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Inner Mongolia eases rules on coal firms Coal hub considered for North China BEIJING -- China's coal producers faced greater inventories in the first half of the year as an economic slowdown and lingering oversupply continued to weigh down the sector, according to data from the National Development and Reform Commission (NDRC).
By the end of June, Chinese coal producers had 99 million tons of unsold coal, while the country's key thermal power plants, the primary consumer of coal, had 79.06 million tons of coal inventories able to meet demand for 23 days, the NDRC said Saturday in a statement.
Wang Xianzheng, president of China National Coal Association (CNCA), warned that the industry's situation could worsen due to a lingering oversupply in the current economic slowdown.
A CNCA investigation across the country showed more than 70 percent of the country's coal enterprises are operating at a loss and workers at over half of China's coal producers have had wage cuts or defaults.
In the January-June period, railway coal shipments reached 1.15 billion tons, up 0.7 percent from the previous year, according to the NDRC.
Customs data showed China's coal imports grew 0.9 percent year on year to reach 160 million tons in the first half of the year, while coal exports slumped 22.4 percent to 3.16 million tons.
BEIJING -- Beijing Mobile, a provincial-level branch of China's largest telecom operator China Mobile, sharply increased data streams for its 4G packages on Saturday without increasing prices.
This is the third time the company has increased data allowances in an attempt to attract more 4G subscribers.
Following the latest upgrade, the most generous package offers 3 GB of data for a 188-yuan ($30) monthly package, up from 500 MB.
The most modest package increased from 200 MB to 500 MB for 58 yuan ($9.3) per month. Era of 4G to bring changes to China China Mobile lowers data price by 40% on 4G service packages
China's 4G users topped 13.97 million by the end of June, seven months after 4G licenses were issued to China's big three telecom operators, China Mobile, China Telecom, and China Unicom.
A fierce competition for customers is under way among the operators, led by China Mobile with 760 million customers. China Unicom has 295 million users and China Telecom has 180 million.
China Mobile, the world's largest mobile services provider by network scale and subscriber base, has lagged behind in the 3G competition. It has ambitiously rolled out the world's biggest 4G network, with plans to expand its 4G network to at least 340 cities by the end of 2014.
As of the end of June, China Mobile had more than 10 million 4G users in more than 300 cities, said the company's vice president, Li Zhengmao, earlier this month.
The Ministry of Industry and Information Technology (MIIT) issued LTE FDD licenses to China Telecom and China Unicom in June.
China Telecom and China Unicom are experimenting with mixed-mode networks in 16 cities. The two operators have adopted both variants of the LTE (Long Term Evolution) standard, TD-LTE and LTE FDD, while China Mobile currently follows the TD-LTE standard, which it played a main role in developing. FDD is more widely used throughout the world.
Wen Ku, director of the MIIT's communication development department, believes that building integrated FDD/TDD networks will become a trend in China's telecom industry.
Figures from the China Internet Network Information Center (CNNIC) show that China's netizen population reached 632 million by the end of June, and mobile Internet users totaled 527 million. This year marks the first for Chinese netizens to use mobile phones (83.4 percent) more often than traditional PCs (80.9 percent).
BEIJING -- Industrial and Commercial Bank of China Ltd (ICBC), the country's largest lender by market value, said Saturday it plans to issue preferred stocks worth up to 80 billion yuan (about $13 billion) to replenish its capital.
Up to 45 billion yuan in preferred shares will be issued in the domestic market and another 35 billion yuan in preferred shares are planned for the overseas market, ICBC said in a filing on the Shanghai Stock Exchange. ICBC taps new business in Turkey
According to the plan approved by ICBC's board, the bank will issue the preferred shares to no more than 200 qualified investors through a private offering in the domestic market.
The issuance of preference shares overseas will be carried out independently from the domestic offering, according to ICBC.
Voting rights for the planned preferred stocks will be restricted, ICBC said.
As bad loans build up, other Chinese lenders, such as Agricultural Bank of China Ltd and Bank of China Ltd, said earlier this year they planned to issue preferred shares worth billions of dollars.
The non-performing loan ratio climbed to 1.08 percent for Chinese commercial banks by the end of June this year, according to the China Banking Regulatory Commission.
To help banks meet new global capital rules known as Basel III, the China Securities Regulatory Commission announced in March this year new rules of the pilot program allowing eligible companies to issue preference shares.
Preference shares, along with common shares, are two primary types of stocks that companies offer to investors. Preference shareholders have priority rights over ordinary shareholders in distribution of profits and residual assets.
Unlike common shares, preference shares function more like a bond. They are rated by major credit-rating companies and their prices are affected by changes in interest rates.
BEIJING -- Chinese college students can apply for higher loans because of an increase in tuition fees over the last decade, according to a government circular on Friday.
Students can apply for a maximum of 8,000 yuan (about $1,291) in loans per person each year, according to the circular released by the ministries of finance and education, the People's Bank of China and China Banking Regulatory Commission.
The new limit is an increase of 2,000 yuan from the previous ceiling, which was set in 2002.
Officials said the raised ceiling would better help college students as fees had risen in some provinces over the past ten years.
The circular also said students in graduate schools will be allowed to apply for up to 12,000 yuan each year.
According to government data, Chinese authorities issued 103.2 billion yuan ($16.66 billion) worth of student loans by the end of 2013, benefiting about 10 million students across the country.
Student loans are part of China's financial aid package to help college pupils. Other means include scholarships, stipends, as well as tuition waivers.
WASHINGTON -- The US Commerce Department on Friday set preliminary dumping margins on imported photovoltaic products from China, signaling that it may impose punitive duties on the products. China urges US to end probe on solar products Homemade PV power station in Zhejiang
The department made its preliminary affirmative determination that crystalline silicon photovoltaic products from Chinese mainland and Taiwan had been sold in the United States at dumping margins ranging from 26.33 percent to 165.04 percent, and 27.59 percent to 44.18 percent, respectively.
Punitive duties would be imposed after both the Commerce Department and the US International Trade Commission (ITC) made affirmative final rulings, which are scheduled on Dec 15, 2014 and Jan 29, 2015, respectively. If the ITC makes a negative determination, the investigations will be terminated.
The investigations are in response to a petition filed by SolarWorld Industries America Inc. based in Oregon, which alleged that crystalline silicon photovoltaic products from China were sold below the fair value of the products in the US market, while Chinese producers and exporters also received "improper" government subsidies.
It was the second US investigation against Chinese photovoltaic products after a similar one in 2011, which seriously affected the Chinese photovoltaic industry and hindered the development of US photovoltaic application market.
China's Ministry of Commerce has reiterated its calls for the United States to objectively and fairly handle ongoing solar trade disputes, honor its commitment against protectionism and work with China to maintain a free, open and just trade environment.
The Chinese government has again proved its ability to maintain economic growth despite widespread pessimism. Yet the pickup in the second quarter has failed to erase market concerns about continued downward pressure in the year's second half.
Concerns continue to mount, and not only because, of the more than 20 provincial areas that have released their six-month GDP statistics, including powerhouses like Beijing, Shanghai and Guangdong, not one has met the growth target set at the beginning of the year. China's H1 growth up 7.4%, showing economic resilience Top 10 regions with highest GDP in China
It is also because investors tend to overreact to even the slightest policy change like a bird on a wire, indicating their uncertainty and lack of confidence in future policy direction. It seems the economy has fallen into a cyclical policy trap over the past few years.
The economic cycle repeats itself over the course of the four quarters, as growth goes up and down with the application of pro-growth stimulus and reform-minded economic policies. That is why sometimes a slowdown can be interpreted as good news, since it signals further loosening, while growth could indicate the end of stimulus measures.
However, truly good news for the market - the uprooting of deep-seated economic problems - has yet to arrive. Finding a way to make that happen, as well as minimize the cost of the process, should be a priority for policymakers as they convene at next week's economic symposium.
The Political Bureau of the Communist Party of China's Central Committee - a panel of about 25 top-ranking officials - will sit down for a closed-door meeting to review the first-half economy and map out strategies for the second.
Whether they will agree to more targeted stimulus moves to offset the high base number of last year's GDP growth is unknown. Also a question mark is the strength of their determination to take on reforms needed to repair the economy.
But it is dogmatic and bookish to forecast China's economy based on a simple calculation of a handful of economic indicators. Both policymakers and investors should bear in mind that the nation's vast territory and differentiated economic situations have enabled China to neutralize a crisis in one area with a boom in another.
That being the case, the market should be more tolerant of the fluctuations of economic indicators like GDP statistics. That would give local governments more latitude to restructure their industries and change their current gauge of economic growth into a more comprehensive scale.
Unless deep-seated structural problems can be weeded out, the truly good news of sustainable growth will never arrive in the world's second-largest economy.
A Chinese worker dusts off an Aston Martin DB9 during an auto show in Chongqing, China, June 6, 2013. BMW and Aston Martin Lagonda will recall autos in China over airbag and gearbox problems respectively, China's quality watchdog said on Friday.[Photo / IC]
BEIJING - BMW and Aston Martin Lagonda will recall autos in China over airbag and gearbox problems respectively, China's quality watchdog said on Friday.
From August 25, BMW and BMW Brilliance will recall a total of 15,474 cars in the 3-Series sold in China due to defects with the airbag, which may malfunction in humid environment, said the General Administration of Quality Supervision, Inspection and Quarantine.
Aston Martin Lagonda will recall 317 cars including DB9, Virage S and Virage Coupe from China's mainland beginning July 30 as defective gearbox could lead to a sudden loss of power.
Both companies will change the flawed parts for free.
The promise of a green card has seen foreign investors, the vast majority from China, invest $150 million in the New York Wheel, an observation Ferris wheel - the tallest in the world - planned for Staten Island.
The 630-foot-wheel project has attracted 300 Chinese investors, at least 90 percent of the foreign investors involved, through the EB-5 visa program, which gives foreign investors a temporary visa to the US, said Richard Marin, president and CEO of New York Wheel LLC.
"We go where the money is," said Marin. "There are a larger number of entrepreneurs with that kind of wealth in China than anywhere else. By far the largest single source of supply - those who seem to find value in investment like this in exchange for a green card and where money is available - is from China."
Marin went on a two-week trip to Beijing, Shenzhen, Guangzhou, Wuhan, and Shanghai, with CanAm Enterprises LLc representatives in March to attract new investors.
The EB-5 program provides foreign investors and their families temporary visas if they invest at least $500,000 and green cards if they create at least 10 jobs for US workers within two years through their investment.
The wheel project, which was approved on Monday by the US Citizen and Immigration Services as an EB-5 investment, has received $500,000 from each of the 300 Chinese investors, said Marin.
"What we're doing is taking advantage of a US program that was approved by Congress almost unanimously," Marin said. "It is a widely supported program to create jobs in the US by using foreign capital and making green cards available to people who want to put foreign capital to work in this country to help build jobs. We had the opportunity presented to us to get attractive financing, so we used it."
The USCIS oversees the EB-5 program and determines which projects qualify for this program. Approval usually takes from 10 months to a year.
Marin said it only took six months to get the wheel project approved thanks to being partnered with CanAm Enterprises, which has 25 years experience in promoting private and government immigration investments.
"The reason why this project sold out so quickly - and why it is such an attractive project - is because it is partnered with CanAm, which is the best in the business," he said. "When they endorse a project, based on their flawless track record, investors know that it is a solid investment."
What attracted investors so quickly and secured speedy government approval, according to Marin, were the sponsorship from CanAm, assurances that investors would get visas approved, an economically viable project that has the ability to pay back debt and location in a high-priority area where there is a need for jobs.
"All of those elements show that this is why the US immigration service would want to push for investors," Marin said. "And this is also what investors look for because they want to get their green cards and make a profit."
Clare Chen, manager of foreign sales and marketing for CanAm, said: "We believe the New York Wheel meets the highest standards of the EB-5 Program and will create thousands of qualifying jobs in the region."
"We were confident that," Chen continued, "with the completion guarantees, fixed-price contracts, all of the financing in place and the design-build team behind it, which is the same team behind the London Eye, the project would be completed on time and on budget."
According to job studies commissioned by New York Wheel, the project will create about 4,200 jobs, including 300-350 construction jobs and 400-600 permanent jobs.
Construction is expected to start in December and the New York Wheel is scheduled to open early in 2017. With 36 capsules, each carrying 40 passengers, it is expected to receive 30,000 riders a day, 4.5 million a year.
At 630 feet high (192 meters), the New York Wheel will be 20 stories taller than the 135-meter London Eye, and higher than similar Ferris wheels in Nanchang (158.5 meters), Singapore (165 meters)) and Las Vegas (167.6 meters).
"These types of attractions have been proven to be very popular around the world," said Marin. "Because New York harbor is a great tourist destination, a lot of people are on the water anyway to visit the Statue of Liberty, so this was the perfect place to put an iconic attraction."
Controls are about to ease on foreign ownership of domestic fund management firms to promote the opening up of the financial sector, the China Securities Regulatory Commission said on Friday.
"We will evaluate the process first and gradually raise the shareholding ratio of foreign capital in domestic fund management companies," said Zhang Xiaojun, a CSRC spokesman. "We hope the move will promote the development of joint ventures."
Earlier this month, the CSRC announced rules establishing a shelf registration system for public mutual fund issues that it said would promote the development of China's fund sector and attract more institutional investors.
The CSRC said it will complete all registration processes for products within 20 days after the required documents are submitted.
Representatives from the European Commission, the Association of the Luxembourg Fund Industry and the French Fund Association have already met with Chinese authorities to discuss the distribution of certain funds into the Chinese mainland, according to the Financial Times.
However, any agreement would have to wait until after a mainland-Hong Kong mutual recognition arrangement is approved. A pilot program is due to begin in October which will, for the first time, allow investors in Hong Kong and the mainland to trade and settle shares listed in both markets via their local exchanges and clearinghouses.
The first joint-venture fund management company in China was set up in 2012. There are 48 fund management companies in the nation, of which 20 each have foreign ownership of 49 percent.
"China is going to step up the development of its funds industry, drawing on the best practices of global players while also strongly supporting its domestic asset managers," said Wu Bowen, a fund manager at Lion Fund Management Co Ltd.
Zhang also said that the agency is exploring "mutual recognition" of mutual funds beyond Hong Kong to overseas markets.
The CSRC is also formulating rules on equity crowd-funding, said Zhang.
Shanghai Husi Food, the US-owned Chinese food supplier at the center of a meat safety scandal, won a court case earlier this year against a former quality control officer whose claims included that he was made to forge meat production dates.
Wang Donglai, who worked at the company from 2007 to 2013, sought about 38,000 yuan ($6,100) in compensation for damage to his health from exposure to chlorine used as a cleaning agent by the meat processor.
He also sought to terminate his contract, claiming he was forced to work overtime and made to do "unethical work" that violated food safety laws, court documents showed.
At his hearing in October, Wang said he was unwilling to illegally forge dates at the plant, adding that he repeatedly urged his employer to change a practice that he said violated food safety laws and hurt consumer interests, according to court documents seen by Reuters.
He said the company, which is owned by the privately held OSI Group in Illinois, ignored his appeals.
Wang could not be reached for comment and his lawyer in the case declined to comment.
Shanghai Jiading People's District Court ruled against Wang in January, saying his health was normal based on records provided by his employer. The judge dismissed Wang's claims about forced overtime and also dismissed the allegations about forged production dates because of a lack of evidence, court papers showed.
Xia Yugang, a lawyer who represented Shanghai Husi Food in the case, said it was an individual labor dispute rather than a food safety issue.
Wang's allegations of tampering with food production dates echo those made in a Chinese undercover TV documentary on July 20 that showed staff members at the Shanghai Husi Food plant mixing old meat with fresh meat and reusing meat picked up from the floor.
In the Dragon TV film, Shanghai Husi workers said they kept two record books related to food products, one of which was doctored to be shown to anyone who came to audit the plant.
Several foreign fast-food brands have pulled Shanghai Husi products from their outlets on the mainland, in Hong Kong and Japan. Yum! Brands, which owns the KFC and Pizza Hut chains, has severed its ties with OSI China.
Shanghai police have detained five people, including the head of Shanghai Husi Food and its quality control manager. OSI has apologized to its Chinese consumers.
Low productivity gains, returns on investment pose problems, top think tank warns
Despite the slight pickup in economic growth during the second quarter, long-term prospects are not that rosy for China, given the feeble productivity gains and declining returns on investment, the nation's top think tank said on Friday.
The Chinese Academy of Social Sciences said in its quarterly economic analysis that China's potential economic growth rate has fallen to between 6.4 percent to 7.8 percent for the next five years.
Capital efficiency, measured in terms of the GDP to capital stock ratio, posted a steeper decline of 4.9 percent between 2008 to 2012, down from negative 0.9 percent between 1985 and 2007, according to the report. Infographics: China's GDP growth since 1978 China's H1 growth up 7.4%, showing economic resilience
This means that more money has to be spent to generate the same amount of GDP, and this is reflected in the skyrocketing money supply versus slower growth. In 2007, total social financing, the broadest measure of credit supply, was 5.96 trillion yuan ($950 billion), while GDP grew 13 percent that year. During the first half of this year, 10.57 trillion yuan was unleashed, but growth dipped to 7.4 percent.
"The current situation serves as a reminder of how defective and unsustainable our growth model is. There can be no delay in altering the traditional investment- and export-driven model, "said Li Yang, vice-president of the CASS.
The CASS lowered its forecast of China's GDP growth for the whole year to 7.4 percent, from 7.5 percent a few months ago. A day earlier, the International Monetary Fund cut its 2014 forecast for China by 0.2 percentage point to 7.4 percent.
As the economy increasingly relies on credit and investment, technology advances are becoming increasingly irrelevant for growth. Total factor productivity, a measurement of output not generated by traditional inputs of labor and capital, increased 1.4 percent annually during 1990 to 2011, and contributed 11.7 percent of the GDP growth. In western China, the annual gain was 0.8 percent and contributed 6.9 percent to growth.
Zhang Ping, deputy director of the Institute of Economics under the CASS and an author of the report, attributed the slowing TFP gain to several reasons.
He said the services sector, usually with lower productivity than manufacturing, has taken a larger role.
The problem is amplified by the fact that China's services sector is mostly low-end, he said. The modern services, such as education, culture, health, telecommunications and banking, is either heavily subsidized by the government or monopolized, making them less competitive.
An aging population casts further constraints on productivity growth.
The most crucial solution, the report said, is boosting human capital by enhancing education. Even in this field, experts saw no reason for relief as families, especially from rural areas, saw no major benefit from sending their children to college and opted to enter the work force without higher education.
China's H1 industrial value added up 8.8% China's H1 retail sales up 12.1%
A trendy woman takes photos of handbags showcased at a fashion store of Louis Vuitton (LV) in Fuzhou city, Southeast China's Fujian province, April 1, 2014. [Photo / IC]
Louis Vuitton Moet Hennessy has seen a drop in demand from Chinese buyers in its home market and overseas, the French fashion, spirits and cosmetics group said on Thursday after posting below-forecast second-quarter sales and profits.
The world's No 1 luxury group said growth in sales from Louis Vuitton, its main cash cow, had dropped in China in the second quarter from the first, while revenues from Chinese tourists declined in major European markets such as France.
It also said fewer tourists, particularly from the Chinese mainland, were shopping in Hong Kong. Hong Kong is where many leading luxury brands generate more than 10 percent of their global revenue.Chinese market offers better times for the rich
"After May, we have seen the level of business there slowing down markedly," LVMH Chief Financial Officer Jean-Jacques Guiony told analysts in a conference call, adding that the group's duty-free unit DFS had suffered particularly.
Guiony's comments echoed watch specialist Swatch Group Ltd which voiced concerns on Tuesday about the outlook in Hong Kong in the near term.
Regarding China, Guiony did not provide an explanation other than pointing to a general difficult business climate affected by the government's efforts to crackdown on corruption and conspicuous spending.
Louis Vuitton, the top luxury brand by revenue which generates more than half of LVMH's operating profit, has also been struggling to counter a growing perception among emerging market customers that it has become too ubiquitous.
The brand's sales growth in the second quarter collapsed to zero from 9 percent the previous three months.
Louis Vuitton has been trying to win back customers and regain exclusivity by strengthening its higher-end offering with leather goods and smart designs but its efforts have been taking time to pay off.
"Louis Vuitton has done a lot to innovate its products, but consumers - especially in China - are still not embracing it in full," Luca Solca, luxury goods analyst at Exane BNP Paribas said.
LVMH's comments contrasted with a more upbeat trading update from rival Burberry Group Plc earlier this month which said it continued to enjoy solid sales growth in China.
UBS AG, which has a buy rating on LVMH shares, said it was going to change its full-year earnings forecasts "given the much-weaker-than-hoped-for start of the year and the fact that a number of adverse factors will likely weigh for some time, including a slowdown in demand in China".
LVMH's sales growth in the second quarter reached 3 percent on a like-for-like basis, below analysts' expectations for 5-6 percent, while the group's operating profit in the first half fell to 18 percent from 19.8 percent last year.
Guiony said part of the profitability drop was due to adverse currency movements and the slower sales growth.
LVMH's operating profit from recurring operations reached 2.576 billion euros ($3.47 billion), down 5 percent from the same period a year earlier.
LVMH said trading in Europe was resilient "despite a still-challenging economic environment" but sales growth stalled in the second quarter, versus a 1 percent increase in the first quarter.
Revenue growth remained solid in North America but fell 11 percent in Japan, against growth of 32 percent in the first quarter, during which sales were boosted by advanced purchases ahead of a VAT increase on April 1.
Employees sit in the lobby of the headquarters of Chinese search engine Baidu in Beijing, on May 22, 2014.[Photo/IC]
Baidu Inc, China's largest Internet search engine, reported better-than-expected earnings for the second quarter on Friday. However, with no aggressive investments made in the year, the Beijing-based company can hardly reassure analysts about its growth momentum in the long run.
Fueled by the strong growth in mobile revenue, Baidu announced in a statement that its total revenues in the three months ending in June soared 58.5 percent year-on-year to 11.99 billion yuan ($1.932 billion).7 amazing ways to mark World Cup
Net income rose to 3.55 billion yuan from 2.64 billion yuan a year earlier, which beat the 2.85 billion-yuan average of nine analysts' estimates compiled by Bloomberg.
Mobile has served as a key driver for Baidu's growth. "As the clear leader in mobile search, mobile map and app distribution, mobile revenue for the first time ever contributed to 30 percent of our total revenue", said Robin Li, chairman and chief executive officer of Baidu.
The strong growth in mobile revenue signals Baidu's smooth transformation from a personal computer-based search giant to a company that has strong monetization capability in the era of mobile Internet. In the fourth quarter of last year, mobile revenue contributed 20 percent of Baidu's total revenue.
Lu Jingyu, an analyst on the mobile Internet with iResearch Consulting Group, said the business model of Baidu is rather simple. "By introducing more advertisements to its apps, Baidu's mobile search, mobile map and app distribution are basically cash cows, which can easily bring in money," she said.
She said search, map and app distributions are quite mature sectors with a lot of established users. But Baidu has failed to make moves in the new sector or launch breakthrough new services, which triggers concerns about its growth in the long term.
The number of people who surf the Internet via mobile devices in China has for the first time exceeded the number using computers to go online. According to a report from China Internet Network Information Center, a government-backed industry administrative body, released in mid-July, about 83.4 percent of China's Internet surfers are using mobile phones to go online.
Baidu's competitors, such as search and mobile security firm Qihoo 360 Technology and the mobile Shenma Search, purchased recently by Alibaba, have rapidly grabbed a significant share in recent quarters.
Compared with its rivals Tencent Holdings Ltd and Alibaba Group Holding Ltd, which aggressively poured billions of yuan investment in various sectors, Baidu has been quiet after acquiring app distribution platform 91 Wireless and taking control of group-buying site Nuomi.com last year.
Gene Cao, senior analyst with Forrester Research Inc, said Baidu should move faster in mobile Internet investment. "Baidu has its own mobile navigation, and mobile ad apps, which did bring higher margins.
But Baidu needs more investment in areas like location-based services or connected devices. Rivals like Tencent have integrated Dianping.com into WeChat, which brings over 600 million users into the location-based services," he said.
PetroChina Co Ltd is reconsidering a plan to auction off its natural gas pipeline unit and could instead sell it to an affiliate, three people who were briefed on the matter by the Chinese energy giant told Reuters.
Selling PetroChina Eastern Pipelines Co Ltd to the affiliate, which is 50 percent owned by PetroChina, would enable China's largest energy producer to maintain control over the national gas grid as well as raise cash to fund oil and gas exploration.
But scrapping the auction would pose a setback to the government's plans to open up the State-dominated energy sector to domestic private investors to improve competition and curb corruption.
PetroChina controls more than 80 percent of China's natural gas grid, and some privately owned domestic gas companies have complained this monopoly hurts their business.
"It's almost a done decision to let the joint venture ... acquire Eastern Pipelines," said a Beijing-based energy industry executive, who declined to be identified as the matter remained confidential.
"Few private investors also have the financial appetite to swallow such a massive asset," the executive added.
A financial industry executive who was also briefed on the sale added: "It's a possibility that PetroChina actually would like to see. They are moving in that direction."
PetroChina's spokesman, Company Secretary Mao Zefeng, declined to comment. Analysts expect PetroChina to make a final decision on the sale in the fourth quarter.
The potential buyer of Eastern Pipelines is PetroChina United Pipelines Co Ltd, a 50-50 joint venture PetroChina set up last year with a domestic insurer and an investment fund that counts numerous non-State institutions among its investors, the sources said.
Gas pipelines generate steady, long-term returns.
United Pipelines is one of a few local companies with enough capital to buy a huge asset such as Eastern Pipelines, one of the sources said.
Eastern Pipelines carries an estimated net asset value of between $4.7 billion and $6.3 billion.
United Pipelines, which already acquired parts of PetroChina's gas pipeline assets last year, has total registered capital of 40 billion yuan ($6.46 billion).
Chinese fund management firm Taikang Asset Management Co Ltd has a 30 percent stake in United Pipelines. Beijing Guolian Energy Industry Investment Fund owns 20 percent. The rest is owned by PetroChina.
Like many other State-owned enterprises in sectors dominated by the government, PetroChina is under pressure from the national government to bring in private investment.
In May, it said it would auction Eastern Pipelines, which controls the two west-to-east, cross-country gas pipelines in China.
There has been speculation that some privately run natural gas distributors, which buy gas from PetroChina and sell it to consumers, would be interested in the pipeline assets.
Investors become cautious about the market, industry index indicates
A 1.3 billion yuan ($209.68 million) trust product has delayed repayments, pointing to the deteriorating health of China's trust industry, which is scheduled to repay investors more than 250 billion yuan in the remaining months of the year.
The Beijing-based China Credit Trust Co Ltd delayed payments on a trust product backed by coal-mining assets after it failed to raise funds to repay investors. The trust repayment was scheduled to occur on Friday, but there was only 61,538 yuan left in the trust as of the end of June, according to the trust's disclosure to its investors.
China Credit Trust has promised to liquidate assets under the trust within 15 months to repay investors, according to a statement on Thursday.
It is the second default by China Credit Trust this year. In January, a 3 billion yuan trust product sold by the company failed to pay part of the interest due to investors.
China Credit Trust is a leader among the nation's 68 trust companies. It oversaw 357.2 billion yuan in trust assets as of Dec 31, 2013 and reported a profit of 1.85 billion yuan last year.
Trust investments, especially those in infrastructure and property, are getting riskier as many projects are finding it hard to maintain positive cash flows amid the economy's deceleration.
Trust products worth more than 250 billion yuan will mature during the rest of the year, according to data from Hithink RoyalFlush Information Network Co Ltd, a financial information provider. In December alone, 456 trust products are expected to mature.
Only 52 percent of trust products had no problem raising funds in June, according to a trust industry index compiled by Use Trust Studio, a trust industry monitor, showing that investors are becoming cautious about investing in trusts.
In a July 10 note, UBS AG compiled a list of 15 trust products that have had repayment problems this year, based on media accounts and company disclosures.
Wang Tao, an economist with UBS, wrote in the note that while government intervention and a pickup in banking lending and liquidity levels have helped avoid large-scale defaults so far, she still sees the risk of trust defaults sending a ripple effect through the credit system, prompting a credit crunch and sizable losses for certain institutions.
"It is still surprising that not more defaults have happened by now," she wrote. "As local governments' financial situations deteriorate going into 2015, market concerns for an explosion of shadow credit defaults may yet revive."
Credit Equals Gold No 2 was created in July 2011 to fund mining projects for Shanxi New North Group Co, a coal company based in the northern Chinese province of Shanxi. The trust is fully collateralized by multiple mining rights.
The Shanghai Securities Journal reported that there is a dispute over one item of collateral, the 100 percent stake in a certain mining company, which the company used to get 200 million yuan financing. The case is currently being heard by a court in Beijing.
China Credit Trust's biggest investor is People's Insurance Co (Group) of China Ltd, which owns a 33 percent stake, according to the trust firm's website.
Kejia, an intelligent service robot designed by the University of Science and Technology of China, neatly lines up several drinks at the 2014 RoboCup@Home competition in Joao Pessoa, Brazil, on Wednesday. [Photo / China Daily]
Robots designed by the University of Science and Technology of China amazed the audience and won the championship for the first time at the RoboCup, which concluded on Friday in Joao Pessoa, Brazil.
Recognized for their stability and precision, the robots of USTC's WrightEagle team - dubbed Kejia - won top honors in the RoboCup@Home league, one of several leagues at the global competition, officially known as the 2014 Robot World Cup Initiative.
Kejia achieved a historical mark of 8,555 points, 3,600 higher than the second-place team, after running through a set of benchmark tests. The tests are used to evaluate a robot's abilities in a realistic, non-standardized home environment - the first stage of the competition.
Following the benchmark tests, the robots wowed the audience a second time in the finals, which consisted of tasks that were designed by each team on their own.
The WrightEagle team designed a program that made the robot open a tight bottle cap in cooperation with another robot, which won an additional 94 points, the highest among all the dozens of competing teams in the section.
The @Home is a new league in the RoboCup that aims to foster the development of applications in the domains of service and assistance robotics, ambient intelligence and human-robot interactions, according to RoboCup's website.
"Many countries are now exerting efforts in the research and development of intelligent service and assistive robots, which is also expected to play an important role in upgrading China's manufacturing sector," said Chen Xiaoping, a computer science professor at USTC and the WrightEagle team leader, after the competition.
The seven-member team is an emerging star in the @Home league but a traditional power in the 2D Simulation League, in which two teams play soccer in a two-dimensional virtual stadium with autonomous software programs.
The high performance of its programs has given the team the championship five times in the 2D Simulation League.
Top 10 amazing robots in the world Android showed in Tokyo
Banks can make new loans to small and micro enterprises if the companies have problems in repaying an old loan, according to a new government policy unveiled on Thursday.
Previously, a company could apply for a new loan only after it had paid off the old one. Additionally, the company would have to wait weeks to get bank approval for the loan. More lenders make RRR cuts Liquidity concerns abate for most Chinese lenders
Presiding over an executive meeting of the State Council, on Wednesday, Premier Li Keqiang asked for a reduction in the high financing costs to companies as well as the enhancement of financial support for the real economy.
Small and micro enterprises sometimes experience tight cash flow when bank loans mature even though their businesses are running normally, Wang Kejin, director of the supervisory rules and regulations department at the China Banking Regulatory Commission, said on Thursday.
At such times, the companies may need to borrow from loan companies or private lending services at high interest rates in order to repay the bank loans.
In some provinces, the monthly rate can reach 2 to 3 percent.
Such heavy financing costs could cause the capital chain of some small companies to break down, Wang said.
Dong Yan, director of the internal control and compliance department at Beijing Rural Commercial Bank Co, said under the new policy, banks can appraise the operational, financial and credit situation of small companies and lend to those meeting certain criteria to help them repay their previous loan.
The policy will help reduce financing costs to small and micro enterprises, allowing them to focus on improving their production and operations, Wang said.
The CBRC also asked banks to tighten control of loan risks to prevent small companies from using the new policy to cover up their true financial condition.
The number of regions that delivered double-digit economic growth in the first half of this year plunged, and growth in some regions was dramatically below the year-earlier level, figures from provincial-level governments showed.
The local statistics offer a level of detail and insight into the economy that national figures do not provide.
Of the 27 provinces, municipalities and autonomous regions that have released first-half GDP data so far, only five managed to expand at a double-digit pace. In 2013, 15 out of 31 mainland regions posted growth rates above 10 percent.
Northern industrial hub Tianjin, which grew 12.5 percent in 2013 and led the nation, slowed to 10.6 percent in the first half. Chongqing in southwestern China led the nation with 10.9 percent GDP growth in the first half, but that pace was 1.4 percentage points slower than in 2013. China's H1 growth up 7.4%, showing economic resilience Top 10 regions with highest GDP in China
Some provinces experienced a sharp drop in growth. Hebei province in northern China, where the government is cutting steelmaking capacity, grew 5.8 percent in the first half, compared with 8.2 percent a year earlier. First-quarter growth was just 4.2 percent.
Coal-dependent Shanxi province expanded 6.1 percent in the first half, while it grew 8.9 percent in 2013.
Heilongjiang province in Northeast China, where just one large oilfield contributed more than half of the province's industrial output, was hit hard by decreased crude production. The province grew just 4.1 percent in the first quarter, the lowest level nationwide. It still has not released its first-half data. In 2013, it grew 8 percent.
All these three regions' economies are heavily reliant on natural resources, and their difficulties underscore the "limits of the traditional development path" and the "urgency to find a new growth model", said Xu Fengxian, a regional economics researcher with the Chinese Academy of Social Sciences, the top government think tank.
Their improvements in the second quarter still relied on expanded production and investment, he said.
Twenty-one of the 27 regions that had reported first-half GDP figures as of Friday indicated a pickup in the second quarter, while four regions reported a slowdown－Tianjin, Anhui province, Xinjiang Uygur autonomous region and Jilin province.
"Both the national and provincial figures show a clear pickup, though the provincial ones more obviously so," said Xu Gao, chief economist at Everbright Securities Co.
Local governments have long reported numbers higher than national figures and "provincial governments still have an incentive to inflate the GDP figures", he said.
In response to slower growth, the regional governments are outlining stimulus plans. Hebei will invest 1.2 trillion yuan ($194 billion) in areas including railways, energy and housing, while Heilongjiang will spend more than 300 billion yuan over two years in areas including infrastructure and mining.
But Zhang Zhuoyuan, an economist who specializes in reform, said on Friday he worried that these local moves would only bolster governments' control over resources, a trend that goes against the reform direction laid out by the Third Plenum of the 18th Communist Party of China Central Committee in late 2013.
A separate report by the CASS showed in terms of development prospects, coastal regions such as Jiangsu and Zhejiang provinces still dominate the list. Between 2013 and 2014, Hebei's ranking in the list dropped from 13 to 23, the largest slide among regions. Shanxi and Heilongjiang also saw major declines.
In a visit to Inspur, a leading cloud service provider in Shandong province, Premier Li Keqiang said on Friday that he will recommend not only China's high-speed railway and nuclear power technologies but also its cloud service to the world in future visits abroad. LIU ZHEN / CHINA NEWS SERVICE
Premier calls for banks to simplify lending process for first-time entrepreneurs
Premier Li Keqiang pledged more financial support for new businesses to encourage entrepreneurship amid the continuing downward pressure on the Chinese economy.
"The government and State-owned banks must conduct in-depth research, change their work styles and mindset to find ways to make it easier for new businesses, which are largely small businesses, to get loans," Li said on Friday.
Earlier that day, Li had met owners of small and micro businesses in Shandong, wrapping up a two-day visit to the coastal province. China Q2 GDP seen steady at 7.4%, recovery in sight Chinese premier rules out economic hard landing
Shandong's economy picked up slightly in the second quarter, after reporting 8.7 percent economic growth in the first, a moderate growth rate compared with other provinces.
Ten business owners attended Friday's symposium, and the difficulty of getting financing was their key complaint.
The State Council issued guidelines on Wednesday that make it easier for businesses to get loans. It listed detailed measures to ensure that more loans would go to small and micro businesses, the service industry, the agricultural sector and projects that safeguard the environment and improve people's lives.
Xu Hui, the owner of an accounting company, one of the 10 businesses invited to the symposium, said most of her clients are small and medium-sized businesses, and lending is their biggest challenge.
Although many policies have been issued to ease financing for small businesses, Xu suggested that the government should work out specific policies for newly registered businesses, because banks are usually reluctant to lend money to businesses newer than 3 years old.
"These businesses are in the early stages of development, usually with fewer contracts than the experienced ones, but that doesn't mean their development potential is weak," she said.
While concluding the symposium, Li said he hoped the business owners' enthusiasm would not be dented by complicated administrative procedures and unnecessary government supervision.
"We should not make the market economy like a hurdle race, where business owners have to leap over hurdles as they go through the administrative procedure for running a business," he said. "Otherwise they may quit soon after the race begins, or be bound hand and foot throughout the race."
Li has consistently emphasized the importance of serving the needs of small and micro companies through administrative and financial reforms during his many inspection visits this year.
"We should have microfinance services for small and micro enterprises. The combination of the two 'micros' will be of great benefit," Li said during a visit to a small loan company in Shenyang, capital of Liaoning, in late March.
During a trip to Hainan province in April, he asked about the increase of newly registered local enterprises, which rose by 77 percent year-on-year in March, while registered capital that month surged by 247 percent.
"Streamlining administration and delegating power to lower levels will increase residents' income by making it easier for them to start their own businesses. The reform can also lower costs. That is what the government should do," Li said.
Landmark move will see lenders in Shenzhen, Wenzhou, Tianjin
China has approved the establishment of three private banks, a landmark effort for the government to open up the State-controlled financial market to private investors.
The banks will be based in Shenzhen in Guangdong province, Wenzhou in Zhejiang province and Tianjin.
Once established, they will be subject to the same regulatory rules as their State-owned peers, Yang Liping, director of the banking supervision department II at the China Banking Regulatory Commission, said at a news briefing on Friday.
The lenders will begin drafting corporate strategies and selecting senior managers and board directors before opening officially. They have a maximum of six months from now to prepare for the launch and can apply for a three-month extension of the preparation work before the commission's approval expires, Yang said.
Shao Ke, a researcher at Bank of China's Institute of International Finance, said: "With the approval, the government is sending a signal that the financial market will open further to private capital. If the three lenders run smoothly, they will dismiss the regulator's doubts, increase market competition and reduce high financing costs of domestic companies."
Founders of the private banks pledged that if the lenders go bankrupt, they will repay deposits in full or partially with net assets of their company or the company's controller.
Yang added: "The banking regulator did not mandate founders of the private banks to take unlimited joint liability. They made such a promise voluntarily, which complies with the law. It will help boost public confidence in the private lenders."
The three private banks will differentiate themselves on marketing positioning and development strategy by taking into consideration the advantages of their shareholders and the characteristics of their regions.
The Shenzhen bank will focus on serving individual consumers as well as micro and small enterprises. The Wenzhou lender will target small companies, individually-owned businesses and community residents, while the Tianjin bank will prioritize local corporate banking.
Weng Yifeng, deputy manager of Huafeng Group, one of the founders of the Wenzhou bank, said: "We want to address the capital access problem for private companies. We will start by solving financial problems among micro, small and medium-sized enterprises in Wenzhou."
Internet giant Tencent Holdings is among the founders of the private bank in Shenzhen. The bank has a registered capital of 3 billion yuan ($484 million), with Tencent holding 30 percent of its shares.
Alibaba Group, Tencent's major competitor, has also prepared for the launch of a private lender after both were named on March 11 as pioneers for a trial program to set up five private banks in China. But Alibaba was not on the approval list on Friday.
Yang said the commission is doing research on expanding the trial program to more areas, especially central and western regions.
It is working on a regulatory guideline for private banks and will also specify a special institution to supervise private lenders with a focus on strengthening regulation on related-party transactions, Yang said.
Meng Jing, Yu Ran and Bao Wanxian contributed to this story.
Top10list:RankingChinaandtheworld China to pilot five private banks