China Digest

Economics and policy from China’s newspapers

Wednesday August 9, 2017

Massive quake strikes southwest China

A 7.0-magnitude earthquake struck Jiuzhaigou County, one of the most famous scenic spots in southwest China’s Sichuan Province, on Tuesday night, the National Business Daily reported. The quake killed at least nine people and injured 135, hitting at a depth of 20 kilometres, China News reported. More than 38,000 people visited the tourist attraction on Tuesday, which is known for spectacular waterfalls and dramatic karst formations.

CBRC drafts regulations on bankruptcy

The China Banking Regulatory Commission said on Tuesday that it is drafting regulations on the disposal of bankruptcy risk in commercial banks, the 21st Business Herald reported. The regulations will be based on core principles of effective disposal as raised by the Financial Stability Board. It will also give full consideration to close-out netting, the primary means of mitigating credit risks associated with over-the-counter derivatives.

US$149 billion agreements on debt-to-equity swaps

The National Development and Reform Commission said around 70 enterprises with high liabilities and various other institutions have reached agreements on debt-to-equity swaps totaling one trillion yuan (US$149.15 billion), China News reported. The enterprises involved are mainly from industries of steel, coal, chemical engineering and equipment manufacturing. The agreements constitute a bid to deleverage under a moderate monetary policy.

Hong Kong official explores yuan market potential

The Chief Executive of the Hong Kong Special Administrative Region, Carrie Lam Cheng Yuet-ngor, met the mainland’s leading banking and financial officials and regulators in Beijing on Tuesday, to discuss offshore yuan market development and cooperation on the Belt and Road initiatives, Sina Finance and the Paper reported. Carrie Lam met with the People’s Bank of China governor, Zhou Xiaochuan, and the vice chairman of the China Securities Regulatory Commission, Jiang Yang, the report added.

China’s export growth slows down

China’s exports in July stand at 1.32 trillion yuan, a rise of 11.2% from a year earlier and the lowest growth rate since the start of the year. Analysts from the Industrial Bank attribute the slowdown to the decrease of exports to the United States and the European Union, as reported by National Business Daily. Meanwhile, July imports recorded a year-on-year 14.7% increase, totaling 1 trillion yuan. The intake of coal has hit a five-month low, along with a decrease in demand of iron ore and steel.

Government to rev up car-sharing industry

The Ministry of Transport and the Ministry of Housing and Urban-Rural Development said in a joint statement it would encourage the car-sharing industry, especially cars of small and medium size and plug-in electric vehicles, China News reported. More than 92.7% of car-sharing companies stock less than 50 vehicles and the top five firms hold only 20% of the market in China. In comparison, the top five firms in the US hold 94% of the existing market.

Facial recognition sweeps 40 cities

Alipay’s facial recognition technology has been implemented involving government affairs among 40 cities, the Economic Information Daily reported. More than 8.75 million users have tested the technology to match faces with personal data to check updates on personal tax, insurance and fees related information. The exercise saved at least four million hours of document proceedings for users over the past three months.

Wanda Group adds China UnionPay as shareholder

Wanda Group has transferred some shares from its financial subsidiary, Wanda Internet Finance, to China UnionPay, according to an article in eeo.com.cn. By adding new shareholders, the registered capital of its financial subsidiary increased to 9.3 billion yuan in July from 5 billion yuan in February. Analysts familiar with the conglomerate think Wanda’s finance arm could be reducing its liabilities to prepare for going public.

Sharp is back with a brand new phone

Sharp, a multinational electronic product manufacturer owned by Foxconn, has launched a new smartphone, Aquos S2, in a major bid to return to the lucrative Chinese market, Caixin reported. Luo Zhongsheng, CEO of the company, said the new model will bring Sharp back to the central position of the Chinese mobile market, which would place it at fifth or sixth place.

McDonald’s eyes hundreds of new outlets

McDonald’s China announced on Tuesday that the Ministry of Commerce has approved a deal that saw CITIC Capital and Carlyle Group buy into the fast food giant, Caixin reported. On the new board, CITIC and Carlyle would hold four and two seats respectively, while McDonald’s would hold one seat. The new company plans to open 500 new outlets per year in the coming half decade, mainly in tier 3 and tier 4 cities.