Govt And Policies

China to invest in emerging industries

China is set to boost investment in emerging sectors ranging from artificial intelligence to biopharmaceuticals as it seeks fresh growth impetus in the new industrial revolution. A number of local authorities, including the Ningxia Hui and Guangxi Zhuang autonomous regions and Shandong province, have rolled out support policies and detailed investment plans, eyeing a bigger proportion of such industries in the broader economy, according to the Economic Information Daily. The government of Ningxia announced 20 million yuan ($3 million) of subsidies for 13 high-tech projects this year and hopes to attract investment totaling 3.65 billion yuan. Partly due to a boost from robust emerging industries, the northwestern region posted a stellar year-on-year GDP increase of 8.6 percent in the first half of the year, outpacing the country's 6.9 percent. The biopharma industry boomed more than 30 percent from a year ago in the region.

NDRC fines medicine firms

China's top economic regulator announced on Monday that two domestic medicine firms had been fined for monopoly pricing practices. Zhejiang Second Pharma and Tianjin Handewei Pharmaceutical were fined a total of 443,900 yuan ($65,975) for fixing prices for an active pharmaceutical ingredient, said a National Development and Reform Commission statement. The two companies charged an unfairly high price for Isoniazid, an antibiotic used to treat tuberculosis, and declined sales with no justified cause, the statement said. The two companies have since restored regular pricing and revived market competition. Monopoly practices in the pharmaceutical sector have been a focus of China's anti-monopoly supervision for some time. The case will help regulate active pharmaceutical ingredient pricing and ensure a fair environment for medicine purchases and sales, according to the NDRC. The NDRC has vowed to increase anti-monopoly supervision to protect market order, consumers and businesses.

Government approves airport project

China's top economic regulator has approved an airport project in southwestern China's Guizhou province, with a total investment of 1.8 billion yuan ($267 million). The airport in Weining is designed to handle up to 350,000 passengers and 1,050 metric tons of cargo every year by 2025, according to the National Development and Reform Commission. Guizhou is one of the least-developed parts of China, with transport infrastructure lagging far behind developed areas. The project is expected to improve regional transport, enhance emergency response support and boost regional economic development. China began an airport construction boom in 2008 when the government began massive spending on infrastructure to offset the global financial crisis. By the end of 2015, China had 207 civil airports and is expected to have around 260 by 2020.

Authorities cut logistics costs

Chinese authorities have massively reduced the country's logistics by canceling road tolls and encouraging internet-based freight brokerage. National logistics costs fell by 35.6 billion yuan ($5.3 billion) in the first half of this year, accounting for 45.5 percent of annual cost reduction goals, according to the Ministry of Transport. The decrease was prompted by a number of measures, including the cancellation of certain road tolls in provincial-level regions and a pilot of internet-based freight brokerages. Fixed-asset investment in highways and waterways rose 23.8 percent year-on-year to 967.3 billion yuan in the first half, more than half the annual investment goal of 1.8 trillion yuan. Lowering logistics costs is part of China's efforts to lower the corporate burden and economically upgrade. The government has pledged to reduce taxes, clear fees and step up construction of national-level logistics hubs.

Beijing shuts down low-grade factories

Beijing's Tongzhou subsidiary administrative center has shut down over 130 factories in an overhaul of industrial structure to build a green city. A total of 138 factories have been shut down, with a further 12 to be closed by the end of this year, Tongzhou district government said. A total of 1,308 companies failed to meet environmental standards and have been renovated. Four wholesale markets for construction materials and home appliances have been shut down. By 2020, the Tongzhou government will dismantle 13 wholesale markets.

Companies And Markets

UBS, Credit Suisse profits on the rise

Swiss banking giants UBS and Credit Suisse both posted higher than expected profits for the second quarter of 2017 thanks to improved investor confidence. UBS net profit for the half year climbed 14 percent at 1.17 billion Swiss francs ($1.21 billion). Credit Suisse posted net income of 303 million francs, above market forecasts and compared with profit a year earlier of 170 million francs, a net profit jumping 78 percent. "Improved investor sentiment and enhanced confidence have translated into improvements in wealth management client activity levels," UBS said in a statement. Chief Executive Sergio Ermotti said: "Considering market conditions, the second quarter results were very good and contributed to a strong first half of the year."

Banco Santander earns 3.6b euros in profit

Spain's largest lender, Banco Santander, earned an attributable profit of 3.6 billion euros ($4.2 billion) in the first half of the year, the bank reported. The figure was a 24-percent increase compared to the same period of a year earlier. According to the bank, the rise was due to "an increase in customer revenues, disciplined cost control, and further improvements in loan loss provisions". Banco Santander reported that the recent acquisition of Banco Popular contributed a further 11 million euros to the profit. "Since acquiring Popular less than two months ago, we have made significant progress in addressing the immediate priorities," said Banco Santander Chairwoman Ana Botin.

Around The World

US economy expands at 2.6%

The US economy grew at an annual rate of 2.6 percent in the second quarter of the year, higher than the revised 1.2 percent in the previous quarter, according to the US Commerce Department. "The acceleration in real gross domestic product growth in the second quarter reflected a smaller decrease in private inventory investment, an acceleration in personal consumption expenditures, and an upturn in federal government spending," the Commerce Department said. Personal consumption expenditures, which account for about two-thirds of the US economy, increased at an annual rate of 2.8 percent in the second quarter of the year. That was an acceleration from the 1.9 percent pace in the first quarter.

Moody's upgrades Cyprus bond ratings

Moody's Investors Services has upgraded the long-term government bond ratings of Cyprus to Ba3 from B1. "The decision to maintain a positive outlook on the rating of Cyprus reflects Moody's view that improvements in economic resilience and continuing fiscal out-performance are likely to be sustained," said a statement. It also said that it expects the country's sovereign debt to be brought down to 95 percent of GDP by 2020 from its 2016 level of 108 percent.

Spain's economy grows by 0.9%

The Spanish economy grew by 0.9 percent in the second quarter of the year, according to advanced data published by Spain's Statistical Office. The figure is 0.1 percentage point higher than that of the previous quarter and it is the highest since the third quarter of 2015. So far, Spain's economy has been growing for 15 consecutive quarters. On a year-on-year basis, the country's economy grew by 3.1 percent, the INE said, which will confirm this data and provide more detailed information about Spain's economic growth on Aug 24. Spain's Prime Minister Mariano Rajoy said that the Spanish economy would "probably" grow by "at least 3 percent" this year. Rajoy said that, given this data, it could be possible for Spain to reach 20 million employed people by 2020.

(China Daily USA 08/01/2017 page14)