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SINOPEC Is Selling Its Argentina Assets at a Loss

Well-known Chinese news site Sina recently reported that SINOPEC (China Petroleum & Chemical Corporation) is looking for buyers for its assets in Argentina. The primary asset is located in the Santa Cruz region and is priced at US$0.75~1 billion. This asking price is not even half of the cost SINOPEC paid in 2010 when it first bought this asset from U.S. Occidental Petroleum at US$2.45 billion. SINOPEC has been losing money (around US$2.5 billion as of 2015) in Argentina and it is also facing labor troubles. It is estimated that there may be 15 potential buyers mainly from the U.S., Europe, Africa, and Latin America. However, Russia and Mexico are also interested. The SINOPEC selling plan has not yet been announced publicly, so all information sources remain anonymous. New oil fields have been found near the SINOPEC fields that sold recently. This may further hurt SINOPEC’s deal. SINOPEC is the largest oil refiner in Asia.

Source: Sina, October 9, 2017
http://finance.sina.com.cn/stock/hkstock/ggscyd/2017-10-09/doc-ifymrcmm9556742.shtml

Ministry of Commerce: Closing Down North Korean Companies Per UN Resolution

China’s Ministry of Commerce recently released its official announcement asking all government branches to close down North Korean owned businesses in China. The regulation was issued under the State Administration for Industry and Commerce (SAIC), which is part of the Ministry. The new government regulation explained that the cause of the policy change was based on the United Nations Security Council Resolution 2375. The scope of the regulation applies to all companies in China that involve North Korea, including joint ventures. SAIC gave the companies 120 days to close down their businesses. The provincial governments are held accountable for enforcing the implementation of the new regulation. However, the new announcement did mention some exceptions for purposes that are not-for-profit and which the UN resolution allows.

Source: Official Website of the Ministry of Commerce, September 26, 2017
http://www.mofcom.gov.cn/article/b/f/201709/20170902652390.shtml

Is Jian Yang a Chinese Spy?

A number of English media and Chinese media reported that Jian Yang (杨健), an MP in the New Zealand government and a member of its ruling National Party, might be a Chinese spy.

Jian Yang was born in Jiangxi Province in China. He earned his Master and Ph. D. degree in International Relations from the Australian National University. Then in 1999, the University of Auckland in New Zealand hired him as a Senior Lecturer in Political Studies. In 2011, he was elected as an MP from the National Party.

The issue was that Yang didn’t disclose his experiences as both a student and instructor at two military schools in China whose main duty is to produce spies. The two schools are the Air Force Engineering College and the Luoyang PLA University of Foreign Languages.

Some of the English media focused on how much Yang had disclosed to the New Zealand government and whether he vowed to be loyal to New Zealand. However, that discussion may not be that relevant since what Yang disclosed (or did not disclose) does not prove (or disprove) he is a spy. In all probability, a spy would not disclose anything that would even hint that he is a spy. A person who is not a spy might not choose to disclose anything either.

So whether Yang is a spy may be left to the intelligence office to decide.

Lianhe Zaobao, the largest Singapore-based Chinese-language newspaper stated, “The two universities belong to the PLA and are the key places where China trains its spies.” It also quoted an expert who said, “Yang almost certainly works for the PLA.”

Source: Lianhe Zaobao, September 13, 2017
http://www.zaobao.com.sg/realtime/china/story20170913-794975

 

Chinese’ Total Bank Savings Amount Is Less Than Total Mortgage Amount

China’s National Bureau of Statistics recently reported that, by the end of 2016, the total amount of resident’s bank savings had reached 60 trillion yuan (US$9 trillion). However an article in the China Business Journal argued that the number is alarmingly small compared to housing prices and mortgage amounts.

Since China has 1.3 billion people, the average bank savings is 46,000 yuan per person. In Beijing’s the average bank savings is 130,000 yuan, the highest in the nation. However, the average housing price in Beijing is 5 million yuan. How can people afford a house?

The article further compared the total mortgage vs. total bank savings in the major cities. The traditional Chinese thinking is not to get in debt, so the author viewed it as a bad thing for the total of mortgages to be higher than the total of bank savings (it would mean that people collectively cannot afford their houses). Several cities fall into this group. For example, take Shenzhen. The total of all mortgages amounts to 1.4 trillion yuan in Shenzhen, but the total bank savings is only 1 trillion yuan.

Source: China Business Journal, September 18, 2017
http://www.cb.com.cn/qijunjie/2017_0918/1199834.html

Caixin: S&P Lowered China’s Sovereign Credit Rating

Well-known Chinese financial news media group Caixin recently reported that Standard and Poor’s (S&P) just announced the decision to downgrade China’s sovereign credit rating from AA- to A+. This is the first time in 18 years that S&P has downgraded China. In May, another world-class ratings organization, Moody’s, also downgraded the rating of China’s currency. S&P explained that concern over China’s debt level was the primary cause of the downgrade. S&P expects sustained growth of loans made outside the standard banking system over the next two to three years, while China’s total debt growth rate will remain higher than its GDP growth. The financial risks in the Chinese economy are still increasing. S&P did acknowledge the success of the recent efforts the Chinese government put in place to control the growth of debt. However, it will take time for the new policies to have a tangible impact. S&P also mentioned that it may increase China’s ratings if the rate of debt growth slows down significantly. All of the international ratings organizations have been monitoring China’s debt level and its financing platforms carefully. They have repeatedly asked the Chinese government to improve the information transparency of local government debts.

Source: Caixin, September 21, 2017
http://finance.caixin.com/2017-09-21/101148569.html

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