Your daily digest of the biggest business news in China, translated and summarized every day.
State Council to address cost of funding problem
China’s State Council wants to implement further reforms in the financial market to address the problem of the high cost of funding for small and medium sized business, which form the backbone of the Chinese economy.
Beijing started to tackle this issue in July this year as SMEs have continued to struggle to raise money from the banking sector. The Chinese government wants privately owned banks to play a bigger role in lending to SMEs. It is also seeking to reform state-owned commercial banks’ incentive scheme to encourage them to lend more to SMEs.
China’s state-owned banking system usually favours SOEs and large private companies over SMEs.
Beijing relaxes its energy price control measures
The State Council has also released a draft plan to encourage further reform in the country’s notorious state-controlled energy market including in electricity transmission and distribution.
The plan promises to introduce more competition into the energy market. However, it has remained silent on the contentious issue of separating the transmission network from the distribution business in the country’s protected electricity market.
More growth room for internet finance companies
The Vice-Chairman of China’s Banking Regulatory Commission Yan Qingmin says the regulator should be more open-minded and tolerant of the country’s internet finance companies. He says the new development should be tolerated if it does not cause regional risk.
Internet finance companies such as Alibaba, Baidu and Tencent have been putting pressure on the traditional banking sector through better services and higher interest rates. Internet giants have been draining deposits from banks at fast rate.
Former Lehman Brothers boss has a new China venture
Former Lehman Brothers boss Richard Fuld is staging a comeback after the spectacular collapse of his storied investment house that nearly brought down the world’s economy.
According to an interview with Caixin, the former Wall Street Kingpin is expected to announce the acquisition of a stock exchange in the US, which will be used as a platform for Chinese companies to list in America.
Beijing to open up its e-commerce sector
The Vice-minister of Industry and Information Technology Shan Bing, says Beijing is considering the option of opening up the country’s fast growing e-commerce sector.
He says to dancing with wolves is good for developing a competitive landscape in China. At the moment, foreign companies cannot control more than 50 per cent of shares in Chinese e-commerce companies. In the future, foreign companies may own up to 100 per cent of Chinese e-commerce companies.
China reduces coal consumption
Beijing wants to lift its renewable energy consumption and reduce its coal consumption to 62 per cent of its total energy need at the end of 2020. A new energy plan calls for more natural gas consumption in key industrial belt regions such as Pearl River Delta, Yangtze River Delta and surrounding region of Beijing.
China has recently committed to increase its renewable energy target to 20 per cent of the total energy consumption in a joint statement with the US at the recently concluded APEC Summit.
Chinese local government will issue more local debt
Chinese local governments will expand their debt issuing program next year as the country seeks to spur its ambitious urbanisation drive. According to statistics from the National Audit Office, local governments rely on banks for 56.65 per cent of its financing requirement for infrastructure projects.
Local government and corporate debts are responsible for 3.71 per cent and 6.22 per cent of total funding requirements.
The Ministry of Finance has recently allowed provincial governments to issue their own debt. However, municipal and county governments are still barred from issuing their own debt.