Your daily digest of the biggest business news in China, translated and summarized every day.
Iron ore miners under pressure
Nearly 20 per cent of Chinese iron ore miners are losing money according to a new survey from the National Bureau of Statistics. The country has 3447 large and medium sized iron ore mines which are under increasing pressure as the price of iron ore hovers around $70.
The average break-even cost for Chinese iron ore miners is around $80 per tonne, significantly higher than major Australian producers like BHP and Rio Tinto.
Cai Hongping bows out
Cai Hongping, a veteran Chinese investment banker has resigned as the Asia Chairman of Deustche Bank, signalling the end of an era of hyperactive Chinese IPO activity.
Cai’s reported departure follows the resignation of Levin Zhu from China International Capital Corp, one of the largest domestic investment banks recently. Cai has been instrumental in bringing in private Chinese companies to international capital markets.
The press report speculates that the departure of Cai and Zhu signals the era of large-scale Chinese IPOs is over.
Government offers incentives to cushion blow to workers
The Chinese government will offer financial incentives to companies from sectors that suffer from the chronic problem of excess capacity if they don’t lay off workers during the process of restructuring.
One of Beijing’s top priorities is to address the problem of excess capacity in sectors such as steel, cement and pleated glass. According to the government work report, Beijing plans to cut 27 million tonnes of steel and iron production and 42 million tonnes of cement.
Beijing is worried about social unrest if steel mills and other factories lay off too many workers.
China’s GDP is larger than official number: Economist
Li Yining, one of China’s most influential economists says China’s GDP is larger than what is officially reported.
Li, a professor of economics at Peking University, says GDP has been underestimated in rural China where things such as housing construction are not included in the calculation. Private companies also tend to under report their revenues to avoid paying taxes, he says.
The professor, whose students include Premier Li Keqiang, has urged the central government to abandon its GDP growth target.
Government pushes for more private banks
Beijing is encouraging private capital to set up small and medium sized banks and other financial services companies to fill the gap in lending to the country’s SME sector.
The move is part of Beijing’s broader strategy to support SMEs. The government is also cutting taxes and fees for the sector.
State Council moves on rural land reforms
Beijing plans to implement a better land title and registration system over the next five years to better protect farmers against land acquisitions from local governments as well as property developers.
Land acquisition is one of the most contentious social issues in China. Local governments often collude with property developers to forcibly acquire land from farmers without adequate compensation.
Government to end salt monopoly
Beijing will end its government monopoly over sales of salt in a move that is designed to introduce more competition into the industry. The Ministry of Industry and Information Technology announced the decision on state-owned broadcaster CCTV.