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Apr 16, 2019 11:31 AM
CX DAILY

CX Daily: Attendance at China's Iconic Trade Fair Bodes Ill For Exports

An exhibition at the 124th Canton Fair in Guangzhou, south China's Guangdong province, Oct. 17, 2018. Photo: IC
An exhibition at the 124th Canton Fair in Guangzhou, south China's Guangdong province, Oct. 17, 2018. Photo: IC

Iconic trade fair loses luster, boding ill for exports

The China Import and Export Fair, or Canton Fair, China’s decades-old event seen as a a barometer of the vitality of China’s international trade, apparently has struggled to attract buyers to its spring session. This bodes ill for the country’s exports, an event organizer said.

The 125th fair opened Monday and will run across three five-day sessions till May 5. Xu Bing, the event’s spokesperson, said the situation this year is “grave,” based on the number of applications made by exhibitors for invitation letters for their overseas customers, the number of preliminary event passes issued and the number of local hotel rooms and airline tickets booked.

Xu skipped the traditional practice of revealing the number of buyers who are expected to attend the event. Just fewer than 190,000 purchasers visited during last year’s autumn session, down 1.1% from a year earlier, official figures showed.

FINANCE & ECONOMICS

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Georgetown Harbour, Grand Cayman, Oct. 1, 2010. Photo: IC

Tax haven /

Questions remain over Cayman Islands tax avoidance law

Three months after the Cayman Islands, the British Overseas Territory in the western Caribbean, enacted a new law to combat cross-border tax avoidance, questions remain about how firms go about passing a test to prove they undertake activities of “economic substance” there ahead of a July 1 deadline.

The Cayman Islands has been a popular offshore incorporation destination for Chinese companies, which sometimes have "variable-interest entity" structures designed to skirt Chinese rules banning foreign investment and ownership in certain sectors, including internet businesses and value-added telecom services. Vague requirements in the new rules say companies must maintain “adequate” physical presence on the islands and have “adequate” operating expenditure and HR.

Lending /

Credit growth accelerates after slowdown in February

China’s total social financing, a broad measure of credit and liquidity in the economy, grew by a net 2.86 trillion yuan ($426 billion) in March, much higher than a net increase of 703 billion yuan the month before, central bank data showed.

The latest data suggest that credit growth may now be resuming in response to the central bank’s efforts to loosen monetary conditions, said Chang Liu, an economist with Capital Economics, in a research note. “However, a rapid economic turnaround is unlikely,” the economist said, adding that even if the recovery in lending continues, economic growth won’t stabilize for a few more months.

Local misdeeds /

Local governments’ problematic treatment of foreign investors

Local authorities in 45 areas were found to have treated overseas-funded businesses poorly in recent years, according to a quarterly report released by the National Audit Office.

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The central province of Hunan stood out. From 2016 to 2018, authorities in 25 city- and county-level governments illegally charged foreign companies 4.8 million yuan ($699,938) to review construction drawings despite a provincial ban on such charges, according to the report. Other provincial-level regions such as Shanxi, Inner Mongolia and Ningxia were also called out for misconduct.

Aging population /

China’s pension fund could see shortfall much earlier than expected

A Wednesday report from the Chinese Academy of Social Sciences predicted that the pension funds collected in 2019 will not cover expenses of the same year. The shortfall is appearing much earlier than expected. This is based on China’s preferred payment rate of 16% of a company's total expenses on staff salaries, not including government subsidies.

When subsidies are taken into consideration, the report shows an annual shortfall would begin in 2028, when a system debt as large as 118.1 billion yuan ($17.58 billion) is expected. The shortfall could soar up to 11.3 trillion yuan in 2050.

Quick hits /

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Japan to send ‘high-level delegation’ to China’s Belt and Road summit

BUSINESS & TECH

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Delivery personnel of JD Logistics check delivery information on their mobile phones Nov. 11, 2018. Photo: IC

Logistics /

Salary cut for deliverymen was due to nearly 3 billion yuan in losses: JD boss

JD.com’s chief said a 12th straight year of losses for its delivery unit was part of the reason it cut base salaries of drivers, leaving them with only commission-based pay.

Richard Liu, the founder of the e-commerce giant, said JD Logistics racked up 2.8 billion yuan ($420 million) in net losses last year. This left the company with enough money to operate for only two more years, he said in a public letter released Monday.

Green energy /

China puts another nail in the coffin of renewable power subsidies

The Chinese government is now prioritizing photovoltaic (PV) and wind projects that can go toe-to-toe with coal and other forms of generation without subsidy support, the National Energy Administration (NEA) said in a draft document, after the government struggled with a backlog of 140 billion yuan in subsidy payments.

Just 3 billion yuan of PV subsidies will be given out this year, with new projects to be graded on a three-tier scale, according to the draft. Approval priority will go to projects in regions with abundant light and therefore greater energy-generating efficiency, while those graded to be in the less promising categories will be less likely to receive approval and will receive less aid even if approved.

Sharing economy /

Up-and-coming Didi rivals want a slice of the pie

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As a follow-up to our feature looking at automakers teaming up to try to unseat Didi from its ride-hailing throne, we've compiled a list of challengers – of which some are niche or localized, but as of last year are increasingly fronted by car manufacturers themselves.

M&A /

China’s ENN drops plan to buy Toshiba’s U.S. LNG assets

Privately owned Chinese energy company ENN Ecological Holdings Co. is scrapping a plan to buy Toshiba Corp.’s long-struggling liquefied natural gas (LNG) operations in the U.S. after a failure to obtain approvals from shareholders and the U.S. government.

ENN said its board terminated the proposed deal after shareholders voted against it, a blow to the Japanese industrial conglomerate, which has long sought to shed the money-losing business.

Real estate /

Shenzhen climbs into top five of most expensive housing markets

Hong Kong, Shanghai and Shenzhen are among the five most expensive housing markets globally, according to a new ranking by U.S. real estate services and investment company CBRE Group Inc.

Hong Kong again ranked at the top of the list with an average home price of $1.24 million, followed by Singapore, Shanghai, Vancouver and Shenzhen. Shenzhen, southern China’s technology hub, made its first appearance in the top five with properties priced at $680,283 on average.

Quick hits /

Opinion: How can we improve the lives of China’s delivery drivers?

Foxconn denies report that its chairman is stepping down

Mercedes-Benz lands at heart of customer dissatisfaction debate

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