CX Daily: China's New Income Tax Regime Will Do Less to Reduce Inequality
China’s industrial profits fell 14% YOY in the first two months of 2019, marking the steepest drop since official monthly data on the subject became available in October 2011.
Over the first two months of this year, the total profits of the country’s industrial sector slumped to 708 billion yuan ($105 billion), according to official data released Wednesday. In China, January and February economic data are usually combined to reduce distortion caused by the weeklong Lunar New Year holiday.
The drop in profits was mostly due to the declining profits of major industries, said Zhu Hong, a senior statistician of the National Bureau of Statistics. If the automotive, oil processing, nonferrous metals and chemical manufacturing industries had been excluded from the data, China’s industrial profits would have grown 0.2% YOY.FINANCE & ECONOMICS
The tax counter of a government office in Jiangsu on March 18, 2019. Photo: VCG
China’s reforms to its personal income tax system could reduce the system's equalizing effect as they sharply cut the number of taxpayers, and some measures disproportionately benefit those with relatively higher incomes, according to a study by Beijing Normal University.
China in October raised the tax-free threshold on monthly income to 5,000 yuan ($744) from 3,500 yuan. Starting this year, the government added six types of tax deductions and consolidated several types of income into one comprehensive taxable income figure. The reforms are projected to weaken the income tax’s redistributive effect, according to a report by the China Institute for Income Distribution.
China securities regulator eases IPO rules on all listings
China’s securities regulator unveiled a new set of guidelines on IPOs, some of which are similar to those being applied to listings on China’s coming Nasdaq-style high-tech board, suggesting that the overall system may be moving in a more market-driven direction.
Still, it’s too early to say that China is moving toward full implementation of a registration-based system for all IPOs, one senior investment banker said. The new rules, released Monday night by the China Securities Regulatory Commission, notably ease requirements on valuation-adjustment mechanism agreements, joint investment by directors, supervisors and senior management, and third-party payments.
Financing / Venezuela
China says IADB meeting canceled because of countries 'politicizing Venezuelan issue'An annual meeting for one of the largest multilateral financing channels in Latin America and the Caribbean was canceled because of disagreement over having Venezuela politician Juan Guaido's delegates represent the South American country at the event, according to China's foreign ministry.
"Guaido himself is not a president elected through legal procedures and thus lacks legitimacy," said a ministry spokesperson, adding that China was not responsible for the decision cancel the March 26-31 meeting of the Inter-American Development Bank, of which China is a nonborrowing member. The meeting was to be held in Sichuan province.
Foreign investment /
GF Securities saddled with offshore hedge fund loss
Shenzhen-listed GF Securities Co. said Wednesday that its subsidiary hedge fund, GTEC Pandion Multi-Strategy Fund SP, had a loss of $139 million in 2018, mainly on foreign exchange trades, leaving the fund with negative capital of $44 million.
GF became the second Chinese brokerage to be saddled with massive losses on foreign investments, after Everbright Securities Co. reported a potential loss on a U.K. investment. It reflects growing exposure to risk after years of aggressive offshore expansion by Chinese financial institutions.
Quick hits /
Citic Bank to jump on perpetual bonds bandwagon with $5.9 billion issue
Opinion: Forced loans to small companies a relic of the planned-economy era
Hyped-up online insurer reports second straight annual loss
BUSINESS & TECH
A new-energy vehicle exhibition in Nanjing, Jiangsu province on March 22. Photo: VCG
China’s cut to electric-car subsidies is the biggest in five years
The government has announced the biggest reduction in subsidies for electric-vehicle makers in five years as it prepares to take the training wheels off the industry completely in 2020.
Several government departments led by the Ministry of Finance issued a notice this week stating that, as of June, the subsidy for electric-battery vehicles with ranges of 400 kilometers (250 miles) and above will be slashed by half to 25,000 yuan ($3,700), down 50% from a year earlier. Meanwhile, vehicles will need to be capable of driving 250 kilometers on a single charge to qualify for any subsidies at all, up from 150 kilometers in 2017.
Maiden annual results for 2018 tech listings
New president brings major staff shakeup to Youku
New Youku president Fan Luyuan downsized Youku's online drama production team and transferred some team members to Alibaba Pictures, sources told us, a move that could allow Youku to shift its focus toward copyright-related business, while positioning Alibaba Pictures as the platform’s content supplier.
Industry watchers said this separation of businesses could avoid conflicts of interest for Youku personnel — a common problem under the leadership of Fan's predecessor Yang Weidong, who was revealed to be “assisting mainland authorities with an investigation into an alleged case of seeking economic benefits,” an expression that usually refers to corruption.
Real estate /
China Resources Land expands assets despite slow year for property industry
China Resources Land Ltd., a subsidiary of the central government-administered China Resources (Holdings) Co. Ltd., grew its land bank by nearly 60% from 37.44 million square meters to 59.57 million square meters in 2018, according to an annual performance report, despite tightened industry supervision.
While real estate sales in China fell last year amid government attempts to cool the property market, observers say China Resources Land, backed by a state-owned parent company, is less likely be concerned with recouping land costs in the short term.
Quick hits /
China’s top state tech academies to accept more members from private companies
Reporter’s notebook: Yancheng blast leaves wounds and scars that won’t fade
Huawei and electric carmaker BYD to develop ‘smart’ driving tech
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