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China to sell cotton stockpiles next week

China will start selling cotton stockpiles next week to increase local supply, industry website cncotton.com said on Thursday.

The country will sell reserves in auctions to be held as early as next week at a minimum of 18,500 yuan ($2,913) a metric ton, the website said, without citing anyone or giving the amount the government intends to unload.

China's textile industry, the world's largest user of the fiber, has been hurt by weak demand as economic growth slowed to the lowest in more than three years in the second quarter, Zhang Zhenguo, founder of Shanghai Goldencot Global Trading Co, said from Shanghai on Thursday. The industry faces high raw material costs because China's cotton is traded at a steep premium to the overseas market, he said.

Caterpillar: China growth may recover this year

Caterpillar Inc, the world's largest maker of construction and mining machines, said China's economic growth will probably recover this year as the government continues to stimulate growth.

China cutting interest rates would help boost growth and "our thesis is that that will continue and we will probably see China recover later this year or early next", said Stuart Levenick, group president for customer and dealer support of the Peoria, Illinois-based company, on Thursday.

China's economy is growing at the slowest pace in three years after the government put in place measures to cap inflation and the eurozone debt crisis crimped global confidence. Caterpillar, with 25 percent of sales in Asia, has cut production at its main Chinese excavator factory, the company said last week

"We have confidence in long-term commodity demand," Levenick said, based on developing economies becoming wealthier and urbanization driving demand for resources.

Lend Lease plans property development fund

Lend Lease Group, Australia's biggest property developer, plans to create a fund that will invest in property developments in China's biggest cities within the next three years as it reduces its exposure to Europe and the Middle East.

The Sydney-based company, which has had a construction business in China for the past 20 years, is seeking to develop retail properties with a mix of its own and other groups' capital, Chief Executive Officer Steve McCann said. It has identified 12 cities for possible developments, he said.

"We've been talking to a number of potential partners for some time now," McCann said. "The medium-term ambition will be to launch a fund in China using offshore capital and invest alongside our investors in some development projects."

Lend Lease on Thursday reported profit rose to A$501.4 million ($517.6 million) in the year ended June 30, driven by increases in income from its Asian development and investment management businesses, and its Australian construction and infrastructure divisions.

S&P bullish on offshore RMB debt market

China's offshore renminbi debt market - commonly known as "the dim sum market" - could greatly increase its depth and breadth, said Standard & Poor's Ratings Services in a report released on Thursday.

"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.

"Tapping the broader field of global institutional investors would enable the market to accelerate its growth. Key elements to achieve this include the introduction of standard covenants that continue for the life of the bond, legal certainty, and increased transparency and accountability," he said.

The cumulative outstanding issuance in the dim sum market in Hong Kong has grown quickly over the past two and a half years to 323 billion yuan ($50 billion) from 3 billion yuan. 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.

ICBC leasing arm orders 50 Airbus A320 jets

Industrial & Commercial Bank of China Ltd's leasing arm signed an order for 50 Airbus SAS A320s alongside a visit to China by German Chancellor Angela Merkel, Xinhua News Agency said.

The order is worth $3.5 billion at list prices, the news agency said. Planemakers usually give customers discounts. Merkel is making a two-day trip to China.

Germany and China also signed more than 10 other cooperative agreements, including one regarding Airbus' assembly plant in Tianjin, the report said without elaboration. Airbus is a unit of European Aeronautic Defence & Space Co, whose corporate functions are mainly in Paris and Munich.

Baoxin to add China car dealerships

Baoxin Auto Group Ltd, the smallest mainland car dealer listed in Hong Kong, 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 on Thursday.

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. The deal underscores the mounting pressure for Chinese auto dealers to consolidate as China's slowing economy undermines demand for automobiles.

Moody's highlights banks' deteriorating asset quality

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

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

The banks' results reflect the challenges of China's moderating economy and accelerating market-oriented reforms, said the report.

Although the NPLs of Bank of China Ltd and China Construction Bank Corp were stable, most other banks, particularly smaller ones, reported some degree of asset deterioration.

Govt to launch UnionPay mobile payment standard

The Chinese government has almost reached an agreement to adopt a mobile payment standard initiated by China UnionPay, according to Xu Luode, chairman of China UnionPay.

Xu said on Wednesday that the 13.56 MHz mobile payment standard got the final nod from the authorities, the Beijing News reported.

This is the first official indication on which standard will be selected and used across the country. If the decision is made, China will eventually settle the issue after years of fighting over a nationwide mobile payment standard.

It also means that China Mobile Ltd, the nation's biggest telecom carrier, is about to lose the battle, since the operator has been promoting its mobile payment standard based on 2.4 GHz technology.

In addition, hardware manufacturers who partnered with China Mobile to invest in the company's technology may also fail to see returns.

Chery to recall vehicles in South America, Singapore

China's largest domestic automaker Chery said on Wednesday that it would recall 18,875 vehicles sold in Brazil, Uruguay, Chile, Argentina and Singapore due to a problem with asbestos.

Chery's spokesperson Jin Gebo said the recalled models are the Tiggo and the A3. Gaskets and exhaust systems installed in the vehicles contained small amounts of asbestos, a carcinogen banned from those auto markets.

Chery recalled 2,445 cars in Australia starting on Aug 15, after Australian authorities detected asbestos in the two models' parts.

Experts say that the asbestos does not pose a risk to drivers or passengers of the vehicles, but might harm car mechanics. In developed economies, auto parts containing asbestos have been banned for many years.

Chery established an operational standard to replace the auto parts after the recall in Australia, to make sure that mechanics at overseas after-sales service points would not be affected, Jin told Xinhua News Agency.

Housing official calls for review of tightening policies

As the domestic property market enters a critical phase, it's important to make sure all tightening measures are in place, an official from the Ministry of Housing and Urban-Rural Development said.

"It's time to review the effect of the property-tightening policies and find out what to do next," said Wang Juelin, deputy director of the policy research center under the ministry.

"As long as existing housing policies are carried out well, there should be no worries about stabilizing the real estate market," said Wang, quoted by the China Securities Journal.

"Although some local governments make this or that adjustment on the home purchase limits (to enlarge housing sales), they won't affect other cities. But it may weaken the market expectations on the policies' implementation," he warned, stressing the importance of sending the right signal to the market.

On January 26, 2011, the State Council announced new policies, dubbed collectively as a "new eight-item measure", to cool down property-market fever. The measures include raising the down payment for second-home purchases from 50 percent to 60 percent, and ending third-home purchases.

360buy.com says online pharmacy revenue growing

Leading e-commerce website 360buy.com said on Wednesday that the company's revenue from its online pharmacy business is approaching 100 million yuan ($15.8 million) and is expected to quickly develop in the near future.

Cui Wei, CEO of www.ehaoyao.com, the company's e-pharmacy unit, said there is great potential in selling medicine and health products online in the Chinese market. The website, which opened less than a year ago, has seen a rapid growth in sales.

The number of average daily visitors to the website is over 100,000, Cui said. The website's monthly sales growth rate is about 20 percent.

"By the end of the year, ehaoyao.com will have a business scale similar to 150 mid-sized chain drugstores," Cui said.

Shanghai tech expo attracts research institutes

A tech expo opened in Jiading district of Shanghai on Thursday as part of the area's effort to stimulate economic growth.

Around 100 research institutes, universities and businesses are taking part in the two-day event, where they are displaying their latest research results and products.

The district's emerging industries generated output valued at 22.25 billion yuan ($3.53 billion) from January to July, accounting for 17.2 percent of its total industrial output value.

Futures exchanges to operate during holidays

China's futures markets will be allowed to operate during holiday breaks as regulators are looking to solve problems arising from the forced closure of the markets, the Shanghai Securities News reported on Thursday.

Futures exchanges will be allowed to operate during the Mid-Autumn Festival and National Day holidays this year, the report said. In the past, future exchanges often stopped their operations during holidays of more than five days.

China's three major futures exchanges - which are based in Shanghai and Shenzhen - raise margins before long holiday breaks to control risks. The breaks may cause significant losses to investors when trading orders cannot be processed after significant price fluctuations.

Allowing futures exchanges to operate during the holidays will help China's domestic futures markets integrate into the global futures market, the report said.

China Daily-Agencies

(China Daily 08/31/2012 page14)