Caixin
Mar 12, 2021 09:23 AM
CX DAILY

CX Daily: China to Boost Basic Research Funding to Give Science and Tech a Shot in the Arm

Premier Li Keqiang attends a press conference on March 11. Photo: Zhou Tailai/Caixin
Premier Li Keqiang attends a press conference on March 11. Photo: Zhou Tailai/Caixin

Two Sessions /

Two Sessions 2021: China to boost basic research funding to give science and tech a shot in the arm

China will boost spending on basic research during the next five years to hasten the country’s emergence as a “science and technology power,” Premier Li Keqiang said Thursday.

The country will increase the proportion of basic research within the overall R&D sector from the current 6%, Li said, noting that developed nations typically assign 15% to 25% of total R&D spending to basic research.

Additionally, China will give scientists more autonomy to decide how to spend grant money so they expend less energy on “filling out forms” and more on “actually doing research,” Li said at a press conference at the end of the annual meeting of the National People’s Congress, China’s legislature.

China’s legislature votes to ensure Hong Kong is governed by ‘patriots’

Power /

Four things to know about China’s sweeping power overhaul

Recent restructuring moves by State Grid Corp., the larger piece of China’s state-owned power transmission duopoly, fueled expectations that the country’s long-stalled power industry overhaul is getting a reboot after nearly 19 years of stagnation.

In August, State Grid transferred its entire stake in property company Luneng Group to a state-owned enterprise free of charge, exiting the real estate sector. In November, an official of the National Development and Reform Commission, China’s top economic planning agency, said the power giant would spin off all of its equipment manufacturing operations by the end of 2021.

The plans marked the government’s renewed push to reorganize the power sector to cut prices and boost efficiency. Here are some key facts about China’s sweeping power industry overhaul and why it matters.

FINANCE & ECONOMY

Stock

Hong Kong-listed China Telecom announced a plan Tuesday to issue up to 12.1 billion shares in a secondary listing on the Shanghai Stock Exchange. Photo: VCG

Stocks /

Road to mainland listing is clear for China Telecom, source says

State-owned telecom operator China Telecom Corp. Ltd. will find there are fewer barriers to listing on a Chinese mainland bourse than in the past as regulators have grown less anxious about the market impact of such a large company floating shares, a source close to financial regulators told Caixin.

On Tuesday, the Hong Kong-listed giant announced a plan to issue as many as 12.1 billion A shares in a secondary listing on the Shanghai Stock Exchange’s main board. Based on Thursday’s closing price of its Hong Kong shares, China Telecom could raise around $4.1 billion from the listing. However, a person at a joint-venture brokerage told Caixin that the company’s mainland debut ought to be priced higher than the Hong Kong shares.

Previously, China Telecom made several attempts to list on the mainland, the source close to regulators said, but “regulators had a lot of concerns due to its huge size.”

China-U.S. /

Top Chinese and U.S. officials to meet in Alaska next week

Top Chinese and U.S. officials will meet in Alaska next week for their first face-to-face meeting since U.S. President Joe Biden’s inauguration as the two countries attempt to redirect their relationship, which many people see as being at its lowest point in decades.

According to the U.S. State Department, the meeting will take place between U.S. Secretary of State Antony Blinken, National Security Adviser Jake Sullivan, and Chinese Politburo member Yang Jiechi and Foreign Minister Wang Yi March 18 in the U.S. state of Alaska, which is located about halfway between the two sides’ capitals.

Blinken said on Twitter that he will “engage [with his Chinese counterparts] on a range of issues, including those where we have deep disagreements.”

Fintech /

China gets some advice on how to regulate fintech without killing innovation

China needs to rethink how it regulates its fintech industry so that it applies the rules to companies based on what they do rather than what license they hold, the World Economic Forum (WEF) advised in a new report.

The advice aims to provide the country with a path for taming the often chaotic development of the country’s fintech industry without stifling the innovation that has made it one of the most advanced in the world in certain aspects.

For regulation to help facilitate innovation, China needs a new regulatory model that will enable regulators to oversee all types of financial businesses, strengthen the consistency of the rules, and test a regulatory sandbox that keeps watchdogs responsive to new technologies, the WEF said Wednesday in a report.

Credit /

China’s February credit expansion beats expectations

China’s credit growth exceeded analysts’ expectations in February, a traditionally slow month because of the Lunar New Year holidays, reflecting stronger credit demand from corporations.

Financial institutions offered 1.36 trillion yuan ($209 billion) of new loans in the month, compared with 3.56 trillion yuan in January and 905.7 billion yuan in February last year, according to the People’s Bank of China. The median estimate in a Caixin survey of economists was 920 billion yuan.

Banks made 1.1 trillion yuan of medium and long-term loans to nonfinancial companies.

Quick hits /

Ex-CLSA banker accuses firm of wrongdoing on Chinese bond deal

Guotai Junan Securities gets OK to sell $7.7 billion of bonds over 2 years

Opinion: Is Wall Street’s hot vehicle for backdoor listings the real deal or financial gimmickry?

BUSINESS & TECH

Defaults /

Slashed credit rating raises specter of further defaults from state energy company

Concerns are rising over the prospect of further defaults from a state-owned energy company whose credit rating has been slashed after it failed to repay hundreds of millions of yuan earlier this month.

Fitch Ratings Inc. downgraded Chongqing Energy Investment Group Co. Ltd.’s long-term foreign-currency issuer default rating to “Restricted Default” (RD) from “BBB,” the ratings agency said Wednesday in a statement. Fitch also lowered its standalone credit profile to “RD” from “B-” as its repayment obligations under an onshore letter of credit and a bank draft had become overdue.

On March 1, Chongqing Energy failed to repay a combined 915 million yuan ($141 million) on debts, including a bank acceptance note from Ping An Bank Co. Ltd. and a letter of credit from China Zheshang Bank Co. Ltd.

Oil /

CNPC sells crude oil in China’s first online auction

State-owned oil producer China National Petroleum Corp. (CNPC) sold 15,000 tons of crude oil in China’s first online auction as part of a dramatic change in the way the commodity is sold in China.

The 5,000 tons of super heavy oil and 10,000 tons of heavy oil produced by CNPC’s Liaohe oil field were auctioned Friday on Dalian Petroleum Exchange’s online platform, according to a local newspaper report. The exchange is a wholly owned unit of CNPC. Eight local refiners in northeast China’s Liaoning province participated in the bidding.

CNPC fetched a higher price in the auction than under the existing system of distributing the commodity using planned quota prices. The oil fetched about 3,100 yuan ($476) a ton, compared with the internal planned quota price of 2,700 yuan set by the Liaohe oil field, according a bidding statement. The auction price was equivalent to global crude prices.

Iron ore /

China’s iron ore futures sag on steel curbs, carbon-cutting worries

Benchmark iron ore futures in the world’s biggest consumer of the key steel ingredient stumbled this week after a major smog wave in North China led to the rollout of government-mandated manufacturing cutbacks to improve air quality.

The most actively traded 12-month futures contract for iron ore due in May on the Dalian Commodity Exchange slid 5.24% Wednesday to 1,040.5 yuan ($159.76) per ton, down 11.4% from a recent high of 1,174.5 yuan per ton on March 4, after the northern city of Tangshan ordered local steel mills to cut production as heavy smog hit the region.

Tangshan, located in Hebei province, which surrounds Beijing, accounted for 13.7% of China’s total crude steel production last year with an output of 144 million tons.

Autonomous truck /

Autonomous truck startup Inceptio powers up new autopilot system

Autonomous truck startup Inceptio Technology launched its latest autopilot system Wednesday, aiming to achieve mass production of vehicles equipped with it by the end of this year.

Named “Xuan Yuan,” the self-driving system to power trucks will be used in Level 3 automatic vehicles made by domestic producers Dongfeng Commercial Vehicles Co. Ltd. and Sinotruk Jinan Truck Co. Ltd., the company said.

The Level 3 category applies to vehicles that can drive themselves only under certain road conditions, such as on highways.

Quick hits /

Foxconn set to make iPhone 12 in India, shifting from China

TikTok prompts EU watchdog’s warning on data being sent to China

Huawei’s woes in Europe grow as Balkan telecom giant mulls removing its gear

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