Training center

FACING heated market competition and expanding dealer network, BMW AG yesterday opened its biggest training center in Asia.

The BMW Training Center Shanghai has 100 million yuan (US$14.6 million) invested in the first phase.

rline group confirms order cut

CHINA'S Hainan Airlines Group (HNA) confirmed yesterday that it halved its order of ERJ-145 jets from the Harbin Embraer Aircraft Industry Company to 25 planes.

Zheng Yang, an official with HNA responsible for Grand China Express, HNA's core business, said shrinking demand had caused the cut.

He said Harbin Embraer had agreed to the order change. Harbin Embraer, a joint venture among Empresa Brasileira de Aeronautica SA (Embraer), Harbin Aircraft Industry Group Co and Hafei Aviation Industry Co had delivered 12 jets to HNA as of April 30.

It would deliver the rest by 2011, instead of 2010, Zheng said. HNA is China's fourth-largest carrier.

New boss at PBOC's Shanghai operation

ZHANG Xin has been named the new deputy director of the Shanghai headquarters of the People's Bank of China, the central bank said yesterday.

He will also head the bank's Shanghai branch.

He was previously head of the financial stability bureau under the central bank. His predecessor, Hu Pingxi, has moved to the Shanghai Rural Commercial Bank as chairman.

Zhang's move from Beijing to Shanghai is seen as a means to support the build-up of Shanghai as a major world financial center by 2020, industry watchers said.

Zhang, 40, who graduated from the graduate department of the central bank in 1989 and gained a PhD in finance from Columbia University in 1996, worked for Merrill Lynch and the World Bank in the late 1990s. He came back to China and joined the China Securities Regulatory Commission in 2000.

He became deputy head of the financial stability bureau in May 2005.

The central bank set up its Shanghai headquarters in March 2006 to enhance Shanghai's position in the international financial market.

The State Council earlier this year issued guidelines with the aim of making Shanghai a leading financial and shipping center by 2020.

Wang sets out the road to recovery

CHINESE Vice Premier Wang Qishan, in an article in yesterday's Financial Times, says the economy will get worse before it gets better.

The vice premier said financial stability would be aided by keeping exchange rates stable through exchange-rate policy coordination.

He rejected protectionism, saying "it is vital unequivocally to reject protectionism of all kinds."

Wang said China would continue with its "proactive fiscal policy and moderately easy monetary policy to ensure sound and steady growth of our economy, and in so doing contribute to the recovery of the global economy."

Joint Investment For Sichuan Car Plant

CHINA First Automobile Works and Europe's auto giant Volkswagen AG said yesterday that they would jointly invest 5 billion yuan (US$733 million) to build an auto plant in Chengdu, capital of southwest China's Sichuan Province.

The plant is expected to create 4,500 jobs. It will have a planned annual output of 150,000 and will make the Volkswagen Jetta.

The firms didn't disclose how the investment would be divided.

Xu Jianyi, CFAW's general manager, said the new investment was made in an effort to support the reconstruction of earthquake-hit Sichuan.

Volkswagen China CEO Winfried Vahland said the Chengdu plant would serve as an important production base to achieve its target of 2 million sales in China by 2018.

Key index set for correction

THE Shanghai stock market is likely to correct this week and post a record daily decline as investors take profit, analysts said.

''The local benchmark index is expected to experience a V-shape movement this month and the index is likely to fall sharply in mid-month due to huge pressure from broad selling by investors to take profits,'' Essence Securities Co wrote in a research note. ''The resistance might be around 2,650 points.''

The Shanghai Composite Index gained an accumulative 5.98 percent last week, the sixth consecutive weekly gain, to close at 2,625.65 points, the highest since August 7.

The gains in surrounding markets, the central government's 20-billion-yuan (US$2.94 billion) fund to boost technology upgrading and Nanhui District's merger into the Pudong New Area pushed the index higher last week, analysts said.

But the recent gains may be offset by a new round of fluctuations in the market, said Teng Yin, an analyst at Everbright Securities Co.

''This will add to the risks of a market plunge as there is mounting pressure for a correction after continuous rallies,'' Teng cautioned.

UBS Investment Research said that it does not exclude the possibility of a big tumble this week in the face of technical pressures. The company forecast the index to move between 2,410 points and 2,680 points.

Gain seen in short term

THE yuan may gain slightly against the United States dollar in the short term but the currency should remain stable in the long term as the Chinese government pledges to continue to maintain an easier monetary stance.

The Chinese currency edged up against the greenback in the past week and ended at 6.8221 on Friday, according to the China Foreign Exchange Trade System. The yuan ended at 6.8250 at the end of the previous week.

China will maintain a moderately loose monetary policy and ensure ample liquidity in the financial system, according to a quarterly report released by People's Bank of China, the central bank, on Wednesday.

"The signal by the central bank will send the yuan higher in the short term, but it doesn't mean the yuan will start to appreciate against the US dollar" over the long term, said Shi Lei, an analyst at the Bank of China.

Innovation gets US$3b boost

THE Chinese government will spend 20 billion yuan (US$2.93 billion) this year on technological innovation in a range of sectors.

The money will mainly be used in the form of subsidized loans, and could boost 460 billion yuan in investment in total, the government said in a statement after a State Council meeting, chaired by Premier Wen Jiabao, approved the plan on Wednesday.

The sectors that will be covered under the plan include petrochemical, textile and food, the manufacturing of wind turbines and nuclear reactor parts, logistics, steel and new energy.

The spending program also called for technological upgrade in the development of integrated circuits, next-generation Internet and the home-grown TD-SCDMA (Time Division-Synchronous Code Division Multiple Access) 3G mobile phone technology.

The government is encouraging companies in the sectors to upgrade technologies to create better product portfolio, and more sustainable industry development.

The spending on innovation is part of the government's rejuvenation plans for 10 key industries.

Auto Sales Said To Reach Record

CHINA'S automobile sales probably reached a record high of 1.15 million units last month as the government's stimulus plans began to pay off, estimates from the China Association of Automobile Manufacturers indicated yesterday.

The official figures for vehicle production and sales are scheduled for release next Monday. Assuming the association's figures are borne out by official data, last month would be the fifth straight month of growth for the industry.

China unveiled a support package for the auto industry early this year, cutting purchase taxes for cars with small engine capacities and providing subsidies to rural purchasers.

China's March auto sales grew 5 percent from a year earlier to 1.11 million units.

Electronics, IT Products Exports Tumble 24.6%

EXPORTS of electronics and information technology products, which account for one-third of total exports on the Chinese mainland, continued to drop in March amid the tough economic environment, the Ministry of Industry and Information Technology said yesterday.

The electronics exports, from laptop computers, mobile phones and LCD panels, totaled US$87.2 billion in March, a drop of 24.6 percent from a year ago, the ministry said, adding that they fell 19 percent in the first two months.

The export value of laptop computers, No. 1 on the list, totaled US$12.7 billion, a 9.9-percent drop from a year ago. The LCD panel exports plunged 47.6 percent to US$3.05 billion.

"It's a tough challenge to the industry but it's an opportunity to upgrade our industry structure," Li Yizhong, the minister, said during a previous broadcast conference.

Export orders dip

CHINA'S leading trade fair, known as Canton Fair, ended yesterday with export orders down almost 17 percent, a sign of troubles ahead for exporters amid the financial crisis, organizers said.

The export deals for more than 20,000 Chinese companies reached US$26 billion at the 105th China Import and Export from April 15 to yesterday, down 16.9 percent from the previous fair in October, said the fair's organizers.

Vanke's sales jump

CHINA Vanke Corp, the country's largest publicly listed developer, said sales jumped 22 percent from a year earlier to 5.27 billion yuan (US$771 million) last month.

The company sold a total of 595,000 square meters of houses nationwide in April, a year-on-year rise of 23 percent, Vanke said in a statement to the Shenzhen Stock Exchange yesterday. On a month-over-month basis, sales dropped 14 percent while volume of space sold fell 18 percent. During the first four months, Vanke's sales rose 21 percent to 17.49 billion yuan from a year earlier.

Ceiling on output of mineral resources

CHINA said yesterday it would impose a ceiling on the output of mineral resources like tungsten, antimony and rare earth in 2009 amid shrinking demand.

The move is aimed to protect China's reserves of these minerals, the Ministry of Land and Resources said in an online statement. The country's tungsten ore concentrate output is limited to 68,555 tons this year; rare earth ore to 82,320 tons, and antimony ore to 90,180 tons, said the ministry. These quotas on output were based on falling demand across the world as a result of the global financial crisis, said the ministry.

Review into investments by SOEs

CHINA'S state-owned asset regulator will launch an investigation into investments made by centrally administered state-owned enterprises in the financial sector in a bid to help them avoid risks.

A total of 28 SOEs, including Air China, China Eastern Airlines and China COSCO Holdings Co, have invested in financial derivatives but most of them suffered losses.

The overriding concern of the SOEs, when they invest in financial derivatives, is to ensure they avoid risks and not to speculate, said Li Wei, vice director of the State-owned Asset Supervision and Administration Commission.

Air China lost 7.5 billion yuan (US$1.1 billion) on fuel-hedging contracts by the end of last year, and China Eastern's wrong-way bets on hedging dragged its revenue down 6.4 billion yuan.

Li said SOEs which plan to invest in financial derivatives must meet four conditions - abiding by hedging rules, hiring financial institutions for consultation, controlling risks and getting the commission's approval.

"SOEs are short of financial talent to deal in such investments, which led to an underestimation of risks and violations, so the commission will issue suggestions after an investigation," Li said.

He also urged local state-asset regulators to investigate locally administered SOEs.

The SOEs have seen their first annual decline in net profit last year since 2002, diving more than 30 percent from a year ago to 665.29 billion yuan.

Moving on

OZ Minerals Ltd yesterday said CEO Andrew Michelmore will resign and join China Minmetals as part of the Chinese firm's purchase of most of the Australian miner.

The A$1.2 billion (US$883 million) deal, aimed at saving OZ from liquidation by its creditors, is due to be completed mid next month following a shareholder vote.

Stake sale

ZOTYE Auto, a Chinese maker of sport-utility vehicles, is raising about 720 million yuan (US$106 million) by selling a 20 to 30-percent stake to a private equity fund-led consortium, aiming for a Shanghai initial public offering later, sources said yesterday.

Zotye planned to sell shares to a group of investors led by SND Ventures Group, a Chinese private equity firm backed by the Suzhou government. The deal was set to be completed later this month.

Yuan prospects

A SENIOR South Korean economist said in a report yesterday that the yuan may emerge as a settlement currency in Asia. Park Bun-soon, a senior fellow at the Samsung Economic Research Institute, said trade volume between China and other Asian countries was huge.

He said that if the yuan was used as a settlement currency in the region, the need to hold the US dollar would fall for Asian countries. However, he said it will take time for the Chinese currency to be a global reserve currency.

ADB says Chinese economy on mend

THE Chinese economy may have already bottomed out and be in the recovery phase, said Haruhiko Kuroda, president of the Asian Development Bank in Bali yesterday.

Kuroda made the remark at a press conference on the last day of the ADB's annual meeting, on the basis of his observations "in this meeting as well as from various statistics already released." Kuroda added that the South Korean economy had showed signs of recovery, and Japan's industrial production showed some signs of bottoming out.

Bank card use rises

CHINA UnionPay Co yesterday said onshore bank card-based transactions rose 46 percent during the three-day May Day holiday nationwide as consumers spent.

Offshore bank card transactions also rose 53.5 percent from a year ago on a strong buying from Chinese bank card holders, UnionPay said yesterday.

Less spending

HONG Kong's retail sales weakened in March with the total value dropping 7.7 percent from a year earlier to HK$20.8 billion (US$2.7 billion) and volume down 9.3 percent, the Census and Statistics Department announced yesterday.

Taking the year's first three months together, total retail sales in the first quarter dropped 3.9 percent in value, or 5.5 percent in volume, from the same period last year.