BRIEFS

GENERAL

Trade critique from EU

China should open its market more quickly and solve trade frictions, said European Commissioner for the Internal Market and Services Charlie McCreevy after Beijing agreed to start talks on a World Trade Organisation government procurement agreement. McCreevy, in Beijing on an official visit, said European countries were under pressure caused by China's rising trade surplus with Europe. "It is wholly fair to everybody that if there is access to the European markets for Chinese goods, products and services, then the same should apply over a period of time to European goods, products and services," he said.

Overheating not contained

China's top economic planner warned that the economy is still in danger of overheating. National Development and Reform Commission chairman Ma Kai said overheating would be caused by continued investments in energy-intensive and polluting industries. Industrial production, which grew 18.1 percent year-on-year in May, is still too high, he said. "This shows that the trend towards economic overheating still hasn't been contained," he said. He also said that "such a trend is hard to curb under the current fiscal system."

No loans for polluting companies

Chinese companies that break environmental laws will not be allowed to receive bank loans. The announcement was made by the State Environmental Protection Administration. Before the announcement, the agency's head, Zhou Shengxian, said worsening pollution was causing "mass incidents", a phrase frequently used for protests. He said the agency had received 8 percent more petitions from the public this year compared to a year ago.

Playboy Mansion in Macau

A Playboy Mansion is planned for Macau as Asia's gambling capital bids to move toward more diversified entertainment. Playboy Enterprises and Macau Studio City announced that they have formed a joint venture to open the 4,000-square-metre Playboy Mansion Macau in late 2009. The mansion, which will offer nightlife, entertainment, dining and shopping activities as well as overnight accommodation in the Hugh M. Hefner Villa, will be part of the US$2 billion (€1.5 billion) Studio City hotel and casino complex being built in the Cotai district. "We knew Macau made sense for the brand as an entertainment destination," said Hugh Hefner, founder and chief creative officer of Playboy.

COMMODITIES

Offshore crude tax announced

The Ministry of Finance announced that an import tax will be imposed on foreign companies for offshore crude oil that Sino-foreign joint ventures export from China. The tax will take effect August 1 this year but existing contracts will be exempt from the tax until August 1, 2012. "The main aim is to protect domestic resources by stopping foreign firms from taking China's offshore crude overseas," said Qiu Xiaofeng, a China Merchants Securities analyst.

Chalco buys Peru Copper

Aluminium Corporation of China, also known as Chalco, has bought Vancouver-based Peru Copper for US$792 million (€580 million). Chalco, China's largest diversified metals and mining company, paid US$6.19 a share for the company. Chalco will give a US$65.6 million cash infusion to Peru Copper to fund a copper mineral deposit project in Morococha in central Peru. Chalco paid for the purchase in a cash agreement at a 21 percent premium to Peru Copper's 20-day volume-weighted average on the Toronto Stock Exchange.

Coal reserves increase

The National People's Congress (NPC) is drafting an amendment to a coal law that, if passed, would increase China's strategic coal reserves. The proposed amendment addresses such issues as the number of reserve sites and the scale of the reserve, said Huang Shengchu, president of the China Coal Information Institute. China currently already has two oil reserve bases with a capacity of 5 million tonnes each, and two more that will be operational this year or the first half of next year. The amendment is scheduled to be submitted to the Legislation Office of the State Council for review by the end of this year.

Sinopec chief steps down

Sinopec chairman Chen Tonghai has resigned from his post for "personal reasons," forfeiting his positions as general manager and Communist Party chief of the Hong Kong-listed arm of state-owned China Petrochemical, though at least one Chinese media report quoted sources from Sinopec's parent company as saying "serious breaches of discipline" - an often-used euphemism for official corruption - were involved. Chen will be replaced by Su Shulin, currently vice-president of PetroChina, one of Sinopec's largest rivals. The appointment of a PetroChina executive to the post may be seen as a disapproval of Sinopec's management methods from high levels in the Communist Party, which controls senior appointments in state-owned companies.

BANKING & FINANCE

Carlyle deal approved

The Carlyle Group may be close to a deal for a stake in a privately owned hotel management company in China. The private equity firm plans to invest nearly US$100 million (€73 million) in Kaiyuan Group. Carlyle has also bought a 26 percent stake in a Chongqing glass fibre manufacturer for US$65 million and a 49 percent stake in a steel pipe maker for US$80 million, but had been frustrated in several past investment attempts on the mainland. Carlyle isstill waiting for approval for its US$375 million takeover bid of Xugong Construction Machinery, China's largest crane and digger producer, a deal that has created political opposition.

CCB offers shares to employees

China Construction Bank (CCB) announced an incentive plan to allow about 270,000 employees to acquire 800 million of its shares from July 6, according to a statement issued by the bank. Under the plan, employees working for more than three years and other individuals approved by the board of directors or the senior management are able to buy or be given shares, which they must hold for at least three years before selling them. The plan will be administered by an independent trustee, according to the statement. CCB, which has a total of about 225 billion shares, is the first of the "Big Four" state-owned banks to offer such a scheme.

Regional indices launched

China's first regional financial indices were launched recently. The indices, which are compiled by Shanghai CBN Media and Shenzhen Securities Information, will be the first made by local financial media in China's securities market using an economic region concept. Each index - the CBN Yangtze River Delta index, the CBN Pearl River Delta index and the CBN Bohai circle index - is composed of 40 representative listed companies within each region as composite samples. The three areas are China's most active economic regions.

ICBC raises largest overseas fund

Industrial and Commercial Bank of China, one of China's largest banks, plans to invest US$584.5 million (€428.2 million) abroad through an overseas-investment fund. In a statement, the bank said it plans to offer investors a fund that includes investments in overseas stocks. The fundraising effort marks renewed interest in the Qualified Domestic Institutional Investor (QDII) program, which allows Chinese investors to pour funds into overseas stocks. Beijing expanded the scheme in March as part of an effort to divert more funds out of its increasingly overvalued domestic markets.

Blackstone eyes National BlueStar

Blackstone Group is considering investing US$400 million (€293 million) in a 20-40 percent stake of National BlueStar Group, a state-owned chemical company. The deal would be the first since Beijing decided to invest US$3 billion in Blackstone just before its initial public offering in June, an investment seen as a push by Beijing to gain greater understanding of private equity. China National BlueStar Group, a subsidiary of China National Chemical Corp, or Chem China, operates three publicly traded subsidiaries.

African fund to focus on China

A much-publicised US$5 billion (€3.7 billion) China-Africa Development Fund, which is supposed to be an aid fund, will invest exclusively in Chinese enterprises and their projects in Africa. The state-owned China Development Bank was expected to launch the first phase of the fund, worth US$1 billion, this week. This phase would focus on Chinese businesses whose trade and economic activities have reached or will reach Africa and projects on the continent invested in by Chinese enterprises. The CDB said investments will focus on projects related to natural resources, infrastructure, agriculture, manufacturing and industrial parks.

TRANSPORTATION

China-made Chryslers for export

Cars made by Chinese manufacturer Chery Automobile under the Chrysler brand could go on sale in the US or Europe within 30 months. Chrysler Group CEO Tom LaSorda told reporters at the official signing ceremony of the Chrysler-Chery alliance that they hoped to start exporting small and sub-compact vehicles to the US in less than a year, with exports to Western Europe beginning within two years. The first exports of the Dodge model, which will be the work of Chery alone, will target other markets. The partnership was announced last year but was delayed due to the sale of Chrysler by its parent group DaimlerChrysler to private equity operator Cerberus Capital Management.

Auto output, sales soar

China's fledgling auto industry maintained strong momentum in the first half of the year, with both vehicle output and sales rising 28.94 percent and 26.71 percent, respectively, compared with the same period last year, according to the China Association of Automobile Manufacturers (CAAM). Statistics show that in the first half, 2.59 million passenger cars and 1.31 million commercial vehicles left factory floors, up 40.30 percent and 7.16 percent from last year. Strong output has caused a price war in the local market, analysts said.

China Southern to cover more air with SkyTeam

China Southern Airlines announced before it becomes a formal member of SkyTeam Alliance, it will expand its routes to share codes with 10 airlines. The Guangzhou-based carrier already has existing agreements with six SkyTeam member airlines. With the expansion, Chinese travellers will be able to reach 728 destinations in 149 countries no later than the end of this year. SkyTeam is one of the three largest international airline alliances, along with Star Alliance and Oneworld Alliance. In all, SkyTeam has a fleet of more than 2,000 aircraft and 14,615 flights per day. Its members include Air France, Aeromexico and Delta Air Lines.

Henan company invests in German airport

Pang Yuliang, an entrepreneur from Henan province, confirmed that his company, LinkGlobal, will become the first Chinese firm to take over operations of an overseas airport. Pang told the local media that the acquisition of Parchim International Airport would take place on July 5 for US$131 million (€96 million). The project had been awaiting approval by the Ministry of Commerce. Pang said the project would be an opportunity for LinkGlobal, a logistics firm, to seek global development.

TECH/TELECOM

Alibaba picks HKSE over NASDAQ

China's leading e-commerce company, Alibaba, will sell shares in Hong Kong rather than follow the typical tech enterprise route of a NASDAQ listing. It was suggested that Alibaba founder Jack Ma wants to steer the US$1 billion (€725 million) offering to Hong Kong rather than the US due to stringent American listing rules. "Jack Ma is a Sarbanes-Oxley hater and doesn't feel it's necessary to do a US listing," a source said. The Sarbanes-Oxley Act, introduced five years ago in the wake of the Enron and WorldCom scandals to make corporate officers more accountable for the behaviour of publicly listed companies, has led many companies to complain that compliance with the law is prohibitively expensive.

China Mobile plans Shanghai IPO

China Mobile plans to raise more than US$6 billion (€4.4 billion) to list on the Shanghai Stock Exchange. The proposed funds would exceed the bourse's previous record set by Industrial and Commercial Bank of China (ICBC) at US$6 billion. "We don't have a timeframe for an A-share listing. But that's always been the company's intention," a spokeswoman for the company said. China Mobile began listing preparations late last year. The new funds will be used for the expansion of the China Mobile network and technologies.

Microsoft buys into Chinese TV maker

Microsoft will spend US$12.3 million (€9 million) on a stake in television and electrical appliance manufacturer Sichuan Changhong Electric. Microsoft and Changhong are to collaborate in developing, making and marketing televisions, computers and other digital home entertainment products. Under the terms of the deal, the Chinese company will place 15 million new shares with Microsoft at RMB6.27 (€0.60) - a 37 percent discount on its last trading price - which would give the US software giant a 1 percent holding. The sale has still to be approved by Changhong's board.

BlackBerry gets green light

Research in Motion (RIM), the company behind the BlackBerry mobile email device, has received permission to sell its handsets in mainland China. A RIM manager in Beijing told the newspaper that BlackBerry 8700g handsets would go on sale in China at the end of August, priced at about US$700 (€513). Customers have already placed 5,000 advance orders. The Canadian company first applied for approval to sell its products in China several years ago, registering its trademark in the country in 1999, not long after it launched in North America. In 2002, it went into partnership with China Mobile to formally enter the market but ran into difficulties with the regulators.