Chinese Government Gives Signals of Rise in Renminbi on the Horizon

During a speech last week, Zhou Xiaochuan, governor of China’s central bank, The People’s Bank of China, hinted that Beijing’s willingness to allow the renminbi to appreciate may be on the horizon.  In comments that contradicted Chinese officials’ previously unwavering commitment to a stable exchange rate, Zhou described the current dollar peg as temporary and said that it was a “special” policy brought on by the current economic conditions.  His statements came just one day after Prime Minister Wen Jiabao stated that exchange rates would remain “basically stable” for now.

“This is a part of our package of policies for dealing with the global financial crisis.  The policies will be abandoned sooner or later, but we must be very cautious and discreet in choosing the timing,” said Zhou. 

Zhou declined to provide any specifics on the time frame relative to a shift in exchange rate policy. 

While an increase in consumer prices domestically has helped persuade some government officials that the renminbi should be allowed to rise, others remain wary that a change in China’s exchange rate will slow economic growth.  Commerce minister Chen Deming said the outlook for international trade remains “uncertain and unstable” and that it may take two or three years before Chinese exports recover to pre-crisis levels. 

According to economists, the decrease in exports trimmed roughly four percentage points off the growth rate of China’s gross domestic product last year.  However, the currency stabilization and a large stimulus program kept China’s economy growing at a robust pace in spite of this, culminating with the country exceeding the eight percent target that the government had set for economic growth last year.

In an email to The New York Times, Cornell University economist and former head of the International Monetary Fund’s China branch Eswar S. Prasad wrote, “It is encouraging that Governor Zhou’s statement suggests that the move to a managed float of the renminbi will be resumed once the global recovery firms up.  It would be even more helpful if, given its economic strength and solid recovery prospects, China’s exchange rate policy could make a contribution to the global recovery rather than being frozen in place while other economies tend to their recoveries.”

One of the most attractive features of the Chinese economy is that it is supported by a currency that is backed by the largest foreign reserves in the world, a government whose relative levels of deficit and debt are far below any other major economy, and consumers who have yet to unleash their true spending power.

As an investment in a Chinese company is also an investment in the Chinese currency, foreign investors can expect augmented returns beyond just the increases in intrinsic business value from their investments for years to come.
 
Adam Roseman,
Founder & CEO
ARC China


Developing Nations Setting Torrid Pace For Mergers
As both companies and countries in the West and Japan stumble under debt and fear, a new enthusiasm for deals has already emerged this year in India, China and other developing countries.

Swollen with cash from fast-growing economies, many emerging-market companies are on the prowl for acquisitions. At the same time, their counterparts in the West -desperate for growth and often seeing few prospects at home - are opening their wallets to move into developing countries, trying to get at resources, new customers or both.

The British insurance company Prudential said it would buy the Asian assets of the American International Group for $35.5 billion, a deal that would make Prudential’s earnings from Asia more than half the company’s overall profits.

Enthusiasts of emerging markets say the flurry of activity is part of a fundamental shift in global business. With economies in the West expected to be sluggish for years to come, the younger populations and less tapped-out consumers of developing countries have become a magnet for Western business and are helping to create the world’s next big multinationals.
Of the $395 billion in deals announced this year, $135 billion — or 34 percent — had a target or an acquirer (or both) in an emerging market, according to Thomson Reuters data. That does not include the Prudential-A.I.A. deal because A.I.A. is based in Hong Kong, which Thomson Reuters considers part of the developed world. If the Prudential-A.I.A. deal were included, emerging market deals would shoot up to 43 percent of this year’s total.

That is up from $97.6 billion, or 15 percent of all deals, 2007, the latest merger boom year.
Some of the rise in the importance of emerging markets is a result of the drying up of deals in the West, as companies and banks grow cautious about adding debt to their balance sheets. And while optimism toward emerging-market deals is palpable, and the macroeconomic signs are positive, the reality for deal makers may not be so rosy. Deals in emerging markets often run into surprises like onerous government intervention or corporate management that, at the last minute, changes terms or tactics. 

Takeovers do not necessarily have to involve a company in an emerging market to be driven by such markets’ growth. The “next wave” of merger activity in Europe will be driven in part by a desire to grow in emerging markets, according to analysts at UBS.
Source: New York Times


CDB Lending To China's Central SOEs Up 48% In 2009
China Development Bank (CDB), one of China's three policy banks, lent RMB 261.3 billion ($38 billion) to country's centrally-administered state-owned enterprises (SOEs) in 2009, up 47.8 percent year on year, CDB said in a statement.

The loans mainly went to support pillar industries, such as electric power, railways and telecommunications, of the central SOEs, according to the statement issued to Xinhua.

Some state infrastructure building projects such as the Beijing-Shanghai high-speed railway and the South-North Water Diversion Project were key recipients of financial support.

New energies and a low carbon economy were also fields in which CDB rendered its support, with total outstanding loans reaching RMB 5 billion, the statement said.
Last year, the CDB lent a total of $25.7 billion to central SOEs for their overseas assets acquisitions.
Source: Xinhua Net


China's Investments In U.S. Up Sharp
Made in China now has a fast-growing sibling: Bought by China.
Beijing is using its accumulation of billions of American dollars to step up its investments around the globe. In the last year, Chinese acquisitions in the U.S. have ranged from a relatively obscure theater in Branson, Missouri, to stakes in such famous brands as Coca-Cola and Johnson & Johnson.

China's huge stockpile of dollars stems in part from Americans' enormous purchases of relatively inexpensive Chinese manufactured goods and the significantly smaller volume of U.S. exports to the Asian country. By recycling much of its dollar trove over the years back to the United States with the purchase of U.S. government debt, China has in effect helped Washington finance its deficits.

Now, Beijing is branching out. The country's direct investments overseas rose 6.5% in 2009 to $43.3 billion -- despite a global slump in such investments -- and could jump to $60 billion this year, Chinese state media reported.

Formal estimates of Chinese investments in the U.S. last year, excluding bond purchases, range from $3.9 billion -- a figure put out by New York research firm Dealogic -- to $6.4 billion, a number that comes from Derek Scissors, a Heritage Foundation research fellow who tracks China's global trans-actions. The real number could be even higher, Scissors says. In any case, the total is up sharply from several years ago, when Chinese investments hardly registered a blip on U.S. financial radar screens.

One goal of the increased investment in the U.S., led by the government's vast sovereign wealth fund, is to buy assets while prices are depressed.

The strategy also seeks higher earnings from Beijing's pile of assets denominated in foreign currencies, which is estimated at $2.5 trillion and mostly held in low-interest U.S. government securities and other low-risk, dollar-denominated investments. Chinese officials worry that a weakening dollar will erode the value of these holdings. A sign that Beijing is acting on that concern came last week when the U.S. government reported that Chinese holdings of Treasury securities slid to $894.8 billion in December, down 3.7% from November and the lowest level since May.

Even at their increased level, Chinese investments last year in U.S. companies and property used up only a speck of Beijing's foreign reserves -- and, according to Dealogic, accounted for just 3% of total foreign investments made in the U.S. last year.
Source: Los Angeles Times


Sanofi - Aventis Seeks Partners In China
France-based Pharmaceutical giant Sanofi-aventis will continue to look for partnership opportunities in China after it launched a joint venture with Minsheng Pharmaceutical, the company’s top management said. "The deal with Minsheng Pharmaceutical is expected to receive regulatory approval within 2010, and we are still seeking other cooperation opportunities," said Thomas Kelly, vice president of Sanofi-aventis Greater China.

On February 3, the French company signed agreements with Minsheng Pharmaceutical Co Ltd to form a new consumer healthcare joint venture. Subject to certain conditions and regulatory approvals, Sanofi-aventis is to obtain a majority equity stake in the venture. The Sanofi-aventis-Minsheng venture will focus primarily on vitamins and mineral supplements (VMS), the largest consumer healthcare segment in China, where Minsheng has established a strong presence with its flagship multivitamin brand of 21 Super-Vita.
Source: China Daily


Green Energy Program Drafted
The government has formulated a 10-year program under which clean energy will account for 15 percent of the total consumption mix by 2020, a top official has revealed.

To realize the goal, the government will invest billions in the construction of nuclear power stations, wind farms, solar power plants and research of renewable energy technologies, said Zhang Guobao, head of the National Energy Administration.

Zhang forecast a boom in the building of renewable energy infrastructure in the coming five years to meet the goal, which Wen pledged to global leaders at the Copenhagen climate change summit in December. The premier also pledged that the country will reduce its carbon intensity by 40-45 percent by 2020 from 2005 levels.

"Power projects take a long time to be up and running, and we are basically allowed five years to complete them although it is a 10-year program," said Zhang. "Otherwise, the facilities cannot be put into use by 2020."

Official figures show that renewable energy accounted for 9.9 percent of total energy consumption last year, compared to 8.5 percent in 2008. Amid the global financial crisis, the government has decided to develop renewable energy as part of a stimulus package to keep the economy on the fast track.

The National People's Congress, the top legislature, recently passed an amendment to the renewable energy law to require power grid companies to buy all the electricity produced by renewable energy generators.

All these efforts reflect the strategic importance of the renewable energy industry, said Zhang, adding the policy will offer more opportunities for global partners.

Last year, China's total energy consumption reached 3.1 billion tons of standard coal equivalent, up 6.3 percent from 2008.

"It appears that some local governments approved energy-guzzling projects during economic crisis," said Zhang. "So only by fully implementing our energy saving regulations can we realize economic growth with less energy consumption."
Source: China Daily


Hong Kong’s Economy Overtaken By Shanghai In 2009
Shanghai’s economy exceeded the size of Hong Kong’s for the first time in at least three decades after stimulus spending helped China skirt the global crisis and lead the world out of recession.

Shanghai’s GDP grew 8.2 percent to the equivalent of $218.3 billion in 2009 compared with a 2.7 percent contraction to $210.7 billion for Hong Kong. The figures highlight 30 years of free- market policies that have spurred China to become the world’s third-largest economy and its No. 1 exporter. Shanghai’s rise may fan concern in Hong Kong that the mainland city will regain its position as China’s dominant financial center, after surpassing the former British colony as the nation’s biggest port and stock-market operator.

“Hong Kong’s role as the bridge linking China and the West is diminishing due to the further opening up of China,” said Hubert Tse, a partner at law firm Boss & Young in Shanghai. “I’m witnessing history as China continues to power ahead.”
Shanghai’s rise is “not a threat,” Hong Kong Chief Executive Donald Tsang told reporters that the cities can find “new opportunities for cooperation.”

Hong Kong has helped mainland firms get international listings, while Shanghai has an edge in tapping domestic Chinese funds, the Financial Services and the Treasury Bureau said.
Source: Bloomberg


JPMorgan’s Abdelnour Closer To Solving China Puzzle
Gaby Abdelnour, JP Morgan Chase & Co. Asia-Pacific Chief Executive Officer, slaps the table three times as he spells out his ambition to end the firm’s five-year wait to enter China’s securities market: “I told everyone, I want to do a JV this year.”

At a town hall meeting, Abdelnour told about 500 of the firm’s employees in Asia that they’re nearer to that goal. JPMorgan has identified a partner for a securities joint venture in China and aims to sign an initial agreement as soon as next week, executives close to JPMorgan said.

JPMorgan CEO Jamie Dimon steered the firm through the global financial crisis, emerging as the only top Wall Street bank to avoid posting a quarterly loss. In China, the company has failed to plug gaps in its business, while rivals Goldman Sachs Group Inc. and UBS AG found the local partners that are a prerequisite for arranging share sales in the world’s biggest market for initial public offerings in 2009.

Abdelnour said he aims for China to contribute about 25 percent of the bank’s Asia revenue “over time” from around 10 percent to 15 percent “through the cycle.” Investment banking, commercial banking and asset management each contribute about a third of revenue in the country. The U.S. bank is also considering buying a stake in a Chinese bank as its next step, when China relaxes limits on ownership, he said.

JPMorgan “needs to get a local venture up and running before becoming a real, active player in China,” said Charles Li, Hong Kong-based founder of investment bank Pelican Securities Ltd., which advises companies in the Greater China region on selling shares overseas and acquisitions.

During the past two years, ventures backed by Credit Suisse Group AG and Deutsche Bank AG have won regulatory approval to underwrite stock and bond sales in China. Morgan Stanley plans to sell its 34.3 percent stake in China’s oldest investment bank, China International Capital Corp., for about $1 billion and seek a new partner after failing to control the venture run by Levin Zhu, son of China’s former premier, Zhu Rongji.

China’s economy has expanded about 60 percent since Abdelnour assumed his current position in mid-2006, and its stock market capitalization has swelled almost sixfold to about $3.13 trillion. By both measures, the country trails only the U.S. and Japan.

Companies raised RMB 209 billion ($31 billion) in IPOs in Shanghai and Shenzhen last year, making China the world’s biggest market for first-time stock sales -- even after the securities regulator blocked sales in the first half of 2009.
UBS Securities Co., 20 percent owned by the Zurich-based bank, had RMB 26 million in net income for 2008, according to the Securities Association of China. Goldman Sachs Gao Hua Securities Co. made RMB 25.7 million. China International, the nation’s biggest domestic share arranger in 2009, earned RMB 627 million. Second-placed Citic Securities Co. posted RMB 7.3 billion in profit.

“From a profitability standpoint, I probably didn’t miss anything,” Abdelnour said. In terms of “market share, I missed something. The ability to be there ahead of everybody else and capture market share makes a big difference, of course. But we can claw it back.”

JPMorgan, which has asset management, futures and options ventures and operates a locally incorporated bank in China, will still face a five-year wait to qualify for a brokerage license under rules set out by the China Securities Regulatory Commission. UBS and Goldman Sachs set up their ventures before the regulations had been developed.
Source: Bloomberg


Nasdaq Parent Wants More Chinese Floats
Nasdaq OMX Group Inc, the parent of the Nasdaq Stock Market, expects more initial public offerings (IPO) by Chinese companies this year after the US IPO market rebounds in the second quarter, a senior executive said.

"Although the market has been choppy in the US over the past two months, there is a huge pipeline of companies in China that are keen on Nasdaq floats this year," said Robert McCooey Jr, senior vice-president for new listings and capital markets of Nasdaq.

The US IPO market will recover in the second quarter of the year as the overall situation stabilizes and Washington's fiscal policy and financial regulations become clearer, he said.

Over 33 Chinese companies listed on the Nasdaq in 2009, including nine IPOs, bringing the total to date to 124. The listing of China's largest online game operator Shanda Games in 2009 was one of the largest US IPOs ever, raising a total of $1.04 billion.

China's monetary policy tightening will not have any major impact on Chinese IPOs, but it may affect the valuation of the companies that intend to list over the next two or three years, said McCooey. Nasdaq is keen on welcoming Chinese companies who have global aspirations and who want to list on the US markets, he said, adding that there will also be opportunities for dual listing of Chinese companies that are already listed in Shanghai and Shenzhen.

The New York-based bourse is also keen on being part of the first batch of overseas companies that would be listed on China's A-share market after the international board debuts in Shanghai this year.

McCooey said Nasdaq would continue its discussions with the Shanghai Stock Exchange on the listing, adding the two sides are yet to reach a final agreement.
A number of overseas companies, including global banking giant HSBC and NYSE Euronext, the parent of the New York Stock Exchange, have expressed interest in listing on Shanghai's international board.
Source: China Daily


Daimler, BYD In China Electric Car Partnership
Daimler AG says it has signed a memorandum of understanding with China's BYD Co, the Chinese carmaker backed by billionaire Warren Buffett, to develop jointly electric vehicles for the fast-growing Chinese market.

Daimler said that the two companies envision a "comprehensive technology partnership" that would result in a vehicle specific to the Chinese market's requirements.

It said the plan is for the car to be marketed under a new brand jointly created and owned by Daimler and BYD and for the companies to set up a common technology center in China to develop, design and test the vehicle.

Daimler said last month it will focus on cleaner technologies to take global market share from rivals Bayerische Motoren Werke AG and Volkswagen AG's Audi brand.

"China has the potential to be among the world's largest markets for zero-emission vehicles," Daimler's Chief Executive Officer Dieter Zetsche and BYD's Wang said in the joint statement.

Daimler, founded in 1883, plans to introduce an all-electric version of its Mercedes Benz A-Class this yeart.

BYD signed a separate electric-vehicle agreement in May with Volkswagen, Europe's largest auto-maker. Volkswagen and BYD will explore cooperation in areas including hybrid cars and lithium-battery powered electric vehicles, the Wolfsburg, Germany-based automaker said in a statement.
Source: China Daily


China's Exports Rebound Continues In February, Up 45.7% 
China's exports grew for the third straight month in February, up 45.7 percent year on year to $94.52 billion, which indicated a rebound in global demand, the General Administration of Customs announced.

Imports in the same month rose 44.7 percent to $86.91 billion.

"February's growth surge also resulted from a lower comparison base last year," said Wang Tao, economist with the UBS Securities, as China's exports in February last year marked the sharpest decline in more than a decade because of the financial crisis.

Foreign trade in February stood at $181.43 billion, up 45.2 percent year on year. The figure was down 11.5 percent compared with January, which Qiao Hong, an economist with the Goldman Sachs (China) said was partly due to fewer working days in February because of the weeklong Lunar New Year Holiday.

Out of the same concern, the administration com-pared February's exports figures with those in the same period of 2008 before the global downturn, as the Lunar New Year fell in February in both 2008 and 2010. The comparison showed that exports grew 8.2 percent while imports were up 9.8 percent.

It also combined data from January and February which could show a more accurate picture of trade conditions as last year's Lunar New Year fell in January.

Exports surged 31.4 percent to $204.08 billion in the first two months over the same period last year. Imports stood at $182.32 billion, up 63.6 percent.
The trade surplus contracted 50.4 percent in the first two months to $21.76 billion.

The European Union and United States remained China's two largest trade partners. Trade with the EU grew 34.5 percent to $65.53 billion, and with the U.S., it rose 25.1 percent to $49.32 billion.

Trade with the Association of Southeast Asian Nations (ASEAN) surged 66 percent to in the first two months.
Source: Xinhua Net


Chinese Company To Develop New Energy In Northeast
Aviation Industry Corporation of China will invest RMB 3.3 billion ($483.9 million) to develop new energy enterprises in China's northeast, the company said.
The State-owned company said it would build wind power stations of 200,000 kilowatts (kW), natural gas power stations of 100,000 kW and solar power stations of 40,000 kW installed capacity in the city of Da'an, Jilin province, northeast China, according to the pact the company signed with the local government.
The waste heat of the natural gas power stations would also be used to warm houses, the company said.

Da'an, located in the northwest of Jilin province, is rich in natural gas, and has a good environment for wind and solar power generation. According to the official website of Da'an municipal government, the city has access to natural gas deposits of about 2 billion cubic meters, and its average time of sunshine totaled 3,013 hours per year.

The Chinese government has vowed to cut carbon dioxide emissions per unit of the GDP by 40 percent to 45 percent by 2020 from the 2005 level, which represents a reduction of roughly 1.5 billion tons of emissions.

The government has promised to subsidize new energy companies as well as giving them other incentives to achieve the reduction, said Finance Minister Xie Xuren in the Central Economic Work Conference held last month.
Source: China Daily


China's Auto Sales Top 2.9 Million Units In First Two Months
China's auto sales maintained steady growth in the first two months of 2010, buoyed by the nation's car purchase incentives and strong demand brought by the week-long Spring Festival holidays.

The combined auto sales in January and February surged 84 percent from a year earlier to 2.9 million units, with February's figures alone reaching 1.2 million units, up 46 percent year on year, according to the China Association of Auto Manufactures (CAAM).

China, the world's largest auto market, adjusted the auto tax-cut policy and old-for-new program in January this year, to boost domestic consumption. Ministry of Commerce said in February that the favorable policies for car purchasing had paid off, with a significant rise in the number of subsidy applications.

Dong Yang, the first deputy director of the CAAM, urged the nation's automobile industry to properly handle the relationship between improving product quality and maintaining fast development.
Source: Xinhua Net


Alstom Looks To High-Speed Train Contracts
While bidding to supply the world's fastest train to China, Alstom is looking at another gold mine in the country - high-speed train maintenance services.
In the eyes of Kim Chan, China managing director of Alstom's transport sector, the logical next step after the country's ambitious goal of building 18,000 km of high-speed passenger rail lines by 2020 is how to ensure greater reliability and availability of the trains that can run at least 250 km per hour.
Alstom plans to cooperate with Chinese local companies to provide maintenance services, Chan said.

"It should be a partnership. We bring our philosophy and our maintenance experience in Europe. But it has to be adapted to the local environment with the help of a Chinese partner. Both sides have roles to play."

As a national priority and a core component of the government's economic stimulus measures, railway investment is expected to peak in the coming two years, with annual investment in between 2010 and 2012 reaching no less than RMB 600 billion ($87.89 billion), according to the Ministry of Railways.

Many new rail lines will be high-speed networks, allowing trains to travel more than 250 km an hour. By 2020, China will own more than half of the world's total length of high-speed rail lines.

Alstom, the world's largest high-speed train maker, has offered the AGV train that can run 360 km per hour as it competes with Bombardier from Canada, Siemens from Germany and domestic suppliers for Chinese contracts.

The AGV, the world's fastest conventional train in terms of designed commercial speed, is expected to enter into commercial service in Italy next year.
But the level of technology transfer has been one of the most important factors that determine to whom the Chinese government awards a rail contract because China has been keen to foster its own rail transport technologies.

"To support the AGV to enter into China, we are flexible with technology transfer," Chan said.

"Given China's ambitious plan to develop its own railway industry and given the size of this market, the government has to do that. For us, technology transfer is a market entry requirement."

China has launched 31 metro lines in 10 cities. The State Council last year approved another 79 metro lines in 22 cities, which are expected to involve a total investment of RMB 882 billion. That will create huge demand for rail-related businesses.
Source: China Daily


Carrefour Well Received By Chinese Shoppers
It's 1 am one day during this year's Spring Festival and hundreds of consumers are on a shopping spree, waiting in long queues, trolleys piled high with goods, at Carrefour's Tiantongyuan outlet in the Changping district of northern Beijing.
The night time craze was symbolic of the retail giant's strong performance in China. Claudio Gouveia, vice-president of Carrefour China and also general manager of the North Territory of Carrefour China, said the country has become one of the most significant and also fastest-growing markets for the retailer.

Carrefour last year pulled out of Russia and southern Italy amid the economic meltdown following decisions to quit Japanese, South Korean and Mexican markets in 2005 and 2006, because of "unsmooth operations". It sold its stores to local enterprises.

However, the retailer maintained steady expansion in China. Gouveia said that Carrefour opened 22 new stores in 2009, boosting the total number of outlets to 157 across the country. It plans to open 20 to 25 new outlets this year.
He added that the company was satisfied and very optimistic about its business in China because the country's household consumption rates have been high.

In the past year, Carrefour benefited a lot from the stimulus measures, introduced by the Chinese government. For example, the authorities subsidized energy-saving household appliances in an effort to encourage their purchase.

Gouveia said Carrefour had a very clear strategic plan for the Chinese market and would be focusing on constructing hypermarkets with an average size from 6,000 sq m to 11,000 sq m.

The company was making great efforts to balance its presence in big cities and also second and third tier cities. It has been operating its retail business in 45 cities across China.

"Currently, Carrefour has a good presence in big cities while more new stores will be in second and third tier cities," said Gouveia.

The French company will be the first international retailer to enter the Inner Mongolia autonomous region, where it plans to build a new outlet in 2011.

The retailer plans to develop its China-based outlets alongside the construction of local infrastructure and arrival of new businesses. "For instance, there will be a new airport in the Daxing district of Beijing's southern suburb and there may be a new outlet nearby. I believe we have many opportunities in this area," said Gouveia.

In response to its rival Wal-Mart, which is planning to build about 50 new stores each year, adding to its current total of 160 outlets, Gouveia said the focus of Carrefour was to keep a good balance between the rhythm of expansion and the quality of the stores.

"Each new store will have energy-saving programs which are expected to save 20 to 25 percent of energy compared with traditional stores," he said.

At the same time, existing outlets will undergo a 15 percent reduction in energy consumption after renovations and reconstructions.

"Retail is a daily battle. Just having bigger or more stores does not guarantee good results," said Gouveia, "For example, a customer who buys a bad loaf of bread would not return for the same product, so we have to monitor closely every detail of the products and service."

The company is also committed to introducing more international brands.

"China is a very open market because the Chinese government allows all retailers to compete and lets customers decide where to go," said Gouveia. "The major way to compete is to be the best in class every day."
Source: China Daily


RBS Eyes Securities License In China
Royal Bank of Scotland has applied for a securities license in China, as it seeks to expand its presence in the country. The British bank, bailed out by the UK taxpayer at the height of the crisis, has applied to the Beijing for regulatory approval in a joint venture with a local partner.

The move comes after RBS was ordered last year by EU antitrust regulators to sell a string of assets, including more than 300 branches and its insurance arm, to compensate for billions received in state aid.

John McCormick, RBS Asia Pacific chief executive said that the bank was looking at several ways to widen its Chinese exposure.

"We have many 'acorns' planted in China and I am confident that these will grow steadily in the coming years," said McCormick.
Source: China Daily


CIC's 2009 Investment Return Over $10 Billion
China's $300 billion sovereign wealth fund, made an unaudited return of more than $10 billion last year on its foreign investments.

"In 2009, CIC's unaudited paper profit on overseas investments exceeded $10 billion, and not just $10.1 billion or $10.2 billion." CIC's return on overseas investment projects could therefore exceed 10 percent for last year, compared with negative 2.1 percent in 2008.

Jesse Wang, executive vice president and chief risk officer at CIC, said last week that the country's sovereign wealth fund completed most of its investments in 2009, leaving relatively little cash on hand.

Wang also described the fund's overseas investment performance as very good last year.
Source: China Daily


Bourse To Beef Up Delisting Mechanism
The Shenzhen Stock Exchange will accelerate the improvement of the direct delisting mechanism of the ChiNext start-up board in an effort to bring down the high valuation of listed companies, said Chen Dongzheng, the exchange's president.
"The direct delisting system is the most fundamental and the most needed system on the ChiNext board, and the adoption of such a system will help promote the healthy development of the board in the long run," Chen said, adding the high valuation of recent listings on ChiNext was partly due to the absence of the delisting risk on the market. The exchange has submitted an improvement plan to the China Securities Regulatory Commission and Chen said the goal was to speed up the delisting process, highlight risks to investors and prevent potential backdoor listings.
The annual average delisting rate has been less than 1 percent in China's capital market over the past 10 years, which is much lower than other major capital markets in the world. The US Nasdaq stock market has an annual average delisting rate of 8 percent and the rate is even higher on the London Stock Exchange's Alternative Investment Market, where around 12 percent of listed companies are removed annually.

"We are trying to make the board more market-oriented and ultimately let the market separate the wheat from the chaff," he said. Chen, a member of the Chinese People's Political Consultative Conference, also proposed setting up a judicial relief mechanism by establishing an investor protection fund to safeguard the interests of retail investors.

He also suggested promoting the development of over-the-counter (OTC) markets to create a truly multilayer capital market in China and to help small- and medium-sized enterprises grow and raise funds.
Source: China Daily


360buy To Expand To Apparel Retail Business Via Acquisition
360buy, the largest 3C B2C online retailer in China, will acquire online shopping site Qian-xun.com as part of its effort to expand to apparel and accessories retail businesses, said Chairman and CEO Liu Qiangdong.

360buy is currently in talks with Qianxun.com, in which South Korean telecom operator SK Telecom Co Ltd has a stake, said a senior official from 360buy's public relations department. Industry insiders said that the acquisition may cost RMB 3 million to RMB 4 million.

On Jan. 27, 360buy announced that it had completed the third round of fundraising, obtaining more than $150 million from an investment consortium led by Tiger Global Management. The company got $10 million from the first round of fundraising in August 2007 and $21 million form the second round fundraising in January 2009.

In 2009, 360buy realized a turnover of about RMB 4 billion and had registered users of more than 6 million. The company's share in the 3C online shopping market in China was 46.7% last year.
Source: China knowledge


Silver Plaza Group To Open Three New Outlets In Dezhou
Jinan-based Silver Plaza Group has announced plans to accelerate its expansion in northwestern areas of Shandong and will invest RMB 500 million to open three new shopping malls in Dezhou.

Of the three new outlets, two are reported to be complete and one is still under construction and is expected to be opened around May 1, 2010.

A representative from Silver Plaza Group told local media that the company's current position in Dezhou is only an interim one and it may add more stores in the counties of Dezhou in the near future. Apart from department stores and supermarkets, Silver Plaza Group will also invest in other industries, including home supplies, tourism, entertainment, and house renting in Dezhou.

When the three new shopping malls are all operational, they are expected to make annual revenues of RMB 800 million and realize taxable profits of RMB 50 million.
Source: China Retail News


Hoteliers Expand Presence In China
Leading luxury hotel companies remain bullish on their prospects in China as they continue to expand their presence in the world's fastest growing economy.
The Ritz Carlton Hotel Company, which operates more than 70 hotels across the globe, announced that it will open two more hotels in China this year to cement its position as the leading luxury hotel brand in the country.

With the opening of The Ritz Carlton Shanghai, Pudong, and The Ritz Carlton, Hong Kong, the United States-based hospitality company will increase its China presence to eight hotels by the end of this year.

"We made the decision more than 12 years ago when we opened our first hotel in the country that China was strategically important to us and we have time and time again shown our commitment to and belief in China as a crucial business and leisure market," said Mark DeCocinis, regional vice president of The Ritz-Carlton Hotel Company.

The 285-room Ritz Carlton Shanghai, Pudong, located in the South Tower of Shanghai ifc, a landmark commercial development in the heart of Lujiazui, will officially open in May to coincide with the World Expo while The Ritz-Carlton, Hong Kong, is due to open in November as the world's tallest hotel, occupying floors 102 to 118 at the International Commerce Centre in Kowloon, the highest skyscraper in Hong Kong.
Source: Shanghai Daily


IBM Banks On China For Growth In Energy Div
IBM sees strong market potential for "smart grids" power distribution systems in China as the country seeks ways to use energy more efficiently. 

IBM -- which counts State Grid Corp. of China, the nation's leading power grid operator, as one of its customers -- unveiled its Energy & Utilities Solutions Lab in Beijing this week.

IBM's products span the range of smart grid systems, including the automation of power stations and electricity distribution networks with the use of digital sensors and communication networks. IBM expects the China revenues of its energy and utilities division to grow by $400 million from now until 2014 as Beijing banks on "smart grids" to make the country more energy-efficient, Gammons said.
"We're looking at $400 million in incremental revenue over our base revenue in China over the next four years," he said.
Source: Reuters


China Needs More Hydropower Projects To Fight Climate Change: Lawmaker
China should build more large hydropower projects so it can live up to its promise to the international community, said Wang Shucheng, vice chairman of the Finance and Economic Committee under the National People's Congress (China's top legislature).

China in 2007 promised to make renewable resources supply 15 percent of its total energy consumption by 2020, in a bid to reduce greenhouse gas emissions and promote sustainable economic growth. To achieve the goal, China needs to raise the installed capacity of its hydropower to 300 million kilowatts (kW) by 2020 from 190 million kW at the end of 2009, said the former water resources minister.

The lawmaker asked the country to hurry up, as constructions of large and mid-sized hydropower projects usually take five to ten years.
Source: China Daily


China Runs First Sugarcane-leaf Power Plant
China's first power plant using sugarcane leaves has been put into operation in south China's Guangxi Zhuang autonomous region. The factory, annually using 200,000 tons of agricultural wastes including sugarcane leaves and tree barks to generate electricity every year, started production in Liucheng County on March 5th.

The station has an annual capacity of 180 million kilowatt hours and can cut the emission of 100,000 tons of carbon dioxide, 600 tons of sulfur dioxide, and 400 tons of dust compared to coal-fired power plants with the same efficiency.

Guangxi has eight million tons of usable sugarcane leaves every year, which can provide materials for about 38 such plants, said Wu Jiguang, the plant manager.
Source: China Daily


China To Build Industrial System Of Low-carbon Emissions
China will build an "industrial system" and "consumption pattern" with low carbon emissions, said Premier Wen Jiabao.

China will work hard to develop low-carbon technologies as well as new and renewable energy resources to actively respond to climate change, Wen said. Other measures to combat climate change include increasing forest carbon sinks and expanding China's forests by at least 5.92 million hectares in 2010.

"We will increase our energy-saving capacity by an equivalent of 80 million tons of standard coal," he said. The daily sewage treatment capacity will increase by 15 million cubic meters and the daily garbage disposal capacity will grow by 60,000 tons.

For developing a circular economy, Wen said China will utilize mineral resources, recycle industrial waste, use by-product heat and pressure to generate electricity, and transform household solid waste into resources.
Source: China Daily


Air China Aims To Buy Shenzhen Airlines
Air China Ltd, the nation's third biggest carrier, intends to buy Shenzhen Airlines Co to add a hub in the south of the country.

"Shenzhen Air is very important in terms of building a strategic network," Chairman Kong Dong said. Air China has begun an audit of the smaller carrier's assets, which should be completed this year, he said.

Air China, which owns 25 percent of Shenzhen Air, wants a hub in the Pearl River Delta to compete with Guangzhou-based China Southern Airlines Co, the nation's largest carrier. Beijing-based Air China took management control of Shenzhen Air in December after police began a probe of the smaller airline's top executive and largest shareholder, Li Zeyuan.

"A takeover would help Air China optimize its domestic network by expanding to southern China," said Jack Xu, an analyst at Sinopac Securities Co in Shanghai. "It's very complicated. The carrier has to sort out financing and get approval from the government and shareholders."
Source: China Daily


Tsingtao Brewery To Buy Sales Subsidiary From Parent
Tsingtao Brewery Co Ltd recently announced that it plans to spend RMB 174 million to purchase a sales subsidiary based in Ji'nan, Shandong Province from its parent, Tsingtao Brewery Group.

When the acquisition is complete, the listed firm's share of the beer market in Ji'nan is expected to exceed 80%, an insider noted.

On Jun. 6, 2009, Tsingtao Brewery Group acquired the sales firm from Shandong Commercial Group General Corp for RMB 250 million. A few months later, the brewery giant began accepting bids for the sales firm, and Tsingtao Brewery won the deal.
An officer of Tsingtao Brewery said that the company aims to sharpen its competitive edge in Shandong Province, in which there are more than 60 brands from all around the world, and that the province is the leader among beer-producing regions by output value.

Sun Yuguo, vice president of Tsingtao Brewery, had a face to face consultation with Li Zhiyong, deputy major of Nanning, Guangxi Zhuang Nationality Autonomous Region, to set up a brewery management center, sources reported.
Source: China Knowledge


Prudent Energy Has Secured $22 Million Series C Financing Led By Northern Light Venture Capital
Prudent Energy, the leading technology developer, manufacturer, and systems integrator of the vanadium redox flow battery (VRB-ESS), has secured $22 million Series C financing led by Northern Light Venture Capital, one of the most respected private investment firms in China. Other new investors in the over-subscribed round include Sequoia Capital China. Existing investors Draper Fisher Jurvetson and DT Capital Partners also participated. This new financing will fuel Prudent's battery manufacturing operations, which relocated From Vancouver to Beijing last year, as well as drive the company's steady growth into the U.S.A. and elsewhere.

"We are thrilled that seasoned investors like Northern Light and Sequoia Capital believe so strongly in Prudent's vision," said Johnson Chiang, CEO of Prudent Energy. "Their support will help us expand our manufacturing capabilities and accelerate our product delivery whilst materially reducing our costs. Already this year we have delivered on nearly twenty of our kW class systems at ever decreasing costs. This capital will strengthen our development activities and presence in North America and allow us to pursue a global sales strategy that will include new initiatives in both China and the U.S.A".
Source: Zero2IPO