01/18/2010 Source: Global Times

Although Chinese banks saw their assets increase while the ratio and balance of bad loans both sank in 2009, the nation’s bank regulator warned over the weekend that banks should pay attention to future risks, especially in the property market.

The total foreign and domestic currency assets of Chinese financial institutions rose 26.3 percent year-on-year to 78.8 trillion yuan ($11.54 trillion) in 2009, and combined liabilities rose 26.8 percent from last year to 74.3 trillion yuan ($10.88 trillion), the China Banking Regulatory Commission (CBRC) announced on its website Saturday.

“The rise of total assets was due to increasing mid- and long-term loans, and the rise of liabilities was largely due to deposits from enterprises, which get loans from banks but do not use all of them, as well as increasing residents’ deposit,” said Zhao Xijun, deputy director of the School of Finance at Renmin University of China.

Zhao expected that banks’ total assets and liabilities increase in 2010 would not be as large as in 2009, but the quality of assets and liabilities would become better.

The bad loan ratio among major commercial banks, including State-owned and joint-stock commercial banks, fell to 1.59 percent, down 0.86 percentage points from the beginning of 2009. Bad loans stood at 497.33 billion yuan ($72.86 billion), down 62.98 billion yuan ($9.23 billion) from the beginning of 2009.

“It is good to see the decreasing bad loan ratio and balance in China, as ‘toxic assets’ in other countries were increased during the financial crisis,” Zhao commented. “However, banks still face challenges from their mid- and long-term loans to enterprises.”

New lending in December rose to 379.80 billion yuan ($55.64 billion) from November’s 294.80 billion yuan ($43.19 billion), and new lending for the whole year in 2009 amounted to 9.59 trillion yuan ($1.40 trillion), almost double the level in 2008, the People’s Bank of China, the central bank, said in an announcement on its website Friday.

Normally bad loan ratios rebound two years after a credit spree, said Li Shanshan, an analyst at BOCOM International Holdings.

The CBRC said at an annual conference Friday that banks should be wary of credit risks despite the decrease in bad loan ratios and balance.

The regulator said banks should ensure that credit enters the real economy, and restrict lending to high-polluting, high-energy consuming industries and those with overcapacity.

01/12/2010 Source: People’s Daily

China’s passenger vehicle market ended last year with a 59 percent year-on-year sales increase to surpass the United States as the world’s largest auto market for the first year, thanks to the central government’s stimulus package.

The domestic sales of cars, sports-utility vehicles (SUV), minivans and multi-purpose vehicles (MPV) hit 10.26 million units last year, surging from 6.4 million units in 2008, said Rao Da, secretary-general of the China Passenger Car Association on Friday.

The growth is also the highest in the country’s auto history, with total automobile sales expected to surge 44 percent year-on-year to 13.5 million units in 2009.

Statistics from the US consulting institution Center for Automotive Research showed that new car sales in the US last year plunged 21 percent year-on-year to a 27-year low of 10.43 million units, more than 3 million behind China.

The China Association of Automobile Manufacturers (CAAM) is expected to release detailed market figures of the country’s automobile industry on Monday.

The spike in vehicle sales was largely boosted by the government’s stimulus policies for lifting market demand, which included tax cuts on small-displacement automobiles, subsidies for trade-ins and subsidies for farmers to buy vehicles.

A low comparative base in 2008, when car sales growth slowed to 6.7 percent with 9.38 million vehicles sold, also helped boost 2009 figures.

To further support the world’s fastest growing auto market, the Chinese government said last month it will extend stimulus measures in the automobile industry for one more year.

The purchase tax for smaller cars will be lifted from the current 5 percent to 7.5 percent of the total vehicle price. The government also decided to raise the subsidy for trade-in cars from between 3,000 and 6,000 yuan ($440 to $880) to between 5,000 yuan and 18,000 yuan per vehicle.

The government’s continued support for the industry promises to fuel its rise for the coming years.

Automobile industry consulting firm Sinotrust predicted that vehicle sales will reach 15.13 million units this year, with a year-on-year growth rate of 15.2 percent.

According to the Ministry of Public Security, until the end of last year, almost 200 million Chinese people are able to drive a vehicle, making up about 15 percent of the country’s 1.3 billion population.

“Natural demand will continue to expand in the next few years,” said Lang Xuehong, chief auto industry analyst at Sinotrust.

Chinese automakers launched a record 221 new passenger vehicle models last year, with a majority of them upgraded models and less than half being new ones, according to the latest statistics from the CAAM.

Chinese automakers are expected to launch about 100 new models this year.

The brisk sales have also brought challenges to China’s appeal for a green society.

However, a number of analysts said the sales may also speed up automakers’ efforts to develop next-generation energy-efficient and emission-free vehicles.

Moreover, “the revised policy for this year, with tripled subsidies to encourage the replacement of outdated vehicles with high emissions and unstable driving performance, will contribute to an environmentally friendly society in which the automobile industry has a heavy responsibility,” said Yale Zhang, director of the Greater China Vehicle Forecasts for US auto industry consultancy CSM Worldwide.

Still, Chinese cities may face worsening traffic as the car boom puts an increasing number of people behind the wheel, with a number of local governments already expressing concern about the rising number of cars.

Zhang Gong, director of Beijing’s municipal commission of development, said the capital will enter the “automobile age” when every 100 families own 66.1 cars.

The capital is rated in a Sohu.com survey of more than 5,000 Web users as the most crowded Chinese city in November.

01/08/2010 Source: Xinhua

China publicized draft regulations for government investment Thursday to solicit public opinions, a move expected to better regulate investment and improve investment efficiency.

To shun from extravagant government buildings or projects simply built to boost image, the draft stipulates the government should mainly use its funds on projects related to the nation’s security or those that can not pool resources efficiently only by exerting market forces, according to the State Council’s Legislative Affairs Office.

Authorities in charge of project examination and approval should “solicit public opinions sufficiently” when the project will either has great impact on economy, society or environment, or involves major public interests, the draft reads.

Projects of “special significance” should go through expert appraisals prior to its approval, it said.

“It will help the government to make decisions on investment more scientifically and democratically,” said an unnamed official of the Legislative Affairs Office Thursday.

“Government investment” here refers to activities of spending government capital in fixed assets in the People’s Republic of China.

Government workers, who use their power for personal gain or are negligent of duties, should be punished in accordance with administrative regulations or laws, and their illegal gains should be confiscated, the draft reads.

People responsible for project construction would be banned from being in charge of government-funded projects for three years and be punished in accordance with laws if they default the government of the funds, start construction without approval, change the original design, or embezzle funds, it stipulated.

Appraisal institutions that falsify or make inconsistent conclusions would face penalties ranging from a warning, rectification, demotion, or revocation of qualifications, it said.

The draft also allows the government to attract investment from private sources on projects by applying policies such as transfer of loan or fiscal interest discount.

The Chinese government launched an economic stimulus plan at the end of 2008 to combat global economic crisis, targeting to invest 4 trillion yuan (585.6 billion U.S. dollars) by 2010. The central government investment had accumulated to nearly 1 trillion yuan in 2009.

People can submit their suggestions on the draft by visiting chinalaw. gov.cn or sending E-mail to zftz@chinalaw.gov.cn before Jan. 30, the Legislative Affairs Office said in a notice.

01/07/2010 Source: Xinhua

China will encourage both FDI utilizing and domestic companies’ overseas investment, said Zhang Xiaoqiang, vice minister of China’s National Development and Reform Commission (NDRC).

Zhang noted that the opening up of monopolized industries in the services sector will be accelerated, and both domestic and foreign enterprises will be treated equally. Meanwhile, domestic companies’ foreign investment in oil, natural gas and mineral resources will be encouraged.

On January 5, Zhang’s speech at a conference was published on the website of the NDRC. He pointed out that China should focus on both direct and indirect use of foreign investment, and guide the foreign investment to engage in the restructuring and transformation of domestic enterprises in various forms.

Zhang said that the government will continue to support qualified enterprises’ listing abroad. Foreign VC and PE investment in China is also encouraged.

Domestic companies should explore the deep processing of resource products on the basis of developing primary products. China’s outbound investment should follow a direction close to requirements of the upgrading of domestic industrial structure, said Zhang, adding that more funds should be put into overseas hi-tech industries and advanced manufacturing industry.

01/04/2010 Source: Xinhua

Chinese companies is likely to raise more than 320 billion yuan (46.87 billion U.S. dollars) from initial public offerings this year on the domestic stock market, up from 185.6 billion yuan in 2009, Price waterwatch Coopers (PwC) said in a report released Monday.

China’s IPO market would see 145 new listings in 2010, with 15 listings in Shanghai and the rest on the Shenzhen bourse’s Small and Medium Enterprise board and ChiNext, the country’s Nasdaq-style board established in October, according to the report.

Whole year IPOs in 2009 reached 97, up 26 percent from that in 2008, as the securities regulator resumed IPOs after a nine-month ban in June.

China became the world’s second largest listing market in 2009,as a combined market value from both Shanghai and Shenzhen stood at 23.6 trillion yuan, said the report.

Financial service, infrastructures, industrial products, consumer goods and retail sectors will continue to be key driving forces to the country’s IPO market in 2010, Frank Y.C. Lyn, PwC’s China Markets Leader, was quoted in the report as saying.

12/31/2009 Source: People’s Daily

The China-ASEAN Free Trade Area (CAFTA), set to open on January 1, 2010, will bring preferential treatment to product trade between China and ASEAN, an official with Ministry of Commerce said.

With the opening of CAFTA, more than 90 percent or over 7,000 products traded between China and the six members of ASEAN, i.e., Brunei, the Philippines, Indonesia, Malaysia, Thailand and Singapore will be tariff-free, Zhang Kening, commercial counselor of the Department of International Trade and Economic Affairs under the Ministry of Commerce said at a press conference on Dec, 29, 2009.

12/22/2009 Source: Xinhua

China’s Ministry of Commerce (MOC) said Tuesday that annual overseas direct investment (ODI) from non-financial sectors is expected to top 42 billion U.S. dollars in 2009.

Non-financial ODI in the first 9 months stood at 32.87 billion U.S. dollars, up 0.5 percent year on year, according to the MOC.

Investment in the overseas market includes establishing marketing networks, securing advanced technologies from overseas countries and overseas acquisitions in the first 9 months, with overseas acquisition contributing to 43.5 percent of the total, said the ministry.

China reported 64.77 billion U.S. dollars of business volume in the overseas-contracted projects in January-to-November period, up 37.5 percent from the corresponding period last year.

New contracts valued at 106.5 billion U.S. dollars were signed in the first 11 months, up 20.9 percent from a year earlier.