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GOVT AND POLICIES

Rail freight volume speeds up in July

China's rail freight volumes recorded faster growth in July, the national railway operator said on Wednesday. The railways carried 246 million metric tons of cargo last month, up 17 percent year-on-year, up from 15.5-percent growth in June, according to figures from the China Railway Corp. Freight on high-speed railways was up 70 percent year-on-year in July, the CRC said. In the first seven months of the year, rail freight volumes reached 1.7 billion tons, up 15.1 percent from a year earlier. In July, industrial output, fixed-asset investment and consumption all posted slower expansion than in June, but the use of electricity saw stronger growth. China posted GDP growth of 6.9 percent in Q2, flat with the previous quarter, but above the government's annual growth target of 6.5 percent.

Nation's central bank acts on liquidity

China's central bank conducted cash injections via open market operations to ease liquidity on Thursday. The People's Bank of China conducted 60 billion yuan ($9 billion) of seven-day reverse repos and 40 billion yuan of 14-day reverse repos, at interest rates of 2.45 percent and 2.60 percent, respectively. The injections saw a net 50 billion yuan in cash pumped into the market on Thursday, offset by 50 billion yuan in maturing reverse repos. In Thursday's interbank market, the overnight Shanghai Interbank Offered Rate, which measures the cost at which banks lend to one another, rose 1.39 basis points to 2.8352 percent. The central bank has increasingly relied on open-market operations for liquidity, rather than cuts in interest rates or reserve requirement ratios.

IMF official is hopeful on China

China's strong growth momentum is expected to help the country achieve safer and more sustainable growth over the medium and long term, a senior official at the International Monetary Fund said. "The strong momentum gives room to accelerate reforms," said James Daniel, assistant director of the Asia and Pacific Department of the IMF and its mission chief for China. "Now it is time to do so," he added. China's economy expanded 6.9 percent in the first half of the year, well above the government's yearly target of 6.5 percent, according to data released from the National Bureau of Statistics last month.

China is biggest foreign investor of Brazil

China has become the largest investor in Brazil so far this year as the Chinese enterprises continue the mergers and acquisitions there, according to the statistics released by the China-Brazil Business Council. China's direct investment in Brazil through M&As has been increasing since 2013. Cross-border M&As by the Chinese enterprises in Brazil hit $11.92 billion in 2016, making China surpass the United States and become Brazil's biggest source country in terms of the M&As for the first time. In recent years, Brazil has witnessed a rapid growth in investment from China. According to the statistics released by China-Brazil Business Council, China has been increasing its investment in Brazil since 2015, with the total investment in 2016 reaching $8.397 billion, showing an annual growth of 13 percent. China's investments in Brazil reached $6.176 billion in the first half of 2017.

COMPANIES AND MARKETS

Gezhouba signs agreement with Iran

China Gezhouba Group International Engineering Co Ltd and Iran & China Investment Development Group recently had signed a strategic partnership agreement in Beijing to promote its investment business in the Middle East. According to the agreement, the two companies will launch cooperation in hydraulic engineering, hydroelectricity and industrial parks, in order to strengthen China-Iran cooperation in the fields of energy and infrastructure construction. The establishment of Iran& China Investment Development Group was proposed by the Iranian government, and supported by several Chinese enterprises. Enjoying the most preferential policies of the Iranian special economic zones, the company has set foot in the fields of nonferrous metallurgy, mine exploitation, solar power generation, gas power generation, building materials, biopharmaceuticals, medical apparatus and others.

Deutsche Post, Ford unveil e-van venture

The Deutsche Post DHL Group and Ford presented their jointly produced electric delivery vans - or e-vans - on Wednesday in Cologne, Germany. The event followed the announcement in June of a joint venture to build electric vans for urban deliveries. Both companies were excited about the venture and would consequently "think about additional joint activities," said Juergen Gerdes, a member of the Deutsche Post AG management board. The planned location for a second production site in North-Rhine Westphalia is expected to be announced within the next month. Steven Armstrong, Ford Motor Co Vice President and President Europe, praised the project as a big step toward cleaner buses, cars and delivery vehicles. The new vehicle, named "StreetScooter WORK XL," is based on a Ford Transit chassis and is equipped with a battery powered drive train and a car body set up according to Deutsche Post DHL Group's requirements.

Danish firm Maersk posts first half loss

Danish oil and shipping giant A.P. Moeller-Maersk reported a loss of $264 million for the first half of 2017, and maintained its annual projections for the full-year, the company said on Wednesday. The loss was mainly attributed to a $732 million post-tax impairment relating to lower asset valuations in Maersk Tankers and in another unit. It compares with the $118 million net profit Maersk reported for the same period last year, according to its interim financial report. Revenue for the first half of 2017 rose to $18.6 billion, up 6.9 percent from $17.4 billion year-on-year. For the second quarter alone, Maersk generated revenue of $9.6 billion, an increase of 7.9 percent from $8.9 billion for the same period last year. Maersk said the second quarter performance was mainly driven by a profitable Maersk Line due to continued recovery in the container market and focus on restoration of profitability.

Air Berlin has talks on possible sale

Germany's second biggest carrier Air Berlin is holding discussions over a sale of its business to airlines Lufthansa and Easyjet after filing for insolvency, media reported on Wednesday. Tour operator Thomas Cook, together with its airline Condor, has also expressed interest in an "active participation in the future of Air Berlin". The German government has granted an emergency loan facility of 150 million euros ($176 million) in response to the insolvency, to enable a continued operation of Air Berlin flights until November. The European Commission subsequently confirmed that it was investigating whether the assistance to the Berlin-based budget airline was compliant with antitrust legislation.

AROUND THE WORLD

Fed officials split on US rates

Federal Reserve policymakers are split over the pace of raising US interest rates, amid increasing concerns about the low inflation rate, according to minutes of the central bank's policy meeting released on Wednesday. The sagging inflation rate, which has remained below the Fed's 2-percent target for more than five years, became a major obstacle to the next interest rates hike because higher interest rates could further suppress inflation. "Many participants... saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside," the Fed said in the minutes of the meeting in July. Some members of the policy-making committee argued the Fed "could afford to be patient under current circumstances," while others worried that the strong labor market and bullish stock markets could result in an overshooting of the Fed's inflation objective.

Italy sees GDP gains in Q2

Italy's statistics office said on Wednesday the country's GDP rose 1.5 percent in the second quarter in year-on-year terms. According to statistics agency ISTAT, GDP rose 0.4 percent in the second quarter this year from the first quarter and 1.5 percent over the first quarter of 2016. The second quarter's 1.5 percent year-on-year rise is the biggest in six years, since the start of 2011 when it was 2.1 percent, the agency said. In its seasonally adjusted estimate, ISTAT said the GDP rise for 2017 is so far 1.2 percent. If the current trend continues, however, the year-end gain will be 1.5 percent, it said.

Outlook is upbeat for the Netherlands

Economic growth in the Netherlands is projected to increase to 3.3 percent in 2017, the highest growth in 10 years, the CPB Netherlands Bureau for Economic Policy Analysis announced on Wednesday. In its analysis the CPB said that on top of its growth prediction for this year, it sees growth of 2.5 percent in 2018. For the first time since the beginning of the economic crisis in 2007, Dutch economic growth would turn out to be higher than 3 percent, it added. In 2016 growth was 2.2 percent and in 2015 it was 2.3 percent. "Today we can celebrate that we have come out of the economic crisis and that we are the fastest-growing economy in the western world," outgoing Prime Minister Mark Rutte told broadcaster NOS before continuing talks over a new government in The Hague.

(China Daily USA 08/18/2017 page18)