Weekly Policy Monitor (Jan 30 to Feb. 3, 2012) · Xinhua News Agency SMEs, finance A statement...

Weekly Policy Monitor

Guosen Securities (HK) Brokerage Co., Ltd. 1

February 3, 2012

Weekly Policy Monitor (Jan 30 to Feb. 3, 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.

(Jan. 30 to Feb.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 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.

Xinhua News Agency

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)


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

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

http://topics.bloomberg.com/new-energy/



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)


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

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)


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, 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.

Xinhua News Agency

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

(January 2 to 6, 2012)


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

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

http://topics.bloomberg.com/chen-deming/

http://www.mofcom.gov.cn/aarticle/ae/ai/201201/20120107915368.html?2211793026=50175321



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)


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

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





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

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 Magazine

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 Magazine






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

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




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


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 Finance

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)



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


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



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

[email protected]

Jiafeng Li Vice President

+852 2899 7281

[email protected]

Chris Berney Managing Director

+852 2248 3568

[email protected]

Chen Long Vice President

+852 2248 3548

[email protected]

Joe Chan Director

+852 2248 3578

[email protected]

Shunei Kin Vice President

+852 2248 3536

[email protected]

Cancy Kong Vice President

+852 2248 3538

[email protected]



Information Disclosures

Disclaimers

The prices of securities may fluctuate up or down. It may become valueless. It is as likely that losses will be incurred rather than profit

made as a result of buying and selling securities.

The content of this report does not represent a recommendation of Guosen Securities (HK) and does not constitute any buying/selling or

dealing agreement in relation to the securities mentioned. Guosen Securities (HK) may be seeking or will seek investment banking or

other business (such as placing agent, lead manager, sponsor, underwriter or proprietary trading in such securities) with the listed

companies. Individuals of Guosen Securities (HK) may have personal investment interests in the listed companies.

This report is based on information available to the public that we consider reliable, however, the authenticity, accuracy or completeness

of such information is not guaranteed by Guosen Securities (HK). This report does not take into account the particular investment

objectives, financial situation or needs of individual clients and does not constitute a personal investment recommendation to anyone.

Clients are wholly responsible for any investment decision based on this report. Clients are advised to consider whether any advice or

recommendation contained in this report is suitable for their particular circumstances. This report is not intended to be an offer to buy or

sell or a solicitation of an offer to buy or sell the securities mentioned.

This report (including any information attached) is issued by Guosen Securities (HK) Brokerage Co., Ltd, a member of Guosen Securities

Co., Ltd. Some parts of the report may have been originally published in Chinese, within the People’s Republic of China, by Guosen

Securities Co., Ltd. That material has been reviewed, translated and, where applicable, adapted by Guosen Securities (HK) Brokerage

Co., Ltd. This report is for distribution only to clients of Guosen Securities (HK). Without Guosen Securities (HK)’s written authorization,

any form of quotation, reproduction or transmission to third parties is prohibited, or may be subject to legal action. Such information and

opinions contained therein are subject to change and may be amended without any notification.

Date post:	07-Aug-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

Weekly Policy Monitor (Jan 30 to Feb. 3, 2012) · Xinhua News Agency SMEs, finance A statement...

Documents