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Thursday November 16, 2017

31 State fi rms picked for new round of reformsTHE government has chosen 31 more State-owned fi rms to participate in its third round of mixed ownership reforms aimed at injecting private capital into the State sector, an offi cial of the country’s top economic planning body said yesterday.

The mixed ownership reform plan is designed to inject market discipline into, as well as open up additional fi nancing for, the State sector.

The State Council has already decided which fi rms to include, choosing State enterprises run by regional authorities as well as the Central Government,

said the offi cial, Meng Wei.“Currently we are pressing

the pilot enterprises to draw up implementation plans,” said Meng Wei, vice head of the policy research offi ce of the National Development and Reform Commission (NDRC).

The 19 pilot fi rms selected in the fi rst and second rounds of reform were now gradually implementing their restruc-turing programs, she told a briefi ng, adding that China’s overall reform plans remained on schedule.

More than a third have already “basically completed” reforms

aimed at introducing new investors, boosting corporate governance and setting up new internal incentive mechanisms, she added.

Policymakers have ruled out the possibility that mixed own-ership reforms could lead to the privatization of State assets.

Xiao Yaqing, chairman of the State-Owned Asset Supervision and Administration Commis-sion, said in remarks published late Tuesday that China will continue to deepen reform of State-owned enterprises and experiment with new owner-ship structures, but strengthen-

ing Party leadership remains the guiding principle.

Imposing Party discipline on State fi rms remains a key part of China’s goals in its effort to fi ght graft, upgrade domestic industry and dominate overseas markets, Xiao said.

Xiao said the reforms were part of efforts to build a new socialism with Chinese charac-teristics as well as other strat-egies set out by President Xi Jinping last month.

“The State-owned fi rm is an important force to promote modernization and safeguard public interests, and an impor-

tant material and political foundation for the development of Party and State affairs,” Xiao said.

China’s total State-owned assets, excluding the fi nan-cial and cultural sectors, had reached 154.9 trillion yuan (US$23.35 trillion) by the end of last year, up 73.1 percent from 2012, Xiao said.

He said China would continue to streamline and upgrade State fi rms while promoting restructur-ing and mergers, besides devel-oping strategic sectors, curbing overcapacity and tackling “zombie enterprises.” (SD-Agencies)

THE central authorities have hit the brakes on subway projects in at least three cities and is asking others to slow down their plans, local governments and media have reported, indicating con-cerns over high debt from city-level infrastructure spending.

China has been in the grips of a subway building binge with more than 50 cities working on over 1 trillion yuan (US$150.8 billion) worth of projects, after population restrictions were loosened last year to allow more cities to have metro systems.

Such infrastructure spending has helped to shore up economic growth but is now being scruti-nized more closely after the government pledged to clamp down on fi nancial risks.

China’s overall debt has jumped to more than 250 percent of GDP from 150

percent at the end of 2006.Financial magazine Caixin,

quoting unnamed sources close to the matter, reported that authorities in Inner Mongolia’s Hohhot and Baotou cities have scrapped approved projects worth billions of dollars in recent months due to concerns over fi nances.

Xianyang City, which wants to build six lines to link up to Shaanxi Province’s capital of Xi’an, said in a statement this month some of its plans had not yet been approved by the National Development and Reform Commission (NDRC).

“The NDRC has become more cautious about approving metro construction plans and it will be diffi cult to achieve approval within the year,” it said, adding that one of the factors was debt concerns.

The Economic Observer newspaper said it was told by the Wuhan City’s economic planner that the NDRC was re-evaluating the country’s subway construction situa-tion.

Guotai Junan analyst Gary Wong said such a crackdown on metro projects was appro-priate given that many remote and fi nancially weak cities had undertaken metro projects. He said he did not anticipate a large impact on locomotive suppliers such as CRRC Corp. that have shifted focus to metro trains to offset the slowing high-speed rail market.

“They are already full with orders. Even if they don’t get new orders at the moment, they will still be busy for the next two to three years,” he said.

(SD-Agencies)

Govt. hits brakes on metro boom over debt concerns

ARTIFICIAL intelligence (AI) startup SenseTime Group said yesterday it has sealed an investment from chipmaker Qualcomm Inc. as part of a funding round that will close later this year.

SenseTime and Qualcomm had announced a strategic tie last month to collaborate on AI, which will see SenseTime’s pro-prietary algorithms deployed in smart devices.

Qualcomm has confi rmed the investment in SenseTime. The two fi rms did not disclose the size of the investment.

Media reports earlier in November said that SenseTime plans to raise about US$500 million in a new funding round, in what would be the biggest-ever such fundraising by an AI startup.

The fundraising will value SenseTime at about US$2 billion and has drawn interest from prospective investors, including Singapore state investor Temasek, the reports said.

The startup is one of several AI facial recognition fi rms in China that are rapidly raising capital from local and foreign investors amid a multibillion dollar global drive to develop advanced facial recognition technology.

It raised US$410 million in July in a funding round led by its main backer, Chinese buyout fi rm CDH Investments, and China’s State-backed fund Sailing Capital.

SenseTime is developing technology that employs AI to quickly identify and ana-lyze identities using cameras, and has been used in limited tests by Chinese authorities to track and capture suspects in public spaces such as airports and train stations.

The startup counts 40 local Chinese governments as clients. It is seeking to expand overseas, including possible plans for an ASEAN headquarters in Singa-pore. (SD-Agencies)

Qualcomm invests in AI startup SenseTime

A member of the security personnel stands on duty on a train platform inside a Metro station in Beijing in this fi le photo. The Central Government has hit the brakes on subway pro-jects in at least three cities and is asking others to slow down their plans, local governments and media have reported. SD-Agencies

PIG herd in China shrank last month by the most in close to two years, said the Ministry of Agriculture yesterday, amid a crackdown on farm pollution that has forced hundreds of thousands of farms to close in the past year.

The world’s largest pig herd contracted by 6.6 percent in October from a year ago, said the ministry, without giving detailed livestock fi gures.

That was more than last month’s drop of 6.1 percent, and a reduction pace not seen since January 2016.

The sow herd fell 5.3 percent last month, also more than last month’s decline, and the largest drop since March 2016.

Both sow and hog herds have registered a year-on-year drop each month since at least the start of 2016, but the pace of shrinkage has accelerated since July this year, as efforts to comply with new environmental regulations gather pace.

Hundreds of thousands of mainly smaller pig farms have closed in recent months, as local governments rush to enforce the new standards by December.

Under those standards, live-stock production is banned near water sources or major popula-tion areas. Farms in other areas must meet high standards on treatment of animal waste.

China produces about 55 mil-lion tons of pork a year, about half the world’s supply.

(SD-Agencies)

Pig herd shrinks further

THE landmark move to ease or remove limits on foreign owner-ship in China’s fi nancial sector will likely stoke acquisition interest in smaller banks, Fitch Ratings said.

China’s life insurance industry could also be attractive to foreign acquirers due to the sector’s low penetration rate and growth potential, Fitch said in a report Tuesday.

Vice Finance Minister Zhu Guangyao on Friday said China will also drop foreign ownership

restrictions on local banks and insurance companies.

The government will also raise the foreign ownership cap on futures fi rms, securities companies and fund managers to more than 50 percent, and that the cap would be removed altogether in three years.

The announcement came after U.S. President Donald Trump visit Beijing where he reiterated calls for improved access to Chi-nese markets.

“The scale of China’s larger

banks could be a constraint for potential acquirers, and it is not yet clear how the strategic benefi ts would compare against the costs,” Fitch said. “The more likely acquisition targets in the banking sector would be the relatively smaller city commer-cial banks or rural banks.”

But such banks tend to have higher risks due to their nar-rower geographical presence, and profi tability pressures are also stronger than in the broader banking sector, Fitch said.

In the non-banking sector, pricing competition is intense, especially in the brokerage and underwriting segments, where brokerage commission rates have fallen to less than 3 basis points, according to Fitch.

The life insurance sector could be more alluring, but the small life insurers that are the most likely acquisition targets usually focus on low-margin products amid tough market competition, Fitch warned.

(SD-Agencies)

Ownership cap change to stir interest in smaller banks: Fitch