Wednesday, November 13, 2013


38% of Global GDP from China's growth in 2014

China to Ease Restrictions on Investing Overseas

SHANGHAI (Reuters) - China will ease restrictions on overseas investments by local firms and deals below US$1 billion (S$1.25 billion) will no longer need approval, the country's economic planner said in another step to cut red-tape and facilitate the growth of private investment.

Starting from May 8, Chinese firms planning to invest less than US$1 billion will only need to register with authorities rather than seek approvals from the National Development and Reform Commission (NDRC), the commission said in a statement late on Thursday.

In a series of sweeping reforms published in November, China promised to free up the market by simplifying administrative controls and to restrict central government management of microeconomic issues.

Lengthy approval times, which can take up to six months, have dented the competitive edge of privately-owned Chinese firms in their overseas acquisitions, since other foreign companies can adjust to changes in economic conditions at a much quicker pace, analysts have said.

China and The West

The new China


China to open more markets to foreign investorsCurbs on sectors such as accounting, logistics, childcare facilities to be eased

China plans to ease the entry barriers for foreign investors in some sectors 

[HONG KONG] China plans to ease the entry barriers for foreign investors in some sectors.
Foreign investors have poured huge amounts of money into China over the years, fuelling the nation's economic ascent. Today, almost all the big global corporate names are present in the country, either to produce goods for export or to sell to Chinese consumers.
Now, having tasted success, firms are clamouring for more market access - a wish that could turn into reality soon, albeit partially.

In a bid to shore up the economy, China announced this week that it will lift the entry barriers for overseas investors in some sectors. The Ministry of Commerce, which oversees the country's business and investment policies, said it plans to ease restrictions on foreign investment in fields such as accounting and auditing, commercial logistics and e-commerce, and child- and elderly-care facilities.



China to start making new officials disclose assets

[BEIJING] China is to launch a pilot programme to make new officials disclose their assets as part of an anti-graft campaign, the Communist Party's anti-corruption watchdog said on Friday.

The government has faced increasing public pressure to improve transparency around officials' wealth, especially after recent corruption scandals involving assets ranging from luxury watches to houses.

Under the programme, "leading cadres" who are newly appointed or promoted will have to disclose their assets, the occupations of spouses and children, and international travel records, the ruling party's Central Commission for Discipline Inspection said in an statement on its website.
It did not give details on how the assets would be disclosed or the extent to which they would be made public.

Blackstone buys 40% stake in China mall owner

Blackstone and ICBC International have bought a 40% and 6% stake respectively in SCP.

The world's largest private equity group and ICBC International acquire stakes in SCP, which manages shopping malls across the Pearl River Delta, Yangzi River Delta and Bohai Economic Rim.

By Alison Tudor-Ackroyd , Chris Dodd | 4 November 2013
Keywords: ma | china | blackstone | icbc international

Blackstone and ICBC International have bought a 40% and 6% stake respectively in SCP, a Chinese shopping mall owner.

Financial details were not disclosed but the value of Blackstone's stake is about $400 million, according to a person close to the situation.

The investment in SCP represents Blackstone's largest mall investment in the Asia Pacific region and gives the firm a platform to continue to invest capital in Chinese malls, whether that is through development of new malls or acquisitions of existing malls.

“With China’s economy increasingly driven by domestic consumption, the retail sector has tremendous potential," said Chris Heady, head of real estate in Asia at Blackstone. Retail sales have grown on average by 16% per annum over the past ten years in China; SCP has grown above the average rate for the past decade.

According to a statement, SCP will have a total asset value in excess of US$2 billion following the deal.

SCP owns and manages 19 shopping malls under three shopping mall brands, Incity, SCP Plaza and One City. Its projects span cities across the Pearl River Delta, Yangzi River Delta and Bohai Economic Rim, with flagship projects being Shenzhen SCP Plaza, Suzhou Incity and Hangzhou Incity. The average occupancy rate is kept at around 95% and leases relatively short in order to manage turnover of tenants as rents rise. Ten years ago SCP was a state-owned company, then it was recapitalized.

Blackstone, the world’s largest private equity firm, is a major owner of shopping malls with more than 110 million square feet of assets across Asia, Europe and the US. It is also an active investor in real estate in Asia.

Stephen Schwarzman, Blackstone’s chairman and chief executive, said in Hong Kong last October that China’s economic slowdown was creating opportunities to invest.

In August the group agreed to buy Hong Kong-listed property and construction group Tysan Holdings - which owns real estate in mainland China - for US$322.6 million.

It has also made investments in Shanghai, Dalian, Nantong and Wuhan. In one deal Blackstone bought Shanghai’s Huamin Imperial Tower, which has 50,000 square meters of office space.

Its investment in SCP comes primarily from its Blackstone Real Estate Partners Asia fund.
ICBCI is a Hong Kong-incorporated, wholly owned subsidiary of ICBC, the world’s largest bank by market value. It serves as the overseas investment banking platform of ICBC group.    --   2013 November   FINANCE ASIA

Chinese developers flush with ca$h
Chinese property developers have more than $25 billion in cash on their books, but they are reluctant to spend money until uncertainties in the markets are resolved, according to a new report.

In the first eight months of 2013, China's real estate management and development companies, including such major players as Shimao Property Holdings and Greentown China Holdings, raised more than $16 billion from offshore bonds and loans, approximately 36 percent more than in the 12 months in 2012, according to Reuters, which studied data from 76 Chinese property companies.        >> MORE   2013 September

East is East

Is the World Ready for China?

Stephen S. Roach

The Slow Boat from China

The world is having a hard time accepting a slowing Chinese economy. Hooked on 30 years of 10 percent average gains in Chinese gross domestic product (GDP), growth-starved economies around the world are desperate for more of the same. But it isn't going to happen.
Some six years ago, China's then premier, Wen Jiabao, posed a paradox that came to be called the "Four Uns": though China's economy looked strong on the surface, Wen argued it was increasingly "unstable, unbalanced, uncoordinated, and ultimately unsustainable." The debate those remarks sparked is now over, and a new Chinese growth model is at hand. China's 12th Five-Year Plan, enacted in 2011, calls for a shift to an economy driven increasingly by domestic consumption, rather than one driven largely by exports and investments.
China's new generation of leaders, President Xi Jinping and Premier Li Keqiang, are now focusing on implementing this daunting structural transformation. During the U.S.-China Strategic and Economic Dialogue on July 10-11, an annual meeting between high-ranking officials from the two countries, the opportunities and the risks of this rebalancing will feature prominently in the discussions.
For its part, China's new leadership is committed to rebalancing. With GDP growth slowing to 7.7 percent in the first quarter of 2013, and data for April and May pointing to more of the same, previous Chinese leaders would have quickly announced a new infrastructure program or other stimulus policies to spur the economy. By not introducing new spending initiatives, the government of Xi and Li has sent a strong signal that Beijing is now willing to accept slower growth. 
That conclusion was reinforced by last month's liquidity squeeze in the overnight bank funding markets. Because the People's Bank of China, the country's central bank, didn't intervene as it normally does in such circumstances, the interbank lending rate shot up on June 20, reaching a record of 13.4 percent -- more than four times the average over the last 18 months (it dropped back a few days later.) This lack of intervention sent a strong signal to banks, especially China's "shadow banks," that the days of risky and undisciplined lending must end. 
The message from China's fiscal and monetary authorities is clear: the days of open-ended hyper growth are over. At the same time, Xi has been calling for a "mass line" education campaign aimed at addressing problems arising from the "four winds" of formalism, bureaucracy, hedonism, and extravagance. Though cryptic, his message appears to underscore a new sense of political discipline, to complement the discipline of China's fiscal and monetary policies. The Chinese Communist Party, Xi seems to be saying, must realign itself with the core interests of the people and their requisite economic fundamentals.
China is at an important juncture in its development journey. It's determined to move away from the quantity dimension of growth to a new focus on the quality of economic development. This is not only about a downshift in GDP growth: it is also a critical shift toward the long dormant Chinese consumer, opening up one of the largest consumer markets in the world to anemically growing Western countries.
This is especially important for the United States, which continues to languish in a weak recovery with unacceptably high unemployment. Washington needs to push hard for free and open access to these markets, an issue that will undoubtedly be high on the agenda for the Strategic and Economic Dialogue.
While China's previous administration recognized the importance of structural change, they made disappointingly little progress. Slower growth doesn't work for China unless its economy undergoes a fundamental transformation. The new policy discipline of Xi and Li is important because it effectively ups the ante on China's rebalancing agenda -- making implementation of the 12th Five-Year Plan all the more urgent.
Page 2 of 2

For consumption to play its proper role in China's economy, three sets of reforms are essential: services-led job creation, urbanization, and a well-funded social safety net. The objective is to boost the consumption of Chinese citizens from its current share of 35 percent of GDP (by contrast, it is 71 percent in the United States) to 40 percent over the next three to five years, and to more than 45 percent by 2023.
The emphasis on services and urbanization should help increase personal income -- the mainstay of consumer demand for any economy. But a services-led China also holds the key to a sustainable slowdown in GDP growth, because services require roughly 30 percent more workers per unit of Chinese output than manufacturing and construction. In other words, China can accomplish the same labor absorption (i.e., employment of poor rural workers) with a services-led economy growing at 7 percent as with a manufacturing- and construction-led economy growing at 10 percent. With services comprising only about 43 percent of the economy -- the lowest share of any major economy in the world -- there is plenty of room for this sector to grow.
Urbanization is also an essential part of China's consumer-led transformation. Urban Chinese workers have per capita incomes of slightly more than three times their counterparts in rural areas. China's urban population reached 52.6 percent of the total population in 2012, up from 20 percent in 1981 and is projected to rise to 70 percent by 2030. As long as job creation, especially in the services industry, accompanies urbanization, a sharp boost in labor income generation is likely. But without a better safety net, Chinese families will keep saving too much and spending too little. The nation's vastly underfunded retirement system is a key aspect of this problem. China's focus has been on expanding the number of citizens enrolled in the retirement and healthcare plans; emphasis now needs to shift to providing more funding for the plans.
While this is a daunting agenda, the new policy discipline of the Xi-Li administration raises the probability of a successful consumer-led rebalancing. If it does succeed, there are three things the world should expect from China: First, Chinese GDP growth will likely hover at 7 or 8 percent over the next decade. The labor intensity of services suggests China can grow in this range and still generate enough jobs and income to maintain social stability.
Second, services-led growth means a move away from resource-intensive manufacturing. While this may pose problems for countries in China's resource supply chain -- especially Australia, Brazil, Canada, and Russia -- it offers the possibility of reduced environmental degradation and pollution, making for a cleaner and greener Chinese GDP.
Third, the emergence of the Chinese consumer is a potential windfall for the developed world. That's especially true in services, where China has little experience or expertise. China's embryonic services sector could increase from $3.5 trillion in 2012 to $15.9 trillion by 2025. Increasingly tradable in a connected world, this $12.4 trillion surge could translate into a $4 trillion to $6 trillion bonanza for foreign companies.
The transition won't be seamless, nor will it happen overnight. But like most of its accomplishments in the post-Mao era, China's development clock runs at roughly four times the speed of others. The Strategic and Economic Dialogue must recognize the opportunities arising from the coming transition to slower, better balanced, and more sustainable Chinese growth.

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