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Govt and policies

Vehicle sales post back-to-back drop

Chinese auto sales edged down 0.1 percent from a year ago in May, registering two consecutive months of declines for the first time since 2015, as the rollback of a government tax incentive dragged on demand. China auto sales fell to 2.1 million vehicles in May, the China Association of Automobile Manufacturers said on Monday. In April, sales dropped 2.2 percent, the steepest fall in 20 months. In the first five months of 2017, sales grew 3.7 percent from year-ago levels, the association said at a briefing in Beijing. Both production and sales of new energy vehicles in China soared in May. A total of 45,000 NEVs were sold in May, up 28.4 percent year-on-year, while 51,000 NEVs were produced, up 38.2 percent year-on-year. Total auto production stood at 2.09 million in May, down 2.4 percent from that in April and up 0.7 percent on a year-on-year basis.

Pledge to expedite talks on partnership

China and Singapore will do their best to expedite talks on the Regional Comprehensive Economic Partnership, Singapore's foreign minister said, calling the potential pact a statement on the importance of free trade. The Beijing-backed RCEP has been given new impetus by US President Donald Trump's withdrawal from the Trans-Pacific Partnership trade agreement, to which China is not party. The two trade deals are not mutually exclusive, and some countries would be members of both.

Companies and markets

Yuan strengthens against US dollar

The central parity rate of the renminbi, or the yuan, strengthened 23 basis points to 6.7948 against the US dollar on Monday, according to the China Foreign Exchange Trade System. In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day. The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.

39 firms debut on New Third Board

A total of 39 small and medium-sized enterprises went on China's New Third Board last week, latest data showed. The newcomers bring the number of companies listed on the National Equities Exchange and Quotation to 11,283. Turnover on the board stood at 4.87 billion yuan ($715.67 million) last week, up 41.53 percent from the previous week. The NEEQ, also known as the "New Third Board", debuted in 2006 as an experimental platform for small, non-listed high-tech enterprises in Zhongguancun Science Park, Beijing. The present system was officially established on Jan 16, 2013. It complements the country's existing stock exchanges, the SME board and the ChiNext board. The board is seen as an easy financing channel with low costs and simple listing procedures.

COSCO suspends Qatar services

China's COSCO Shipping Lines Co Ltd has suspended shipping services to Qatar, citing "uncertainties" after Arab countries severed diplomatic ties with the Gulf state and imposed port restrictions. The world's fourth-largest shipping line suspended services after Saudi Arabia, Egypt and other Arab nations cut ties with Qatar over its alleged support for terrorism, an accusation the country denies. COSCO told customers about the suspension of services to and from Qatar's Hamad Port in a notice issued on Wednesday, a spokeswoman for COSCO's parent company said on Monday. "In view of the uncertainties as the situation develops, in order to protect the interests of customers, our company is from now on suspending booking services and deliveries for Qatar," it said in the notice. It added that it had launched a contingency plan that it would inform customers of as soon as possible.

Yancoal, Rio Tinto deal approved

China's Yancoal has gained Chinese regulatory approval for its $2.45 billion purchase of Rio Tinto's Australian unit Coal & Allied Industries Ltd, the company said in a stock exchange filing on Sunday. The company said it had received approval from the National Development and Reform Commission and the anti-monopoly bureau of the Ministry of Commerce for the deal. In January, Rio said it was selling its interest in Coal & Allied Industries Ltd to Yancoal's subsidiary Yancoal Australia Ltd for $2.45 billion. Glencore on Friday made a counterbid for Coal & Allied offering $2.55 billion in cash. The terms of the Yancoal agreement allow Rio to engage in negotiations with another party if it made a better offer. Glencore's proposal is $100 million higher and fully funded, but Rio Tinto has to give Yancoal the chance to make a counter offer, opening the way for a bidding war.

Fund makes bid for chip nod

Canyon Bridge Capital Partners LLC, the China-backed buyout fund that agreed to acquire Lattice Semiconductor Corp in November for $1.3 billion, will submit the deal for US review for the third time, people familiar with the matter said on Sunday. The move comes as Canyon Bridge seeks to get the deal approved by the Committee on Foreign Investment in the United States, a government panel which reviews corporate acquisitions for potential national security risks. The standard CFIUS review lasts for up to 75 days. Canyon Bridge submitted the deal for CFIUS review in January and refiled it in March. Refiling with CFIUS resets the clock and provides up to another 75 days for review.

Around the world

Most State capital yet to be equitized

Up to 92 percent of Vietnamese state capital has not been equitized by the end of the first quarter of 2017, according to the latest report by the country's National Assembly. As of March 31, some 96.5 percent of state-owned enterprises were subject to equitization but the equitization value has totaled only 8 percent, the report said. The figures imply mainly small SOEs have been privatized, and that the private sector has attended insignificantly in fields which the state does not need to hold. Meanwhile, the Ministry of Planning and Investment estimated that drastic divestment can bring the state coffers $15 billion-$20 billion during 2016-20.

Signal for tightened monetary policy

South Korea's top central banker on Monday signaled the need to tighten monetary policy as the country's policy rate stayed at a record low level for a year. Bank of Korea Governor Lee Ju-yeol said on the 67th anniversary of the bank's founding that he would consider the possibility of adjusting the current accommodative monetary policy when the trend of economic recovery gets clearer. This was the first time that Lee mentioned the possibility of a tightened monetary policy. The BOK reduced its benchmark interest rate from 3.25 percent in July 2012 to an all-time low of 1.25 percent in June last year. The record low policy rate has accelerated already massive household debts together with eased regulations on mortgage financing.

EU, East Asia top Philippine markets

Philippines' National Economic and Development Authority said on Friday that total Philippine trade grew to $11.7 billion in April 2017, with 12.1 percent growth in exports offsetting the 0.1 percent decline in imports. The agency said it is optimistic about the country's trade performance for the rest of the year, considering thriving exports and trade linkages, especially with Europe and East Asia. "For exports, East Asia and the EU remain the top destinations of our products, accounting for 62.3 percent of total export receipts," Socioeconomic Planning Secretary Ernesto Pernia said. Pernia said exports to the EU and East Asia grew by 36 percent and 10 percent in April, respectively. Despite global uncertainties, Pernia said the NEDA is "upbeat that the country will sustain the strong performance of export and trade growth recorded in the first quarter".

FTA paper shows trade ambitions

New Zealand Trade Minister Todd McClay on Sunday released an information paper on the scope of the proposed free trade agreement between New Zealand and the European Union, as the government seeks to have 90 percent of New Zealand goods trade covered by FTAs by 2030. "The early release of this paper will give New Zealanders and New Zealand businesses a better insight into the high level of ambition we have for this agreement as well as details about the market access we are pushing for and the quality outcomes we want to achieve," McClay said. The EU is New Zealand's third-largest market for goods and services and bilateral trade grew to more than NZ$20 billion ($14.42 billion) in 2016.

China Daily - Agencies