IN BRIEF (Page 12)

Aviation

ICBC leasing arm orders 50 Airbus jets

Industrial & Commercial Bank of China Ltd's leasing arm signed an order for 50 Airbus SAS A320s when German Chancellor Angela Merkel was in China for a two-day visit, Xinhua News Agency reported.

The order is worth $3.5 billion (2.8 billion euros) at list prices, the news agency said. Aircraft makers usually give customers discounts on bulk orders. Germany and China also signed more than 10 other cooperative agreements, including one regarding Airbus' assembly plant in Tianjin, the report said without elaborating.

China Eastern to expand routes

China Eastern Airlines Corp, the nation's second-largest carrier by passengers, will accelerate capacity growth in the second half to 10 percent as it adds new aircraft and boosts international services.

Expansion will focus on overseas routes after a 19 percent increase in nationwide outbound passenger numbers in the first half, Zeng Yongchao, an executive vice-president, said in Hong Kong.

The airline has boosted international load factors 5 percentage points this year, compared with flat figures at Air China Ltd and China Southern Airlines Co, because of a recovery in demand for Japan flights following last year's earthquake, rising international leisure travel and an upgraded long-haul fleet, according to Jefferies Group Inc.

Agriculture

Global cotton glut expected to increase

Cotton inventories in China, the world's biggest user, will triple over the next two years to a record as domestic demand slumps to the lowest since 2005, a year after record prices spurred farmers to expand their output, according to the latest estimates from the US Department of Agriculture. Global harvests will exceed demand for a third year, swelling stockpiles worldwide by 10 percent to 74.67 million 218-kilogram bales by August.

Soybean meal price soars due to drought

Soybean-meal futures in China advanced to record levels following concern that the worst US drought in 56 years may cut oilseed supplies available to the biggest importer. Soybean prices in Dalian, Liaoning province, rose to the highest level since 2008.

Meal for January delivery rose as much as 3 percent to 4,361 yuan ($687, 548 euros) a metric ton on the Dalian Commodity Exchange, the highest price for a most-active contract since trading began in July 2000. The contract ended at 4,341 yuan a ton.

Manufacturing

China world's top provider of lifts

China has become the world's largest manufacturer and seller of lifts, with an average annual growth of 20 percent over the past 10 years, the organizers of the upcoming 2012 World Elevator Summit said on Sept 4.

By the end of last year, China had installed more than 2 million lifts nationwide, while its lift sales and production volume both topped 450,000 units, accounting for more than 60 percent of the global total, the summit's organizers said. China exported more than 47,000 lifts in the same period.

The huge demand has helped boost the development of domestic lift producers, which now occupy almost 40 percent of the domestic market, double what it was 10 years ago.

Weichai Power buys Kion stake

The Chinese automotive and equipment manufacturing company Weichai Power Co Ltd says it will pay 738 million euros ($928 million) for a stake in the German forklift truck maker Kion Group GmbH and its hydraulics subsidiary, the largest direct investment by a Chinese company in Germany.

Under the agreement signed on Sept 3, Weichai Power, whose headquarters are in Weifang, Shandong province, and which is part of the Shandong Heavy Industry Group, will buy a 25 percent stake in Kion Group, the world's second-largest forklift maker, for 467 million euros, and a 70 percent controlling stake in Kion's subsidiary Linde Hydraulics for 271 million euros, from KKR & Co and Goldman Sachs Group Inc.

Metal

Chalco gives up effort to buy SouthGobi

Aluminum Corp of China Ltd, the nation's largest producer of the metal, says it has dropped its C$925 million ($938 million, 741 million euros) bid for the coal producer SouthGobi Resources Ltd as it is unlikely to be given regulatory approval.

"The proposed transaction has minimal prospect of obtaining the necessary regulatory approvals within an acceptable time frame," Vancouver-based Turquoise Hill Resources Ltd, SouthGobi's largest shareholder, said in a statement. "As a result, Turquoise Hill and Chalco have agreed to terminate the lockup agreement, including Chalco's obligation to make a proportional offer."

Chalco's plans to buy a stake in SouthGobi have been hindered by the Mongolian government, which passed a law in May restricting foreign state-owned companies from controlling key assets.

Finance

S&P bullish on offshore RMB debt market

China's offshore renminbi debt market, commonly called the dim sum market, could greatly increase its depth and breadth, Standard & Poor's Ratings Services says.

"The market's long-term success would require increased issuance from the Ministry of Finance, the adoption of best practices from developed markets, and the participation of more institutional investors and non-bank State-owned enterprises," said Ping Chew, managing director and head of Greater China, at the international rating agency.

The cumulative outstanding issuance in the dim sum market in Hong Kong has risen from 3 billion yuan to 323 billion yuan over the past two and a half years. But S&P expects the recent decline in offshore renminbi deposits to dampen prospects of an acceleration of renminbi bond issuance, at least in the near term.

Banks' performance rating deteriorates

Chinese banks' deteriorating asset quality and slowing profit growth are credit negative, Moody's Investors Service said in a report.

Over the past week, most listed Chinese banks, including two of the Big Four, announced interim 2012 results that generally showed non-performing loan ratios are still low and that profitability remains strong.

"However, the announcements also showed deteriorating asset quality and slowing profit growth, which are credit negative because they mean the end of a multi-year streak of improving financial performance since a massive bank restructuring nearly 10 years ago," said Hu Bin, vice-president and senior analyst at the international ratings agency, who also wrote the report.

Auto

Baoxin to add China car dealerships

Baoxin Auto Group Ltd, the smallest mainland car dealer listed in Hong Kong, has agreed to buy NCGA Holdings for $305 million to bolster its network of showrooms in northern China.

Baoxin will pay $232 million in cash, issue $58 million in bonds to NCGA's owners and offer $14.6 million in new shares, the Shanghai-based company said in a statement to the Hong Kong stock exchange.

The purchase will help Baoxin increase its number of dealerships by 36 percent and add Porsche and Volvo to its collection of luxury vehicle brands.

Chery to recall vehicles in South America

China's largest domestic automaker, Chery, is recalling 18,875 vehicles sold in Argentina, Brazil, Chile, Uruguay and Singapore because of a problem with asbestos.

A Chery representative, Jin Gebo, said the recalled models are the Tiggo and the A3. Gaskets and exhaust systems installed in the vehicles contain small amounts of asbestos, a carcinogen banned in those auto markets.

China Daily-Agencies

(China Daily 09/07/2012 page12)