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Shanghai World Expo Considers Pavilions for Chinas Private Enterprises

The Shanghai World Expo Executive Committee said here on March 1 it was considering pavilions for Chinese private enterprises and small and medium-sized companies (SMEs).

“I will do what I can to make this happen,” said Zhou Hanmin, Vice Director of the committee and a standing committee member of the National Committee of the Chinese Peoples Political Consultative Conference (CPPCC), a political advisory body.

Zhou made the remarks on the sidelines of the annual CPPCC session, in response to a suggestion by a political advisor that such pavilions would be a very good platform to showcase Chinas private enterprises and entrepreneurs.

“The problem is that we are on a tight schedule.” Zhou said all the Expo pavilions would start construction by May 1.

Altogether 185 countries and 46 international organizations have so far confirmed to participate in the Expo, Zhou said.

The World Expo 2010, with the theme of “Better City, Better Life”, is due to be held from May 1 to Oct. 31 next year and expected to attract 70 million visitors.

VC Fund Increases Steadily in China

The venture capital (VC) funds kept rising in China last year, with 91 new funds entering into market, up 57 percent from the previous year, according to a report released by EZ Capital and Holy Zone, a consulting firm.

Up to 264 billion yuan (USD 37.7 billion) were raised by the new funds in 2008, a rise of 347 percent, China Daily quoted the report as saying on March 9.

The report said most of the new funds were yuan-denominated, while only 33 were USD-denominated funds.

It was a result of the government efforts to promote venture capital in China, as the government had unveiled new rules to give local funds a healthy development condition and make progress on setting up a trading board for emerging companies, the newspaper said.

However, most of the yuan-denominated funds were small, with an average value of 672 million yuan (USD 98.3 billion), or one-ninth of that of the USD-denominated funds, according to the report.

Foreign VC funds have long been taking the dominant role in terms of the investment value in China. The favored sectors include the information technology, new media, telecommunication and semiconductor.

Real Estate Prices See Falling Trend

Property prices in Chinas 70 major cities fell 1.2 percent year-on-year in February, the third drop in a row since December 2008, the National Development and Reform Commission said in a statement on March 10.

The decrease rate is 0.3 percentage points higher than January when property prices dropped 0.9 percent on a yearly basis.

Beijing, Shanghai and Guangzhou, the largest cities in the country, all experienced a price fall, with a drop of 0.7 percent, 2.4 percent and 4.4 percent, respectively.

The price drop has, however, stimulated sales. According to China Index Institute, the countrys largest real estate research organization, property transaction volumes in 80 percent of the cities it monitors experienced a month-on-month increase in February.

Property sales in Guangzhou were up 85.6 percent, and that in Beijing and Shanghai also saw an increase of some 50 percent.

“Falling prices and increasing sales will continue into the second quarter,” said Qin Xiaomei, research chief at CB Richard Ellis Beijing branch.

An apartment in Tomson Riviera, the most expensive residential complex in Shanghai with an average price of 110,000 yuan (USD 16.1 thousand) per sq m, was sold for 68,000 yuan (USD 9.9 thousand) per sq m, a discount of 38 percent, in January.

Along with the sales rebound, property developers have also tweaked their pricing strategies.

Beijng Runfeng Real Estate Co., Ltd, the developer of Riverside, a residential project in the capitals CBD area, initially priced its new apartments at 14,000 yuan (USD 2.05 thousand) per sq m. The price is now around 2,000 yuan (USD 293.4) lower than those sold last year.

The marketing manager of Runfeng Real Estate said the company may adjust prices when its new block opens for sale this weekend. That would depend on buyer feedback and market changes, he said.

Though property prices in key cities have dropped, the prices of new residential buildings in a number of second- and third-tier cities have increased. Yinchuan in the Ningxia Hui autonomous region and Beihai in the Guangxi Zhuang autonomous region topped the list with a price increase rate of 8.7 percent and 6.9 percent, respectively, in January.

“This is mainly due to their low price base,” said Qin of CB Richard Ellis. “Those cities GDP growth is strong enough to fuel more increases in property prices.”

Chinas Central Bank Prepares for Pilot Trade Settlement in Yuan

Chinas central bank will facilitate the pilot programs of settling international trade in the Chinese currency by reducing “institutional obstacles”, a central bank official said here on March 11.

The Peoples Bank of China (PBC) will reduce “institutional obstacles for cross-border trade settlement in the yuan” and provide convenience for such settlement, Su Ning, vice governor of the central bank, said on the sidelines of the annual session of the National Committee of the Chinese Peoples Political Consultative Conference (CPPCC), a political advisory body.

Chinas State Council, or the Cabinet, announced last December to settle trade in the yuan between Guangdong, the Yangtze River Delta and Hong Kong and Macao, and that between Guangxi, Yunnan and members of the Association of Southeast Asian Nations on a trial basis.

Chinese Premier Wen Jiabao said last week in his government work report the mainland would accelerate the trial operation of settling trade in yuan with Hong Kong and Macao this year.

“The PBC will actively advance the operation according to the requirement of the States Council,” said Su, a CPPCC National Committee member.

Despite the trial programs, what currencies enterprises use to settle trade is “a voluntary act by both sides of the trading”, Su said.

He noted that as yuan has proved more stable than some other currencies in the region amid the financial crisis, both Chinese companies and those in some neighboring countries and regions are willing to settle trade in yuan.

Customs figures released on March 11 show that Chinas foreign trade totaled 124.95 billion US dollars in February, down 24.9 percent year-on-year. It was the fourth straight monthly decline as global demand shrank.

Central bank governor Zhou Xiaochuan told a press conference on March 7 that China is expected to soon issue a policy facilitating settlement in yuan for trade between Hong Kong and the mainland, saying what remains to be done is only a few fine tunes on the transaction systems of banks and regulating policies.

China Puts Brokers under New Rules

China Securities Regulatory Commission (CSRC) will put the countrys securities brokers under new regulations, in a bid to professionalize the securities market and protect investors interests.

The regulations, starting April 13, order all brokers to acquire standard professional qualifications and work for sole securities firms.

Securities brokers are defined as persons assigned by securities firms to attract clients and provide customer services

“These securities brokers are not the formal staff of securities companies. Competition among them may harm the rights of investors and affect the development of the securities market,” said a CSRC official as saying.

The new regulations also require securities firms to sign formal contracts that would clarify the rights and duties of these brokers, in a bid to help protect the brokers interests.

The CSRC began to solicit public opinions on the regulations in September of last year.

“As of the end of October of 2008, there were about 80,000 securities brokers in the industry, and about 30,000 brokers had passed qualifying exams. After completing the training courses and registering with the Securities Association of China, the brokers can conduct business,” the official said.

China Export Tax Rebate up 20% in First 2 Months

Chinas State Administration of Taxation (SAT) said on March 23 the actual export tax rebate in the first two months stood at 66.7 billion yuan (USD 9.77 billion), up 20.8 percent year-on-year.

“The actual export tax rebate rose despite the fact that export volume declined. It shows the countrys tax rebate policy is taking effect,” the SAT said in a notice.

China increased the export tax rebate for labor-intensive, mechanical and electrical products in the second half of last year.

“Exports in those industries, therefore, declined slower than others,” the notice said. “The increased tax rebate has in a sense eased capital pressure for some businesses.”

China Overseas 2008 Net Profit Grows 21%

China Overseas Land & Investment Ltd., one of the leading residential developers focusing on the Chinese mainland market, bucked the industry trend to report a growth of 21 percent in its 2008 net profit on March 23.

The growth was about in line with previous estimates by analysts, who had expected growths between 22 percent and 23 percent, according to media reports.

The companys net profit grew 20.8 percent to 5.05 billion HK dollars (USD 647.4 million), partly thanks to revaluation gains of 1.1 billion dollars, company chairman Kong Qingping said at the annual results conference in Hong Kong.

The final dividend was 0.07 HK dollars, with full-year dividend at 0.13 HK dollar.

The Hong Kong-headquartered firm said the mainland contributed over 90 percent of its annual turnover and operating profits in 2008, as sold area in the market increased 25 percent year on year to more than 2.7 million square meters and sales there rose to 25.9 billion HK dollars (USD 3.3 billion).

Kong said the company improved on its risk management and slowed the pace of land reserve growth in 2008, given the uncertainties in the real estate markets.

The impacts of the global financial crisis will carry well into 2009, leading to severe challenges for most of the firms operating in the industry, he added.

But the silver lining is that the prospects for the mainland markets as a whole in 2009 will be in no means worse than it had been in 2008, Kong said.

The company has no intention to adjust its sales target of 3.5 million square meters for 2009, he said, adding that the company had already had already realized sales of 8 billion HK dollars (USD 1.03 billion) from January 1 to March 22.

China Overseas is a subsidiary of construction conglomerate China State Construction Engineering Corporation. It was incorporated in Hong Kong in the year of 1979 and went public in 1992. The stock became a constituent of the blue chip Hang Seng Index in 2007.

Price of the companys shares closed up 3.39 percent at 12.82 HK dollars on March 23. It has accumulated growth of close to 40 percent since March 9.