Economy/Resources - 170. page

Xinhua recently published an article about an upcoming investigation into monopolies on pricing. The Anti-monopoly Bureau, which is under the State Development and Reform Commission, stated that it will focus on an investigation of the pricing monopoly in the following industries: the airlines, household chemicals, automobiles, electronic communication, drugs, and electrical appliances. According to the Commission, at the beginning of 2013, the State Development and Reform Commission issued 353 million yuan (US$58 million) in fines to six companies that make Liquid Crystal Panels. It was the first time a foreign company had been targeted. In August of this year, the Commission fined six domestic milk powder companies in the amount of 670 million yuan (US$110 million) for violating the anti-monopoly law. It was the largest fine in China’s anti-monopoly history.

Source: Xinhua, November 25, 2013
http://news.xinhuanet.com/politics/2013-11/25/c_125754705.htm

Xinhua reprinted a China Business News article reporting on backdoors loans made to local governments. The article stated that such loans are rampant and lack proper accounting. 

According to China Business News, when, due to their investment and financing platforms and the local governments existing debts, they find it difficult to obtain additional loans, some of them ask large companies that have international backgrounds to take out bank loans on their behalf. These large companies then use local governments’ land as collateral for the bank loans.

Because the loans are obtained to satisfy the needs of local governments, the funds are then remitted to the local governments, thus becoming debts of the local governments. However, as a result of special accounting treatment, the local governments do not record the loans on the books as actual loans, but as current accounts with these large companies. 

First, not all the fund transfers are recorded in the books. Second, since the local governments’ land is used as collateral for the loans, some local governments may call the loans “Assets” on their books. Third, because the large companies have already recorded the loans as liabilities, the local governments use that as a reason not to report the loans as their own liabilities. Fourth, some large companies have gone so far as to create a separate bank account for these loans. The money is set aside for the local governments to use so they can withdraw funds and deposit the payments for the loans. 

Source: China Business News reprinted by Xinhua, November 19, 2013

According to Jiangnan Times, a publication under People’s Daily, Professor Li Daokui from Qinghua University, one of the most influential economists in China, predicted that it will take another 20 years to absorb China’s existing real estate surplus. 

On November 20, Qiushi published an article explaining the goals of economic reform as proposed during the Third Session of the 18th Congress of the Communist Party. 

According to a report from Di Xing Tong, China’s largest cell phone chain store, since the iPhone 5S and 5C were introduced in China on September 20, the ratio of iPhone 5S and iPhone 5C phones purchases in China has been 3.68:1 compared to 2:23:1, which is the ratio in the overseas markets. The report indicated that the reason Chinese consumers favored the 5S over the 5C, even though their quality is comparable, is that the 5S is considered to be more upscale. They are therefore less likely to be attracted to the cheaper version of the iPhone5C.

Source: Guangming Daily, November 15, 2013
http://it.gmw.cn/2013-11/15/content_9495124.htm

The China Luxury Goods marketing Research Agency recently issued the "China’s Luxury Goods Consumption Report," which contained information on China’s spending on luxury goods. China has the largest number of luxury goods consumers in the world. These consumers have spent an estimated US$102 trillion on luxury goods in 2013, which accounts for 47 percent of the total worldwide luxury goods market. China’s total luxury goods purchases included domestic as well as foreign purchases. In 2013, China’s domestic luxury goods purchases are expected to show growth of three percent. Chinese tourists also drove the overseas luxury goods spending market. Price differences between the domestic and foreign market and the appreciation of the Chinese yuan are cited as the reasons. Reports indicate that, even though the Chinese people’s luxury goods consumption continues to grow, the rate of increase has slowed down compared to prior years.

Source: Guangming Daily, November 15, 2013
http://economy.gmw.cn/2013-11/15/content_9495500.htm

On November 13, PetroChina Company Limited (PetroChina), China’s biggest oil producer and the listed arm of the state-owned China National Petroleum Corporation (CNPC), announced a deal to acquire Brazil’s state-run oil company Petrobras’s Peruvian oil and gas assets. PetroChina will buy all of the 145 million stock shares of Petrobras Energia Peru S.A., which has three oil and gas fields in Peru, at a premium price of $2.6 billion, considering Energia Peru S.A.’s total asset of $1.42 billion, with a 2012 operating income of $0.6 billion and net income of $102 million.

Petrobras Energia Peru S.A.’s three oil and gas fields currently produce about 800,000 metric tons of oil equivalent per year, according to PetroChina. Experts shared the view that, when compared to Africa and the Middle East, there is less political risk buying assets in South America.

PetroChina’s 2012 domestic and overseas production totaled 278 million metric tons of oil equivalent, or 761,600 metric tons per day. In mid-March this year, PetroChina took over the Mozambique oil and gas lots under the Italian multinational oil and gas company Eni at $4.2 billion, as the company’s largest overseas acquisition. CNPC is also expected to buy U.S. oil and gas company ConocoPhillips’ Kashagan oil field in Kazakhstan at an expected price of $5 billion.

Source: Xinhua, November 14, 2013
http://news.xinhuanet.com/2013-11/14/c_125699990.htm