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State council approves cross-strait bank alliance (NewsTrak Daily, Sep 2)
Mainland China’s big four state-owned commercial banks are seeking alliance with Taiwanese banks and the move is approved by the State Council, sources said. Industrial and Commercial Bank of China(1398.HK), Construction Bank of China(0939.HK), Agricultural Bank of China and Bank of China(3988.HK) are reaching out to Taiwan Cooperative Bank (5854.TPE)
in a move to build a joint financial platform for Taiwanese merchants, reported Taiwan media.
The details of the alliance are still under negotiation but source said China’s State Council had approved the project and would provide capital of RMB50 billion. Taiwan Cooperative Bank, headquartered in Taipei, is currently Taiwan’s second largest bank in terms of asset value. Continue (继续)

(WSJ) China’s Legend Holdings Ltd. is best known as the parent of Lenovo, the company that owns the ThinkPad brand of notebook computers. Now, a new deal with a Chinese conglomerate may signal that Legend is carving out a bigger role in China’s corporate landscape.

On Friday, China Oceanwide Holdings Group Co., a company with holdings in real estate, finance and energy, said it was buying a 29% stake in Legend from the Chinese Academy of Science for $404 million.

The stake sale isn’t expected to have a big impact on Lenovo Group Ltd., which Legend founded. However, it could pave the way for Legend to become a broader corporate investment-holding company modeled in some ways on Investor AB of Sweden, according to a person familiar with the situation. Continue (继续)

(China Daily) The money-earning capability of China’s top 500 enterprises has exceeded that of their United States counterparts for the first time, as the sweeping financial crisis pummeled many US firms while China is already entering an economic recovery.

Net profits for the Chinese companies stood at $170.6 billion in 2008, well above the $98.9 billion for US companies in the same period, according to the latest report released on Saturday by the China Enterprise Confederation (CEC) and China Enterprise Directors Association. Continue (继续)

(WSJ) The resignation of Kai-Fu Lee, head of Google Inc.’s China operations, is the latest evidence of the search giant’s continued struggles in the region, where Internet competition is intensifying.

The company announced Mr. Lee’s departure late Thursday, saying the 47-year-old executive, will be moving on to start a new venture in Beijing. His new project will involve investing in young companies, according to one person familiar with his plans. Continue (继续)

(FT) Huntsman, the US chemicals group, is considering spending part of a $2.7bn compensation package from the collapse of a buy-out plan to acquire specialty chemical plants in China, according to a senior company executive.

The group, which moved the headquarters of its textile chemicals business from Basel to Singapore earlier this year, is evaluating several possible facilities, including some owned by Clariant and BASF, the Swiss and German chemicals groups. Continue (继续)

(Tradewinds) A Chinese builder could become a reluctant owner after agreeing to delay delivery.China’s Singapore-listed Jiangsu New Yangzijiang Shipbuilding (JNYS) could become the latest yard to enter shipowning.

The Jiangsu-based player may have to take on a post-panamax bulker due to be handed over at the end of the year after agreeing a change of delivery schedule with the original owner, market sources say.

The 92,500-dwt newbuilding is said to have been ordered by D’Amato di Navigazione but the Italian owner has asked JNYS to delay delivery by at least a year, according to brokers. Continue (继续)

(Beijing Review) Although China’s economic downturn is widely believed to be fading fast, one of its side effects is now taking center stage—the escalating controversy over unreasonably high executive pay.

The news broke like lightning after it was revealed that the pre-tax compensation of Ma Mingzhe, Chairman of the Board of the Ping An Insurance (Group) Co. of China Ltd., totaled an astronomical 66 million yuan ($9.7 million) in 2008—far above the industry average. Ping An is a giant insurer headquartered in Shenzhen and is listed on both the Shanghai and Hong Kong stock exchanges. Continue (继续)

(Shanghai Daily) PROFITS at China’s industrial companies declined at a slower pace in the first seven months of this year in a sign that the world’s third-largest economy is beginning to recover.

Domestic manufacturers in 22 provinces chalked up a total net profit of 1.11 trillion yuan (US$161 billion) from January to July — a drop of 17.3 percent from a year earlier. But the decline was slower compared with a 21.2 percent tumble in the first half of this year, the National Bureau of Statistics said yesterday.

Accounts receivable rose 9.5 percent to 3.37 trillion yuan in the period, 0.5 percentage point higher than the first-half’s rise.

“The faster growth of accounts receivable showed stronger confidence by the companies in vendors, which reflected their optimism over a future economic recovery,” said Xue Hua, an analyst at China Merchants Securities Co.

Out of the 39 industries the bureau surveyed, 14 reported their profit increased in the seven months compared with the first half. For example, the rubber industry saw a 34.3 percent increase in profit while the general equipment manufacturing industry posted a 3.9 percent rise, according to the bureau. Continue (继续)

(Shanghai Daily) CHINA’S tax man is taking unprecedented steps to strengthen inspection and bolster enforcement in an effort to crack down on tax manipulation that is depleting government coffers in a year of tight finances.

The State Administration of Taxation has started nationwide audits on some of the nation’s most profitable businesses – initially singling out highway construction firms and tire manufacturers, according to a reliable source familiar with the issue.

The tax body has also issued tighter rules related to transfer pricing that have placed multinational companies in the crosshairs.

“The tax authorities are taking an assertive position on tax inspection and other related anti-tax avoidance initiatives,” said Jessica Tien, an Ernst & Young tax partner in Shanghai. “More enforcement initiatives are likely to be rolled out later this year.” Continue (继续)

(FT) When China Mobile, the world’s largest telecom operator by subscribers, reported its slowest interim profit growth in 12 years last week, investors were underwhelmed – especially as management warned that margins would remain under pressure.

Part of the former monopolist’s troubles is the intensified competition that has come with the government-ordered industry restructuring last year, which made China Telecom and China Unicom rivals.

But that does not mean China Mobile’s two smaller rivals, set to report on Thursday and on Friday, will present a drastically different picture. Although they have brighter prospects for gaining market share, China Mobile’s drop in average revenue per user and the downtrend in earnings growth is a taste of what is in store for all three.

“The main growth momentum in China’s telecom sector will have to come from signing up new subscribers in rural areas from now on,” says Charice Wang, an analyst at Ovum, the research company. “Since these subscribers tend to spend much less than urban residents in general and business users in particular, this will continue to drive average revenues per user down.” Continue (继续)

(WSJ) China Unicom Ltd. clinched a deal to sell Apple Inc.’s iPhone in China, bringing the popular device to the world’s largest mobile market in terms of subscribers.

The country’s second-largest mobile phone operator after China Mobile Ltd. said it has signed a three-year agreement to purchase iPhones from Apple on a wholesale basis. The two companies’ deal doesn’t include revenue sharing.

China Unicom hopes the iPhone will give it a long-sought competitive edge over its larger rival, China Mobile, allowing it to attract an elite customer base in Chinese cities, where cellphones are often status symbols. China Unicom had 141 million users at the end of July, compared with 498 million for China Mobile, the most of any carrier in the world.

China Unicom offers third-generation mobile services based on the wide band code division multiple access technology widely used in Europe and Asia. China Mobile is saddled with a less-mature, domestically developed 3G mobile standard. Nonetheless, it is planning to roll out several high-end phones to vigorously compete for 3G market share. Continue (继续)

(WSJ) Last year was a relatively good year to be a Chinese bank, and for none more so than for China Merchants Bank Co., a mid-sized lender that in recent years has built a strong franchise and reputation for quality service.

While the global financial crisis savaged other big banks around the world, it did relatively little harm to Chinese lenders, who continued to lend at a rapid clip even as Western financial institutions tightened credit. While earnings growth slowed, it was still quick enough to be the envy of almost every other major financial sector in the world.

China Merchants Bank’s net profit in 2008 rose 38% in 2008 to 21.08 billion yuan ($3.09 billion) — a faster rise than larger rivals like Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. So it is perhaps not surprising that Wall Street Journal Asia subscribers and other businesspeople ranked China Merchants Bank first overall for leadership in the Asia 200 survey of Chinese companies, beating out other financial companies and a bevy of big technology companies. Continue (继续)

(China Daily) China National Nuclear Corp (CNNC), the country’s largest nuclear power plants operator, plans to start building the third phase of its Tianwan nuclear power plant in Jiangsu province from October next year.

The two reactors (number 5 and 6), of 1,000-mW capacity each, have got preliminary approval from the National Development and Reform Commission (NDRC), the company said in a statement on its website.

Construction of the number 5 reactor is scheduled to begin in October 2010, said the statement.

It did not say which technology the two reactors would use.

The Tianwan power plant is designed to have eight reactors, and it already operates two 1,060 mW reactors.

Once all eight reactors come into commercial use, the site will have a combined capacity of over 8,000 mW, by when it would become one of the nation’s primary power bases, a CNNC source who declined to be named told China Daily yesterday.

The Tianwan nuclear power base will develop into China’s third nuclear generating complex, following those built in Qinshan in Zhejiang and Daya Bay in Guangdong, he said. Continue (继续)

(WSJ) China’s government issued a fresh pledge to make it easier for small businesses to raise money and get access to public funds to help them grow, amid worries that the economic rebound has mainly benefited big state concerns.

The government is trying to support small- and medium-size enterprises, or SMEs, because they provide jobs for most of the people and their growth will be crucial once the government’s stimulus program tapers off.

“Fostering the growth of small- and mid-size enterprises is an important foundation for maintaining steady and rapid economic growth,” the State Council, China’s Cabinet, said in a statement on the central government’s Web site. “It is a vital strategic task that affects the lives of people and social stability.” Continue (继续)

(WSJ) After twice falling out with local partners in China, Fiat SpA faces what might be its last chance to expand into one of the few markets still seeing red-hot growth.

The Italian company is setting up a €400 million ($570 million) joint venture with Guangzhou Automobile Group Co. as it attempts to make inroads in a country that last month saw sales soar by more than 60% from a year ago.

Despite fierce competition, China’s market is proving irresistible. General Motors Corp. calls China a key growth driver; PSA Peugeot-Citroën SA has said it is open to the idea of a second joint venture with a local partner; and Nissan Motor Co. plans to build another plant with its partner, Dongfeng Motor Co. Continue (继续)