China Moves Closer to Letting Foreign Banks Underwite Yuan Bonds
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http://online.wsj.com/article/SB10001424052702304186404576387000212315130.html
By LINGLING WEI And DINNY MCMAHON
BEIJING—China is moving closer to allowing foreign banks into the potentially lucrative business of underwriting yuan-denominated corporate bonds, as Beijing seeks to develop the country’s debt capital market.
HSBC Holdings PLC and Citigroup Inc. are among the foreign banks being considered for a license by the People’s Bank of China, according to people familiar with the matter. It wasn’t known how many other banks are being considered or when a decision could be made.
The National Association of Financial Market Institutional Investors, a unit of the central bank, recently set out the criteria under which foreign firms could qualify to manage sales of corporate debt, including commercial paper and medium-term notes, which in recent years have seen explosive growth in China. An association official said no bank has yet been approved to manage a bond offering under those rules. Spokesmen at HSBC and Citigroup declined to comment.
Such a move could broaden the range of participants in China’s 20.5 trillion yuan ($3.162 trillion) bond market, and help the government advance its goal of developing additional funding sources for Chinese companies, especially small- and medium-sized enterprises. Foreign investors can already buy and sell yuan bonds in the mainland with the approval of Chinese regulators.
Unlike in the U.S. and other developed countries, where companies have several funding sources ranging from banks, stocks, bonds to private equity, Chinese companies traditionally have relied on bank lending. But Chinese banks, most of them state-owned, remain reluctant to lend to private companies, making credit hard to come by for many Chinese entrepreneurs. Moreover, in recent months, China has been trying to put a brake on bank loans in a bid to fight inflation.
Several foreign banks already have approval for joint ventures that allow them to underwrite stocks in China. They have been lobbying for years to enter the bond maket as well. The issue has made more headway since the third annual U.S.-China Strategic and Economic Dialogue, held in Washington in early May, where the U.S. pushed for better access to China’s markets, according to the people with knowledge of the matter.
“The advantage of having foreign banks in the market is that they bring extensive global experience in underwriting public debt,” says Nicholas de Boursac, chief executive officer of Asia Securities Industry & Financial Markets Association, a trade group.
That could translate into better risk management and pricing in a market dominated by China’s state-owned banks, most of whom have little experience operating in more competitive international markets, where bond-issuing companies aren’t implicitly backed by the government.
For these global firms, bond underwriting in China also could bring handsome profits as the associated fees generally are higher in the mainland than in more developed markets.
So far, China’s bond market has mainly served as a vehicle for the central government to raise money to help finance the construction of airports, highways and other infrastructure projects. The bulk of the yuan bonds are traded over-the-counter in the so-called interbank market. The PBOC relies on that market to control money supply and interest rates through selling central-bank bills.
Chinese companies have been issuing yuan bonds for years. But issuance didn’t start to take off until 2008, when China encouraged domestic enterprises to tap into the bond market. (Businesses also can sell dollar-denominated bonds in the mainland, but that figure is tiny.)
Many analysts expect more Chinese companies to turn to the bond market to raise capital, as China moves toward its goal of letting the market set interest rates. Right now, interest rates are determined by the PBOC.
Corporate bond offerings in the mainland have expanded from those with full bank guarantees to securities that don’t have such guarantees but have credit ratings, such as commercial paper and medium-term notes. Still, partly because of limited distribution channels, the issuance of corporate debt in the mainland remains dwarfed by that of government bonds and central-bank bills.
According to data provided by the China Central Depository & Clearing Co., the issuance of commercial paper and medium-term notes jumped to about 1.17 trillion yuan last year from 607.6 billion yuan in 2008. Total debt sold in China’s interbank market amounted to 9.5 trillion yuan in 2010, up from 7.1 trillion yuan in 2008. Corporate debt represents the fastest-growing area in the yuan debt market, though government debt still accounts for the majority of debt outstanding.
It is in Beijing’s interest to further develop the debt market into a viable financing source for Chinese companies, analysts say. “Competitive financial markets are part of the infrastructure that Chinese corporations need to be globally competitive,” Mr. de Boursac of the Asia Securities Industry group said.
China Cotton Imports to Rise; Domestic Supply Faces Constraints
(Beijing Today website’s blog section does not represent any view of Beijing Today or its reporter. Anyone interested about the story can find the original text from the link above the article. The Blogger column aims to introducing foreign media’s interesting stories and expat blogs in China to more Chinese readers, as 50 percent of Beijing Today readership remain young Chinese who have experience of living abroad, white colors or school students. Authors who do not want his or her story linked at Beijing Today’s website, please email to info@beijingtoday.com.cn to take down the stories.)
http://online.wsj.com/article/SB10001424052702304186404576387574100453818.html
BEIJING—China is likely to buy more cotton from abroad while domestic supplies decline as Beijing gives top priority to grain production, government and industry officials said.
January-May cotton imports by the world’s largest cotton consumer and importer fell 12% from a year ago to 1.2 million tons as high international cotton prices damped China’s buying interest.
“Our dependence on cotton imports is likely to rise further in the future,” Liu Xiaonan, deputy director of the National Development and Reform Commission’s economy and trade division, told a conference in Dalian, according to the transcript on the China National Cotton Exchange, one of the conference organizers.
An increase in those imports could benefit the U.S., which is a major exporter of the fiber to China. The U.S. Department of Agriculture estimates the U.S. has shipped 3.9 million bales between Aug. 1, 2010, and June 2. One bale weighs 480 pounds.
Fang Yan, vice director of the NDRC’s rural economy division, said she isn’t optimistic about the domestic cotton-supply situation as acreage can’t be ensured while the government has grain production as its top priority.
It is also difficult for China to increase per-unit cotton output, which has hovered around 1.3 tons per hectare since 2006, Ms. Fang said.
“There has been a decline in the enthusiasm of the Xinjiang government to promote cotton planting,” she said. “The situation is very worrisome.”
Xinjiang Uygur Autonomous Region is the country’s top cotton producer, accounting for about 40% of China’s total.
Chinese farmers planted 5.4 million hectares of cotton this year, up 5.2% from a year earlier, the China Cotton Association said Wednesday.
But the growth estimate was down from last month’s 6.6% as drought and flood in the middle and downstream regions of the Yangtze River, a major cotton area, have hindered cotton planting and growth.
The National Bureau of Statistics said China’s cotton output was 5.97 million tons, down 6.3% from a year earlier, while the China Cotton Association said last year’s output was 6.65 million tons.
Beijing aims to produce 6.8 million tons of cotton this year, the NDRC said in its annual economic development target report in March.
Beijing worries as sense of injustice deepens
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http://www.ft.com/intl/cms/s/0/596a378c-976d-11e0-af13-00144feab49a.html?ftcamp=rss#axzz1POS42giq
By Rahul Jacob
Numbers associated with China are usually big. Even so, a Beijing academic’s recent estimate of the number of “incidents” – an official euphemism for strikes, protests and riots – at 180,000 last year, double the number five years ago, is huge. It works out at 493 a day.
That might seem implausibly high even for a country of more than 1bn citizens, but not in the past few days.
In the southern town of Zengcheng, usually better known for its production of blue jeans, migrant workers rioted over the weekend after security staff manhandled a pregnant 20-year-old street hawker. On Monday the focus was in the eastern city of Yangxunqiao, where workers seeking compensation for lead poisoning were prevented by riot police from boarding buses to go and petition higher authorities. In the central province of Hubei last week protesters pelted police with eggs and bottles after the death in custody of a popular anti-corruption official.
Responding to a wave of strikes in southern China last year, Beijing said it intended to double the minimum wage over the next five years. Buying off strikers is child’s play, however, compared with dealing with ever larger numbers of people who believe Chinese society to be manifestly unjust.
The common thread that ties these protests of the past week together is not primarily economic, but rather that a growing tribe of migrant workers and others feel oppressed by local authorities.
Martin King Whyte, a Harvard University sociologist, argues that the idea that growing financial inequality in China is at the root of growing unrest is wrong. Most Chinese regard individual wealth as the product of education and hard work, he argues in his book Myth of the Social Volcano. In fact, Chinese are almost American in their belief that individual effort enables people to get ahead, Mr Whyte posits.
The injustice of having his house demolished by corrupt local officials prompted Qian Mingqi, a 52-year-old, to set off bombs at government buildings in Fuzhou city in Jiangxi province in late May, killing himself in what appeared to be a suicide bombing directed at the unyielding state.
On the internet before his death Qian complained of having gone from pillar to post seeking justice after the illegal demolition of his home. “Ten years of fruitlessly trying to seek redress have forced me to go on a path I did not wish to take,” he wrote. Within days of his death, thousands had posted comments on the internet, lauding him as a hero.
Alarmed by the wave of sympathy for people who use violence in protests against the government, the state-owned Global Times newspaper editorialised last week that the correct response was to improve the rule of law, not use the law of the jungle.
It is precisely because so many local officials resort to the law of the jungle that there is a steady rise both in the number of protests and their intensity. That their misdeeds are being written about online or shared via mobile phone texts and photos has added to the speed at which protests erupt and spread.
The convergence of this widening sense of injustice in the past few months with the grievances of migrant workers will worry Beijing. Migrant workers often feel aggrieved because they lack the hukou, or residency papers, needed to secure social insurance, healthcare and housing.
The leadership is noticing. A government think-tank warned on Tuesday that if migrants were “not absorbed into urban society … many conflicts will accumulate”. Guangdong’s charismatic party secretary, Wang Yang, called last year for migrants to be treated with more respect. In Zengcheng, officials were televised this week paying a hospital visit to the Sichuanese worker whose treatment prompted the unrest.
That could all be window-dressing. The rule of law seems a long way off in China, never more so than this year with detentions and disappearance of Chinese human rights lawyers and high-profile dissidents. But when a full-on riot is provoked by security personnel pushing a pregnant woman around for the “crime” of selling goods on the street, it is a sign that the laws of the jungle favoured by local officials is not working.
Chinese clone cows to make human breast milk
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http://www.cbs12.com/news/milk-4733127-human-modified.html
Chinese scientists have successfully cloned genetically modified cows that produce milk containing the same nutritional properties as human breast milk.
BEIJING — Chinese scientists have successfully cloned genetically modified cows that produce milk containing the same nutritional properties as human breast milk, offering a possible substitute to formula milk in a country rattled by tainted milk powder scandals.
Moo-ove over Mom! A group of Chinese scientists have successfully produced a herd of genetically modified cows that make milk that could substitute for human breast milk, offering a possible alternative to formula milk in a country rocked by tainted milk powder scandals.
Researchers at the State Key Laboratory of Agro biotechnology of the China Agricultural University introduced human genes coding for milk production into the DNA of Holstein dairy cow embryos, and then implanted the embryos into surrogate cows.
After years of testing on mice, in 2003, scientists managed to create the first cow that could produce milk with the same nutritional properties as human breast milk, but which tasted stronger and sweeter.
Over 300 cloned cattle now live on an experimental farm in suburban Beijing, with new calves delivered every week.
Professor Li Ning, the project’s leading researcher and director, said the GM milk has the same benefits as human milk.
“The genetically modified cow milk is 80 percent the same as human breast milk. Our modified cow milk contains several major properties of human milk, in particular, proteins and antibodies which we believe are good for our health and able to improve our immune systems, as well as those that help us counter viruses and bacteria,” he said.
Supported by a major Chinese Biotechnology Company, Li’s team aims to have an affordable form of the milk on the market within three years.
However, before that happens, stricter safety tests are needed.
“In fact, we still need to conduct clinical trials on human beings with volunteers and finally prove that the cow milk is good and safe for the elderly, infants and the ill, especially those suffering from chronic diseases. Only after all these steps are completed can the government examine it and approve a certificate for its commercial use,” said Li.
Regardless of the team’s confidence, the latest breakthrough has drawn criticism from individuals and NGOs who oppose GM food, questioning the safety of the milk for humans, and also possible impacts on the cows’ health.
Greenpeace insists that GM product should not be allowed to enter human food chains. They argue that China has been investing considerably in GM research in recent years, despite the lack of a credible, independent system of supervision and inspection.
Some parents like Miss Lu, mother of a 14-month-old girl, echoed such concerns.
“No, I won’t try it. Even if it’s very similar to human breast milk, it’s still genetically modified. I think natural products are much better. I don’t know what might happen if my daughter consumes genetically modified products,” she said.
Feng Zhenghui (pron: feng jeng-hoy), holding his two-year-old son, was more open to the idea.
“I can’t say that I completely trust the new product but I wouldn’t mind trying it. As parents, we have to face a situation where breast milk is not enough. I think it’s worth trying,” he said.
Similar experiments also have been undertaken in Argentina where a group of scientists declared to successfully develop Latin America’s first gene-modified cow that produces human-like milk on the 9th of June.
China’s dairy sector has been plagued by poisonings and toxin scandals that have shaken consumer trust in indigenous milk products.
In 2008, at least six children died and nearly 300,000 fell ill from drinking powdered milk laced with melamine, an industrial chemical added to low quality or diluted milk to fool inspectors checking for protein levels.
Tibet exhibition opens in Beijing
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http://news.xinhuanet.com/english2010/china/2011-06/15/c_13931636.htm
BEIJING, June 15 (Xinhua) — Tibet today sits amid its best historical phase–featuring economic and social progress, ethnic solidarity, flourishing cultural development, and an improved quality of life for its residents, a senior Chinese official said on Wednesday.
Wang Chen, director of the Information Office of the State Council, made the remarks during his speech at the opening ceremony of the exhibition marking the 60th anniversary of the Peaceful Liberation of Tibet in Beijing from June 15 to July 8.
During the past six decades, under the leadership of the central government and assistance from across the nation, Tibet has undergone sweeping changes, Wang said.
“The Tibet plateau has performed a miracle by achieving what could only be done in thousands of years in a short span of several decades,” Wang said.
The peaceful liberation of Tibet was an epoch-making tipping point in Tibet’s history, marking its transition from autocracy to democracy, from poverty to affluence, and from seclusion to openness, Wang said.
Wang said the exhibition showed that Tibet has been an inalienable part of China since ancient times.
The exhibition, with 500 photos, more than 30 relics, 30 tables and graphs and video clips, focused on the remarkable achievements made in economic, political, cultural and social realms in Tibet during the past six decades, Wang said.
The exhibition will also help the world to see a true picture of a changing Tibet, Wang added.
The exhibition is organized by the United Front Work Department of the CPC Central Committee, Information Office of the State Council, National Development and Reform Commission, State Ethnic Affairs Commission, the government of the Tibet Autonomous Region, and Xinhua News Agency.
The exhibition is free and open to the public. It will be held once again in mid July in Lhasa, the capital city of Tibet Autonomous Region.
Chinese defense minister vows to promote military ties with Tanzania to new height
(Beijing Today website’s blog section does not represent any view of Beijing Today or its reporter. Anyone interested about the story can find the original text from the link above the article. The Blogger column aims to introducing foreign media’s interesting stories and expat blogs in China to more Chinese readers, as 50 percent of Beijing Today readership remain young Chinese who have experience of living abroad, white colors or school students. Authors who do not want his or her story linked at Beijing Today’s website, please email to info@beijingtoday.com.cn to take down the stories.)
http://news.xinhuanet.com/english2010/china/2011-06/15/c_13931866.htm
Chinese State Councilor and Defense Minister Liang Guanglie
BEIJING, June 15 (Xinhua) — Chinese State Councilor and Defense Minister Liang Guanglie pledged to push forward military ties and cooperation with the Tanzanian army on Wednesday.
Liang made the remark when he met with visiting Chief of Defense Forces of the Tanzania People’s Defense Forces (TPDF) General Davis Mwamunyange.
Liang said China and Tanzania have a profound and traditional friendship, and the bilateral relationship of cooperation has stood the test of time.
The two sides have shared the same view on major issues since they established diplomatic ties in the 1960s, said Liang, adding that mutual exchanges and cooperation in all areas have consistently expanded.
Liang hailed Tanzania’s support to China on Taiwan and Tibet-related issues as well as other major issues concerning China’s core and critical interests, saying the Chinese People’s Liberation Army (PLA) is ready to make joint efforts with the TPDF, so to improve their relationship.
Echoing Liang’s remark, Mwamunyange said the TPDF and PLA have maintained frequent exchanges in recent years, and their cooperation continues to deepen.
Mwamunyange said he hoped the friendly relationship between the two armies could be further strengthened.
Mwamunyange and his delegation arrived in Beijing on Sunday for a official goodwill visit at the invitation of PLA’s Chief of the General Staff Chen Bingde.
China Group Buying Websites Quicken Listing
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BEIJING, Jun 13, 2011 (SinoCast Daily Business Beat via COMTEX) — Insiders believe that the online group buying market will swell in terms of market value if Groupon successfully floats shares on the capital market ahead of its peers, let alone the Web site could get rich investment returns.
Chinese domestic online group buying Web sites also have plans for listing, although no bellwether has emerged from them, since listing could improve their brand influence. However, only performance and market share could attract investors and stock traders after their listing.
Since Lashou.com put too much in advertising, it needs more investment after listing. Meituan.com encountered capital and talent shortage in its prophase expansion, therefore urgently need to adjust its development strategy. 55tuan.com is still growing up after winning USD 200 million. Its top priority is to consolidate its status.
Earlier, more than 200 backbones of the east China region of Lashou.com were reported to leave their posts and join 55tuan.com, which was denied by Lashou.com. However, the job-hopping will undoubtedly affect the choice of investors.
A top executive of a fund company points out that Chinese investors tend to be more rational and pay more attention to the profitability and management of investment targets.
Sequoia Capital is an investor of Meituan.com. As one of the world’s largest venture capital investors, the former has invested in influential IT companies such as Apple Inc. (AAPL), Cisco Systems Inc. , Oracle Corporation (ORCL), Yahoo! Inc. (YHOO) and Google Inc. (GOOG).
Insiders believe that the prophase investment of Sequoia Capital in Meituan.com was small, since the investor was cautious. Hence, following investment is urgently needed by the online group buying Web site.
Lashou.com has the longest list of investors among domestic peers, including Taishan Invest, Milestone Capital, Richemont, GSR Ventures, Tenaya Venture and Norwest Venture. The investors of 55tuan.com are less influential than its management team. They include CDH Investments and Zero2ipo Capital.
The CEO of 55tuan.com used to hold the same post of Beijing Focus Wireless Media Technology Co., Ltd. He joined the Web site in December 2010. The CFO of 55tuan.com was formerly also the CFO of Focus Media Holding Ltd. (FMCN) and helped the company in its listing on the Nasdaq.
Joseph Tong, the COO of 55tuan.com, has been responsible for the management of Chinese assets under the control of Telstra Corporation Limited. He helped the listing of SouFun Holdings Ltd. (SFUN) in the US.
Chinese online group buying Web sites are believed to kick off IPO on the Nasdaq like the country’s Internet companies that have floated shares in the US, such as SINA Corporation (SINA), NetEase.com Inc. (NTES) and Sohu.com Inc. (SOHU).
(USD 1 = CNY 6.48)
China hopes to strengthen military co-op with Israel, defense minister
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http://news.xinhuanet.com/english2010/china/2011-06/13/c_13927147.htm
BEIJING, June 13 (Xinhua) — China is willing to further strengthen military cooperation with Israel to contribute to the development of country-to-country relations, State Councilor and Defense Minister Liang Guanglie said Monday.
Liang made the remark in his talks with visiting Israeli Deputy Prime Minister and Defense Minister Ehud Barak.
Liang said, “China values relations with Israel and is ready to expand and strengthen pragmatic exchange and cooperation between the two militaries, so as to make contributions to the further development of relations between the two countries and the two militaries.”
Liang said the Chinese and Israeli people have deep traditional friendship, and the bilateral relationship has maintained a good momentum of development since the establishment of China-Israel diplomatic ties.
Liang hailed increased political mutual trust and the achievements the two sides have made in all areas through pragmatic cooperation in the past 19 years of diplomatic ties.
Barak echoed Liang’s remark, saying that he hoped the two sides could expand common ground, strengthen friendship and learn more from each other through his visit.
He also pledged to lift pragmatic cooperation between the two nations’ armies, and make joint efforts with the Chinese side for a better and deeper military relationship.
Report: Life in Beijing worse than Guangzhou, Shanghai
(Beijing Today website’s blog section does not represent any view of Beijing Today or its reporter. Anyone interested about the story can find the original text from the link above the article. The Blogger column aims to introducing foreign media’s interesting stories and expat blogs in China to more Chinese readers, as 50 percent of Beijing Today readership remain young Chinese who have experience of living abroad, white colors or school students. Authors who do not want his or her story linked at Beijing Today’s website, please email to info@beijingtoday.com.cn to take down the stories.)
http://www.chinadaily.com.cn/china/2011-06/12/content_12678965.htm
BEIJING – Life quality in China’s national capital of Beijing is worse than that in the metropolises of Guangzhou and Shanghai, according to a report on urban life in China.
The cities of Nanjing, Yinchuan, Hohhot, Hefei and Shijiazhuang also outpace Beijing in terms of life quality, according to the China City Life Quality Index Report, jointly released on Sunday by the Institute of Economics of the Chinese Academy of Social Sciences and the Capital University of Economics and Business (CUEB).
The “Life Quality Index” for Chinese cities was calculated using objective indicators such as per capita income and inflation rates, as well as subjective indicators provided by urban residents, such as their opinions on their incomes, living costs, medical care and living environment.
Subjective indicators were weighted at 40 percent in compiling the index, organizers said.
According to the report, Guangzhou tops Chinese cities with a Life Quality Index of 64.07, followed by Shanghai’s index of 60.5 and Nanjing’s index of 59.49.
Beijing end up with a Life Quality Index of 56.23, ranking eighth out of 30 provincial or regional capital cities.
Professor Zhang Liancheng, dean of the School of Economics at CUEB, said the satisfaction of urban residents does not seem to match up with the rate at which the country’s economy has grown over the past 30 years.
Factors such as soaring inflation, high property prices and the quickening pace of urban life have had a negative effect on satisfaction levels, Zhang said.
China inflation may top 6 percent in June: expert
(Beijing Today website’s blog section does not represent any view of Beijing Today or its reporter. Anyone interested about the story can find the original text from the link above the article. The Blogger column aims to introducing foreign media’s interesting stories and expat blogs in China to more Chinese readers, as 50 percent of Beijing Today readership remain young Chinese who have experience of living abroad, white colors or school students. Authors who do not want his or her story linked at Beijing Today’s website, please email to info@beijingtoday.com.cn to take down the stories.)
http://www.reuters.com/article/2011/06/12/us-china-economy-inflation-idUSTRE75B0E020110612
(Reuters) – China’s inflation rate may accelerate to more than 6 percent year-on-year in June, which could bring the full-year consumer price index for 2011 to as high as 5 percent, a government researcher said in remarks reported on Sunday.
Zhang Zhuoyuan, an economist at the Chinese Academy of Social Sciences, a top government think tank in Beijing, said taming inflation would remain the priority in coming months. He called for faster steps to push real interest rates into positive territory and douse price pressures.
The People’s Bank of China has raised interest rates twice in 2011 and many analysts believe it may raise them again soon in an effort to control inflation.
“It will be very difficult for China to cap its annual inflation within 4 percent and the full-year CPI is likely to reach 5 percent,” Zhang was quoted as saying by the state radio.
Beijing has set an annual inflation ceiling at 4 percent this year, but prices keep rising stubbornly and many economists have said it will be tough to achieve the goal.
Zhang said his inflation forecast for June also reflected the relatively low ase of comparison of a year earlier.
He attributed the persistent inflationary pressure mainly to an excessive supply of money and credit over a long time, when Beijing rolled out a massive stimulus plan to shield the economy from the financial crisis.
The increases of other input costs for enterprises, such as rising prices of labor and raw materials, will also make this round of inflation last for a while, he added.
According to a Reuters poll of 22 economists, China’s consumer price index (CPI) in May may have accelerated to 5.4 percent from 5.3 percent in April.
The National Bureau of Statistics is scheduled to publish monthly economic indicators, including the consumer price index, for May on June 14.
