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Monday June 5, 2017

THE government will strengthen regulatory over-sight of overseas transactions on Chinese bank cards, as it fi ghts money laundering, terrorist fi nancing and tax avoidance, the country’s for-eign exchange regulator said Friday.

From Sept. 1, banks will be required to report daily their bank card holders’ overseas withdrawals, plus every bank transaction that exceeds 1,000 yuan (US$146.7), the State Administration of For-eign Exchange (SAFE) said in a notice.

Under previous rules, China only measured the total amount of overseas transac-tions on Chinese bank cards.

“Statistics on cross-border transactions need to be improved in terms of trad-ing transparency and data quality, as there are more requirements to fi ght money laundering, anti-terrorist fi nancing and tax avoidance in global cooperations,” the SAFE said.

Authorities have been cracking down on under-ground banks, which have been accused of being a major

channel used for money laundering and illegal cross-border transfer of funds.

Last year, police busted more than 380 underground banks, involving more than 900 bil-lion yuan, and arrested more than 800 suspects, accord-ing to the Ministry of Public Security.

Transactions made by bank card holders overseas exceeded US$120 billion in 2016, raising the need to “improve statistics quality and maintain trading order,” the SAFE said.

It added that it will continue

to support legitimate use of bank cards overseas and the new rules don’t change China’s foreign exchange management policy.

The rules will be applied to all kinds of bank cards, includ-ing debit and credit cards.

The stepped up regulatory interest in overseas account activities coincided with a clampdown on capital out-fl ows, as authorities sought to relieve downward pressure on the yuan currency and stop the depletion of China’s foreign exchange reserves.

Capital outfl ows have ebbed

in recent months, but some ana-lysts say there are signs of an uptick in the second quarter.

French investment bank Natixis said in a report last week its capital fl ow tracker for China shows capital outfl ows for the second quarter will rise somewhat, reversing the recov-ery in the fi rst quarter.

Banks’ compliance of the rules will be measured as part of their foreign exchange management assessment, and failures to comply will result in “regula-tory measures and punishment” according to the law, the SAFE said. (SD-Agencies)

Overseas use of bank cards under scrutiny

Hengyi to start up US$3.4b Brunei oil refi nery in 2019PRIVATE company Hengyi Group expects to start operat-ing a US$3.4 billion refi nery in resource-rich Brunei in 2019 after completing building work in October next year, two industry executives briefed on the matter said.

Hengyi had previously delayed the startup of the 160,000-barrels-per-day facil-ity in Southeast Asia from an initial 2015 target, partly blaming delays in local infra-structure.

East China-based Hengyi, a leading manufacturer of syn-

thetic fi ber, in March signed off on the fi nal investment for the US$3.445 billion refi nery at Pulau Muara Besar island in Brunei, the largest of its kind run outside China by a private Chinese fi rm.

The facility will primarily provide feedstock for Hengyi’s massive Chinese production of pure terephthalic acid, or PTA, an intermediate for making polyester. But it will also churn out fuel, competing with supply from the region’s oil hub, Singapore.

Hengyi agreed in 2012 with

Royal Dutch Shell, long active in exploring for oil and gas in the kingdom, to supply the refi nery with crude oil over a 15-year term.

It was unclear if that deal remained valid. Shell said it would not comment on com-mercial matters.

One of the two industry sources said Hengyi may explore a swap deal with Shell, with the major supplying some crude in return for refi ned products.

China’s Lanzhou LS Heavy Equipment Co. has been con-tracted to build key production

units at the refi nery including a 1.5-million-ton-per-year aro-matics facility and a 2.2-million tpy hydrocracking unit.

Kunlun Construction and Engineering Corp., a unit of State energy group China National Petroleum Corp., has previously said it won a deal in late 2016 to build a 15-mil-lion-barrel tank farm at the development.

Started as a small sock-weav-ing factory in 1994, Hengyi recorded 79.4 billion yuan (US$11.68 billion) sales revenue in 2015. (SD-Agencies)

THE government will pursue “neither loose nor tight” mon-etary policy to ensure basically stable liquidity, People’s Bank of China Deputy Governor Chen Yulu said.

The central bank will continue to implement “prudent and neu-tral” monetary policy, and create a “neutral and moderate” fi nan-cial environment for supply-side reform, Chen told the Tsinghua PBCSF Global Finance Forum in Beijing on Saturday.

Intensifi ed measures by poli-cymakers to cut fi nancial lever-age have spurred concerns over excessive tightening. The central bank started to boost the cost of its money-market loans in the third quarter of last year, after the previous loosening cycle pushed benchmark interest rates to record lows.

Combined with a slew of tougher supervisory measures introduced by bank, insurance and security regulators, the central bank’s tightening has made an impact. The seven-day repurchase rate, a benchmark for interbank liquidity, averaged 2.93 percent last month, the highest since March 2015, according to the National Interbank Funding Center. Stocks have also been whipsawed in the process.

The government has been vocal about fending off fi nan-cial risk this year. “China has entered into an era which requires greater attention to fi nancial security than ever before,” Wu Xiaoling, former central bank deputy governor and now dean of Tsinghua PBCSF, told the same forum.

The central bank wants to lead the fi nancial institutions to return to their original role of supporting the real economy, and hopes enterprises will be focused on their core busi-nesses, reversing the tendency of “blindly” stepping into the fi nancial sector, Chen said.

Chen also said the central bank will beef up support to high-end manufacturing and the “weak links” in the economy, while boosting direct fi nancing and cutting funding costs.

(SD-Agencies)

Central bank reaffi rms neutral policy

Hyundai Motor’s China sales dive 65%Hyundai Motor’s vehicles are displayed in this fi le photo. Vehicle sales in China for Hyundai Motor, South Korea’s biggest carmaker, fell 65 percent in May. The result follows reports that competitors are outpacing the South Korean company, with Honda Motor Co. and Geely-owned Volvo Car Group reporting double-digit sales gains in China last month. Hyundai’s China factory sales fell to 35,100 vehicles in May from 100,328 a year earlier, dropping for a third consecutive month, Samsung Securities analyst Esther Yim said Friday, citing company data. SD-Agencies

THE government approved around 300 more green energy vehicle models Friday to receive subsidies as part of a program that has rapidly boosted sales in the sector, with the pace of approvals accelerating from earlier in the year.

China is the world’s larg-est market for green energy vehicles, with the government aggressively promoting the seg-ment, including spending bil-lions in subsidies, in a bid to fi ght intense urban air pollution.

Regulators had put the brakes on subsidies for new energy vehicles — defi ned as battery electric and plug-in hybrids — after discovering widespread cheating of the subsidy scheme last year, instituting stricter rules for qualifying and slowing approvals at the start of 2017.

That pace has since quick-ened with the latest 300 or so bringing total approvals for the second quarter to 1,396 models, compared to 386 receiving the green light in the fi rst quarter, according to statements on the Ministry of Industry and Information Technology website.

But profi ts for new energy vehicle makers remain under pressure as the amount of subsidies each car is eligible to receive has decreased from last year, as the government seeks to gradually wean the industry off State support. (SD-Agencies)

Approvals for car subsidies gain speed

THE European Union and China failed Friday to reach agreement on the problem of steel overca-pacity and the EU’s stance toward Chinese dumping, despite “nar-rowing differences.”

China, the world’s biggest producer and consumer of steel, vowed last year to reduce its capacity but European steel-makers have complained that cheap Chinese exports are still fl ooding the market.

Chinese Premier Li Keqiang said that World Trade Organi-zation (WTO) rules had to be

implemented and the EU should accept China’s situation in the WTO had changed.

“This will send a signal to society and the market that we both abide by international rules and abide by multilateralism,” Li said.

“The European side indicated they are in the middle of a leg-islative amendment and it is consistent with WTO rules. It is non-discriminatory.”

Jean-Claude Juncker, president of EU commission, told a news conference after a meeting of EU

offi cials with Premier Li that they had discussed the issue of steel overcapacity and China’s demand that, 15 years after it joined the WTO it should no longer be treated as a special case.

“We were able to narrow the positions but we are not yet there,” Juncker said.

China has launched a legal challenge against the EU’s existing anti-dumping rules at the WTO, although the bloc is in the process of changing its rules on combating dumping.

(SD-Agencies)

EU, China fail to agree on steel, trade dumping