What's news

Small refineries struggling to stay afloat

Under pressure from a plunge in world oil prices that began in June, small local refineries that were already grappling with a glutted market have seen their profits almost evaporate, and some may even close, industry sources said.

The price of one international trading benchmark, Brent crude oil, has declined by more than 55 percent in the past seven months to below $50 a barrel.

But Chinese refineries have not seen any benefit from this decline because of weak downstream markets and high inventories that had to be sold at lower prices, said Li Yan, an oil analyst with Shandong Longzhong Information Technology Co.

"Affected by the falling oil price, domestic petrochemical companies and traders are also facing reluctant buyers, which caused profit declines for wholesalers and losses by refineries," Li said.

Ministry raises sales tax on gas, oil products

China is raising sales taxes on oil products from Jan 13, the Ministry of Finance said. Taxes on gasoline, petroleum naphtha, solvents and lubricants will be raised 0.12 yuan per liter to 1.52 yuan (roughly 25 cents) per liter, while taxes on diesel, jet fuel and fuel oil will be raised by 0.10 yuan per liter to 1.2 yuan per liter, the ministry said. The government said it is cutting gas prices by 0.13 yuan per liter and diesel prices by 0.20 yuan per liter, according to the National Development and Reform Commission.

Facebook considered Xiaomi investment

Mark Zuckerberg and Xiaomi Corp CEO Lei Jun discussed a potential investment by Facebook in China's top smartphone maker ahead of its $1.1 billion fundraising last month, but a deal never materialized, several people with knowledge of the matter told Reuters. The discussions, at a private dinner when Zuckerberg visited Beijing in October, were never formalized, three of those people said, as the two CEOs weighed the political and commercial implications of Facebook, which has been banned in China since 2009, buying into the Chinese tech star now valued at $45 billion.

US poultry imports banned after avian flu

China has banned imports of poultry products and eggs from the United States after the US Department of Agriculture said on Jan 12 that it has discovered a highly pathogenic strain of avian flu in the Pacific Northwest, a region in western North America bounded by the Pacific Ocean to the west and, loosely, by the Rocky Mountains on the east. The ban became effective as of Jan 8, according to the USDA and USA Poultry and Egg Export Council. All poultry-related products shipped from the US after this date would be returned or destroyed. The ban extends to poultry breeding stock, which includes live chicks and hatching eggs.

Smartphone sales perk up Huawei's revenue

Huawei Technologies Co's revenue gained about 20 percent last year, aided by rising sales of higher-end smartphones. Revenue increased to at least 287 billion yuan ($46.3 billion) from 239 billion yuan in 2013, Chief Financial Officer Cathy Meng said during a news conference in Beijing on Jan 13. Operating profit from what Huawei described as its main business increased 18 percent to between 33.9 billion yuan and 34.3 billion yuan. Officials of the closely held company declined to provide more details before the upcoming release of audited financial statements.

Qinshan nuclear plant boosts output capacity

Qinshan Nuclear Power Plant's expansion project at Fangjiashan successfully connected to the National Grid and started electricity generation on Jan 12. The Fangjiashan project consists of two 1,080 megawatt pressurized water reactors. The expansion takes the total number of operational units at the Qinshan nuclear base to nine with a total installed capacity of 6,546 mW and annual power generation of around 50 billion kilowatt hours, making it the nuclear base with the largest number of reactors and the greatest capacity in China.

Nation to speed up yuan convertibility

The nation will accelerate the yuan's convertibility for capital accounts while strengthening efforts to monitor cross-border capital flows and financial risks, the State Administration of Foreign Exchange said at the annual work conference in Beijing. SAFE's priorities in 2015 include further simplifying administrative procedures for foreign exchange management, speeding up the construction of an administration system for external debt and capital flow, and introducing management innovations.

Coal industry outlook remains poor

The China Coal Industry Association said more measures will be taken to control coal supplies and support prices this year, with the industry outlook likely to remain poor because of overcapacity and weak economic growth. It added that it remained pessimistic about demand this year, with the economy under pressure from weak export markets and falling real estate investment.

Jiangsu raises standards on economic zones

Jiangsu province has issued new regulations on the upgrading of its economic development zones. The provincial government said zones that fail to meet environmental standards and targets for land efficiency, for instance, will be given official warnings, followed by a deadline for rectification. If changes aren't made, penalties or forceful closures will be issued. The regulations said provincial development zones that grow rapidly or strongly will be upgraded to state-level development zones.

Alibaba, Incheon partner to build complex

Alibaba Group Holding Ltd is in talks with the South Korean city of Incheon for a 1 trillion won ($923 million) joint investment in a new business complex, Dong-A Ilbo Daily reported on Jan 12. The newspaper said the complex would include a major shopping mall, a hotel and a logistics center. Alibaba's payment subsidiary Alipay is in advanced talks to buy a $550 million stake in India's One97 Communications.

Medical insurance provision heads for review

Financial officials have finished a draft revision of the nation's Insurance Law, which is expected to be submitted to the State Council for review. The revision will allow insurance companies that can offer life insurance policies to also sell medical liability coverage. It will also raise the capital requirement for shareholders of insurance companies.

Banks approved to offer online accounts

Banks will be permitted to offer online accounts in a bid to help them keep up with developing trends in Internet finance. The People's Bank of China is soliciting opinions on guidelines for the creation of yuan-denominated online bank accounts. It has instructed banks to use appropriate technology, such as facial recognition software, to achieve the same results as real name authentication. Banks are also required to provide an external assessment for authorities to verify that they actually can determine clients' identities using such technology.

Bond futures will be based on long-term debt

The China Financial Futures Exchange has issued draft rules for 10-year government bond futures in another step toward interest rate liberalization. The futures will be based on long-term government bonds with durations of 6.5 to 10.25 years to maturity, the CFFEX said on Jan 7.

China Daily

(China Daily Africa Weekly 01/16/2015 page18)