Cabinet highlights credit support for small firms

China's cabinet on Monday unveiled details of financial support for the cash-strapped small businesses that play a key role in growth and employment. Credit growth to small enterprises should not be lower than total credit growth. The incremental amount should not be less than that recorded a year earlier, read a statement from the State Council. Village banks, credit companies and other small financial institutions are encouraged to set up branches in areas where small businesses are concentrated. Private banks, financial leasing companies and other financial companies are also encouraged to set up in those areas.

Hongqiao adds aluminum capacity amid global glut

China Hongqiao Group Ltd, the nation's largest non-State aluminum producer, is accelerating expansion to take advantage of low raw material prices, even as the government seeks to trim capacity amid a global glut. "The government wants to shut down outdated capacity while Hongqiao is a good company that has the best equipment and efficient energy consumption," Chief Executive Officer Zhang Bo said in Hong Kong on Monday. "Good companies will keep expanding and gaining market share, forcing those with outdated capacity out of the market." Hongqiao expects to have nearly 3 million metric tons of capacity by the end of this year, up from 2.46 million tons currently, as the company builds new facilities while prices of raw materials such as steel and cement are low, Zhang said.

Shanghai gets $41b loan from Agricultural Bank

Shanghai will receive a 250 billion yuan ($41 billion) loan from Agricultural Bank of China Ltd, to help fund the city's planned Disneyland park and free-trade zone, the South China Morning Post reported on Monday. The State-owned bank signed an agreement last week to provide the funding, which is equal to about 12.5 percent of the city's GDP last year, the newspaper said, citing unidentified government and banking industry sources familiar with the situation. The loan from China's third-biggest lender by market value is a sign the central government is relaxing its policy stance to prevent the world's second-biggest economy from slowing further, Zhang Zhiwei, chief China economist at Nomura Holdings Inc in Hong Kong, said on Monday.

LDK expects to profit on EU deal, domestic demand

LDK Solar Co, the Chinese solar-panel maker that's reported eight straight quarterly losses, expects to return to profit this year on domestic demand and as a tariff deal promises better sales in Europe. The company, which is scheduled to report second-quarter earnings on Wednesday, started generating positive cash flow from selling wafers used in solar cells in June, President Tong Xingxue said in an interview. "This is the first time in two years we witnessed obvious improvement," he said. "The market is steadily rising and our demand has exceeded supply. The basic barrier to Europe has been overcome" and the domestic market is taking off, he said.

Daimler's Smart plans more models, outlets in China

Daimler AG's Smart brand plans to introduce more models and expand its sales network in China in a bid to boost sales in the world's biggest auto market. The automaker aims to bring to China an electric version of its two-seater Smart Fortwo and a new four-seater being developed with Renault SA, head of Smart Brand Annette Winkler said in an interview. Smart expects to boost annual sales in the nation by an average 15 percent in the next few years by tapping demand in cities with a population of more than 1 million, she said on Saturday. Smart plans to have 100 sales outlets in about 75 Chinese cities by the end of this year, compared with 88 showrooms in 68 cities now, Winkler said.

China poised to gain control as shipyard shakeout looms

China grew into the world's leading shipbuilder over the last decade as hundreds of private yards opened to compete with State-run companies, bloomberg said. Now, China is poised to regain control as the industry heads for consolidation. The number of shipyards has swollen to 1,647, contributing to a global capacity glut. To stabilize the industry, one-third to one-half of the yards will probably have to disappear through acquisitions and closings, according to executives and analysts. State-run companies are at an advantage because they have easier access to credit to pay workers, buy raw materials and provide financing for clients. China State Shipbuilding Corp, China Shipbuilding Industry Corp and other government-backed companies won three-quarters of all orders in the first half of this year.

Railways carry more passengers in July

China's railways carried 196.34 million passengers in July, marking a 10.1 percent year-on-year rise spurred by the country's transportation reform, the State-owned China Railway Corp said on Monday. The passenger volume in July also posted a 10.4 percent rise, or an increment of 18.46 million passengers, from June, according to the CRC. Meanwhile, over 259.72 million tons of cargo were transported via the country's railways, marking a year-on-year rise of 6.39 million tons, or 2.5 percent. The increases in both passengers and cargo in July can be attributed to cargo transportation reform, rising demand for coal, petroleum and grain, and the summer travel peak season, according to the CRC.

Ordos seeks diversity in its economic development

Ordos, a major city in the Inner Mongolia autonomous region is seeking diversity in its development path as it takes a route less dependent on coal and energy-related industries. "We aim to build a city that is both comfortable for living and suitable for economic development," said Lian Su, mayor of Ordos. The city's transformation is attracting interest and investment. Beijing Bai Nian Wei Cheng Investment Co Ltd invested 40 million yuan ($6.5 million) in a major development in Juli Square in the Dongsheng district of Ordos. The square will be a landmark with a garden-themed business mall complex including hotels and coffee chains.

BMW Brilliance constructs first China engine plant

BMW Brilliance, the joint venture between German luxury automaker BMW and China's Brilliance Auto, said construction of an engine manufacturing plant has begun in Shenyang, capital of Liaoning province, the Beijing Times reported on Saturday. The new plant will be BMW's only engine manufacturing facility outside of Europe. The goal is for the plant to help double the joint venture's annual engine output from its current mark of 200,000 units to 400,000 when it begins production in 2016. All of the engines will be used in locally produced automobiles.

Mengniu Dairy signs JV agreement with Danone

China Mengniu Dairy Co Ltd and French food giant Groupe Danone SA signed an agreement on Aug 9 to establish a joint venture, the Chinese dairy producer said on Monday. The joint venture will see the companies invest in chilled yogurt products in China. Danone owns a 20 percent stake in the joint venture and China Mengniu owns 80 percent. The companies previously said the joint venture will use Danone's advantage in quality control and product innovation while fully leveraging Mengniu's distribution networks in China's yogurt market. The French company will assign two senior executives to the joint venture's board of directors, while Mengniu will assign the remaining four.

Meiya Power markets dollar bonds as credit risk declines

Meiya Power Co is marketing dollar- denominated bonds as Asian corporate debt in the currency rebounded from two weeks of losses after Chinese economic data improved and credit risk declined. The company, a unit of China General Nuclear Power Group, plans to sell five-year notes at a spread of about 275 basis points more than Treasuries, according to a person familiar with the matter who asked not to be identified because the terms aren't set. The average yield on Asian corporate debt dropped from 4.88 percent to 4.80 percent since Aug 1, according to Bank of America Merrill Lynch data.

442,000 foreign-funded companies established

About 442,000 foreign-invested companies had been set up in China by the end of July, up 0.26 percent from a month earlier, according to a report released by the State Administration of Industry and Commerce on Monday. Their registered capital fell 0.03 percent from a month earlier to 12.09 trillion yuan ($1.95 trillion). In July, the number of newly registered foreign-funded companies increased 3.11 percent from a month earlier to 3,000. Amid the lackluster global economic environment, multinational companies scaled back their investment in China.

China Daily - Agencies

(China Daily USA 08/13/2013 page14)