Economy

Production to slow down: HSBC

China's manufacturing sector will likely to see the slowest expansion in three months this month because of lower output growth, HSBC Holdings Plc said on Dec 16.

A preliminary reading of the Purchasing Managers' Index for the manufacturing industry edged fell to 50.5 in December from 50.8 in November, the lowest level since October, the bank said in a report.

The production output sub-index fell to 51.8 in December from 52.2 in November, pressuring the index.

Meanwhile, the new orders sub-index hit a nine-month high of 51.8 this month, compared with 51.7 in November, while the new export orders sub-index rose to 50.3 from 50.2 last month, suggesting stable market demand.

Resources

Steel sector still faces profitability problems

Chinese steelmakers' profits will remain low next year as output remains high and demand growth slows, industry experts said.

The ratings agency Moody's Investors Service said on Dec 18 that its outlook for the Asian steel and coal sectors is negative for next year.

According to its just-published report 2014 Outlook - Asian Steel and Coal, Oversupply and Weak Prices Drive Negative Outlooks, demand for steel will increase a modest 2 to 3 percent next year as the Chinese government tolerates slower GDP growth and shifts economic growth drivers to domestic consumption from infrastructure spending.

Severe overcapacity has been the biggest obstacle for China's steel industry, which has affected steelmakers' profits in the past few years.

Copper output rises to record on high fees

Copper production in China, the world's largest user, climbed to a record in November as high treatment and refining fees encouraged smelters to process more material. Refined-copper output rose 28 percent from a year earlier to 654,000 metric tons, says the National Bureau of Statistics. That was 2.7 percent higher than the previous record of 637,000 tons a month earlier. Production was also lifted by rising availability of scrap copper imports as a government operation to stop illegal imports of solid waste came to an end last month.

Chinalco copper mine starts production in Peru

Chinalco Mining Corp International said its Toromocho copper project has started production. The mining project, in central Peru, is expected to achieve full capacity in the third quarter of next year and will turn out 220,000 metric tons of refined copper a year, accounting for 18 percent of China's total copper resources, the company said. Toromocho will also produce molybdenum and silver. But unreliable power supplies will hit output and copper production for 2014 is likely to fall by 20 percent, the company said.

Finance

Cross-border yuan direct investment to be loosened

The Ministry of Commerce hasannounced that it will further loosen controls on cross-border yuan direct investment in an effort to facilitate investment. Under the new regulation, approval procedures for yuan-denominated direct investment from overseas investors will be further simplified. The new regulation takes effect on Jan 1. In cross-border yuan direct investment, foreign investors use legally acquired yuan to invest in China by founding companies, increasing investment or participating in mergers with and acquisitions of domestic enterprises, the ministry said.

Slower growth seen for insurance industry

China's insurance industry is likely to grow at a slower pace and face lower profit margins next year because of fierce competition, industry observers say.

"Insurers are no longer just focusing on pure growth. Many players are becoming more profit oriented, with a higher awareness of risk management and willingness to diversify into new product areas," said Standard & Poor's credit analyst Connie Wong. "And that should mean more sustainable growth in the longer term."

Fitch Ratings' analysts also believe that life insurers' increasing product diversity and greater emphasis on margin improvement, instead of market share, will support quality growth in the sector next year.

Customs duties to be adjusted next year

China is planning to adjust its customs duties from Jan 1, 2014, to help economic restructuring, support emerging industries and drive balanced foreign trade, the Ministry of Finance said. Duties on about 760 imported goods will be reduced by an average of 60 percent, including raw materials for emerging industries. Meanwhile, provisional annual tariffs on products will not be introduced in 2014. The ministry said that to promote ecological development, provisional export tariffs on coal, crude oil, fertilizer and titanium will stay in place, while export tariffs for fertilizer will have reduced. In general, after the adjustment, import and export tariff items will have increased from 8,238 to 8,277 in 2013. Newly added products include 3-D printers, crystal and welding robots.

Logistics

UPS to deliver more parcels in China

United Parcel Service Inc, the world's largest package delivery company by revenue, is looking to keep an upper hand in the Chinese market by adding 14 inner-city express services next year.

UPS began domestic courier services in 2012, when it was granted seven licenses by the State Post Bureau of China. With more goods circulating in the world's most populous market, it expanded to 19 first- and second-tier cities this year and expects to reach 33 cities next year.

Scott Davis, chief executive officer of UPS, said China's middle class will grow significantly over the next 20 years and more delivery services will be needed, so the company wants to expand its network in the country.

"China will be an important market for UPS in the future and we want to have the ability to serve this marketplace," he said.

Davis believes that China does a better job in foreign trade than most of the world and that the nation is keen to sell more goods through diversified channels.

Auto

Daimler to end rebates on Mercedes vehicles

Daimler AG, the third-biggest maker of luxury cars, is working to end rebates on its Mercedes-Benz vehicles in China, including pricing of its C- and E-Class sedans, while matching the premium segment's growth next year. "We're not aiming for volume at any price," Hubertus Troska, head of Daimler's operations in China, said at a news briefing near the manufacturer's headquarters in Stuttgart, Germany. "We're first tackling the positioning of the E- and C-Class. The success of Mercedes-Benz in China doesn't depend on the sales volume of 2014."

Acquisitions

Han's Laser takes over Israel-based Nextec

Han's Laser Technology Co, based in Shenzhen, Guangdong province, a Chinese supplier to Apple Inc, bought Israel's Nextec Technologies to expand in the market for laser measurement devices used in the auto and aircraft industries. Gao Yunfeng, president of Han's Laser, said the company paid "a few million US dollars" for privately held Nextec, without elaborating. Danny Shacham, president of Nextec, declined to comment.

China Daily Agencies

Workers assemble heavy equipment at a factory in Qingzhou, Shandong province. A preliminary reading of the Purchasing Managers' Index for the manufacturing industry edged down to 50.5 in December from 50.8 in November. Wang Jilin / for China Daily

( China Daily European Weekly 12/20/2013 page18)