09/03/2009  Source: Xinhua

Hong stocks extended its marginal opening gains to 1.23 percent during Thursday’s trading, boosted by the surge on Chinese mainland’s market and led by the mainland’s lenders and property developers.

With Wall Street falling while Chinese mainland’s markets hiking, the benchmark Hang Seng Index opened with 5 points higher, and widened its gains in the afternoon. The blue chip index rose 239.68 points, or 1.23 percent, to close at 19,761.68 on Thursday, after fluctuating between 19,823.03 and 19,526.89.

Turnover rose to 57.77 billion HK dollars (7.46 billion U.S. dollars) from Wednesday’s 53.38 billion HK dollars (6.89 billion U. S. dollars).

Analysts said they expect the index to remain volatile in near term, due to a lack of clear direction from the U.S. and the Chinese mainland’s stock markets.

Three of the four major sub-indices gained ground, with the properties moving up most by 1.46 percent, the commerce and industry 1.36 percent, as well as the finance 1.26 percent. The utilities-sub-index fell 0.42 percent.

Chinese mainland’s lenders and insurers moved higher across the board. ICBC ended 2.1 percent higher at 5.38 HK dollars, Bank of China up 1.6 percent to 3.81 HK dollars, and China Construction Bank up 0.9 percent at 5.83 HK dollars. China Life was up 2.77 percent while Ping An up 3.07 percent.

Chinese mainland property developers staged strong rebounds Thursday following losses in recent sessions.

China Resources Land surged 8.2 percent to 17.20 HK dollars after shedding 16 percent since the beginning of August. Sino Ocean Land rallied 9.5 percent to 7.62 HK dollars after falling 15. 9 percent in the past month. Shimao Property closed 8.0 percent higher at 12.96 HK dollars, after tumbling 26 percent from its peak of 16.28 HK dollars on Aug. 3.

Heavyweight HSBC Holdings rose 0.43 percent to 81 HK dollars.

With New York oil futures holding firm, CNOOC rose 1.79 percent while PetroChina up 0.94 percent, and Sinopec Corp up 1.67 percent.

08/31/2009 Source: Xinhua

Science and Technology Minister Wan Gang said Monday China’s government would provide strong support for small-and medium-sized enterprises (SMEs) to help them tide over the current economic downturn.

“The most effective way to withstand the impact of the global economic meltdown is to accelerate technological innovation, the new economic growth engine,” Wan said in a signed article on the front page of Monday’s Study Times, run by the Party School of the Central Committee of the Communist Party of China.

Wan attributed SMEs’ development hiccups mainly to low-tech products and poor research and development capability.

China has more than 42 million SMEs which contribute more than 60 percent of the nation’s GDP, 50 percent of tax revenues, 70 percent of import and export trade and 80 percent of urban employment.

But the number of innovation-based SMEs in China is only about 160,000, much less than in the United States where they made up about 10 percent of the sector, and Israel where they comprised 17percent.

In China, SMEs refer to enterprises where staff numbers are less than 2,000, annual revenues are under 300 million yuan (44.1 million U.S. dollars), or with total assets under 400 million yuan.

Wan said to sharpen these enterprises’ innovative edge, the Ministry of Science and Technology planned to make research and development resources more accessible for them.

The ministry would help establish a technology platform participated in by universities, research institutes and enterprises. It would coordinate research and development and enable innovation-based SMEs to share the results.

Wan, also vice chairman of the Chinese People’s Political Consultative Conference National Committee, said the ministry would set up national State-funded laboratories and technology centers for the SMEs.

To ease technological personnel shortages, the ministry, together with other central departments, would assign 100,000 researchers and technicians from universities and research institutes to the SMEs, Wan said.

08/25/2009 Source: People’s Daily

Against the backdrop of the international financial crisis, China’s outbound direct investment is expanding rapidly while international capital flow, transnational investment, and mergers and acquisitions are dropping sharply. This year, China’s outbound foreign direct investment (FDI) is expected to exceed FDI into China for the first time, reaching 150 billion U.S. dollars.

China’s actual use of FDI amounted to 48.4 billion U.S. dollars in the first seven months of the year, down by 20 percent over the same period last year.

China’s overseas investment reached 52.1 billion U.S. dollars in 2008, nearly double that of 2007.

China’s outbound investment has upgraded from its early stage into a stage of rapid development, and China’s role in the global economy will shift from “manufacturer” to “capital exporter.”

Fan Chunyong, standing director of China Industrial Overseas Development and Planning Association explained the reasons for that. Firstly, 30 years of economic development has enabled China to accumulate a large amount of capital. Chinese capital will naturally flow overseas if that market has lower cost and higher profit than domestic investment.

Secondly, with increasing economic globalization, China has broad access to the transnational production processes and global production networks. Chinese companies have a strategic need to invest in overseas upstream production and downstream markets to guarantee the stability of their supply chains and target markets, and prevent external factors from causing uncertainty in their overall production and operation.

Thirdly, against the backdrop of the global financial crisis, many countries are facing serious funding shortages and have huge demand for foreign capital. At present, many foreign enterprises are successively coming to China to find buyers. Holding the world’s highest foreign exchange reserve of almost 2 trillion dollars, China has plentiful capital.

In addition, costs for capital market are relatively low due to the strong Chinese currency. All of these factors are naturally driving Chinese enterprises to seize overseas investment opportunities.

08/24/2009 Source: Xinhua

The Chinese government has not yet given approval to Sichuan Tengzhong Heavy Industrial Machinery Co. to purchase Hummer, government officials said Monday.

The officials, who refused to be named, were commenting on recent media reports saying the Ministry of Commerce (MOC) had approved the Chinese machinery maker’s acquiring Hummer.

Sichuan Tengzhong did not say in its application to the National Development and Reform Commission that it would produce Hummer in China, or acquire Hummer’s assets or stake in parent company General Motors (GM).

An MOC official also denied media reports the ministry had given a green light to the deal, saying Tengzhong had only said it would purchase the Hummer brand in its application.

The ministry has asked Tengzhong to make clear whether it intended to buy the Hummer’s patent or its technology.

The Chengdu-based company signed a memorandum of understanding with GM in early June to buy Hummer.

08/21/2009 Source: People’s Daily

On August 19, Guangdong Province published its decision to promote closer cooperation with Hong Kong and Macao, proposing joint efforts to form a metropolitan circle with the strongest core competitiveness in the world by 2012.

Guangdong Province will promote closer cooperation with Hong Kong and Macau’s service industries and grant their modern service industrial projects the same preferential policies as domestically-funded enterprises, including the same special funding, taxation, credit guarantee and interest subsidy support.

Guangdong will construct international shipping, logistics, conference and exhibition centers focused on developing complementary sectors to those in Hong Kong and Macao.

It will also explore and introduce feasible methods for Hong Kong and Macao’s higher learning institutions to establish education institutions in Guangdong Province.

It will promote a pilot Renminbi settlement service program with Hong Kong and Macao.

The decision also proposes intensifying special funding to help Hong Kong and Macao-funded enterprises enhance their capability to cope with the international financial crisis.

Efforts should be made to promote Guangdong’s independent innovation cooperation with Hong Kong and Macao, focusing on garment, lighting decoration, furniture, hardware, leather and other industries. Specialized industrial towns in Guangdong in particular, will introduce design services from Hong Kong and Macao.

Guangdong will also strengthen its cooperation and exchanges with Hong Kong and Macao in fields such as film and television production, cartoon animation and advertising design.

The decision also suggests accelerating the construction of cross-boundary traffic projects including the Hong Kong-Zhuhai-Macao Bridge, the Guangzhou-Zhuhai intercity high-speed rail and the project to extend inter-city rail to Macao.

The decision proposes constructing a high-quality life circle around the greater Pearl River Delta and attracting funds from Hong Kong and Macao to Guangdong’s medical service market. Hong Kong and Macao residents will be given the same treatment as Chinese mainland residents when they see a doctor in Guangdong Province.

The strategic goal proposed in the decision states that by 2012, the industrial structure of Guangdong Province will be further optimized and enhanced, the modern service industry system matching the International Financial Center in Hong Kong will be improved and major infrastructures will be integrated.

Moreover, a green high-quality life circle around the greater Pearl River Delta will be steadily constructed. International shipping, finance, logistics, trade, conference and exhibition, tourism and innovation centers will be formed, featuring work sharing and cooperation, mutual support of relative advantages and complementary development.

That means that the life circle will become a metropolitan circle with the strongest core competitiveness in the world. By 2012, the most vigorous and competitive city cluster in the world will be formed, becoming an economic growth pole with a strong driving effect.

08/18/2009 Source: Xinhua

Since August 1, 2008, the day on which China’s Anti-Monopoly Law came into effect, the Ministry of Commerce (MOFCOM) received over 100 prior notifications of concentrations of undertakings, and 58 of them were accepted. Multinationals were involved in 40 cases, indication their strong mergers & acquisitions capability as well as keen law awareness, said Yao Jian, spokesman of the MOFCOM, on August 17.

Anti-monopoly reviews have helped to safeguard fair competition and public interest, he said.

Among the 58 prior notifications of concentrations of undertakings accepted by the MOFCOM, 46 cases were concluded: 43 won unconditional approval, 2 got conditional approval, and only Coca-Cola’s bid to acquire Huiyuan was rejected.

The MOFCOM has set up anti-monopoly dialogue mechanisms with the EU, the US, Japan, United Nations Conference on Trade and Development (UNCTAD), OECD and APEC, Yao added.

08/13/2009 Source: People’s Daily

According to Shanghai Securities News, the latest report published by the China Academy of Social Sciences (CASS) pointed out that, impacted by a rise in domestic asset prices, a flow of hot money may return to China. CASS experts believe that Hong Kong may be the most recent source of hot money flowing into the Chinese mainland.

Zhang Ming, deputy director of the International Financial Research Office under CASS, said that the latest data from Hong Kong shows that nearly 100 billion HKD have flowed into Hong Kong since July 2009.

Zhang pointed out that the flow of hot money into Kong Kong may actually be targeted at the Chinese mainland, and not merely intended to appreciate the HK dollar. He said that Hong Kong is adjacent to the Chinese mainland and the continuously expanding “Chinese mainland and Hong Kong Closer Economic Partnership Arrangement” (CEPA) has created space for closer capital flows between the two sides. Therefore, Hong Kong is very likely the more recent source of short-term international capital flowing into the Chinese mainland.

He added that the financial crisis has significantly slowed down the growth of the European and American economies and also caused many international investors to turn their attention to emerging Asian markets. The Chinese mainland has become a place favored by large quantities of investment capital because it has the most attractive economic growth model and capital market trend, as well as the rapid increase in Chinese mainland’s asset prices caused by China’s astronomically large loans.

Although the expectation of Renminbi appreciation is not the biggest cause of an inflow of hot money, as with previous inflows of hot money, speculative hot money entering the Chinese mainland has mainly entered into the stock and real estate markets, where investment has high profits and products can be sold easily, said Guo Tianyong, director of the Chinese Banking Industry Research Center at the Central University of Finance and Economics.

Overseas capital investors have switched their focus of investment to the Chinese mainland’s stock markets. According to statistics detailed in the report on China’s QFII A-share funds which was jointly released by Thomson Reuters Lipper and Shanghai Securities News, as of the end of the first half of 2009, nearly all QFII funds have been invested in stocks.

Zhang said that the foreign exchange administration authorities in the Chinese mainland should remain vigilant to a flow of hot money to Hong Kong.