HSBC launches private banking in China

(Agencies)

HSBC Holdings, Europe’s largest lender, launched private banking services in China on Monday as foreign banks including Citigroup target the country’s fast-growing market for services to wealthy clients.

 

Chinese regulators had given HSBC approval to offer private banking services in Shanghai, Beijing and the southern city of Guangzhou, the bank said.

 

It will target individuals with a minimum net worth of $10 million, it said, while the minimum initial deposit for an account will be $1 million.

 

HSBC and other foreign lenders are targeting China’s rapidly growing wealthy class, as full deregulation of the country’s banking industry has allowed them to conduct local-currency business with Chinese individuals.

 

“The creation of wealth in China is a unique phenomenon in that greater wealth is being generated by a relatively younger age group as compared to the rest of the world,” Monica Wong, HSBC private bank chief executive for Asia, said in a statement.

 

Annual economic growth of more than 10 percent has created more than $345,000-millionaires in mainland China, according to a Merrill Lynch report.

 

HSBC, which has set up a wholly owned China unit, posted more than $1 billion in pretax profit in China last year.

 

HSBC rivals CitiBank and Standard Chartered have already started private banking businesses in China, while Bank of East Asia has said it planned to launch such services in the second quarter.

 

Local banks, including Industrial and Commercial Bank of China and Bank of Communications , in which HSBC holds a stake, have also joined the competition to offer services for wealthy Chinese clients.

 

 

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             copy from chinadaily

 

China agrees to open up financial service industry

(Xinhua)
Updated: 2007-12-13 16:30

BEIJING — China and the United States have agreed upon specific steps for foreign companies to enter China’s financial service industry following two-day high-level economic dialogues.

China said it would complete a study of foreign equity participation in the banking sector by the end of 2008 and make relevant policy recommendations.

Foreign-invested companies including banks will be allowed to issue RMB denominated stocks and bonds, while mutual funds administered by Chinese banks will be allowed to invest in the US stock market, according to a statement from the US government.

This has created new opportunities for US firms in a variety of securities business, said the statement.

But China will resume licensing of new joint-venture securities companies and allow foreign securities firms to expand their operations in China to include brokerage, proprietary trading and fund management.

Several foreign firms, including some US firms, are already in advanced stages of establishing new joint ventures, says the statement, without elaborating.

Shortly before the dialogue, China raised the quota for qualified foreign institutional investors, which allow foreign mutual funds to invest in China’s domestic stock market, from 10 billion US dollars to 30 billion US dollars.

U.S. Treasury Secretary Henry Paulson called this progress “moderate”, affirming that opening China’s financial markets to foreign competition strengthens the financial backbone of the Chinese economy. “It’s critical to China’s goals of spreading the benefits of growth to all Chinese people,” he said.

A statement from the Chinese side said the policies should be carried out in accordance with relevant prudential regulations.

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China, US work out new tasks after SED

(Xinhua)
Updated: 2007-12-13 16:07

US Treasury Secretary Henry Paulson shakes hands with Chinese Vice-Premier Wu Yi (L) during the opening of The Third Strategic Economic Dialogue in Xianghe, near Beijing, December 12, 2007.  [Agencies] 

– Further intensify dialogue and exchanges in the areas of product and consumer safety, including food, feed, and drug and medical products, through new and existing bilateral cooperation mechanisms.

– Conduct extensive cooperation over a ten-year period to address energy and the environment, advance technological innovation, adoption of highly-efficient, clean energy technology and technology in addressing climate change, and promote the sustainability of natural resources. A working group will be started in order to start planning as soon as possible.

– Meet early next year and work together to jointly promote the negotiation in the WTO on the reduction or, as appropriate, the elimination of tariffs and non-tariff barriers to environmental goods and services to achieve results as soon as possible, recognizing the urgency of environmental challenges.

– Expand cooperation on development of a detailed plan to gradually reduce the sulfur content in fuels to 50 ppm or lower and introduce corresponding advanced vehicle pollution control technology, for incorporation into China’s 12th Five Year Plan (2011-2015).

– Strengthen cooperation on construction and management of strategic oil stocks through the exchanges of information and technologies, as well as training, including cooperation with the International Energy Agency.

– Begin a high-level exchange of investment policies, practices, and climates. Intensify ongoing discussions regarding the prospects for negotiating a Bilateral Investment Treaty.

– Continue consultations in a cooperative manner on China achieving market economy status. Continue cooperation through the High Technology and Strategic Trade Working Group under the Joint Commission on Commerce and Trade by positively implementing “Guidelines for U.S.-China High  Technology and Strategic Trade Development” and taking appropriate  constructive measures and working out an action plan to expand and facilitate bilateral high-tech and strategic trade. Relevant departments of the two sides have agreed to meet or hold a digital video conference (DVC) in the field of rules of origin.

– Explore the scope of respective international obligations on transparency. Continue to exchange information on reviewing and responding to comments received during the rulemaking process. Establish a communication mechanism to exchange information regularly on the conditions, procedures and timeframes for granting administrative licenses in areas of the Chinese market of interest to the United States and areas of the  U.S. market to China.

                                                                                                                        source from Chinadaily

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Yuan gains vs greenback after US interest rate cut

By Dong Zhixin (chinadaily.com.cn)
Updated: 2007-11-01 13:05

China’s currency rose to a new record against the greenback on Thursday after the US Federal Reserve cut the key interest rate the previous day.

Before Thursday’s trading started, the People’s Bank of China (PBOC) set the yuan central parity rate at 7.4552 relative to the US dollar. The new midpoint marked an appreciation of 0.6 percent in the past seven trading days and a 4.6 percent rise since the beginning of the year.

The hefty rise of 140 basis points over the previous session came after the Fed slashed the federal funds rate, an overnight lending rate between banks, by 25 basis points on Wednesday to prevent a slowdown in the economy.

“The rate cut further reduces the appeal of dollars and will facilitate the capital flow to emerging markets, including China,” Professor Guo Tianyong of the Central University of Finance and Economics (CUFE) told chinadaily.com.cn Thursday morning.

The weakening dollar makes China’s yuan and other world major currencies face rising pressure for appreciation.

However, China’s exchange rate formation system is still a managed floating one, Guo said, adding that the central bank has to take various factors into consideration when deciding whether to allow a faster appreciation in the coming days.

In addition to the exchange rate pressure, China faces other fallouts from the Fed move. Before Wednesday, there was wild speculation in China that the PBOC was mulling a sixth interest rate hike this year to keep the world’s fastest growing major economy from overheating.

The country’s gross domestic product grew 11.5 percent year-on-year in the third quarter, while inflation jumped 6.2 percent in September, the National Bureau of Statistics said last week.

However, “the Fed move increases the difficulty for the central bank [to raise interest rates],” said Professor Song Guoqing of Peking University. Song anticipates another rate increase this year.

Guo of CUFE shared Song’s view, saying the pressure on the central bank is growing.

But Guo deemed that the central bank has the room to raise rates, as there is still a difference between benchmark interest rates in China and the United States.

The current one-year deposit rate in China stands at 3.87 percent while the US federal funds rate is 4.50 percent after Wednesday’s cut.

Moreover, the interest spread is not the major concern for the central bank, Guo said, adding that the domestic inflationary level and asset prices are more important factors to decide policy changes.

The US rate cut also gave rise to mounting worries in China about increasing liquidity, which has pushed up housing and equity prices in the country.

Guo downplayed those concerns, saying the interest spread is not the major target of outside capital. “Whether the liquidity will increase depends mainly on the expectation of rising prices in the housing and equity market, and the renminbi appreciation.”

Zuo Xiaolei, chief economist of Galaxy Securities pointed to the pressure of increasing liquidity as capital inflow might increase, and is urging the PBOC to tighten the curb on potential hot money influx.

The Fed should have been more cautious when deciding on the rate cut, said the female economist, citing inflation and red-hot crude oil prices in the global market.

“It [the Fed] should not just consider Wall Street,” Zuo said. “All factors should be taken into account.”

In an online vote on the Wall Street Journal website, by 14:29 Thursday (Beijing Time) only 33 percent of those surveyed thought the Fed had made the right move, while 49 percent believed the rate should be left unchanged.

 

Minerals sector opening up further

By Wu Jiao (China Daily)
Updated: 2007-10-20 09:48

China is gathering pace in opening its mineral sector to foreign investment, a top official said on Friday.

“Some pilot minerals have been recently designated for opening up and we are in the process of conducting surveys and evaluating their potential,” said Wang Min, vice-minister of land and resources.

Those pilot minerals, including metals in Yunnan Province and in the middle and lower reaches of the Yangtze River, will be open to public bidding a year later, according to Wang.

Wang added that due to high risks in oil and natural gas exploration, foreign investment is rare in those fields. But the country’s top three oil and gas giants are also cooperating with foreign businesses in exploiting some specific projects.

Wang made the remarks on the sidelines of the ongoing 17th National Congress of the CPC.

China has been preparing to open its minerals sector to foreign investment since 2005, but no breakthroughs have been made so far as the country’s mineral market is undergoing an overhaul to ensure a level playing field for firms from both home and abroad, according to Wang.

But he said that the country has made major progress in its oil and gas exploration in recent years and further advances continue to be made.

The country has so far proved up nine big gas fields with reserves of above 100 million tons each, and five big gas fields with reserves of above 100 billion cubic meters each, according to Wang.

The discovery of Jidong Nanpu Oilfield in the Bohai Bay, boasting proven reserves of more than 1 billion tons, or about 7.35 billion barrels, was announced in May.

It was the largest-ever discovery in the country in the past four decades.

Wang said that the outlook for oil and gas output has remains quite optimistic, adding that there should be a number of oil fields like Nanpu.

But he declined to reveal more information in order not to affect the stock market performance of listed oil companies.

According to Wang, China is expecting an average annual increase of about 900 million tons of oil and 450 billion cubic meters of natural gas in its newly added proven reserve amount before 2020.

“That figure may be conservative too,” Wang said, adding that more discoveries will be made.

Official estimates made last month said that the country may have 65 billion tons of oil reserves and around 25 trillion cubic meters of natural gas.

China is also expecting an annual output of 100 billion cubic meters of natural gas and 200 million tons of oil in 2010, while the figure is set to rise to 170 billion cubic meters of natural gas and 220 million tons of oil in 2020.

“By 2030, the market will be equally divided between oil and gas,” said Wang.

Wang also mentioned that China’s oil and gas pipelines and the transportation facility need further updating in order to better transport those energy products.

The nation has so far built over 80,000 km of oil and gas pipelines, ranking sixth in the world, according to figures from the China Petroleum Pipeline Scientific Research Institute.
 

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Yuan has grown more flexible

(Xinhua)
2007-10-17 14:51

China’s currency has grown more flexible with its central parity rate having gained 10.19 percent accumulatively against the US dollar as of September 30, according to statistics released at the 17th National Congress of the Communist Party of China yesterday.

China scrapped its decade-long peg to the greenback in July 2005 and linked it to a basket of currencies. The yuan is now allowed to rise or fall 0.5 percent a day against the US dollar.The central parity rate yesterday was 7.5136 yuan against one US dollar, up slightly from Monday.

China insists the revaluation of the yuan must be gradual to maintain the country’s stability economically.

In a keynote speech to the Party congress on Monday, President Hu Jintao said China would improve the yuan exchange rate system and gradually make the yuan convertible under the capital account.

 

Yuan strengthens after US rate cut

(Source: Chinadaily)

Sept. 20 – RMB strengthened against the US dollar on Wednesday after the Federal Reserve cut the prime interest rate by 50 basis points on Tuesday. Before trading started on Wednesday morning, the People’s Bank of China (PBOC) set the yuan midpoint at 7.5170 against the greenback, compared with 7.5266 on the previous day. The yuan may rise or fall 0.5 percent from the mid-point each day. Analysts attributed the rise in the yuan’s value to a weaker US dollar. The Fed cut the federal funds rate charged on overnight loans between banks to 4.75 percent from 5.25 percent, exerting a downward pressure on the US currency. The Fed’s move put China’s central bank in a difficult position, some analysts said. The PBOC is under pressure to raise the interest rate one or two more times by the end of this year to put inflation in check, while the Fed is widely expected to further cut the federal funds rate at its next policy meeting in October, to prevent the credit crunch from derailing the overall economy. If both central banks do as they are expected, then the interest spread between the two countries will grow wider. That will lead to a new wave of hot money flowing into China, increasing the pressure on the yuan to appreciate. The difference in interest rate policies reinforced the dollar’s weakening trend and the strengthening trend of Chinese yuan, central bank vice governor Wu Xiaoling said in an interview early this year. She made the remarks while predicting the Fed would cut interest rate next year and saying the market strongly expected more interest rate hikes by China. Wu also expressed confidence in the world’s largest economy during the interview. “We believe the consumption-focused US economy has a relatively large amount of flexibility and that the adjustment in the property market will last a long time (but) the US economy will return to a more sustainable level in the coming one to two years.” China’s trade surplus jumped nearly 33 percent year-on-year to US$24.98 billion in August, the second highest on record. That surge came even after China took a series of measures, including cutting tax rebates for thousands of export items. To address this issue, as well as the influx of hot money, some economists have called for faster increases in revaluing the yuan.  However, others argued that move would further cut the profit margins of Chinese exporters and might lead to millions of job losses. Across the Pacific, US lawmakers are threatening trade sanctions unless China revalues the yuan at a faster pace. But the Bush administration has voiced opposition to any unilateral action, while calling for further talks between the two major economies. China insisted on the gradual reform of the yuan exchange rate and said a stronger renminbi alone could not put an end to the high-flying trade surplus. The yuan has now appreciated more than 9 percent since RMB ended its peg to the US dollar in July 2005.

 

FDI grows steadily this year

By Jiang Wei (China Daily)

Actual foreign direct investment (FDI) in China maintained steady growth in the first eight months and government agencies are investigating the latest batch of “Made in China” toy recalls, a senior commerce official said yesterday.

The Ministry of Commerce approved 24,848 foreign-invested enterprises in the past eight months, with actual spending rising 12.79 percent year-on-year to US$41.95 billion, ministry spokesman Wang Xinpei told a news conference.

For August alone, realized FDI in China jumped to US$5.02 billion, up 11.87 percent from a year earlier. The ministry did not release the statistics for contracted foreign investments.

Wang said the Ministry of Commerce had dispatched teams to Dongguan and Shenzhen in Guangdong Province after it learned about the latest toy recall case in the United States.

Toy giant Mattel recalled around 848,000 toys earlier this month – its third recall of Chinese products this summer – because of the high lead content in the paints used.

The latest recall follows a similar move last month, when the company recalled 18 million Chinese-made products worldwide over high lead levels and small magnets that have allegedly injured at least three children.

“Our initial investigation shows all the recalled toys are products under original equipment manufacturing and were exported in processing trade. Three companies in Guangdong were involved in Mattel’s third recall,” Wang said.

He said the products in question were made according to US specifications, adding that the government will conduct further investigations and punish whoever is accountable.

“These are stray cases, considering the fact that there are 8,000 toymakers in China and the quality of China-made toys in general is reliable,” Wang said. “As toys concern children’s health, we are treating each case seriously, regardless of whether the case is one out of a hundred or one out of a thousand.”

The government also urged toymakers to improve their quality control system to meet both Chinese quality standards and those set by importing countries.

Large-scale training courses on quality enhancement are being held in Jiangsu and other provinces famous for toy exports.

Canadian business professor Hari Bapuji recently said most recalls of toys made in China are due to design errors, not manufacturing flaws.

We should be asking the toymakers: ‘Are you guys learning from the errors you are making? What are your systems to test? What are your systems to make sure that an error doesn’t get repeated in the future?’” he said in an interview on Canadian Television recently.

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Foreign Banks triple China profit growth

(Bloomberg)
Updated: 2007-07-04 17:12

Profit growth at Citigroup Inc, ABN Amro Holding NV and other foreign banks in China tripled this year after they were allowed to offer local-currency services, a central bank report said. Overseas banks earned a combined 3.05 billion yuan ($401 million) in the first five months, up 43 percent from a year earlier, the People’s Bank of China said in a research report published by China Securities Journal. Profit growth accelerated from an average 14 percent over the past five years.

China fully opened its banking industry in December, sparking a rush among foreign banks to add outlets and workers to compete for the nation’s $2.2 trillion of household deposits. They’re still dwarfed by the likes of Industrial & Commercial Bank of China Ltd, which earned 18.7 billion yuan in the first quarter.

“A rising tide lifts all the boats,” said Zhang Xi, a banking analyst at Beijing-based Galaxy Securities Co. “Foreign banks will never achieve the economies of scale to pose a serious challenge to domestic rivals given their current speed of expansion in China.”

As of May 31, 75 foreign banks operated 186 outlets in 25 Chinese cities, according to the report. They had 514.3 billion yuan of outstanding loans and 305 billion yuan of deposits. Their non-performing asset ratio stood at 0.6 percent at the end of May.

Overseas banks’ combined profit from local-currency services more than doubled to 1.3 billion yuan through May, today’s report said.

“Business has never been so good,” Jeroen Drost, ABN Amro’s Asia chief executive, said in an interview yesterday. “The key challenge here is to keep up with the growth.”

Foreign banks expect to double their total workforce in China to almost 36,000 by 2010, according to a survey by PricewaterhouseCoopers LLP published in May. HSBC Holdings Plc, Citigroup, Standard Chartered Plc, Bank of East Asia Ltd and eight others have become locally incorporated to offer yuan- denominated bank cards and mass-market services this year.

 

Traditional Chinese medicines find new avenue to int’l market

China’s military medical academy announced on Friday that it would licence a British company to use the patent of its new anti-dementia drug based on Traditional Chinese Medicine (TCM), opening up a new avenue to the international market for TCM products.

After ten years of efforts, a group led by Ma Baiping of the Academy of Military Medical Sciences (AMMS) of the People’s Liberation Army has finished pre-clinical research for its new anti-dementia drug, dubbed NJS, which is derived from TCM substances.

The deal gives controversial Traditional Chinese Medicine a better chance of penetrating the international market, he added.

Dementia is a condition characterized by a progressive decline of mental abilities — including loss of memory — accompanied by changes in personality and behavior. Alzheimer’s disease is the most common form of dementia.

With ageing populations swelling worldwide, the potential for a holistic new dementia treatment is enormous.

Phytopharm CEO Dr. Daryl Rees said western countries have some negative perceptions of TCM.

Linking up with an overseas company that can carry out clinical research and market promotion will help boost the credibility of TCM in the international market, Rees said.

Pre-clinical results were very “exciting”, he said, and he had an optimistic forecast for the new drug.

When it began laboratory research, AMMS patented NJS both in China and in its potential markets such as Europe, Japan, Korea and the United States.

“China’s TCM manufacturers are now more aware of patent protection,” Sun said.

Both sides declined to disclose the value of the deal.

Under the deal, the academy will sell the patent licence to U.K.-based Phytopharm plc, disclose key NJS technologies, and rely on the pharmaceutical firm to do clinical trials and promote the product in the international market.

“This is the first time China has sold a TCM patent licence to a foreign firm and represents a major stride towards international credibility,” said AMMS president Sun Jianzhong.