China Focuses on Green Finance

The G20 Summit was held this year in Hangzhou, China on September 4-5 and one of the major topics might surprise many. Green finance was on the agenda for the first time. Prior to the Summit, a G20 Green Finance Study Group that was co-chaired by China and the UK and had more than 80 people involved issued a report. They identified the major challenges to green finance and laid out key options to consider.

As described on one website, “Green finance, generally defined, is the act of setting up market and policy tools for the financing of public and private sustainable investments. The main goals for green finance in China are to increase return on green investments and decrease the return on polluting investments. In this way, green finance can help restructure China’s market towards a more sustainable economy, and reduce pollution and greenhouse gas emissions.”

Learn more about Green Finance and about the steps that were taken at the G20 Summit.

 

Advertisements

Discussions Between China and New Zealand

Prime Minister John Key met with Chinese business people at a networking event in Beijing recently alongside Alibaba billionaire Jack Ma. Key is leading a delegate trade mission which includes 40 people. It is focused on upgrading their ties to New Zealand and its free trade agreement with China.

China and New Zealand signed a memorandum of understanding which will allow New Zealand small businesses more access to sell their products on Alibaba. Ma is hoping to introduce products from New Zealand to China. As he said, while talking to the media after the signing,

“I think your total population is 4.5 million, and we’ve got 1.4 billion people. So the market is huge … and I think our cities are already demanding a quantity that will scare you guys. So this is something that we would love to do; not only buy from New Zealand, we should learn from New Zealand how to protect the environment and then continue to do that.”

During the course of the six day trip that Key was on, he saw the signing of three agreements just on the first day. These included the Alibaba announcement and “an extension to communications provider Huawaei’s sponsorship of the Wellington Phoenix and an agreement for production company Natural History New Zealand to produce documentaries and children’s programmes for China Central Television.”

China’s Cabinet Creates New Department

China’s Cabinet has just created a new department to coordinate financial and economic affairs as a goal of restoring investor confidence in the government’s regulation of markets. The move has not been publically announced yet, but was reported to Bloomberg Business by an insider. Agricultural Bank of China VP Li Zhenjiang was nominated as the deputy director who will be responsible for the daily operations and he has just taken the post.

The move shows an understanding by Communist Party leaders that the current structure needs to be redone as a reflection of China’s markets and their economic slowdown. The Shanghai Composite Index has decreased more than 17% since late December.

Learn more about these plans and pay attention to their implementation in the weeks ahead.

Scottish Beers Coming to China

A group of Scottish beer producers have set their sites on China, Hong Kong and Dubai. the Inveralmond Brewery in Perth and the Eden Mill Distillery and Brewery at Guardbridge have benefited from the Craft Beer Clan efforts.

As Eden Mill owner Paul Miller said, “This market has been fantastically good for us. The latest order has been our third to China through Craft Beer Clan in the last year. We are excited about the Chinese market which has a lot of potential for further growth for our brewery.”

The Craft Beer Clan is the international division of Glasgow-based food and drink wholesaler JW Filshill. Their goal is to help Scottish craft brewers and distillers enter the Asia Pacific region. It is currently working with 22 brewers and four craft distillers across Scotland. They have also brokered deals with importers in Taiwan and secured orders in Thailand and Panama.

As Chris Miller of JW Filshill International said, “We attended the key whiskey exhibition in Beijing and Shanghai in August with the Single Malt Club, our distributor in China. The Chinese market is key to our international growth as consumers, they are hugely interested in Scotland and have a particular appetite for Scotch whiskey as well as premium food and drink products.

 

Uber Battles it out in China

Uber is now hoping to raise $2.5bn for its China unit. This would double the amount the company has already raised.  They are locked, at the moment, in a fierce fight with their Chinese rival, Didi Kuaidi. They have already raised $3bn in a round that closed recently. The race for the market between the two companies will be determined by who can raise the most money. Uber’s Chinese investors include Baidu, while Didi’s include Tencent and Alibaba.
Uber has said it plans to invest $1bn this year in China. Chief Executive Travis Kalanick described it as “one of the largest untapped opportunities for Uber, potentially larger than the US”.

Uber just announced a new carpooling service in Chengdu, Southwest China. This is the first time that they have launched a brand new service outside of the US. The service is being called “UberCommute” and it will enable long-haul commuters to pick up other passengers for a free who are going in the same direction.

 

 

China Real Estate Picking Up…But Only in Larger Cities

China’s metropolitan areas have witnessed a financial and property revival while the recovery in smaller cities has been much slower. The home sales volume in tier-1 cities surged 42.9% in teh first half of this year from last year. For tier-2 cities the uptick was 16.9% and for tier-3 cities there was a fall of 2.9%.

The recovery for the housing market in tier-3 and tier-4 cities is weighted down by high inventories, according to Zhang Dawei, chief analyst at Centaline.

China reduced the down payment levels for second-home buyers in March. It is now 40%, rather than the 60-70% that was previously required. They also exempted business tax for sales of homes that are purchased over two years ago.

Read the whole article to see more of the nuance of the issue.

Uber Moves Into Chinese Market

Uber has recently struck a deal with China Yongda Automobiles Services Holdings. This is a Chinese luxury auto dealer. Together, they plan to provide discounts and financing for drivers of Uber cars. Yongda will provide Uber’s partners with discounts on new car purchases, financing and after-sale services.

Uber has faced a great deal of pressure in its attempts to expand into the Chinese market. Time will tell how they do trying to squeeze into the market. To read more about this ventu, see the full article.

Optimism for Asia Pacific Investments

Datastat - Modification from wikipedia

Datastat – Modification from Wikipedia

Optimism is rising for making investments into the Asia Pacific region. There is greater confidence among executives in the region, a large percentage of whom, according to a PwC report believe that in the next 12 months there will be substantial growth. Given that it has risen 10 points from 2012 and four from 2013, this is a good sign.

However, growth has not been encountered all that much in China. So will this impact the rest of the Asia Pacific region? According to the study, 67 percent of executives are anticipating that they will make large investments in the APEC region over the next year. And they will be doing this within each of the 21 member economies. As well, China is actually up there as one of the most popular places for such investments.

If that is the case, how do investors justify these plans if China’s economy is not encountering growth? A couple of weeks ago, Bob Davis at ‘The Wall Street Journal,’ wrote that we are witnessing the end of the Chinese economic miracle.”

However, just recently China started admitting its issues – which is a huge deal vis-à-vis solving them.   It announced a drop in interest rates which will once again begin to make the region more attractive to outside investors.

Still, there is much more to be done. The facts are that the country’s manufacturing sector is facing challenging overcapacity, resulting in a drop in prices. As well, there was an increase of GDP in the third quarter by 7.3 percent. These issues have to be addressed as well as interest rates, if China is going to have a chance of getting back in the foreign investment game.