nuclear Engineering & Construction was announced by the State-Owned Assets Supervision and Administration Commission yesterday in a one-line statement posted on its website.
In a filing later yesterday, CNEC’s listed unit said its controlling shareholder will be CNNC after the deal.
The combined company would have assets worth more than 620 billion yuan (US$99 billion) and a workforce of almost 150,000, according to Reuters’ calculations based on data on the firms’ websites and in company filings.
Beijing wants to overhaul its nuclear sector in order to create globally competitive firms and reduce overcapacity across its broader power market. The nuclear industry is struggling with project delays and a slowdown in approvals for new domestic projects.
By creating a unified home-brand series of reactors, and combining firms, China will be better positioned to bid for and finance overseas projects, experts say.
Both companies have built nuclear plants overseas, including in Pakistan, and developing Chinese nuclear technology abroad is a key goal of China’s Belt and Road initiative.
“(The) merger ... will give the new company vast financial firepower to take on the significant capital costs involved in developing new nuclear reactors — both domestically and abroad,” said Georgina Hayden, head of power and renewables at BMI Research.
Last year, the government oversaw the marriage of China’s top coal miner Shenhua Group Corp Ltd with China Guodian Group Corp, among the country’s top five state power producers, to create the world’s largest power company.
This deal will cut the number of SOEs administered by the central government to 97, down from 117 in 2012.
Nutella bottles are seen in a French store yesterday. French consumer fraud authorities are probing a promotional campaign for Nutella that caused scuffles in several supermarkets — and even police intervention. The Finance Ministry’s fraud agency said on Tuesday it will examine whether the campaign by the Intermarche supermarket chain violated pricing regulations. Intermarche drew big crowds at several stores last week after announcing sales of the chocolate and hazelnut spread for just 1.41 euros (US$1.74), 70 percent below the regular price. Video circulated online of ensuing scuffles in some stores, drawing worldwide attention — and questions from authorities.
INTERNET giants Alibaba and Tencent are seizing a big opportunity from China’s growing property rental market and could see considerable growth in online shopping, Forbes magazine said.
The report noted that Alibaba, Tencent and JD.com have “staked out claims” in China’s real estate industry in recent months, investing in apartment rental startups or preparing to launch their own home rental services.
The move comes as the Chinese government is encouraging renting, as high property prices have made it difficult for young people to buy an apartment in first-tier cities such as Beijing, Shanghai and Shenzhen.
Tencent recently invested in online rentals startup Ziroom, which leases apartments from individual owners and then renovates them before sub-leasing to customers through its website and app.
Alipay users can rent apartments directly on the app, with apartments provided by Shanghai-based startup Mogoroom. Alipay users with good credit ratings can rent rooms without making any deposit, and they can also pay the rent through the app.
There is plenty of room for such services to grow, the Forbes report said, adding that the Internet giants can resolve some existing problems in the rental market with their wider range of price options and user credit rating service.
By using home rentals as a portal, they can reach a lot more customers, which could benefit their other businesses, the report quoted Chen Tao, an analyst at a Beijing-based consultancy firm, as saying.
ARTIFICIAL intelligence has become a “forefront application” that innovates and changes the financial service sector in Shanghai, which then creates market opportunities for startups, industry officials told a forum recently.
An average funding of US$1 billion has been injected into startups that integrate AI with financial services over the last two years. Around 30 percent of large financial institutions including state-owned banks are investing in AI, according to a PWC report.
Chinese technology giants Baidu, Alibaba, Tencent and JD.com, or known collectively as BATJ, and banks like the Industrial and Commercial Bank of China and the Bank of China as well as startups have invested heavily in the integration of AI and financial services, speakers said at the 2018 SAIF MF International Youth Leadership Finance Summit in Shanghai.
But as competition in the Fintech sector becomes increasingly intense, more established companies and fledgling private firms are keen to accelerate the integration of AI and financial services, according to market observers.
Che Pinjue, partner of VC firm Sequoia Capital China, said that startups have more opportunities and space to apply AI applications and attract investments.
CHINA has made progress in the development of artificial intelligence, with the number of AI firms reaching 592 as of June 2017, a report said yesterday.
In 2016, China saw 30,115 applications for AI-related patents, said the 41st China Statistical Report on Internet Development, which was released by the China Internet Network Information Center.
As of December 2017, there were 77 “unicorn companies” — private startups valued at over US$1 billion — in Internet and information industries in China, the report said.
Over 30 percent of these “unicorns” were e-commerce or Internet finance businesses, while culture and entertainment, automobile and transport, online medical service and AI firms also developed rapidly, it said.
SOUTH Korea has uncovered illegal cryptocurrency foreign exchange trading worth nearly US$600 million, a sign authorities are tightening the regulatory screws on the digital asset that many global policymakers consider to be opaque and risky.
The country’s customs service said in a statement yesterday that about 637.5 billion won (US$596.02 million) worth of foreign exchange crimes were detected. “Customs service have been closely looking at illegal foreign exchange trading using cryptocurrency as part of the government’s task force,” Customs said, underscoring stepped-up efforts by Seoul to crack down on illegal trade in the digital asset.
Illegal foreign currency trading of 472.3 billion won formed the bulk of the cryptocurrency crimes, Customs said, but gave no details on what action authorities were taking against the rule breaches.
South Korea has adopted a tough stance on regulating cryptocurrency trading as many locals, including students and housewives, jumped into a frenzied market despite warnings from policy makers around the world of a bubble.
Effective from Tuesday, authorities allowed only real-name bank accounts to be used for cryptocurrency trading designed to stop virtual coins from being used for money laundering and other crimes.
Customs said there were also cases where investors in Japan sent their yen worth 53.7 billion won to their partners in South Korea for illegal currency trade.
It said authorities will monitor for any violations of foreign exchange rules or of money laundering activities.
BLOCKCHAIN technology can make transactions safe and secure, but cryptocurrency exchanges that trade bitcoins and other virtual currencies that are based on this technology have been hacked because they are not working on secure networks, experts say.
Recently, the Tokyo-based Coincheck exchange reported a 58 billion yen (US$530 million) loss of crypto currency due to hacking. The Coincheck exchange has halted trading of the stolen currency, NEM and restricted dealings in most other cryptocurrencies. It was the second major hacking assault on a Japanese crypto exchange after the Mt. Gox debacle in 2014. Here’s a look at the security concerns surrounding cryptocurrencies.
What is blockchain?
As its name implies, blockchain is a chain of digital “blocks” that contain records of transactions, says Curtis Miles at IBM Blockchain. Each such block is connected to those before and behind it, making it difficult to tamper with because a hacker would need to change the block containing that record and all those linked to it to avoid detection.
The records on a blockchain are secured through cryptography and network participants have their own private keys that are assigned to the transactions they make and act as personal digital signatures.
Any alteration will make those signatures invalid and alert others in the network to the changes. Blockchains are kept in so-called “peer-to-peer” networks that are continually updated and kept in synchronization. It would require huge amounts of computing power to access every instance of a certain blockchain and alter all its blocks at the same time.
While a blockchain can be secure, the exchanges that play a crucial role in increasing the amount of crypto trading, enabling bitcoin and other such currencies go mainstream, do not use the same technology, says Simon Choi, a director at anti-virus software company Hauri Inc.
South Korean exchanges reportedly get poor reviews for cyber security, and officials have said those that fail to beef up such precautions will face fines. “If security on the exchanges is not secure, their currencies can be stolen,” Choi said. “If the exchanges are to play their intermediary role, they should be as safe as banks and strengthen their security.”
According to crypto currency research firm Chainalysis, losses of bitcoin, including stealing individuals’ holdings through scams, malicious computer software known as ransom ware and hacks, increased at least 30 times to US$95 million in 2016 from at least US$3 million in 2013.
The attack on Coincheck, which did not affect its holdings of bitcoin, was the second major hacking assault on a Japanese crypto exchange after Mt. Gox, the world’s largest bitcoin trading exchange before its collapse, lost hundreds of thousands of bitcoins likely stolen through hacking.
Coincheck has apologized and promised to reimburse customers for their NEM losses. It has pledged to comply with a Financial Services Agency’s order to determine why the losses happened, and improve its security to prevent a recurrence.
Details of how the losses happened or who might be behind them are still unclear.
The Mt. Gox case put many Japanese investors off bitcoin, at least for a time, and prompted authorities to impose more regulations. Chainalysis estimates that the bitcoins lost at Mt. Gox were worth US$7.5 million at the time the coins were stolen but now worth nearly US$10 billion as of January.
It’s possible to trace blockchain transactions but not to identify the owners of the “wallets” where the cryptocurrencies are kept, says Choi.
“It’s the biggest weakness,” said Choi. “You can track the blocks based on the records in the blocks but you cannot tell whose wallet it is. They went to hackers’ wallet but if we don’t know who the hackers are we cannot catch them.”
The rising hacks have prompted the crypto community to seek ways to halt the bad guys.
South Korea’s government is trying to make crypto transactions traceable by implementing a system that links crypto accounts to existing bank accounts that have been vetted by financial institutions. Such efforts however will not help identify hackers if they send cryptocurrencies to exchanges outside South Korea that do not identify their users.
CHINA’S manufacturing activity expanded in January at the slowest pace since last May while services activity grew at the fastest in four months to reflect stable development in overall economic activity, the National Bureau of Statistics said yesterday.
The manufacturing Purchasing Managers’ Index, which measures vitality in the manufacturing sector, dipped last month to 51.3 from December’s 51.6.
The reading was below market expectations for 51.6 but remained above the 51 mark for the 16th consecutive month.
A reading above 50 indicates expansion, and below 50 contraction. The manufacturing PMI has been in positive territory for 18 straight months in a row.
The non-manufacturing PMI rose for the third consecutive month to reach 55.3 in January, up from December’s 55.
A general PMI, published for the first time to cover both manufacturing and services industries, was flat at 54.6, as data showed the December reading would have read the same.
The new index was introduced to better track the economy as the border between the manufacturing and services sectors has become more ambiguous.
While old indexes will remain, the new gauge will “provide a new perspective to monitor the macro-economy, and enrich and improve the current PMI system,” the bureau said, adding that it has undertaken more than two years of research and testing.
The mechanism in compiling the index is in line with global practices, it said. Its use will make economic activity in China more comparable on a global level.
“As of December, countries and regions including the eurozone, the United States, Britain, Germany and Japan have compiled and published such an index,” the bureau said.
Zhao Qinghe, a senior statistician of the bureau, said business activity of companies in China continues to maintain stable growth at a relatively fast rate, with the services sector outpacing manufacturing.
Growth in demand moderated as some industries approach the low season, but the consumer goods sector accelerated ahead of the Spring Festival, Zhao said.
January’s sub-index for production fell to 53.5 from December’s 54, and new orders fell to 52.6 from 53.4. Sub-indexes for raw material inventory, employment and suppliers’ delivery time were still lower than 50.
Businesses saw easing pressure from rising operating costs in January, and export growth softened as overseas demand fell after the Christmas and New Year holidays, Zhao added.
PMI for the consumer goods sector was 52.7, 0.3 points higher than December and 1.8 points higher than January 2017.
China’s economy is shifting to a consumption-led growth model to wean itself off reliance on exports and investment. Consumption contributed to 58.8 percent of economic growth last year.
Meanwhile, expansion in services industries was led by retail, air transport, broadcasting, Internet and financial services.
Economists at Bank of Communications, in a note, attributed the lower manufacturing PMI to seasonal reasons but warned about possible trade volatility as new export orders fell below 50 for the first time in 16 months.
The note said manufacturing activity and trade may remain cool this month due to the Spring Festival, whereas activity may rebound after March to show the continuous momentum in the domestic and external demand.
GERMANY’S scandal-hit auto giant Volkswagen yesterday suspended its chief lobbyist Thomas Steg as outrage mounted over monkey and human experiments to study the effects of diesel exhaust fumes.
CEO Matthias Mueller said VW had “taken first consequences” from the tests on monkeys and put Steg on leave. Steg, the general representative for external relations and government affairs, had “taken full responsibility,” said Mueller.
The New York Times reported last week that American researchers in 2014 locked 10 monkeys into airtight chambers and made them breathe in diesel exhaust from a VW Beetle while the animals were watching TV cartoons.
Separately, it emerged that a research group funded by VW, Mercedes-Benz parent Daimler and BMW had ordered a study in Germany measuring the effects of inhaling nitrogen dioxide on 25 human volunteers.
The scandal follows VW’s admission in 2015 that it had manipulated 11 million diesel cars, equipping them with cheating software to make them seem less polluting.
Mueller on Monday called the animal testing “wrong ... unethical and repulsive.”
And Steg was quoted in the top-selling Bild daily saying “what happened should never have happened.”
He admitted that he had been informed in advance of the monkey experiment in the United States but insisted he prevented a plan to carry these tests out on humans.
The German government has called a special meeting with the affected car companies to ask them to explain themselves.
In Brussels, European Commission spokesman Margaritis Schinas said yesterday the European Union was “shocked” and took note of Berlin’s vow to investigate the matter, adding that “we hope that they will.”
The EU Commission has summoned Germany and eight other EU countries to explain how they plan to lower toxic emissions to meet the bloc’s air quality standards if they want to avoid action before the European Court of Justice.
German Chancellor Angela Merkel has condemned the latest controversy to engulf the nation’s powerful auto industry. “These tests on monkeys or even humans are in no way ethically justified,” said her spokesman Steffen Seibert on Monday.
“The indignation felt by many people is completely understandable.”
All the three German carmakers have scrambled to distance themselves from the research body in question — the now defunct European Research Group on Environment and Health in the Transport Sector (EUGT) — and promised to launch internal investigations.
Mueller said that “we are in the process of scrutinizing the work of the EUGT, which was dissolved in 2017, and drawing all the necessary conclusions from it.
Steg, in his comments to Bild, also addressed the German tests conducted in an institute in Aachen in 2013 and 2014, stressing that the volunteers had been exposed to “much lower levels than those found in many workplaces” and that no-one suffered any harm.
Amid the controversy, Berlin’s Tageszeitung daily said that “while these experiments are doubtless scandalous, the bigger scandal is the experiment the car industry has been conducting on the wider population for decades.”
“While the monkeys and human volunteers only had to inhale exhaust fumes for a few hours, people with the misfortune to walk along arterial roads have been breathing in levels of nitrogen oxide far higher than EU limits for years.”
MULTINATIONALS, expats and organizations using a virtual private network service in China won’t be affected by the country’s regulation on the VPN market, a top industry regulator said yesterday.
VPN services can allow users to access services unavailable on the Chinese mainland such as Google and Facebook.
Since January 2017, China has been carrying out a regulation campaign in the VPN market, which is scheduled to end in March, to crack down on illegal and unlicensed VPNs. Unauthorized VPN services will be blocked from April, according to the regulation.
The normal VPN usage in China “won’t be influenced” by the campaign, said Zhang Feng, chief engineer of the Ministry of Industry and Information Technology.
“The campaign aims to regulate the market environment and keep it fair and healthy,” Zhang said at an MIIT press conference in Beijing yesterday.
For those “VPNs which unlawfully conduct cross-border operational activities, we want to regulate this,” Zhang said.
Tech giant Apple has removed many VPN applications from its App Store in China.
The new regulation requires using approved providers such as China Mobile and China Unicom.
Zhang dismissed concerns that using state-approved providers could jeopardize security of business and individual data. He said the telecom enterprises just offer VPN communications as “channels and service providers.” Neither carriers nor government bureaus are able to access contents of the communications like e-mails and data.
“The rights for using normal intentional telecommunications services is strictly protected,” said Zhang. With VPN regulation, related contents and services, such as e-mails and data transmission, are “secure and protected,” he said.
Meanwhile, MIIT also welcomed foreign business to invest in smart manufacture and 5G industries in China.
“As China’s achievements are closely connected to its opening up, we will, as always, widen market access for foreign investment, and the door will never be closed,” Miao Wei, minister of industry and information technology, said at yesterday’s conference.
For example, China’s 5G development and market opportunities are open to all overseas companies.
AMERICAN companies in China are enjoying growing sales and are more confident China will further open up to foreign investment in coming years, despite concerns about the regulatory environment, a business lobby said yesterday.
Some 64 percent of the member companies reported revenue growth in 2017, up from 58 percent in 2016 and 55 percent in 2015, according to a survey released yesterday by the American Chamber of Commerce in China in partnership with Bain & Co.
Those figures reflect China’s booming economy which last year grew 6.9 percent, accelerating for the first time since 2010. For 2018, the average forecast for GDP growth from respondents was 6.3 percent, up from the 2017 prediction.
The survey was conducted in October and November, and was sent to 849 member company representatives, of which 411 completed a significant portion.
The outlook on sustainable economic growth in China was “generally positive,” with 46 percent of respondents expressing confidence that the government would further open China’s market to foreign investment within the next three years, up from 34 percent in the previous survey.
Nearly six in 10 companies rank China among their top three investment priorities, up from the previous year but still below the historical average.
“Regarding the economy, there is cautious optimism that the ‘new normal’ rate of growth is sustainable for the foreseeable future, providing opportunities for business to expand,” said William Zarit, chairman of AmCham China.
A third of members plan to expand their investment in China by over 10 percent in 2018.
Asked about the report, Chinese foreign ministry spokeswoman Hua Chunying said China’s door would only open wider and the government would provide an even better investment environment for foreigners.
Some 36 percent of respondents believe relations between China and the United States will improve this year, compared with 17 percent last year.
After US President Donald Trump’s visit in November, China announced it would liberalize foreign investment access to its financial services market, a key industry for American firms worldwide.
Regulation remains a concern for many, the survey found. Respondents cited inconsistent regulatory interpretation, unclear laws and enforcement as the top challenge to doing business in China.
A freight train sets off from Wujiashan Railway Center in Wuhan, capital of Hubei Province yesterday. An expansion project was completed at the station yesterday. Wujiashan is the starting station for railway link between the central China city with Europe. About 500 trains are expected to run from the station to Europe this year, up over 30 percent from the 377 trains in 2017.
China will further strengthen financial regulations as there are still risks of asset bubbles, a senior central bank official wrote in an article.Yi Gang, vice governor of the People’s Bank of China, said that the central bank will bring shadow banking, property financing, and web-based financial activities under its macro-prudential supervision framework.The policy framework that includes the macro-prudential and monetary policies, introduced by the PBOC last year, will be improved and should play a better role in preventing systematic risks and maintaining financial stability, Yi said.To address overall financial risks, the PBOC expanded its macro-prudential assessment framework last year by including off-balance-sheet wealth management products. It will further improve its supervision by covering negotiable certificates of deposits from the first quarter of 2018.Under the macro-prudential policy, the central bank will work to bolster green financing and conduct counter-cycle adjustments for capital flows, Yi said.“China’s economy is expected to post steady growth in 2018 thanks to the continuing structural reforms, simplification of administrative procedures, and implementation of an innovation strategy, but potential risks in the economy should also be monitored,” Yi said.Yi said he believes the structural readjustment will be an arduous task as the country’s debt and leverage levels remain high.He said regulators should still be alert to hidden risks. “Prudent monetary policy should be kept neutral, the floodgates of monetary supply should be controlled, and credit and social financing should see reasonable growth.”Yi urged more efforts on financial reforms, further the yuan’s exchange rate, and promote inclusive finance to channel funds into key economic sectors.
THE eurozone economy, for so long a source of uncertainty, has enjoyed its best year in a decade, clear evidence it has broken out of the prolonged debt crisis that raised fears about the very survival of the euro currency.
In its first estimate for the fourth quarter, Eurostat, the European Union’s statistics agency, said yesterday that the eurozone expanded by 0.6 percent in the October-December period from the three months before.
That more-than-healthy level of growth means that for the whole of 2017, the eurozone economy grew by 2.5 percent. That was up from 2016 and its best performance since 2007, when it grew 3 percent. The eurozone even grew faster than the US, which expanded by 2.3 percent.
“Economic growth has shifted to a substantially faster growth path over the course of 2017,” said Bert Colijn, senior eurozone economist at ING. “While detailed breakdowns have yet to be released, it seems that the eurozone economy continues to fire on all cylinders.”
In the decade since 2007, the eurozone has had to grapple with one crisis after another, starting with the financial crash of 2008 that prompted the deepest worldwide recession since World War II. That exposed the weak underbelly of the eurozone — the state of the public finances in a number of member economies.
Four countries — Greece, Ireland, Portugal and Cyprus — had to be bailed out by their partners in the eurozone and the International Monetary Fund, and in return they made deep budget cuts to get their public finances into shape, hitting their economies hard. The Greek economy, for example, shed around a quarter of its output, and saw unemployment and poverty levels ratchet higher.
It’s only recently that existential concerns surrounding the euro have eased. Greece, notably, is set to emerge from its bailout era this summer, eight years after it first faced potential bankruptcy.
With fears of a breakup of the eurozone largely evaporated, confidence across the bloc has risen. That’s evident in the fact that growth isn’t just reliant on the big economies of Germany and France. Stronger growth is being recorded in those countries that were at the forefront of the crisis and that’s helping to bring down unemployment, potentially reinforcing the recovery even more.
Following the defeat of several populist political movements in elections in 2017, such as in France and the Netherlands, there are fewer fears about the prospect of anti-euro politicians taking the helm.
Meanwhile, the recovery has been boosted by the European Central Bank’s massive stimulus program and its move to slash interest rates. The wider global economy — in particular trade — is also on the up, and that’s supporting the eurozone’s exporters.
That combination of positive factors is set to hold in 2018 and growth is anticipated to come in around 2017’s level.
CHINESE private courier companies are increasingly using international freight flights to transport goods as global e-commerce booms.
Earlier this month, SF Airlines, the cargo airline under SF express, opened a freight air route between cities in northeast China and Ulan Bator, capital of Mongolia. The company also launched regular flights between Nanjing, capital of Jiangsu Province, and Osaka in Japan, in December, with five round-trip flights each week.
“The opening of new air cargo routes enriches the international air express transportation network of SF Express, makes the company’s cross-border logistics capabilities more efficient and helps create a better customer experience,” said David William Adams, CEO of SF Express’s international business unit.
China’s top courier companies, including ZTO Express, Yunda Express and STO Express, plan aggressive expansion overseas, while the world’s logistics market is still dominated by DHL, UPS and FedEx.
According to the Ministry of Commerce, the value of China’s cross-border e-commerce industry stood at 3.6 trillion yuan (US$569 billion) in the first half of 2017, a year-on-year increase of 30.7 percent. Chinese sellers are the most active among cross-border e-commerce groups, and products from Chinese sellers are sold in over 220 countries and regions globally, according to eBay.
The rapidly growing market has created numerous opportunities for Chinese delivery companies.
According to China’s State Post, the number of international express deliveries (including packages to Hong Kong, Macau and Taiwan) in the first three quarters of 2017 reached 560 million, up 32.3 percent year on year, higher than the growth rate of domestic deliveries.
China’s private delivery companies have also established joint ventures with international partners or merged other companies to expand their global market.
Last year, UPS and SF Express announced a joint venture. YTO Express bought a majority of Hong Kong-listed On Time Logistics.
MUTUAL funds continued to add consumer stocks to their portfolio in the fourth quarter of 2017, said UBS Securities.
This increase came on the heels of tighter financial supervision and open market operations by the Chinese authorities, the report released by the Swiss brokerage said.
The sectors which saw the greatest weighting increases were insurance, beverages (mainly liquor), white goods, and property developers, the report said, adding that electronics, non-ferrous metals and securities suffered the largest drop in weightings.
Electronics and beverages remained the two most overweighted sectors, although the former saw the biggest weighting drop in the fourth quarter, the report said.
“In the A-share market we suggest a well-balanced sector allocation, and continue to prefer financials (insurers and large banks), consumer staples, tourism, healthcare, and utilities,” said Gao Ting, head of China Strategy at the firm.
SEVENTEEN Chinese provinces with combined economic output more than six times the size of Australia’s gross domestic product have cut their 2018 growth targets as the world’s second-biggest economy pivots away from growth driven by polluting factories and risky lending.
Economists expect China’s overall GDP to grow at a slower pace this year after accelerating for the first time in six years in 2017 as Beijing extends its effort to curb financial risks, cut corporate debt and contain the liabilities of local governments.
An anti-pollution drive sweeping across the Asian economic powerhouse and a campaign to move up the value chain will also shutter traditional smokestack industries. A cooler real estate market will slow construction.
Total output of the 17 provinces was at US$7.29 trillion in 2017, compared with around US$1.21 trillion for Australia, a resource-rich economy highly reliant on China for growth.
Among the 17 provinces cutting targets are Guangdong, Shandong and Zhejiang, according to a series of official data released in recent days.
The southern island province of Hainan has taken the extra step of removing targets for GDP, industrial output and fixed-asset investment for some local cities and towns.
President Xi Jinping said at a twice-every-decade Communist Party Congress in October last year that China will strive for higher quality growth rather obsess over the pace of expansion.
The cut in targets is a firm sign local governments are heeding Xi’s call. In previous years, provinces had tended to set goals higher than the national target to showcase grand expansionary plans, economists say.
But China is not about to dispense with targets.
“Lowering growth targets does not represent no growth, and high-quality growth does not mean no growth,” according to a commentary in the official People’s Daily on Monday.
Premier Li Keqiang will announce China’s overall economic growth target for 2018 in March. Policy sources previously told Reuters the target will be kept at “around 6.5 percent,” flat from last year. GDP expanded 6.9 percent last year.
Twelve out of China’s 31 provinces and municipalities including Beijing, Shanghai, Fujian and Sichuan are keeping their targets unchanged.
Some economists say China’s push for high-quality growth may very well provide an opportunity for some local governments to straighten out their statistics.
Chinese provinces and cities have long been suspected of massaging numbers. The performance of local government officials is often assessed based on how well their respective economies fare.
The local governments of the northern municipality of Tianjin and top coal producing region Inner Mongolia recently admitted that some economic numbers for 2016 were overstated.
“Cheating is unlikely to be restricted to these provinces,” said Brock Silvers, managing director at Kaiyuan Capital, a Shanghai-based multi-asset advisory firm.
“Officials may now have an opening to confess prior accounting sins, and that would be a very welcome development, but the pressures leading to those false statistics may still remain.”
SHANGHAI stocks extended losses yesterday and closed below 3,500 points with a mixed picture of heavyweights and financial sector declining while retail shares rebounded.
The Shanghai Composite Index closed down for the second day, losing 0.99 percent to 3,488 points.
Brokerages fell amid a relatively weak trading sentiment as the Chinese New Year holiday approached. GF Securities fell 2.36 percent to 19.05 yuan and China Merchant Securities lost 2.62 percent to 19.36 yuan.
Property developers also declined, with Gemdale Corporation sinking 5.88 percent and Poly Real Estate Group shedding 2.71 percent to 16.52 yuan.
Steel makers retreated, with Anyang Iron & Steel Co falling 2.45 percent to 5.18 yuan and Nanjing Iron & Steel Co losing 3.27 percent to 5.32 yuan.
On the other hand, retail shares rose after Dalian Wanda Group said a consortium of investors led by technology giant Tencent Holdings was set to invest in its commercial property arm.
Retailers are embracing partners with strong technological and digital capability to help them restructure business and better target consumers.
Both Shanghai Join Buy Co Ltd and Tianjin Quanyechang Group Co surged by the daily limit of 10 percent. Ningbo Shanshan Co added 1.51 percent and Suning Commerce Group Co rose 0.6 percent.
SHARES of Leshi Internet Information & Technology fell yesterday by 10 percent for a fifth day, causing the Shenzhen-listed firm to lose 20 billion yuan (US$308 million) in market value since it resumed trading last week.
Leshi, which used to be the top firm in the Nasdaq-like GEM or Growth Enterprise Market in China, closed at 9.05 yuan yesterday, compared with 0.97 percent of the GEM index.
Leshi’s market value is now 36 billion yuan, down from 56 billion yuan when it halted trading.
In the first three quarters of last year, Leshi posted a net loss of 1.6 billion yuan according to latest data.
Leshi is still coordinating measures with debtors and suppliers to “ease liquidity pressure and resume business”, the company said last week. It had halted trading due to heavy debt and asset integration since April last year.
Leshi is considering asking Jia Yueting, the company’s founder and top shareholder, to use the non-listed electric car business to pay back the debt. Jia and his related company still owe 7.5 billion yuan to the listed firm, Leshi said.
Jia, who is in the US, is seen as being responsible for the heavy debt after an aggressive business expansion into the electric car and smartphone markets.
Jia is still Leshi’s top shareholder with a 26 percent stake.
PFIZER Inc beat analysts’ estimate for adjusted profit yesterday, helped by strong demand for its pneumonia vaccine Prevnar and rheumatoid arthritis drug Xeljanz, while reporting an US$11 billion gain from the new tax law.
The largest US drugmaker also forecast full-year earnings and revenue well ahead of Wall Street estimates and said it would invest about US$5 billion in the United States over the next five years.
The drugmaker said it would pay about US$15 billion in taxes over eight years to bring funds kept overseas back to the United States under the new tax laws.
Pfizer said the 2018 forecast reflected a full-year contribution from the consumer healthcare business, which the drugmaker plans to divest or spin-off this year.
The company said it booked a gain of US$11.34 billion from the new tax law, leading to a surge in fourth-quarter profit to US$12.27 billion, or US$2.02 per share.
Excluding the tax gain and other items, the company earned 62 cents per share. Revenue rose marginally to US$13.70 billion.
Analysts on average were expecting a profit of 56 cents per share and revenue of US$13.68 billion, according to Thomson Reuters.
Prevnar raked in sales of US$1.53 billion, up 8.3 percent from a year earlier, and above hopes of US$1.4 billion, according to consensus estimate from Barclays.
Xeljanz sales jumped 47.5 percent to US$410 million, beating estimates of US$393 million.
However, sales of the company’s breast cancer treatment Ibrance came below consensus estimate, despite an 11.4 percent increase to US$716 million.
For an investor with 100 million yuan (US$15.8 million) or more worth of assets, here’s Beijing-based CreditEase’s recommendation for this year’s investment.
THE clichéd advice is “don’t put all your eggs in one basket” when investing, but the trick is in choosing the best baskets, and that’s not so simply stated.
Looking ahead to 2018, many investors are still basking in the glow of great returns last year. Global equities rallied more than 20 percent, and commodities and bonds also delivered good yields, according to a recent report by the wealth management arm of Standard Chartered Bank.
That’s history now. What is less clear is whether the bulls will continue their rampage in 2018 and where they may run strongest.
In its report, Standard Chartered recommended multi-asset strategies. It predicted that global corporate earnings, supported by strong economic growth and relatively modest inflation, will grow 10 percent this year.
The British lender is particularly keen on equities on the European Union and in Asian markets outside of Japan. The wealth management team at the bank noted that Chinese equities are increasingly being driven by strong corporate profits and fair valuations.
In China, sectors backed by strong government policies, such as clean energy, e-commerce, entertainment and healthcare, are likely to perform well, the bank said.
Zhao Bing, a healthcare analyst at UBS Securities, said the pharmaceutical industry last year recorded its best performance since 2015, and he is optimistic about generic drug makers in the next three years because more than 90 percent of medication manufacturers are now making generics.
Swiss-based UBS said China’s “Belt and Road Initiative” provides investors new investment scope. Infrastructure projects along the trade route are “gaining momentum,” the bank said, predicting that relevant spending will double in the next five years to up to US$160 billion.
Sounding a cautious note, Ethan Wang, head of investment strategy at the wealth management unit of Standard Chartered Bank (China), said “Belt and Road” investments are most suited to investors with a long-term view.
For those with shorter investment timelines, UBS is keen on technology, with a focus on companies related to digital data, automation and robotics, and smart mobility.
In terms of fixed-asset investments, Standard Chartered Bank said it likes emerging market government bonds denominated in US dollars and Asian corporate bonds denominated in US dollars. Both, it predicted, will outperform global bonds in general.
UBS noted that “green bonds” are one of the fastest-growing segments of the fixed-income market. It includes debt tied to renewable energy, energy efficiency, sustainable waste management, sustainable land use, biodiversity conservation, clean transportation and clean water.
In the commodities realm, UBS advises investors to go overweight in gold and silver as insurance against geopolitical uncertainty, higher inflation and a weaker US dollar.
The property market, another favorite for Chinese investors, is turning its focus to rentals, Wang Tao, chief China economist at UBS, noted in a recent report.
She said she believes rental housing via large-scale operators could lift home renovation spending, and she expects cheaper housing costs to increase consumer outlays on education, healthcare and tourism.
Among her top stock picks are China Merchants Shekou Holdings, Yili, a major dairy company, Shanghai Jinjiang International Hotels (Group) and China International Travel Service Ltd.
Jack Lee, head of China equity research at Schroder Investment Management (Shanghai), said the inclusion of A-shares in the MSCI emerging markets index has given domestic and foreign investors new scope in investing in listed companies.
He said the top picks of overseas investors in A-shares this year will be blue chips, even though valuations of big-cap companies are no longer a bargain.
“The stock market’s performance this year, as measured by the broad market index CSI300, may fall short of last year’s 21 percent gain,” Lee said, adding that “opportunities still exist among Chinese companies that have restructured or are showing improved profits, such as iron and steel manufacturers.
Smaller-cap companies that dominate the Shenzhen stock market are also worth keeping an eye on, Lee told Shanghai Daily. Certain companies with solid fundamentals have seen their valuations becoming more reasonable, underpinned especially by their growth potential, he added.
CreditEase, a Beijing-based financial technology conglomerate, advises investors to concentrate on the long term and stop chasing overnight profits. Stock markets globally face debt markets at historic highs, economic polarization and uncertain politics, like the Brexit negotiations, it noted.
In uncertain times, investors may seek comfort in so-called “alternative assets,” such as antiques, fine wines, rare stamps and coins, CreditEase said. These investments, which are less liquid than stocks, bond and cash, usually require longer investment horizons.
Fund of funds
For an investor with 100 million yuan (US$15.8 million) or more worth of assets, CreditEase recommends that a portfolio allocate 25 percent to private equity, 20 percent to real estate, 20 percent to mainland fixed-income assets, 20 percent to stocks, 5 percent to offshore private credit instruments and 10 percent to insurance products.
Randolph B. Cohen, a senior lecturer at the Harvard Business School and visiting lecturer at the MIT Sloan School of Management, said he believes the so-called “fund of funds” is the best channel for asset allocation.
That is an investment strategy in which a fund invests in different types of funds, with underling assets in bonds, stocks and other securities. It frees individual investors from having to make direct investments in any asset class and diminishes the risk of putting money in a single fund.
Last September, IDG Capital Partners and CreditEase unveiled a fund of funds in China. Tang Ning, founder and chief executive of CreditEase, said it’s an ideal way for the nation’s super rich to invest.
Of course, no discussion of eggs in baskets could overlook the currently popularity and controversy of digital currencies like bitcoin.
UBS Chairman Axel Weber told CNBC at the recent World Economic Forum in Davos that bitcoin is a “speculative investment” and the bank is not advising its clients to invest in it.
HSBC senior economic advisor Stephen King compared the bitcoin boom with the “tulip mania” bubble in Holland in the 1700s, which resulted in a spectacular market crash. He said people who want to invest in bitcoin should “be prepared to lose everything.”
DALIAN Wanda Group has agreed to sell its two Australian projects for a total of A$1.13 billion (US$913 million) in equity and assumed debt.
Wanda Group will get A$315 million for the sale, and the buyer will also repay A$815.1 million in assumed debt on behalf of the company, according to Wanda Hotel Development Co Ltd yesterday, the Hong Kong-listed unit of Wanda Group.
The deal, signed on January 18, comes just days after it sold a high-profile London luxury development project for around US$81 million, the latest in a string of asset sales that underscore financial strains hitting the Chinese conglomerate.
The buyer of the Australia firm is AWH Investment Group Pty Ltd, the statement said.
“Consistent with the Company’s strategy to deleverage, the Company considers that the Disposal represents an opportunity for the Group to realize its investment in both Gold Coast Project and Sydney Project and would benefit the Group by strengthening the liquidity and financial position of the Group,” Wanda Hotel said.
Wanda Hotel said the disposal of the company, which owns the One Circular Quay in Sydney and 55 percent of the Jewel Resort on the Gold Coast which are both under development, would post a gain of around HK$556 million (US$71 million) for Wanda Group.
Wanda Hotel owns 60 percent of the company, while Wanda HK owns 40 percent. Both are subsidiaries of Wanda Group.
Wanda Hotel will also use HK$4.1 billion of the proceeds to repay loans and interest due to Wanda HK, it added.
Shares of Wanda Hotel will resume trading today. They have been suspended since January 19.
Home prices in Beijing declined in 2017 as a result of tough control measures introduced mainly in March to cool the property sector.Prices of new homes, including public housing, fell 0.9 percent year on year to 37,800 yuan (US$5,981) per square meter in December, according to the Beijing Municipal Commission of Housing and Urban-Rural Development.Meanwhile, prices of pre-owned homes, dropped 1.2 percent year on year to 59,100 yuan per square meter last month, declining 13 percent from the high level in March.Starting mid-March, authorities in Beijing have rolled out more than 20 policies, including higher downpayments and mortgage rates, to rein in speculation in order to cool the housing market, said Xu Jianyun, head of the commission.Also in March, they closed more than 1,000 real estate agencies in a crackdown on operational irregularities.Authorities will continue the control measures this year in a bid to maintain a stable housing market, Xu said.Chinese authorities have constantly reiterated that “houses are built for living in, not speculation,” pledging to step up reform of the housing system and foster a long-term mechanism.
CHINESE conglomerate Dalian Wanda Group said yesterday that its debt-laden commercial property arm will receive a boost from a group of investors led by technology giant Tencent Holdings, who will buy a 14 percent stake in the company.
The investors, which also include retailer Suning Commerce Group, e-commerce company JD.com Inc and property developer Sunac China, will buy the stake for 34 billion yuan (US$5.37 billion) from investors who purchased the interest when the company was delisted from the Hong Kong bourse with a view to relisting “as soon as possible.”
In a separate statement, Suning said it will contribute 9.5 billion yuan for a 3.91 percent stake in Wanda Commercial.
The new infusion of cash will also herald a strategic shift in the nature of the subsidiary, Dalian Wanda Commercial Property.
In a statement yesterday evening, Wanda Group said that, after the introduction of the new strategic investors, Wanda Commercial will be renamed Wanda Commercial Management Group and will aim to complete previously earmarked asset sales in the next one to two years.
“Going forward, it will stop engaging in property development and will transform into a company solely focused on commercial management,” Wanda Group said.
As the core holding company at the center of Dalian Wanda Group, DWCP contains the majority of Wanda’s land reserves and commercial real estate.
The deal will help Wanda Commercial to relieve imminent capital pressure to repay the old investors in the buyout fund created for the delisting. Those investors were promised up to 12 percent annual interest if Wanda Commercial failed to relist in Shanghai within two years.
The company was delisted in 2016 when Wanda Group took it private with a US$4.4 billion fund while planning to relist in Shanghai in the hope of achieving better share price performance.
Wanda Commercial needs to make a US$510 million payment on a syndicated loan by the end of March. It has a further US$1 billion to repay by the end of May and has US$600 million in offshore notes due in November, ratings agencies have said.
Wanda Group said earlier yesterday that it will receive HK$10.32 billion (US$1.3 billion) from the disposal of London, Sydney and Gold Coast developments.
Last year Wanda sold a portfolio of domestic hotels and tourism assets, including 13 theme parks, for US$9 billion to Sunac and Guangzhou R&F Properties. Wanda Commercial operated 235 Wanda Plazas in China as of the end of last year.
Two years ago, Wanda began pursuing an “asset light” strategy in which the company oversees the financing, construction and operation of mixed-use properties but does not own them outright.
SELF-DRIVING trucks adopting the latest artificial intelligence applications are being used in Zhuhai port and will be tested in Shanghai port, said a Shanghai-based startup which develops the trucks.
Self-driving trucks can help logistic companies and ports improve work efficiency and save labor cost, according to industry watchers.
These self-driving trucks, used in Zhuhai Port in Guangdong Province, can also see the environment, navigate and decide on the best routes to move containers within the port using AI and chips developed by startup Westwell.
The startup has also just signed a cooperation deal with Shanghai Zhenhua Heavy Industries Co to develop self-driving trucks to move containers in the city’s port. China’s national strategy aims to develop a core AI market worth over 150 billion yuan by 2020, according to the State Council.
SHANGHAI stocks dropped from their highest in nearly two years today amid profit taking in financial and consumer shares.
The Shanghai Composite Index shed 0.99 percent to close at 3,523 points.
Liquor makers and financial companies declined after last week's gain. Industrial Securities lost 2.63 percent and China Life Insurance shed 2.70 percent. Kweichow Moutai fell 5.26 percent.
Consumer shares and transport shares have gained significantly since the beginning of January and investors would cash in to take profits, according to a research note by Essence Securities’ chief strategist Chen Guo.
Meanwhile, steelmakers and coal producers gained on strong investor demand and the former's better-than-expected earnings.
Nanjing Iron & Steel Co jumped 4.36 percent to 5.50 yuan while Yanzhou Coal Mining Co surged 6.03 percent to finish at 18.30 yuan.
JAPAN’S financial regulator said yesterday it would inspect all cryptocurrency exchanges and ordered Coincheck to get its act together after hackers stole over US$530 million worth of digital money from its exchange in one of the biggest cyber heists on record.
The theft highlights the vulnerabilities in trading an asset that global policymakers are struggling to regulate and the broader risks for Japan as it aims to leverage the fintech industry to stimulate economic growth.
The Financial Services Agency yesterday ordered improvements to operations at Tokyo-based Coincheck, which on Friday suspended trading in all cryptocurrencies except bitcoin after hackers stole 58 billion yen (US$534 million) of NEM coins, among the most popular digital currencies in the world.
Coincheck said on Sunday it would return about 90 percent with internal funds, though it has yet to figure out how or when.
The NEM coins were stored in a “hot wallet” instead of the more secure “cold wallet,” which operates on platforms not directly connected to the Internet, Coincheck said. It also does not use an extra layer of security known as a multi-signature system.
The hack has drawn into focus Japan’s approach to regulating cryptocurrency exchanges. Last year, it became the first country to regulate exchanges at the national level — a move that won praise for boosting innovation and protecting consumers, and that contrasts sharply with crackdowns in South Korea and China.
The FSA said it ordered Coincheck to submit a report on the hack and measures for preventing a recurrence by February 13, and that it will, if necessary, conduct on-site inspections of other cryptocurrency exchanges.
It also said it has yet to confirm whether Coincheck had sufficient funds for the reimbursement.
But the FSA does not have any rules banning the use of “hot wallets” by exchanges, nor does it set requirements on how much should be kept in “cold wallets,” an FSA official said at a briefing.
In response to FSA’s order for improvements, Coincheck said in a statement that it would promptly strengthen its customer protection and governance, and develop its risk management systems.
Japan started to require cryptocurrency exchange operators to register with the government only in April 2017, allowing pre-existing operators such as Coincheck to continue offering services ahead of formal registration.
The FSA has registered 16 cryptocurrency exchanges so far, and another 16 are still awaiting clearance. Coincheck’s application was made in September.
“It’s been long said that cryptocurrencies are a solid system but cryptocurrency exchanges are not,” said Makoto Sakuma, research fellow at NLI Research Institute.
“This incident showed that the problem has not been solved at all. If Coincheck screws up its crisis management, that could deal a blow to the current cryptocurrency fever.”
EMPLOYERS on the Chinese mainland are still cautious about hiring despite growing optimism over the economy and business environment, according to recruiter Hays.
While 63 percent of companies in the mainland see an increase in business activity and 49 percent expect the economy to strengthen, only 45 percent plan to increase headcount in 2018, said a report released by Hays recently.
“Our survey shows that the vast majority of employers in the mainland are optimistic about strong economic growth and business activity in 2018,” said Simon Lance, managing director of Hays China.
“We believe this positive sentiment will eventually lead to more businesses increasing their headcount to take advantage of the promising economic and business landscape,” he said.
But employees can expect to earn more as the survey found that 51 percent of employers in the mainland may increase salary by over 6 percent — 24 percent higher than the overall Asian level.
A further 35 percent of the employers planned to raise salary by 3 to 6 percent to retain professionals in 2018, the survey, conducted among 3,000 employers across the mainland, Hong Kong, Japan, Malaysia and Singapore, said.
“Recruitment and retention of employees of high quality remains a key factor in the success of any business, and employers in the mainland recognize that raising salary is one way to keep their best people on board,” Lance said.
Also, Hays expects to see a higher number of foreign workers employed in the mainland compared to last year. Foreigners mow make up 10 percent of the workforce in the mainland, up 4 percent year on year.
MEMBERS of a Japanese girl pop group, the Virtual Currency Girls, said yesterday they had refused an offer to be paid in yen and would stay loyal to cryptocurrencies despite a US$530 million cyber heist jeopardizing their chances of getting paid.
A cryptocurrency account that pays part of the band’s salary was among those frozen as a result of the suspension of trading at Tokyo-based Coincheck exchange on Friday following the theft of NEM, one of the world’s most popular digital currencies.
“Our manager offered to pay us in yen, but we declined,” said Hinano Shirahama, who is the band’s bitcoin character.
Dressed in maid costumes and wearing wrestling masks adorned with fuzzy pom-pom ears and cryptocurrency symbols the eight Virtual Currency Girls are a pop music manifestation of the digital currency frenzy that has swept Japan and other parts of the world.
Shirahama and other group members said they would stay together regardless of the setback. Formed by an entertainment promoter the band debuted this month and have yet to garner a significant following.
Regulators fear the rampant speculation in cryptocurrencies and risk that the markets could be used for funding criminal and terrorist groups.
Japan’s FSA on Friday said it would begin inspections at other exchanges.
A Chinese Internet finance guild warned domestic investors about risks in trading overseas “initial coin offerings” and virtual currency transactions.
“Investors should be alert to risks from overseas ICOs transactions as some of the transaction platforms have been shut down and others restricted from logging on,” the National Internet Finance Association of China said in a statement. “As there are no specific regulations, overseas ICOs transaction platforms face risks in system security, market manipulation and money laundering.”
ICOs allowed companies to issue “tokens,” or cryptocurrencies, to investors in exchange for currencies of more liquid value such as bitcoin, without the need to follow rules associated with traditional channels such as initial public offerings.
Unlike IPOs, in which investors buy stocks in companies, investors in ICOs receive digital coins developed by the firms, which could appreciate in value if the companies fares well and demand for their currencies grows.
“ICOs, in essence, are a kind of unauthorized and illegal public fundraising, which are suspected of being related to criminal activities such as financial fraud and pyramid schemes,” according to an earlier statement from the central bank.
China has toughened regulation over bitcoin and other digital cryptocurrency to rein in financial risks, with exchanges closed and trading halted.
THE Internet and e-commerce industry was the largest employer in China last year, followed by the investment and securities sector, recruitment portal 51job.com said in a report yesterday.
Internet and e-commerce companies offered 3.96 million job positions last year, exceeding the 2.72 million positions offered by investment and securities companies, 51job.com said based on a total of 36 million non-repeated job advertisements it published last year.
Positions for educational and training personnel surged 42 percent year on year to 2.21 million, the quickest among all tracked sectors.
JAPAN-BASED virtual currency exchange Coincheck said yesterday it will refund about US$400 million to customers after hackers stole hundreds of millions of dollars’ worth of digital assets.
The company said it will use its own funds to reimburse about 46.3 billion yen to all 260,000 customers who lost their holdings of NEM, the 10th biggest cryptocurrency by market capitalization.
On Friday, the company detected an “unauthorised access” of the exchange, and later suspended trading for all cryptocurrencies apart from bitcoin.
The resulting 58 billion yen (US$530 million) loss exceeded the value of bitcoins which disappeared from MtGox in 2014.
The major Tokyo-based bitcoin exchange collapsed after admitting that 850,000 coins — worth around US$480 million at the time — had disappeared from its vaults.
The high-profile demise of MtGox failed to douse the enthusiasm for virtual currencies in Japan, which in April became the first country in the world to proclaim it as legal tender.
Nearly one third of global bitcoin transactions in December were denominated in yen, according to specialist website jpbitcoin.com.
As many as 10,000 businesses in Japan are thought to accept bitcoin and bitFlyer, the country’s main bitcoin exchange, saw its user base pass the one-million mark in November.
Many Japanese, especially younger investors, have been seduced by the idea of strong profits as the economy has seen years of ultra-low interest rates offering little in the way of traditional returns.
Major Japanese newspapers yesterday labeled the management of virtual currencies at Coincheck as “sloppy” and said the company had “expanded business by putting safety second.”
Local media added the Financial Services Agency was set to discipline Coincheck, which proclaims itself “the leading bitcoin and cryptocurrency exchange in Asia.”
DIEBOLD Nixdorf Inc and NCR Corp, two of the world’s largest ATM makers, have warned that cyber criminals are targeting US cash machines with tools that force them to spit out cash in hacking schemes known as “jackpotting.”
The two ATM makers did not identify any victims or say how much money had been lost. Jackpotting has been rising worldwide in recent years, though it is unclear how much cash has been stolen because victims and police often do not disclose details.
The attacks were reported earlier on Saturday by the security news website Krebs on Security, which said they had begun last year in Mexico.
The companies confirmed to Reuters on Saturday they had sent out the alerts to clients.
NCR said in a Friday alert the cases were the first confirmed “jackpotting” losses in the US. It said its equipment had not been targeted in the recent attacks, but that it was still a concern for the entire ATM industry.
“This should be treated by all ATM deployers as a call to action to take appropriate steps to protect their ATMs against these forms of attack,” the alert said.
Diebold Nixdorf said in a separate Friday alert that US authorities had warned the company that hackers were targeting one of its ATM models, known as Opteva, which went out of production several years ago.
A secret US Secret Service alert sent to banks said the hackers targeted stand-alone ATMs located in pharmacies, big box retailers and drive-thru ATMs, Krebs on Security said.
BEIJING will shut down 1,000 manufacturing companies and 300 markets and logistics centers by 2020, to further move its non-capital functions out of the city, according to a press conference from the ongoing local legislative session on Saturday.
In 2018, Beijing will close 500 manufacturing companies and 176 markets and logistics centers, and relocate several universities and hospitals to suburban areas, Liu Bozheng, deputy director of the Beijing office overseeing the integration of the Beijing-Tianjin-Hebei region, said at the press conference.
Beijing plans to inject 12.2 billion yuan (US$1.9 billion) into moving its non-capital functions, according to the capital’s 2018 draft budget report distributed at the legislative session.
In 2015, China released a three-year plan for the integrated development of Beijing, Tianjin and Hebei to balance the development of the three regions.
IKEA founder Ingvar Kamprad has died aged 91, the company said yesterday, leaving behind a global business empire built on revolutionary flat-pack furniture but under investigation over its tax practises in the Netherlands.
The company said in a statement that Kamprad “passed away peacefully surrounded by his loved ones” at his home in the southern Swedish region of Smaland on Saturday “following a brief illness.”
“Ingvar Kamprad was a unique entrepeneur who has meant a lot for Swedish business and who has made home furnishing available for many people, not just the few,” Swedish Prime Minister Stefan Lofven told TT news agency.
Born in 1926 to a farming family in Smaland, Kamprad, whose 2017 fortune was estimated at 37.3 billion euros (US$46 billion) according to the Swiss economic magazine Bilan, founded the company at the age of 17.
Despite his enormous success and wealth, Kamprad’s modest spending habits bordered on the obsessive.
In 1973 he fled Sweden’s higher tax structure for Denmark before seeking even lower taxes in Switzerland.
Starting in 2010 Kamprad gradually made way at the helm of the company for his three sons, finally returning to live in Sweden in 2014.
Kamprad announced in 2013 that he would be stepping down from the board of Inter IKEA, owner of the furniture giant’s concept and brand, and his youngest son became chairman.
Last year, the European Commission announced that it had launched an investigation into IKEA’s tax deals in the Netherlands.
The Consortium of Investigative Journalists in 2014 cited leaked tax files from Luxembourg when it identified IKEA as one of the giant multinationals fingered for corporate tax avoidance by shuffling money to tax havens.
The group insists that it complies fully with national and international tax regulations.
Kamprad has faced harsh criticism in the past for his ties to the Nazi youth movement during World War II.
Sweden was neutral in World War II, and its Nazi party remained active after 1945. The IKEA founder said he stopped attending its meetings in 1948.
He later described the period as the “folly of youth” and “the greatest mistake of my life.”
The story of IKEA — acronym for Ingvar Kamprad, Elmtaryd and Agunnaryd (the name of his farm and municipality of origin) — began in 1943.
Backed with modest financial support from his father, Kamprad began selling pens, picture frames, typewriters and other goods, delivering orders on his bicycle. His early success arose from squeezing his prices to undercut more established competitors.
In 1947 the young Kamprad started selling furniture made by local artisans, and four years later began publishing the first of his mail order catalogs — now printed in 200 million copies and 33 languages annually.
IKEA’s revolutionary self-assembly model — which would cut transport and storage costs — was conceived in 1956 after an employee suggested table legs be removed during freight so the package would fit into a car.
Two years later Kamprad opened IKEA’s first store in Almhult, south of his hometown.
He was proud of the egalitarian spirit that his company promoted, telling Sydsvenskan newspaper in 2008, “I belong to the people on the (shop) floor.”
“The greatest intelligence within IKEA is on our floors. If I want to know something I don’t approach a top manager, I talk to 10 sales people,” he added.
From 1970, IKEA conquered major markets in Europe, North America, Asia and the Middle East, thriving on the spending power of the emerging middle class.
An American Airlines plane is seen in this file photo. American Airlines posted a dip in fourth-quarter profit yesterday due to higher costs as it projected stronger-than-expected 2018 profit because of strong demand. The US carrier reported fourth-quarter earnings of US$258 million, down 10.9 percent from the year-ago period. Revenues rose 8.3 percent to US$10.6 billion.
CHINA’S top banking regulator’s recent fine is “credit negative” for Shanghai Pudong Development Bank Co Ltd, Moody’s Investors Service said yesterday, adding that the move will harm the lender’s reputation.
Last Friday, the China Banking Regulatory Commission imposed the Shanghai-based lender 462 million yuan (US$72 million) fine for its illegal cover-up of bad loans.
The CBRC accused the bank’s Chengdu branch of “knowingly” providing 77.5 billion yuan in illegal new loans to 1,493 shell companies via false declarations. Around 200 people at the Chengdu branch were held accountable.
In a credit outlook report yesterday, Moody’s said the scandal illustrated deficiencies in the bank’s risk management system and internal controls and and the problem was "significant” given the long period of the illicit activities, the amount of credit and the number of people involved.
Moody’s said although the branch had complied with the CBRC’s request for remedial action by September 2017 and resumed normal operation, it may “take some time” for the bank to revamp its control and risk management systems, and to rebuild its reputation.
Moody’s, however, doesn’t see the fine to really affect the lender’s financial earnmings as it equals around 0.7 percent of the bank’s 2017 pre-tax profit.
A preliminary financial announcement said the bank expected its net profit in 2017 to still rise by 2.15 percent from a year earlier, even after taking into account the fine.
Moody’s said the fine showed China’s strict scrutiny of banks and that it will deter the lenders from risk of breaches and non-compliance.
EUROPEAN Central Bank governors left their massive support for the eurozone economy in place yesterday, opting not to rock the boat after comments from the US sent the euro soaring against the dollar.
The Frankfurt institution left interest rates at historic lows and held fast to plans to buy 30 billion euros (US$37.2 billion) of government and corporate bonds per month until September, offering no hints about when it might step back from the mammoth stimulus program.
Central bankers’ caution may have been prompted by remarks from US Treasury Secretary Steven Mnuchin, who declared on Wednesday that “a weaker dollar is good for us” — helping send the euro to its highest level against the greenback since December 2014.
The former banker downplayed the comments yesterday by insisting the Trump administration “believe in free currencies” and was “not concerned with where the dollar is in the short term.”
But the market reaction underscored how tricky it will be for the ECB to wean the eurozone off mass bond-buying and ultimately raise interest rates in the coming months and years.
Mnuchin’s remarks came after the single currency was already stoked by the minutes of the ECB’s December meeting, which revealed governors plan to “revisit” policy early this year.
The ECB’s almost 2.3 trillion euros in purchases of government and corporate bonds, cheap loans to banks and historic low interest rates have aimed to fire eurozone growth and boost inflation toward its target of just below 2 percent.
Growth has indeed picked up — estimated at 2.4 percent in 2017 — but inflation stood at just 1.4 percent in December.
In what the Frankfurt institution says is a side effect — but critics allege is by design — its policy has also suppressed the value of the euro against other currencies, supporting growth by encouraging exports and inflation by making imports more expensive.
A pricier euro could slow the ECB’s quest to complete its mission, although some analysts argue there is little it can do to brake the currency’s rise.
In the ECB boardroom, strong economic fundamentals prompted some central bank governors to argue at December’s meeting that “a policy stance that remained in crisis configuration” was no longer needed.
Policymakers decided in October to cut bond-buying by half to 30 billion euros per month from January and set a time limit of September.
“We can be hopeful that the October extension was the last one,” ECB executive board member Benoit Coeure told German business daily Handelsblatt in November.
Council members favoring a prolonged, gentle exit from bond-buying are holding off more aggressive “hawks”, as the bank approaches technical limits to bond-buying that could open it to legal challenge.
Such constraints mean “the ECB is resigning itself to the inevitable” as it prepares to wind down bond-buying, Commerzbank economist Michael Schubert noted.
If the ECB halts asset purchases sooner than September, an interest rate rise — slated in ECB statements for “well after” the end of bond-buying — could also be moved up the agenda.
Whatever is happening to the exchange rate, “Draghi will have to clarify things” following the market reaction to December’s minutes, according to Societe Generale economist Michel Martinez.
NEARLY 50 percent of Chinese millionaires remain “extremely confident” in China’s economy, according to the latest Hurun Chinese Luxury Consumer Survey 2017.
The proportion of the millionaires who are “extremely confident” in the Chinese economy rose to 46 percent from 28 percent from a year ago, the survey revealed.
Those who said they have “no confidence” in the Chinese economy fell to six percent from nine percent a year earlier, the survey added.
The survey was conducted among 463 individuals with a personal wealth of 10 million yuan (US$1.5) each and 64 percent of them have assets worth above 100 million yuan.
Real estate is still the most favored investment for China’s millionaires because 24 percent of respondents would invest in it, while 22 percent said they would choose equities. The millionaires are also more keen on fixed income wealth management products and mutual funds compared to a year ago.
The survey also revealed that over the next three years, overseas investment and art collection will see higher interest from the millionaires while bank savings will wane as an investment choice.
SHANGHAI-LISTED Baoshan Iron & Steel Co expects net earnings to surge between 113 and 121 percent in 2017 from a year ago amid a rally in steel prices as China cuts supply.
Net profit attributed to shareholders last year is set to rise between 10.1 billion and 10.8 billion yuan (US$1.6 billlon-US$1.7 billion) from 2016, as the company's profit margins widened amid steel price increases and its efforts to cut costs, it said yesterday via a public filing. Its net profit in 2016 was 8.97 billion yuan.
In 2017 steel prices nationwide rose as China cut 50 million tons of steel capacity. The rebar price in Shanghai gained 38.1 percent to 4,350 yuan per ton and in Beijing it rose 37.7 percent to 4,090 yuan per ton, said Lange Steel Information Center, a steel industry consultancy.
Baosteel said the price gain has helped it to “reap higher profit margins.”
The steelmaker also attributed the profit growth to higher synergies with Wuhan Steel which merged with Baosteel in 2016 to form parent group Baowu Steel Group Corp.
Several domestic steel firms have also predicted a growth in their profits.
DJI Managing Director Michael Perry unveiled the Mavic Air by pulling it out of the pocket in New York on Wednesday. The new foldable drone was released yesterday in Shanghai with a starting price from 4,999 yuan (US$791). The company said it will start shipping pre-orders from Sunday. DJI expects revenue of 18 billion yuan in 2017, making it the world’s biggest drone maker by revenue. Overseas income is expected to account for almost 80 percent of its revenue.
SOUTH Korea has hit back rapidly at US tariffs on washing machines and solar panels, filing challenges and demands for compensation at the World Trade Organization.
The WTO published the South Korean complaints yesterday, two days after US President Donald Trump signed the steep tariffs into law. He billed the move as a way to protect American jobs but the solar industry said it would lead to thousands of layoffs and raise consumer prices.
The 30 percent tariff on solar panels was among the first unilateral trade restrictions imposed by the Trump administration as part of a broader protectionist agenda aimed at helping US manufacturers, but which has alarmed Asian trading partners that produce lower cost goods.
South Korea challenged the US tariffs under the WTO’s Safeguard Agreement, leaving open the possibility of a full trade dispute later.
The agreement gives the US 30 days to settle the matter, after which South Korea has a 60-day window to impose trade sanctions, if the US measures break WTO rules. It was not clear if the United States could challenge that assumption.
Seoul is already seeking WTO trade sanctions to retaliate for Washington’s failure to comply with an earlier WTO ruling.
On Wednesday US Commerce Secretary Wilbur Ross brushed off the threat of South Korea going to the WTO.
“The fact that they may get a favorable decision (at the WTO) doesn’ mean that it’s a correct decision,” he said. “But in any event there’s been no decision yet so it’s a little bit too early to assume that the safeguards will be knocked out.”
No country has ever negotiated a settlement under the WTO safeguard rules, and it was not clear if they could provide a quicker result than a full dispute, which could take three years or more, giving US manufacturers a long period of protection from competition by their South Korean rivals.
Under WTO rules, a country can impose safeguards — temporary emergency tariffs — to shield its domestic industry from an sudden, unforeseen and damaging surge in imports.
Ricardo Melndez-Ortiz, head of the International Centre for Trade and Sustainable Development, said the solar tariffs would fail to boost US solar manufacturing and would destroy US jobs while impeding the fight against climate change.
“These tariffs are insufficient to really generate enough stimulus to create the manufacturing capacity that they are trying to stimulate,” he said.
“It’s just going to slow down the production of sustainable energy and solar in the US, in a big way.”
BANKS in China expect to see their revenue from inclusive finance grow by US$63.4 billion in 2020 and this increase is set to be the highest globally, according to an EY report yesterday.
Inclusive finance is the provision of affordable, accessible and relevant financial products to individuals and businesses which had previously not been able to access them.
The report states that banks could focus on three measures to boost their financial inclusiveness: to customize offerings and simplify financial solutions to meet the specific needs of customers at affordable cost, to innovate channels to reach more customers at lower cost and to creatively mitigate risk to address absence of credit histories.
To boost commercial banks’ lending to small and micro-sized enterprises, startups and agricultural enterprises, the People’s Bank of China announced last September a targeted reserve requirement ratio cut, which went into effect yesterday.
EY identifies start-up community with access to diverse sources of capital as “an important enabler” to China’s inclusive finance sector.
The digital finance provided by China's leading Internet and mobile payment platforms have tremendously enhanced financial inclusion in emerging markets such as China, said Jack Chan, EY’s China financial services managing partner.
EY sees “massive potential” for banks to provide more credit to the agriculture industry as loans to the sector account for just 1 percent of the commercial banking credit portfolio.
Farmers’ access to conventional bank loans has been limited by a lack of credit data and many are then forced to secure credit from “shadow banking” firms, the report noted.
Chinese banks could close a financing gap of 3 trillion yuan (US$441 billion) to the agricultural sector by developing creative credit profiling techniques, said a report by Chinese Academy of Social Sciences in 2016.
CHINA’S trade and investment with countries along the Belt and Road jumped last year, the Ministry of Commerce said yesterday.
China’s trade with countries along the Belt and Road rose 17.8 percent year on year in 2017 to 7.4 trillion yuan (US$1.16 trillion), 3.6 percentage points faster than the overall growth of China’s foreign trade.
Exports jumped 12.1 percent while imports surged 26.8 percent, said ministry spokesman Gao Feng at a briefing in Beijing.
Chinese companies made US$14.4 billion in foreign direct investment in B&R countries, and signed new engineering contracts worth US$144.3 billion, an increase of 14.5 percent from 2016.
Large scale projects have been completed or started in Kenya, Laos, Thailand, Hungary, Serbia, and Pakistan. Economic zones in Belarus and Egypt have been held up as examples of economic and trade cooperation along the B&R.
China has also signed free trade agreements with Georgia and Maldives, and talks have been started with Moldova and Mauritius.
Chinese companies have deepened economic links with Belt and Road countries after authorities tightened scrutiny and limited investments in real estate, hotels, cinemas, and entertainment, while those in sectors such as gambling would be banned.
The Belt and Road initiative was broached by President Xi Jinping in 2013 to boost economic links between China and countries in Central Asia, the Middle East, East Europe, Southeast Asia and Africa.
QUALCOMM Technologies Inc has signed memorandums of understanding for sales worth at least US$2 billion with top Chinese smartphone vendors, receiving vocal support from the firms as it fights an unsolicited buyout bid from Broadcom Ltd.
Lenovo Group, Guangdong OPPO Mobile Telecommunications Corp, vivo Communication Technology and Xiaomi Communications have expressed an interest in buying Qualcomm components with a total value of no less than US$2 billion over three years, the US chip maker said yesterday.
The non-binding agreement will be subject to further agreements and covers technology related to RF Front-End components, Qualcomm said in a statement.
The companies announced the multi-year agreement at a Qualcomm-hosted event in Beijing attended by the US firm’s chairman and CEO.
At the event representatives from the Chinese companies expressed concerns that a possible acquisition of Qualcomm by Broadcom could hurt investment in chip technology.
Broadcom in November made an unsolicited US$103 billion bid for Qualcomm, which Qualcomm says undervalues it.
A potential merger would likely face regulatory scrutiny in China, where Qualcomm has been fined before over anti-trust issues and where the government is promoting local chip production.
TRADE firms in the Shanghai Pilot Free Trade Zone can now apply for a fast-track quarantine and inspection process for the garments they import.
Imported garments are major trade items in the comprehensive bonded area of Pudong International Airport, which hosts several well-known enterprises.
Nearly 2 billion yuan (US$313 million) worth of garments were imported through the bonded area last year, a jump of 40 percent from a year ago. Many companies have decided to establish their Asia-Pacific distribution center in the FTZ.
The Shanghai Entry-Exit Inspection and Quarantine Bureau will clear clothing imported by the companies in the FTZ in just seconds, compared to around 10 days under the normal inspection procedures early last year.
Under the scheme, only 5 percent of the garments imported by a reputable company needs to be examined, compared with 100 percent previously.
Meanwhile, five Changning-based firms became the first batch of companies to try out the fast-track quarantine and inspection process for their imports.
The Shanghai quarantine watchdog and Changning District have jointly launched a trial scheme to allow consumers, for instance, to drink fresh milk from New Zealand within three days of production, down from at least eight days previously.
The five companies are engaged in imported dairy products, food, wine, clothes, shoes and jewelry. This scheme will run for a year before being evaluated.
SHANGHAI stocks extended their rally yesterday as film companies and telecommunication firms rose.
The Shanghai Composite Index edged up 0.37 percent to close at 3,559.47 points.
Shares of film producers and publishing companies gained the most yesterday after investors turned optimistic following a UBS Securities report yesterday that China’s film industry has potential to grow steadily from 2018 to 2020.
“We expect short-term momentum to be stable as cinema remains the dominant channel for movie consumption in China and China’s box office performance in 2017 beat our expectations,” said Liu Zhijing, Media and Internet analyst at UBS Securities
“Given the increasing popularity of domestic films, we think local distributors with both online and offline distribution capabilities are better positioned," Liu added.
Hengdian Entertainment Co Ltd surged by the daily limit of 10 percent to 33.88 yuan (US$5.30), Chinese Universe Publishing And Media Co Ltd jumped 7.31 percent to 17.76 yuan and Shanghai Film Co Ltd rose 5.06 percent to 22.44 yuan.
Investors also pushed telecom shares higher after the Ministry of Industry and Information Technology said yesterday the government will continue to support and encourage private funds to invest in the sector. The ministry said it will further encourage innovation in business model and services in the telecom sector, as well as further promote healthy and high-quality development of the industry.
Fiberhome Telecommunication Technologies Co Ltd added 3.30 percent to finish at 28.80 yuan and Hangzhou Freely Communication Co Ltd climbed 2.17 percent to close at 48.11 yuan.
SHARES of Leshi Internet Information and Technology, the listed arm of technology conglomerate LeEco, slumped by the daily limit of 10 percent at the market opening yesterday after the stock resumed trading.
The plunge came after a suspension since April last year, when the company said in a filing to the Shenzhen Stock Exchange that it was contemplating capital restructuring.
The planned deal to acquire a film arm from troubled LeEco was dropped due to the latter’s financial woes.
LeEco was in deep water in the past year as the company’s aggressive expansion into electric cars and other markets resulted in a rapid build-up of debt.
LeEco founder Jia Yueting was said to owe about 7.5 billion yuan (US$1.17 billion) to Leshi together with his affiliates, according to Leshi.
Jia, currently in the United States, was ordered by China’s securities regulator to return to China to deal with the mounting debt trouble.
Leshi said in a recent filing with the exchange that it had seen sharp declines in revenue and a surge in financing costs in 2017. It also claimed difficulty in collecting receivables and a tight cash flow situation.
The smart TV maker expected a net loss for 2017 and warned investors of operational difficulty.
GAME firms saw their share prices surge yesterday after mobile games Traveling Frog and Lover and Producer surprisingly went viral in China.
Japanese mobile game “Tabi Kaeru,” or “Traveling Frog” people, and has becomes a buzz word on social networks in China. In Apple’s store, the Traveling Frog had 1 million downloads in China. Users spent about US$200,000 on the mobile game by Sunday, just one month after its debut, said research firm App Annie.
Before the frog game, Lover and Producer was the star title in China. The mobile game targeting female users got 4.7 points in a 5-point rating system in Apple’s store with over 216,830 ratings.
Shenzhen-listed Sanqi Interactive Entertainment Network Technology Co, which was involved in distributing the mobile game Lover and Producer, surged 9.26 percent yesterday to close at 20.3 yuan (US$3.1).
Shenzhen-listed Youzu Interactive Co jumped 6.49 percent and Perfect World Co gained 4.69 percent yesterday, while the Shenzhen stock index rose 0.45 percent.
The popularity of Lover and Producer proves that digital entertaining still has great potential in the domestic market, according to GF Securities in a report yesterday.
SENIOR US officials hit back yesterday against suggestions that Donald Trump’s “America First” agenda was hurting globalization and trade, setting an aggressive tone ahead of the US president’s visit to the World Economic Forum.
In keeping with Trump’s combative trade stance, US Treasury Secretary Steven Mnuchin also welcomed a weaker US dollar, helping to send the world’s reserve currency to a three-year low against a basket of major peers.
“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told a press briefing at the annual summit in the Swiss ski resort of Davos.
World leaders, including Indian Prime Minister Narendra Modi, Canada’s Justin Trudeau and Brazilian President Michel Temer, raised concerns this week at the summit about growing protectionism, in remarks that delegates said seemed aimed at Trump’s policies.
Under his America First agenda, Trump has threatened to withdraw from the North American free-trade agreement, disavowed the global climate change accord and criticized global institutions including the United Nations and NATO.
Trump is expected to arrive today and deliver a keynote address to the forum tomorrow, mingling with the same elite “globalists” that he bashed during his 2016 presidential run.
Mnuchin and US Commerce Secretary Wilbur Ross mounted a joint defense of Washington’s aggressive trade actions in Davos yesterday and said more were to come.
“This is about an America First agenda. But America First does mean working with the rest of the world,” Mnuchin said. “It just means that President Trump is looking out for American workers and American interests no different than he expects other leaders would look out for their own.”
Ross said US trade actions were provoked by “inappropriate behavior on the part of our trading counterparties.”
On Tuesday, for example, the United States slapped steep import tariffs on washing machines and solar panels, in moves billed as a way to protect American jobs. China and South Korea condemned the tariffs, with Seoul set to complain to the World Trade Organization over the “excessive” move.
The slide in the dollar also helps US exports, but Mnuchin noted: “Longer term the strength of the dollar is a reflection of the strength of the US economy and the fact that it is and it continues to be the primary currency in terms of the reserve currency.”
Many in Davos worry that a brighter world economic outlook could darken if geopolitical threats — from protectionism and climate change to cyber attacks and war — gather pace in 2018.