IN BRIEF (Page 24)

Forecast for huge mainland opportunities

A European expert on China-EU business expressed optimism about prospects for trade between Beijing and Brussels, despite concerns registered by some EU officials. Luigi Gambardella, president of Brussels-based business-led association ChinaEU, told Xinhua in an interview that in the coming five years China would import 8 trillion euros ($8.6 trillion; 6.8 trillion) worth of goods, attract 600 billion euros in foreign investment and make 750 billion euros of outbound investments. He also said Chinese tourists would make 700 million overseas visits in the same period.

Central bank suspends repurchase agreement

China's central bank suspended open market operations for a third-straight trading day on Feb 7, in another sign of policy tightening. The People's Bank of China withdrew 120 billion yuan ($17 billion; 15.8 billion euros; 13.5 billion) from the market on Feb 7, as 120 billion yuan of reverse repurchase agreements (repos) matured. Reverse repos are deals through which central banks purchase securities from banks with an agreement to sell them back in the future.

Luxury spending recovery boosts stores

China's recent recovery in luxury spending may boost sales of department-store operators and high-end retailers in the country, according to global ratings agency Fitch. Reports from international brands such as Coach, Swatch and LVMH suggest luxury spending in China is beginning to pick up after a few difficult years caused by China's anti-corruption campaign and weak consumer sentiment, according to Fitch.

Purchasing Managers' Index eases in January

China's service sector slowed in January, as a private survey showed on Feb 6 that an index for the sector fell slightly after reaching a 17-month high in December 2016. The Caixin General Services Purchasing Managers' Index edged down to 53.1 last month from 53.4 in December, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co Ltd. A reading above 50 indicates expansion, while anything below 50 represents contraction. New service business continued to rise rapidly, but the rate of expansion declined from that seen at the end of 2016, according to the survey, which is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 400 companies.

Yuan strengthens to 6.8604 against dollar

The central parity rate of the Chinese currency the renminbi, or the yuan, strengthened 2 basis points to 6.8604 against the US dollar on Feb 7, according to the China Foreign Exchange Trade System. In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.

Yancoal acquires Rio Tinto's coal assets

China's Yancoal Australia will take over Rio Tinto's coal assets in Australia in a deal worth $2.35 billion. Under the deal, Coal & Allied Industries Ltd, which operates two mines in Australia, will be sold to Yancoal Australia, which is majority controlled by Yanzhou Coal Mining, one of China's largest mining groups by market capitalization. The deal is expected to be completed before October, according to Yanzhou Coal Chairman Li Xiyong.

Monetary policy seen as prudent, neutral

China's monetary policy is expected to become more prudent and neutral to rein in asset bubbles and guard against financial risks, economists have said. Last week the central bank, the People's Bank of China, raised the interest rate for seven-day repurchase agreements, a key tool used to adjust monetary policy, and for longer 14 and 28-day repo rates. In January the central bank also raised rates on its medium-term loan facility for the first time since it started the facility in 2014.

Henan cultivates more high-yield fields

The central province of Henan added 500,000 hectares of high-yield farmland in 2016, as the grain base modernized its agriculture, according to local officials. The province, which annually produces a tenth of China's grain, plans to upgrade 4.25 million hectares of farmland by 2020, according to the local high-yield grainfield office. So far, about 3.75 million hectares have been upgraded to high-yield land, 84.1 percent of the overall target.

Cross-Straits trade lowers by 4.5 percent

Trade volumes between the Chinese mainland and Taiwan reached $179.6 billion in 2016, down 4.5 percent from 2015, according to the Ministry of Commerce. Mainland trade to Taiwan totaled $40.4 billion last year, a 10.1 percent year-on-year drop, and Taiwan's trade with the mainland stood at $139.2 billion, down 2.8 percent. Taiwan is the mainland's seventh biggest trade partner.

Carmaker FAW reports record sales in January

FAW Group, China's major automaker, reported wholesale vehicle deliveries of 323,000 units in January, up 13.9 percent year-on-year, hitting a record sales high in January. FAW, or First Auto Works, sold 29,000 of its own Jiefang vehicles in January, a growth of nearly 130 percent from the same period last year. The sales of joint venture-branded vehicles also increased remarkably, including 147,000 units of FAW-Volkswagen, up 15.5 percent; 55,000 FAW-Toyota, up 4.6 percent; and 12,000 FAW-Mazda, up 139.5 percent year-on-year. FAW has set an annual sales target of 3.3 million vehicles in 2017, including 2 million units of joint venture brands.

JPMorgan gets license in China

JPMorgan Chase & Co said on Feb 6 it had received approval and the license to underwrite corporate bonds in China's interbank bond market, making it the first US-headquartered bank to do so. The license enables JPMorgan to underwrite debt financing instruments issued by non-financial entities, including commercial papers, medium-term notes and other instruments approved by regulators, it said. The license was granted by the National Association of Financial Market Institutional Investors, which oversees the Chinese interbank bond market, said a statement issued by JPMorgan.

Consumer inflation expected to pick up

China's consumer inflation in January was expected to increase due to food price rises, economists said, a week before the publication of official data. The consumer price index, a main gauge of inflation, is likely to increase by 2.4 percent in January from a year ago, 0.3 percentage points higher than December, said Lu Zhengwei, chief economist with the Industrial Bank. Food prices are expected to rise by 2.5 percent month-on-month in January, driven by rising grain prices, according to China Merchants Securities' analyst Xie Yaxuan.

Insurers invest in infrastructure

Chinese insurers had initiated 651 investment projects with registered capital of 1.65 trillion yuan ($240.2 billion; 224.7 billion euros; 191.9 billion) in infrastructure and livelihood improvement by the end of 2016, official data showed. The investment was made through equity and bond purchases, as well as asset support plans, which mostly went into transport, energy, real estate, healthcare and elderly care, according to the Insurance Asset Management Association of China.

(China Daily European Weekly 02/10/2017 page24)