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Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 1
June 1, 2012
China Weekly Policy Monitor (May 28- Jun 1, 2012)
China is a highly policy driven market. Sectors that enjoy government support measures stand to benefit. Each week,
we will compile and share with you a snapshot of the previous week’s policy news and rumours. We hope this serves as
a useful guide for allocating portfolio weightings from a top-down level to generate alpha.
May 28- Jun 1, 2012
TOP NEWS
Vice-Premier says Xinjiang will be the key focus for expanding domestic demand.
China will target 8% GDP growth for 2012.
China has no plans for a new RMB4 trillion stimulus.
Sectors Policy Source
Insurance, stocks CSRC and CIRC discussed plans to permit asset management and brokerage
companies to manage insurance funds (June.1)
Furthermore, according to unnamed sources, more insurance funds will be used to invest in stocks
in the near future.
Sina Finance
Macro Vice Premier says Xinjiang will be the key focus for expanding domestic demand
(June.1)
Vice-Premier Li Keqiang on Wednesday urged for more support for the Xinjiang Uygur
Autonomous Region to drive rapid development and long-term stability in this utter-most western
region of China. According to the vice-premier, huge achievements have already been made in the
past two years under a large number of assistance projects for Xinjiang, especially projects to
improve the well-being of Xinjiang citizens. Vast land, abundant resources and huge development
potential make Xinjiang a major area to implement China's strategy to expand domestic demand
and to develop the country's western regions.
China Daily
Nuclear The State Council has approved the 12th FYP for nuclear safety (June.1)
The State Council approved the 12th Five-Year plan for nuclear safety, and radioactive-pollution
prevention and control, during an executive meeting hosted by Premier Wen Jiabao on May 31.
The market expects existing projects that are currently suspended to be resumed soon.
Cnstock.com
Property Hunan denied easing restrictions for first-home buyers in the province (May.31)
Tian Yongjun, the Deputy Director of the Hunan Development and Reform Commission stressed
that it had NEVER discussed any property market rescue measures. At the same time, Xiamen,
Shanghai and Guangdong also announced that they have no property stimulus measures in the
pipeline and that they will continue to strictly enforce all central government policies and measures.
Sina Finance
Macro, property, imports China will target 8% GDP growth for 2012 (May.30)
Premier Wen reportedly said at a conference in Wuhan on May 19th that China will target 8% GDP
growth for 2012 instead of 7.5%. It was only on May 30 that the HK Economic Times apparently
picked up this story after being informed by a source of the premier’s comments.
Premier Wen added that it will maintain tight control of the property market but will allow
fine-tuning, such as lowering down-payment requirements. To boost consumption, he said China
will reduce imports and encourage domestic production. He also required investment proposals
under the central government’s budget for 2012 to be submitted for approval by the end of July.
Cnfol.com
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 2
Strategic emerging
industry
The State Council approved the 12th
Five-Year plan for strategic-emerging industries
(May.30)
China’ strategic-emerging industries, including energy saving, environmental protection, new
energy, next generation communications technology, bio-science, high-end equipment
manufacturing, new materials and new energy vehicles, will receive strong support from the central
government, according to the 12th Five-Year plan recently approved by the State Council.
Sina Finance
Stocks Companies from western China will be given priority when approving IPOs (May.30)
To support China’s western development plan, China Insurance Regulatory Commission proposes
to give companies from western China top priority when approving IPOs.
Cnstock.com
Property Over 10 cities raised lending cap for the housing accumulation fund for first-home
buyers (May.30)
To boost housing demand, over 10 cities, including Chongqing, Xiamen, Nanchang, Zhengzhou
and Wuhan, have raised lending caps for the housing accumulation fund (which usually offers
lower interest rates than banks) for first-home buyers.
Sina Finance
Property Hunan announced stimulus measures for the local property market (May.30)
The Development and Reform Commission of Hunan Province met to adjust control over the local
property market under the central government's theme of tight restrictions. To boost demand,
Hunan will provide preferential interest rates and lower down-payment requirements for first-home
buyers, as well as cut taxes. The market expects these measures to have the same impact as the
"property rescue measures" in 2009.
Caixin
Insurance, stocks China will allow insurance companies to issue convertible bonds (May.30)
According to a notice issued by the China Insurance Regulatory Commission this week, insurance
companies will be permitted to issue convertible bonds and include these bonds in their tier-2
capital, which will help broaden their capital-raising channels.
Tencent Finance
Macro China has no plans for a new RMB4 trillion stimulus (May.30)
The central government has issued official documents to clarify rumours and to confirm that the
government has no plans for a stimulus package similar to the RMB4 trillion in 2009.
JRJ.com
Auto China will provide RMB1B-2B in financial support each year to subsidise the
industrialisation of new-energy cars (May.29)
To push forward the development of new-energy vehicles, the Ministry of Finance announced
annual subsidies of RMB1-2 billion to qualified auto manufacturers to promote the industrialisation
of new-energy cars and to support R&D. Besides, China targets electricity powered car sales to
reach 0.5 million units in 2015.
Reuters
Futures The Shanghai Futures Exchange unveiled development blueprint (May.29)
The Shanghai Futures Exchange outlined its development plan on the Shanghai Derivatives
Market Forum. According to the plan, it will promote crude oil futures trading, innovative products,
continuous trading systems and internationalisation of the Futures Exchange.
Sina Finance
Bio-chemicals The 12th Five-Year plan for the bio-industry is expected to be announced soon (May.29)
According to officials of the Ministry of Industry and Information Technology, the State Council is at
the final stage of discussion regarding the 12th Five-Year plan for the bio-industry. Total output
value of the bio-industry is targeted to reach RMB3.6 trillion by 2015, which will greatly spur the
industry’s development.
Cnstock.com
Home appliance Energy-efficient flat panel TVs and air-conditioners will receive RMB100-400 in
subsidies (May.29)
Under the new home-appliance stimulus plan, China will provide rebates of RMB100-400 for
energy-efficient flat panel TVs and air-conditioners, starting from June 1st, 2012. This is expected
to increase domestic consumption by RMB135 billion.
Hexun.com
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 3
Transport China encourages private capital to fund the development of intelligent transport
systems (May.29)
China encourages private capital to invest in intelligent transport systems. Investment in intelligent
transport systems is estimated to reach RMB200 billion by 2020.
JRJ.com
Services Beijing will start replacing business tax with VAT soon (May. 29)
The State Council has approved expansion of VAT reform to Beijing. Under the reform programme,
implemented in Shanghai since the start of this year, certain services industries have switched
from paying a business tax, levied on total revenue, to a value-added tax, lowering their overall tax
burden. Several cities, including Guangzhou, Tianjing, Shenzhen and Nanjing, have also
submitted their applications to be included in the trial programme.
JRJ.com
Aviation NDRC gives green light to several large airport construction projects (May.29)
Following the acceleration of approval of airport projects in April, the National Development and
Reform Commission recently gave the green light to the construction and expansion projects of
two airports, with investment in each project of around RMB100 million.
Sina Finance
Auto China is rumoured to launch another “old-for-new” scheme to stimulate auto sales
(May.28)
According to unnamed sources, the scheme will focus on small-engine vehicles to promote
environment protection, and an auto-to-rural scheme may also be released to subsidise car buyers
at 10% of the purchase value or a maximum of RMB5,000.
Reuters
Stocks Retail investors starting to participate in share-backed financing (May.28)
China has recently started to allow retail investors to participate in share-backed financing, which
was previously only open to institutional clients with a balance of more than RMB5 million in their
investment accounts with brokerage firms.
Reuters
Services Premier Wen urges further opening up in the services sector (May.28)
Premier Wen Jiabao called for increased opening up in the country’s service sector and
encouraged local service providers to go global to boost the industry’s share in foreign trade. Wen
said China will promote service outsourcing in areas of software, information and construction,
while actively expanding imports to bring advanced technology and management experience from
overseas. Like industrial companies, Wen said service providers will also enjoy preferential power
and water rates, and will have priority over other companies for land acquisitions.
Xinhua New
Agency
Environment protection The 12th 5-Year plan for environmental friendly sectors will be released soon (May.28)
According to unnamed sources, the National Development and Reform Commission is drafting the
12th Five-Year Plan for the recycling sector to support China’s energy conservation and emission
reduction goals. Total output value of related industries is expected to reach RMB1.5 trillion in
2015.
Sina Finance
Steel, transport, energy,
water conservancy, coal
chemicals
Top priority will be given to steel and transport projects as the NDRC accelerates the
approval process (May.28)
According to senior officials from the National Development and Reform Commission, as China
accelerates the approval process for infrastructure projects, top priority will be given to steel,
transport, energy, water conservancy and coal-chemical sectors.
Tencent Finance
state-controlled and
monopolized sectors;
banking
China boosts private investment across industries (May.28)
The central government will open state-controlled and monopolised sectors wider to private
investment, in a bid to stimulate economic growth. Several ministries have issued guidelines on
investment of private capital into the strategic-emerging industries, among which, the China
Banking Regulatory Commission announced its plan to raise the upper limits on private investment
in banking institutions. And to encourage private investors to lend to rural residents and small
enterprises, the China Banking Regulatory Commission also lowered the minimum shareholding of
the main founder for rural banks (which usually are state-owned commercial banks) from 20% to
15%.
Xinhua News
Agency
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 4
May 21-25, 2012
TOP NEWS
The central government will give more financial support to infrastructure projects
Regulators expected to release guidelines to encourage private investment in various industries
Beijing will support development of the aviation and ocean engineering equipment sectors
Related sectors Policy Source
Infrastructure The central gov’t will give more financial support to infrastructure projects (May 22)
The government plans to speed up the approval process for large-scale infrastructure projects, and
has asked various parties to submit their project proposals for this year before the end of June. The
number of infrastructure project proposals under review is expected to peak in 1H. Some projects
initially scheduled to start construction in 2H will be brought forward to 1H, and the government
plans to speed up budget allocations to various construction projects.
JRJ.com
Private investments Regulators expected to release guidelines to encourage private investment in various
industries (May 23)
Regulators are drafting detailed guidelines to encourage private investment across industries, with
a special focus on the heavily state-controlled electricity, oil and natural gas sectors. The
guidelines will also cover civil aviation, healthcare, research & development of engineering
technologies and strategic emerging industries, etc. To better promote implementation of the
guidelines, the National Development and Reform Commission and local authorities will also issue
related regulations.
Tencent Finance
Aviation & ocean
engineering
equipment
Beijing will support the aviation and ocean engineering equipment sectors (May 24)
To adjust the economic structure and transform the development patterns, the central government
will soon issue suggestions on promoting development of civil aviation and supportive policies for
the ocean engineering equipment industry.
JRJ.com
Securities &
brokerage
China considers allowing HK individual investors to buy A-shares directly (May 21)
According to Hong Kong media reports, China-related authorities are considering allowing Hong
Kong individuals to directly invest in A-shares. Meanwhile, the QFII structure may be expanded to
allow the Hong Kong subsidiaries of Chinese securities companies to buy A-shares directly.
Hket.com
Securities &
brokerage
China starts to test I.T systems for brokerages to centralise warehousing of stocks
available for short-selling (May 21)
China will start to test I.T systems this week for brokerages to centralise warehousing of stocks
available for short-selling. The pilot test will include 25 brokerages and different financial
institutions like exchanges, asset management houses, etc. If successful, this centralised
stock-lending programme could be officially launched in two months time, covering 76 brokerages.
JRJ.com
Railways The Ministry of Railways will conduct open tenders in local markets (May 21)
The Ministry of Railways launched guidelines for conducting open tenders in local markets. The
guidelines require the local departments to follow fair and open market rules to conduct public
tenders. This will help to ensure a fairer, competitive and free market, and curb corruption.
JRJ.com
Property The central government expressed support for the property subsidy measures in
Yangzhou (May 22)
The central government expressed support for the property subsidy measures in Yangzhou for the
first time. Yangzhou provided 4%-6% subsidies to home buyers of completed flats two weeks ago.
It indicates that the central government on the one hand restricts speculation/investment demand,
but on the other hand allows fine-tuning to support genuine demand.
Tencent Finance
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 5
Pharmaceutical Beijing launches pilot scheme to remove pharmaceutical profits from the operating
revenues of public hospitals (May 21)
Beijing launched a pilot scheme aimed at cutting medical costs and enhancing hospital treatment
quality by removing pharmaceutical profits from the operating revenues of public hospitals. Five
public hospitals will take part in the trial to discourage over-prescription and to cut patients’ bills.
Tencent Finance
Construction and
buildings materials
China plans to expand the rural building materials pilot programme (May 22)
The government plans to expand the rural building materials pilot programme to stimulate the
consumption in rural areas through subsidies.
The pilot programmes were established in Shandong and Ningxia provinces in 2010, and were
expanded to Beijing, Tianjin and Chongqing in 2011.
JRJ.com
Taxation China may expand the trial programme of replacing corporate tax with VAT soon (May
22)
China may expand the trial programme of replacing corporate tax with lower value-added tax soon.
Beijing, Tianjin, Chongqing, Xiamen, Shenzhen, Jiangsu, Hunan, Hainan, Anhui and Fujian have
all applied for the trial reform. The plan for the expansion will be announced at the end of May or
June, and the trial should be rolled out by the second half of the year. The expanded trial
programme will mainly focus on the transportation & services sectors and follow the model of
Shanghai where the trial programme is currently being tested.
Sina Finance
Banking and
non-banks financials
Wenzhou judicial authority indicates support for the city’s financial reform (May 22)
Wenzhou’s intermediate court issued 30 suggestions on providing strong support for the city’s
financial reform. The 30 suggestions aim to provide judicial support, regulate private financing
activities, and ensure financial reform and innovation.
JRJ.com
Separation
membrane
The 12th Five-Year Plan for ‘separation membrane’ will be released soon (May 22)
The 12th Five-Year Plan for ‘separation membrane’ will be released soon. The plan states that
China will establish a mature market for the separation membrane sector and reach advanced
world standards during the 12th Five-Year Plan period (2011-15). Driven by the plan, the demand
for fluids for removing spent metal in the water market is expected to grow.
JRJ.com
Construction and
building materials
The NDRC accelerated approval of new projects on May 21st (May 23)
The National Development and Reform Commission accelerated approval of new projects on May
21st again by announcing about 100 new projects, mostly in the energy sector. This number was
roughly equal to the total approvals announced during the first 20 days in May. However, the
rebound in investment approvals has not helped commercial banks tackle the weakening credit
demand dilemma. New loans by the big 4 banks in the first 20 days of May totaled only RMB34
billion.
Sina Finance
Real estate &
construction and
building materials
The Chinese government may adjust the target outlined in the 12th FYP for public
housing construction (May 23)
The central government is assessing its target of constructing 36 million public housing units over
2011-15 to determine whether it needs to adjust it. This will require local authorities to work out
plans for construction of public housing during 2013-2015 based on the actual demand and submit
plans by the end of May.
Tencent Finance
Brokerage &
Securities
China launched the trial private bond placement programme for SMEs (May 23)
China’s two bourses have launched guidelines to kick off a trial programme that allows SMEs to
issue corporate bonds via private placements. However, property developers and financial
companies are not permitted to join the programme.
According to the guidelines, the bonds must have a duration of one year or more, and their interest
rates must not exceed three times that of the benchmark lending rate. Each bond issuance can
issue to not more than 200 investors.
JRJ.com
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 6
Securities &
brokerage
China’s first judicial interpretation on insider trading will become effective on June 1
(May 23)
The Supreme People’s Court of China has published its first judicial interpretation on criminal
cases filed against inside trading and illegal information leakage, to be effective on June 1. Under
the new law, any insider trading which makes a profit of more than RMB150,000, or whose
turnover exceeds RMB500,000 will be specified as “serious” violations and will be subject to
criminal punishment. It also noted that those who obtain inside information unintentionally would
not constitute a crime.
Caijing.com
Banking and
non-bank financials
China will give priority to stabilising economic growth (May 24)
The government should give priority to stabilising China’s growth and implement pre-emptive
policy adjustments and “fine-tuning more forcefully", according to a statement in an executive
meeting of the State Council.
The statement urged the implementation of structural tax reduction measures, maintenance of a
prudent monetary policy, optimised credit structure to focus more on satisfying the needs of the
real economy and major projects in the areas of railways, energy-saving and environmental
protection, as well as infrastructure, educational and healthcare facilities in rural and western
areas.
It also encourages private capital into sectors such as the construction of railways, municipal
utilities, energy, telecommunications, education and healthcare. Furthermore, the tightening
policies in the housing market will be stabilised and strictly implemented.
Xinhua.net
Railways The Ministry of Railways’ outstanding bonds are close to the regulatory limit of 40% of
its net assets (May 25)
The Ministry of Railways’ outstanding bonds are close to the regulatory limit of 40% of its net
assets. But it is still looking to raise the upper limit to increase project financing. The National
Development and Reform Commission and the Ministry of Finance are still studying the request
but give no response yet.
Tencent.com
Home-appliance Central government will provide subsidies for energy efficient home-appliances (May
25)
The central government launched RMB26.5 billion in subsidies to promote the consumption of
energy efficient home-appliance. Several ministries are working on detailed plans which are
expected to be released in July.
It also formulated detailed guidelines for the promotion of energy efficient air conditioners. The
guideline sets a wider scope of applicable for subsidies and principle of subsidies that is the more
energy efficient, the more subsides will be provided. The maximum subsidy is likely to be
RMB1,000 per unit.
JRJ.com
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 7
(May 14 to 18, 2012)
Date Related sectors Policy Source
May .18 Minerals, mining The Ministry of Commerce announced additional export quotas for rare earth minerals
totaling 10,680 tonnes. Of the added quotas, 9,490 tonnes were light rare earths, and
1,190 tonnes were medium and heavy rare earths, a statement on the MOC website
said.
The additional quotas would be provided to a total of 12 companies which had recently
passed examinations by the Ministry of Environmental Protection, the statement said.
The companies included Baogang Group, the country's largest light rare earth
producer, and the Aluminum Corporation of China.
Xinhua News
Agency
Railway The Ministry of Railways (MOR) sold RMB20 billion in bonds with a maturity of one
year, which will be used to fund construction projects and purchase new rail vehicles.
The MOR suffered a deficit of RMB6.98 billion in the first quarter, the Shanghai
Clearing House reported on May 2.
While the ministry can issue bonds to support major construction projects it should
also focus on improving its operating efficiency to pay off its massive debts, experts
said.
Global Times
May.16 Retail & Consumer The State Council announced the government will earmark RMB26.5 billion to
subsidise the consumption of household electrical appliances for a one-year period.
The appliances include air conditioners, flat-panel television sets, refrigerators,
washing machines and water heaters that meet energy-saving standards.
The government will allocate another RMB2.2 billion to promote the consumption of
energy-saving light bulbs and LEDs (light-emitting diodes) and RMB6 billion for
purchases of vehicles with engine sizes below 1.6 litres.
Another RMB1.6 billion will be earmarked to promote the consumption of highly
efficient electrical machinery, according to the statement, which did not elaborate on
how the subsidies will be implemented.
China Daily
Health care payment Minister of Health Chen Zhu announced that China plans to expand medical payment
reforms to ensure that new payment systems will be implemented throughout the
country's rural areas by 2015.
Chen said that the payment systems will help control medical costs, as they will result
in the scrapping of the fee-for-service system and cap patients' total medical
expenditures.
The current fee-for-service system is believed to have encouraged an excessive
number of prescriptions and unnecessary medical examinations.
Medical payment reforms will create a portfolio of payment models, including payment
based on diagnosis-related groups (DRGs), per diem payment for inpatient care and a
pre-pay system for outpatient care.
China Daily
May.15 Property China will increase residential land supply by more than 20% this year to further
restrain property prices, according to a plan released by the land authorities.
The Ministry of Land and Resources said that the government plans to provide a total
of 172,600 hectares of residential land this year, up 21.3% from 2011.
The amount of land to be doled out is double the annual average of 87,300 hectares
supplied over the past five years, the ministry said.
The ministry said 79.3% of the land supply will be used for affordable housing
development, as well as for small- and medium-sized commercial housing, up 0.7
percentage points from last year.
A total of 50,100 hectares of land, or 29.1% of the total, will be used to build affordable
homes, the ministry said.
Xinhua News
Agency
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 8
Property According to a policy released by the Shanghai Real Estate Trading Center, if a single
Shanghai householder has an apartment already registered under the owner's name,
they are not permitted to purchase another property,
Industry insiders believe that updating the rules is to remedy the loophole of the
original version.
Xue Jianxiong, research director of China Real Estate Information Corporation noted
that the new initiative shows that the real estate market is strongly regulated by the
Shanghai government, and it is also a response to rumours that Shanghai intends to
loosen real estate market regulations.
China Securities
Journal
May.14 Brokerage & Securities The China Securities Regulatory Commission (CSRC) is considering allowing more
foreign investors to enter the mainland stock and bond markets, by easing restrictions
on the country's Qualified Foreign Institutional Investor (QFII) scheme, the only
channel for foreign investors to access the country's capital markets.
This news, which the CSRC has yet to officially comment on, comes as the country
moves to open the domestic capital markets to more overseas investors. The nation's
financial regulators raised the total QFII quota from US$30 billion to US$80 billion on
April 3.
Under the current rules, foreign investors with QFII quotas are required to invest at
least 50% of their assets in mainland stocks. Regulators may soon scrap this
restriction though, according to the newspaper, citing a source from the CSRC.
China Securities
Journal
Government bond issuance The Ministry of Finance (MOF) announced that the State Council has given approval to
Shanghai and Shenzhen, as well as Zhejiang and Guangdong province, to continue
the trial bond issuance programme this year.
China Daily
May.12 Banking and non-bank
financials
The People’s Bank of China announced that China will lower banks' reserve
requirement ratio (RRR) by 0.5 percentage points starting May 18.
The cut, the second of its kind this year, will lower the RRR for the country's large
financial institutions to 20% and the medium- and small-sized financial institutions to
16.5%.
The cut will release an estimated RMB400 billion in capital into the market. China had
previously lowered the RRR by 0.5 percentage points on February 24.
China Daily
(May 7 to May 11, 2012)
Date Related sectors Policy Source
May.11 Nuclear Power Qian Zhiming, deputy director of China’s National Energy Administration (NEA), said in
an interview that draft guidelines for nuclear power development have been approved
by the NEA, and are currently under review by the China Securities Regulatory
Commission (CSRC). China targets increasing nuclear power installed capacity to
about 70,000 MW by 2020, according to draft guidelines.
Hexun
Cultural China targets to at least double the total value-added of the cultural industries over
2011-15, according to the 12th Five-Year Plan for cultural reform and development
released by the Ministry of Culture. The Chinese government will strengthen policy
support for culture-related industries, especially the comic and animation industry,
according to the plan.
Hexun
Pension fund investment Administrative measures for state pension fund investment have been formulated and
are currently under review, according to unnamed government officials. Thirteen
provinces and municipalities have entrusted some of their pension funds to the
National Council for Social Security Fund, said Yin Weimin, the Minister of Human
Resources and Social Security.
Tencent Finance
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 9
May.10 Property The State Council has decided to expand the coverage of the trial property tax reform
in 2012, although details are still unclear, according to an official at the Ministry of
Housing and Urban-Rural Development. The central government is assessing and
analysing the effects of the pilot programmes carried out in Shanghai and Chongqing,
according to media reports.
Cnstock.com
Financial The CSRC announced new rules to promote more dividend payout by listed
companies, and may disclose names of companies with a low dividend payout history.
Companies will be required to disclose their profit distribution plan over the next three
years in their IPO filings, according to a notice released by CSRC.
CNBC
May.9 SOEs China's Supreme Court issued new rules that smooth the way for bringing lawsuits
against dominant companies. The rules allow plaintiffs to bring their cases in more
courts, specifically lower courts in big cities such as Shanghai, Beijing and
Guangzhou. The new rules also classify SOEs as dominant entities, making it easier
for plaintiffs to launch legal battles against them.
WSJ
Sugar Sugar-industry websites in China posted a notice from the government-backed China
Sugar Association offering rewards ranging from RMB1,000 (US$159) to RMB500,000
(US$79,365) for information that "exposes criminal sugar smuggling." The government
promised even more for "exceptional cases." The association said the anti-smuggling
reward was "to preserve normal sugar production and operation and the interests of 40
million sugar farmers in poor and remote areas."
WSJ
Financial The CSRC is considering a proposal to lower the bar for obtaining a license that allows
foreigners to buy securities in the country, which could pave the way for hedge funds
to gain direct access to the Chinese market, said two industry sources with knowledge
of the regulatory agency's thinking on the issue.
Reuters
High-end equipment
manufacturing
According to the 12th Five-Year Plan for the high-end equipment manufacturing
industry released by the Ministry of Industry and Information Technology, China
targets to increase the sales revenue of the industry to over RMB 6 trillion by 2015,
and make it a pillar industry by 2020.
JRJ.com
Water Conservation The Ministry of Water Resources plans to release a series of measures to regulate the
use of water resources and encourage water conservation. It plans to complete
trans-provincial water allocation, offer vigorous support to water conservation projects
and promote the water pricing reform in the next five years.
Sina Finance
May.8 LED The Ministry of Science and Technology began to seek feedback on the 12th Five-Year
Plan for LED. According to the draft plan released on the Ministry’s website, it targets
to increase the sales revenue of the LED industry to RMB500 billion, and develop 30
highly competitive leading LED companies during the 12th Five-Year Plan period
(2011-15).
JRJ.com
Energy conservation China’s Ministry of Finance and Ministry of Housing and Urban-Rural Development
said in a notice that they’ll take some joint measures, such as providing subsidies, to
promote the development of green buildings. China targets to increase the share
green buildings make up as a percentage of China’s total newly constructed buildings
to over 30% by 2020.
JRJ.com
May.7 SMEs The Ministry of Finance said in a notice that it will take various financial and tax
measures, including offering tax concessions, setting up SME development
foundations to help ease the strain on their cash flow, and increasing their access to
government procurements, etc, to support the development of small enterprises.
Tencent Finance
Telecommunications According to the 12th Five-Year Plan for the telecommunications industry released by
the Ministry of Industry and Information Technology, China targets to increase the
revenue of the telecommunications industry to over RMB1.5 trillion by 2015 and invest
over RMB2 trillion in related infrastructure construction.
Tencent Finance
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 10
Brokerage Zhu Guangyao, a Vice Minister of Finance, said the central government plans to allow
foreign firms to own as much as 49% of joint ventures involved in securities
underwriting. Foreign firms would also be allowed to take a 49% stake in commodity
and financial-futures firms.
Sina Finance
(April 30 to May 4, 2012)
Date Related sectors Policy Source
May.4 Environment protection The government has issued a plan to boost the development of the waste-to-energy
industry during the 12th Five-Year Plan period. Under the plan, government subsidies
and preferential taxation treatment will be granted to waste-treatment companies to
promote the rate of harmless treatment of household garbage nationwide, especially in
large and medium-sized cities.
Meanwhile, Li Keqiang, the Executive Vice-Premier of the State Council pointed out at
an international meeting that China will invest up to RMB5 trillion in the environment
protection sector in 2011-15.
Hexun
May.3 Software, integrated circuit China has introduced new stimulus policies to boost the development of the software
and integrated circuit (IC) industries. As part of the new policies, qualified
manufacturers of IC will be entitled to tax cuts or exemptions. In addition, software
firms will continue to enjoy preferential corporate income tax policies. The government
also encourages consolidation in the software and IC industries and will provide
financial support for technological research and development.
Hexun
Agriculture The Ministry of Finance will launch a pilot programme of value-added tax exemption on
certain agricultural products on July 1, 2012, which is expected to greatly boost the
development of the agriculture sector.
Cnstock.com
Banking China will postpone the implementation of new capital adequacy rules for banks until
the year-end, which was scheduled to take effect on July 1, 2012. According to the
new capital adequacy rules, systemically important banks in China are required to
meet a minimum 11.5% capital adequacy ratio and 9.5% core capital adequacy ratio
by 2013. The market believes that the delay will to a certain extent ease the financing
pressure of relevant banks and boost new loans.
Reuters
Insurance Foreign insurance companies will be able to participate in the compulsory third-party
insurance business upon approval, according to an amended regulation released by
the State Council. This is expected to benefit foreign insurers and increase their share
in China’s insurance market.
Reuters
May.2 Futures Four major futures exchanges in China, namely Dalian Commodity Exchange,
Shanghai Futures Exchange, Zhengzhou Commodity Exchange and China Financial
Futures Exchange, announced to lower transaction costs for futures, starting from
June 1, 2012.
Sina Finance
May.1 Brokerage & Securities The Shanghai Stock Exchange, the Shenzhen Stock Exchange and the China
Securities Depository and Clearing Corporation jointly announced that the transaction
cost of A-shares will be lowered by 25%, starting from June 1, 2012. Meanwhile, to
further optimise the charging structure, the two exchanges will base the initial listing
fee and annual listing fee on companies’ registered capital, and offer a 50% discount to
GEM-listed companies.
Besides, the China Securities Regulatory Commission has officially issued the
guidance on the reform for the IPO issuing system, according to which, the
three-month lock-up period has been canceled to boost the circulation of new shares.
In a separate article, it was reported that the Shenzhen and Shanghai exchanges have
started to seek feedbacks on the proposed delisting rules, in a move to push forward
the healthy development of blue chips.
Hexun
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 11
Apr.30 Foreign trade, energy,
consumer goods
The State Council released the administrative guidance on foreign trade to ensure
sustainable growth. Import duties on primary energy resources and daily necessities
may be lowered through provisional tariffs, subject to domestic economic conditions.
Cnstock.com
Airlines & Aviation Several airlines raised the fuel surcharge for some international routes, including US,
Canada, Australia and Brazil, by RMB100-RMB300, starting from May 1, 2012.
Ifeng.com
(April 23 to 27, 2012)
Date Related sectors Policy Source
Apr.27 Bank The CSRC drafted IPO guidelines for small and medium-sized Chinese banks.
According to the draft, 20% of small and medium-sized Chinese banks are likely to be
listed in coming years only if they meet the following criteria: ranked the third level or
above by banking supervision departments in recent three years; risk-control
indicators in the recent year meet the requirements; asset profit ratio and return on
capital ratio are higher than the bank industry average in the recent year; bad-loan
ratio is lower than the bank industry average in the recent year; no violation of laws
and regulations in recent three years.
Finance.ifeng.com
Financial service A trial service centre to register private lending transactions in Wenzhou was
launched, representing the official start of financial reform in Wenzhou. The centre will
be run as a company, with a registered capital of RMB6 million. It will provide a series
of financial services including providing platforms for related financial institutions,
integrating information and disclosing it, rating related institutions and registration of
private lending transactions.
Sohu.com
Energy The 12th Five-Year Plan on the natural gas industry is pending approval while
coverage of the trial reform pricing mechanism for natural gas may be expanded.
During the 12th FYP, the consumption proportion of natural gas as a once-off energy
should be lifted from 4% to 7% or 8%. Driven by that, PetroChina will import much
more natural gas from this year.
JRJ.com
Apr.26 Finance The Zhejiang provincial government has approved the financial reform plans for
Wenzhou and would release them soon. Plans pointed out the objectives of reform are
following:Add 30 small loans companies and increase the number to 100 in 2013,
covering the urban area and major towns; municipal branches of banks are required to
set up departments specialising in small businesses to integrate rural cooperative
financial institutions into the shareholding system; new type of rural financial
institutions such as village banks will cover the whole cities and counties. The
government promised to provide strong policy support to achieve goals.
Sina Finance
Water resource China had vowed to invest RMB1.8 trillion in water conservation projects during the
12th Five-Year Plan period (2011-2015), with the central government contributing
RMB800 billion and local governments raising RMB1 trillion. Furthermore, RMB4
trillion would be invested to construct public water projects by 2020. To achieve the
goals, local governments will be required to continue to set aside 10% of local
revenues accrued from land sales for agricultural irrigation and water conservation.
JRJ.com
Energy The National Energy Administration is drafting regulations to encourage private
investment in China’s energy sector and may release them by the end of June.
JRJ.com
Apr.25 Solar & wind power The Ministry of Science and Technology (MST) unveiled the Five-Year Plan on solar &
wind power technology development. The solar power plan focuses on the research
and development of crystalline silicon solar cells, thin-film batteries and new batteries;
while the latter plan focuses on the establishment of large wind plants, targeting to
establish six plants onshore and two offshore. To ensure the success, the MST will
encourage private capital to enter these two sectors and to take advantage of various
related policies.
Hexun
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 12
Public housing fund The Ministry of Housing and Urban-Rural Development may expand the scope of
application of the public housing fund. Funds may possibly be used to rent and
decorate flats, which will improve living conditions. Furthermore, more pilot
programmes are expected to be established to use public housing fund to support the
construction of social housing. These policies will help make good use of idle public
housing funds.
JRJ.com
Finance A Shanghai Exchange official said the launch of Small Medium Enterprise (SME)
private placement bonds had been approved. These bonds include, but not limited to,
high-yield bonds. And the issuer should meet the following criteria: firstly, SMEs with a
credit rating of between BBB to AA- (including listed enterprises); located in developed
areas and especially limited in Beijing, Shanghai, Tianjin, Zhejiang, Suzhou and
Guangdong; high-tech enterprises or agriculture enterprises or enterprises with
independent innovation abilities.
Sina Finance
Apr.24 Infrastructure To balance regional development, related government departments are working on the
adjustment of “national highway network planning”, including connecting county
highways to the network and extending the network by 20,000 km. The draft has been
completed and will be distributed to provinces for more suggestions. This indicates the
government’s strong support to the construction of highways.
JRJ.com
Insurance The China Insurance Regulatory Commission and the Ministry of Finance plan to
establish tax deferred pension trial projects in Shanghai within this year. Many other
provinces actively applied for the establishment of trial projects. Tax deferred pension
may be extended to the entire country earlier than expected. The preferential tax
amount for individual tax deferred pension may be between RMB500 and RMB1,000
per month. Four experienced listed insurance companies are likely to be the pioneers.
JRJ.com
(April 16 to 20, 2012)
Date Related sectors Policy Source
Apr.19 Financial services In a move to tighten the banking sector's risk prevention and control, the Ministry of
Finance (MOF) ordered financial enterprises to keep 1.5% of their gross loans as
general provisions beginning in July this year, up from the existing 1%.
The new "dynamic provision" rules will apply to policy banks, commercial banks,
financial companies, urban and rural credit cooperatives, lease financing companies
and financial asset management firms, as well as smaller town- and village-based
banks.
To ensure a smooth transition, financial enterprises will be given a grace period of five
years to meet the new regulatory standard.
Under the existing rules, financial asset management firms and small town- and
village-based banks are not subject to the regulation in this regard.
Xinhua News
Agency
Central banking Commercial banks in several cities, including Beijing, Shanghai and Guangzhou
lowered mortgage rates by as much as 15% for first-home buyers, according to
unidentified industry sources. First-home buyers can generally enjoy at least 10%
discount, they said.
China will increase liquidity via open market operations and cutting banks' required
reserves to steer the economy towards a soft landing, the official Xinhua news agency
quoted an unnamed central bank official as saying late on Wednesday.
The People's Bank of China will "increase reverse repo operations and cut the reserve
requirement ratio at an appropriate time to release liquidity," the official was quoted as
saying in an interview with the state news agency.
China Daily
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 13
Auto China is making the industrialization of pure electric vehicles and plug-in hybrid
automobiles the focus of its new plan to develop energy-saving and alternative-energy
vehicles by 2020.
The measure, aimed in part at upgrading the auto industry, was adopted by the State
Council on Wednesday in the long-awaited industry development plan on energy
saving and new-energy vehicles.
The plan sets the target of an accumulative production and sales of 500,000 pure
electric and plug-in vehicles by 2015, and more than 5 million by 2020.
It also aimed to lower the average fuel consumption of passenger cars produced in
2015 to 6.9 liters per 100 kilometers, and further to 5 liters per 100 kilometers in 2020.
People’s Daily
Shipping & Agriculture The National Development and Reform Commission has established an ad-hoc group
to study plans to boost the weakening shipping industry, and domestic shipping
companies might be granted tax concessions.
China Development Bank (CDB) said Thursday that it will extend 200 billion yuan
($31.75 billion) in loans over the 12th Five-year Plan (2011-2015) period to support the
development of modern agriculture.
The loans will be used in 10 key sectors, including modern agricultural production and
modern gardening industries.
Xinhua News
Agency
April 18 Healthcare China plans to expand a basic medical care insurance plan in the country and ensure
a coverage rate of no less than 95%.
In 2012, the government will provide an annual per-capita subsidy of RMB240 for
basic medical insurance programmes designed for urban and rural residents, said a
circular published on Wednesday about the country's work arrangement in 2012 for
healthcare reform.
The circular also called for measures to promote the development of commercial
health insurance and non-public hospitals in China.
Sina Finance
Aviation The Ministry of Finance has set up a new government fund to collect money for civil
aviation development, but has abolished two charges, so the move will not affect air
travelers' costs.
The move allows the authorities to use the money on more than just infrastructure
construction.
Passengers will stop paying the airport construction fee and airlines will no longer have
to pay into the Civil Aviation Infrastructure Construction Fund.
The change of fund names also signals a change in how and where the fund can be
spent. For example, the fund can now be used to develop energy conservation and
emission-reduction measures.
Tencent Finance
April 14 Foreign exchange regime The People's Bank of China announced that it would widen the yuan's daily trading
limit against the US dollar from 0.5% to 1%.
In the foreign exchange spot market, Chinese banks can exchange the yuan 1 percent
above or below the central parity against the U.S. dollar announced by the China
Foreign Exchange Trading System each trading day.
Reuters
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 14
(April 9 to 13, 2012)
Date Related sectors Policy Source
Apr.13 Infrastructure Five ministries, including the Ministry of Transport, the National Development and
Reform Commission, the Ministry of Finance, the Ministry of Supervision, and the
State Council jointly issued a notice to prohibit the illegal transfer of highways financed
by government loans. Highways financed by government loans cannot be operated for
commercial purposes, according to the notice.
Tencent Finance
Apr.12 Property Commercial banks in several cities, including Beijing, Shanghai and Guangzhou
lowered mortgage rates by as much as 15% for first-home buyers, according to
unidentified industry sources. First-home buyers can generally enjoy at least 10%
discount, they said.
Sina Finance
Financial China will start a pilot project to allow Hong Kong banks to lend yuan directly to
Shenzhen firms and vice visa. The direct loan programme has received state approval
and low-cost yuan loans from Hong Kong will be used mainly to develop the Qianhai
zone in Shenzhen, according to a notice released by the Shenzhen municipal
government recently.
Reuters
Apr.11 Shipping The National Development and Reform Commission has established an ad-hoc group
to study plans to boost the weakening shipping industry, and domestic shipping
companies might be granted tax concessions.
JRJ.com
Financial The State Administration of Foreign Exchange (SAFE) said recently that it will
gradually broaden channels for capital outflow, encourage eligible institutions to invest
overseas, and relax restrictions on overseas investment by individuals.
Sina Finance
Financial China is considering increasing the ability of Chinese corporations to borrow
yuan-denominated funds outside its borders for use on the mainland, according to
people familiar with the matter, a potential move aimed at broadening cross-border
capital flows as it pushes to make the yuan a global currency. The People's Bank of
China and other government agencies are weighing a quota-based system through
which approved mainland businesses would be able to take out yuan loans offshore
and remit the funds, the people said. Subsequent to this report, Reuters reported on
April 12, 2012 that China will commence a pilot project in Shenzhen for cross-border
lending with Hong Kong (refer to the Reuters story above).
WSJ
Porperty Guangdong may impose property tax on new homes, according to Guangzhou-based
Yangcheng Evening News. Levying property tax can help combat property
speculation, increase housing supply, and curb property prices, the paper cited a
government official as saying.
Yangcheng
evening news
Apr. 10 Banking, non-bank
financials
The China Banking Regulatory Commission said in a notice posted on its website that
it began an investigation into bank fees on April 1, adding that banks that are found to
be charging high fees for routine services will be punished. China's bank regulator
warned in the notice that lenders will be "severely punished" for charging excessive
fees.
WSJ
SOEs The Chinese government tightened rules on major SOEs investing in non-core
businesses overseas. SOEs will not be allowed to make investment abroad in
non-core businesses, unless they get approval from the State-owned Assets
Supervision and Administration Commission of the State Council (SASAC), according
to a notice released by the nation’s state assets watchdog.
Cnstock.com
Taxation Foreign joint ventures involved in oil and gas production in China will be charged a
compensation fee calculated on production value rather than volume, according to the
Ministry of Land and Resources. The fee will extend to unconventional oil and gas
resources such as coal-bed methane gas, the ministry said, adding that it will be
retroactive from November 2011 and valid through March 2020.
WSJ
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 15
Apr. 9 IT According to the 12th Five-Year Plan for the software and IT sector released by the
Ministry of Industry and Information Technology (MIIT) recently, the Chinese
government targets to double the industry turnover to RMB4 trillion by 2015, and
develop at least 10 software companies with annual revenue of over RMB100 billion
each.
Tencent Finance
Coal, Power, Oil & Natural
gas, Logistics
The National Development and Reform Commission announced eight key tasks for
this year, including taking measures to ensure and stabilise the supply of coal, power,
oil & gas, support the development of the logistics industry, closely monitor economic
activities, promote economic restructuring, etc.
Cnstock.com
(April 2 to 6, 2012)
Date Related sectors Policy Source
Apr.5 Insurance China has begun preparing draft regulations that will allow insurers to trade domestic
stock index futures as part of a broader plan to gradually open up the domestic
securities market. Participation by Chinese insurers, however, would be limited to
hedging, and they would not be permitted to trade for speculative reasons, according
to unidentified industry sources.
China Securities
Journal
Apr.4 Banking, non-bank
financials
China needs to break a banking “monopoly” of a few big lenders that make easy profits
because it’s hard to borrow money elsewhere, Premier Wen Jiabao said. The country
can extend nationwide the successful parts of a pilot program in Wenzhou in Zhejiang
province that allows private financing, including non-bank lending, according to Wen.
Bloomberg
Financial The China Securities Regulatory Commission increased the quotas for qualified
foreign institutional investors to US$80 billion from US$30 billion, according to a
statement on its website. Offshore investors will also be allowed to pump an extra
RMB50 billion (US$7.95 billion) of local currency into the country, up from RMB20
billion.
Bloomberg
Macro, Property, Agriculture Premier Wen Jiabao said in an economic meeting that the government should release
policy fine-tuning measures as soon as possible, provide vigorous support for the
agricultural sector to ensure sufficient supply of agricultural products, promote the
growth of SMEs, and “resolutely” maintain its curbs on the property market.
Cnstock.com
Apr. 3 Environment protection The Ministry of Industry and Information Technology has set the 2012 energy
conservation target at 5% of energy consumption per unit of industrial value-added.
The target for 2011 was 4%.
Sina Finance
Imports China raised import tariffs by increasing the customs value. The customs value of
several imported goods, such as perfume and consumer electronics, has been
increased by over 50%. The market expects the import tax on luxury items may be
levied on the basis of the full value of the goods.
Tencent Finance
Apr. 2 Stocks The China Securities Regulatory Commission (CSRC) announced that it has started to
seek feedbacks on the proposed new rules for IPOs, in a move to solve high initial
pricing and to curb speculative trading. According to the CSRC, the reform aims to
ensure the pricing of new shares reflect the true value of enterprises and protect
investors' rights and interest. The CSRC is also considering increasing scrutiny of
IPOs with PEs that are higher than their listed industry peers, especially when it is
more than 25% higher.
In a separate article, it was reported that the latest development plan for the OTC
market has been submitted to the State Council, according to which, more than 100
software and high-tech companies may be listed in 2012.
JRJ.com
Pharmaceuticals As stated by the National Development and Reform Commission, the retail price caps
for 53 kinds of drugs for digestive systems will be cut by 17% on average, starting from
May 2012. Prices for three other categories of drugs, namely, antineoplastic drugs,
Xinhua News
Agency
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 16
disease-modifying antirheumatic drugs and blood by-products, may also be reduced
soon.
Aviation The National Development and Reform Commission and the Civil Aviation
Administration of China announced the new fuel surcharge rate for domestic routes.
The new regulation, which took effect on April 1, 2012, states that the fuel surcharge
rate cannot exceed RMB0.002541 per passenger-km with every RMB100 increase
over the base blanket purchasing jet fuel price.
Following the new regulation, several airlines raised the fuel surcharge for some
domestic routes from RMB130 to RMB140, starting from April 5, 2012. After the
adjustment, domestic routes that exceed 800 km will incur a fuel surcharge of about
US$22.
Sina Finance
Internet The Ministry of Industry and Information Technology plans to speed up the expansion
of Internet broadband access. The objective is to cover 50% of all users with
broadband access speed of 4Mbps or above and to install fiber-to-the-home
broadband connections for 35 million families this year.
China Daily
Macro The PBoC said it would move ahead gradually on interest rate liberalisation, will
strengthen two-way movement of the RMB, and pledged to continue its current
“prudent” monetary policy stance. It would also actively explore measures to guide the
supply of money and credit to grow steadily.
Wall Street
Journal
(March 26 to 30, 2012)
Date Related sectors Policy Source
Mar. 30 Communication The National Development and Reform Commission issued suggestions on the
construction of “China’s Next Generation Internet” by identifying two development
stages – commercial pilot programme and full adoption in the commercial sector.
During the first stage, IPv6 will be used by the 100 most popular commercial websites,
70% of external networks of central or provincial governments, external networks of
key universities, new telecom businesses and new Internet fixed terminals, as well as
mobile terminals. During the second stage, IPv6 will be used by the 1,000 most
popular commercial websites, 70% of external networks of county governments and
universities, mobile Internet service, upgrade of China telecom business, interactive
TV business and TV terminals.
JRJ.com
Construction & Building
Materials
A National Development and Reform Commission official said China will strictly limit
investment in new cement capacity this year. In addition, the government will
encourage M&A in the cement industry by providing financial support to eliminate
backward production capacity and to prevent blind expansion of capacity and low-end
redundant construction. These measures are in line with requirements under the 12th
Five-Year Plan.
JRJ.com
Automobile The State Council has approved a draft of safety regulations for school buses. The
draft clearly defines governments’ responsibilities. Local governments above the
county level are responsible for school bus safety management in their jurisdiction,
while the central government is in charge of guidance and supervision of school bus
safety. For rural areas that cannot ensure nearby schooling or convenient public
transport to schools, measures should be taken to ensure students' access to school
buses.
It also specifies stricter requirements for technical conditions of school buses and bus
drivers' qualifications, as well as limiting maximum speed limits and load of school
buses.
The draft will not only protect students from traffic accidents but will also create broad
market opportunities for businesses and coach makers.
China daily
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 17
Mar. 29 Financial The State Council will launch a trial reform financing programme in Wenzhou. It
pointed out 12 major tasks for the programme as follows:
regulate the development of private financing business; promote the development of
new types of financial institutions; cultivate professional asset managers; execute
individual foreign direct investment; deepen reform of local financial institutions;
establish multi-level financial services system; develop local capital market; develop
various types of debt products; broaden the range of insurance services; construct
better social credit system; improve local financial management system and establish
an economic reform system and risk-prevention mechanisms.
Insidechina.com
Automobile The Ministry of Industry and Information Technology (MIIT) plans to launch trials of
methanol-fueled cars in Shaanxi, Shanxi and Shanghai as these three chosen regions
have all accumulated abundant experience in developing methanol-related
technologies including methanol-fueled cars.
The MIIT said it expects the trials to help establish a criterion for the development of
methanol-fuelled cars, provide solutions to construct, improve and manage
infrastructure facilities, as well as develop policies for industry development.
JRJ.com
Mar. 28 Securities Chinese Vice Premier Wang said China should create conditions for the establishment
of a national over-the-counter market system. He also emphasised that it was crucial
to accelerate the mechanism reform by promoting direct financing and optimising
financial structures to meet the demand of diversified investments.
Hexun
Communication Several ministries will jointly study plans for the implementation of the China
broadband strategy. They will map out procedures for the establishment of
organisations, investigation, document drafting and consultation and summit the plans
to the central government for approval in June.
JRJ.com
E-commerce According to the newly issued 12th Five-Year Plan for E-commerce, China targets to
increase E-commerce turnover to over RMB18 trillion by 2015. E-commerce of
corporations will become the main contributor to that goal and the main driver to
improve China’s competitiveness in the global market. Mobile E-commerce will also
get priority to be developed in agriculture, business management, safety production,
tourism, etc.
Cnstock.com
Mar. 27 Financial The Ministry of Finance said that local social security funds can only be invested in
fixed deposits and treasury bonds, while any other direct or indirect investment is
strictly prohibited. It also points out the necessity to consolidate bank accounts of local
social security. Bank accounts of provincial social security have to be reduced to five,
while county level is limited to three by the end of this year.
Sina Finance
Securities China’s first cross-exchange ETF products, the CSI 300 Exchange Traded Fund, will
be approved to execute day trading. They will be launched by Huatai-PineBridge
Money Market and Harvest and be listed on Shanghai and Shenzhen stock exchanges
respectively. This signals a major move in creating a blue-chip market and paves the
way for more ETF launches.
Cnstock.com
Luxury goods, Food &
Beverages
Chinese Premier Wen Jiabao said SOEs and agencies must “strictly control” funds
used to renovate “luxury” office buildings or buy artwork, according to a statement on
the government’s website. He also pledged to ban the use of public funds to buy
cigarettes and “high-end” alcohol, warning that this may easily lead to corruption in the
Communist Party and endanger the ruling Party’s survival.
Bloomberg
Mar. 26 Securities Based on the requirements of the 12th Five-Year Plan, the China Securities
Regulatory Commission will further promote reform to improve capital markets in nine
aspects, including the establishment of a consistent regulation system of the
over-the-counter market, the lower requirements for H-share listing and the
strengthening information disclosure system, etc.
JRJ.com
Financial Quotas for RMB Qualified Foreign Institutional Investors (QFII) were approved to reach
RMB20 billion in February and distributed to nine fund management and 12 securities
companies. 80% of the money will be invested in bonds while the rest will be invested
Sina Finance
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 18
in equities (mainly in A shares). Based on this, the China Securities Regulatory
Commission will further promote the opening-up of the capital market by expanding the
RMB QFII pilot scheme, increasing QFII & RMB QFII quotas and expanding the
investment range for RMB QFII.
(March 17 to 23, 2012)
Date Related sectors Policy Source
Mar. 23 Property A document drafted by the NDRC and approved by the State Council declares that the
government will speed up reform of China’s fiscal regime and will expand the property
tax reform pilot scheme at an appropriate time. Industry insiders predict that Shenzhen
and Guangzhou may be included in the scheme. At present, property tax is levied in
two cities: Shanghai and Chongqing.
Tencent Finance
Mar. 22 Coal mining The National Energy Administration (NEA) released a coal industry development plan
for the 2011-2015 period. According to the plan, China intends to form 10 coal
companies with an annual capacity of 100 million tonnes each, and another 10 with a
capacity of 50 million tonnes each by 2015.
These 20 companies are expected to account for over 60 percent of the nation's total
coal output. And China’s annual coal output will be controlled at around 3.9 billion
tonnes during the period.
Xinhua News
Agency
Economic planning The government has approved a plan to rejuvenate the economy of northeast China
by 2015.
The northeastern region, once a leading industrial hub, will be built into an
internationally competitive base for equipment manufacturing, raw materials and
energy supplies, according to a statement from the National Development and Reform
Commission (NDRC).
The region, which includes the provinces of Heilongjiang, Jilin and Liaoning, will also
be built into an important base for agriculture and animal husbandry, according to the
NDRC.
China Daily
Anti-dumping The Ministry of Commerce (MOC) announced that it will levy anti-dumping duties on
photographic paper imported from the EU, the US apan, saying the imports have
caused "material damage" to the industry in China.
The anti-dumping measures will last for five years beginning Friday and the duty rates
range from 16.2% to 28%, depending on the dumping margin, or the difference
between the average value of the product in its country of origin and its export price.
Xinhua News
Agency
Electronics The Ministry of Finance announced that China will raise an import tariff on liquid crystal
display (LCD) panels to 5% starting on April 1.
China has previously placed a 3% tax on imported LCD panels of 32 inches or more
(excluding backlight modules) in order to spur development in the country's booming
television manufacturing sector, which is heavily reliant on LCD panel imports.
The increased tariff comes at a time when several domestic LCD production lines have
gone into operation, changing the market's dynamics.
Sina Finance
Pension fund investment It has been announced that the National Council for Social Security Fund has been
entrusted to manage Guangdong provincial pension fund worth around RMB100
billion.
The National Council for Social Security Fund said much of the fund will be deposited
in banks and invested in the bonds market, rather than in stock markets as previously
rumoured.
Sina Finance
Mar. 21 Agriculture The Ministry of Finance (MOF) said in a statement that it has earmarked RMB24.3 People’s Daily
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 19
billion as subsidies for farmers to support the upcoming spring farming work.
So far this year, the MOF has allocated RMB107.8 billion in subsidies to help farmers
buy agricultural materials such as equipment to plant seeds and reapers, an increase
of nearly 30% y-o-y, according to the statement.
Mar. 20 Banking People's Bank of China Governor Zhou Xiaochuan wrote in an article that conditions in
China are "basically mature" for interest rate liberalization and the creation of a deposit
insurance system. He said the authorities are studying the launch of such a system
when conditions mature but did not give a specific timetable for these reforms.
In the same article, he also argued that China should open up its financial markets,
enhance the two-way flexibility of the yuan and gradually open more channels for
outbound capital flows and push forward the opening of the capital account.
Sinan Finance
Energy China raised fuel prices for the second time this year, hiking gasoline and diesel by
6.5% to 7%. Prices went up by RMB600 a metric tonne, the biggest hike since June
2009.
China, the world's second-biggest oil user, raised fuel prices for the first time this year
by RMB300 a tonne on Feb 8.
The prices are set in reference to a basket of crudes (Brent, Dubai and Cinta), which
jumped more than 10% in the past 22 working days.
There's widespread market speculation that China will reduce the price-adjustment
reference period to 10 days, from 22 days, to better reflect volatile global oil
prices. The NDRC hasn't said when it might further reform the pricing system.
China Daily
Mar. 19 Taxation China’s Finance Minister Xie Xuren said at a forum that China is considering
increasing the proportion of underlying tax, which is smaller compared with circulation
tax under the current Chinese taxation system.
Further, China will expand trials of replacing turnover tax with VAT in a bid to boost the
development of the tertiary industry.
The underlying tax includes income tax of individuals and corporate business income
tax, while the circulation tax covers the VAT, turnover tax, and consumption tax.
China Daily
(March 12 to 16, 2012)
Date Related sectors Policy Source
Mar. 16 Property Banks in Beijing are lowering mortgage rates for first home buyers, and the best deal
currently is a 15% discount to the benchmark rate. However, the minimum down
payment requirement for first-home buyers remains at 30%.
Tencent Finance
Furniture Shen Danyang, spokesman for the Ministry of Commerce, disclosed in a press
conference that the ministry will test run the “old for new” furniture subsidy programme
in selected cities, and could expand the scheme to nationwide.
People.com
Mar. 15 Energy Liu Tienan, head of the National Energy Administration, said recently that the
upcoming 12th FYP for exploration and development of shale gas is expected to
create a golden period for the development of related industries. China’s shale gas
development strategy during the 12th FYP period will mainly focus on shale gas
exploration, according to Liu.
JRJ.com
Financial Chinese Premier Wen Jiabao said in a press conference that the PBoC and the China
Bank Regulatory Commission are considering launching a pilot scheme in Wenzhou to
regulate private lending and encourage private capital flow into the financial industry.
Hexun.com
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 20
Banking China is easing restrictions on lending capacity at three of the nation’s four biggest
banks after new loans dropped to a four-year low, officials at the banks with knowledge
of the matter said. The regulator is letting the lenders use more of their deposits to
make loans, the bank officials said, after China’s exports, industrial production and
retail sales declined in the first two months.
Bloomberg
Mineral Shen Danyang, spokesman for the Ministry of Commerce said in a press conference
that China’s rare earth export restrictions are justified and are in accordance with
World Trade Organization rules. The policy aims to protect resources, and realise
sustainable development, according to Shen.
China Daily
Mar. 14 Pharmaceutical China vowed to extend drug-price cuts, rankling some of the country’s largest
manufacturers, in an overhaul of its health-care system to trim the cost of caring for an
aging population. The plan will be supported by a tendering system tested in Anhui
province that encourages drug makers to compete on price and quality for state
contracts.
Bloomberg
Property Chinese Premier Wen Jiabao stressed in a press conference that home prices remain
far from a reasonable level and relaxing curbs could cause “chaos” in the market,
indicating no imminent relaxation of cooling measures. A bursting property bubble
would hurt the entire economy, and the government wants “long-term steady and
sound growth” in housing, according to Wen.
Bloomberg
Mar. 13 Property Seven ministries, including the Ministry of Housing and Urban-Rural Development,
National Development and Reform Commission, etc, said in a report published
recently that they aim to stabilise the first-home mortgage policies this year. The
government should ensure adequate credit for first-home buyers, while curbing
unreasonable housing demands, according to the report.
Sina Finance
High-tech China will exempt import duties on a wider list of "key technical equipment", in a further
step to shift manufacturing to strategically important industries such as cleaner and
higher-tech sectors in the world's second-largest economy. The ministry did not
elaborate on the value of the tax cut. The new list will come into effect on April 1.
Reuters UK
Shipbuilding The Ministry of Industry and Information Technology released the 12th Five-Year Plan
for the shipbuilding industry, pursuant to which the shipbuilding industry will see the
total sales revenue increase to RMB1.2 trillion by 2015, nearly doubling from 2010.
Sina Finance
Securities The China Securities Regulatory Commission has issued a circular to domestic
securities companies, according to unnamed sources. The regulatory authority orders
various departments within these companies, including the asset management
department, the investment banking department, etc, to take joint measures to combat
speculation in new shares.
Hexun.com
Mar. 12 Defense & Telecom The Ministry of Industry and Information Technology is drafting supporting rules to
guide and encourage private capital investment, especially investment in the national
defense industry and the telecom industry.
Tencent
Finance
Retail, Nondurable goods,
Durable goods, etc
According to a notice issued by China’s Ministry of Commerce, the ministry will launch
a nation-wide Consumption Promotion Programme from April 2 to May 4. It points out
in the notice that expanding consumption is a long-term strategy Beijing sticks to, and
an important measure Beijing takes to cope with the global financial crisis.
government
website
Communication, Internet,
Information Technology
The 12th FYP for broadband network construction will be issued after the NPC &
CPPCC sessions. China aims to expand average bandwidth to at least 20 MB/s for
urban households and 4 MB/s for rural households by 2015. In the capitals of more
developed eastern regions, average bandwidth is expected to reach 100 MB/s,
according to sources close to the situation.
JRJ.com
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 21
(March 5 to 9, 2012)
Date Related sectors Policy Source
Mar. 9 Property The Ministry of Human Resources and Social Security said that no further property
tightening measures will be issued, but that strict implementation of existing policies
will continue in 2012.
Sina Finance
Telecom The government is formulating regulations for private capital to enter the telecom
market. A clear schedule is already in place, and the Ministry of Industry and
Information Technology is now working on the specific implementation rules.
China Venture
Nuclear China will soon resume the approval and construction of nuclear power plants, senior
officials said during the plenary session of the Chinese People's Political Consultative
Conference (CPPCC) National Committee. Ten approved new nuclear plants, whose
construction were put on hold last year after Japan's Fukushima nuclear accident, will
soon be given permission to start construction.
China Daily
Mar. 8 Stocks The Ministry of Human Resources and Social Security said that the trail operation of
local pension fund investment will be launched in selected provinces and cities after
the “two meetings”.
The PBoC is assessing the possibilities of quota increase for existing QFII institutions.
The Shenzhen Stock Exchange issued new regulations regarding new share trading.
New shares with a turnover velocity of over 50% and a fluctuation range of 10% will be
suspended from trading.
The CBRC head says it is formulating regulations for private capital to enter into the
financial area. The standard will be broadly the same as that for government capital.
Xinhua.net
Macro The Ministry of Commerce and other authorities are drafting new policies to spur
domestic consumption with the expiration of a previous stimulus package. According
to the former assistant minister of commerce, the government may draft a package of
policies to encourage large companies to engage in direct talks with the owners of
foreign brands to benefit the public.
China Daily
Transport, energy To further strengthen energy conservation and emission reduction, energy-saving
vehicles and vessels, and new energy vehicles and vessels, will receive a 50%
reduction or be exempted from vehicle and vessel tax, respectively, as announced by
the Ministry of Finance.
Besides, according to the National Energy Administration, China is now drafting the
control scheme for energy consumption. The power consumption cap for 2012 may be
at 4.1 billion tonnes of standard coal, and 6,400 billion kw-hr.
Reuters China
Private sector According to the Ministry of Commerce, China will proactively support private
companies to “go global”. The Export-Import Bank of China (one of the three state
policy banks) also represented that it will take active measures to support the policy,
including purchasing some assets from other countries.
Reuters China
Mar. 7 Retail The Beijing Municipal Commission of Commerce announced that this year’s “Beijing
Shopping Season” started on March 8, and will last until March 25, with Suning
Appliance, Suning.com, Beijing Easyhome, Beijing Hyundai, Wumart, Lohohd, Love
Diamond and China Environment International Travel Service being joint sponsors.
100,000 cash coupons with a total value of RMB200 million will be issued to citizens
during the period.
The Beijing News
Property The government plans to expand the pilot scheme on property tax reform. Shanghai
and Chongqing have already commenced the pilot scheme since the beginning of
2011.
Tencent Finance
Energy Domestic fuel prices may be linked to the price of West Texas Intermediate crude,
instead of Cinta, under proposed changes to China’s fuel-pricing system.
Economic Info.
Daily
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 22
Mar. 6 Property Second home purchases are restricted in some districts of Shanghai, banning
unmarried children with one home registered under their own names from purchasing
more properties.
Meanwhile, the National Development and Reform Commission is working on a
long-term mechanism to regulate the real estate industry. According to the NDRC,
China will stick to its macro-regulation stance towards the real estate industry, and
thus promote a steady and healthy long-term development.
Tencent Finance
SMEs As stated by Xie Xuren, the Finance Minister of China, at the National People’s
Congress, the country will establish a development fund to provide more support to
SMEs.
Hexun.com
Foreign exchange According to Zhao Xiaochuan, the PBoC governor, the RMB exchange rate floating
range can be increased. Premier Wen Jiabao also pointed out in his work report that
China will improve the RMB exchange rate formation mechanism in 2012.
Sina Finance
Mar. 5 Macro The 2012 Chinese People’s Political Consultative Conference and the National
People’s Congress commenced today. As announced by Premier Wen at the meeting,
this year’s target of GDP growth will be set at 7.5%, while the CPI growth will be
confined to around 4%. This is the first time that China reduces its target of annual
economic growth in 8 years.
Wen also restated that China will push forward its pro-active fiscal policy and prudent
monetary policy, and make moderate and proper adjustments under certain
circumstances.
Xinhua News
Agency
Property First-home buyers enjoy preferential interest rates. Starting from Jan. 2012, a number
of banks have gradually reduced the mortgage rates for first-home buyers. The Bank
of China and Citibank offered max 10% discount in interest rates to selected clients.
China Securities
Banking, non-bank
financials
The PBoC has halted the issuance of central bank bills for 9 successive weeks. This
has sent a positive signal to the capital market. SSE Index has increased 13.7% during
the period. The market is expecting further liquidity improvement.
Sina Finance
Paper-making The Ministry of Industry and Information Technology, the Ministry of Science and
Technology and the ministry of Finance jointly released the 12th Five Year Plan for the
Promotion of Cleaner Production, pursuant to which new technology will be introduced
in the paper-making industry, which will create challenges for industry players.
Tencent Finance
Automobile As outlined in the recently released 12th Five Year Plan for Western China
Development, priority will be placed on transport infrastructure construction, which is
believed to benefit the commercial vehicle market.
Meanwhile, the 12th Five Year Plan for the Technological Development of Electric
Cars has been released, pursuant to which, great efforts will be exerted to develop the
technologies related to battery cars.
Hexun.com
(February 27 to March 2, 2012)
Date Related sectors Policy Source
Feb. 27 Bank The PBoC released for the first time the tentative schedule for opening China’s capital
account. It stated that the capital account opening process will be implemented in three
stages. During stage one (i.e. 1-3 years) it will loosen control on the direct investment
of companies with a real trading background. During stage two (3-5 years), it will
loosen control on the commercial credit of companies with a genuine trading
background. During stage three, it will gradually open up the property, stock and bond
markets cautiously under close supervision.
Sina Finance
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 23
Automobile The Ministry of Industry and Information Technology released the “2012 government
vehicles purchase catalogue”. All 412 brands on the list are domestic brands, such as
Geely, Chery and Great Wall Motor. It also includes low-end cars and new energy cars.
We believe Geely (0175.HK) and Great Wall Motor (2333.HK) will benefit the most from
the new list, as they account for 20% and 12% of the vehicles included in the list
respectively.
NetEase
Finance
Coal The 12th Five-Year plan for the coal industry is expected to be released soon following
the meeting of the national coal council on February 24 to discuss methods for
implementing the goals during the five-year period.
21CBH.com
Financing The China Securities Regulatory Commission (CSRC) has entered into discussions
with the Finance Ministry and the State Taxation Administration on ways to promote the
development of the securities market. The CSRC proposes to reduce the tax rate for
individuals on interest earned from corporate bonds.
JRJ.com
Feb.28 Financing Considering the importance of blue chips in the market, it is crucial for securities and
fund companies to promote the development of blue chips and make them dominant in
the market, according to the China Securities Regulatory Commission. Six measures
will be taken by the Shanghai Stock Exchange to achieve the goal later.
Sina Finance
Electricity The China Electricity Council has proposed a 10-year blueprint to help develop a more
market-oriented electricity industry. Based on the blueprint, restructuring will start in
some provinces first and will be gradually promoted to the rest of the country. Guizhou
has been selected to conduct a pilot programme to reduce electricity prices but specific
prices have not been set yet.
QQ Finance
Healthcare According to an official of the Health Ministry, the 12th Five-Year Plan on healthcare
will be released soon. However, medical payment reform is complicated as different
provinces have different problems. The plan is expected to promote the development of
basic healthcare and hospitalisation healthcare, but still needs future discussion due to
the anticipated difficulties in implementing the plan.
JRJ.com
Energy The Ministry of Industry and Information Technology released the 12th Five-Year Plan
for industrial energy saving. The government targets to reduce coal consumption by
670 million tonnes by 2015, according to the new energy saving standard. Nine energy
saving projects valued at RMB590 billion will be launched and relevant measures will
be taken to ensure success.
Sina Finance
Feb. 29 Energy A National Development and Reform Commission official said within this year quotas
for using renewable energy will be set in accordance with the macro objective of
adjusting the energy consumption structure. The quotas will be mainly distributed to
power producers, large corporations investing in power generation and local
governments.
Hexun
Food & Beverage &
Pharmaceutical
The Ministry of Industry and Information Technology unveiled the 12th Five-Year Plan
on the meat industry. It is also working with the Agriculture Ministry to determine
development plans (2011-2020) for the grain processing industry. The government
targets the total value of the grain processing industry to reach RMB 3.9 trillion in 2015
and grow to RMB6.9 trillion by 2020. The government also hopes to incubate a number
of established grain processing companies.
JRJ.com
Culture, Media and
Entertainment
The Ministry of Culture released details for the development for the culture sector
under the 12th Five-Year Plan period (2011-15). The government targets the
value-added of the sector to grow by 20% pa to reach RMB800-900 billion by 2015,
doubling from the 2010 level of RMB400-430 billion. The plan includes details on the
government’s developing objectives and approaches covering 11 sectors such as
games, entertainment and Internet culture.
JRJ.com
Infrastructure The NDRC plans to delay the approval of new highway projects as the debt-to-asset
ratio for previous highway projects reached more than 70%. The delay will make it
more difficult for companies to secure financing from banks.
QQ Finance
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 24
Mar. 1 Industry The Finance Ministry and Work Safety Administration launched regulations to improve
production safety standards, covering more sectors, such as metallurgy machines,
machinery manufacturing and development of new weapons.
Hexun
Bank As the RMB currency is being gradually accepted overseas, the PBoC will continue to
expand cross-border RMB business, which will further boost the use of RMB in
cross-border trading and investment. Two measures will be taken to support the
expansion: 1) enhance the liquidity of RMB; and 2) promote commercial banks to offer
excellent financial service on cross-border RMB. The PBoC will also strengthen
cooperation with other central banks.
Xinhua net
Energy The Ministry of Industry and Information Technology released the 12th Five-Year Plan
for the solar photovoltaic industry, pointing out clearly that it is necessary to support the
development of competitive companies, and promote resource integration and merger
and recombination among key corporations.
Hexun
Food & Beverage &
Pharmaceutical
A new plan to reduce the price of drugs on the national healthcare catalogue will be
released. Four major categories of drugs will lead the reduction first, including
antineoplastic drugs, immunity drugs, blood products and drugs for digestive disease.
JRJ.com
Energy According to the NDRC, residential electricity prices will be divided into three tiers
across the country within this year. The first tier is to meet the basic electricity demand;
the second is to satisfy the reasonable electricity demand, while the third is to meet the
power demand to improve living conditions.
Sina Finance
Mar.2 Financing Seven ministries including the PBoC, the Ministry of Finance and the NDRC launched
a report to reform and develop the water industry. The seven ministries pledged
support for IPOs of water companies to issue equity and debt in the open market. The
report also points out that it is necessary to attract diversified investments through local
governments’ and financial institutions’ joint effort.
JRJ.com
Financing China may announce QDLP (Qualified Domestic Limited Partnerships) this month,
allowing overseas hedge funds to raise onshore RMB. The first batch will be US$5
billion. In accordance with QDLP, a fund may be registered in Shanghai to raise
onshore RMB. After that, the fund will be permitted to invest in overseas markets
through other overseas registered hedge funds.
JRJ.com
External trade Ten ministries including the Ministry of Commerce and NDRC launched a report to
promote transformation of external trade growth. The report points out that the
objective of external trade is to make products and corporations more competitive,
enhance the cooperation among different industries and improve the government’s
competence in establishing international trading rules. To achieve the objectives,
relevant policies concerning tax and financial services will be released.
Hexun
(February 18 to 24, 2012)
Date Related sectors Policy Source
Feb 18 Banking China's central bank announced to lower banks' reserve requirement ratio (RRR),
underling its efforts to ease the short-term credit crunch and secure growth.
The cut, the second of its kind in three months, will lower the RRR by 50 basis points to
20.5% for large commercial banks and 17% for medium- and small-sized banks.
The move became effective on February 24 and released an estimated RMB400 billion
in capital into the market.
Sina Finance
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 25
Feb 20 Media & Entertainment China and the US have reached an agreement concerning issues related to films.
Although the agreement does not change the annual quota of 20 revenue-sharing
foreign films in Chinese theatres, it allows 14 premium format films, such as 3-D and
IMAX movies and similarly enhanced format films, to be exempt from the quota.
Also, the US studios' share of their films' grosses in the Chinese market will rise to
25%, from about 13.5% to 17.5% now.
China Daily
Feb 21 Infrastructure & Building
Materials
The State Council has approved a plan aimed at accelerating development in the
western regions through the end of 2015.
According to the plan, about 15,000 km of railways will be opened in the western
regions in this period. Energy-saving and resource conservation will also be given an
emphasis. The government targets the western regions to achieve a 15% cut in energy
use per unit of GDP from that of the end of 2010, and to reduce water consumption by
30% per unit of industrial output growth.
Xinhua News
Agency
Manufacturing Zhong Shan, Deputy Minister of Commerce, said at the 2012 China Imports and
Exports Work Conference that China will "at the appropriate time”, increase tax
rebates on specific categories of goods, including “labour-intensive products". The
move, if implemented, will be the first increase since 2009.
China Daily
Feb. 22 Food & Beverage &
Pharmaceutical
Tong Min, a senior official from the State Food and Drug Administration (SFDA) has
vowed to implement higher standards for the registration and production of health food
products.
He said some companies, especially those that sell products intended for weight loss
and blood sugar reduction, use illegal additives and exaggerate the effects of their
products in advertisements.
According to Tong, the SFDA will revise its regulations to adjust the permitted scope
and usage of health food products and adopt new methods to evaluate the products.
China Daily
Feb 23 Financial regulation The China Securities Regulatory Commission issued a statement saying it is
formulating policies to curb speculative investments, especially for IPOs and inferior
stocks that drive share prices to irrational highs. The measures may include improving
the delisting mechanism and a more efficient risk-warning system for private
investors.
Xinhua News
Agency
Healthcare & Insurance China will raise government subsidies for health insurance offered to farmers and
non-working urbanites to more than RMB360 a year by 2015.
The 80% increase was announced after a State Council meeting on Wednesday
where new health reform targets were set for the 12th Five-Year Plan (2011-15)
period.
Major reform targets include the expansion of basic health insurance coverage,
improving the country's essential medicine system, as well as community-level clinics
and public hospitals.
Sina Finance
Feb 24 Tourism Beijing city hopes to boost tourism by providing financial incentives to travel agencies.
According to the Beijing Tourism Development Committee, the municipal government
will provide bonuses ranging from RMB300, 000 to RMB500,000, according to the
length of time foreign tourists stay in the city.
People’s Daily
(February 13 to 17, 2012)
Date Related sectors Policy Source
Feb 17 Metals & Resources China raised the resources tax on six minerals, including iron ore, tin and
molybdenum, to help conserve reserves in the world’s second-biggest economy. The
tax on iron ore production was raised to 80 percent of a base rate, from 60%, effective
Bloomberg
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 26
from February 1, the official China Taxation News said in a report, citing a joint circular
from the Ministry of Finance and State Administration of Taxation.
Infrastructure The Ministry of Railways intends to give local governments more power to decide on
their railway construction projects, according to an unnamed government official.
cnstock.com
Communication, Internet,
Information Technology
The Ministry of Industry and Information Technology plans to carry out a “Broadband
China” Strategy aimed at higher Internet connection speed at a lower price this year,
Qin Hai, vice chief of the ministry’s promotion department said. China aims to expand
average bandwidth to at least 20 MB/s for urban households and 4 MB/s for rural
households by 2015. In the capitals of more developed eastern regions, average
bandwidth is expected to reach 100 MB/s.
JRJ.com
Internet, Information
Technology
Eight ministries, including the Ministry of Commerce and the Ministry of Finance, jointly
issued a document to promote the sound and rapid development of the electronic
commerce industry. The eight ministries will set up an expert consultative committee to
help develop national E-commerce model cities, and launch a pilot project on
E-invoicing, according to the document.
cnstock.com
Tourism & Travel, Food &
Beverage
Seven ministries jointly issued a document requesting financial support for the tourism
sector. Financial institutions should create innovative financial products to facilitate the
sound development of the tourism industry, according to the document.
China daily
Feb. 16 Metals & Resources The State Council pledged to expand the pilot programme of VAT reform and advance
resource tax reform, according to a statement released after a government meeting
presided over by Chinese Premier Wen Jiabao.
People’s Daily
Banks, non-banks financials The People’s Bank of China said in its fourth-quarter monetary policy report that, it will
flexibly use interest rates and other price-based tools to maintain the overall stability of
the economy and price levels. It will also use interest rates to adjust the demand for
capital, as well as saving and investment decisions.
Sina Finance
Internet The Chinese government intends to regulate and continue censoring social networking
sites on the mainland for the foreseeable future, the State Council said in its revised
outline for China’s 12th Five-Year Plan on Cultural Reform and Development.
Forbes
Feb. 15 Property According to an unnamed source, the Ministry of Housing and Urban-Rural
Development is mulling an expansion of the pilot programme of using local property
pensions to support social housing construction.
Tencent Finance
Pharmaceuticals China plans to expand its list of essential drugs this year to 800 to cover diseases such
as cancer, and prices for pharmaceuticals may fall further, Health Minister Chen Zhu
said. China may have 500 Western products and as many as 300 traditional Chinese
medicines on the new list, according to Chen.
Bloomberg
Information Technology The Ministry of Industry and Information Technology announced the 12th Five-Year
Plan regarding the “Internet of Things”. According to the plan, China aims to build a
complete Internet-of-Things industry chain, develop 10 industrial zones and over 100
key enterprises by the end of 2015.
JRJ.com
Feb.14 Macro Chinese Premier Wen Jiabao said the nation needs to start “fine-tuning” economic
policies this quarter, the first indication of a timeframe for an adjustment he has
pledged since October. Economic circumstances in January and the first quarter
deserve attention, Wen told business executives in Beijing as he sought opinions on a
government report. “We have to make a proper judgment as early as possible when
things happen and take quick action,” Wen was cited as saying.
Bloomberg
Banks China’s regulatory authority is mulling a revision of the commercial bank capital
regulations, and the revised version is expected to come into effect as early as July,
according to an unnamed source. The revised regulations may allow banks to include
loan-loss reserves as their Tier-2 capital.
Sina Finance
Media China told its television broadcasters to limit the number of imported television series
they show, China’s State Administration of Radio Film and Television said on its
Xinhua news
agency
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 27
website. Domestic television channels will not be allowed to broadcast foreign TV
series during prime-time hours, and no imports can exceed 50 episodes, according to
SARFT.
Feb. 13 Property Wuhu’s new property measures were stopped three days after they were announced.
The eastern Chinese city of Wuhu said it will delay implementation of planned
subsidies for apartment purchases, a striking reversal demonstrating that national
authorities are not yet ready to allow a loosening of controls on the key sector.
Wall Street
Journal
Property Chinese Premier Wen Jiabao said at a meeting that, China’s property tightening
policies should serve two goals: 1) to cool down the red-hot property market, and bring
property prices down to reasonable levels; and 2) to ensure the sustainable, steady
and healthy development of China’s property market. The central government will
maintain its property regulation polices until home prices return to reasonable levels.
Sina Finance
Infrastructure Chinese Premier Wen Jiabao said private capital should be introduced to railway
construction. The government plans to take several measures, including introducing
private capital, to solve funding shortages for various railway construction projects,
Wen said at a meeting held in Beijing
Tencent Finance
Banks China's banking regulator has drafted rules to stop banks from charging their
customers excessive fees, which have become a focus of rising frustration. The new
rules, issued recently by the China Banking Regulatory Commission, said all fees must
be set by banks' head offices and not local branches, that banks must be more
transparent when setting prices, and that they must give three months' notice before
raising fees.
Wall Street
Journal
(February 6 to 10, 2012)
Date Related sectors Policy Source
Feb.10 Property Wuhu, an industrial city in Anhui province, is launching policies to support tax
reduction and hukou transfers, according to a statement aimed at improving residents’
housing and living conditions published by Wuhu’s municipal government on its
website. It is believed that Wuhu’s measures have the potential to be replicated by
other cities. This might finally break the central government’s policy deadlock
regarding the property sector.
Shanghai
Securities News
Tourism The US Ambassador to China announced that the US will simplify travel visa
application process and increase visa processing speed by 40% in 2012, which is
believed will boost tourism both in China and the US.
Beijing Business
Today
Feb.9 Financing Zhejiang province will now allow small loan financing companies to increase capital
from their shareholders, to provide additional sources of funding for these companies.
Sina Finance
Feb.8 Employment The State Council issued a job-creation and wage-growth plan for the 12th Five-Year
period, pursuant to which, during 2011 to 2015:
45 million new jobs will be created and urban unemployment rate will be maintained
within 5%;
China also plans to create jobs for 40 million people in the rural surplus labour force;
and
The government also pledged to maintain a minimum 13% annual growth in the
nation’s minimum wage standards and to keep the standard in most regions higher
than 40% of the average wage of local urban employees.
State Council
Petrochemicals The National Development and Reform Commission raised processed oil prices.
Prices of petrol and diesel for national reserves will be revised up by RMB300/tonne to
RMB8,580/tonne and RMB7,730/tonne, respectively, while adjustments will be made
NDRC
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 28
to the prices of petrol and diesel for other uses.
Banks The Administrative Measures on Capital of Commercial Banks is expected to be
officially implemented from July 1, 2012, which will directly affect the refinancing
programmes in the market.
Sina Finance
Property The PBoC will provide credit support to first-home buyers. This is seen as a signal of
relaxing credit terms relating to first-home purchases. What’s more, as released by the
National Development and Reform Commission, the investment budget of the central
government for 2012 has been increased by RMB20 billion approximately, which will
mainly be used in the construction of social security housing projects.
Sina Finance
Feb.7 Construction As announced by the Ministry of Finance, local governments’ income from government
bonds, property tax etc will be used to build security housing projects.
Sina Finance
Feb. 6 Auto The legislative Affairs Office of the State Council issued the draft recall policies for
automobiles, pursuant to which responsibilities and scope for car manufacturers and
tire manufacturers were defined.
Sina Finance.
Agriculture The National Development and Reform Commission has raised the minimum prices
for 2012 of early indica rice, middle-season and late indica rice to RMB120, RMB125
and RMB140 per 50 kgs, or by RMB18, RMB18 and RMB12 compared with 2011,
respectively.
NDRC
Aviation Pursuant to a notice recently released by the Ministry of Transportation and
Communications, unless approved by relevant government authorities, no aviation
company that is involved in the European Union Emission Trading System is allowed
to raise freight charges or add fee items for this reason.
Reuters China
Stocks The China Securities Regulatory Commission will strengthen the regulation on IPO
pricing. It is planning to authorise third-party research institutes to analyse the industry
PE ratios of all listed companies, and release the results for public inspection. For
those IPOs whose prices deviate significantly from the relevant industry PE, its issuer
and underwriter will be requested to provide explanations on the basis for their pricing.
Reuters China
(January 30 to February 3, 2012)
Date Related sectors Policy Source
Jan. 30 Finance The National Development and Reform Commission (NDRC) and the Shanghai
Municipal Government jointly issued a plan to make Shanghai a global centre for
innovation, transaction, pricing and clearing of RMB-denominated financial products
by 2015.
The plan also aims to make the government-backed Shanghai Interbank Offered Rate
(Shibor) the benchmark for RMB credit everywhere and targets to more than double
the annual non-forex financial market trading volume to RMB1,000 trillion by 2015.
Yet the NDRC's plan did not specify how quickly China would liberalise its capital
account, a crucial step in Shanghai's attempt to become a global money hub.
Reuters
Feb. 1 Water-conservation,
machinery, seed trade
A document publicised by the Central Committee of the Communist Party of China and
the State Council said China will step up efforts to construct water-conservation
facilities and continue to increase funding for the projects to boost agricultural
development.
China will promote new technologies and equipment for water-saving irrigation,
expand the purchasing subsidies and offer tax breaks for equipment.
The document also said that China will push for agricultural mechanisations in the
country by boosting credit support for the purchase of large and medium-size
Xinhua News
Agency
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 29
machineries.
This government document gives emphasis to scientific innovation in seed production,
saying China will support the cultivation of new varieties of seeds and promote
commercialisation of the industry by encouraging large enterprises to enter the seed
market through mergers and acquisitions as well as equity participation.
SMEs, finance A statement released after a State Council executive meeting presided over by
Premier Wen Jiabao announced that China's central government will earmark RMB15
billion to establish a development fund for small and medium-sized enterprises,
particularly focusing on newly-formed ones.
The country will relax restrictions on the usage of private capital, foreign capital and
funds from international organisations in setting up small financial institutions.
Xinhua News
Agency
Feb. 2 Public finance A proactive fiscal policy is a "feasible and indispensable" option to allow China to
maintain steady development amid the global economic downturn, said Finance
Minister Xie Xuren on Wednesday.
In an article for the latest issue of Qiushi, a journal of China’s Communist Party, he
also wrote "the domestic and global turmoil has not changed the fundamentals of
China's economy, and fiscal policies will have to continue to play a vital role in
maintaining steady development".
Xie said that further expenditure is needed in areas such as key projects under
construction and those in the planning stage. Other areas include improving people's
livelihoods and bolstering the upgrading of smaller businesses.
Xinhua News
Agency
Feb. 3 Oil & Chemicals The Ministry of Industry and Information Technology announced the 12th Five-Year
Plan for the oil and chemicals industries. The ministry vows to devise a mechanism to
ensure the stable supply of some important raw materials such as crude oil, coal,
kalium, sulphur and natural rubber that China’s manufacturers are heavily dependent
on. It also states the intention to assist qualified manufacturers in venturing overseas
and to support their joint exploration efforts with foreign partners.
Government
website
(January 23 to 27, 2012)
Date Related sectors Policy Source
Jan. 27 Real estate Jiang Weixin, China’s Minister of Housing and Urban-Rural Development, said
recently that the central government would accelerate the establishment of its personal
housing information system, and 40 major cities will be able to share personal housing
information online by the end of June. The system will allow housing authorities at all
levels to know the exact housing status of every individual in their area, and thus help
the government combat property speculation.
Sina Finance
Jan. 26 Auto, Clean energy Beijing will implement the national vehicle V emission standard in 2H12, according to
the Beijing Municipal Environmental Protection Bureau. The new standard is similar to
the Euro V Standard on vehicle emission in Europe and targets lower sulphur content.
NOx emission from existing vehicles in Beijing is expected to be reduced by 10%
following introduction of the national V standard.
Sina Finance
Jan. 25 New energy, Environment
protection
A programme to curb the increase in greenhouse gas emission in Guangdong
Province will probably be the largest of the nation’s seven test climate-protection
systems, according to Bloomberg New Energy Finance. Guangdong is seeking to cut
the amount of carbon emitted per unit of production in its economy by 19.5% in the five
years through 2015. Other regions have lower targets, with Chongqing and Hubei
setting reductions of 17%.
Bloomberg
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 30
Real estate, Internet A second-hand property transaction platform will be built in Beijing, through which
buyers and sellers will be able to sign contracts online. According to the Beijing
Municipal Commission of Housing and Urban-Rural Development, Beijing citizens
logging on to the platform will be able to access reliable property sales and leasing
information.
Sohu Focus
Food & Beverage Zhang Yong, head of China's State Council Food Safety Commission, said in a food
safety forum that China will work to further boost food safety through legislation, and
eliminate regulatory loopholes and supervisory blind spots.
Sina Finance
Logistics The major channel of the “North-to-South Grain Transfer” project, a key project aimed
at boosting China’s grain storage and promoting the construction of logistics
infrastructure, will be opened up during the 12th Five -Year Plan period, according to
Nie Zhenbang, head of China’s State Administration of Grain.
Xinhua News
Jan. 24 Paper making China will cut over 10 million tonnes of outdated paper-making capacity by 2015 and
enhance recycling in order to reduce pollution during the 12th Five-Year Plan period,
the NDRC announced recently. Mergers and acquisitions will also be promoted to
realise production expansion and energy conservation.
National
Business Daily
Jan. 23 Agriculture China will continue to strengthen policy support for agriculture, Chinese President Hu
Jintao said during a tour of rural areas in Beijing during the Spring Festival holiday.
President Hu said that considerable attention has been paid to the work related to
agriculture, rural areas and farmers, and he believes that the living standard of
Chinese farmers will improve with support from the government.
Tencent Finance
(January 16 to 20, 2012)
Date Related sectors Policy Source
Jan.20 Stocks According to the Ministry of Human Resources and Social Security, several pilot
provinces have officially authorized the National Council for Social Security Fund to
manage their pension funds. A maximum of US$57 billion would be injected into the
A-share market once the relevant approval is granted by the central government.
Reuters
Jan.19 Consumer goods, service
sector
The Ministry of Commerce intends to issue policies to stimulate consumption, pursuant
to which fiscal measures may be taken to promote the sales of energy saving home
appliances, e.g. solar products for home use.
Sina Finance
Light industry, textile,
pharmaceutical,
chemicals, consumer
staples
China has released its industrial restructuring plan for the 12th Five-Year Plan period
(2011-15). The plan has set the following targets:
Light industry: technology innovation will be enhanced to meet the increasing
requirements for consumer goods.
Textile industry: The annual growth of industrial value added is targeted at 8%. By
2015, total exports within the industry are expected to reach US$300 billion, with an
annual growth of 7.5%.
Pharmaceutical industry: The target of annual growth in total output during the period
from 2011 to 2015 is set at 20%, and the adjustment of the industry structure will be
strengthened, to promote rapid development.
Chemical fibre industry: energy conservancy and pollution reduction will be further
promoted.
Sugar manufacturing industry: Annual sugar production for the relevant period should
reach 16 million tonnes.
Hexun
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 31
Jan.18 Energy The approval of new nuclear energy projects will be resumed in 1Q2012. China has
suspended approval of projects in order to revise safety standards following the
nuclear disaster in Japan in March 2011.
People’s Daily
Auto The second draft of the car warranty policy is being reviewed. The return policy may be
lengthened from the current 30 days to 60 days, while guarantees for repairs,
replacements or compensation on faulty products will be strengthened.
Xinhua News
Agency
Jan.17 Service sector,
transportation
Following the success in Shanghai, several cities, including Beijing and Shenzhen,
have filed applications to the Ministry of Finance for a pilot programme to replace
turnover tax with a value-added tax (VAT) in the transportation sector and some
services industries. The VAT reform is expected to reduce the tax burden and promote
the development of the related industries.
China Daily
Stock market Local pension funds of RMB100 billion will be injected into the market in 1Q 2012. The
funds will be managed by the Social Security Fund. A large portion of the fund is
expected to be invested in fixed-income assets, while around 30% to 40% in stocks.
The report also mentioned that an improved version of the Dutch Auction IPO system
is expected in the A-share market, and that there’s no timeline for the launch of
Shanghai’s international board. In traditional auctions, the price rises until one bidder is
left. In a Dutch auction, the auctioneer sets an extraordinarily high price and lowers it
until someone bids on the item.
The report added that China’s Securities Regulatory Commission will reduce the
overseas listing threshold of Chinese companies.
Sina Finance
Jan. 16 Heavy industry, new energy Seven cities and provinces, including Beijing, Shanghai, Shenzhen, Tianjin,
Chongqing, Guangdong and Hubei, will conduct trial programme of carbon emission
trading to accelerate the national economic restructuring.
Sina Finance
Real estate The pilot programme for property tax may be expanded to more cities, but will not be
implemented nationwide in 2012, as indicated by the Ministry of Housing and
Urban-Rural Development and the Ministry of Finance, after having assessed the
effectiveness of the pilot scheme.
China Daily
Bonds, stocks China’s Securities Regulatory Commission may expand its RQFII pilot programme in a
bid to further open the country’s capital market. It is also considering allowing some
institutions under the RQFII programme to issue exchange-traded funds (ETFs) made
up of A-shares, citing an unnamed official close to the commission. The total
investment quota is approximately RMB20 billion. He also indicated that the proportion
of institutional investors in IPO subscription may increase to over 20% in 2012.
Meanwhile, Dai Xianglong, the head of the Social Security Fund, said at the Third
Annual Economics Conference that China should remove QFII quota restrictions step
by step, to create more channels to promote the internationalisation of the RMB.
Xinhua News
Agency
Foreign trade According to Zhang Xiaoqiang, the Vice Minister of the National Development and
Reform Commission, China’s target for foreign trade growth for 2012 has been set at
around 10%, due to the challenging economic conditions.
Sina Finance
Construction, steel The Ministry of Housing and Urban-Rural Development issued the guidance on
speeding up the application of high tensile reinforcement steel. High tensile
reinforcement steel (Grade 500 MPa) will be promoted in construction projects for
environment protection purpose.
MOHURD
(January 9 to 13, 2012)
Date Related sectors Policy Source
Jan. 10 Bonds, stocks Guo Shuqing, chairman of the China Securities Regulatory Commission, said the
watchdog plans to launch several new products, including high-yield corporate,
Xinhua News
Agency
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 32
municipal and government agency bonds, in order to boost direct financing. He
revealed that the authorities are also working to further open the securities market to
foreign investors by raising the investment quota for Qualified Foreign Institutional
Investors (QFII) in the A-share market.
Foreign exchange rate In an interview with the People’s Daily, PBoC governor Zhou Xiaochuan said at
present the RMB is allowed to fluctuate as much as 0.5% on either side of the central
bank’s reference rate. He said China could expand the floating range of the RMB when
a balance is reached between capital inflows and outflows, and when conditions are
ripe to widen the floating range. He stressed that an enlarged floating range does not
mean the average RMB exchange rate will take an apparent upward or downward
trend.
People’s Daily
Energy, taxation The National Energy Bureau said it is exploring the possibility of imposing fossil-fuel
tax in the future and that it will levy resource tax on crude oil, natural gas and coal on
the basis of prices.
Xinhua News
Agency
Agriculture, IT The No. 1 central government document for 2012 is to be formally released soon. A
vice-minister revealed that this year’s document revolves around the primary industry.
The document emphasises on taking advantage of technology to promote innovation
and entrepreneurship. Information technology is expected be brought to the fore, as
the Ministry of Science and Technology has embarked on a pilot scheme in seven
provinces to promote the use of information technology in agriculture in rural areas.
Xinhua News
Agency
Jan. 11 Export & Import China's exports and imports grew at their slowest pace in more than two years in
December as foreign and domestic demand ebbed. A source told the 21st Century
Business Herald that the Ministry of Commerce is considering measures to stabilise
China’s exports, including channeling credit to three kinds of exporters, namely
manufacturers with stable orders, exporters of daily necessities and businesses
exporting to emerging economies. Policies on tax rebates and foreign exchange rate
will remain stable.
The 21st Century
Business Herald
Entertainment China’s film watchdog indicated plans to cap movie ticket prices in a move to create
more access to cinemas. The State Administration of Radio, Film and Television
(SARFT) may impose a price cap on tickets and may require theatres to show more
half-price screenings, according to a Xinhua report earlier this week. The report didn’t
say when regulators plan to implement pricing changes or offer additional details,
adding that the SARFT plans to issue pricing guidelines for theatres this year.
Shenzhen Daily
Jan. 12 Banks, non-banks
financials
In an interview with the China Daily, Zheng Xinli, deputy head of the economic
sub-committee of the National Committee of the Chinese People's Political
Consultative Conference, called for the quick launch of a deposit insurance system,
which he said would reduce potential default risks and help drive market-oriented
interest rate reform for commercial banks.
China Daily
Renewable energy Liu Tienan, Minister of the National Energy Bureau, said that China will start work on
its second installment of wind power projects for the 2011-2015 period, aiming to add a
total installed capacity of 15-18 million kilowatts. Meanwhile, China will also implement
the first installment of solar power projects, which will add a total installed capacity of 3
million kilowatts. The government is increasingly cautious about giving approvals to
new solar power projects.
Business China
Jan.13 Railways An informed source revealed that China’s Ministry of Railways plans to spend RMB80
billion to purchase locomotives and carriages, an amount lower than that spent in
previous years. The 2010 budget for locomotives and carriages was RMB126 billion.
Sina Finance
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 33
(January 2 to 6, 2012)
Date Related sectors Policy Source
Jan. 06 Oil & Gas The Ministry of Finance increased the threshold for the nation’s oil windfall tax to
US$55 per barrel from US$40 effective Nov. 1, 2011. This is positive for the Chinese
oil giants as it will boost earnings. Our 2011E earnings sensitivity to the tax adjustment
is: 22% for PetroChina, 14% for Sinopec and 11% for CNOOC.
Bloomberg
Auto Global auto makers are scrambling to size up the impact of China's decision to stop
encouraging growth among foreign companies, a move that appears to give domestic
car companies greater protection from outside rivals. China last week said it would no
longer promote investments from foreign auto makers through policies such as
preferential tax treatment and streamlined approval processes.
Wall Street
Journal
Media The Chinese authorities are clamping down on the type of content being broadcast on
the airwaves and websites within the country, aiming to promote Chinese culture and
reduce outside influences. The order, which came into effect January 1, restricted the
number of entertainment programs that satellite channels can broadcast each week to
two, with a maximum of 90 minutes of content defined as entertainment allowed during
prime time -- between 7:30 p.m. and 10 p.m.
CNN
New energy, Internet,
Tourism
The Chinese government is studying policies to encourage spending on energy-saving
products, and will take other measures including the promotion of online shopping and
tourism, as it strives to meet challenges posed by a global slowdown, Commerce
Minister Chen Deming told the ministry’s annual works conference, according to a
statement posted on its website.
Bloomberg
Jan. 05 Postal industry The State Postal Bureau of China recently issued targets for the express courier
service industry under the 12th Five-Year Plan. The government aims to boost the
revenue of domestic courier companies to RMB143 billion by the end of 2015, 1.5
times higher than 2010, with an annualised growth of 20%. At the same time, the
government aims to develop more than five large and highly competitive domestic
courier companies with annual revenue of over RMB10 billion each.
People’s Daily
Consumer goods China’s Ministry of Commerce has set the targets for growth in retail sales, exports and
imports under the 12th Five-Year Plan. China targets retail sales of consumer goods to
grow by about 15% annually, and for exports and imports to increase by about 10%
per annum.
Ifeng Finance
Waste treatment The Ministry of Industry and Information Technology issued the utilisation target for
industrial solid waste treatment under the 12th Five-Year Plan. According to the plan,
the rate of utilisation will reach 50% by 2015, which will stimulate investment in the
solid waste treatment industry.
Hexun.com
Jan. 04 Banks, non-banks financials China’s central bank said at the monetary policy meeting that it will implement prudent
monetary policy. It stressed the need to fine-tune policies to steer a course between
economic restructuring and managing inflation.
Sina Finance
Home appliance, Auto A former official of China’s Ministry of Commerce hinted in an interview that the
proposed government stimulus measures may include subsidies for families living in
affordable housing to buy appliances and for consumers planning to change their cars.
The Ministry of Commerce said last week that new consumption stimulus policy will be
announced.
China Daily
Macro policy Chinese Premier Wen Jiabao reiterated that Beijing is focused on fine-tuning both
monetary and fiscal policies for individual sectors and warned of a difficult first quarter
during a tour of heavy machinery factories in Hunan Province over the New Year's
holiday. The authorities have made clear they will stay on the path of "prudent"
monetary policy with a priority on ensuring stable growth, Wen said in a government
report on the visit. China will tighten and loosen different policies according to the
needs and situations of different sectors, he added.
Wall Street
Journal
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 34
Jan. 02 SMEs The Ministry of Finance said government departments will make at least 30% of their
purchases through small and medium-sized enterprises starting from the start of 2012.
China Daily
Jan. 01 Taxation The Chinese government said it will continue to offer value-added tax (VAT) refunds to
the animation industry 2012 in its effort to boost cultural development. For companies
that develop their own animation software products, a 17% VAT will be levied, but the
portion of VAT actually collected that exceeds 3% of the taxpayers' tax base will be
refunded upon tax collection, the Ministry of Finance said in a statement on its website.
China Daily
(December 26 to 30, 2011)
Date Related sectors Policy Source
Dec.30 Foreign investment According to a guideline recently released by the National Development and Reform
Commission and the Ministry of Commerce, which will take effect on January 30,
2012, China will ease its restrictions on foreign investments and it will encourage
foreign investments in emerging industries and the service industry, especially in the
central and the western regions of China.
Sina Finance
Banking, non-bank
financials
The People’s Bank of China (PBoC) did not issue 3-month bills on December 29,
2011. The PBoC usually issues 3-month bills each week. The suspension on
December 29 was viewed by the market as another signal that the PBoC will lower the
reserve requirement ratio next year to ease the tight market liquidity condition.
Sina Finance
Retail, onsumption Minimum wages in 24 cities increased by 22% on average in 2011. Starting from
January 1, 2012, minimum wage in Beijing will rise to RMB1,260, up RMB100 or 8.6%
compared to the current level.
Hexun.com
Dec. 29 Rare-earth exports China unveiled an initial cut of 27% in its quota for rare-earth exports for 2012.
According to the Ministry of Commerce, China has set the first tranche of rare earth
export quotas at 10,546 tonnes for 2012, which only includes export quotas for
enterprises that have already passed stringent environmental inspections.
The Wall Street
Journal
Agriculture The central government is estimated to have injected over RMB1 trillion into the
agricultural sector in 2011 to support development of the rural area. This represents a
huge increase compared with that of 2009 and 2010.
Hexun.com
Dec. 28 SMEs China will promulgate favourable policies for small to medium-sized enterprises
(SMEs) in 1H 2012. Policies include establishing public service platforms for SMEs
and providing a favourable environment for innovative and high-tech SMEs, to achieve
a growth of 11% in industrial value added and to create new job opportunities. The
basis of taxation for SMEs will be revised upwards from RMB30,000 to RMB60,000 for
the period from January 1, 2012 to December 31, 2015.
Sina Finance
Environment protection Twelve ministries and commissions, including the National Development and Reform
Commission, the Ministry of Education, the Ministry of Finance, the Ministry of Housing
and the Urban-Rural Development and the Ministry of Commerce etc., have jointly
issued an energy conservation plan, which is designed to restrict the carbon emissions
of more than 17,000 enterprises with annual energy consumption of over 50 million
tonnes of standard coal.
NDRC
Retail, consumption Starting from Dec. 2011 to Jun. 2012, the Ministry of Commerce, the National
Development and Reform Commission, the Ministry of Police, the State Administration
of Taxation and the State Administration for Industry & Commerce will actively rectify
the irregular charging activities in the retail sector.
Sina Finance
Auto The State Administration of Taxation released the measures for Administration of Tax
on Vehicle Purchases. Several fees and procedures have been cancelled to ease the
tax burden and to simplify the process for second-hand car buyers.
China Securities
Journals
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 35
Auto China released four national standards on electrical vehicle (EV) charging ports, which
will come into force on March 1, 2012. These standards are designed to promote a
unified market and the long-term development of the domestic EV industry.
China Securities
Journal
Consumption According to Xiao Jie, the Director of the State Administration of Taxation, China will
further improve preferential tax policies in 2012. In terms of consumption tax reform,
the range and structure of consumption tax will be adjusted to promote environment
protection, energy conservation and rational consumption.
Tencent Finance
Dec. 26 Energy The National Development and Reform Commission announced that starting from
December 26, 2011, China will initiate the trial of pricing mechanism reform for natural
gas in Guangdong province and the Guangxi autonomous region, where the pricing
mechanism will change from the “cost-plus” approach towards market driven. The
reform will gradually move to other provinces.
China Securities
Journal
Banking, non-bank
financials
Ms. Wu Xiaoling, a former vice-governor of China’s central bank said at a forum in
Beijing that the People’s Bank of China will resort more to reserve requirement ratio
(RRR) as a tool to pursue a prudent monetary policy. She told her audience that if
funds outstanding for foreign exchange grow by a small margin or even drop, the
central bank will have to offer more liquidity by adjusting the RRR.
China Securities
Journal
Taxation Xie Xuren, China’s Finance Minister, unveiled the roadmap of how the structural tax
reduction programme will be conducted in 2012. According to him, the tariffs on some
products will be lowered in 2012 to facilitate the import of energy, natural resources,
technically advanced products and key components. Small businesses with an annual
leviable income of less than RMB60,000 will receive tax concessions and will be
entitled to have their leviable income halved to calculate income tax at a rate of 20%.
The current pilot scheme of replacing income tax with valued-added tax (VAT) for
transportation businesses and sophisticated service business based in Shanghai will
be expanded gradually. Resource tax reform will be implemented more widely, shifting
towards price-based taxation. He also vowed to push ahead with property tax reform
on a trial basis. In addition, the VAT levied on the wholesale and retail of vegetables
will be removed in 2012.
Xinhua News
Agency
(December 19 to 23, 2011)
Date Related sectors Policy Source
Dec.19 Banking, non-bank
financials
The regulation of China’s credit rating industry will be centralised with the People’s
Bank of China, a PBoC vice-governor revealed at a forum. At present, in addition to
the PBoC, the National Development and Reform Commission, the China Banking
Regulatory Commission and the China Insurance Regulatory Commission also act as
watchdogs in different market segments. The PBoC is expected to harmonise
regulations and cut red tape with a view to facilitating development of the industry. The
news is welcome by China’s credit agencies, as they will be regulated primarily by the
central bank in the future rather than by more than three government agencies
currently.
Sina Finance
Macro-economy, taxation A director of a research institute affiliated with China’s Ministry of Finance hinted that
there would be a high probability that environmental tax would be introduced during
the 12th Five-Year Plan period, i.e. 2011-2015. Corporate income tax is also likely to
be reduced as part of a structural tax reduction programme.
Sina Finance
Dec. 20 Pension, equity Dai Xianglong, chairman of the National Council for Social Security Fund and former
central banker, indicated the central government is considering allocating a portion of
the pension funds managed by provincial and municipal governments for long-term
equity investment.
Xinhua News
Agency
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 36
Real estate The Information Office of the Shanghai Municipal Government vowed to continue to
enforce property purchase limits next year. A number of major cities, including Beijing,
Xiamen, Haikou, Fuzhou and Qingdao, had made similar commitments. China’s
policymakers suggested at the Central Economic Work Conference, which concluded
last week, for the property tax to be introduced more widely on a pilot basis next year.
Currently, property tax is only levied in two cities, Chongqing and Shanghai.
Sina Finance
Dec. 21 Banking, non-bank
financials
The Financial Supervisory Commission in Taiwan issued a statement, saying that
mainland Chinese banks can hold stakes in Taiwan’s local banks starting from January
2, 2012. Mainland banks will be allowed to have a maximum of 5% holding in a Taiwan
bank. And the combined holding of mainland investors in a Taiwan bank is capped at
10%. Mega Financial Holding Co. and Cathay Financial Holding Co., in which Taiwan’s
government is a major shareholder, have expressed intention to sell shares to
mainland investors.
Caijing agazine
Dec. 23 Railway, Construction,
Steel, Machinery
Sheng Guangzhu, the minister of China’s Ministry of Railways, revealed at an industry
conference that RMB500 billion will be deployed for investment in fixed assets for
railway construction in 2012. RMB400 billion of this amount will be spent on
infrastructure and a total of 6,366 km of new railways is expected to be put into
operation.
He stressed the need to complete projects that are currently under construction,
construct indispensible new railways and improve support facilities.
Rapid railway construction slowed down after the fatal train crash in July 2011. Since
2008, China’s railway construction has gone through a peak to a trough. Mr. Sheng’s
speech signaled that China’s leadership intends spending on railways to return to the
norm in the coming years.
Xinhua News
Agency, Caijing
agazine
(December 12 to 16, 2011)
Date Related sectors Policy Source
Dec.16 Banking, non-bank
financials
Guo Shuqing, chairman of the China Securities Regulatory Commission, suggests to
invest RMB4 trillion of pension funds into the domestic equity market. Endowment
security and housing security should also be invested into the equity market to derive
profits, following the success of investment of social security funds. The social security
fund currently manages RMB800 billion and has an annual compound return of 9.17%.
Domestic securities companies will benefit from the development of the national social
security system.
Sina Finance
Import and export,
Domestic consumption
According to the Ministry of Commerce, China is adjusting foreign trade policies to
maintain steady growth as the trading environment will be very tough in the first quarter
of 2012. The government is also discussing new policies to stimulate consumption as
the home-appliance subsidies will expire soon.
Sina Finance
Domestic consumption Chinese Vice-Premier Li Keqiang said expanding domestic demand has been set as
the top priority for 2012. Regulations on commodity prices will be enhanced, while
economic restructuring will be further promoted.
Reuters China
Dec.15 Import The Ministry of Commerce said that China will cut its import tariff rates on over 730
commodities to boost imports. The provisional tariff rates will average 4.4%, which is
much lower than the current most-favoured-nation rate.
Sina Finance
Dec.14 Import, Automobiles The Ministry of Commerce announced that China will impose anti-dumping and
countervailing tariffs on high-emission vehicles imported from the US in the following
two years. Auto producers affected include GM, Chrysler Group, Mercedes-benz,
BMW and Honda of America, etc.
Reuters China
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 37
Dec.13 Pharmaceuticals The 12th “Five-Year Plan” for the pharmaceutical industry will be released. According
to the plan, the industry expects to achieve an average annual growth of 20% in terms
of total output, and 16% in terms of value addition.
Hexun
Real estate As pointed out at the 2011 Central Economic Work Conference, China’s regulation
over the real estate industry has entered a crucial stage where the results are still
unstable. Thus, austerity policies must be maintained to further reduce housing prices
to a more reasonable level.
People’s Daily
Foreign investment To regulate approval of establishing foreign invested enterprises and foreign exchange
control, the Ministry of Commerce and SAFE (State Administration of Foreign
Exchange) have issued a notice, stipulating that no loans granted by domestic
institutions to foreign invested enterprises can be used for reinvestment purpose in
China.
Reuters China
Dec.12 Export and import,
technology, clean energy
President Hu Jintao says China targets to expand the country’s exports to exceed
US$8 trillion over the next five years in order to balance trade. China will continue to
open its market to attract more advanced technology and bolster higher-valued
products to become more competitive. China’s industries of the future will be cleaner,
more technological, more value added and be able to create more jobs. Hu added that
China will lower import costs and make trading systems more efficient for importers.
China will also continue to welcome foreign investment, encouraging higher-end
projects such as the establishment of research and development centres in coastal
cities, and factories in central and western areas to make the entire industry structure
more complementary, Hu said.
Shanghai Daily
Automobiles China’s State Council released a draft regulation on school bus safety. Premier Wen
Jiabao pledged central and local government funds to provide and improve school bus
services in the wake of the traffic accident that killed 19 pre-school children and
sparked national outrage.
School bus and coach manufacturers in China are expected to benefit from
government purchases of more school buses that meet safety requirements.
China Daily
Banking, non-bank
financials
As pointed out at the 2011 Central Economic Work Conference, which commenced on
December 12, 2011, proactive but moderate monetary policies, which are subject to
constant adjustments, will be adopted to cope with the complexity and uncertainty of
the current economic conditions. Proactive fiscal policies will be adopted in 2012 to
promote economic growth.
Sina Finance
(December 5 to 9, 2011)
Date Related sectors Policy Source
Dec.9 Banking, non-bank
financials
The Central Economic Work Conference will be delayed until December 12-14. This is
the first time the meeting has been postponed in the past six years. A media report
claims postponement of the meeting is to give the leadership extra time to deliberate
and reach a consensus on next year’s strategy given the challenging global economic
conditions. Stabilising growth is expected to become China’s top policy priority.
Sina Finance
Banking, non-bank
financials
The vice minister of the Ministry of Finance said that China will continue to implement
the structural tax cut policy. The cut has so far reduced tax burdens of corporate and
individuals by around RMB500 billion. The official added that proactive fiscal policies
and moderate monetary policies will be further promoted in the future.
Sina Finance
Dec. 7 Banking, non-bank
financials
The macro-economic policy is expected to be more flexible and pro-growth next year
as the market has formed a consensus 2012 GDP growth will be less than 9% but
within the government’s tolerance level.
Tencent inance
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 38
Dec.5 Real estate The Ministry of Housing said home purchase restrictions will continue after they were
originally supposed to expire by the end of this year. According to an officer, the
purchase restrictions are unlikely to loosen in the foreseeable future.
Sina Finance
Import & Export Chinese Vice Premier Wang Qishan said taxes for import and export enterprises will
be cut. According to the vice premier, the tax liability should be reduced to maintain
consistency and stability in China's foreign trade policies.
Sina Finance
(November 15 to December 2, 2011)
Date Related sectors Policy Source
Dec. 2 Banking, non-bank
financials
The China Securities Regulatory Commission released a notice to ease the
requirements for listing IPOs by quality brokers, effective from January 1, 2012.
Instead having “strong market competitiveness” and “promising development space”,
brokers who only meet one of these requirements can now be granted permission for
listing IPOs. The criteria for both terms have been reduced as well.
Reuters China
Dec. 1 Banking, non-bank
financials
The People’s Bank of China announced a 50 basis points cut in banks' reserve
requirement ratio, effective from December 5, 2011.
PBOC
Healthcare The National Development and Reform Commission promulgated the Relative Price
Rule on pharmaceuticals to enhance the scientific level and transparency of
government pricing and suppress extravagant profits.
Sina Finance
Nov. 30 Healthcare Vice Premier Li Keqiang said that reforming the healthcare system will be the sector’s
focus under the 12th Five-Year Plan. Three initiatives will be taken: (1) establish a
protection mechanism to address serious diseases and develop corporate health
insurance; (2) fine tune the system for regulating basic drugs, and expand the scope to
villages and grass-root non-governmental health organisations; and (3) accelerate
reform of public hospitals and retain their non profit-making nature.
Sina Finance
Nov. 29 Banking, non-bank
financials
According to a media report, the State Administration of Foreign Exchange, the
People's Bank of China and the China Securities Regulatory Commission have
reached a consensus on the so-called "small QFII", known as RQFII (RMB Qualified
Foreign Institutional Investor programme). Implementation of RQFII will be accelerated
and targeted to be launched at the end of this year.
Sznews.com
Media & entertainment According to The State Administration of Radio Film and Television, starting from
2012, advertisements will be banned during the broadcasting of TV dramas to improve
the viewing experience for audiences. TV stations fear this will seriously affect
profitability and the quality of their programmes.
SARFT
Agriculture & forestry Details for fine-tuning of the valued-added tax on agriculture and forestry residues, and
its recycled products were announced. Measures including tax rebates, tax waivers
and business permits will be used to encourage companies to support the scheme.
Ministry of
Finance
Nov. 28 Banking China has commenced renminbi trading against the Australian and Canadian dollars.
The market believes this is an important step towards internationalisation of the
renminbi.
JRJ.com
Real estate Austerity measures for the Chinese real estate sector will continue, Chinese
Vice-Premier Li Keqiang said.
Sina Finance
Nov. 28 Machinery Details of the 12th Five-Year Plan for the machinery and industrial engineering sector
were announced. The bearing industry has been particularly emphasised, and a 12%
annual growth rate is required.
Sina Finance
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 39
Healthcare, agricultural,
new energy
The Ministry of Science issued the 12th Five-Year Plan on biotechnology
development, focusing on the bio-pharmaceutical, bio-agricultural, bio-manufacturing
and bio-energy sectors. The government will release RMB10 billion in special funds
and RMB30 billion of supporting funds for subsidising the development of 30 new
medicines, 200 technological improvements and 20-30 key techniques for
industrialisation.
Ministry of
Science
Nov. 26 Cement Details of the 12th Five-Year Plan for the cement industry were announced. It
encourages merger and acquisitions in the industry to boost the sector's
competitiveness and improve product quality.
Sina Finance
Banking, non-bank
financials
Securities margin trading and related policies were officially announced to transfer this
from the testing stage to a regular basis.
Sina Finance
Nov. 24 Banking China's Banking Regulatory Commission chairman says regulations for "systematically
important banks" will be strengthened.
Sina Finance
Nov. 23 Banking, non-bank
financials
The People's Bank of China says the RRR cut for rural cooperatives in Zhejiang is a
“normalisation” process.
Hexun.com
Nov. 15 Technology China’s ministries have decided to actively develop e-commerce. Twenty one major
Chinese cities, including Beijing and Shanghai, will act as the model cities for the
policy.
NDRC
Sales Contact
Dan Weil
Global Head of Institutional
Sales and Trading
Managing Director
+852 2248 3588
Chris Berney
Managing Director
+852 2248 3568
Joe Chan
Director
+852 2248 3578
Cancy Kong
Vice President
+852 2248 3538
Weekly Policy Monitor
Guosen Securities (HK) Brokerage Co., Ltd. 40
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