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BEIJING -- Chinese shares extended losses on Tuesday amid weak economic data, suggesting the world's second largest economy faces mounting downward pressure.
The benchmark Shanghai Composite Index dipped 1.23 percent to end at 3,166.62 points, and the Shenzhen Component Index lost 3.67 percent to close at 10,162.52 points.
The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, fell 5.38 percent to close at 1,889.49 points.
The downswing in passenger vehicle sales in China deepened further in July, with sales of locally-made models dropping by 6 percent on last year.
This second year-on-year decline in a row has seen year-to-date growth tumble to a low of 5.6 percent.
Closer scrutiny of the seasonally adjusted annual rate paints an even grimmer picture, with the selling rate of passenger vehicles falling to 17.7 million units, marking the lowest level in the last 24 months since August 2013.
Meanwhile, further concerns were raised by China Automobile Dealers Association's latest dealer-level index, which reflected a value of 1.65 months for July, barely changed from the 1.68 months seen in June or May's 1.7 months.
The dealer-level destocking process, which had been in evidence during the opening months of the year, ceased in May, although wholesales were seen to slow down markedly during the same period.
These various factors give rise to a number of questions, all of which are preoccupying industry insiders.
Will the Chinese passenger vehicle market continue to slow down?
More worryingly, has the resilient Chinese market finally reached an end-point?
In other words, is this the end of China's automotive boom? To shed light on these troubling questions, we must delve deeper into the complex regional disparities that exist across this vast and developing nation.
During the first half of 2014, registrations of passenger vehicles in China's first-tier and second-tier cities grew by 15 percent on the previous year, and contributed around 40 percent to the total growth seen across the country.
Conversely, during the same period this year, growth in the second-tier cities amounted to a mere 3 percent year-on-year, while the first tier cities experienced an annual decline of 21 percent in registrations, which, together, acted as a drag on overall market growth.
In sharp contrast, when looking at the third to the fifth-tier cities, the pattern is decidedly more consistency, with the year-on-year growth of 18 percent in the first half of last year and of 15 percent in the first half of 2015.
An accurate analysis of these comparisons is critical to our understanding of the prevailing market headwinds, which, in turn, helps shape our forecasts.
The fall in registrations in the first-tier cities during the first half of 2015 was, quite simply, the result of a drag from the city of Shenzhen, which was the last of the first tier cities to impose restrictions on vehicle purchases, applicable from this year onwards.
This trend is set to continue into the second half, and is expected to be followed by mild growth in registrations next year in China's top-tier cities.
Indeed, Shenzhen is likely the witness of the inevitable rebound in registrations, typically seen during the second year of restrictions, while China's other tier-one cities are projected to experience a predominantly flat trend.
However, the situation is more complex in the second-tier cities, where the slowdown in sales can be attributed largely to the twin forces of a ‘payback' from the buying frenzy, which took place during the second half of 2013 and first half 2014, and the ‘holdback' resulting from the current volatility in the stock market.
This dual dynamic triggered a spike in sales during the first half 2014 in a number of the second-tier cities, followed by a leveling off in the second half of last year and, in recent months, by a downward dip.
Looking ahead, we believe that most of the pent-up sales will be revived during the fourth quarter 2015 and the first quarter 2016 and, with a comparatively lower base in year-on-year terms, second-tier cities are likely to see far stronger growth in 2016.
On a more positive note, the lower-tiered cities have acted as a pillar supporting overall growth, thus far, in 2015.
Going forward, although the economic slowdown poses a risk to growth momentum, we are of the view that double-digit growth is entirely possible during the second half of this year and into next year, given the low vehicle parc density and inexorable rise in household income in these lower-tiered cities.
Taking all of these factors into account, and in spite of the major downward adjustment, for the second consecutive month, to our forecast for this year as a whole, our assessment is that the passenger vehicle market could turn a corner during the final quarter of 2015 to come back on track, and be followed by annual growth of a high single-digit during the course of 2016. In short, China's automotive story is far from over.
The author is China forecasting manager at LMC Automotive. Contact the writer at firstname.lastname@example.org.
WELLINGTON -- The New Zealand government has approved a strategic alliance between Air New Zealand and Air China in a move that will boost the country's tourism sector, Transport Minister Simon Bridges said Tuesday.
Air New Zealand and Air China announced the intention to enter the alliance during Chinese President Xi Jinping's state visit to New Zealand in November last year.
Bridges said the alliance would allow a new service to compete with existing services operated by China Southern, China Eastern and Cathay Pacific.
"This alliance means travelers will be able to access more flights and lower fares between New Zealand and Beijing and Shanghai, ensuring they have access to a greater range of choices, " Bridges said in a statement.
"In addition to expanding services, the alliance will mean Air China will actively market New Zealand as a visitor destination," he said.
"China is our second largest tourist market behind Australia, with visitor arrivals due to double in the next five years. Tourists from China recently pushed New Zealand's annual visitor numbers over the 3 million mark."
China was also New Zealand's number one export destination with annual exports reaching NZ$11.3 billion ($7.21 billion) in September 2014.
Bridges had authorized the alliance for an initial term of five years and four months.
During this period, the airlines would need to demonstrate the alliance had delivered real benefits to consumers and had not adversely affected competition in the New Zealand-China market.
BEIJING -- Business activity in China's non-manufacturing sector expanded in August with slightly slowed pace from June and July, official data showed on Tuesday.
The purchasing managers' index (PMI) for the non-manufacturing sector fell to 53.4 in August, down from 53.9 for July, according to a report released jointly by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.
Non-manufacturing PMI tracks business activities of the service and construction sectors. A reading above 50 indicates expansion, while a reading below 50 represents contraction.
"China's non-manufacturing sector was growing steadily," said NBS statistician Zhao Qinghe, adding that the August reading was well above the expansion-contraction line, although it was lower.
The service sector sub-index stood at 52.6 in August, down from 52.8 for July, indicating slower growth in the industry.
The sub-index for the construction sector retreated to 57.8 in August, down from 60.1 for July, suggesting waning construction activities.
Meanwhile, the new order sub-index in general slid to 49.6 last month, falling to contraction territory from 50.1 for July.
Potential homebuyers take a look at residential housing at a sales center in Yichang, Hubei province, May 23, 2015. [Photo/IC]
China's real estate market continued warming up in August, with new home prices rising both month-on-month and year-on-year for the first time since last April.
The average price per square meter in a sample of 100 cities rose 0.95 percent month on month to 10,800 yuan ($1,696) in August, according to a survey by the China Index Academy, a research unit of SouFun Holdings Ltd.
The data showed housing prices advanced in 51 cities, while the rest of the sample, 49, saw month-on-month contraction.
Among all, Shenzhen led the robust momentum with a 26.38 percent year-on-year surge to 38,093 yuan per square meter, followed by Shanghai, whose housing price rallied 9.9 percent.
Only seven out of the 100 cities saw a month-on-month decline of more than 1 percent in August, as compared to 17 in July, according to the report.
The warm-up came as the government unleashed more easing measures to prop up the economy. The benchmark rate for housing provident fund loans was slashed to 3.25 percent, the lowest in history.
In a joint statement by the Ministry of Housing and Urban-Rural Development, Ministry of Finance and the central bank on Monday, the minimum payment for buyers who use their housing funds to buy a second home has been lowered to 20 percent from 30 percent, if buyers had paid off their previous mortgage.
Although Beijing, Shanghai, Guangzhou and Shenzhen, the four most expensive cities in China, are not required to follow the relaxation, such a move is expected to attract more second-home buyers, said analysts.
"The rate cuts will propel the housing market to further warm up in September, China's traditional peak season," said the China Index Academy in the report, adding that it expects de-stocking to continue as the major trend.
A hotpot made of a carton is heated in the restaurant in Shanghai, Aug 28, 2015. [Photo/CFP]
From the logo outside to the tables, chairs, and even the hotpots inside, almost all the furniture and decor are made of cartons, the first restaurant of its kind in Shanghai.
The cartons are specially made to be water and heat resistant and can be recycled.
Customers can enjoy a delicious meal cooked in a carton hotpot, which can withstand temperatures as high as 250 degrees, according to the restaurant owner. Customers also can take the drinking box and use it as a small garbage can or a money box at home.
The restaurant is part of a carton creativity park in Shanghai that exhibits hundreds of products made of cartons.
Customer dines in the restaurant in Shanghai, Aug 28, 2015. [Photo/CFP]
Carton-made a table and seats made of cartons are displayed in the restaurant in Shanghai, Aug 28, 2015. [Photo/CFP]
Carton-made tables and chairs provide seating in the restaurant in Shanghai, Aug 28, 2015. [Photo/CFP]
A box holds straws in the restaurant in Shanghai, Aug 28, 2015. [Photo/CFP]
Heavy paper cardboard cup holders are used in the restaurant in Shanghai, Aug 28, 2015. [Photo/CFP]
Heavy duty carton shelves and a garbage can made from a box are used in the restaurant in Shanghai, Aug 28, 2015. [Photo/CFP]
A waitress brings food on a tray made from a carton in the restaurant in Shanghai, Aug 28, 2015. [Photo/CFP]
The restaurant's cashier's desk is also made from a carton, Shanghai, Aug 28, 2015. [Photo/CFP]
A small cardboard box holds business cards at the restaurant in Shanghai, Aug 28, 2015. [Photo/CFP]
An Air China Airbus A330 takes off from Beijing Capital International Airport. [Photo/Provided to China Daily]
The net profits of China's four major airlines surged due to a slump in international oil prices in the first half of 2015, even though revenues only increased slightly or even decreased, according to their financial reports published on Friday.
The reports show that in the first half of this year, Air China's net profit was 3.92 billion yuan ($615 million), 7.3 times of that of last year; the net profit of China Southern Airlines had a year-on-year growth of 442 percent to 3.48 billion yuan; the net profit of Hainan Airlines showed a year-on-year growth of 232 percent to 1.6 billion yuan and the net profit of China Eastern Airlines dramatically increased by 237 times to 3.56 billion yuan.
Aviation fuel is the main cost for airlines. The reports show that the main reason for the surge of net profits is the plummeting cost for fuel. In the first half of 2015, Air China spent 12 billion yuan on fuel, down 5.3 billion yuan year-on-year. The spending only accounted for 30 percent of its main costs, and the figure was 41 percent in 2014.
Insiders and analysts are positive about these airlines' performance in the future. "The demand in August is still huge, and the net profits of airlines are likely to continually increase in the fourth quarter."
BUENOS AIRES -- China's recent market-oriented economic reforms, including devaluing its currency and cutting interest rates, help to keep the domestic economy growing and by extension, the global economy, a top Chinese envoy said.
Wang Liang, the charge d'affaires at the Chinese embassy in the Argentine capital Buenos Aires, told Xinhua about the necessity of the reforms launched earlier this month, and the turbulent way international stock markets reacted -- or overreacted.
"Both in the past and today, China has had to handle the pressure of an excessively overvalued yuan tied to a basket of currencies," said Wang, adding that the present "fluctuation in its value, in keeping with market supply and demand, represents a new normalcy."
While "China doesn't need to devalue the yuan to spur its exports and guarantee the economy moves forward," said Wang, it does need to implement the necessary monetary policy adjustments and reform measures to ensure continued growth.
"The sustainable growth of China's economy is its biggest contribution to the world economy and neighboring countries," Wang said.
As China's economy evolves, so must the government's policies, said the envoy, referring to the country's transition from an export-driven to a consumer-driven economy, what Chinese officials call "the new normal."
"Unless it adapts better to its new economic normalcy and maintains financial stability through market-oriented reforms, China will not be able to increase its imports, nor its investments abroad, much less make an even greater contribution to the world economy," Wang said.
Talking about the source of instability of the global financial markets, the official said, "the biggest uncertainty stems from a possible interest rate increase by the US Federal Reserve and the indebtedness and growth outlooks of developed countries, such as Japan and those in Europe."
"China is known as a manufacturing powerhouse, as opposed to a financial powerhouse, as the yuan has yet to become a reserve currency. As such, the spillover effect of the yuan's exchange rate fluctuation cannot be compared with that of the US dollar," Wang said.
On Aug 11, the People's Bank of China announced a more flexible currency exchange rate that sparked a 1.9-percent depreciation of the renminbi versus the US dollar. The move was followed by a cut in interest rates and the injection of 150 billion yuan ($23.4 billion) to ensure liquidity.
"The turbulence in international markets had some impact on China's economy," including a sharp dip in the Shanghai Stock Exchange, Wang said.
Still, "the foundation of the country's economy remains stable (and) the economy is advancing reasonably. There's room for growth in innovation, as there is in domestic demand, which today is the engine for growth," he said.
"China is capable of reaching its annual economic development target thanks to the measures put in place to stabilize its growth," the official said.
NAIROBI -- Jane Charity grew up in an era when patriarchy was entrenched and society expected little from women and girls despite their exceptional talents.
The ambitious mechanical engineering student from the Kenyatta University knew from an early age that success would never be handed over to her on silver Plata.
To prove cynics wrong, Charity worked hard in school and scored impressive grades in science subjects that were a preserve for boys.
Self driven and versatile, Charity has defied negative cultural stereotypes to pursue a cream course that Kenyan girls have dreaded for decades.
Charity was among the talented Kenyan youth who participated in this year's Africa Technology Challenge (ATC) sponsored by Chinese company AVIC International.
During an interview with Xinhua recently, Charity said her participation at the prestigious technology contest widened her horizons.
"I heard about the Africa Technology Challenge from friends and decided to give it a try. My participation at this contest was a golden opportunity that I will forever cherish," Charity remarked.
She was among the exceptionally talented female university students who overcome great hurdles to participate in a grueling competition to assess their competence in technology and innovation.
This year's Africa Technology Challenge kicked off in early August and attracted dozens of contestants from all parts of Kenya.
The final competition commenced on August 30th and ended on August 31st.
"The Africa Tech Challenge can be nerve wracking, but has enormous rewards. The contest unlocked hidden talents in me and I am ready to pursue my dream career with renewed vigor," said Charity.
Her exemplary performance at the Africa Tech Challenge secured her a scholarship to pursue a master's degree in mechanical engineering in a Chinese University.
Charity said Chinese mentors at the Africa Tech Challenge helped demystify engineering discipline.
"The Chinese tutors emphasized on passion and self-drive to enable us to succeed in our careers. I also leant the Chinese are keen on precision. These attributes are an imperative in the engineering field," she told Xinhua.
Currently an admired heroine in her native village, Charity vowed to return home after her study tour in China to contribute to Kenya's socio-economic transformation.
The African Tech Challenge has strengthened Sino-Africa friendship through skills and technology transfer.
Zhao Leilei, AVIC Project Manager, said the prestigious competition has unleashed enormous benefits to Kenyan youth.
"Some of the students who enroll in the Africa Tech Challenge do not know how to operate a machine. After the rigorous training, the students are able operate any machine," Zhao remarked.
He added that Africa Tech Challenge has inspired many Kenyan youth to pursue the engineering discipline that is key to power industrial progress in the east African nation.
Winners of this year's Africa Tech Challenge will be entitled to cash rewards and scholarships to pursue further studies in China.
Zhao revealed that some of the winners will also be employed by Chinese companies including AVIC International.
Female participants at this year's Africa Tech Challenge felt honored to participate in a contest that is male dominated.
Ajuma Perry, an engineering student at a leading public university in Kenya said her participation at the contest was a watershed moment for the bubbly youth.
"As a female engineering student, the Africa Tech Challenge refined my skills in a coveted discipline that is dreaded by many girls. We have gained new skills during the contest," Perry told Xinhua.
The Africa Tech Challenge has resonated with Kenyan youth determined to become self-reliant.
Bernard Salabo, a senior officer in the Ministry of Education, noted the China-funded technology contest has imparted lifelong skills to the Kenyan youth.
"Africa Tech Challenge has provided vocational skills to the youth to enable them to become self reliant. Participants can now start their own workshops to produce machine parts," Salabo told Xinhua, adding that technology and skills transfer that has blossomed courtesy of the Africa Tech Challenge will catalyze industrial progress in Kenya.
The Africa Tech Challenge has as well resonated with Kenyan youth with limited formal education.
Joseph Nyakundi, a former cleaner at Technical University of Kenya, was attracted by the China funded technology contest having witnessed its immense benefits.
"During my stint as a cleaner, I felt an urge to learn how to operate the machines. My curiosity paid off when I got a chance to train on how to operate the machines at the university workshop," Nyakundi told Xinhua.
The self-taught technician aspires to work as a machine operator in a reputable manufacturing plant.
A confinement nurse takes care of a new-born baby at a hospital in Fuyang, Anhui province. [Photo/China Daily]A national quality standard for the mother and childcare services sector was released by the Standardization Administration of China recently, which is being seen as a first step toward regulation of the "confinement nursing" market.
In recent years, this occupation - which Western readers might call "nannying" - has become increasingly popular in China's mega cities.
But along with its rising popularity, the employing of these nurses, or yuesao in Chinese, is now being questioned by many, because of rising instances of unprofessionalism and the growing costs involved, prompting calls for urgent government intervention.
According to a recent survey, more than 80 percent of the people in Guangzhou, the capital of Guangdong province, said they needed a maternity nanny to take care of both their newborn baby and the new mother.
Only 13.6 percent said they did not consider hiring a helper during this period of confinement at home, according to a report in Yangcheng Evening News, a local newspaper.
Almost all my friends here in Beijing hired nannies in the month after they give birth, no matter whether it was their first or second baby.
One new mom I know who lives in a 55-square-meter, one-bedroom apartment with her husband and mother-in-law, booked her nurse five months in advance of her son arriving.
The Peking University graduate urged me to book myself my own nanny when I was expecting. She said, "do it well in advance", because demand in the capital for the most-experienced helpers has become fierce.
But from what I found out, the confinement nursing market in China is out of control, both on the quality of service available and on price.
I heard that largely unqualified workers are pouring in, which is presenting a serious risk for unsuspecting families.
The incomes of confinement nurses are already higher than many other service occupations.
I was told that even in a first job, such a helper can expect to earn at least 7,000 yuan ($1,100) per month in Beijing.
In contrast, an experienced domestic servant, who cleans houses and cooks meals, earns around 3000 yuan every month.
Zhao Erni, the 49-year-old lady who took care of my son a year ago during my month of confinement at home, cost me 12,000 yuan a month, higher than my own salary. She was entitled to another 500 yuan per month "bonus" if she received no complaints from us.
Moreover, my mother-in-law cooked and cleaned for the whole family, including Zhao, whose sole job was to look after me and the baby.
I read a piece recently written by one young mother, who said the nanny she hired had acted like "a queen" during her stay.
"She insisted on being provided with the best fruit and bottled mineral water every day. My own mother went without, to save money. She bossed us around, talked to us as if she was an expert on everything, and never took instructions."
Not all the money we paid Zhao went into her own pocket, though.
She kept 7,000 yuan, and the rest went to an agent who got her the post in the first place.
The companies involved often have strong contacts in maternity hospitals or the local health authorities, who provide them with a steady stream of clients, for a fee.
But the confinement nurse training provided by these companies might last only about a week, and again, there is a fee involved for those taking the courses.
Because of the high salaries involved, many women of all ages have been queuing up to land nannying jobs.
When they start work, there have been stories of poor hygiene, bad manners, but much more seriously, of nannies with little or no actual nursing knowledge, or even those carrying infectious diseases or suffering from mental illness.
After I gave birth, I was sharing a room with two other new moms in the hospital, one of whom already had her own confinement nurse helping her.
This 40-year-old woman wrapped up the newborn in a thick cotton quilt on that hot summer day at one point - something our doctors had underlined not to do, because babies' heat tolerance is so poor. Her error was quickly corrected, luckily.
This issuance of national quality standards is a good first step toward much-needed regulation of the sector, in which of course there are some excellent nurses operating, too.
But I would urge the government to ensure that concrete rules and laws are introduced as soon as possible, so the sector is awarded the level of controls it so desperately deserves.
The wine producing region in Northwest China's Ningxia is expanding rapidly, despite a slowdown in the industry.
Data from China Alcoholic Drinks Association show that 64.7 percent of Chinese wineries recorded deficits in 2013.
Last year, the decline continued with the sector producing 116 million tons of wine, down by 1.5 percent compared to 2013, according to figures released by AskCIData, a leading institution of industry research.
The government's anti-corruption drive, which affected the luxury brands sector, was partially to blame for the downward trend.
Imports of wine also dropped, according to the General Administration of Customs - down 2.51 percent to $1.51 billion.
In contrast, the Helan Mountain area in Ningxia Hui autonomous region is forging ahead.
By 2020, it will have a grape-growing base of "66,666 hectares". It was already half way there by end of last year.
Since 2000, China has more than doubled the land devoted to grape growing, which now stands at 799,000 hectares, the International Organisation of Vine and Wine, known as OIV, has reported.
"China wants to be self-sufficient in all sectors, this one included," Jean-Marie Aurand, OIV director, told the Reuters news agency. "Vines are imported from all around the world and are mostly red grapes as Chinese virtually doesn't drink white wine."
At the forefront of this expansion is Ningxia. "By 2020 we will build the region into the wine capital of the East with more than 100 quality wineries," Li Jianhua, Party head of Ningxia, said. "This will generate 100 billion yuan ($15.7 billion) in revenue and 100,000 jobs."
Shandong province is recognized as China's traditional region for the wine industry. Last year, the province produced 292,300 tons of wine compared to Ningxia's 190,000 tons. But quality not quantity is Ningxia's goal.
"We have never emphasized our wine production," Hao Linhai, the head official in charge of the Ningxia wine region, said. "We actually want the market to be impressed by the quality of our wines. We want a big wine industry-composed of smaller-scale wineries."
Shandong is home to Changyu Pioneer Wine Company, the oldest producer in the country. But the region mainly concentrates on "factory wines", using grapes collected from other parts of the country. Ningxia tends to focus on "boutique estate wines".
"Zhang Bishi, founder of Changyu, made a great contribution to China's wine industry when he started the company more than a century," Hao said.
"He translated the names of the different varieties of grapes such as Cabernet Sauvignon into beautiful Chinese," Hao added.
Vine varieties include Cabernet-Sauvignon, Syrah, Merlot and Chardonnay, which are grown in Ningxia, and Sichuan and Hebei provinces.
"These are quite dry areas where there is little competition with other crops," Aurand, of the OIV, told Reuters.
Despite the wine industry's rapid expansion in China, the country's production figures still trail the world's major producers, such as France, Italy and Spain.
BEIJING -- China's factory activity continued to lose steam in August, suggesting the world's second largest economy faces prolonged downward pressure, official data showed Tuesday.
China's manufacturing purchasing managers' index (PMI) came in at 49.7 in August, down from 50 for July, according to data released by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.
A reading above 50 indicates expansion, while that below 50 represents contraction.
The index fell into contraction territory for the third time this year, and the August reading was the lowest since August 2012.
The production sub-index posted 51.7 last month, still expanding, but lower from 52.4 for July. The sub-index for new orders came at 49.7, down from 49.9 for July, indicating grim challenges in demand.
"Growth momentum was weak in the manufacturing sector," said NBS statistician Zhao Qinghe, attributing the PMI decline mainly to the phasing-out of traditional manufacturing, bad weather caused by El Nino, air pollution controls around Beijing, and low commodity prices.
Despite the dreary signs, Zhao said signs of improvements have emerged with steady growth in high-end manufacturing and consumer goods production.
However, other analysts were less optimistic after a private survey said manufacturing PMI was 47.3 in August, much lower than the official line, according to a survey by financial information service provider Markit and sponsored by Caixin Media Co. Ltd.
Qu Hongbin, chief China economist at HSBC, said the private PMI indicates that China's external and internal demands remain sluggish and deflation risk is considerable.
"The Chinese economy is spiralling down, with a murky outlook," said Qu, adding that it was necessary for policymakers to continue monetary easing and expansionary fiscal policy.
Li looks to overhaul manufacturing sector
By Zhao Yinan(China Daily)
Premier says nation must 'make up for missing lessons' in development
Premier Li Keqiang is considering adopting pioneering technologies to upgrade low value-added domestically made products as China faces weakening activities in the manufacturing sector that threaten the country's rise.
At a State Counci session on Friday, Li, vice-premiers, state councilors and more than 100 officials from China's Cabinet and heads of State-owned enterprises listened to an hour-long lecture on three-dimensional printing and modern manufacturing.
Lu Bingheng, a scientist from Xi'an Jiaotong University who specializes in machinery manufacturing and automation, was the lecturer.
Afterward, Li said China has to "make up for missing lessons" in industrial development, which is large in terms of volume, but lacks competitiveness.
"If we want to make made-in-China products to compete with commodities from Japan, Germany and the United States, we need creative perceptions," he said.
Li said 3-D printing opens up thoughts on the development of not only manufacturing, but of other sectors.
"China is not rich in natural resources. Sometimes they are even lower than the world's average level, and additive manufacturing can offer a revolutionary change to ways of production.
"Making additions also applies in other sectors. For instance, by integrating the Internet with industrial production, we have accumulated wisdom, altered the way of marketing and made institutional breakthroughs," he said.
Li said a technological revolution is ongoing, and many countries have spared no effort in seizing opportunities in industrial development.
"The stabilization and upgrading of the Chinese economy requires industrial restructuring and a new driving force, in which intelligent manufacturing could be the key," he said.
Purchasing Managers Index, a main gauge of manufacturing activities, fell to 47.1 in August, the lowest level since March 2009, according to a preliminary reading of the Caixin PMI, signaling a deep contraction in the sector.
Another index measuring the final value of industrial production－value-added industrial output－expanded by 6 percent in July year-on-year from 6.8 percent in June.
In March, China unveiled ambitious plans to upgrade its manufacturing power in the next 10 years. The program, called Manufactured-in-China 2025, calls for greener and intelligent manufacturing, with the emphasis on quality and deeper integration with the Internet.
The aim is to transform labor-intensive domestically made products into those with higher value.
Lu, the lecturer, said: "It is not easy to give a lecture to top leaders. I have to condense the essential knowledge as well as in-depth analysis of a field in less than an hour," adding that he revised the script at least three times.
Comparing the strengths and deficiencies of modern manufacturing among Germany, the US and China, Lu said China has a relatively complete industrial system and a huge domestic market with abundant human resources.
The Germans are known for a solid industrial foundation and rigorous technique, while the US is competitive in high technologies, innovative ideas and the ability to attract global talent, he said.
Friday's lecture was the first of its kind for State Council officials.
The recent decision to depreciate the yuan by the People's Bank of China, or central bank, caught many people by surprise. This triggered speculation that all was not well with China's economy.
But now that the dust has settled, it is time to reflect on the deeper implications behind the exchange rate decision. In doing so, it should become clear that this was a carefully calculated move by the Chinese government as part of its reforms to modernize and internationalize the country's industrial base.
While many companies here have built successful domestic and international brands, the global marketplace has become extremely competitive. Businesses such as telecommunications equipment provider Huawei Technologies Co Ltd and PC manufacturer Lenovo Group Ltd continue to lead the way.
But for the smaller and medium-sized companies keen to follow in the footprints of Huawei and Lenovo, establishing a firm presence in overseas markets still requires a strong strategy. That is why the currency depreciation move will help in this process of brand building.
A few years ago, you would have struggled to interpret the decision to adjust the yuan against the US dollar in this way. But the image of Chinese companies has undergone a major transformation.
Internet, technology and energy brands enjoy an envious reputation for quality, durability and reliability. The currency swing will not change that. At the same time, it is imperative that the government and companies promote publicly the "increased value" of these branded products rather than dwell on the fact that they are now cheaper.
The great strides made by companies in quality and service standards should allow them to put forward a convincing hybrid strategy, where lower prices are perceived as "added value" and not simply a way to generate sales growth.
Honda Motor Co Ltd represents a perfect example of how one of the world's most successful brands began life by adopting a cost-competitiveness strategy. After international markets accepted the company's early products, it moved swiftly up the value chain with globally recognized brands.
Once again, credit must go to the Chinese government for producing a policy that boosts brand building. It is now the turn of industry to grab this opportunity and build for the future.
The author is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer on marketing at Southampton Solent University's School of Business.
Fears that China is heading for an economic recession have been overstated. After last week's global market mayhem, concerns from Western analysts and economists surfaced again.
Talk was rife that the broader Chinese economy was in trouble after the Shanghai Composite Index suffered its steepest five-day fall since 1996 before bouncing back. But those remarks had a hollow, sounding ring when looking at the bigger picture.
When it comes to the overall economy, the stock markets in China play a minor role. In the United States and Europe, institutional investors are the major players in New York, London, Frankfurt and Paris.
In Shanghai, 80 percent are small individual investors with many looking to double their money as quickly as possible instead of investing in the long-term. This in turn has helped fuel the boom and bust cycle that saw the Shanghai Composite Index drop by 17 percent in three days last week before recovering sharply.
The fallout was felt in cities across the Western world as markets slumped.
Word quickly spread that the turmoil surrounding the Shanghai Composite Index was just part of a broader problem that underpinned a weak Chinese economy. By the end of the week, global markets had regained their composure and reversed the downward trend.
Markets, of course, have a tendency to overreact. At times, they can baffle the most ardent trader. Back in 2007 when China's growth remained steady, the bulls went on a rampage.
This year as growth slowed, the market soared before tumbling in the past six weeks. Unlike the rest of the "real" economy, the bubble finally burst on inflated stock prices.
After years of double-digit growth, the Chinese economy is going through a transformation. The export-fueled model of the past is being replaced by a more balanced economy, revolving around innovation, services and domestic consumption.
As the second-largest economy in the world, what happens in China will have global implications. But the long-term outlook is far from bleak. Services, not industry, are now driving the country's growth.
Wages are rising, which is fueling domestic demand, and the creation of non-agricultural jobs is strong, particularly in the creative sectors of telecommunications, technology and media, or TMT. The rise of the middle class is also attracting multinational companies from all over the world.
Obviously, there are still challenges ahead, but these are being addressed. Last week, the People's Bank of China, or central bank, cut its key lending rate by 0.25 percent to 4.6 percent.
In a statement, it cited "downward pressure" on economic growth and pointed out that this would reduce financing costs for companies and promote a "sustainable and healthy economy".
The PBOC also promised to pay close attention to liquidity, or the availability of credit, in a move to ease concerns that a rise in capital outflows from China might stifle lending.
But more still needs to be done. At the macro level, China has to gradually reduce its debt burden, which exceeds 250 percent of GDP.
Moreover, the country needs to accelerate efforts to increase domestic consumption.
While it continues to rise, it is still below other nations as a share of GDP. Even so, the rest of the world needs to factor in China's "new normal" growth patterns, and give the country time to continue its economic reforms.
China's rare earth producers say they have increased their efforts at upgrading product ranges and shifting toward downstream businesses due to a glut in supplies of the raw materials, including those produced by illegal mining.
"We have been putting more effort into innovation and technology in downstream products," said Gan Mei, director of public affairs for Tianhe (Baotou) Advanced Tech Magnet Co.
"But many rare earth miners have been forced to shutdown production in the past three to five years because of ongoing price wars and excessive production."
The Baotou-based firm is a unit of Tianhe Magnets, a producer of magnets made of rare-earth alloys, such as neodymium iron boron.
Gan said the company, which used to be just a rare earth smelter, has continued spending around 4 percent to 5 percent of revenue on research and development even as the market hit leaner times.
Its rare earth-produced magnets are widely used in the wind-power, electric vehicle and military sectors.
She said 30 percent to 40 percent of its products are exported to countries including Germany, Italy, Russia and South Korea.
There is huge potential for rare earth product application, especially in the electric car industry, as many cities across the country suffer from heavy air pollution, she said.
The Ministry of Industry and Information Technology has taken a series of measures to promote the transformation and upgrade of the rare earth sector, with financial support to promote integration, for instance, between industrialization and research.
The policies have been frequently targeting key rare earth-producing areas such as Baotou, and encourage the upgrade of relevant production standards.
Chen Chuandong, an expert at Baotou Research Institute of Rare Earths, said one of the challenges companies have faced is the huge cost often involved in R&D.
"When market prospects are good, Chinese companies that are busy making money can be unwilling to invest in innovation or product upgrade," he said. "But of course, also when the market is struggling, there is a reluctance too because they are suffering falling profits or even losses."
A map of the 21st Century Maritime Silk Road at a commodity fair in Yiwu, Zhejiang province. The Belt and Road Initiative reflects the thinking of driving regional and global economic development through international integration. [Photo/CFP]China's market, the largest in the world for many consumer brands, is obviously strategically important to multinationals. For many years, leading global companies, including Volvo Group, have benefited by developing their operations through investment and cooperation with local partners.
Nowadays, China's economic transformation has picked up speed with the government's efforts to upgrade the country's industrial base in order to develop new growth. This has set the stage for the Belt and Road Initiative, which reflects the top-down thinking of driving regional and global economic development through international integration.
Simply put, the Belt and Road Initiative, which was proposed in 2013, is a trade and infrastructure network that includes the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The network connects Asia, Europe and Africa and passes through more than 60 countries and regions with a population of about 4.4 billion.
For multinationals in China, the initiative provides an excellent opportunity to expand growth. According to an Asian Development Bank forecast, total investment in infrastructure in Asia will reach $8.28 trillion within the next 10 years - 13 times China's 4 trillion yuan stimulus package introduced in 2008.
Data from the Ministry of Commerce has showed that direct investment by Chinese enterprises in countries along the Belt and Road Initiative reached $7.05 billion in the first half of this year. This involved 1,401 planned construction projects in 60 countries, including new contracts worth $37.55 billion.
Naturally, this speaks volumes about China's ability to cooperate with different partners in relevant regions. While the Belt and Road Initiative promises immense opportunities, it also entails risks and requires a clear understanding of various crucial factors in those countries. These include geopolitics, cultural conflict, commercial risks, and trade and administrative barriers.
In this respect, multinationals here can play a unique role by supporting Chinese industries in these regional projects. Many multinationals have operated in countries along the Belt and Road Initiative for many years. During this period, they have established comprehensive business networks and acquired partners from diversified industries.
Their deep understanding of the local political environment, business atmosphere and culture has earned them excellent reputations. So, if Chinese enterprises can launch a strategy of cooperation with these multinationals, they will yield exceptional results.
One major global brand that has a rich experience in diversified markets is Volvo Group, a company which has a large presence in China. The company believes that for the Belt and Road Initiative to be a success it should be put on a sustainable footing from the beginning.
This means that businesses must have respect for local cultures and traditions while advancing their economic interests. They should also pursue sustainable development that will benefit society and the environment.
As multinationals push their agendas, they need to have a clear understanding of the role of the Chinese government as the "guide" in this project. Volvo Group, for example, believes the best way to do this is by:
Increasing transparency in Belt and Road Initiative projects by publishing lists in a timely manner and opening financing to private capital.
Ensuring cooperation in project design, as well as establishing an order of priorities, including sustainable development in an energy-efficient and environmentally-friendly way.
Taking measures to remove trade and administrative barriers to improve efficiency.
In the logistics field, where Volvo Group operates, it may be worth promoting recognized standards for freight vehicles, oil quality and emissions. In the end, multinationals and their Chinese partners have an important role to play in the success of the Belt and Road Initiative.
The author is president of Volvo (China) Investment Co Ltd.
An investor checks stock prices at a brokerage in Jiujiang, Jiangxi province. Further crackdowns against market violation and manipulation are seen as being essential for restoring investor confidence. [Photo/China Daily]Caijing journalist Wang Xiaolu charged with spreading false market information
The authorities have detained four executives from China's largest brokerage, CITIC Securities Co, a staff member of the China Securities Regulatory Commission, and a journalist from business magazine Caijing, in the latest moves to crack down on stock market violations.
The CITIC executives, who have confessed to their violations, were named as Xu Gang, Liu Wei, Fang Qingli and Chen Rongjie. They have been placed under "criminal compulsory measures" for suspected insider trading, reported Xinhua.
Liu Shufan, the official with CSRC, has also been held over suspicious insider dealings, taking bribes and forging official seals, the news agency said.
Liu too has confessed to taking advantage of his position to secure approvals from the securities authorities for trading in a public company, helping the growth of CITIC's shares, as well as accepting bribes worth several million yuan.
Xinhua said Liu admitted to using insider information from CITIC and another company, and obtaining millions of yuan in illegal gains. Liu confessed, too, that he had forged official seals to fake a court ruling on the divorce and taxation certificates of his mistress.
Wang Xiaolu, the Caijing journalist, is being charged with colluding with others to fabricate and spread fake information on securities and future market.
In a program televised on Monday morning, Wang confessed that he wrote fake reports on the Chinese stock market based on hearsay and his own guesses, without conducting verification, and admitted that the false information "caused panic and disorder on the stock market, seriously undermining market confidence and inflicting huge losses on the country and investors".
CSRC spokesman Zhang Xiaojun told a press conference on Friday that the authorities had launched 22 cases involving suspected market manipulation, insider trading, false information fabrication and dissemination.
Among those, seven involved suspected insider trading by several professionals working in the securities market.
A recent research report by Shenyin & Wanguo Securities Co said only strengthened measures against insider trading and other violations by the authorities would boost market confidence in the long run.
Pan Yingli, a professor at the Antai College of Economics and Management of Shanghai Jiao Tong University, said that further crackdowns against market violation and manipulation were essential to develop the capital market, restore investor confidence, and create a more transparent and fairer market.
Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co, China's largest rare earth miner normally abbreviated to REHT, raked in 3.2 billion yuan ($500.1 million) in revenue during the first half of the year, a 35 percent year-on-year increase, according to its latest financial report.
Profit rose a more-modest 2 percent to 261 million yuan during the period, it said, amid a tough time for the industry in China, which has seen as many as 90 percent of domestic rare earth mining firms falling into the red, as prices have dropped for the specialist commodity.
The domestic cost of rare metals has been plummeting since 2011 due to an oversupply caused by smuggling and black market trade.
The prices of neodymium oxide, for instance, which is generally extracted and refined from rare earths, dropped a further 6.5 percent to 293,000 yuan per metric ton during the first half.
Chen Zhanheng, deputy secretary-general of the Association of China Rare Earth Industry, said the major reason behind REHT's revenue surge was primarily its efforts at pushing downstream businesses, as well as its huge stockpiles of available material.
"On those stocks, there is no need to pay tax, which has added to its revenue," he said.
"Judging from its report, rare earth prices are very close to the company's production costs, amid an industry slowdown which is very obvious to see."
Chen said compared to rare earth mines in southern China, northern sites have remained more profitable because of different minerals contained in those mines.
REHT's report claimed uncertainties over the global economic recovery, coupled with domestic economic growth, which "still faces heavy downward pressure", have hurt demand for downstream rare earth products.
"Overcapacity is still overwhelming in China and demand from downstream consumers is still weak," Chen said.
A recent report from RnR Market Research showed that while annual production of rare earth extraction companies exceeded 300,000 tons across China, industry demand was at below half that.
In January, China dropped export quotas on rare earths which had been imposed since 2010, and in April the country lifted a ban on export tariffs on the minerals altogether.
According to Association of China Rare Earth Industry figures, the measures are likely to help boost overall exports to about 30,000 tons this year.
The Ministry of Industry and Information Technology has revealed that it has shut down 55 illegal rare earth producers and 22 illegal mines over the past four years, and will continue to strengthen its efforts at cracking down on black market trade, while at the same time helping to restructure and consolidate the overall rare earth sector.
Yuan Hui contributed to this story.
'Intangible assets' are playing an increasing role in defining the value of listed firms
Sustainable investing is transforming the business world. Simply put, companies that successfully manage environment and sustainability-related issues stand to see the benefits of that strategy reflected in their share price.
By the same token, analysts equipped with the skills to evaluate a company's commitment to sustainability will be better placed to make more precise financial projections.
Working out the value of a company is more complex than simply calculating its fixed and floating assets. "Intangible assets" have become an increasingly important part of the equation and a component that analysts can not afford to ignore.
Two decades ago, analysts in the United States faced similar problems when interpreting accounting data from companies based in foreign jurisdictions. Typically, they adhered to accounting standards which did not have the rigor of those in their home market.
"Intangible assets" place a balance sheet value on brands, including "goodwill". This in turn, is based on underlying factors such as reputation, culture, research and development, and human capital.
Today, only 20 percent of the market value of S&P 500 companies resides in their tangible assets, compared to more than 80 percent in 1975, according to data by the intellectual property experts Ocean Tomo in the United States. Below are four key factors in this new era of "intangible assets":
Power of data
The evolution of non-financial data, which now takes in information on sustainability, has increased the valuation of "intangible assets". During the past 15 years, the world's largest corporations have started to disclose sustainability data on supply chain risks, health and safety records, and environmental pollution.
They have been guided by the Global Reporting Initiative, an international independent standards organization, which lists more than 400 indicators on corporate non-financial performance.
The launch of the Sustainability Accounting Standards Board in 2011 has helped companies identify what environmental, social and governance issues they need to adhere to in various industrial sectors. The European Union will mandate disclosure of non-financial information from 2017 for all public companies with more than 500 employees.
Negative environmental and social issues can cut projected cash flows and threaten the survival of a business. The tragic consequences of the collapse of a clothing factory in Bangladesh in 2013 had a negative effect that spread quickly across the international clothing and textile industry.
According to the World Economic Forum's annual global risk rankings, the top-five dangers companies face when they do business are:
・ Water crises.
・ Failure to adapt to climate change.
・ Extreme weather events.
・ Social instability and inequality.
The disclosure of serious problems can lead to fines, sanctions or the loss of brand equity. Company CEOs have no alternative but to be mindful of how they work out "intangible assets" on their balance sheets. They have the potential to cause long-lasting financial and reputational damage.
Scientists have now reached a consensus that a large number of health risks are concentrated in a small number of industries. While coal-fired power stations remain the biggest source of global carbon emissions and a major driver of climate change, in the US some of the most toxic and carcinogenic chemicals are emitted from aluminum and cement industries.
Increasingly, environmental and health issues in certain sectors pose real economic threats to corporations. This in turn damages shareholder value. While a company can attempt to reduce this problem by altering production methods or product design, it can often be hard to achieve in a global supply chain.
Rewards on offer
Safe and efficient factories reduce insurance costs, create superior working environments, and produce higher-quality products that are bought by consumers.
Due consideration of risks and opportunities create value for shareholders and local communities alike. Research on the gold mining sector showed that miners gained financially if they had a track record of positive engagement with communities.
Indeed, the breakdown of relationships with communities have often resulted in mines being shutdown or crippled by production delays.
Non-financial indicators of success are not obvious, and environmental and sustainability issues can be hard to present in financial statements. That is precisely why they can be a crucial factor for active investment managers who know how to find and measure them.
The author is equity strategist of UBS Global Asset Management.
A Wanda cinema in Yichang, Hubei province. Wanda Cinema Line Corp, the country's largest chain in terms of box office revenue, raked in 3.49 billion yuan ($545.4 million) during the first half of the year. [Photo/China Daily]China's film industry continued to prosper during the first half of the year, driven by a continued expansion in the number of cinemas and the growing popularity of going out to watch a movie.
Another 600 theaters and 2,449 screens were added nationwide during the period, according to new statistics from EntGroup Consulting, the Beijing-based entertainment industry consultancy.
Wanda Cinema Line Corp, the country's largest cinema chain in terms of box office revenue, raked in 3.49 billion yuan ($545.4 million), a 40.82 percent increase on the previous year. That delivered a net profit of 629 million yuan, a 50.43 percent year-on-year rise.
Wanda attributed the strong performance to its ongoing expansion of theater screens, a rapid growth in online tickets sales, and its large-scale acquisitions and mergers both inside the country and elsewhere.
By the end of July, Wanda said it owned 195 operational movie theaters housing 1,732 screens.
SMI Holdings Group Ltd, the Hong Kong-listed theater operator, meanwhile, reported theater revenues of HK$1.25 billion ($161 million) in the first half, a 64.1 percent rise year-on-year.
By June, the company said it owned 130 cinemas in the major Chinese cities, with more than 1,000 screens, up from 90 and 700 respectively at the end of 2014. The number of moviegoers visiting SMI's theaters increased 67.31 percent in the first half year-on-year.
Officials at SMI said it plans to increase its total number of theaters in the country to 200 by the end of this year, mainly in second-and third-tier cities, where there is the greatest potential.
Elsewhere in the market, EntGroup's study showed Bona Film Group Ltd, the leading film distributor and producer, generated $189 million in revenue during the first six months, a 85.9 percent annual growth.
Huang Guofeng, a movie analyst with the Beijing-based information technology consultancy Analysys International, said: "In recent years, Chinese audiences have gradually developed more mature film-watching habits, especially in first-and second-tier cities.
"This has been driven by factors including government support of the movie industry, growing per capita disposable income, and a positive shift in ideas about cultural and entertainment consumption."
Information from Analysys claims the average annual frequency of movie-going among Chinese increased from 3.9 in 2011 to 6.4 in 2014.