China Digest

Yuan crude futures make global move

The Chinese futures market took another step on March 26 toward internationalization with the unveiling of yuan-denominated crude oil future contracts, the first of their kind open to overseas investors.

The futures, under discussion for nearly 17 years, will set a crude oil pricing benchmark that reflects supply and demand in China and Asia, said Jiang Yang, vice-chairman of the China Securities Regulatory Commission.

The September crude futures contract that registered the largest trading volume on March 26, with the transaction amount reaching 17.64 billion yuan ($2.8 billion), saw its price close at 429.9 yuan per barrel, up 3.34 percent.

With this step, China takes the lead with innovative measures to make up for the lack of a benchmark for crude oil in Asia, said Li Li, research director at energy consulting firm ICIS China. 

Soldiers’ remains from Korean War returned

The Republic of Korea (ROK)handed over to China on March 28 the remains of 20 Chinese soldiers who died during the Korean War in the 1950s, the Ministry of Civil Affairs said.

Gao Xiaobing, deputy head of the ministry, said the remains of 589 Chinese People’s Volunteers have been returned in five groupings since 2014.

“China appreciates the ROK government’s efforts and hopes the ROK government will fully implement the agreements that have been reached by the two countries and continue to facilitate future handovers,” she said.

Gao made the remark at the handover ceremony held at Incheon International Airport.

Some 30 people attended the ceremony, including representatives of the Chinese embassy, China-funded organizations, overseas Chinese and students, the ministry said.

New PBOC chief to accelerate opening-up

China will work to accelerate financial opening-up, further taxation reform and continue strengthening regulations to reduce systemic risks and control the debt level, senior officials said on March 25.

Yi Gang, the newly elected governor of the People’s Bank of China (PBOC), confirmed at the China Development Forum 2018 that the next step in facilitating the opening-up of the financial sector, a series of reform measures to ease market access for foreign investors, will be launched.

As part of the services industry, the financial sector should allow market-oriented competition by using the existing national treatment system as well as a negative list mechanism, Yi said at the forum hosted by a think tank affiliated with the State Council, China’s Cabinet.

The whole opening-up process, as Yi described, needs to be in line with the ongoing foreign exchange rate reform and the process of capital account liberalization.

Solve trade friction through talks: Li

Premier Li Keqiang called on the United States to work with China in solving trade friction through dialogue and negotiations, but added that China is fully prepared to respond to any possible trade war.

Li reiterated China’s stance on a possible trade war between the two countries for a second consecutive day when he met with a US congressional delegation headed by Senator Steve Daines in Beijing on March 27.

On March 22, US President Donald Trump signed a memorandum for a plan that could impose tariffs on up to $60 billion worth of imports from China and curb Chinese investment in the US.

The two countries have made progress in bilateral relations since the establishment of diplomatic ties decades ago despite twists and turns, Li said. President Xi Jinping and Trump have met several times and maintained communications, he said.

VAT to be reduced as part of tax reforms

China will cut value-added tax (VAT) rates as part of a tax-reduction package amounting to 400 billion yuan ($64 billion) this year to drive high-quality development, a State Council executive meeting chaired by Premier Li Keqiang decided on March 28.

The tax rate for manufacturing will be lowered from 17 percent to 16 percent, and for transportation, construction, basic telecommunications services and farm produce from 11 percent to 10 percent.

Li said the reform is a major step in China’s tax regime reform.

“VAT reform has helped to reduce the overall corporate tax burden and improve the tax regime. The reform has proved to be conducive to the transformation and upgrading of the economy, unifying the tax structure and making taxation fairer,” he said.

“This round of tax cuts will apply to all manufacturing companies. All businesses registered in China, be they joint ventures or wholly foreign-owned companies, will be treated equally,” Li said.

Former Anbang chief  on embezzlement trial

Wu Xiaohui, former chairman of Anbang Insurance Group, the Chinese insurer that owns the Waldorf Astoria New York hotel, stood trial on March 28 on charges of fraudulently raising $10 billion and embezzlement.

The trial concluded after nearly 10 hours at Shanghai No 1 Intermediate Court. No verdict was given.

Prosecutors charged Wu, 51, with fraudulently raising 65.25 billion yuan ($10.4 billion) and abusing his post to benefit himself, according to a live report the court released on its social media account.

The funds, raised by ignoring capital limits set by regulators to oversell insurance products worth 724 billion yuan to 10.6 million investors, were transferred to companies he personally controlled for overseas investment, debt repayment and “personal squandering”, according to the report.

Wu was also charged with embezzling 10 billion yuan in premiums paid by policyholders, a violation of insurance regulations, to ensure the cash flow of his other companies.

Bronze thought to be looted goes on auction

A rare Chinese bronze water vessel, thought to have been taken during the looting of Beijing’s Summer Palace in 1860, has been discovered in Kent, southeast England.

The relic will go on sale at The Canterbury Auction Galleries on April 11 at an estimated price of 120,000 to 200,000 British pounds ($170,000 to $285,000).

According to the auction house, only six similar vessels, known as ying, are said to exist, and five of them are in museums.

China’s State Administration of Cultural Heritage said in a statement that it is looking into the auction, adding that it opposes the sale and purchase of stolen cultural relics.

The vessel dates to the Western Zhou Dynasty (c.11th century-771 BC). It is called the Tiger Ying because the spout and lid are both cast with models of the creature.

Beijing warns against ‘Taiwan independence’

Beijing will not allow any “Taiwan independence” secessionist to split China, An Fengshan, spokesman for the State Council’s Taiwan Affairs Office, said on March 28.

The comment came against the backdrop of recent visits to Taiwan by two officials from the United States after US President Donald Trump signed a bill called the Taiwan Travel Act, which encourages reciprocal visits between Taiwan and the US by officials at all levels.

Alex Wong, deputy assistant secretary of the US State Department’s Bureau of East Asian and Pacific Affairs, visited Taiwan from March 20 to 22. Another US official, Ed Royce, the House Foreign Affairs Committee chairman and a Republican, visited the island after Wong. The visits increased friction in cross-Straits relations.

Beijing opposes the travel act and has urged the US to adhere to the one-China policy.

Shanghai to help firms hire foreign lawyers

Shanghai is drafting guidelines that will allow local law firms to employ foreign attorneys, as the eastern metropolis aims to boost legal services for overseas investors, it was announced on March 28.

The city’s Justice Bureau, which is drawing up the rules, said it is ironing out procedures for recruiting legal professionals from overseas and their qualification requirements.

“As an incentive, we may also provide policy support to assist expat lawyers in obtaining residence permits in Shanghai as well as receiving social welfare and social security,” said Lu Weidong, director of the bureau.

Another approach to provide legal services of higher quality to foreign businesses and individuals is to promote joint ventures between local and foreign law firms, he said.

“Such operations have been allowed in the China (Shanghai) Pilot Free Trade Zone since 2013 and have achieved desirable results in enabling mutual learning between the two sides,” Lu said.

Former vice-mayor gets death penalty for graft

The former vice-mayor of a northern Chinese city has become the first corrupt official to be given the death penalty since the launch of a widespread anti-graft crackdown in 2012.

Zhang Zhongsheng was sentenced on March 28 in Linfen, in North China’s Shanxi province, after being convicted of accepting 1.04 billion yuan ($165 million) in bribes.

Between 1997 and 2013, he accepted massive kickbacks to help others land lucrative contracts — including in the coal mining sector — while serving as a county head and then vice-mayor of Lyuliang, according to Linfen People’s Intermediate Court.

“When the amount of corruption is particularly large and the circumstances are particularly serious and have a severe social influence, the defendant can be sentenced to death under the law,” the court said in a statement.

Elite bombers conduct large training drill

An elite bomber unit of the People’s Liberation Army Air Force sent 12 H-6K bombers on March 26 on a long-range combat training mission that is believed to be the Air Force’s largest deployment of bombers in a single operation in recent years.

The unidentified bomber division, based in Northwest China’s Shaanxi province, conducted the training to hone its strategic strike capability, a statement published by the Air Force on March 27 said without elaborating.

Photographs released by the Air Force showed the bombers flying above what appeared to be bodies of water and islands.

Sources close to the Air Force told China Daily that it was the largest deployment of bombers in a single mission in at least a decade.

Pakistan fighter jets to get radar upgrade

China will upgrade Pakistan Air Force JF-17 fighter jets with a world-class radar system that will substantially improve the combat capability of the aircraft, a top Chinese radar researcher said.

Hu Mingchun, head of the Nanjing Research Institute of Electronics Technology in East China’s Jiangsu province, said the KLJ-7A active phased array radar will give the JF-17 many advantages in aerial combat.

“Our product will tremendously extend the fighter jet’s detection range, giving it a much longer sight that will help it detect the enemy’s aircraft before they do, and this is very important because in real combat if you see first, you fire first,” he said.

“The radar is capable of tracking dozens of targets and engaging several of them simultaneously. It also has a good jamming-resistant capacity that keeps the plane away from the enemy’s electronic interference.”

Waste imports to face stronger oversight

China’s environmental watchdog has approved two action plans, vowing to further crack down on the smuggling of overseas garbage while maintaining a tough stance against pollution caused by processing of imported waste.

The 2018-20 action plan for implementation of the country’s reform plan to ban waste imports and the 2018 action plan for inspections on pollution caused by processing imported waste were approved on March 26 by the first executive meeting of the newly established Ministry of Ecology and Environment.

“The ban on foreign garbage imports is a landmark measure for the country’s construction of an ecological civilization and should be implemented unswervingly and effectively,” the ministry said in an online statement.

It also said a long-term working procedure featuring information sharing and coordinated law enforcement will be established. 

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