Shanghai Daily Business
Updated: 54 sec ago
ONCE again it is time for resolutions. For China, which sailed through a difficult year safe and sound, and with government promises of a more efficient and open economy, the country is ready to start a new journey.
Despite some turbulence along the way, China’s economy ended 2017 stronger than expected: headline growth is sure to meet targets, financial risks are being contained, the property market is cooling down, and key reforms are making steady progress.
So far, the world’s second-largest economy has proved to be a key engine for global growth. Will its role continue to improve, and how will China navigate troubled waters? The following are some key areas to watch.
Deeper supply-side reforms
China’s wide-ranging structural reforms, designed to improve the supply side of the economy, have produced desired outcomes in 2017 and are expected to gear up in 2018.
In the battle against overcapacity, a major task for the reforms, China has accomplished its plans to slash steel production capacity by around 50 million tonnes and coal by at least 150 million tonnes last year.
Progress has also been reported on the other four fronts, including deleveraging, destocking, lowering costs and enhancing weak links.
The annual Central Economic Work Conference last month pledged that China will press ahead with supply-side structural reform in 2018 with more efforts to improve economic quality.
In what some dubbed the “toughest year” for China’s financial industry, authorities have taken real steps to curb widespread malfeasance in the rapidly expanding financial market.
Banks, insurance and securities companies have received heavy fines for flouting market rules, and internet finance companies once prospering on easy and fat profits are having a difficult time surviving with the enhanced rules.
The hardline stance is set to continue as senior leaders agreed to maintain the resolute crackdown on irregular and illegal activities in the financial sector to forestall risks.
Although a statement released after the key economic meeting did not mention deleveraging, financial risk control is still a priority given that defusing major risks is one of the three tough battles that the country has vowed to fight.
Escalating war on pollution
There is no better gauge than the clear and blue skies in Beijing this winter to demonstrate the effects of China’s anti-pollution drive.
Once a rarity, blue winter skies are no longer a luxury in Beijing due to a government campaign for increased use of clean fuel for heating and tough punishments against polluting enterprises.
Pollution control has also been listed as one of China’s “three tough battles” for the next three years, targeting a significant reduction in the emissions of major pollutants and an improvement in the overall ecological environment.
To win the battle, efforts should be focused on adjusting the structure of industries, strengthening energy conservation and making the skies blue again, according to the Central Economic Work Conference.
Real estate control to stay
In 2017, the property market, once deemed a major risk for the broader economy, cooled down amid tough curbs such as purchase restrictions and increased downpayment requirements as the government sought to rein in speculation.
With the market holding steady, Chinese authorities aim for a “long-term mechanism” for real estate regulation and a housing system that ensures supply through multiple sources and encourages both housing purchases and rentals.
In large and medium-sized cities, the government will step up the development of housing rental market, especially long-term leases. Meanwhile, reducing unsold housing will still be a priority for the third- and fourth-tier cities and counties.
A report from the National Academy of Economic Strategy predicted that the country’s property market should remain stable in 2018 if there is no major policy shock.
SOE reform quickens
Reforms of state-owned enterprises (SOEs) will also go into deeper waters in 2018 as the Chinese government expects them to play a bigger role in leading excess capacity cuts, keeping the debt ratio under control and driving high-quality economic development.
In 2017, up to 68.9 percent of the central SOEs were involved in mixed-ownership reforms, and authorities are reviewing plans for more to join the drive.
At the 19th National Congress of the Communist Party of China (CPC), the Chinese leadership pledged to further reforms to make SOEs “stronger, better and bigger,” and turn them into “world-class, globally competitive firms.”
The government will press ahead with stronger restructuring and deleveraging efforts, as well as furthering mixed-ownership experiments at more SOEs, authorities said.
Doors to open wider
The year 2018 will mark the 40th anniversary of China’s reform and opening up policy, and Chinese leaders have promised that its door to the world will only open wider.
China will increase imports and cut import tariffs on some products to promote balanced trade, according to the Central Economic Work Conference.
To give foreign firms greater opportunities in China’s booming market, a negative list approach to market entry, which states sectors and businesses that are off limits to foreign investment, will be expanded nationwide in 2018.
The country will also grant more power to pilot free trade zones and explore the opening of free trade ports, according to the 19th CPC National Congress.
CHINA’S foreign exchange regulator will cap overseas withdrawals using domestic bank cards at 100,000 yuan (US$15,370) per person per year in an effort to target money laundering, terrorist financing and tax evasion.
Individuals who exceed the annual quota will be suspended from overseas transactions for the remainder of the year and an additional year, the State Administration of Foreign Exchange said in a notice posted on its website.
Under the new rules, SAFE will submit a daily list of individuals banned from making overseas bank card withdrawals, and banks must suspend the users by no later than 5pm the same day. Domestic card users will also be barred from withdrawing over 10,000 yuan a day abroad, the authority said.
Since 2003, the quota for overseas withdrawals has been 100,000 yuan per card each year. The new rules can “prevent law breakers from withdrawing a large amount of cash with different cards from different banks,” the authority said.
In 2016, 81 percent of domestic cards saw overseas cash withdrawals of less than 30,000 yuan. Thus, the new rules can meet normal cash needs and curb illegal activities.
The new rules come into effect today, and reporting adjustments must be adopted by banks by April 1, SAFE said.
China has strengthened regulatory oversight of overseas card transactions in the past year, targeting illegal cross-border transfers and money laundering.
In September the authority brought in regulations requiring Chinese banks to report daily their bank card holders’ overseas withdrawals as well as every transaction exceeding 1,000 yuan.
CHINA’S manufacturing activity edged down in December, official data showed yesterday, but largely maintained momentum despite curbs on heavy industry aimed at taming the country’s chronic air pollution.
The manufacturing purchasing managers’ index (PMI), a gauge of factory conditions, stood at 51.6 last month, the National Bureau of Statistics said, compared to 51.8 in November.
Anything above 50 is considered growth, while under 50 points to contraction.
China has curbed activity in heavy industries in the northeast to reduce surplus capacity and the heavy smog that typically blankets the region in late autumn and winter.
The index in December is on par with the annual average, still pointing to a strong resilience in China’s growth, according to NBS senior statistician Zhao Qinghe.
Sub-indexes for production and new orders came in at 54 and 53.4, respectively. However, the sub-index of raw material inventory stood at 48 in December, down 0.4 percentage points from November, indicating continuously decreasing raw material inventory in the manufacturing sector.
China’s manufacturing PMI has been in positive territory for 17 months in a row.
The data also showed that the country’s non-manufacturing sector expanded faster in December, with non-manufacturing PMI at 55 in December, up from 54.8 in November.
The service sector continued steady growth, with business activity index standing at 53.4 in December.
“Early indicators for December show China’s economy pushing into 2018 with growth steady, if unspectacular,” said Tom Orlik, Bloomberg chief Asia economist, as “the official purchasing managers’ indexes show the manufacturing sector slowing slightly and non-manufacturing sector picking up.”
“Growth remains remarkably robust, underpinned by resurgent global demand, stimulus-boosted infrastructure spending, and a deleveraging program that remains more honored in the breach than the observance.”
Vehicles run on a solar expressway in Jinan, Shandong Province. China yesterday opened a 1-kilometer section solar expressway for testing. Solar panels are laid beneath part of a ring road surrounding Jinan. The road surface is made of a transparent, weight-bearing material that allows sunlight to penetrate. The panels, covering 5,875 square meters, can generate 1 million kilowatt-hours of power in a year, enough to meet the everyday demand of around 800 households.
SHANGHAI needs to promote internationalization of the yuan and develop a financial market and institutions with global influence to enhance the city’s status as an international financial hub, the Shanghai headquarters of the People’s Bank of China said in a report yesterday.
Although Shanghai has achieved much for the goal of becoming an international financial center, it still trails New York and London which are unchallenged in global financial operations, said the third edition of the central bank’s Development Report on International Financial Centers.
The report tracks the latest trend in international financial centers.
Shanghai has been urged to deepen financial and economic reforms to develop sound, stable and transparent market regulations, and build a rule-of-law environment that is just, open and fair, the report advised.
The city should also improve its services and its supporting infrastructure to meet the standard of an international financial center, the report added.
“Shanghai has basically confirmed its status as a domestic financial center with the financial market system as its core,” the central bank said in the report.
“In future, Shanghai should make more efforts in promoting international aspects,” especially in yuan internationalization, global influence of the financial market and developing globally dominant financial institutions.
The opening of Shanghai Insurance Exchange, Shanghai Commercial Paper Exchange, and China Trust Registration Co were listed among major innovations and indicated the wider opening of the financial market, the report said.
Also, more international financial institutions have set up operations in Shanghai including the Global Association of Central Counterparties, China Development Bank, and the National Internet Finance Association of China.
The report said the PBOC will support Shanghai’s endeavor in boosting financial innovation.
CHINA’S banking regulator has issued draft measures for amending its licensing and oversight of some foreign-funded bank activities, a move it says is aimed at promoting investment in the country’s fast growing financial sector.
In a statement yesterday, the China Banking Regulatory Commission said it is preparing to implement amended administrative measures to “standardize market access” for foreign lenders, and cut red tape to create a level playing field for such activities as branch openings, debt fundraising and examination of senior executives.
The CBRC said the amended measures will also put in place procedures “to provide a clear legal basis” for foreign-funded banks to make equity investments in Chinese financial institutions.
A notification system also will be installed for four types of activities, including securities fund custody business and the provision of wealth-management services for foreign customers, the CBRC said.
In October, CBRC Chairman Guo Shuqing said China was preparing to further open up its banking system to foreign investors. The market share of foreign banks in China has fallen to 1.2 percent from 2.4 percent 10 years ago, Guo said, which “is not beneficial for promoting competition.”
In November, Vice Finance Minister Zhu Guangyao said China will hike foreign ownership caps in some joint ventures in futures, securities and funds to 51 percent from 49 percent.
CHINA said yesterday that it will temporarily exempt foreign companies from paying provisional income tax on profits they re-invest into the economy, in a bid to stop foreign firms shifting their operations out of the country.
The move will help “promote growth of foreign investment, improve quality of foreign investment and encourage overseas investors to continuously expand their investment in China,” the finance ministry said on its website.
Analysts say a planned tax cut by US President Donald Trump, which could lead to a repatriation of earnings by US firms, poses a challenge China’s bid to lure foreign investment.
The temporary exemption on provisional income tax is retroactive from January 1, 2017, which means firms that have paid taxes this year will be refunded.
But foreign firms must meet several conditions to be eligible for the exemption, the ministry said. These include making direct investment into sectors encouraged by the Chinese government while investments must be transferred directly to invested companies.
China’s standard corporate tax rate is 25 percent although it gives firms more leeway to make profit deductions when they make charitable donations.
Some Chinese and foreign-funded firms have complained about rising business costs.
Guangzhou Automobile Group Co (GAC) and Shanghai-based electric carmaker NIO will set up a joint venture to collaborate on intelligent cars and new-energy vehicles.The two companies yesterday signed an agreement for the joint venture which will have a registered capital of 500 million yuan (US$76.5 million). The venture will focus on research and development of smart and new-energy vehicles, according to a statement from GAC.GAC and NIO each own 45 percent of the joint venture. The management team of the new company will take the remaining 10 percent, the two partners said.“We believe the joint venture will fully tap advantages of both sides, as NIO has deep research capability in the field of Internet and GAC has advantages in traditional automotive industry and vehicle manufacturing industry chain,” said Feng Xingya, general manager of GAC.William Li, founder and chairman of NIO, said: “In future, we will further cooperate with each other on sharing of technology, research and development resources, supply chain and manufacturing resources. Both parties will also share resources to enter global markets and infrastructural facilities of electric vehicles.”The new company will not be involved in manufacturing. A factory, set up by GAC in Guangzhou, will be completed by the end of next year and will make new-energy vehicles developed by the joint venture.According to the statement, the two companies also intend to collaborate on car sharing and car leasing business in future and to cooperate in auto parts.
SHANGHAI stocks rallied yesterday, boosted by distilleries as Kweichow Moutai raised the price of its fiery liquor.
The Shanghai Composite Index gained 0.63 percent to end at 3,296.38 points.
Distilleries surged, with the sub-index up 5.16 percent.
Kweichow Moutai Co, China’s leading liquor maker, jumped 8.21 percent to 718.69 yuan (US$110) after announcing a rise of at least 10 percent in its product prices next year and forecasting a 58 percent increase in 2017 profit on the back of a 50 percent gain in revenue.
Moutai’s gains spilled over to other distilleries. Sichuan Swellfun Co rose 3.84 percent, and Shanxi Xinghuacun Fen Wine Factory Co added 3.32 percent.
Nonferrous-metal makers such as Zijin Mining Group Co, Henan Zhongfu Industrial Co and Jiangsu Lidao New Material Co all surged by the daily limit of 10 percent, boosted by news that world copper futures prices hit a record high over the past 55 months at US$7,240 yuan per ton on the London Metal Exchange.
Xining Special Steel Co also jumped by the daily 10 percent cap to 5.68 yuan. Industrial raw materials such as nonferrous metal and steel have enjoyed profit and price gains over the year on the back of China’s supply-side reform and industrial upgrading, Chuancai Securities said in a note.
STANFORD Residences have just added several more prestigious serviced apartment awards to the illustrious honor’s list they have already, to end an incredible 2017.
Stanford Residences, founded by the Hong Kong-based K. Wah International Holdings Ltd (KWIH), scooped the “Best Serviced Apartment Brand” by “iDEAL Shanghai Awards 2017”, “Serviced Apartment (Puxi and Pudong) of the Year” by “Time Out Family Awards Shanghai 2017”, “Serviced Apartment Operator of the Year” by “China Travel & Meetings Industry Awards 2017” and “2017 China’s Best Upscale Long Rental Residence Brand” by “Golden-Pillow Award of China Hotels”.
A relatively new player in the city’s increasingly crowded serviced residency realm, Stanford Residences seems to have worked out its own recipe for success: To grow at its own pace, making a footprint in the industry and sticking to a philosophy of “Where Enchanted Living Comes Together”. In essence, to offer its residents a true living experience instead of just luxury accommodation.
“Since the debut of our first project in March 2015, we have expanded our local portfolio to three projects, or 350 rooms, with total leasable space reaching nearly 70,000 square meters,” said Leo Lee, associate director of K. Wah (China) Investment Co Ltd. “We feel so proud that all of our projects boast satisfactory occupancy and room rates, which are probably among the highest of its kind in the city.”
The first property opened under the Stanford Residences brand, Stanford Residences Jing An, located in the prosperous CBD of West Nanjing Road and launched in three phases with a total capacity of 129 units starting from 227-square-meter three bedrooms, has managed to maintain its overall occupancy at around 90 percent.
As for the other two projects, which both came into the market earlier this year, client feedback is also encouraging.
Located on the prestigious West Jianguo Road with convenient access to the city’s multi-dimensional transportation system as well as a wide range of shopping, dining and entertainment venues, Stanford Residences Xu Hui has achieved a 90 percent occupancy within just a few months since the launch of its first phase — 66 apartments housed in two buildings — in June.
Evoking classic French elegance and conveying a poetic ode to European art, the Xu Hui project is definitely a standout with its high-rise lobby that combines luxury and sophistication. Residents are entitled to access to the Palace amenities, which includes a stunning 3,600 square meter private club, and the Palace Lane lifestyle center, where a wide selection of international groceries are offered. There is also a 5-star butler service, 24-hour concierge service, all-day room service, attentive baby care and business center service, to make sure residents’ every single request is taken care of quickly.
Under the company’s plan, an additional two towers, comprising 53 luxury units, will be rolled out at Stanford Residences Xu Hui during the first half of next year, which will then increase units to 119 apartments in total.
Stanford Residences Jin Qiao, the third and the newest member in the city under the brand, has also registered steadily rising occupancy over the past few months.
The first Stanford Residences property on the other side of the Huangpu River, the Jin Qiao project, introduced in September, has 102 modern units with a broad selection of layouts which caters to all that a family needs. The interior design, crafted by Indigo, which is a leading brand in residence and hotel design, features carefully selected color palettes and finishing to create simplicity and subdued sophistication. Best-in-class brands, including Kohler for the bathroom, Kuppersbusch for the kitchen and King Koil for the bedroom, offer residents a sense of luxury and extreme comfort.
Sitting next to the Biyun international community, a high-end neighborhood in Shanghai for expatriates, most renowned for its well-established educational and medical facilities for overseas residents, Stanford Residences Jin Qiao has set itself apart with the highest standards in environmental sustainability. Designed with the concept of “health and life”, the project boasts landscapes featuring lush greenery, a natural river nearby and a jogging trail surrounded by fruit trees.
Notably, the Jin Qiao project offers clients more flexibility in leases, allowing tenants to stay for one month instead of a minimum 12 months required at the other two properties in Puxi.
“For the next two to three years, we aim to achieve 90 percent occupancy at each of our projects, which should be all operated under full capacity,” Lee said. “From the brand’s perspective, we hope to build Stanford Residences into an industry benchmark in Shanghai’s highly competitive serviced residency market.”
In the longer term, the company will also keep an eye on expansion opportunities in other gateway cities where demand for high-end serviced residency is robust, as well as key second-tier ones with great business potential.
“We expect the high-end serviced residency industry to experience notably faster growth in China over the next couple of years amid a nationwide trend of consumption upgrading in almost all aspects as well as continuously-increasing accommodation demand from travelers who have grown more and more sophisticated,” Lee said. “Out of all, players with great operational capability and outstanding strength in branding and service quality will most likely emerge as ultimate winners in the market.”
ALMOST a third of medium-sized Chinese companies consider having a sustainable impact on the community and environment as one of their top three long-term objectives, an HSBC survey has found.
The proportion is slightly above the global average of 30 percent, HSBC said in a report yesterday.
More than half of the surveyed Chinese firms said sustainable business practices will improve their growth and profitability, while 34 percent of the companies believed becoming a more sustainable business would contribute to improving their financial performance over the next three years, the survey found.
The survey covered more than 1,400 decision-makers at companies with between 200 and 2,000 employees across 14 countries and regions.
The growing green awareness of companies echoes with Chinese authorities’ determination to protect environment.
China’s economic development has entered a new era and the basic feature is that the economy has shifted from high-speed growth to a stage of high-quality development, according to a statement issued last week after the annual Central Economic Work Conference.
SHANGHAI Junzheng Network Technology Co, which owns the Hellobike brand, said yesterday that it has raised 1 billion yuan (US$153 million) in the latest round of financing, which makes it the third-biggest bike-sharing company in China.
The latest fundraising followed Hellobike’s previous round of financing of US$350 million on December 4 from investors, including Alibaba’s Ant Financial.
The company has raised a total of just over US$500 million this month.
The 1 billion yuan financing was led by Fosun Capital and GGV, among other investors.
Hellobike will be integrated with Fosun’s business covering Big Data, the Internet of Things, tourism, real estate and other sectors, according to the company’s statement yesterday.
The investment represents heated competition among bike-sharing firms in China, which has seen smaller players close down.
Hellobike, which has 88 million users and processes 10 million daily users, offers services in third and fourth-tier cities and scenic areas, according to analysts.
BIKE-SHARING company ofo said yesterday that it now sees 32 million rides every day.
The company has 10 million shared bikes globally and 200 million users in 250 cities around the world, said its Vice President Xiang Jigui.
“Riding is a gigantic market. According to our calculation, ofo users could reach 2 billion in the future,” he said.
“Shared bikes could provide great space for development for the Internet of Things. Imagine street lights turning on or off with the arrival of ofo riders.”
SHANGHAI stocks fell yesterday, led by heavyweight financial and transport counters, as investors worried about tightening liquidity in the run-up to the year-end.
The Shanghai Composite Index lost 0.92 percent to 3,275.78 points amid lukewarm trading sentiment ahead of the New Year.
Profits at China’s major industrial companies rose in November at the slowest pace in seven months on cooler prices, the National Bureau of Statistics said yesterday.
Industrial companies’ profits totaled 785.82 billion yuan (US$120 billion) last month, rising 14.9 percent from a year earlier but that was a drop from 25.1 percent in October.
AVIC Securities wrote in a research note that the tight liquidity situation would pose pressure for the market in the near term.
Financial shares were weak amid the liquidity squeeze. Ping An Insurance (Group) Co tumbled 4.86 percent while China Merchants Bank lost 3.2 percent.
Airliners also fell, with China Southern Airlines losing 3.25 percent, Air China dropping 3.08 percent and China Eastern Airlines declining 2.76 percent.
Automakers moved up after the government extended the purchase tax exemption on new-energy vehicles until the end of 2020.
Yangzhou Yaxing Motor Coach Co and Shenyang Jinbei Automotive Co both surged by the daily limit of 10 percent.
THE number of initial public offerings on the yuan-denominated A-share market and the Hong Kong exchange hit a 10-year high in 2017, a latest report showed.
This year will close with more IPO listings than any year since 2007, driven by lower market volatility across regions, high-valuation levels and a renewed appetite for cross-border IPOs, an EY report said yesterday.
The Shenzhen Stock Exchange topped with 222 IPOs, followed by 214 IPOs in Shanghai, giving a total of 436 on the Chinese mainland. The Hong Kong exchange was third globally with 160 IPOs launched.
“The year 2017 has registered 1,624 IPOs with US$188.8 billion raised, indicating a year-on-year increase of 49 percent by the number of deals and 40 percent by capital raised,” said Lawrence Lau, EY assurance partner.
“Although these figures do not reach the level of 2007 (1,974 IPOs with US$338.4 billion of funds raised), investors are anticipating that as markets return to the pre-crisis level. IPO activities will rise with more mega deals, increasing the global proceeds in 2018.”
The 436 IPOs in the A-share market in 2017 raised a total of 230.4 billion yuan (US$35 billion), up 92 percent by volume and 53 percent by proceeds compared with last year.
“Driven by SMEs, IPOs in the A-share market reached over 400 by annual deal number for the first time, exceeding the previous record of 347 IPOs in 2010, hitting a record high,” said Wang Yang, EY assurance partner.
“However, funds raised were only 47 percent of that in 2010, mainly due to the absence of large individual IPOs of over 5 billion yuan, while the SMEs dominated the IPO market with individual proceeds of less than 1 billion yuan,” Wang said.
IPOs in the A-share market included 18 companies which exited the National Equities Exchange and Quotations this year and successfully launched IPOs, raising a total of 6.96 billion yuan.
By sectors, industrial enterprises continued to rank first in IPO number and funds raised, with 137 IPOs netting 63.9 billion yuan in total, followed by the TMT (technology, media and telecom) sector, consumer products, retail, materials and health care industries.
EY expects A-share listings in industrials, TMT and materials to be the top three industries in the IPO pipeline in 2018, and forecasts more IPOs from the health care industry.
THE People’s Bank of China announced plans yesterday to regulate QR code payment to contain risks arising from the popular service.
Payment institutions must obtain proper permits to offer barcode-based payment services, according to a document released by the PBOC.
Both banks and non-banking payment institutions must channel cross-bank transactions involving barcodes through the clearing system of the PBOC or other legal clearing houses.
The institutions should also enhance their security to prevent data breaches, the document said. The new standards on barcode payment will be put into trial use from April next year.
Paying through QR code is increasingly popular.
By scanning QR codes at convenience stores, subway stations or street vendors, people can buy almost anything.
The number of China’s mobile payment users has exceeded 520 million, according to Alibaba’s affiliate Ant Financial.
But the growing popularity of the payment method has also brought concerns such as security issues and unfair market competition, the PBOC said, adding that it always seeks a balance between encouraging innovation and controlling risks.
TESLA founder and CEO Elon Musk said the electric car company will make a pickup truck after the release of its next model.
In a message on Twitter late on Tuesday, Musk said: “I promise that we will make a pickup truck right after Model Y.” The Model Y is an electric SUV that’s due for release in about two years. He said the pickup would probably be slightly bigger than a Ford F-150.
Musk was responding to suggestions he had solicited through Twitter about what the company could improve.
Tesla has focused on producing passenger cars over the past decade but has branched out in recent years. It plans to make electric semis and has invested in battery production.
CHINA will extend the exemption of a purchase tax on new-energy vehicles until the end of 2020, a boost for makers of hybrid and electric cars.
The extension signals the strong determination of the government to encourage sales and use of green cars to help reduce dependence on fossil fuels and clean up the skies in major cities.
Buyers of qualified electric vehicles, plug-in hybrid vehicles and fuel-cell vehicles will not have to pay the 10 percent vehicle purchase tax — which was set to expire at the end of this year — from January 1, 2018, through December 31, 2020, according to a statement issued yesterday by the Ministry of Finance, the Ministry of Industry and Information Technology, the State Administration of Taxation and the Ministry of Science and Technology.
The extension comes as automakers in China brace to meet strict green-car quotas starting in 2019 that are sparking a flurry of electric car deals and new launches of electric and hybrid models.
Amid the shift, some global automakers have called on China to maintain financial support for the market, citing concerns consumer demand alone will not be sufficient to drive sales without state-backed incentive schemes to lure buyers.
“The policy will further support the innovative development of the new-energy vehicle industry,” the statement said.
China introduced the tax exemption three years ago. New-energy vehicles already qualified for the rebate will continue to be exempted from the tax.
Cui Dongshu, secretary-general of the China Passenger Car Association, said the policy is a positive signal to both industry and consumers.
“The policy will effectively promote consumers to choose new-energy vehicles and result in a steady and rapid growth of the new-energy vehicle market,” Cui said.
China’s auto market, the world’s largest, has slowed sharply this year, but new-energy vehicles has been a bright spot.
In the first 11 months, 609,000 new-energy vehicles were sold in China, up 51.4 percent year on year, according to data from the China Association of Automobile Manufacturers.
“Sales of new-energy vehicles in China are expected to exceed 700,000 units this year,” Cui added.
The extension of the exemption lifted shares of new-energy vehicle makers. Shenyang Jinbei Automotive Co surged by the daily 10 percent cap to 5.71 yuan (87 US cents), and Xiamen King Long Motor Group Co rose 3.33 percent to 13.03 yuan.
CHINA’S Geely Holding, which already owns the Volvo Car Group, is buying an 8.2 percent stake in Swedish truckmaker AB Volvo from activist investor Cevian Capital for around US$3.3 billion.
Volvo Car Group was split from AB Volvo almost 20 years ago, and Geely said it was not its current intention to try to reunite the two businesses.
“Given our experience with Volvo Car Group, we recognize and value the proud Scandinavian history and culture, leading market positions, breakthrough technologies and environmental capabilities of AB Volvo,” Geely Chairman Li Shufu said in a statement yesterday.
Geely’s expertise in the Chinese market and skills in developing electric and autonomous vehicles should help the truckmaker to expand, he added.
AB Volvo owns 45 percent of Dongfeng Commercial Vehicles, one of China’s largest truckmakers, and also has a significant construction equipment business in China.
The value of the investment amounted to around 27.2 billion Swedish crowns (US$3.3 billion), a Reuters calculation showed, although Geely and Cevian did not disclose the exact value of the transaction in their statement yesterday.
The deal makes Geely the biggest individual shareholder in AB Volvo and second ranked in terms of voting rights behind Swedish investment firm Industrivarden.
Volvo shares have gained more than 50 percent this year as it and rivals in the truck industry such as Germany’s Daimler and Volkswagen hit a sweet spot thanks to robust demand in major markets.
Cevian, who has held shares in Volvo since 2006, this year called for a break-up, suggesting the smaller Volvo Construction Equipment and engine and technology firm Volvo Penta should be separated from the main truck making business.
As well as Volvo Car which it acquired in 2010, Geely also owns the company that makes London’s black cabs and sports carmaker Lotus.
In a sign of its ambitions, Geely last month offered to take a stake of up to 5 percent in Daimler via a discounted share placement but was rebuffed, according to sources with knowledge of the talks.
In the latest deal, Geely will acquire 88.5 million A shares and 78.8 million B shares to give it 15.6 percent of Volvo voting rights. Industrivarden owns mostly A shares and controls 22.8 percent of the votes.
Nomura International Plc and Barclays Capital Securities Ltd have agreed to acquire Cevian Capital’s shares, and will sell them to Zhejiang Geely Holding Group when the necessary regulatory approvals have been obtained, the companies said.
SHANGHAI yesterday welcomed a new industrial software park in Qingpu District that will help boost local industry development in artificial intelligence and the Internet of Things.
Shanghai Shixi Software and Information Park, located in the west of the city, will focus on development of IOT, AI, industrial software and applications for location, health care and logistic sectors.
The park expects the revenue of all the companies located there to hit 60 billion yuan (US$9.2 billion) in 2020 and 150 billion yuan in 2025, according to the Shanghai Commission of Economy and Information Technology, the city’s industry regulator.
But the commission didn’t reveal the number of companies it hopes to draw to the park.
Shanghai expects to post an AI industry revenue of 100 billion yuan by 2020, and AI is set to become the city’s new growth engine.
Software and service has been touted as one of Shanghai’s strategic industries to help develop the economy into a more innovative one, the regulator said.