Shanghai Daily Business
Updated: 55 min 24 sec ago
CHINA has announced a pilot program to help pension schemes meet growing pressure from an aging society by transferring shares of state-owned enterprises to social security funds.
A document released by the State Council said the program would begin this year with shares of up to seven SOEs to be transferred.
The plan is intended to help make up for shortfalls in the nation’s pension schemes and will be expanded in 2018 to involve more SOEs, the document said.
The move will ensure the sustainable development of the country’s basic pension insurance system, while also diversifying the capital structure of SOEs as part of an ongoing reform to improve efficiency, the Ministry of Finance said in an online statement.
The program will only involve a small number of listed SOEs, with the majority being non-listed central and local SOE equity, the ministry said.
The assets will be transferred to the National Council for Social Security Fund and wholly state-owned firms, the State Council said. The initial transfer ratio will be 10 percent of the state-owned equity.
Under certain circumstances, the NCSSF can set up a pension fund management company to independently operate the transferred assets.
The recipients can earn dividends from SOE shares and have the right to disposal, but will not be involved in the management decisions of the companies, the document said.
The recipients will, in principle, be subject to a three-year lock-up period before they can sell the transferred shares.
The transfer program will cut the burden of the working generation by expanding the pension fund scale without raising taxes or pension contribution rates, the finance ministry said.
It said the program is not aimed at selling off state-owned assets to meet pension obligation. Rather, it is a long-term mechanism that supplements social security funds and optimizes the structure of state-owned capital.
China has more than 200 million people over the age of 60 and the country faces a severe challenge in meeting its pension obligations.
The problem has become acute in certain regions, such as the northeast industrial belt, home to many elderly former workers at now struggling SOEs.
Pensions are traditionally held by banks or used to purchase treasury bills. They are now allowed to be invested in a variety of financial products, including bonds and stocks.
Since the end of 2016, seven provincial-level regions have entrusted their pensions to the NCSSF.
The State Council said its plan would help foster a more sustainable pension system and promote reform of SOEs.
“Over the course of economic development and the aging of the population, the pressure on basic pension payments has continuously increased,” it said.
According to China International Capital Corp estimates, a 6 percent transfer rate of SOE shares to social security funds would result in a 1-percentage-point reduction to basic pension contribution rates for companies.
That will lower corporate costs, and also foster healthy growth of the capital market as social security funds become a large and long-term institutional investor in the market.
A child tries a VR driving simulator during the 19th China Hi-Tech Fair in Shenzhen, Guangdong Province yesterday. More than 3,000 exhibitors from over 30 countries attended the six day fair, which ends tomorrow. The annual science and technology fair, launched in 1999, is the largest and the most influential in China.
CHINA’S central bank has issued sweeping guidelines to tighten rules on asset management business, the latest step by Beijing to fend off systemic risks in the country’s rampantly growing shadow banking sector.
The guidelines unified rules covering asset management products issued by banks, trust firms, insurance asset management companies, securities firms, funds and futures companies, the People’s Bank of China said in a joint statement with the banking, insurance, securities and foreign exchange regulators on Friday.
At the end of 2016, the collective outstanding volume of their asset management business was 102 trillion yuan (US$15.38 trillion), including 29 trillion yuan of bank wealth management products and 17.5 trillion yuan in trust products, according to the PBOC.
The new rules aim to close loopholes that allow regulatory arbitrage, reduce leverage levels to curb asset price bubbles and rein in shadow banking activity.
The new rules will set leverage limits for asset management products. They will cap the total assets to net assets ratio at 140 percent for open mutual funds and 200 percent for private funds. Investors will be prohibited from pledging their shares in asset management products as collateral to obtain financing, a practice that would increase leverage.
The PBOC also said financial institutions must break the practice of providing investors with implicit guarantees against investment losses.
Financial institutions will also be forbidden from creating a “capital pool” to manage funds raised through asset management products. The practice allows banks to roll over the products constantly. The investment losses will be implicitly covered by the new product issuance.
The draft guidelines are the latest and most comprehensive set of rules proposed by financial regulators to fend off shadow banking risks that could spread across different asset classes.
“Clearly this is a critical turning point of the financial regulations,” said Zhou Hao, a Singapore-based analyst at Commerzbank. “Over the past few years, while the financial risks were rising, the overall regulations were actually behind the curve.”
PBOC Governor Zhou Xiaochuan has warned that China’s financial system is becoming increasingly vulnerable due to high leverage and accumulating “hidden, complex, sudden, contagious and hazardous” latent risks.
Financial institutions will not be allowed to use asset management products to invest in commercial banks‚ credit assets or provide “channel service” for other institutions to bypass regulations, the statement said.
THE business world is mobilizing to convince the Trump administration to save the North American Free Trade Agreement, which corporate leaders say has greatly benefited the world's largest economy for 23 years.
With televised ads proclaiming “NAFTA works for America” and study after study enumerating the dangers of withdrawing from the treaty, the US Chamber of Commerce and like-minded trade proponents have taken their message to Capitol Hill.
The effort has taken on added significance now that negotiators from Canada, the United States and Mexico working to overhaul the treaty are conducting their fifth round of talks in Mexico City.
“We — along with several other business, agriculture, and industry groups — made the case on the Hill in recent weeks. On October 24, the group talked about NAFTA with all 100 Senate offices,” a spokeswoman for the US Chamber of Commerce said.
Their message: exiting NAFTA would be a grave mistake that could, among many other painful outcomes, devastate American agriculture, including wheat producers, according to the chamber.
According to Monica De Bolle, senior fellow at the Peterson Institute for International Economics, an outright US withdrawal remains “a very, very clear possibility.”
The last round of talks in October saw radical propositions from the US side, including a “sunset” clause — which would require the three sides to renew the treaty in five years, failing which it would expire — and a call to scrap the trade dispute arbitration mechanisms in Chapter 19 of the agreement.
Both proposals are anathema to investors, and were immediately rejected by Mexico and Canada.
They were also a wakeup call to lawmakers and businesses who until then had not taken President Trump’s threats seriously, said Edward Alden of the Council on Foreign Relations.
“To be fair, this president is hard to predict,” he said. “We’ve never had a president like him before, so it is hard to make a good judgment on what constitutes a laugh and what constitutes a serious threat.”
China’s property market remained stable in October with home prices falling or posting slower growth in major cities amid tough control policies, according to the National Bureau of Statistics.On a yearly basis, new housing prices saw slower growth in 13 of the 15 major cities considered the “hottest markets,” the bureau’s data showed.On a month-on-month basis, new housing prices fell in nine of the 15 cities.New home prices in Tianjin, Shanghai and Chengdu rose 0.1, 0.3 and 0.7 percent, respectively, from a month earlier.Of the 70 large and medium-sized cities surveyed, home prices in 50 cities rose month on month, compared with 44 in September.Bureau statistician Liu Jianwei said housing prices were “generally stable” in major cities as control policies in different cities continued to take effect.New housing prices in the country’s first-tier cities dropped 0.1 percent compared with a month earlier, while pre-owned home prices remained flat.On a yearly basis, both new and pre-owned home prices in first-tier cities reported slower growth for the 13th consecutive month in October.New home prices in smaller second and third-tier cities both rose 0.3 percent month on month, higher than the growth in September.The data provide fresh evidence that the property market boom is running out of steam as the government continues cooling measures to squeeze asset bubbles.Since late last year, dozens of local governments have passed or expanded restrictions on house buying and raised minimum down payments.The market was also cooled by relatively tightened liquidity conditions as the government moved to contain leverage and risk in the financial system.Data from the People’s Bank of China showed that loans to the real estate sector continued to slow, with outstanding loans up 22.8 percent year on year to 31.1 trillion yuan (US$4.7 trillion) at the end of September, 1.4 percentage points lower than the rate seen at the end of June.Despite the cooling measures, China’s economy expanded by a robust 6.9 percent year on year in the first three quarters, well above the government target of 6.5 percent for the year.Recent policies have showed the government will not loosen its stance in curbing property speculation and that will limit the upward potential for housing prices, Bank of Communications said in a note.Authorities stepped up measures to act against irregularities in property financing earlier this month, prohibiting property developers, real estate agencies as well as Internet finance and micro-loan companies from offering illicit down payment financing.Using funds obtained via channels such as consumer loans for property purchases will also be banned, the Ministry of Housing and Urban-Rural Development said.Earlier data showed that property sales by floor area rose 8.2 percent in the first 10 months, losing 2.1 percentage points from the January-September level. At the end of October, 602.58 million square meters of property remained unsold, down by 8.82 million square meters from a month earlier.
In a sharp contrast to the industry-wide revolution to eliminate fossil-fueled vehicles, little evolutionary is happening to an equally old living fossil: automotive retailing.While China’s booming e-commerce puts almost the entire world at the touch of our fingertips, buying a car is still a huge project of legwork and haggling. Why do we have to put up with all this when we are spoiled by overnight deliveries from our Singles Day shopping spree? For years, I have been told by industry veterans that automotive retailing is not quite as simple as running a grocery store. “It is exactly you guys who are making a big deal out of it,” I say, teasing my dealership friend Eddie Zhang whenever he complains about high-maintenance customers. “All those slick sales pitches, back-and-forth negotiations, complicated cost packages and the tedious process of delivery.”The process doesn’t have to be that convoluted. During the recent Singles Day shopping festival, up to 800,000 cars were reportedly ordered on China’s top three automotive online retail platforms. That’s more than a third of total sales last month. Online dealerships have streamlined the whole car-buying process, including the offer of their own financing and trade-in services. The concept “car vending machine” unveiled by Alibaba earlier this year stunned many with its hassle-free simplicity. It will be officially introduced by the end of the year, putting cars of different brands on a huge vertical shelf for you to just grab and go, like a can of soda. It would be my dream come true to drive a brand-new car that I fell in love with at first sight on a showroom floor, or to fall in love with a car the moment it showed up at my doorstep as a surprise. China’s much-vaunted consumerism is producing more easy-going customers than ever before, encouraging the kind of impulsive shopping that was once inconceivable. Special discounts on Singles Day convinced my family to spontaneously buy a TV online. In the past, such a big-ticket item would have required weeks of research and bargain hunting. My family felt comfortable taking the risk because we can ask for a refund within a week of purchase and even get compensated if any further price cuts occur. Smarter buyers or not?Of course, a television set isn’t a car. Buying a vehicle still requires a deal finalized at a dealership, where consumers may once again get hornswoggled by price mazes and inflexible sales policies. No wonder the media is always probing the question: Are online automotive sales surreptitiously skewed if not inflated? There really are people in this world willing to blindly buy a car. Tesla Model 3 buyers put US$1,000 deposits down on the vehicle more than a year ago, before they ever even saw the car. One year later, due to production hell, many of them are still waiting with their refundable deposits.My friend Laura is still languishing somewhere in a queue, waiting for her second car. She refused to be coerced into paying more for “express delivery” — a common practice at traditional franchise dealerships, but strange to any new energy vehicle startup that deals directly with customers. What the startups lack in production readiness, they make up for with promises of an exceptional ownership experience. In the US, Tesla is offering a leasing package with the option to buy the car at the end. It combines a low down payment, monthly payments and an exit clause if the purchaser regrets his decision. A similar offer will be available in China with Volvo’s new Polestar electric car model.To shop for the first mass-production model of China’s local electric car startup Nio, hard-core fans first need to get “invitation codes,” which are distributed within an exclusive circle to make the deal seem like more of a privilege. I was once approached by a Nio salesman in a fancy shopping mall, where a pop-up exhibition was set up to display both concept and production vehicles. He didn’t give me any secret code but kindly asked me to sign up for online “fan engagement” to get free souvenirs. By comparison, most established carmakers maintain more detachment from customers, preferring to exert influence through their ironclad control over dealerships. I have always wondered whether standardized and sometimes robotic services at franchised dealerships rob consumers of the human touch. After all, I may simply go to a car vending machine in the future. It would fulfill my basic needs, just like so many automated, self-help services nowadays that save people money.I asked my dealership friend Eddie if he ever worried that customers might stop coming to see him in person. “Maybe I will end up as a door-to-door salesman, coming to your doorstep along with a test-drive car and my charm,” he said, laughing off my concerns. “I could take a customer out for a spin and get myself a deal. It sounds cool, right?”Traveling all the way to a dealership in the suburbs has lost its former sense of ritual, what with pop-up auto displays everywhere. The Internet is overflowing with product information, and the same trend is coming to after-sales services departments as owners of cars with expired warranties choose nearby, faster repair shops over expensive dealerships. “I have no doubt you will get to keep your job,” I reassured my friend.After all, even if brick-and-mortar dealerships decline, solid experience will still be much needed in many instances. That expertise, however, will need to be outstanding. The quality of customer service will be a defining factor in who gets the business and who does not.I have no doubt that dealerships will survive the Internet age, but perhaps they will have to undergo changes. We may see cafes or restaurants attached to car marketing, personal tours of automotive assembly lines or even design-your-own-car studios. To my mind, seeing my custom-made car roll off the assembly line would be a shopping experience more thrilling than any flash sale I can get from home.
Commercial application of self-driving trucks is progressing perhaps more steadily than for autonomous passenger cars because trucks operate on open highways and aren’t subject to the vagaries of downtown traffic.“Self-driving trucks will be able to operate commercially in confined areas, such as quarries,” said Lars Stenqvist, chief technology officer of Volvo Group during an interview with Shanghai Daily. “In reality, they are almost doing that now. The self-driving technology will reach more public areas, like harbors and dedicated highway lanes.” Earlier this month, Volvo Group unveiled an autonomous concept truck for the first time in China. The truck is designed for hub-to-hub transport in semi-confined areas. It has been trialed in Beijing, where onlookers could watch it turn and do other maneuvers without a driver.Volvo Group said the truck navigates by using Lidar and GPS technology to continuously read its surroundings. It can maneuver around fixed and movable obstacles while gathering data via an on-board system that helps optimize its route, ensure safety and conserve fuel.The company said it is in discussions with different customers around the world ahead of trials in enclosed spaces, such as quarries and harbor terminals. No specific timeline has been revealed for mass commercialization.Volvo Group is not the only vehicle maker developing driverless trucks. Daimler Truck tested driverless truck convoys on public highways in the US in September, and Uber shipped a trailer of Budweiser beer in a self-driving truck 120 miles along a US highway last year. Self-driving trucks have their pros and cons. The need for more efficient goods transportation is rising globally, amid an atmosphere where costs and environmental damage also need to be minimized. Self-driving trucks are being touted as fuel-efficient and maintenance friendly. David Zhang, an independent automotive consultant, said, “Self-driving trucks are expected to reduce costs to companies. Compared with human drivers, self-driving trucks are operated by machines using deep learning systems. By contrast, some truck drivers press the accelerator with great force, which is not fuel-saving.”Zhang said a fleet of self-driving trucks can be made to drive closely behind one another. The first truck will be autonomously driven, while those behind just follow its lead.Safer to drive“With the use of sensors and a vehicle control unit, it is easy to achieve platooning from a technical perspective,” he said.The commercial application of self-driving trucks is also touted as a public good.“The introduction of self-driving trucks is expected to increase road safety,” Stenqvist said. “Research shows that humans cause 80-90 percent of road accidents. The new technology will result in a decrease in the number of accidents, which means an increase in road safety.”However, he mentioned that application of self-driving vehicles in downtown areas will need to come in careful sequence.“A lot of people might be scared,” he said. “But a step-by-step approach will allow people to get used to the idea of autonomous vehicles. As companies prove that their vehicles are safe, public acceptance will follow gradually.” Of course, autonomous trucks are not good news for truck drivers. The International Transport Forum said in a report that “self-driving trucks could reduce the demand for drivers by 50 percent to 70 percent in the US and Europe by 2030, with up to 4.4 million professional trucking jobs becoming redundant.”“Automation in trucking demands a managed and just transition,” said Steve Cotton, general-secretary of the International Transport Workers’ Federation. “We must avoid excessive hardship on truck drivers and ensure that gains from technology are fairly shared across society. Self-driving trucks threaten to disrupt the careers and lives of millions of professional truck drivers.”China has an estimated 30 million truck drivers, carrying three-quarters of the nation’s freight traffic. “In the short-term, there won’t be any immediate effect on the truck drivers,” said Zhang Xiaofeng, an independent market observer. “In the long run, self-driving trucks will mean some unemployment of truck drivers. There is no need to worry too much. We have to realize that truck drivers will find new jobs in other sectors.”
Waymo earlier this month said that its self-driving cars are hitting the road without anyone behind the wheel as the Alphabet subsidiary steers toward launching an automated ride service.The subsidiary of Google parent Alphabet has been testing autonomous cars for years, but with a driver behind the wheel to take over if needed.Waymo chief executive John Krafcik used the Web Summit in Lisbon to announce a portion of its fleet in the Phoenix area will operate in fully autonomous mode with the cars handling all the driving.“After more than eight years of development, we’re taking the next step toward unlocking the potential of fully self-driving technology,” the Waymo team said in a blog post.“Starting now, Waymo’s fully self-driving vehicles are test-driving on public roads without anyone in the driver’s seat.”The testing will initially be limited to part of Phoenix, Arizona.Since Waymo began as a project in Google’s moonshot lab in 2009, its vehicles have logged more than 3.5 million miles of autonomous driving on US roads, according to the company.Waymo employees will be the first to test the fully automated rides.The company plans to eventually launch a driverless on-demand ride service, potentially eliminating the need for car ownership in the long term.“Over the next few months, we’ll be inviting members of the public to take trips in our fully self-driving vehicles,” Waymo said.“A fully self-driving fleet can offer new and improved forms of sharing: it’ll be safer, more accessible, more flexible, and you can use your time and space in the vehicle doing what you want.”The service will initially expand to members of a Waymo early-rider program, who will be able to get rides to or from school, work, shops, pubs or any other local spots they might typically go in their own vehicles.Waymo appears to have a head-start in what is expected to be a competitive race to a ride-sharing future, with established automakers such as Ford and BMW and ride-sharing groups Uber and Lyft in the mix.French firm Navya separately unveiled an electric-powered, self-driving Autonom Cab designed to provide local rides for people in urban centers.The Autonom Cab has no steering wheel or foot pedals, and is capable of carrying as many as six passengers, according to the company.“Imagine what cities would be like if there were nothing but Autonoms running on the road,” Navya chief executive Christophe Sapet said in a release.“No more traffic jams or parking problems, fewer accidents and less pollution.”Navya boasted partnerships with transport specialty firms, notable Keolis in Europe and RAC in Australia, that it said will enable it to roll out Autonom fleets in cities.A self-driving electric shuttle built by Navya was tested early this year in Las Vegas and will start a regular route there, the company said.Arma shuttles operated in a collaboration with Keolis will provide rides along a route in downtown Las Vegas, away from the casino-lined main strip.Operators will be on board the shuttles to act more as hosts than back-up drivers, introducing people to the technology, while Arma shuttles tend to navigating the route, according to a company spokesperson.The Arma program was slated to last one year.
Everyone talks about the coming era of self-driving cars. That’s pie in the sky to many consumers, who are anxious to know how soon the concept will become reality on the streets.China, which seeks to become a world leader in their development, has set some guidelines. By 2020, about half of newly delivered vehicles are to be equipped with driver-assistance features. By 2025, 80 percent are to be equipped with autonomous driving features, according to an industry development plan issued in April.But Professor Zhu Xichan of the School of Automotive Studies at Tongji University said he thinks the dawn of the new era may be even closer.By next June, he said, the first licenses allowing the testing of self-driving cars on public roads may be issued. At present, road testing of self-driving cars is allowed only in special closed areas such as the National Intelligent Connected Vehicle Shanghai Pilot Zone.Is Professor Zhu being overly optimistic? Apparently not.“China is expected to issue a license next year that allows road testing of self-driving cars,” said David Zhang, an independent automotive consultant. “It means that the government is pushing forward the self-driving vehicle sector. From a global perspective, countries are making great efforts in developing autonomous vehicles. Some countries like United States have already issued self-driving road testing licenses. China will keep up with the global trend.” It’s not only passenger cars that are part of self-driving development. Self-driving trucks are also under testing. A Beijing-based start-up called TuSimple this month conducted road tests of self-driving trucks in the National Intelligent Connected Vehicle Shanghai Pilot Zone.Using 10 cameras and radar, the trucks can start automatically, travel along a planned route, turn left or right on their own and pass through a tunnel. The trucks can also interact with traffic lights and make decisions on whether they need to stop.TuSimple’s detection algorithms enable the cameras to “perceive” surroundings just like the human eye. The company’s artificial intelligence system can guide vehicles along the most fuel-efficient route with precision positioning of only a centimeter. “Self-driving trucks are expected to improve road safety because more than 90 percent of driving accidents are caused by human error,” said Chen Mo, chief executive officer of TuSimple. “They can also reduce logistics costs and address the problem of a shortage of truck drivers.”TuSimple is not the only participant in the field. Late last year, Foton Motor Group and Baidu unveiled a self-driving truck in Shanghai. Foton said driverless trucks are expected to go into production in 2025. FAW Jiefang unveiled its self-driving truck in April this year and plans to commercialize the intelligent driving vehicle in as early as 2018.Industry analysts, however, said the development of self-driving truck in China is still in the early stages. Still, self-driving trucks may beat passenger vehicles in the race to production because they operate mainly on highways, reducing aspects related to ordinary downtown street traffic.“The self-driving truck may be a small segment in China, but it has good development prospects because of government encouragement,” said Zhang.China is an ideal country to lead in pioneering autonomous driving technology because it is a nation of people — primarily young people — who embrace every new technology that comes along. “Chinese consumer acceptance of self-driving is high, based on our studies,” said Andrey Berdichevskiy, director of global lead mobility solutions at Deloitte. “Consumers’ adaptability to new technologies far outpaces the rest of the world. Auto makers are paying attention to this eager audience.” Consulting firm J.D. Power said in a recent auto industry report that Chinese consumers have a high degree of trust in self-driving technologies, but concerns about safety and regulation persist.According to a J.D. Power survey of 1,576 Chinese customers and 8,571 US consumers, 78 percent of Chinese respondents indicated they definitely would or probably would trust a fully automated, self-driving vehicle. This is contrast to US consumers, where only 31 percent shared the same sentiment.The survey found that the best thing Chinese consumers like about the idea of self-driving vehicles is the freedom to “engage in other activities while driving.” It also found that they believe autonomous driving will be less pressured.J.D. Power said those perceptions arise from the stressful urban lifestyle today in China and the serious traffic congestion in Chinese cities. According to the report, about 60 percent of respondents say they would read books, watch videos, surf the Internet, play games, send text messages and play online games while in a self-driving vehicle. “As a consumer, I am basically optimistic about self-driving vehicles,” said Zhou Yiming, a student at Tongji University. “I am looking forward to the application of partially autonomous driving so I can send messages via WeChat to talk to family and friends when driving.”He said self-driving cars may also help to ease traffic congestion in cities like Shanghai.“I hope self-driving will help me to relieve the stress of traffic jams,” Zhou added. “All in all, as a consumer, I hope technology will make driving more enjoyable.”Still, niggling concerns remain. Some consumers said they are concerned about technical failures and errors in self-driving cars. According to the J.D. Power report, 53 percent of Chinese consumers fall in that category. About 18 percent wondered just who will be liable if accidents occur. Eleven percent worried about self-driving car systems being hacked.“For consumers, the biggest concern may still lie in safety considerations,” Zhou agreed. “If the vehicle has technical problems or system errors, it would be dangerous.”
China will raise the retail prices of gasoline and diesel today, the 10th increase and by far the largest this year, the country's top economic planner said yesterday.As international oil prices have increased, the retail prices of gasoline and diesel will rise by 265 yuan (US$40) and 250 yuan per tonne respectively, according to the National Development and Reform Commission.Under the current pricing mechanism, if international crude oil prices change by more than 50 yuan per tonne and remain at that level for 10 working days, the prices of refined oil products such as gasoline and diesel in China are adjusted accordingly.The NDRC has asked major Chinese oil companies, including China National Petroleum, China Petrochemical and China National Offshore Oil, to ensure stable market pricing.Global crude prices have risen above 35 percent since mid-June.
Volkswagen will invest more than 10 billion euros (US$12 billion) along with its partners in China to build new energy vehicles in the country, the company said yesterday.Volkswagen is also forming a new joint venture with state-owned JAC Motors to make electric vehicles, with an aim to get the first electric car to market by next year, the company said in a press release on the eve of the Guangzhou Auto Show.The move comes as China has put in place a series of carrots and sticks to compel carmakers to produce more fuel efficient and eventually petrol-free cars.Volkswagen has been a laggard in the area so far, selling just a few hundred “green” cars among sales of four million vehicles in China last year.The investment and partnership will help the German manufacturer reach its goal of introducing dozens of new energy models and delivering 1.5 million new energy vehicles in the country by 2025.“China is leading the way to the final breakthrough in the adoption of e-mobility and Volkswagen Group China is determined to be at the forefront,” said Jochem Heizmann, president and chief executive of Volkswagen Group China.China will implement a complex quota system in 2019 requiring automakers to produce a minimum number of electric cars.China originally wanted to start enforcing the rule in 2018, but it delayed it by a year after Germany and some foreign firms raised concerns.For electric car buyers, China has introduced subsidies and in some cities like Beijing, where getting a valid license plate is near impossible, authorities have allocated thousands of plates for electric cars.China has plans to phase out petrol vehicles entirely, though it has yet to set a date for the ban.Volkswagen now faces one of the biggest challenges for electric carmakers — batteries — and it said it was looking for partners to ramp up battery production capacity for its vehicles.Other foreign automakers are also stepping up efforts to produce green cars in China.US-based Ford sees that 70 percent of all Ford cars available in China will have electric options by 2025. Last week it unveiled a US$756 million investment with its Chinese joint venture to make e-cars.Volvo plans to introduce its first 100-percent electric car in China in 2019.
US industrial production jumped a solid 0.9 percent in October as factory activity recovered from the impact of Hurricanes Harvey and Irma.
The Federal Reserve said yesterday that manufacturing activity surged 1.3 percent last month. Many of the gains came from a sharp increase in the production of chemical and petroleum and coal products. Motor vehicles and metals also posted decent gains. But factories are also benefiting from favorable conditions around the world.
“The pick-up in global growth and the weaker dollar have triggered a broader turnaround in the prospects for the manufacturing sector,” said Paul Ashworth, chief US economist at Capital Economics.
Mining activity fell 1.3 percent in October as Hurricane Nate caused a brief decline in oil and gas drilling. Production at utilities rose 2 percent.
Over the past year, industrial production has increased 2.9 percent.
The Fed report is among the many indicators that factories are roaring back in recent months.
Over the past year, manufacturers have added 156,000 jobs. That’s the strongest annual growth since the middle of 2015.
Manufacturing hit a rough patch roughly two years ago when a strengthening dollar hurt exports and falling energy prices led to fewer orders for pipeline and equipment. But manufacturing has been steadily rebounding this year amid a stronger global economy.
The Institute for Supply Management, a trade group of purchasing managers, said recently that its manufacturing index dipped to 58.7 in October from a 13-year high 60.8 in September. Anything above 50 signals that factories are expanding. Manufacturers have seen growth for the past 14 months.
CHINA will open up its payment industry in a balanced and orderly way, Fan Yifei, deputy governor of the People's Bank of China, said at a forum yesterday.
The country would give overseas-funded financial institutions “pre-establishment national treatment,” which means giving equal treatment to overseas and domestic companies even before they make investments, coupled with the negative list approach, according to Fan.
“The government will significantly ease market access and push forward opening in the e-payment sector,” Fan said at the Sixth China Payment and Clearing Forum.
Front-end trading and settlement will be opened up first.
Being an important part of the financial service, all payment businesses from public, private and foreign-funded institutions should ask for permission and be subject to Chinese supervision.
Central bank governor Zhou Xiaochuan called for more reform and opening up of China’s financial sector earlier this month.
Zhou also said in June that opening up helped to build a strong and competitive financial sector, and that protectionist behavior limiting the participation of foreign players would lead to poor competitiveness and weakness.
SHANGHAI stocks dipped yesterday amid economic uncertainties and rising interest rates, analysts said.
The Shanghai Composite Index slid 0.1 percent to 3,399.25 points to mark a three-day decline, “which suggests investors still held a wait-and-see mood after data showed an industrial slowdown,” said Gu Yongtao, strategic analyst at Cinda Securities.
“Meanwhile banks’ interest rates have been increasing, dampening investment sentiment in the stock market,” he added.
The overnight Shanghai Interbank Offered Rate, which measures the cost at which Chinese banks lend to one another, has rebounded to a one-and-half-month high to close at 2.8 percent yesterday.
But the drop in the index yesterday has been smaller than the previous day, “suggesting investors should be optimistic for the long-term momentum, although uncertainty remains high,” said Li Lifeng, strategic analyst at Sinolink Securities. Bank of Shanghai Co tumbled by the daily limit of 10 percent to 15.41 yuan (US$2.33), while Jiangsu Wujiang Rural Commercial Bank Co lost 4.65 percent to 9.85 yuan.
CHINESE banks recorded the second straight month of net foreign exchange purchase in October as cross-border capital flows stabilized, official data showed yesterday.
Chinese lenders bought US$128.9 billion worth of foreign currency last month and sold US$126.1 billion, resulting in a net purchase of US$2.8 billion, the State Administration of Foreign Exchange said in a statement.
The surplus widened from US$300 million of net purchase in September, when banks bought more forex than they sold for the first time in more than two years.
In the first 10 months, Chinese banks bought US$1.33 trillion worth of foreign currency and sold US$1.44 trillion, resulting in a net sales of US$110.1 billion, the data showed.
SAFE said the country’s cross-border fund flows remained basically balanced in October, with market entities acting more rationally.
The willingness of individuals to buy foreign currencies fell in October from a seasonal high during the third quarter, and was sharply down compared with a year ago, it said.
Capital inflows through goods trade, foreign investments, and cross-border financing activities maintained upward momentum.
There were concerns over capital flowing out of the Chinese market in the second half of 2016, when the economy was facing downward pressure and the yuan was in the middle of a losing streak against the US dollar.
In January, China’s forex reserves had plunged below US$3 trillion, but as the economy stands on a firmer footing and the yuan continues to stabilize, the stockpile has increased steadily since February.
Recent data showed that China’s forex reserves rose for the ninth month in a row in October to US$3.109 trillion, up US$703 million from a month earlier.
As China restructures its economy to push sustainable growth, cross-border capital flows will continue to be balanced and stable in the medium and long term, SAFE said.
PROPERTY giant Sunac, one of the major shareholders of Leshi Internet Information & Technology, said yesterday that it has offered a 1.79 billion yuan (US$270 million) loan to the Shenzhen-listed IT company to support its smart TV business operation.
Hong Kong-listed Sunac will provide Leshi a 1.29 billion yuan loan for general cash flow and an additional 500 million yuan loan for its TV unit. Meanwhile, Sunac is also offering 3 billion yuan of guarantees covering Leshi’s debts, the property giant said in a statement yesterday.
Leshi, whose shares have been suspended from trading since April, faces heavy debts and cash problems because of aggressive expansion from smart TV and online video to smartphone and new-energy car by the company and its parent firm LeEco.
Shares of Leshi, which used to be the top firm on the ChiNext board by market value, are now worth about 3.9 yuan each, only a quarter of the price in May, according to several funds owning its shares.
In January, Sunac invested 15 billion yuan in LeEco. In July, Sun Hongbin, chairman and executive director of Sunac, was appointed Leshi head, replacing Jia Yueting, LeEco’s founder and former CEO. Jia, who is still in the United States, said recently he couldn’t pay the debt in the short term.
SHANGHAI’S tax authority said yesterday it will prioritize improving its credit record system and moving more operations online as it implements new policies to make business easier for companies.
Jiang Xutao, chief economist of the Shanghai Municipal Office of the State Administration of Taxation, said the authority aimed to create a dynamic credit record system to replace the current annual assessment.
The new system will allow for a more timely rating of companies and connect with banks and commercial regulators to cut costs and red tape.
The authority said it is considering allowing small businesses and startups to use credit records to apply for bank loans instead of paying substantial fees to acquire commercial guarantees.
The move is happening in tandem with the digitalization of paper forms and moving all taxation operations online next year, improving from the current 80 percent.
Jiang said the work will involve more than 1,000 forms and applications that currently can be only submitted offline by visiting tax authority offices.
The authority released 28 measures last week to improve the business environment in the city, including one-stop services for startups, and encouraging the sharing of information across various government agencies.
SHANGHAI’S state-owned enterprises will invest around 800 billion yuan (US$121 billion) annually over the next five years to develop innovative products and enhance efficiency, the government said yesterday.
The investment will be channeled into high-tech industries such as digital technologies, renewable energy and new materials to enhance Shanghai SOEs’ competitiveness, said Jin Xingming, director of the State-owned Assets Supervision and Administration Commission of Shanghai at a press conference.
In August, the city signed a collaborative agreement with SASAC under which centrally-administered SOEs would invest 220 billion yuan in over 20 projects in Shanghai to accelerate the city’s development into a global innovation hub.
SOEs in the city have spent over 110 billion yuan in research and development since 2013. They have also been encouraged to be listed and reform their management models and structures to enhance efficiency.
A total of 16 SOEs in Shanghai have been listed abroad while 338 Shanghai SOEs have adopted mixed ownership by offering shares to employees since 2014.
BAIDU will start the production and trial operation of self-driving mini-buses in July 2018 in collaboration with Xiamen King Long United Automotive Industry Co, the company’s CEO and chairman, Robin Li, said yesterday.
At the Baidu World Technology Conference in Beijing yesterday, he also demonstrated a driver fatigue detection system using Baidu’s image recognition and facial detection technology.
“Bring Artificial Intelligence to Life” is the theme of this year’s Baidu World Technology Conference, and the Chinese search engine giant has been pushing AI capability backed by its leading position in text and voice search.
After hiring former Microsoft senior executive Lu Qi, it also made a number of AI acquisitions, such as voice detection and recognition startup KITT AI and smart interactive device and technology firm Raven Technology.
Baidu also released a new version of its conversational AI platform DuerOS to work better on the Apollo platform. Apollo provides a technical solution to support all major features and functions of an autonomous vehicle.
Baidu also unveiled a strategic cooperation deal with Xiongan New District in Hebei Province to provide smart traffic system and a transport solution scheme.
Research firm McKinsey has estimated that up to 15 percent of new cars sold in 2030 will be fully autonomous.
Through the Apollo project, Baidu will build a collaborative ecosystem using its strength in AI technology to work with other companies to promote the development and popularization of autonomous driving technology.
Baidu began investing in research and development on autonomous driving technology in 2015.
It conducted successful road tests on the highways and roads of Beijing in late 2015 and finished open trial operations of its autonomous car fleet in late 2016 at the World Internet Conference in Wuzhen, Zhejiang Province, where over 200 guest passengers rode in the cars.
CHINA’S non-financial outbound direct investment fell 40.9 percent year on year in the January-October period as authorities curbed irrational investment overseas, data showed yesterday.
Chinese investors spent a total of US$86.3 billion on 5,410 enterprises from 160 countries and regions during the period, the Ministry of Commerce said in a statement.
“Irrational outbound investment was effectively contained,” the statement said, while noting a slightly milder decrease of investment and a better industrial structure.
In the January-September period, ODI had dropped 41.9 percent from a year earlier.
Outbound investment in October fell 29.6 percent year on year to US$8.28 billion, Reuters calculated from official data, narrowing from a 42.5 percent decline in September.
Investment in the first 10 months mainly went to leasing and commercial services, manufacturing, wholesale and retail, and information technology sectors.
No new projects were reported in property, sports or entertainment.
China’s ODI has seen rapid growth in recent years. However, noting an “irrational tendency” in outbound investment, Chinese authorities last year set stricter rules and advised companies to make investment decisions more carefully.
China says it continues to encourage genuine overseas deals but has vowed to limit investment in industries it suspects is more speculative.
In a document released in August, the State Council said overseas investment in areas such as real estate, hotels, cinemas and entertainment would be limited, while investment in sectors including gambling would be banned.
Earlier this month, the National Development and Reform Commission released a new draft rule on outbound investment, including stipulations on the investment activities of firms established overseas by domestic companies.
Top government officials have recently stressed that China is looking to step up its outbound investment, and is encouraging firms to expand globally as the country looks to play a larger role in the global economy.
Meanwhile, ODI to countries involved in the Belt and Road initiative has been encouraged.
During the first 10 months, Chinese companies invested US$11.2 billion in 53 countries along the Belt and Road, accounting for 13 percent of the total ODI, up 4.7 percentage points from a year earlier, the ministry’s data showed.