Your daily digest of the biggest business news in China, translated and summarized every day.
Senior Chinese legislator warns of local debt risks
One of China’s most senior legislators has warned about the growing risk of local debt, saying it has the potential to trigger a regional fiscal crisis.
Yi Zhongqing, deputy chair of the economics committee of the National People’s Congress, says local governments don’t usually think about making repayments when they raise debt and think the central government will bail them out in the end.
There is potential for a fiscal crisis in the region and some local governments may even go bankrupt, according to Mr Yi’s speech at the conference.
Chinese local governments have 17.9 trillion yuan debt, according to official statistics.
Beijing to complete interest rate liberalisation by 2016
Deutsche Bank predicts China’s central bank will accelerate the pace of interest rate liberalisation, predicting Chinese banks would be free to set their interest rates by 2016.
The central bank recently raised the deposit rate ceiling to 120 per cent of the benchmark, from 110 percent. It means banks can set their own deposit rate 20 per cent above the benchmark to encourage more competition between banks for depositors.
Central bank governor Zhou Xiaochuan said China would move towards full interest rate liberalisation within one to two years in March this year.
Government encourages more private capital
The State Council, China’s cabinet, has just released draft guidelines that encourage more private sector investment into infrastructure.
The key sectors would include environmental protection, municipal services, transport, energy and information services. The Chinese government has been actively encouraging public and private partnership (PPP) as a way to attract more private capital.
Alibaba expands into western China
Chinese e-commerce giant Alibaba has signed an agreement with Xinjiang province to expand its footprint in the far western part of China.
The company is looking to expand its e-commerce, cloud computing and logistics offerings to lesser developed areas of China on the back of Beijing’s strategy to build a new Silk Road economic zone connecting China and Central Asia.
Government plans to buy housing stock
The Ministry of Housing and Urban-Rural Development has flagged its intention to buy housing units from commercial developers to boost its low-income affordability program.
Under China’s 12th five year plan, the government wants to build 36 million units of public housing for low income earners and increase the proportion of public housing to 20 per cent of total housing stock in the country.
Analysts suspect the move by the government is also designed to boost China’s slowing property market and take pressure off the rapidly expanding housing stock.
Beijing’s 2 trillion yuan waste water treatment splurge
The National Development and Reform Commission, the country’s powerful economic planning agency is set to unveil its massive wastewater treatment plan soon.
Experts estimate the investment in wastewater plants nationwide could be as much as 2 trillion yuan. Some Chinese provinces have already released their own plans to improve the country’s worsening water pollution problem.
Guangxi will invest 11.4 billion yuan over the next two years. Guangdong province will invest 86.9 billion yuan over the next five years.
Electric car production skyrockets
Last month China produced 1.9 million vehicles, taking the total for the year to date to over 18 million, according to data published by the Ministry of Industry and Information Technology (MIIT).
The number of "new-energy" vehicles - which includes both electric, plug-in hybrids and other non-fossil fuel powered vehicles - produced in October was 5,685, 24 times the number produced in the same month last year.
The total number of "new-energy" vehicles produced over the first 10 months of the year has increased almost five fold on last year to 47,000.
State Council to speed up development of high-tech services sector
China's cabinet announced new policies aimed at encouraging the development of firms that are focused on exporting their high value-added services.
Government departments will also lift their consumption of services from the sector and also reduce red tape.
Policymakers will support IT firms, finance companies and various other service industries by expanding financing channels, providing more in the way of intellectual property protection and by introducing targeted tax breaks.
The government hopes that the sector will help advance their plan to shift China's economy away from a reliance on low-end manufacturing and towards a high value-added services-oriented economy
The government also hopes that the development of the sector will be a source of future jobs growth and help reduce reliance on heavily polluting industry.
National Audit Office to examine state-run lottery books
In mid-November, China's National Audit Office launched an investigation into the financial affairs of the fund charged with handling the revenue of China's state-run lottery system.
The NAO sent out 18 auditing teams to 18 different provinces to look into the books of the fund.
A person involved in the audit said that this year's investigation was more wide-ranging that those conducted in the past and that it would last about 1 month.
It's unlikely that the results of the audit will be published before the end of the year.
The decision to audit the lottery fund appears to have been made quite suddenly and it had not been flagged on list of planned audits that the NAO published earlier in the year.
In a further sign that this investigation might actually discover financial wrongdoing, staff from local auditing agencies have not been included as members of the auditing teams.
Last year total lottery sales across the country exceeded 300 billion yuan, up 18 per cent on 2012.