China Digest

Economics and policy from China’s newspapers

Friday July 14, 2017

US$4.4 million net profit, a hidden red line for IPOs?

China’s securities regulator rejected three out of five initial public offering (IPO) applications on Wednesday, Yicai reported. Insiders said there is a greater chance of receiving rejection for companies that show a net profit lower than 30 million yuan after deducting non-recurring gains and losses.

CBRC issues US$49 million in business penalties

The China Banking Regulatory Commission (CBRC) issued 1,334 ticket violations worth 338 million yuan (US$49.83 million) over the first six months of 2017, the Paper reported. The most common cases involved credit businesses, while 20% of the tickets were due to billing violations, the report added.

Expansion eyed for Qianhai and Shekou free trade zone

Shenzhen’s Qianhai and Shekou free trade zone has released a draft plan that proposes to expand the area by ten square kilometres, a core pivot of the Guangdong-Hong Kong-Macao Greater Bay Area, Caixin reported. The free trade zone is expected to cover 38 square kilometers with more than 47 million square meters of building space accommodating an estimated 620,000 residents.

Once heated overseas investment cools off

Chinese investors have parked their money in 3,975 non-financial foreign enterprises in 145 countries around the world in 2017, totalling US$48.19 billion, a drop of 45.8% from a year earlier, Caixin reported. Both the real estate sector as well as the culture, sports and entertainment industry have seen a sharp drop in outbound investment due to policy controls.

Exports surge to US$1.06 trillion in 2017

China’s exports have soared to 7.21 trillion yuan (US$1.06 trillion) in the first half of 2017, a rise of 15% from a year earlier, the Securities Daily reported on Friday. While imports stand at 5.93 trillion yuan, increasing 25.7% year on year. The trade surplus has narrowed to 1.28 trillion yuan, a 17.7% decrease.

China’s duty free market a battlefield amid tourism boom

China Duty Free Group and Sunrise Duty Free have won the bidding contracts at Beijing airport, the Economic Information Daily reported. The growing 30-billion-yuan duty free market in China has turned into a battlefield, as the number of cross-border tourists in 2016 has topped the world, reaching 122 million people. Analysts think the combination of China Duty Free and Sunrise Duty Free is the big winner, accounting for 75% of the market share.

Cities in bid to boost residential land supply

Shanghai plans to make available 55 square kilometers of residential land for 1.7 million homes as part of the 13th Five Year Plan, a 60% increase compared to the 12th Plan period, Yicai reported. Shenzhen also plans to provide 2.18 square kilometers of residential land in 2017, in an effort to increase land supply in first and second tier cities according to population growth.

US$63.41 billion fund set up to encourage tech innovation

Four funds led by the National Development Bank and six central government-owned enterprises have teamed up to encourage technological innovation in China, the Economic Information Daily reported. The 430- billion-yuan effort will support the research and development of high-speed railway, new energy cars, quantum communications, 3D printing and robotics.

Real estate group sparks speculation over Evergrande merger

The Shenzhen Special Economic Zone Real Estate & Properties Group said it will postpone the resumption of trading on the Shenzhen Stock Exchange, as it is going through due diligence and auditing for an upcoming restructuring. A anonymous source believes the postponement could be a signal that the company will soon merge with Evergrande, one of China’s leading property developers, Xinhua reported on Thursday night.

SAIC reports rapid growth in new market entities

The number of new market entities reached 8.87 million in the first six months, a 13.2% year on year increase, while 49,000 new companies or self-employed entrepreneurs registered each day on average, the Economic Information Daily reported, citing data from the State Administration for Industry and Commerce (SAIC). New companies also contributed 11.2% to boosting employment in the second quarter, the report added.