L'Oreal Group has offered to buy Chinese facial mask maker Magic Holdings International Ltd for HK$6.5 billion. Provided to China Daily

Deals

L'Oreal seeks more shine in China

French cosmetics major L'Oreal Group has offered to buy Chinese facial mask maker Magic Holdings International Ltd for HK$6.5 billion ($840 million). The deal, if approved, is expected to give the world's largest cosmetics group a leading edge in China's $15 billion skincare market.

Six key shareholders, representing 62.3 percent of Magic equity, have supported L'Oreal's offer but the deal still needs to be approved by the Ministry of Commerce, the Paris-based L'Oreal said.

Telecoms

ZTE helps Ethiopia to expand mobile network

ZTE Corp, China's second largest telecom equipment company, has signed an $800 million deal with Ethiopian telecom operator Ethio Telecom to help expand the African nation's mobile network infrastructure. Ethio Telecom is the only mobile operator in the African country of more than 80 million people. ZTE's agreement with Ethio Telecom is half of a $1.6 billion project split with Huawei Technologies Co Ltd, the world's second largest telecom equipment maker. Huawei reached an agreement with Ethio last month. Andualem Admassie, acting CEO of the state-run Ethio Telecom, said the agreement would enable the African country to double subscribers to more than 50 million.

Retail

Alibaba buys stake in US online shopping firm

Alibaba, China's largest e-commerce company, has acquired a minority stake in US online shopping company ShopRunner. The acquisition is part of a series of investments by Alibaba as it mulls going public, according to sources. Alibaba will pay $75 million for the stake in ShopRunner, run by former Yahoo chief executive officer Scott Thompson. Jonathan Lu, Alibaba's chief executive officer, said in an interview in July that money raised from a potential listing would be used to fund further acquisitions.

Trade

Stiff duties likely for shrimp exports to US

The US Commerce Department has decided to impose anti-subsidy duties on frozen shrimp exports from China, India, Malaysia, Ecuador and Vietnam. In its ruling, the US Commerce Department said it believes that shrimp exporters from these nations have received subsidy support from the government for their exports to the US. The US International Trade Commission has been asked to evaluate whether the alleged subsidies have harmed shrimp companies in the US, and if proven, tariffs of up to $1.7 billion will be imposed on shrimp imports from the five countries.

Commerce

Shenzhen unveils plans for tariff-free pilot zone

Shenzhen is set to launch a free trade zone under a pilot program. The city government recently released detailed plans for a tariff-free zone for exports and imports from 2013 to 2015. The zone, which includes seven industrial parks covering 10.48 square kilometers, will be developed into an international commodity trade and logistics center. It will also incorporate a settlement center as well as a center for setting prices of key commodities. Once established, the zone will be a comprehensive free trade area incorporating a free port, a renminbi offshore center and a services trade center connecting Shenzhen, Hong Kong and Macao.

Property

Healthy development of realty sector on cards

China will come out with long-term measures for the healthy development of the real estate market over the next three months, a top industry official said on Aug 14. The plan outlines measures for urbanization development and a long-term development mechanism is in the pipeline, Zhu Zhongyi, vice president of the China Real Estate Industry Association, said during the 2013 Bo'ao Real Estate Forum in the Southern Chinese resort city of Sanya.

Economy

Drive to close obsolete capacity will intensify

Efforts to shutter obsolete industrial capacity will be intensified further in line with China's efforts to bolster energy efficiency and accelerate economic transition, said Minister of Industry and Information Technology Miao Wei.

A revised list of closures will be released soon, Miao said. The ministry will urge the companies involved in the process to dismantle obsolete equipment so that excess capacity can be eliminated by 2014, a year ahead of schedule.

"The closures will result in issues such as settlements for laid-off workers, loss of assets and dealing with debts. The move will also affect local governments' revenue and employment rates in the short term," Miao said.

Finance

China trims US Treasury holdings in June

Though China reduced its holdings of United States Treasury securities in June, it still continued to lead Japan as Washington's largest foreign creditor, figures from the US Department of the Treasury show. Overall, total foreign holdings of US Treasuries dropped for the third straight month.

China trimmed its holdings by 1.7 percent to $1.28 trillion, while Japan, the second-largest buyer of US debt, cut its holdings by 1.8 percent to $1.08 trillion, according to the monthly Treasury International Capital report.

Debt crisis unlikely in short term

The government debt situation is unlikely to worsen in the short term, a top think tank said, even as it suggested speedy reform of the public finance system to strengthen the fiscal position of local governments.

The Development Research Center of the State Council, a think tank under the cabinet, said the net value of China's government liabilities as of the end of 2010 stood at 11.3 trillion yuan ($1.85 trillion).

The asset-liability ratio of the public sector was at the "middle" level by international standards, and the possibility of a short-term debt crisis was low, the report said.

But it noted that as China's economic growth moderated, fiscal revenue growth would also slow significantly. The gap between revenue and expenditure would widen and the asset-liability ratio would rise.

Data

Electricity consumption rises further

Electricity consumption in China, a major indicator of economic activity, rose 8.8 percent year-on-year to 495 terawatt-hours in July, the National Energy Administration said. The growth was 4.3 percentage points higher than a year earlier and 2.5 percentage points more than in June, the NEA said. In the first seven months of the year, power consumption increased 5.7 percent year-on-year to 2,990 terawatt-hours. During the same period, electricity use by the service sector grew 9.9 percent, to 351 terawatt-hours, while the industrial sector used 2,210 terawatt-hours, 5.4 percent more than a year ago.

Aviation

Minsheng unit, German carrier in aircraft deal

Air Berlin Plc, Germany's second-largest airline by passenger volume, will sell 11 aircraft - including used and new narrow-body aircraft - to Minsheng Commercial Aviation Ltd, the airline said on Aug 15.

The transaction consists of five used Airbus 320 aircraft and two new deliveries in 2014, including one from the A320 family and one Boeing 737 aircraft, which will all be sold and leased back to the carrier, Air Berlin said.

In addition, Minsheng Commercial Aviation will have an option to buy four Boeing 737s from Air Berlin and operate them in the Chinese market.

China Daily-Agencies

(China Daily European Weekly 08/23/2013 page18)