CUSTOMERS of Shanghai Pudong Development Bank will be able to use their voice to check the balance in their accounts and buy wealth-management products as the lender launched the industry’s first voice-based interaction app yesterday, the latest effort by a Chinese bank to embrace an artificial intelligence era.
“Your voice is your passport to our banking services,” said Chen Zhuo, product manager of the lender’s electronic banking department.
The Pudong Bank has built an open alliance for smart financial innovation with Baidu, iFLYTEK Co and Shanghai Clearing House.
“As the artificial intelligence era has come, the combination of the technology and finance will revolutionize the financial industry in terms of the way of doing business, the internal momentum as well as the service efficiency,” said Pan Weidong, executive vice president of the Shanghai-based bank.
IFLYTEK, a software firm, provides the smart interaction technology for this app.
China’s top economic planner has punished four heating companies for violating pricing rules as it urged local governments to protect public rights amid rising demand in winter.The National Development and Reform Commission found the heating companies in Heilongjiang, Zhejiang, Sichuan and Shandong provinces breached pricing rules in an investigation which started on December 19, the NDRC said yesterday.The Heilongjiang company had imposed additional charges of 361,200 yuan (US$55,205) on users when they joined the heating network, while the firms in the other three provinces had arbitrarily demanded higher heating prices and made a profit of over 718,100 yuan.All the firms have been asked to pay back the illegal income to the users or to hand in it to the local governments. The Heilongjiang firm was also fined 541,900 yuan.China aims to ensure public rights by monitoring heating prices and supplies, and ordering local governments to beef up investigation into pricing violations.China’s heating demand has been surging during winter, “especially raising the natural gas prices” after the government asked users to switch from coal to gas, the commission said.The NDRC has also started an antitrust investigation on December 20 in 17 natural gas heating companies.
ANOTHER 126,000 households in Beijing can use clean heating instead of coal stoves this year, city authorities said yesterday.
At a cost of 7.4 billion yuan (US$1.1 billion), the city completed 296 projects to switch coal-fired heating to clean energy in rural areas this year, reducing the city’s annual coal use by 2.1 million tons.
As part of a campaign launched in 2013, Beijing phased out coal-fired heating facilities in 185,000 households across 415 villages, reducing the city’s coal use by 18 million tons over five years.
Beijing will phase out coal-fired heating facilities in 217,000 households between 2016 and 2020. By shifting to clean fuel, such as electricity and gas, the city can cut emission of carbon dioxide by nearly 600,000 tons, particulate matter by 3,700 tons and sulfur dioxide by nearly 1,500 tons.
Small stoves in Beijing’s suburban and rural areas, not covered by the central heating system, have been blamed for worsening the capital city’s smog during the winter.
A booming digital economy is reshaping China's economic landscape as the spread of technology such as big data and AIrevives traditional industries and casts new light on high-quality development.
The country's digital economy amounted to 22.58 trillion yuan (US$3.43 trillion) last year, ranking second globally and accounting for around 30 percent of national GDP. Its near-20-percent growth substantially outpaced the overall economy, which grew 6.7 percent in 2016.
The trend is likely to continue in the future and is expected to hit US$16 trillion by 2035.
"The digital economy has become a core engine powering China's economic growth," said Pony Ma, founder of Internet giant Tencent.
Tencent has plowed big money into forging competitiveness in fintech and big data, and recorded strong growth in games, digital content, online advertising and payments in the third quarter.
"China is already more digitized than many observers appreciate and has the potential to set the world's digital frontier in coming decades," the McKinsey Global Institute (MGI) said in a report.
As of June, there were 3.89 billion Internet users around the world, of which 751 million were in China. The enormous number of web users has created room for risk takers in e-commerce, mobile payments and other emerging areas to stretch their wings.
With leading online retailers Alibaba and JD.com, China is the world's largest e-commerce market, accounting for more than 40 percent of the value of worldwide transactions, up from less than 1 percent a decade ago. In terms of mobile payments, China has a transaction value 11 times that of the United States.
"The digital economy is making greater contribution to the national economy and rising as a fresh driver of economic transformation and upgrades," said Lin Xiunian, deputy head of the National Development and Reform Commission, the country's top economic planner.
As China's policy-makers pledged to steer the economy onto a new path featuring high-quality rather than high-speed growth, at the recent three-day Central Economic Work Conference, digital technology will give a push to the shift, revitalizing sluggish sectors and creating new growth points.
"China will briskly foster new growth drivers, improve technological innovation, push for upgrades of traditional sectors, and foster innovative, leading businesses," according to a statement of the key meeting.
The government has rolled out an array of policies such as "Made in China 2025" and "Internet Plus" strategies to spur the integration of Internet technologies and manufacturing, as well as other traditional sectors.
"After the process of digitization, businesses will see a 30-percent increase in production efficiency on average and a 20-percent drop in operation costs," the Ministry of Industry and Information Technology (MIIT) said.
Wu Hequan, an academician with the Chinese Academy of Engineering, said big data technology would redefine a series of sectors including finance, medical care, manufacturing, logistics and transportation, and prompt automobile, education and tourism to form new business models.
The food delivery unit of Meituan Dianping, China's largest group deals site, hires around 500,000 couriers, 31 percent of which come from declining traditional industries and 10 percent from poor areas.
"Our services create employment and value, and represent the future of the economy," said Wang Xing, chief executive of Meituan Dianping.
Innovators on the rise
The digital economy is backed by numerous homegrown Chinese tech firms developing from followers to leaders in the international tech community.
"China's three Internet giants are building a rich digital ecosystem that is now spreading beyond them. Baidu, Alibaba, Tencent and others are driving technical performance such as computing efficiency to set new world-class standards," the MGIsaid.
Investment has also poured in. The MGIsaid China was in the top three in the world for venture-capital investment in key types of digital technology, including autonomous vehicles, 3D printing, robotics, drones and AI.
One in three of the world's 262 unicorns, startups valued at more than US$1 billion, is Chinese, commanding 43 percent of the global value of these companies.
The government has promised tax breaks, financing support and other favorable policies to help innovative firms sprout and grow, and expects to see more domestic players able to take on international rivals.
"China is already a global digital economy, and it is going to have a greater impact on the global digital world," said Jonathan Woetzel, senior partner at Mckinsey.
SHARING economy is booming in China, but can it last? The answer is yes, according to economists, and growth will be fast, but not without challenges.
The market value of sharing economy will reach 4.5 trillion yuan (US$687 billion) in 2017, compared with 3.45 trillion last year, according to the State Information Center.
The sharing economy is expected to maintain annual growth of about 40 percent over the next few years, the SIC forecast.
The business model was originated from and flourished in the consumption sector, with companies such as Mobike and ofo in bike sharing and Airbnb in home sharing.
It is now also accepted by manufacturing and artificial intelligence enterprises.
By establishing a sharing platform that connects global innovation with China-made products, IngDan has now brought together more than 16,000 programs of intelligent hardware, 14,000 suppliers, and 16 million hardware buyers.
“The sharing economy is providing new growth in the manufacturing industry, while sharing of production materials will become more important,” said Ding Minglei, analyst with the Chinese Academy of Science and Technology for Development.
Shenyang Machine Tool (Group) developed an “i5” smart operating system which serves as a sharing platform for raw materials.
“The i5 is actually five ‘i,’ standing for five English words, industry, information, Internet, intelligent and integrate,” said Guan Xiyou, chairman of the group.
Thanks to the core technology with multiple patents, i5 smart machine tools have received more than 20,000 orders. Over 50 agreements have been signed to build smart factories nationwide.
Knowledge sharing is also on the up.
“Paying for superior online knowledge and content has become popular, replacing the previous mode of providing knowledge online for free,” said Zhou Yuan, founder and CEO of Zhihu, an online community sharing knowledge.
A series of credit services, including deposit exemption service, fueled the sharing economy, with users of sharing products increased by 12.7 percent month on month from January 2016 to April 2017, SIC data showed.
Despite the good news, the sharing economy faces blind expansion, with regulators struggling to forestall risks and clear the market.
Large and medium-sized cities, including Beijing and Shanghai, have made regulations since August, stopping bike-sharing companies from adding new bikes.
“The industry has seen excessive production and delivery of bikes, causing road safety problems,” said Tang Yunyi, a researcher with Shanghai Academy of Social Sciences.
Tempered by competition and regulation, a couple of bike-sharing companies have closed with nearly 1 billion yuan of deposit missing.
A research report by the Tencent Research Institute showed that 15 companies providing transportation services, such as on-demand taxi service, have closed in 2016 and 2017.
To promote the sharing economy, China issued guidelines in July. The government will encourage innovation in sharing while regulating the sector in a tolerant and prudent manner, according to the National Development and Reform Commission and other seven government departments.
The country will open more government and public data to the market to improve efficiency.
Specific employment and taxation policies would be adopted to assure the sharing economy’s growth.
CHINA will invest steadily in transport development in 2018, flat with this year, Minister of Transport Li Xiaopeng said yesterday.
In 2017, fixed-asset investment in railways and highways was targeted to reach 800 billion yuan (US$122 billion) and 1.65 trillion yuan respectively.
Citing the main transport target for next year, Li said around 5,000 kilometers of highways would be built and put into use.
The country will also renovate about 200,000km of roads in rural areas and increase over 600km of inland waterways.
China will continue to support the construction of roads in poor regions, so as to ensure these areas are connected by highways by 2020.
Over the past five years, China has made remarkable progress in transport development with total length of roads increasing by 534,000km and railways in operation by 27,000km.
In particular, over 7 billion trips have been made through high-speed railways in the 2012-2017 period.
In the following three years, transport will play a bigger role in eradicating poverty and achieving greener, safer development, according to Li.
He also said China will continue to push supply-side structural reform in the transport industry and further lower logistics costs in 2018.
China reduced logistics costs by more than 88 billion yuan in 2017, according to the ministry.
The cuts were made through measures such as the removal of some road tolls in provincial regions and streamlined traffic services, according to the ministry.
The country will expand pilot programs in highway toll collection and streamline some charges in ports, Li said.
Statistics from the National Development and Reform Commission showed the cost of logistics in China took up about 14.9 percent of GDP in 2016, down by 1.1 percentage points from the previous year.
Although the ratio had dropped for four years in a row by 2016, it is still higher than some developing economies.
Authorities have stepped up reform in the transport sector this year to reduce the logistics burden of companies. Rail freight charges were canceled or lowered, while more means of financing were made available to companies in the logistics sector.
THE Ministry of Commerce yesterday determined to turn China into a “strong economic and trading nation in all respects” by 2050.
In the past five years, China’s domestic consumption, foreign trade and investment all surpassed most other economies, laying a solid foundation for strengthening the economy and trade, Minister of Commerce Zhong Shan said at a meeting.
Before 2020, China should consolidate its position as a large economy and trader. The goal of becoming a strong trading nation should “be basically realized” by 2035 and be accomplished in all respects by 2050, according to Zhong.
He said efforts should be made to complete the goal in advance, without giving specifics about the meaning of “a strong economic and trading nation.”
China has remained the world’s largest goods exporter and second-largest importer for eight straight years. The market share of China’s exports in the world rose from 10.4 percent in 2011 to 13.2 percent in 2016.
China’s trade growth has contributed to the global economic and trade recovery, as Chinese products benefit people around the world, while imports help the development of trade partners, according to a statement from the ministry.
However, Chinese products rely mainly on quantity and price advantages in international competition, while lacking core competitiveness and added value.
China aims to basically realize socialist modernization by 2035 and develop into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious and beautiful by 2050, according to a report delivered to the 19th National Congress of the Communist Party of China.
ASSETS managed by China’s money market funds have hit a record high as savers’ demand for higher returns on investment remains strong, latest data showed.
Money market funds managed over 6.8 trillion yuan (US$1 trillion) of assets by the end of November, up 2.52 trillion yuan from the end of last year, according to the China Banking Association.
These funds accounted for nearly 60 percent of all mutual funds, a record-high proportion, the association said.
China’s money market fund sector, already the second-largest globally, has ballooned in recent years as people sought to invest their savings in higher-return, but relatively safe, products.
The sector’s growth slowed markedly in the past few months after regulators attempted to rein in expansion and avert risks.
Driven by the expansion of money market funds, the overall mutual fund sector saw assets rise 24.6 percent in the first 11 months of the year to 11.41 trillion yuan, according to the association.
SHANGHAI’S foreign trade grew steadily in November while foreign direct investment soared, indicating further progress in the opening-up of the city’s economy.
FDI in the city soared 150 percent to US$7.52 billion in November to touch a new high this year in both year-on-year growth rate and value, according to Shanghai Statistics Bureau.
The number of FDI projects in the city jumped 20.3 percent to 326 last month from a year earlier, the bureau said.
They included 78 Sino-foreign joint-venture projects whose contract value rose 7.9 times to US$1.73 billion, while that of wholly foreign-owned projects added 1.6 times to US$5.72 billion.
The contract value of FDI in the tertiary sector grew 3.6 times to US$7.29 billion, taking up 96.9 percent of the city’s total.
The contract value of the leasing and commercial service industries expanded strongly by 8.8 times in November.
Meanwhile, Shanghai’s foreign trade rose 3.6 percent from a year earlier to 291.61 billion yuan (US$44.6 billion) last month, a sharp slowdown from a 17.5 percent leap in November last year, according to the bureau.
Imports added 6.3 percent from a year earlier to 175.77 billion yuan while exports dipped 0.2 percent to 115.84 billion yuan.
Exports by state-owned enterprises in Shanghai tumbled 24.9 percent from the same month of last year to 10.42 billion yuan, and imports fell 26.8 percent to 27.88 billion yuan.
Imports and exports of privately owned companies grew more than 10 percent.
CHINA’S online data exchange market is expected to generate a value of 100 billion yuan (US$15.2 billion) by 2020, with Shanghai set to play a leading role nationwide, the city’s data exchange center said yesterday.
Shanghai has “natural advantages” to conduct data exchange business as a global finance center tapping its advanced information infrastructure and rich talent pool, Shanghai Data Exchange Corp said.
Shanghai’s tradable data volume accounts for 12 percent of the national level, said Keven Tang, chief executive of state-owned SDE.
The company will offer free services for data exchange and trade between 2016 and 2018 to cultivate the market.
SDE has developed a credit risk profile product that offers a database of 50 million enterprises.
The product is designed for financial institutions such as banks, brokerages, insurers and P2P platforms to improve risk control through credit and data checking.
With a registered capital of 200 million yuan, SDE’s shareholders include Shanghai Information Investment Inc, China Unicom and Wanda Group’s Wonders Information Co.
CHINESE smartphone vendor Oppo is tapping its “brand upgrade” strategy to woo consumers in big cities by opening a flagship store in downtown Shanghai.
Oppo, the No. 2 smartphone vendor in China, also plans to open more stores in other first-tier cities to “directly communicate with consumers,” said Wu Qiang, vice president of the company.
Opening stores in first-tier cities represents a brand upgrade as Oppo and Vivo have so far targeted third and fourth-tier cities where consumption means are limited, according to analysts.
China’s liquefied natural gas prices grew 6.4 percent in mid-December amid surging winter demand, the National Bureau of Statistics said yesterday.The price of LNG was around 7,409.80 yuan (US$1,127) per ton nationwide from December 11 to 20, up 6.4 percent from the first 10 days of this month, according to the bureau.Demand nationwide, especially in north China, has surged in winter boosted by policies to promote the shift from burning coal to using gas for heating, “which has been faster than expected,” said Zhang Yuqing, former deputy director of the National Energy Administration.Natural gas consumption in Jiangsu, Hebei, Shandong, Henan and Sichuan provinces, which have encouraged the switch from coal to gas, has grown more than 20 percent year on year in 2017, reported Shanghai Securities News.Natural gas consumption grew 7 percent for the whole of 2016, data from the National Development and Reform Commission showed.China suffered a supply shortage amid the rise in demand, prompting energy giants such as Sinopec and China National Petroleum Corp to accelerate exploration and import of natural gas to meet the growing domestic appetite.Sinopec said yesterday that it will increase natural gas production by 1.1 million cubic meters per day in January by working at full capacity.An official inspection has found about 5.6 percent of villages in north China’s 28 cities had reported a shortage of natural gas supply for winter heating.Inspection teams in these cities that are located in or near the Beijing-Tianjin-Hebei region found that 426,000 households in 1,208 villages had faced natural gas shortage after their homes were heated with gas instead of coal, the Ministry of Environmental Protection said in an online statement.Officials took measures such as increasing gas supply or temporarily heating the homes with coal to ensure all the residents in these villages enjoy a warm winter as of Wednesday night.To make the air cleaner, China has been replacing coal-fired boilers with natural gas and electricity-powered boilers in the smog-plagued northern region.Over 4.7 million households in 21,516 villages in the inspected region have completed the coal-to-gas or coal-to-electricity conversion, 3.94 million of which finished the switch this year, according to the ministry.China is intensifying efforts to fight pollution and environmental degradation after decades of growth left the country saddled with problems such as smog and contaminated soil.Tackling pollution has also been listed as one of “the three tough battles” that China aims to win in the next three years, according to the Central Economic Work Conference, which concluded earlier this month.Thanks to the initiatives, China’s northern region has been enjoying cleaner air this winter.
CHINA’S industrial value-added output will grow more slowly in 2018 as the economy shifts gear, the Ministry of Industry and Information Technology said yesterday.
Industrial output is set to grow at around 6 percent for 2018, retreating from the 6.5 percent expansion estimated for this year, according to the annual work conference of the ministry.
The combined scale of telecom business will expand by 50 percent, and revenue from the Internet industry will grow by 30 percent, the ministry predicted.
Reviewing China’s industrial performance in 2017, the ministry took note of increasing innovation, gathering new momentum and continued integration between manufacturing and Internet.
This year also saw a faster pace of industrial overcapacity cuts, with the steel industry outperforming the annual target of cutting 50 million tons of capacity.
For next year, the ministry said it will focus more on improving the quality of manufacturing supplies and speed up the shift from traditional drivers to new ones.
Industrial output is used to measure the activity of designated large enterprises with annual turnover of at least 20 million yuan (US$3 million).
NEW home sales in Shanghai rose to the highest in 12 weeks, with medium to low-end properties being the most popular among home seekers, latest market data showed.
The area of new homes sold, excluding government-subsidized affordable housing, climbed 2.1 percent to 126,000 square meters during the seven-day period ended on Sunday, staying above the 100,000-square-meter threshold for the second consecutive week, Shanghai Centaline Property Consultants Co said in a report released yesterday.
“Areas with comparatively abundant supply in previous weeks began to register notable momentum,” said Lu Wenxi, senior manager of research at Shanghai Centaline.
Lu added that projects which offered attractive prices posted strong sales.
The outlying Baoshan and Qingpu districts led last week with sales of new homes hitting 30,000 square meters and 24,000 square meters, respectively. These figures represented a week-on-week jump of 100 percent and 33 percent.
The average cost of new houses edged up 1.1 percent to 48,202 yuan (US$7,331) per square meter, according to Centaline data. Eight of the 10 most sought-after projects cost no more than 50,000 yuan per square meter.
A residential project in Baoshan emerged as the best-selling development after selling 22,766 square meters, or 201 units, for an average 53,899 yuan per square meter — below the price of its earlier batch.
However, only 304 square meters of new homes, or equivalent to two apartments, were released in the city, a week-on-week plunge of 99.6 percent, according to Centaline data.
CHINA needs annual growth of 6.3 percent in 2018-2020 to realize the target of doubling the 2010 GDP by 2020, an official has said.
“Judging from current economic performance, there will not be any huge barrier in meeting the goal,” Yang Weimin, deputy head of the office of the central leading group on financial and economic affairs, said at an economics forum.
Five years ago, China decided to double 2010 GDP and per capita income by 2020 as an important component of becoming a moderately prosperous society in all respects.
The country’s gross domestic product grew 6.9 percent year on year in the first three quarters of 2017, above the government’s target of around 6.5 percent for the whole year.
In a report delivered at the 19th National Congress of the Communist Party of China, a GDP-doubling target was not mentioned, showing an emphasis on development quality rather than fast expansion.
“High-quality development is the fundamental requirement for determining the development path, making economic policies and conducting macro-economic regulation,” said a statement following the central economic work conference on Wednesday.
Yang said: “The theme of economic development will become high-quality development, instead of rapid growth.”
The potential growth rate has changed due to upgraded consumption, financial risk and environmental constraints, he added.
“If China ignores these realities and continues to be obsessed with fast growth rates, the concomitant risks will outweigh the increase in GDP,” Yang said.
China must build and improve mechanisms for pushing forward high-quality development, including indicators, policies, standards, statistical and performance assessment systems, according to the Wednesday statement.
Realizing high-quality development is a must for sustaining healthy economic development and the people’s growing needs for a better life, it said.
Different policies on different housing will support first-home buyers and upgraders in China and curb speculation in 2018, an official has said.“We should stick to the principle that housing is for living in, not for speculation, and improve the long-term mechanism to promote a steady, healthy housing market,” Wang Menghui, minister of housing and urban-rural development, said at a meeting.Market monitoring and analysis should be improved to ensure the accuracy of policies, he added.“We should move faster to put in place a housing system that ensures supply from multiple sources, provides housing support through multiple channels, and encourages both house purchases and rental,” he said.Large and medium-sized cities with net population inflow should step up the development of the housing rental market and set up state-owned home renting companies, Wang said.China will support home renting companies and build government-led rental management and service platforms.Third and fourth-tier cities and counties should continue to reduce unsold housing, according to the minister.
CHINA’S first hydrogen fuel cell industry park will be built in the economic and technological development zone of Wuhan, capital of Hubei Province.
With an investment of 11.5 billion yuan (US$1.7 billion) from a Shenzhen-based high-tech company, the projected industry park will focus on research and production of hydrogen fuel cells, according to authorities of Wuhan Economic and Technological Development Zone.
The zone authorities said they hope the industry park will help form an industrial chain incorporating research, manufacturing and sale of hydrogen fuel-powered generators, develop and produce hydrogen fuel cells for coaches in cooperation with coach builders from other Chinese cities.
The industrial output value of the park is estimated to be 35 billion yuan each year.
CHINA has released new guidelines on the civilian unmanned aerial vehicle (UAV) industry, expecting the market value to surge 40 percent year on year on average to 60 billion yuan (US$9.1 billion) by 2020.
The figure is expected to triple to 180 billion yuan by 2025, according to the guidelines of the Ministry of Industry and Information Technology.
The estimate was higher than a forecast by an iResearch report last year, which said the overall market of UAVs, commonly known as drones, could reach 75 billion yuan by 2025 in China.
The country’s UAV manufacturing industry has been expanding rapidly in recent years thanks to extensive use of drones in fields such as surveying and mapping as well as rising individual consumption.
The ministry said China is playing a leading role worldwide in consumer UAV manufacturing.
The ministry will promote national unified management of the industry, strengthen its competitive edge and foster several leading drone makers by 2020, the guidelines said.
While it is good to see drones increasingly used in agriculture, environmental monitoring and public entertainment, civilian drones have threatened the safety of civil aviation on many occasions.
In late April, four drones flown illegally over Chengdu Shuangliu International Airport in Sichuan Province. They forced 58 flights to land at alternative airports, four to return, and many more to be canceled.
China requires civilian drones weighing over 250 grams to be registered under real names from June 1 to improve civil aviation safety.
SMALL and micro enterprises have earned most attention from banks for the first time, according to a report by China Banking Association.
Around 65 percent of the surveyed bankers chose the businesses as their key potential clients for the future, the report showed.
In recent years, the banks’ recognition and dispersal of risk has been strengthened and management of loans to small businesses improved, the report said.
In a bid to improve credit support for small and micro enterprises, startups and agricultural production, China’s central bank announced a targeted reserve requirement ratio cut in September.
The new policy, to take effect in 2018, offers commercial banks a reserve requirement ratio cut of 0.5-1.5 percentage points if their annual outstanding or new loans in inclusive financing meet certain requirements.
The survey covered 1,920 bankers from 166 domestic financial institutions.
BRITISH toy retailer Hamleys has opened its largest store in the world in Beijing.
Christmas elves, a teddy bear parade and a curiously slender Santa marked the opening of the five-story emporium — double the size of Hamleys’ flagship London store — in Beijing’s Wangfujing shopping district.
The launch comes two years after Chinese shoe company C.banner acquired Hamleys from its previous owner, France’s Groupe Ludendo, for 100 million pounds (US$134 million).
“In China, the holiday is just for kids. It’s a time to have fun and get some new toys,” said Daisy Yan, one of hundreds of locals who came to the store.
“This place is too expensive though. The toy car my son picked out costs 10 yuan more than most other stores.”
A stuffed lemur had a 1,619 yuan (US$246) price tag and a Hello Kitty ornament cost a whopping 2,208 yuan. Hamleys bears engraved with “I love China” on one paw cost less, at 129 yuan.
The toy retailer, founded by William Hamley in London in 1760, already has branches in the cities of Nanjing and Xuzhou in east China’s Jiangsu Province.
CHINA’S home-grown AG600, the world’s largest amphibious aircraft in production, took to the skies yesterday for its maiden flight.
The plane, codenamed “Kunlong,” took off from the southern city of Zhuhai and landed after roughly an hour-long flight.
With a wingspan of 38.8 meters and powered by four domestically-built turboprop engines, the aircraft is capable of carrying 50 people and can stay airborne for 12 hours, according to its developer, the Aviation Industry Corporation of China.
“Its successful maiden flight makes China among the world’s few countries capable of developing a large amphibious aircraft,” chief designer surnamed Huang said.
The Communist Party of China Central Committee and the State Council congratulated all those engaged in the mission.
The congratulatory message said that the maiden flight was a major breakthrough in developing special-purpose aircraft following the maiden flight of the large C919 passenger jet in May.
The new aircraft has a maximum take-off weight of 53.5 tons and a top cruising speed of 500 kilometers per hour.
The amphibious aircraft will be used for firefighting and marine rescue, with at least 17 orders placed so far due to its multiple uses and advanced manufacturing technique.
It can carry 50 people during search-and-rescue missions, collect 12 tons of water in 20 seconds for fire fighting and transport up to 370 tons of water on a single tank of fuel.
Its name “Kunlong” stands for a high expectation in Chinese culture with the “Kun” meaning an enormous legendary fish and “Long” a dragon.
The AG600 is the third member of China’s large aircraft family.
China released a guideline on large aircraft projects in 2006 which has resulted in three large aircraft models.
In 2013, transport aircraft Y-20 made maiden flight and entered into service with China’s air force in July 2016.
In 2017, China’s first domestically-produced large passenger aircraft C919 completed first flight, allowing China entry in a civil aviation market currently monopolized by the Airbus and Boeing.
“Its successful maiden flight helps China enter the global aviation industry chain,” said Chen Mingsheng, one of the designers of the AG600.
CHINA is expected to maintain its status as the world’s largest auto market this year, with a record-high 29 million cars sold, according to the Ministry of Commerce.
That’s just over a third of the cars expected to be sold worldwide this year, according to the website Statista.
Despite the top-line figures, sales growth of cars in China — once entrenched in double digits — has been slowing and that trend is forecast to continue. Sales in 2018 are predicted to rise about 3 percent, lagging the estimated 5 percent growth rate this year, according to the China Association of Automobile Manufacturers.
While the numbers of cars driving out of showrooms may be decelerating, changes in the auto industry are not. Stiff competition among carmakers is producing an almost constant flow of new models. Electric cars, under benevolent government policies, are making inroads in public acceptance. Internet and car technologies are merging, with the advent of “smart” cars that can sense traffic hazards, provide in-cabin entertainment and even drive themselves.
It’s a dizzying array of new horizons for both automakers and consumers. For car manufacturers, it’s a stark reminder that they have to be quick on their feet to adapt to a fast-changing market. For consumers, it means more choices and often cheaper prices.
The younger generation, who are avid consumers, online addicts and enthusiast embracers of new technologies, will play a defining role in shaping the future of the auto industry in the next five years. The Chinese government, which wants to clean up the skies and reduce dependence on fossil fuels, will be pulling the policy levers.
So where have been and where are we going? The end of another year and the advent of a new one is the perfect time to stop and take stock. This issue of AutoTalk is devoted to that endeavor.
Highlights of 2017
Dual credit policy to boost green vehicles
China issued a regulation in September requiring automakers to produce a minimum number of nonpolluting vehicles. Known as the dual credit policy, it forces carmakers to generate new-energy credits equivalent to 10 percent of the sales in 2019, rising to 12 percent in 2020. Car manufacturers that fail to meet minimum production targets must “buy” credits from other companies. The regulation will take effect next April.
The regulation also includes targets for fuel economy and a credit-trading system aimed at saving energy and promoting green cars. The new policy is part of the government’s campaign to reduce dependence on fossil fuels and clean up the skies in major cities.
“The policy will affect the future of China’s auto industry and the strategies of automakers, especially foreign original equipment manufacturers,” said Xu Qian, China head of automotive practice at AlixPartners.
Some foreign manufacturers are stepping up alliances with domestic partners, such as green car pacts between Volkswagen AG and Anhui Jianghuai Automobile Group, and between Ford Motor Co and Anhui Zotye Automobile Co.
Online car sales
The Internet has become a prime channel for Chinese consumers seeking information about car brands and the latest models. Car buyers can now also purchase vehicles or car accessories through online channels, such as Alibaba’s Tmall shopping site and JD.com, China’s second-largest e-commerce retailer.
Consulting firm J.D. Power said in a report that online vehicle shopping is a fast-growing trend that is expected to continue. The proportion of online shoppers among all new car buyers has increased from 8 percent in 2015 to 17 percent this year, the report said.
Car manufacturers are closely watching the trend. Earlier this month, Ford Motor Co and Alibaba Group signed a letter of intent to collaborate in online car sales. It calls for the two companies to conduct a study of digital solutions for new retail opportunities, from pre-sales to test drives and leasing options.
Internet giants and electric car start-ups
China’s Internet giants Baidu, Alibaba and Tencent — also known as BAT — are investing in electric car companies.
Alibaba took a 10 percent stake in Guangzhou Xiaopeng Motors Technology. Baidu and Tencent have invested in Shanghai-based electric carmaker NIO. Baidu also invested in Shanghai-based WM Motor Technology Co Ltd, which works on intelligent electric vehicles.
The three companies are betting that more new cars will be connected to the Internet in the coming years, giving their technologies an edge in the development of future vehicles that will feature software, data, settings and algorithms inside cars.
Connectivity that links vehicles and other online systems also will become extremely important for vehicles.
Tesla in China
US electric carmaker Tesla said the company is in talks with the Shanghai government on setting up a plant in the city. Elon Musk, chief executive officer of Tesla, said he expects to start manufacturing cars in China in about three years.
“Tesla probably will make the smaller and cheaper Model 3 sedans and upcoming Model Y crossovers in China, but won’t build the pricier Model S or Model X there,” Bloomberg News reported.
Tesla is actively setting up more charging stations and charging poles in China in order to meet the demands of electric car owners in the world’s biggest auto market.
In October, Tesla opened a charging station in Shanghai with the capacity to charge 50 electric cars at a time. Tesla said it is the company’s largest supercharger station anywhere in the world. The company opened another large charging station in Beijing in November.
With the rise of the “sharing economy,” more people are participating in programs that share cars. The business model is similar to that of bike-sharing. Consumers rent cars for a short period of time with the use of their smartphones. They can drop off the cars in parking lots near destinations, instead of returning them to the points of departure. All payments can be made digitally.
Beijing-based car-sharing company TOGO and Shanghai-based Global Carsharing & Rental Co are among those expanding their networks into more cities in China. Earlier this month, BMW launched its own car-sharing service, called ReachNow, in the southwestern city of Chengdu in Sichuan Province.
Consumers typically use car-sharing services for commuting to work, business trips and recreational outings. The system is especially popular with younger drivers, who find it a convenient, low-cost way to get to and from work.
The Ministry of Transport issued a guideline in August to standardize the development of the car-sharing industry. It requires car-sharing companies to improve customer services and ensure that safety mechanisms are in place.
Trends in 2018Hu Yumo
Consumer interest in luxury cars helped keep China’s auto industry afloat in the black in 2017, and that trend is expected to continue into the new year.
The big market trends — electrification of vehicles, autonomous driving, connected driving and car sharing — have gained pace and are set to continue defining the auto industry going forward.
Overall, sales in the passenger-car segment slowed this year after double-digit growth in 2016. Still, foreign carmakers were busy launching new vehicles in China, especially luxury cars and sports-utility models. Domestic auto companies, meanwhile, have sought to lift their brand profiles and to expand into higher-priced cars and overseas markets.
So what’s ahead for 2018?
Chinese car buyers have always been enthusiastic about luxury cars, which resulted in expected 16-17 percent sales growth this year. Industry analysts said that rapid pace shows no signs of abating.
“The luxury segment remains the most attractive segment,” said Xu Qian, China head of automotive practice at AlixPartners. “Most luxury brands have shown significant sales increases this year. I expect that momentum to continue in 2018.”
Bill Peng, a partner with PwC’s Strategy&, agreed with that assessment. Many consumers are likely to choose a luxury vehicle car as their second car, he said. “In major cities, consumers are now in a transition period from first car to second car,” Peng said. “Five years ago, they bought their first car. With an increase in disposable income, they will tend to buy more expensive cars the second time around.”
The “second tier” of the premium car segment is expected to show particularly strong growth in the coming year. “First-tier premium cars include Mercedes-Benz, BMW and Audi,” he said. “But it’s the second-tier brands such as Cadillac, Jaguar Land Rover and Volvo that are set to do especially well, with the introduction of new models. This trend already began this year, with sales of General Motor’s Cadillac as one example. Chinese consumers are willing to try new brands, and if second-tier car brands can offer competitive models, people are likely to buy them.”
Ye Sheng, auto research director at market research firm Ipsos, takes the same view.
“Second-tier luxury brands will see faster growth,” he said. “They have diversified products with different price ranges that appeal to the younger generation. Chinese consumers are looking for distinctiveness when buying vehicles. Many second-tier premium car brands are good at telling the stories behind their brands.”
Domestic carmakers, long the laggards in vehicle sales, are seeking to improve their image with higher-priced models to attract more consumers. Sales of domestically made cars are expected to maintain stable growth next year, but the competition and differentiation between domestic car manufacturers may get fiercer.
“Domestic brands will likely continue to maintain a steady upward trend next year,” said Ye Liang, a Shanghai-based principal of Roland Berger. “Chinese car manufacturers are seeking opportunities to improve themselves in terms of price, quality, after-sales service, product experience and other areas to compete with joint-venture automakers.”
Domestic carmakers are also making inroads overseas. Chinese automaker Zhejiang Geely Holding Group launched its Lynk & Co brand, which will be introduced to the US and Europe, and Great Wall has unveiled a premium brand called WEY.
Indeed, Chinese carmakers are on a roll in research and development to catch up with foreign brands. Those companies failing to innovate will be left behind.
In order to enhance their advantage, domestic carmakers are also starting to collaborate with one another.
Earlier this month, Chinese auto giants FAW, Dongfeng and Changan signed an agreement on joint technology innovation, industrial value chain operation, global expansion and new business models.
“The strategic alliance of these three companies is a good example of the new trend,” said Ye Liang. “In the future, competitive breakthroughs may be achieved through cooperation. Chinese carmakers are seeking opportunities to work together in areas such as connected vehicles, mobility service and batteries.”
Domestic brands are also positioning themselves in the field of new energy vehicles amid a national drive to encourage pollution-free driving.
“Next year, domestic brands will put more focus on new energy vehicles and entry level products in the luxury segment so that they can elevate their brand image and increase profit margins,” said Xu at AlixPartners.
China’s auto market faces the implementation of several policies next year, affecting both manufacturers and buyers.
On January 1, the purchase tax for vehicles with engines below 1.6 liters will be raised from 7.5 percent to 10 percent, according to the Ministry of Finance. Analysts said the change is leading to a small peak in sales at the end of this year and perhaps will result in a slight reduction in car sales for the first half of next year.
New car loan policies also come into force in the new year. China’s central bank and the China Banking Regulatory Commission announced earlier that consumers may borrow from banks up to 85 percent of the cost of a green vehicle for personal use. The ratio for traditional internal combustion engine vehicles is 80 percent.
“The policy is a good sign for new-energy vehicles,” said Roland Berger’s Ye. “It will enlarge the potential consumer base for new-energy vehicles and prompt the sales of more green cars, even in the premium segment. The new policy may also further promote the development of car sharing because it reduces the initial investment costs for companies operating in that realm.”
The future of China’s auto market seems destined to be shaped by the whims of a younger generation that often has its own ideas about what is fun and practical to drive.The young, for example, tend to view luxury cars differently from their parents. They are interested not only in the looks of a vehicle but also in features that create distinctive individuality. They want technologies that make the driving experience more enjoyable and are in tune with their addiction to all things digital.Automakers are striving to understand youthful preferences and cater to those tastes. They want to get up close and cozy with the younger generation.UK premium carmaker Jaguar Land Rover is seeking to address the demands of younger Chinese drivers with the launch of a new sedan this month called the Jaguar XEL. The car is targeted at drivers born in the mid-1980s or later, according to the company. “It’s a stylish and dynamic car, and the main target audience will be young people,” said Frank Wittemann, president of Jaguar Land Rover China and Chery Jaguar Land Rover Integrated Marketing Sales and Service. “Young people in China have different tastes, and they want to stand out. I believe brands like Jaguar Land Rover have a very good chance if they target the young generation.” The company said it has conducted market research and initiate discussions with young consumers prior to the launch of Jaguar XEL.James Hu, executive vice president of Jaguar Land Rover China, said the young generation is fast becoming the mainstream of auto buying, and that trend is raising the bar for premium carmakers.“Automakers need to think how to meet the diverse demands of young consumers in terms of personalization, configuration and vehicle technologies,” he said. “Competition among carmakers lies not only in brand and product, but also in customer experience and services.”Jaguar Land Rover invited Hong Kong singer-actor William Chan to do celebrity endorsement for the new model. Chan fit the image of the vehicle, the company said, and has very strong appeal among young people.Analysts said this is the first time that Jaguar Land Rover has attempted to connect with the younger generation.“Jaguar Land Rover enriched its product line by bringing in a sedan aimed at younger drivers,” said Zhang Xiaofeng, an independent market analyst. “This shows that premium car brands are increasingly aware of the importance of young consumers in China.”
DYSON Ltd, the British technology company most commonly associated with revolutionizing vacuum cleaners and other household appliances, is moving into the increasingly crowded realm of electric car development.
The company, founded by inventor James Dyson in 1987, announced it has begun working on a battery-powered vehicle to be launched by 2020. The company said it will invest 2 billion pounds (US$2.6 billion) in research and development on the car.
In the driving seat for the new technology is Jim Rowan, who took over as Dyson’s chief executive officer in November. Prior to that, he served as chief operating officer for the company since 2012.
Shanghai Daily recently talked with Rowan to discuss the company’s expansion beyond it core business. He was mum on what the prototype of the new car will look like and said the company isn’t ready to disclose manufacturing sites. However, founder Dyson has been reported as saying that the electric cars will probably be built in Asia.
Q: Why this move on the part of Dyson?
A: We are always interested in products that can advance industry and change the world. Dyson has many of the technologies for a successful electric vehicle. Those technologies include digital motors, battery technology, electronics, fluid dynamics and mechanical engineering.
So, it’s not such a strange industry for Dyson to become involved in. The electric vehicle market is undergoing tremendous change at present. Together with this change and the technology that Dyson can bring to it, we think it’s the right time for Dyson to enter the market.
Q: How is the electric vehicle project going so far?
A: We already have more than 400 engineers working on the project and a large number of facilities and technology labs dedicated to electric vehicles in the UK. We are making good progress. We have a very detailed plan for the project, but we cannot disclose it now.
Q: It is a huge expense to develop and manufacture an electric car. Technology aside, companies need to think about how to bring the product to market and make profits from it. Can Dyson make money from electric cars?
A: Some car manufacturers now producing electric cars also produce conventional internal combustion cars. They still have costs related to that technology. We don’t have any of those costs. This will be a new industry for us. We expect to make profits from electric cars, but that means we need to get all the different aspects of the project correct — not just design and performance but also manufacturing and the supply chain.
Q: What advantages does Dyson bring to development of electric cars?
A: We have almost 4,000 engineers in our company. That’s very advantageous for us. We have very deep, pure engineering talent, and the labs and specific equipment, not just for the electric vehicle project but across our entire product range.
Dyson already has capabilities in the main components of electric vehicles. That is, the digital motor, electronics and battery technology. And we have invested over US$100 million in solid-state batteries.
Q: You say this was the right time to enter the electric vehicle market. Why is that?
A: There are several reasons. Everyone is concerned about high pollution levels. More and more people live in cities, which makes urban pollution even greater. Governments are now formulating policies and legislation on electric vehicles.
At the same time, we have developed battery and digital-motor technologies that make the performance of electric vehicles much higher than ever before. Last but not least, consumers want mobility, but they want it from a cleaner energy source.
Q: How can Dyson establish a close relationship between technological innovation and Chinese consumers?
A: China has built some great technologies in recent years. Many are very aligned to Dyson technologies, such as artificial intelligence, machine learning and battery technology. Chinese consumers like intelligent products. We built a Chinese model home in the Shanghai Technology Lab that opened in May. We invite Chinese consumers to come and try our products, some of which haven’t been released yet. We ask them what they like about the products and things they would like to change. This is a good example of Dyson combining innovation with the interests of Chinese consumers.
Q: How does Dyson view Chinese consumers?
A: Chinese consumers appreciate value. They are value sensitive rather than price sensitive. We find the Chinese consumers are tech-savvy as well. Chinese consumers understand technologies very well, more so than in some other markets. That’s why the relationship between Dyson and Chinese consumers is growing very fast.
One of the great things about China is that it is so connected through social media. There are about 900 million WeChat users in China. It means that people who use our products hopefully will communicate with each other and write reviews about how nice the products are and how well they work.
We plan to launch a product next year based on an idea arising from the insights of Chinese consumers. The product will be launched globally. The whole drive of the product is behind Chinese consumers, which is a very big sea change for us.
The Republican-controlled US House of Representatives gave final approval on Wednesday to the biggest overhaul of the US tax code in 30 years, sending a sweeping US$1.5 trillion tax bill to President Donald Trump for his signature.In sealing Trump’s first major legislative victory since he took office in January, Republicans steamrolled opposition from Democrats to pass a bill that slashes taxes for corporations and the wealthy while giving mixed, temporary tax relief to middle-class Americans.The House approved the measure by 224-201, passing it for the second time in two days after a procedural foul-up forced another vote on Wednesday. The Republican-led Senate had passed it 51-48 in the early hours of Wednesday.“We are making America great again,” Trump said, echoing his campaign slogan at a White House celebration with Republican lawmakers. “Ultimately what does it mean? It means jobs, jobs, jobs, jobs.”Trump, who emphasized a tax cut for middle-class Americans during his 2016 campaign, said at an earlier Cabinet meeting that lowering the corporate tax rate to 21 percent from 35 percent was “probably the biggest factor in this plan.”It was uncertain when the bill would be signed. White House economic adviser Gary Cohn said the timing depended on whether automatic spending cuts triggered by the legislation could be waived.The administration expects the waiver to be included in a spending resolution Congress will pass later this week, a White House official told reporters. Cohn told Fox News Channel on Wednesday night that Trump could sign the bill as soon as today if the resolution was passed by then.“If not, most likely we’ll sign it in the first week of the new year,” Cohn said.In addition to cutting the US corporate income tax rate, the debt-financed legislation gives other business owners a new 20 percent deduction on business income and reshapes how the government taxes multinational corporations along the lines that the country’s largest businesses have recommended for years.Wall Street’s main indexes were little changed on Wednesday, taking a breather after a month-long rally ahead of the long-anticipated tax vote. The S&P 500 has climbed about 4.5 percent since mid-November, led by a rally in sectors such as transport, banks and others that are expected to benefit the most from lower taxes.Under the bill, millions of Americans would stop itemizing deductions, putting tax breaks that incentivize home ownership and charitable donations out of their reach, but also making tax returns somewhat simpler and shorter.The bill keeps the existing number of tax brackets but adjusts many of the rates and income levels for each one. The top tax rate for high earners is reduced. The estate tax on inheritances is changed so far fewer people will pay.Once signed, taxpayers likely would see the first changes to their paycheck tax withholdings in February. Most households will not see the full effect of the tax plan on their income until they file their 2018 taxes in early 2019.In two provisions added to secure needed Republican votes, the legislation also allows oil drilling in Alaska’s Arctic National Wildlife Refuge and removes a tax penalty under the Obamacare health law for Americans who do not obtain health insurance.
CHINA’S leading ride-hailing company Didi Chuxing managed to attract US$4 billion funding from domestic and overseas investors, months after a funding round that made it Asia’s most valuable startup, as it presses on with a global battle with US giant Uber.
The new equity funding would be used to support the company’s building of artificial intelligence capacity, and new business initiatives, including the development of new energy vehicle service networks.
Last month, Didi said it has set up a joint venture with the Global Energy Interconnection Development and Cooperation Organization to build its own electric vehicle charging systems to serve its own fleet as well as private and public vehicles. Didi said in an e-mailed statement that it aims to build new energy vehicle services and systems that face the next generation of transport and mobility solutions to support sustainable development.
The names of the investors were not disclosed, and Didi is already backed by technology giants including Apple, Alibaba and Tencent as well as state-backed institutions such as China Life Insurance and Ping An Group.
Didi, which bought Uber’s China operations last year, has nearly half a billion users around the world and handles up to 25 million rides per day. It will see its valuation rise to US$56 billion, sources close to the matter told AFP.
It became Asia’s most valuable startup in April with a valuation of US$50 billion after its previous round of fundraising.
Uber and Didi have been fighting a global turf war since Didi bought out the US firm’s China operations.
Didi has been battling for global market share with Uber by working with local firms through investment or partnership, including Southeast Asia’s Grab, India’s Ola, US-based Lyft, and Europe’s Taxify.
Bloomberg News has said Didi was in talks with Japanese taxi operator Daiichi Koutsu Sangyo to provide riding services for Chinese tourists in Japan.
THE US economy grew at its fastest pace in more than two years in the third quarter, powered by robust business spending, and is poised for what could be a modest lift next year from sweeping tax cuts passed by Congress this week.
Other data yesterday showed a jump in the number of Americans filing for unemployment benefits last week. The underlying trend in jobless claims, however, remained consistent with a tightening labor market.
Gross domestic product grew at a 3.2 percent annual rate last quarter, the Commerce Department said in its third GDP estimate for the period. While that was slightly down from the 3.3 percent reported last month, it was the quickest pace since the first quarter of 2015 and rose from the second quarter’s 3.1 percent growth rate.
It also marked the first time since 2014 that the economy experienced growth of 3 percent or more for two straight quarters. But the expansion in the July-September period likely overstated the health of the economy.
An alternate measure of growth, gross domestic income, rose 2 percent in the third quarter. GDI was previously reported to have risen at a 2.5 percent rate.
The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic growth, added 2.6 percent instead of the previously reported 2.9 percent.
Growth in the third quarter was also boosted by an accumulation of unsold goods and a rebound in government investment. Growth in business investment in equipment was raised to 10.8 percent, the fastest in three years, from the previously reported 10.4 percent.
Growth in consumer spending, which accounts for more than two-thirds of the US economy, was revised down by one-tenth of a percentage point to 2.2 percent in the third quarter. Consumer spending rose by a robust 3.3 percent in the second quarter.
The government said after-tax corporate profits surged 5.7 percent last quarter instead of the previously reported 5.8 percent. Profits rose at only 0.1 percent in the second quarter. Undistributed profits jumped 13.9 percent after declining for two straight quarters, suggesting that companies were anticipating deep tax cuts.
KOBE Steel Ltd, at the center of a data-falsification scandal that has shaken Japan’s manufacturing industry, admitted for the first time that executives were aware of the cheating, and reassigned three senior officials.
Japan’s No. 3 steelmaker, which supplies the manufacturers of cars, planes and trains across the world, has said about 500 customers had received products with falsified specifications, throwing global supply chains into turmoil.
Outside investigators appointed by Kobe to look into the malpractice have found that senior officials in the company’s copper and aluminum business knew of some of the cheating.
“Based on this information, as of today, we have reassigned these three executives,” the company said, adding it would decide on any punishments after the probe was completed.
The three were senior officials in the company’s aluminum and copper business, where most of the cheating occurred.
Kobe Steel “takes it very seriously that current executive officers were aware of this,”
Kobe also said the investigation would be completed by around the end of February, two months later than expected.
The 112-year-old company has had Japanese government-sanctioned seals of quality revoked on many of its products and is also the subject of a US Justice Department inquiry.
Kobe Steel has been in touch with the Justice Department multiple times since an initial contact through lawyers, Yoshitsugu Nishimura, a public relations manager, said at the briefing. He declined to provide further details.
No safety issues have so far been identified from the data cheating, which mainly involves falsely certifying the strength and durability of products.
THE world may soon see the birth of 5G commercially because the first global 5G standard was finalized yesterday, which will boost commercial development and network construction of the next-generation standard, said telecommunications firms and 3GPP, the organization that governs cellar standards.
China Mobile, China Unicom and China Telecom and technology giants like Huawei and ZTE are some of the major corporations that will be involved in harnessing the 5G standard which allows network speed of 20 to 50 times faster than the current 4G networks. The 5G networks are expected to roll out around 2019, according to market observers.
Huawei said in a statement yesterday it will accelerate construction of mass scale network and commercial use of the new 5G technology.
China Mobile partners 112 companies to develop new applications on 5G, including drone, bike sharing, parking, wearable computing and robotics, said the world’s biggest mobile carrier with more than 880 million users.
SHANGHAI stocks rose yesterday after investors were cheered by the central government's pledge it would deepen structural reform and improve economic quality in the coming year.
The Shanghai Composite Index edged up 0.38 percent to 3,300.06 points.
Investor turned optimistic after China vowed the economy will focus on high-quality development and the government will continue to deepen the supply-side structural reform in 2018.
Real estate developers rose after the government said it will ensure the sector’s stable development and promote housing purchases and rentals.
Poly Real Estate Group Co Ltd jumped 7.78 percent to 13.03 yuan (US$1.97), Fiberhome Telecommunication Technologies Co Ltd rose 3.34 percent to 31.55 yuan and Beijing Dalong Weiye Real Estate Development Co Ltd added 2.39 percent to close at 3.86 yuan.
APPLE Inc has addressed claims from an app company that says the maker of iPhones slows down the performance of older phones.
On Monday, the blog Primate Labs, a company that makes an app for measuring the speed of an iPhone’s processor, published data that appeared to show slower performance in the Apple’s iPhone 6s and iPhone 7 models as they aged.
Apple on Wednesday acknowledged that the company does take some measures to reduce power demands — which can have the effect of slowing the processor — when a phone’s battery is having trouble supplying the peak current that the processor demands.
The problem stems from the fact that all lithium-ion batteries, not just those found in Apple products, degrade and have problems supplying the big bursts as they age and accumulate charging cycles, Apple said in a statement. The problems with peak current draws can also occur when batteries are cold or low on charge.
“Last year we released a feature for iPhone 6, iPhone 6s and iPhone SE to smooth out the instantaneous peaks only when needed to prevent the device from unexpectedly shutting down during these conditions,” Apple said in an emailed statement to Reuters. “We’ve now extended that feature to iPhone 7 with iOS 11.2, and plan to add support for other products in the future.”
When an iPhone’s processor makes a big current draw from a flagging battery, the battery can deliver the current in spikes that may damage the phone’s electronics. iPhones would then suddenly shut down to protect the pricey processor.
China will work to ease market access restrictions on foreign investment and encourage the opening of the manufacturing, producer services and financial sectors, the Ministry of Commerce said yesterday.The country will push for nationwide implementation of a pre-establishment national treatment system as well as a negative list, which determines industries in which foreign participation is prohibited or limited, spokesman Gao Feng told a press briefing.China will also improve its mechanism for foreign investors to file complaints and protect their legal interests, Gao said.Efforts will be made to attract more foreign investment into the country’s central and western regions, while improving the quality of investment, he said.Foreign direct investment into the Chinese mainland rose 9.8 percent year on year to 803.62 billion yuan (US$122 billion) in the first 11 months. The growth was much faster than the 1.9-percent year-on-year increase registered in the first 10 months.Chinese leaders have reiterated that the country will not close its door to the world, but rather the door will only open wider.
Artificial Intelligence has become a major catalyst in the financial technology industry but "robo advisers" will not be allowed in China, said Phoenix Finance, an online finance subsidiary under Phoenix Television.Phoenix Finance intends to tap AI to grow its presence in China and abroad by specifically targeting users with investible assets of between US$100,000 and US$1 million — a group that is expected to reach 100 million people globally in the next few years. AI will exploit investor behavior analysis, risk control, financial information selection and recommendation on wealth management and insurance products. The integration of these technologies is part of the “continued evolution of intelligent finance”, said Vince Zhang, president of Phoenix Finance.However, Chinese authorities will not allow AI technology to make investments on behalf of of investors. Restrictions have been put in place to limit automated investment programs, or robo-advisors, from making recommendations to users who have to make the investment decision and place the final purchase order themselves, Phoenix Finance said. China aims to develop an AI market of over 150 billion yuan (US$22.66 billion) by 2020, according to the State Council.
SHANGHAI’S economic growth in November was steady, with increases in industrial output, consumer prices and transport activity, according to data from Shanghai Statistics Bureau.
The value of total output of industrial enterprises above a designated size grew 1.3 percent in November from the same month last year to 310.78 billion yuan (US$47.16 billion).
November’s industrial sales-output ratio edged up 0.8 percentage point from that of the same month in 2016 to 99 percent. But the value of exports of industrial companies in Shanghai dropped 4.7 percent to 67.21 billion yuan.
Shanghai’s six key industrial sectors produced a total output of 214.97 billion yuan, up 1.1 percent from November last year.
The output of automobile manufacturing last month grew fastest by 11.8 percent to 67.33 billion yuan while the production of complete equipment manufacturing rose 2.8 percent. The output of petrochemical and fine chemicals sectors rose 2.5 percent year on year, while the other three sectors posted a fall in output.
The city’s Consumer Price Index, a main gauge of inflation, rose 1.2 percent in November year on year, and grew 1.7 percent annually from January to November.
Transport of goods in November expanded 10.2 percent annually to 82.73 million tons.
Cargo throughput at Shanghai port grew 6.5 percent annually to nearly 64.2 million tons from November 2016. Container traffic jumped 11.8 percent to 3.6 million TEUs (twenty-foot equivalent units) last month.
BIKE-SHARING Mobike will work with LINE Corporation, operator of the popular mobile messaging platform, as a strategic investor in its subsidiary in Japan as the Chinese start-up boosts its overseas expansion.
LINE Corporation will take the largest minority stake of under 20 percent, according to a joint statement yesterday.
Mobile seeks to leverage LINE’s existing network and relationship with government agencies, municipalities and companies in Japan.
“Through this capital investment and strategic business partnership with Mobike, we can support the expansion of Mobike’s service in Japan by leveraging our network of local governments and private companies,” LINE Corporation president and CEO Takeshi Idezawa said in a statement.
The two companies will also work together on a series of initiatives to promote the adoption of smart dockless bikesharing in Japan.
“Working together with LINE, we will be able to provide tens of millions of LINE users with a seamless and localized experience for finding, unlocking and paying for bikes with the LINE app,” said Mobile founder and president Hu Weiwei.
Mobike will be integrated into the LINE app as an exclusive bikeshare function so that LINE’s 71 million users in Japan will be able to sign up for Mobike and pay for their rides with the app.
Mobile is already available to Sapporo residents and will officially roll out its service in Fukuoka this week. Mobile officially launched its service in Shanghai in April last year and has since expanded the service to over 200 cities globally.
Mobike’s biggest rival ofo, which is also expanding overseas after its success on China’s campuses and urban areas, partners Japan’s SoftBank.
CHINESE technology company Xunlei Ltd plans to launch a cloud computing service in the United States and Europe next year, aiming to compete in Amazon’s home market, Xunlei’s chief executive said yesterday.
Xunlei adds to a line of Chinese technology brands that are expanding into developed markets. Huawei, the No. 3 global smartphone brand, said this week it will lift its US presence by selling via American telecom carriers next year.
Xunlei launched its OneCloud service in August, which it says lowers costs for photo storage, video and other functions by having users contribute idle bandwidth and storage capacity.
“Hopefully we will start to do business in the United States market and European market in the first half of next year,” CEO Lei Chen said in a telephone interview.
Cloud computing is growing fast in China but access for foreign providers is limited by official curbs on data handling.
Apple Inc said in July it would open a data center in China to comply with requirements that information about Chinese citizens be stored in the country. In November, Amazon Inc sold the hardware for its cloud business in China to a local partner but said it retains ownership of the intellectual property behind it.
Shenzhen-based Xunlei plans to begin its foreign expansion in January or February in other markets closer to China, Chen said, without giving more details.
INVESTMENT in Shanghai’s real estate was vibrant this year with en bloc investment deals remaining above the 100 billion yuan (US$15 billion) threshold for the second straight year, global real estate services firm Cushman & Wakefield said in a report yesterday.
As of mid December, more than 120 major real estate investment deals worth over 120 billion yuan in total, excluding land transactions and confined to property acquisitions worth over US$10 million each, had been sealed in the city.
However, this was slightly below 2016 when more than 130 billion yuan worth of deals were concluded but higher than the yearly average of 40 billion yuan the city recorded between 2010 and 2015, according to Cushman & Wakefield data.
“Office towers continued to be the most sought-after property type in the local market while residential buildings have gained rising interest from institutional investors,” said Eric Lu, director of investment and advisory services for Cushman & Wakefield’s China operation.
Office buildings took up 75 percent by value and 70 percent by volume of the total investment deals in Shanghai this year, the data showed.
ALIBABA’S cloud computing unit today signed deals with established partners to deepen collaboration in artificial intelligence to better serve the real economy.
“Artificial intelligence should be better combined with industries to solve issues in the real economy and to lead the next wave of industrial revolution,” said Alibaba Cloud president Hu Xiaoming.
“We want to push forward the applications of artificial intelligence technologies in a wide number of areas,” he said at the Cloud Computing Conference today.
Alibaba Cloud’s partners include China Telecom, Xinhua Bookstore and Beijing Capital International Airport.
China is also seeking to improve the AI technology in the next three years and to apply applications widely in multiple areas ranging from smart automobiles to robots and drones.
Alibaba Cloud also unveiled an AI program tailored for the aviation, financial and retail industries yesterday.
Its AI solution for the financial industry could help evaluate the credibility status of companies and enhance risk control measures.
UBER should be classified as a transport service and regulated like other taxi operators, the European Union’s top court said in a landmark ruling yesterday that could impact other online businesses in Europe.
Uber, which allows passengers to hail a ride through an app on their smartphones, has transformed the taxi industry since its launch in 2011 and now operates in more than 600 cities globally.
In the latest of a series of legal battles, Uber had argued it was simply a digital app that acted as an intermediary between drivers and customers looking for a ride and so should fall under lighter EU rules for online services.
“The service provided by Uber connecting individuals with non-professional drivers is covered by services in the field of transport,” the European Court of Justice said.
“Member states can, therefore, regulate the conditions for providing that service,” it said.
The case follows a complaint from a professional taxi drivers’ association in Barcelona that Uber’s activities in Spain amounted to misleading practices and unfair competition from Uber’s use of non-professional drivers — a service Uber calls UberPOP and which has since been suspended in Spain and other countries.
Uber has taken the fight to regulators and established taxi and cab companies, expanding from a Silicon Valley start-up to a business with a valuation of US$68 billion.
Following changes at the top and legal battles, it recently adopted a more conciliatory approach under its new chief executive Dara Khosrowshahi.
The European case had been widely watched as an indicator of how the burgeoning gig economy, which also features the likes of food-delivery company Deliveroo, would be regulated in Europe.
The ECJ said Uber “exercises decisive influence over the conditions under which the drivers provide their service” and that without the Uber mobile app “persons who wish to make an urban journey would not use the services provided by those drivers.”
The decision is unlikely to have an immediate impact on Uber’s operations in Europe, where it has cut back its use of unlicensed services such as UberPOP and adheres to local transport laws.
“This ruling will not change things in most EU countries where we already operate under transportation law,” an Uber spokeswoman said in a statement.
“As our new CEO has said, it is appropriate to regulate services such as Uber and so we will continue the dialog with cities across Europe. This is the approach we’ll take to ensure everyone can get a reliable ride at the tap of a button.”
Uber is in the middle of a legal battle over its right to operate in London, its most important European market.
Bernardine Adkins, head of EU, Trade and Competition Law at Gowling WLG, said the ruling provided “vital clarity to its (Uber’s) position within the marketplace.”
“Uber’s control over its drivers, its ability to set prices and the fact its electronic service is inseparable from its ultimate consumer experience means it is more than simply a platform connecting drivers to passengers.”
IRU, the world road transport organization, which includes taxi associations, cheered the ruling as finally offering a level playing field for providers of the same service.
CHINA’S number two dairy company will be the official supplier of drinkable yoghurt and pre-packaged ice cream at next year’s World Cup after signing an agreement with global soccer body FIFA yesterday.
China Mengniu Dairy Co has become the fourth company from the country to sign a deal with FIFA after Dalian Wanda, Hisense and Vivo.
Chinese firms have increasingly been backing high-profile world sports events, especially in soccer, even though the country’s own team failed to clinch a spot in the tournament scheduled to kick off next June.
FIFA said in a statement that Mengniu would be “the official drinkable yoghurt and pre-packaged ice-cream of the FIFA World Cup and the official milk and powdered milk of the FIFA World Cup.”
“Mengniu is one of the biggest dairy producers in the world and is a strong brand in the Chinese market. Growing the game worldwide is one of our key priorities,” said FIFA’s chief commercial officer Philippe Le Floch.
Wanda is a so-called tier one partner, meaning they receive the highest sponsorship rights, including rights to all FIFA competitions and corporate activities up to and including the 2030 FIFA World Cup.
Mengniu, Vivo and Hisense are so-called tier-two partners who have sponsorship rights for the tournament in Russia.
FIFA is trying to recover from the worst corruption scandal in its history and has been struggling to sign up sponsors since several dozen football officials, including several in senior FIFA positions, were indicted in the United States in 2015 on corruption-related charges.
FIFA offers a maximum of 36 sponsorship slots and it still has around half of those open six months before the tournament in Russia.
FIFA needs sponsorship to help reach its target of a US$100 million surplus for the four-yearly cycle ending at the 2018 World Cup.
SHANGHAI stocks fell yesterday after iron and steel companies as well as property developers declined after the Chinese Academy of Social Sciences said investment in the real estate sector is likely to slow next year.
The Shanghai Composite Index edged down 0.27 percent to close at 3,287.61 points.
Shares of iron and steel providers, telecommunication firms and property developers were among the biggest decliners yesterday.
Xinjiang Ba Yi Iron & Steel Co Ltd slumped 6.58 percent to 13.48 yuan (US$2.05) and Lushang Property Co Ltd lost 3.95 percent to 3.95 yuan. Beijing Urban Construction Investment & Development Co Ltd fell 4.57 percent to 13.37 yuan.
“Since the second quarter of this year, investment in the real estate sector has started to decline. We estimate that the investment in real estate is likely to slow next year,” Lou Feng, a researcher at the Chinese Academy of Social Sciences, said at a conference yesterday.
Lou attributed the slowdown to the Chinese government’s tightening measures being implemented around the country, which has been effective in maintaining a stable property market.
Sentiment dimmed as investors became concerned over tightened supervision. China said it would continue to battle illegal financial activities, and curb financial risks.
CAOHEJING Nanqiao Business Park yesterday signed agreements with more than 10 companies to develop itself as a new technology and innovation center in the southern part of Shanghai.
The companies include big-name real estate and investment managers like CBRR (Commercial Real Estate Services) and JLL (Jones Lang LaSalle).
A batch of startups, whose business covers cross-border e-commerce, biotherapy and artificial intelligence-driven translation device, also said yesterday they will set up facilities in the park which aims to become a “technology oasis.”
Firms in the park will get rent reduction, investment from industrial funds, and favorable tax policies, said Zhang Sifu, chairman of the park.
The 720,000 square meter park, founded in 2016, is a subsidiary of Lingang Group, a state-owned industrial park operator. The company has nearly 20 industrial parks in Shanghai.
Bottles of Tsingtao beer are placed on shelves at a supermarket in Shanghai in file photo. Japanese brewer Asahi Group Holdings said yesterday it would sell its 19.99-percent stake in Tsingtao to the Chinese brewer and to Fosun Group. Fosun will pay US$847 million to buy about 90 percent of some 270 million shares held by the Japanese group, Asahi said in a statement. Tsingtao separately will buy the remainder for HK$735 million (US$93.94 million).
IN a world of changing regulations, concerns about cybersecurity and pressure to innovate or lose business, corporations are demanding new solutions and their bankers are turning to technology to provide them. In short, companies want new ways to expedite, document and safeguard cash flows.
One popular method is cash pooling, which is a mix enabling centralized management of the accounts within a corporation.
Companies now face challenges from regulations and from cybersecurity, said Gu Wei, head of treasury services in China for JPMorgan Chase.
To serve its clients better, the bank rolled out its Virtual Branch service in China this May, she said. It turns paper-based documentation work into digital format.
With this new service, clients can upload, check and store their supporting documents electronically and there will be no need for them to be physically present at traditional bank branches, according to the bank.
“The portal’s sophisticated Dashboard offers track-and-trace capabilities, which allows clients to check and monitor the end-to-end workflow progress of all their cross-border merchandize trade transactions, within a cohesive platform,” Gu said.
Deutsche Bank, a traditional market leader in cash management, is also turning to high-tech systems to retain its position.
“We are talking about how to maximize technology and how to help our clients manage data and connect them with different systems,” said Mahesh Kini, managing director and head of global transaction banking for China at Deutsche Bank.
One of those systems, designed by the European Union, is the Revised Payment Service Directive, shorthanded to PSD2. It aims to revolutionize the industry by allowing non-bank businesses like Amazon and Facebook to participate in payments and data management systems, thereby competing with banks.
“Next year is going to be a big year as the new payment infrastructure comes into play in Europe and brings non-banks into the picture,” said Kini. “We are looking at how to help companies navigate through this change.”
Citibank said it plans to “keep ahead of the market” by thinking ahead and responding with anticipated changes. That has worked in the past. Citi was the first bank to introduce cash pooling to China.
Back to 2013, the bank heard from clients that they needed strong solutions for cross-border cash flows. The lender added a yuan function to its system even before the People’s Bank of China unveiled relevant policies late that year, Pei Yigen, executive vice president and country head of China at Citi Treasury, told Shanghai Daily during a recent interview.
“We take great pride in this move because we anticipated the trend and made preparations in advance,” he said. “So when the policy came out, we were ready in terms of product, system and customers.”
Another innovation where Citibank China took the lead was electronic commercial drafts — developed with “Chinese characteristics.” It came in response to problems foreign companies were having with manual processing of drafts.
“We understood the problems and saw that digitalization would be an irreversible trend in this regard,” Pei said. “So we invested heavily ahead of our peers, and when the People’s Bank of China began to push ahead with electronic drafts last year, we were able to capture the trend quickly.”
The bank took it a step further by introducing a host-to-host solution for e-draft this October, enabling its clients to process the features of e-draft entirely through their Enterprise Resource Planning system without manual interface.
GERMANY’S competition watchdog said yesterday that Facebook was abusing its dominant position to “limitlessly” harvest user data from outside websites and apps, allowing its advertisers to target customers with hyper-specific ads.
In a preliminary assessment, the Federal Cartel Office said it had focused its probe on the US social media giant’s use of third-party sites to track users’ browsing behavior, often without their knowledge.
“The authority holds the view that Facebook is abusing this dominant position by making the use of its social network conditional on its being allowed to limitlessly amass every kind of data generated by using third-party websites,” the FCO said in a statement.
These third parties include Facebook-owned services such as WhatsApp and Instagram, but also sites and apps that are less obviously linked to Facebook, often through the “like” button at the bottom of a webpage.
The FCO said many users were unaware their movements on other sites were being shadowed by Facebook, and that it “can also not be assumed” that users consent to the data collection.
“Consumers must be given more control over these processes and Facebook needs to provide them with suitable options to effectively limit this collection of data,” it said.
The data transmitted from third sources give Facebook a wealth of information about its users, from which the Silicon Valley titan benefits financially by offering targeted advertising on its website.
FCO president Andreas Mundt said the social network’s advertising space was “so valuable” precisely because it has “huge amounts of personalized data at its disposal.”
Facebook has over 30 million active monthly users in Germany, making it the most popular social network.
Facebook, which has also come under fire in other countries for its use of data harvesting, said in an e-mailed response that it would reply to the FCO’s questions.
But it said the preliminary report “paints an inaccurate picture,” stressing that Facebook was not a dominant company and that it complied with European data protection laws.
The anti-trust watchdog expects to finish its probe by mid-2018, some two years after it was launched.
The FCO does not have the power to slap Facebook with a fine, but the company can be forced to alter or even cease some of its activities.
The German scrutiny marks another setback for Facebook in Europe at a time of heightened concerns over the tracking of personal data online.
On Monday, France’s data protection agency told WhatsApp it needed to obtain users’ permission to transfer some information to its parent company Facebook, and gave it a month to comply.
A South Korean exchange trading Bitcoin and other virtual currencies declared itself bankrupt yesterday after being hacked for the second time this year, highlighting the risk over cryptocurrencies as they soar in popularity.
The Youbit exchange said it had lost 17 percent of its assets in the attack yesterday.
It came eight months after nearly 4,000 Bitcoins — then valued at 5.5 billion won (US$5 million) and nearly 40 percent of the exchange’s total assets — were stolen in a cyber attack blamed on North Korea.
“We will close all trades, suspend all deposits or withdrawals and take steps for bankruptcy,” the exchange said in a statement which did not assign blame for the latest attack.
All its customers will have their cryptocurrency assets marked down by 25 percent, it said, adding it would do its best to “minimize” their losses by using insurance and selling the remains of the firm.
The exchange — founded in 2013 — brokered trades of multiple virtual currencies including Bitcoin and ethereum.
It is the first time that a South Korean cryptocurrency exchange has gone bankrupt.
Investing in virtual currencies has become hugely popular in the hyper-wired South, whose trades account for some 20 percent of global Bitcoin transactions.
About one million South Koreans, many of them small-time investors, are estimated to own Bitcoin. Demand is so high that prices for the unit are around 20 percent higher than in the US, its biggest market.
Global Bitcoin prices have soared around 20-fold this year.
Concerns over a potential bubble have unnerved Seoul’s financial regulators, who last week banned its financial institutions from dealing in virtual currencies.
SHANGHAI stocks ended higher yesterday on gains made by financial companies and a bullish World Bank report on China's economic outlook.
The Shanghai Composite Index rose 0.88 percent to close at 3,296.54 points.
Investors were cheered after the World Bank said yesterday that China’s economic growth has remained strong this year, supported by rising household incomes and improving external demand. The bank said in its report that China’s economic growth is projected at 6.8 percent this year, which exceeded initial expectations.
In October, the bank predicted China’s economic growth this year at 6.7 percent, 0.1 percentage point below the growth rate released yesterday.
The bank also cited the recovery in global trade for supporting economic activity in China this year.
“Business confidence has improved as well, job creation remains buoyant, capital outflows have stabilized and the renminbi has appreciated against the US dollar,” the bank said in the report.
Hangzhou Freely Communication Co Ltd rose 6.75 percent to 51.90 yuan (US$7.85), New China Life Insurance Co Ltd added 6.69 percent to 68.10 yuan and Jiangsu Wujiang Rural Commercial Bank Co Ltd climbed 4.09 percent to 8.40 yuan.
ONLINE broadcasting platform Huajiao Live expects viewers to pay 5 billion yuan (US$757 million) for content and broadcasts this year, a jump of 60 percent year on year.
Huajiao, founded by China’s biggest cyber security firm 360, plans to cooperate with TV stations to improve brand awareness and help widen the influence of Internet celebrities on the platform. The platform shares income with broadcasters in the ratio of 30 to 70 on average.
Viewers are set to pay 5 billion yuan to Huajiao’s broadcasters, who offer online stream performance from talk show, dance, music playing, use of cosmetics to sports. In 2016, viewers paid about 3 billion yuan to Huajiao, which raised about 1 billion yuan in the latest round of financing in May.
Barely a presence three years ago, the fastest-emerging Internet broadcasting sector produced revenue of more than 30 billion yuan in 2016. The income will triple in 2020, according to an estimate of investment bank China Renaissance Securities.
HONG Kong aims to enhance cooperation with Shanghai to serve the treasury needs and overseas expansion of Chinese mainland companies under the Belt and Road Initiative, the head of Hong Kong's investment promotion agency told Shanghai Daily yesterday.
“Within the recent half year Hong Kong has offered Shanghai companies really exciting opportunities as they continued on their own internationalization,” said Stephen Phillips, director-general of InvestHK. “Hong Kong has so many ingredients that can help Shanghai companies go all around the world.”
He added that Hong Kong promotes its lower tax rates and open market to attract mainland investment. Hong Kong in October halved the profit tax rate for the first HK$2 million (US$256,000) generated by a small and medium sized company to 8.25 percent.
The Hong Kong government has also cut the tax for aircraft leasing companies in July.
AFTER a year of relatively healthy global economic growth, economists are predicting pretty much the same for 2018 — a neither too-hot nor too-cold Goldilocks scenario, but with little sight of the three bears.
The idea is that all is pretty much on track for growth that will be stronger than in 2017.
Part of this may come from the fact that forecasters generally got it wrong last year, underclubbing this year’s economic performance, particularly for the eurozone and Japan.
The International Monetary Fund, for example, saw 2017 global growth at 3.4 percent with advanced economies expanding 1.8 percent. It now reckons them at 3.6 percent and 2.2 percent.
It had the eurozone and Japan growing 1.5 percent and 0.6 percent, respectively. It now has them at 2.1 percent and 1.5 percent.
This performance has made some economists optimistic. Nomura is among the more bullish: “Global growth has far more self-reinforcing characteristics at present than at any time over the last 20-30 years.”
But Goldilock’s bears do have a habit of showing up. There are huge numbers of potential political and economic risks to the status quo. But as in the fairy tale, let’s go with just three: central banks, trade, and bubbles.
Part of 2017’s global economic success was put down to a combination of extraordinarily loose monetary policy and competent management by central banks of their attempts to wean the world off such largesse.
Entering 2018 the US Federal Reserve is lining up for three more hikes, the European Central Bank is slowly cutting back on its asset purchases, and China is increasing rates.
All of this is being carefully flagged by the policymakers, but mistakes can happen and any significant shift of gear could cause a sharp retrenchment in consumer and corporate spending.
The amount of US corporate debt outstanding, for example, is nearly US$8.8 trillion, according to Sifma, the US securities industry group. That is up 35 percent since 2010 and a major driver behind corporate expansion.
“Financial stability risks pose a bigger threat to the continuation of the (growth) cycle than price stability risks,” Morgan Stanley co-head of economics Chetan Ahya wrote in a 2018 outlook, saying US corporations were the most exposed to higher interest rates.
This implies that central bank tightening to curb overly robust growth or inflation risks creating a credit squeeze — hence the caution in Washington, Frankfurt, Beijing and Tokyo.
President Donald Trump’s 2016 election campaign was peppered with “America First” rhetoric and a dollop of belligerence about other countries.
In office, the Trump administration has done a few things in the name of US interests to upset multilateralists.
It has, for example, launched an investigation into steel imports, blocked the appointment of judges at the World Trade Organization, and withdrawn the United States from a now 11-member Pacific Rim trade pact.
Other measures have not progressed as far, notably the threat to withdraw from the North American Free Trade Agreement, and the pledge to reverse the trade deficit with China.
But the US trade deficit increased to US$43.5 billion despite growth-driven US exports. The China-US deficit dropped a bit but was still US$34.6 billion in Beijing’s favor.
“The massive TRADE deficits must go down quickly,” Trump tweeted after a trip to Asia in November.
Were rhetoric to turn to practice, the economic climate of 2018 could quickly turn chilly.
It is far from just a China-US matter: the World Bank estimates world trade accounts for 52 percent of world GDP, more than doubling its clout over the past 50 years.
Bubbles are hard to gauge until they have popped (there is a tendency to say “this time it is different,” until it isn’t).
But if economists have learnt one thing from this century’s financial market crashes it is that they bring the house down with them.
The World Bank estimates that the global growth rate fell from around 4.4 percent in 2000 to some 1.9 percent in 2001, when the dot com bubble burst, and that the financial crisis prompted a plunge from a roughly 4.3 percent growth rate in 2007 to a 1.7 percent contraction in 2009.
What happens is that sudden losses in financial instruments cause companies and consumers to stop spending, leading to tumbling growth, layoffs, and debt defaults.
There are plenty of examples of assets that have soared continually and steeply in the past year: Bitcoin’s staggering rise is but the most obvious.
The CEO of Japanese automaker Subaru said yesterday he and all other executives would return part of their pay until next March following an inspection scandal at the company.“All executives will voluntarily return part of their pay,” CEO Yasuyuki Yoshinaga told a press conference.Last month Subaru recalled 395,000 vehicles from its domestic market after announcing in October that it had allowed uncertified staff to conduct inspections of some vehicles.Nine models, including a sports car that Subaru manufactures for Toyota, were recalled but vehicles sold overseas were not affected.The recall is estimated to have cost 20 billion yen (US$178 million), according to the automaker.A third-party investigative report submitted by Subaru to the government yesterday said the inspections by uncertified workers might have begun about three decades ago in the 1980s.The report also said workers concealed the practice from authorities during their visits to factories.The scandal came to light after the government ordered Japan’s automakers to check their inspections following the recall of some 1.2 million cars by Nissan in October.Nissan said the vehicles had failed to meet domestic rules on final inspections.The embarrassing admissions have hurt Japan’s auto industry, once the envy of the world.
PROSECUTORS have raided the headquarters of four of Japan's biggest construction companies, investigating alleged collusion on bids for a multibillion dollar maglev railway that Prime Minister Shinzo Abe’s government has backed as a showcase project.
TV news reports yesterday showed dark-suited investigators from the Tokyo District Public Prosecutors Office heading into the headquarters of Taisei Corp and Obayashi Corp, two of four companies targeted in the probe.
Shimizu Corp and Kajima Corp, the two others, issued statements yesterday acknowledging the raids.
Obayashi responded to a request for comment on reports it had admitted to the bid rigging by saying the company could not give further details because it was under investigation.
All the contractors have promised to cooperate fully with the investigation into the alleged violations of anti-trust laws. Reports said prosecutors are looking into alleged “obstruction of business” because the contracts for the line, called the Linear Chuo Shinkansen, are for private sector, not public contracts.
The US$80 billion magnetic levitation, or maglev, railway between Tokyo and the central Japanese city of Nagoya is a decades-long project that is set to cut travel time between the two cities to 40 minutes from the current 100 minutes once it opens in 2027.
JAPAN’S Mitsubishi Materials Corp said it has found more cases of products shipped with possible falsified specifications as it investigates a widening data-fabrication scandal that has affected more than 300 of its customers.
The revelation is among the latest in a slew of scandals to rock Japan’s manufacturing industry.
Mitsubishi Materials said yesterday that its unit, Mitsubishi Cable Industries Ltd, shipped magnetic wires with possibly fabricated data to five customers, and that it was checking on the safety and performance of the products.
Mitsubishi Materials had said last month that the same unit had inappropriately distorted data for rubber sealing products, used in aircraft and cars.
While no safety issues have been identified in the earlier cases, the company has said customers in Japan, the US, and China may have received affected products.
Mitsubishi Materials President Akira Takeuchi said the firm in its ongoing investigation into the matter had not found any evidence to suggest senior executives knew of the failings.
“I do not think there were instances of infraction of compliance issues based on instructions from headquarters,” Takeuchi said.
THE World Bank has raised China’s growth forecast for this year from 6.7 percent to 6.8 percent, based on rising household income and improving external demand, according to its latest report yesterday.
It was the bank’s second upward revision for China, after it revised up the projection from 6.5 percent to 6.7 percent in April.
“China has maintained growth resilience and gained reform momentum as the authorities have undertaken a host of measures aimed at reducing macro-economic imbalances and limiting financial risks without notable impact on growth,” said John Litwack, World Bank lead economist for China. “As a result, economic rebalancing received a boost. The growth of household incomes and consumption accelerated relative to investment.”
He underlined the fact that net exports had returned to positive contribution to growth, business confidence improved, job creation remained buoyant, capital outflows stabilized and the yuan appreciated against the US dollar. The bank estimated China’s GDP growth to decelerate to 6.4 percent in 2018 and 6.3 percent in 2019, mainly due to domestic policy tightening.
“Prudent monetary policy, stricter financial sector regulation, and the government’s continuing efforts to restructure the economy and to reign in the pace of leveraging are expected to contribute to the growth moderation,” according to the report.
“Favorable economic conditions make this a particularly opportune time to further reduce macro-economic vulnerabilities and pursue reforms that target better quality, more efficient, fairer, and more sustainable development,” said Elitza Mileva, World Bank senior economist and co-author of the report.
The report pointed out that the successful implementation of reforms of government budget and China’s pension system were critical to the country’s macro-economic stability, economic rebalancing and social transformation in the coming years.
The major downside risk to the forecast is the rising leverage of the non-financial sector.
“Despite the recent slowdown, credit continues to grow considerably faster than GDP. Outstanding bank loans reached 150 percent of GDP in November 2017, up from 103 percent at the end of 2007,” the report said.
China’s GDP expanded 6.9 percent year on year in the first three quarters, above the government’s target of around 6.5 percent for this year.
The International Monetary Fund also revised up its China forecast for the fourth time — 6.8 percent in 2017 and 6.5 percent the year after.
CHINA’S top economic planner yesterday ordered local authorities to strengthen regulation on the pricing of heating and natural gas during the upcoming holidays as demand surged.
The National Development and Reform Commission said in a statement that the heating prices for households converting from coal to gas should be regulated more strictly during the New Year and the Spring Festival.
Authorities should punish those who fabricate and spread information on price hikes, engage in price rigging and fixing, or make arbitrary charges for installing heating equipment, the NDRC said.
The move came amid surging natural gas demand in China as millions of households switched to gas from coal for heating this winter to help combat air pollution.
The country’s natural gas consumption rose 18.9 percent year on year in the January-November period, 12 percentage points higher than that in the first half and more than 8 percentage points higher than the average growth in the previous five years, according to NDRC data.
North China’s Hebei Province has activated a second-level alert for natural gas supply, indicating that the province’s natural gas supply is 10-20 percent lower than its total demand.
China’s major state-owned oil firms have been told to maximize production at domestic gas fields. An NDRC spokesperson said that gas supply for industrial use will be reduced moderately to better meet household demand.
Xu Bo, an analyst with China National Petroleum Corp’s Economics and Technology Research Institute, estimated that natural gas use is expected to reach 230 billion cubic meters this year, with 20 billion cubic meters coming from the coal-to-gas transition. Xu projected a growth rate of 17 percent for natural gas consumption in 2017, compared with 7 percent last year.
IN a world where corporations are expanding their footprint across the globe, cash is not only king, it is also on the move.
In fact, billions of dollars change hands every day, creating a vast system where players need cash management in order to operate efficiently and profitably. In China, those services are expanding because of deregulation and the technology of the digital age.
That management is often called transaction banking. Simply put, it’s the process of transferring money and includes commercial banking products, domestic and cross-border payments, professional risk mitigation for international trade, and the provision of trust, agency, depository, custody and related services.
About 20 years ago, Citibank first introduced rudimentary cash management services into China.
“Before that, Chinese banks were pretty much just providing some very simple clearing and settlement services,” said Pei Yigen, Citi China’s country head of treasury and trade solutions.
He said that globalization is a major driver in what is now a booming sector and the trend is expected to continue through 2018.
Transaction banking began coming into its own after the 2008 global crisis as more banks repositioned themselves in a daunting market environment, according to the recent annual report by China Transaction Banking 50 Forum.
“When you look back on the crisis, strong transaction banking business really helped us through the crisis,” said Mahesh Kini, managing director and head of global transaction banking in China for Deutsche Bank. “Every client who has working capital running needs cash management. Everyone. It brings a lot of stability to our balance sheet.”
Indeed, transaction banking is one of the major top line and bottom line business contributors for Deutsche Bank China, according to Kini.
Hang Seng Bank (China) Ltd said it registered 70 percent growth in cash management during the first half of 2017.
Gu Wei, head of treasury services for China at JPMorgan Chase, likens cash management to a marriage. Once clients become wedded to our services, she told Shanghai Daily in a joking way, divorce becomes unlikely.
Visibility of cash positions, concentration and profit are the three goals of chief financial officers and corporate treasurers, according to Kong Lingji, a partner of consulting at PricewaterhouseCoopers Management Consulting (Shanghai) Ltd.
As such, banks are constantly striving to meet those demands, he added.
Talking of the recent trends, Deutsche Bank’s Kini cited the Nets Union Clearing Corporation, a new online clearinghouse platform backed by the People’s Bank of China.
“It will be fully running next year,” he said. “Our clients will want us to receive money through the clearinghouse for goods they are selling on Taobao or JD.com. That is a huge change that we are discussing with clients now. It’s really about putting your technology capabilities to leverage the infrastructure changes and, at the same time, give clients better service.”
With deregulation, cross-border money flows are holding steady.
“The trend is very obvious,” said JPMorgan’s Gu. “Previously, domestic cash management dominated our business, but now transactions are increasingly done beyond borders.”
As the yuan makes inroads as a global currency, banking giants are having to rethink their strategies.
“We used to focus on serving inbound money flows, but we are now thinking the other way around — that is, how we can serve the outbound flows of Chinese clients,” Pei said.
In this new world of finance, technology has become the name of the game.
JPMorgan, Gu said, invested US$9.5 billion globally last year on technology across the bank’s operations. About US$3 billion of that went to new initiatives like big data, cloud computing, robotics and machine learning.
“One area with great potential is to apply technology to speed up our interbank information exchanges, one of the trouble spots facing the banking industry,” she said. “Previously, if any transaction was suspected of links to money laundering, we had to halt the transaction and ask our counterparty bank to clarify the underlying assets. That back-and-forth exchange can be very time-consuming.”
Hang Seng Bank (China) launched a new service called Virtual Account this year, which increases the efficiency of collection and payment services.
“Take, for example, tuition payments,” said Kelvin Au, deputy chief executive and head of commercial banking at the bank. “Schools deal with a large number of receivables from thousands of students. Setting up a universal virtual account will help them handle the money in a much easier way.”
Transaction banking is a very competitive business, with financial institutions scrambling to offer the latest and best solutions to attract clients.
Autobahn, initiated by Deutsche Bank China, is an app-based platform where clients can access all products with a simple login.
“It is a very modern, very smart data management system, enabling clients to make better decisions,” said Kini.
This October, DBS Bank launched an online treasury and cash management simulation tool. Users are able to simulate various bank and corporate solutions on its Treasury Prism at no cost, and review potential opportunities that will maximize value for their enterprise, according to the bank.
Talking about the competition in the market, Deutsche Bank doesn’t seem too worried.
“Each one has a position in the market,” said Kini. “If you put Deutsche Bank in a diagram, we are somewhere in the middle, with large global banks on one side and specialist banks on the other. We can move and do both sides from the center. That is one of our advantages: being flexible.”
With China’s Belt and Road Initiative expanding the tentacles of trade, cross-border liquidity becomes crucial for companies.
“I think that more investment will come into the country,” said Kini. “It presents new opportunities. And I am very confident on China and on transaction banking in 2018.”
CHINESE leadership opened the annual economic work meeting yesterday, drawing plans for 2018 with a target of high-quality growth while minimizing financial risks.
The Central Economic Work Conference will review the economic work of the past five years, and make policy priorities for 2018 with a focus on implementing the decisions from the 19th National Congress of the Communist Party of China.
Observers believe that the decisions to be made at the meeting will reflect China’s new development concept featuring high-quality development.
The event is being closely watched as it marks the first economic work conference since the 19th CPC National Congress was held in October at which the leadership declared China’s economy has been transitioning from a phase of rapid growth to a stage of high-quality development.
The economic agenda for 2018 will focus on deepening supply-side reform, invigorating market participants, applying rural revitalization strategy, pushing coordinated rural-urban development and all-around opening-up, observers say.
The work for next year will also aim at helping improve people’s living standards, building a housing mechanism with lasting effects, and supplying more high-quality ecological products.
Language on monetary and fiscal policy will be under scrutiny for even minor changes.
China set the tone of its monetary policy in 2017 as prudent and neutral, keeping appropriate liquidity levels but avoiding excessive liquidity injections.
In the lead-up to the meeting, the Political Bureau of the CPC said the country will seek solid progress in curbing major risks, eradicating poverty and controlling pollution, the “three tough battles” for 2018.
China’s gross domestic product expanded 6.9 percent year on year in the first three quarters, above the government’s target of around 6.5 percent for this year.
The economy has shown structural improvements, with new models contributing more than 10 percent to the economic growth, and the growth rate of residents’ income outstripping the overall economic growth.
Manufacturing data show the economy remains in a sweet spot and points to continued resilience in China’s growth, said Tom Orlik, Bloomberg’s chief Asia economist.
Backed by better-than-expected growth, the International Monetary Fund has revised up its forecast for the fourth time this year, to 6.8 percent for 2017 and 6.5 percent for 2018.
The Asian Development Bank also revised up China’s growth prospects for 2017 from 6.7 percent to 6.8 percent as household spending held steady.
The world’s second-largest economy, however, still faces a complicated global environment and domestic structural conflicts, potential risks in the financial system, and disparities by industries and regions.
The IMF recently warned of China’s rapid build-up of credit and risky lending moving away from banks toward less-regulated parts of the financial system known as “shadow banking.”
“The system’s increasing complexity has sown financial stability risks,” the IMF said, advising China to take measures such as strengthening systemic risk oversight and improving regulation.
In the past year, China’s leaders have made financial stability one of their top priorities and have made notable progress in their bid to bring to heel some of the major “gray rhinos,” generally shadow banks that pose significant threats to the economy.
“Given the size and importance of the Chinese market, with the world’s largest banks and second-largest stock market, that is welcome news for China and the world,” Ratna Sahay and James P. Walsh, two senior IMF officials, said in a recent blog post.
Global ratings agency Moody’s this month predicted a stable outlook for Chinese financial institutions through 2018, citing strengthening regulations and steady economic growth.
Over the past four years, China’s economy has expanded by an average annual rate of over 7 percent, outstripping the 2.6 percent average global growth and the 4 percent growth of developing economies.
It contributed over 30 percent of global economic growth, and is seen as powerhouse and anchor of the global economy.
HONG Kong, Macau and Taiwan residents employed on the Chinese mainland can now join the public housing provident fund program, the Ministry of Housing and Urban-Rural Development announced yesterday.
A statement, which was issued jointly by the Ministry of Finance, the People’s Bank of China, the Hong Kong and Macau Affairs Office of the State Council and the Taiwan Affairs Office of the State Council, said people from the three regions keen to participate in the program will be treated on par with their mainland counterparts.
China’s public housing provident fund offers favorable lending rates than commercial banks. In Shanghai, for example, employees covered by the fund pay 7 percent of their monthly salary to the fund and their employers are required to match the amount.
Prior to the latest move, the market response to these policies in some mainland cities were lukewarm.
Shanghai acted on the initiative way back in September 2015.
“Over the past two years, I received very few inquiries from Hong Kong, Macau and Taiwan residents about participating in the housing fund program,” said a staff member of the hotline service operated by the Shanghai Housing Provident Fund Management Center.
Lu Wenxi, senior manager of research at Shanghai Centaline Property Consultants Co, said: “The latest statement by the ministry reflects some improvement in the government policies as it allows people from the three regions, who represent a very small part of the workforce on the mainland, to enjoy the same benefits as their mainland counterparts.”
“However, the cold response it received in Shanghai, for example, should be a pointer as very few Hong Kong, Macau and Taiwan residents have plans to buy a house here.”
Lu estimated people from the three regions account for less than 1 percent of the total home buyers in Shanghai.
A human resources director with a US-based chemical company confirmed to Shanghai Daily that few employees from the regions have shown interest in participating in the housing provident fund program.
“The majority of our employees from the three areas plan to be on the Chinese mainland only for few years,” said the director who did not want to be identified.
“In almost all cases, our non-mainland Chinese employees prefer housing allowances, which is usually included in their overall package, over provident fund that requires them to pay a fixed amount of their salary to the fund every month. They can only withdraw the money when they leave the Chinese mainland.”
A Blockchain platform that targets the booming Financial Technology, or FinTech, and artificial intelligence sectors in the country is on trial in Shanghai — the first of its kind in China, Shanghai Daily learned yesterday.
Shanghai-based startup Bottos offers a trading platform between AI firms and organizations that can handle a huge volume of data, which are a key resource to help AI firms improve algorithms.
Bottos’ applications have unique advantages of Blockchain like trackability, creditable data and records and user-friendly interfaces, said the company. Its unidentified investors are from both finance and tech industries.
Blockchain, which distributes a database network that maintains a continuously growing list of “blocks” with data records, provides a tamper-proof data structure for virtual transactions.
Bottos now boasts an online community of over 100,000 users. Bottos has tech partners including ARM, SenseTime and Haier.
In November, China’s Bitcoin trading platforms stopped topping up and cash services after the government halted Bitcoin trading in September as it clamped down on crypto-currencies.
China’s direct investment in FinTech sectors in 2016 tripled annually to 6.5 billion pounds (US$8.1 billion), pointing to a huge potential in online finance, blockchain and other applications, EY said recently.
China aims to develop a AI market valued at more than 150 billion yuan (US$22.66 billion) by 2020.
TENCENT and JD.com have invested a combined US$863 million in online shopping service provider Vipshop Holdings to expand the offerings of the two Internet giants through tie-ups and partnerships.
The investment gives them a total 12.5 percent stake in Vipshop — seven percent held by Tencent and 5.5 percent by JD.com.
The move is aimed at challenging Alibaba's dominance.
The purchase of newly issued shares of Vipshop at US$65.40 per share is a 55 percent premium over the closing price on its last trading day.
“The strength of Vipshop’s flash sale model and apparel businesses, as well as its outstanding management team, create clear and strong synergies with us,” said JD chairman Richard Liu.
JD.com’s expansion beyond electronics and home appliances include its recent push into the apparel segment and a partnership with online fashion retailer Farfetch inked earlier this year.
“We already see substantial demand from our users to discover, discuss and purchase branded apparel in our applications, and we believe that connecting our users more deeply to products on Vipshop’s platform will enrich their online experiences while benefiting Vipshop,” Tencent president Martin Lau said in a statement.
Tencent is JD’s largest shareholder, with a stake of about 18 percent, and the Hong Kong-listed Internet giant has been stepping up collaboration with e-commerce players by allowing them to leverage Tencent’s social networking traffic.
Tencent will allow Vipshop an entry point on the interface of its mobile social networking application WeChat's wallet segment, and JD.com provides Vipshop entry into the main page of JD.com’s mobile application.
This will help Vipshop in raising transaction sizes beyond it own online channels.
"We will explore collaboration with Tencent and JD in multiple areas including a strategic alliance with brand suppliers and online traffic,” said chairman and CEO of Vipshop Shen Ya.
Alibaba’s financial services affiliate Ant Financial Services Group plans to boost registered capital in its consumer finances businesses to 12 billion yuan (US$1.79 billion) to support the healthy development of the consumer finance market in China amid a recent crackdown on unlicensed cash-loan services.“The investment will allow Ant Financial’s consumer finance businesses to better meet customers’ financial needs, and we will reserve the option to further increase registered capital in the future based on business operations and regulatory requirements,” said an e-mail statement yesterday. The combined registered capital of Chongqing Mayi Micro Loans Co Ltd, which operates Ant Financial’s credit pay service Huabei, and Chongqing Mayi Shangcheng Small Loans Co Ltd, which handles cash loan service Jiebei, will be raised from 3.8 billion yuan to 12 billion yuan.“We have always been determined to develop our consumer finance services to support the development of the real economy,” Ant Financial said.
SHANGHAI stocks closed higher yesterday amid gains made by coal providers and consumer companies while investors were buoyed by the Chinese central bank injecting liquidity in the financial market.
The Shanghai Composite Index edged up 0.05 percent to close at 3,267.92 points.
Investor sentiment was boosted after the People’s Bank of China injected a net liquidity of 300 billion yuan (US$45.3 billion) into the financial market via reverse repurchase agreements, according to a statement published on its official website.
Yanzhou Coal Mining Co Ltd climbed 6.22 percent to finish at 14.17 yuan (US$2.14).
Hebei Hengshui Laobaigan Liquor Co Ltd added 4.55 percent to close at 32.19 yuan.
BITCOIN futures received a lukewarm reception at its launch on the CME Group Inc on Sunday, although market experts believe a recent rally in the cryptocurrency has further to go.
The CME Bitcoin front-month futures contract did open higher at US$20,650, but dropped 6 percent within the first half hour.
The contract was last at US$18,805, below the US$19,500 reference price set by the exchange for the January contract.
The reference price, from which price limits are set, is US$19,600 for the February contract, US$19,700 for March and US$19,900 for June, according to CME.
On December 10, Chicago-based derivatives exchange Cboe Global Markets launched Bitcoin futures, which saw the price surge nearly 20 percent in its debut.
The week-old Bitcoin futures contract at Cboe was last trading at US$18,890, up 4.3 percent.
Spot Bitcoin eased 1.9 percent on the Bitstamp exchange to US$18,650, after surging to a record high of US$19,666 on Sunday.
The launch of Bitcoin futures is viewed as a major step in the digital currency’s path toward legitimacy, which should encourage the entry of big institutional investors.
“We saw a nice open on light volume, but pretty uneventful so far,” Spencer Bogart, partner at Blockchain Capital LLC, said shortly after trading began on Sunday.
“This is a brand-new asset class and I think perhaps a lot of investors want to sit back and see how this plays out before dipping their toes in this market.”
Volume on CME was recently at 590 contracts. On its debut on December 10, the Cboe traded nearly 4,000 contracts during the full session.
Bitcoin was set up in 2008 by an individual or group calling itself Satoshi Nakamoto, and was the first digital currency to successfully use cryptography to keep transactions secure and hidden, making traditional financial regulation difficult if not impossible.
Some investors believe the CME Bitcoin futures could attract more institutional demand because the final settlement price is culled from multiple exchanges.
“The launch should increase buy side pressure and potentially be the catalyst that pushes Bitcoin above $20,000,” said Shane Chanel, a fund manager at ASR Wealth Advisers in Melbourne.
“The introduction by CME and CBOE has added validity acknowledging Bitcoin as a legitimate asset.”
SEVEN-DAY sales of new homes exceeded the 100,000-square-meter threshold in Shanghai for the first time in 11 weeks, boosted by robust demand for homes in outlying areas.
The area of new homes sold, excluding government-subsidized affordable housing, jumped 74 percent from the previous week to 123,100 square meters during the seven-day period ended on Sunday, Shanghai Homelink Real Estate Agency Co said in a report released yesterday.
The city’s outlying Fengxian District led with weekly transactions of new homes at 31,000 square meters. It was followed by Nanhui in Pudong New Area where 16,000 square meters of new homes were sold and Qingpu District with 15,000 square meters sold during the same period.
“The notable recovery in sales indicated that demand from end-users for medium to low-end homes remained strong in Shanghai,” said Zhang Yue, chief analyst with Shanghai Homelink. “Projects with comparatively affordable prices are always popular among general buyers.”
Around 75,000 square meters of new houses were unveiled locally last week, up 2.9 percent week on week. More than 750 new apartments at two projects were launched to notch the highest volume in 12 weeks, Homelink data showed.
Meanwhile the average cost of new homes shed 2.6 percent from the previous week to 47,493 yuan (US$7,171) per square meter. Three of the 10 best-selling projects sold for more than 50,000 yuan per square meter and one sold for below 30,000 yuan per square meter.
A residential development in Fengxian was the most sought-after project of the week after it sold 229 units, or 21,865 square meters, for 37,109 yuan per square meter each.
China’s 15 hottest housing markets continued to stabilize in November while signs of a pick-up began to emerge in the country’s second and third-tier cities, latest data released by the National Bureau of Statistics showed.Seven of the 15 cities, comprising first-tier cities and key second-tier cities, saw new home prices fall from October. Prices in four cities were flat from a month earlier and the remaining four posted month-on-month growth, according to the bureau, which tracks property prices in 70 major cities.In the four first-tier cities, new home prices in Beijing and Shanghai remained flat while those in Guangzhou shed 0.1 percent and Shenzhen’s dipped 0.2 percent.On an annual basis, Guangzhou, Xiamen, Jinan and Wuhan were the only four cities where prices climbed while the remaining 11 cities all posted declines.“New home prices in the majority of the country’s 15 hottest markets were lower than a year earlier, evidence that various policies implemented in different cities to quell speculation were effective in cooling these markets,” Liu Jianwei, the bureau's statistician, said. “Particularly in first-tier cities, both new and existing home prices have recorded slower growth for the 14 consecutive months.”New home markets in 10 out of the 70 cities saw month-on-month price drops, down from 14 in October.In the pre-owned housing market, 11 cities suffered price setbacks from a month ago, down from nine in October, according to the bureau.On a monthly basis, new home prices in second-tier cities climbed 0.5 percent while those of pre-owned houses edged up 0.3 percent. In third-tier cities, they gained 0.4 percent and 0.3 percent respectively in new home and pre-owned home markets.“On average, new home prices in the 70 cities expanded 0.42 percent in November from a month earlier,” Xia Dan, a senior researcher at the Bank of Communications, wrote in a report. “The larger increase compared to October was mainly boosted by a recovery in residential property sales in second and third-tier cities.”Sales of new homes in China continued to grow by single digit in the first 11 months of this year, while housing inventory fell again, according to data released earlier by the bureau.Over 9.57 trillion yuan (US$1.45 trillion) worth of new homes, excluding government-subsidized affordable housing, were sold between January and November, up 9.9 percent annually. In the first 10 months of the year the increase was 9.6 percent.
THE British government has signed an agreement with the Asian Infrastructure Investment Bank to contribute US$50 million to the bank’s project preparation special fund.
The agreement was signed by AIIB President Jin Liqun and British Chancellor of the Exchequer Philip Hammond.
CHINA and Britain have vowed to continue and strengthen cooperation on a wide range of economic, financial and trade issues, including speeding the introduction of a Shanghai-London stock connect program.
In a joint statement, coinciding with an official visit to China by British finance minister Philip Hammond, the countries also said they opposed trade protectionism and reaffirmed their support for the World Trade Organization as a key pillar of the global trade system.
THE second prototype of China’s domestically made narrow-body passenger aircraft C919 completed its maiden flight yesterday in Shanghai, marking a milestone in its efforts to enter the global aviation market.
The single-aisle aircraft took off at 10:34am from the fourth runway of the city’s Pudong International Airport and returned at 12:34pm after a longer duration and higher altitude test flight than its predecessor, which was on May 5.
The upgraded Inland Container Depot on the outskirts of Nairobi, Kenya is launched yesterday. The inland cargo handling facility that was upgraded by the China Roads and Bridge Corporation is set to decongest the port of Mombasa while lowering the cost of transporting goods. — Xinhua
“GRAY rhinos” have become the most hunted species in China — not on the prairies but in the financial sphere.
Slow, heavy and easy to neglect, rhinos can suddenly charge flat out, delivering a fatal attack — as can financial risk across the country.
THE success of Oxford University’s US$1 billion bond, the first in its 1,000-year history, is good news for Britain’s top academic institutions at a time of anxiety over Brexit-related funding shortfalls and calls to scrap student tuition fees.
The 100-year bond, launched on December 1 with a 2.5 percent coupon, has taken the market for deals for UK universities and colleges to a new level on a par with such big US names as Harvard and Yale.
CHINA will curb business activities of insurers with low asset liability management capabilities in a bid to address risks in the sector, said the country’s insurance regulator.
Insurance companies will be rated from A to D by the regulator based on their ability to ensure the matching of maturity, cash flow and cost on both sides of their balance sheets, and those with low ratings will be banned from certain investment activities, according to draft rules released by the China Insurance Regulatory Commission.
CHINA will set up funds totaling 50 billion yuan (US$7.6 billion) to invest in Belt and Road projects in Guangxi Zhuang Autonomous Region and ASEAN countries.
The funds will be established jointly by an investment arm of China’s policy bank China Development Bank and Guangxi Investment Group. They will be used to support infrastructure and industrial projects along the B&R, according to the CDB.
THAILAND expects trade and investment with China to increase under the Belt and Road Initiative as Bangkok unveiled incentives for foreign investment.
“Thailand supports very much the Belt and Road Initiative which is meant to improve prosperity and benefit for people and countries,” Arthayudh Srisamoot, director general of the Department of International Economic Affairs, Ministry of Foreign Affairs, told Shanghai Daily. “Greater trade and investment will connect countries closer to each other and lift incomes of the people.”
THE interest rates for China’s open market operations rose by 5 basis points yesterday, following the interest rate hike by the US Federal Reserve on Wednesday.
The operations included 30 billion yuan (US$4.54 billion) of seven-day reverse repos, with the interest rate up from 2.45 percent to 2.5 percent, and 20 billion yuan of 28-day reverse repos, with the rate up from 2.75 percent to 2.8 percent, the People’s Bank of China said on its website.
SALES of new homes in China maintained their single-digit growth in the first 11 months of this year while housing inventory continued to fall, data released yesterday by the National Bureau of Statistics showed.
More than 9.57 trillion yuan (US$1.45 trillion) worth of new homes, excluding government-subsidized affordable housing, were sold between January and November, a year-over-year increase of 9.9 percent, the bureau said in a statement posted on its website. That compared to the 9.6 percent gain in the first 10 months and the 11.4 percent rise in the first three quarters.
CHINA’S auto sales growth is set to slow to 3 percent next year, according to data from the China Association of Automobile Manufacturers.
“Total sales are set to rise 3 percent to 29.8 million units in 2018. China’s passenger car sales are expected to add 3 percent to 25.5 million units and commercial vehicles will climb 2 percent to 4.3 million units next year, “ said Xu Haidong, a spokesman of CAAM during a conference.
CHINESE offshore stocks and A-shares are both expected to perform well in 2018, according to Robeco, an international asset manager.
The company revised the profit forecast for A-share investors higher to 22.4 percent for 2017 and 15.1 percent for 2018.
STOCKS fell yesterday with financial and heavyweight counters under pressure.
The Shanghai Composite Index shed 0.32 percent to close at 3,292.44 points.
DISNEY is buying a large part of the Murdoch family’s 21st Century Fox for about US$52.4 billion in stock, including film and television studios and cable and international TV businesses, as it tries to meet competition from technology companies in the entertainment business.
The deal gives Disney film businesses including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000, which together are the homes of Avatar, X-Men, Fantastic Four and Deadpool. On the television side, Disney will get Twentieth Century Fox Television, FX Productions and Fox21, with shows including “The Simpsons” and “Modern Family.”
THAILAND expects trade and investment with China to increase under the Belt and Road Initiative as Bangkok unveiled incentives for foreign investment.
“Thailand supports very much the Belt and Road Initiative which is meant to improve prosperity and benefit for people and countries,” Arthayudh Srisamoot, director general of the Department of International Economic Affairs, Ministry of Foreign Affairs, told Shanghai Daily. “Greater trade and investment will connect countries closer to each other and lift incomes of the people.”
SHANGHAI-BASED PPDai, which issued an initial public offering in the US market last month, said yesterday it has signed a cooperation agreement with Hong Kong-based Sun Hung Kai on asset management and online finance.
Both sides will form a joint team to seek opportunities in consumer finance and innovative finance services, said Zhang Jun, PPDai’s chief executive.
THERE were mixed signals of economic growth in November as industrial output and investment continued to slow in China, while retail sales surged, indicating a steady outlook despite a softer fourth quarter.
Industrial production, an important contributor to GDP, expanded 6.1 percent year on year in November, slowing from 6.2 percent growth in October due to tighter environmental rules, data from the National Bureau of Statistics showed yesterday.
FOREIGN direct investment into the Chinese mainland surged 90.7 percent year on year to hit nearly 125 billion yuan (US$19 billion) in November, thanks to fast growth in new foreign-funded companies.
The number of new foreign-funded companies surged 161.5 percent to 4,641 in November, according to data from the Ministry of Commerce.
GOOGLE announced yesterday that it will open a new artificial intelligence research center in Beijing, tapping China’s talent pool in the promising technology.
Artificial intelligence, especially machine learning, has been an area of intense focus for American tech stalwarts Google, Microsoft and Facebook, and their Chinese competitors Alibaba, Tencent and Baidu as they bid to master what many consider the future of computing.
TRADE ministers are set to wrap up their biennial World Trade Organization meeting without having reached a single agreement yesterday, still reeling from criticism brought by the United States, once the WTO’s driving force.
The ministers gathered in Buenos Aires were never expected to agree great reforms, with relatively minor and unrelated proposals on the table, including discussions on fishing subsidies and e-commerce.
TOYOTA said yesterday it wanted half of its global sales to come from electric-powered vehicles by 2030, as the industry strives to meet toughening environmental regulations.
Electric-powered vehicles now represent around 15 percent of the roughly 10 million units Toyota sells annually — mostly hybrids such as its best-selling Prius.
PRIVATE equity funds can play a role in innovating and developing the real economy and help create long-term capital, said the chairman of the Asset Management Association of China.
Hong Lei pointed out that innovation and development needs a multi-level capital market to bring about long-term capital because a huge amount of equity capital is essential as innovative development has risks. A multi-level capital market therefore helps equity capital to form while PE funds have a vital part in promoting long-term capital.
SHANGHAI shares ended higher yesterday, helped by strong gains in consumer and airline counters.
The Shanghai Composite Index ended 0.68 percent higher at 3,303.04 points.
SOUTH Korea yesterday banned its financial institutions from dealing in virtual currencies such as Bitcoin, as the cryptocurrency soars in a bubble fueled by retail speculators, many of them from the country.
The hyper-wired country has emerged as a hotbed for cryptocurrency trading, accounting for some 20 percent of global Bitcoin transactions — about 10 times its share of the world economy.
SHANGHAI residents will be able to rent 3,000 electric SUV rental cars from yesterday, EVCard, one of the country’s biggest hourly car rental operators, said.
The new Roewe ERX5 cars will benefit family users and those planning for cross city trips, said EVCard.
CHINA is set to surpass the US as the world’s largest economy by 2028 with its economy growing above 5 percent over the next two decades, Bank of Communications said in a report yesterday.
The bank’s baseline forecast sees China’s gross domestic product growing at 6.5 percent in the next three years, and the average annual growth rate will be at 5 percent between 2021 and 2035.
CHINA will relax requirements for foreign banks to take retail yuan deposits and allow them to do business in government bonds, the banking regulator said yesterday, in its latest move to open up the financial sector.
For decades, China has carefully controlled the activities of foreign banks in a bid to protect domestic lenders, with foreign banks’ share in a fast-growing market falling to just 1.4 percent.
CHINA’S central bank yesterday continued to inject liquidity into the financial system for a third consecutive day through open market operations.
The operations included 70 billion yuan (US$10.57 billion) of seven-day reverse repos, with an interest rate of 2.45 percent, and 60 billion yuan of 28-day reverse repos, with an interest rate of 2.75 percent.
THE concept of “smart,” which has become ubiquitous in our daily digital life, has also started sailing along in the shipping industry.
At the just-concluded Marintec China 2017 exhibition in Shanghai, the first Chinese-made “smart ship,” named Great Intelligence, debuted to show the nation’s world-first achievement in this area.
File photo of the City of London in background. UK inflation hit 3.1 percent in November, its highest level in nearly six years, official data showed yesterday, forcing Bank of England Governor Mark Carney to explain the rise in an exceptional letter to finance minister Philip Hammond. The rise was due to high prices of air fares, recreational goods and costly food and non-alcoholic drinks. — AFP
THE global investment environment offers growing opportunities and risks in 2018, with Asian equities among the most positive but a Chinese debt crisis is not expected, according to a UBS Wealth Management’s Chief Investment Office forecast.
An extreme financial outcome, principally a Chinese debt crisis, is unlikely to materialize in 2018 but still the issue is worth monitoring, UBS said in its latest report. Total bank assets in China are equivalent to 310 percent of the country’s gross domestic product — nearly three times higher than the average in emerging markets.
SALES of pre-occupied homes rose moderately in Shanghai last month but were still below the 20,000-unit level, while prices remained generally stable.
Around 11,600 pre-owned homes changed hands in November, a month-on-month gain of 7.7 percent, according to data released yesterday by Shanghai Centaline Property Consultants Co. But the gain represented a plunge of 42.4 percent year on year.
THE outlook for financial institutions in China through 2018 will be stable amid tighter government regulations on the industry and the nation’s overall stable economic growth, Moody’s Investors Service said yesterday.
Moody’s rated asset risks for banks to stabilize next year as their corporate profits are expected to rise. But the risk of delinquencies remains elevated among some highly-leveraged and loss-making borrowers as their borrowing costs are likely to increase amid tighter shadow banking regulations.
SHANGHAI stocks slumped yesterday as aviation and financial counters declined.
The Shanghai Composite Index fell sharply by 1.25 percent to close at 3,280.81 points.