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Publications FCCC publishes “10 Years: Flanders-China Chamber of Commerce 2005 – 2015”

FCCC activities Meeting with high-level Chinese business delegation – 26 March 2015 – Ghent

Notice Register NOW to FCCC sectoral newsletters: Automotive; Metals & Minerals; Environment; Logistics

Advertisement opportunities Advertisement opportunities FCCC 10 th Anniversary publication, Newsletters and Website

Advertisement An Executive MBA by IMD & CKGSB

Hainan Airlines, your direct link from Belgium to China

Activities supported by FCCC “Afstudeerbeurs” – Asia Job Corner – 31 March 2015 – ICC, Ghent

EY panel: 'Doing Business in China' – 1 April 2015 – Ghent

Legal aspects of doing business with China – 2 April 2015 – Brussels

8 th China Green Companies Summit (CGCS) – 20-22 April 2015 – Shenyang

Past events Seminar: 'China Market Deregulation and Impact on Financing Solutions’ – March 12, 2015 – Gent

FCCC 10 th Anniversary and Chinese New Year Reception – 23 February 2015 – Brussels

Pictures of the FCCC 10 th anniversary and Chinese New Year Reception

Automotive Land Rover to recall Evoque SUVs

Finance Germany, France and Italy join AIIB

Regulations on P2P lending being worked out

China steps up fight against tax evasion by multinationals

Foreign investment FDI rises 17% in first two months

Foreign trade China third largest arms exporter with 5% market share

Health Target of zero growth in fertilizer and pesticide use

Advertisement CrossTainer: air & sea forwarding services

IPR protection Huawei world’s top patent applicant

Macro-economy OECD warns of downside risks for China’s economic growth

FCCC Newsletter No 401, March 23, 2015 Page 1

Mergers & acquisitions Shandong company acquires stake in Toulouse-Blagnac Airport

Real estate Chinese real estate tycoon buys most expensive home in Vancouver

Retail Sony launches PlayStation in China

Science & technology President Xi meets Harvard University President

Stock markets Two OTC indexes launched

Travel Chinese airports and airlines worst in punctuality

One-line news

PUBLICATIONS

FCCC publishes “10 Years: Flanders-China Chamber of Commerce 2005 – 2015”

On the occasion of its 10th anniversary, the Flanders-China Chamber of Commerce has issuedthe publication “10 Years: Flanders-China Chamber of Commerce 2005 – 2015”. The publication bundles interviews with H.E. Qu Xing, Ambassador of the People's Republic of China to Belgium; H.E. Michel Malherbe, Ambassador of Belgium to the People's Republic of China; Mrs. Claire Tillekaerts, CEO of Flanders Investment & Trade; Mr. Stefaan Vanhooren, President Agfa Graphics; Mr. Matthew Taylor, CEO, Bekaert; Mr. Stephan Csoma, Executive Vice President and two other Executives, Umicore; Christian Dumoulin, CEO, Vitalo; Filip Goris, General Manager Asia, Recticel; Mr. Hudson Liu, CEO, Huawei; Mr. Li Shufu, Chairman, Zhejiang Geely Group; Mrs. Chai Hui, General Manager Brussels Branch, ICBC; Mr. Robert Zhao, Chief Representative of the Weihai EU Office in Ghent; Mr. David Liu, Deputy Managing Director, APM Terminals; and Mr. Ma Jian, Chairman, Tianjin Liho Group.

Mr. Geert Bourgeois, Minister-President of the Government of Flanders, wrote the foreword to the publication. Chairman of the FCCC, Mr. Bert De Graeve, provided the introduction and Mrs. Gwenn Sonck, Executive Director of the FCCC, provided some more details about the FCCC.

The publication is available to Members of the FCCC free of charge.

Here is the link to the brochure online.

FCCC Newsletter No 401, March 23, 2015 Page 2

FCCC ACTIVITIES

Meeting with high-level Chinese business delegation – 26 March 2015 – Ghent

On March 26, 2015 the China-Platform (the Province of East-Flanders, the City of Ghent, Ghent University and the Flanders-China Chamber of Commerce) in cooperation with Flanders Investment & Trade will receive a high-level Chinese business delegation in Ghent.

The China-Belgium Technology Center (CBTC) has invited this delegation to Belgium to get a better understanding of the investment environment and to seek potential opportunities for businesses, partnerships and R&D cooperation.The delegation is in the process of seeking partnerships within the following sectors: Environmental protection and Biotechnology, IT, Electronics and E-commerce. A description ofthe visiting companies and their interests for cooperation can be downloaded via the following links: Companies List; Companies Summary.

If you are interested in participating in this delegation, please send an e-mail to info@flanders-china.be and weidong.he@jxiti.com and mention which companies you would like to meet.

The CBTC is the first Chinese Technological Incubator in Europe and is based in Louvain-la-Neuve Science Park, a business center with full facilities including 71,000 m2 of offices.

NOTICE

Register NOW to FCCC sectoral newsletters: Automotive; Metals & Minerals; Environment; Logistics

In 2015, The Flanders-China Chamber of Commerce will continue to publish its China sectorialreports in order to keep you up to date on the developments in China in the sector that you areactive in.

However, we are going to change from free sectoral newsletters to paid newsletters. The pricewill be 125 € per sector. These fees will help cover our costs of research and development.

We currently produce newsletters in the following sectors:

• Automotive, metal & minerals• Environment• Logistics• Healthcare• ICT

Past newsletters can we viewed on the FCCC website: http://www.flanders-china.be/en/publications/fccc_newsletters.

If you are interested in continuing to receive one of these sectorial reports, we kindly invite youto subscribe via the following subscription formula before 28 February 2015:

Register now

If you are interested in a sector not listed above, please send an e-mail to info@flanders-china.be.

We hope you will enjoy reading these publications and thank you for subscribing.

ADVERTISEMENT OPPORTUNITIES

Advertisement opportunities FCCC 10th Anniversary publication, Newsletters and Website

This year, the Flanders-China Chamber of Commerce celebrated its 10th anniversary! We would like to give your company the opportunity to give more exposure about your companies' activities to Belgian companies active on the Chinese market and Chinese companies present in Belgium.

There are still opportunities to advertise in the second printing of the 10th anniversary

FCCC Newsletter No 401, March 23, 2015 Page 3

publication.

In the link below you can find further information and a proposal for sponsorship as well as advertisement opportunities on our website and newsletters.

Link a dvertisement opportunities

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An Executive MBA by IMD & CKGSB

All over the world, people are beginning to do business with China. All over China, people have been doing it for centuries. So, who better to help prepare you for China’s increasing influence on the global marketplace? While the Chinese economy continues to grow, gaining expert knowledge from the other side of the business fence can give you an unquestionableadvantage in leading the way between China and he world.

CKGSB: Cheung Kong Graduate School of Business and IMD business school can help youdevelop your understanding of China with a fully global perspective. CKGSB is recognized as China’s world-class business school with an alumni base that accounts for 13.7% of China’s GDP. Our world-class faculty represents many of the best minds from the U.S. and Europe’stop business schools. IMD is a top-ranked business school.100% focused on executive education, IMD offers Swiss excellence with a global perspective. Together these twoleading business schools have devised the Executive MBA program.

FCCC Newsletter No 401, March 23, 2015 Page 4

The Executive MBA by IMD & CKGSB is designed in two stages – the foundation stage and the mastery stage. The program will allow you to master Eastern and Western business concepts and practices whilst gaining all-important international connections. The program will also strengthen leadership, strategy and general management skills.

Made up of equal numbers of participants from both Eastern and Western businesses, theprogram will include 11 weeks of face-to-face learning. The program is scheduled to take place from February 2015 until September 2016 with a unique split of 50/50 program delivery across Eastern and Western locations. Delivered by two world-class business schools, the IMD-CKGSB Executive MBA is the ideal answer for fast-rising executives who want to create value for their organizations by spanning both East and West. You’ll go beyond the basics to atrue understanding of the forces that will be shaping the world of business in the future.

For admission details or further information visit imd.ckgsb.info

Hainan Airlines, your direct link from Belgium to China

Hainan Airlines, your direct link from Belgium to China.

Hainan Airlines is your 5 Star Airline awarded by Skytrax, operating direct flights from Brussels to Beijing.

Save time, fly in comfort and have the possibility to connectto 50 domestic destinations including Hong Kong and Taipei.

A seamless connection and a convenient transfer service will bring youvia Beijing to your destination in Hong Kong.

ACTIVITIES SUPPORTED BY FCCC

“Afstudeerbeurs” – Asia Job Corner – 31 March 2015 – ICC, Ghent

Registration is now open for the 2015 edition of the Afstudeerbeurs / Job Market for Young Researchers (31 March 2015). Click http://afstudeerbeurs.augent.be/ or go directly to the registration page.

After last year's roaring success of the China Job Corner, we are now organizing an Asia Job Corner on the 2nd floor of the ICC. Occupying a booth, you will have direct access to Asian (Chinese, Indian, ...) final-year Master students, doctoral students and postdoctoral fellows in

FCCC Newsletter No 401, March 23, 2015 Page 5

all academic disciplines. The purpose of the Job Corner is to help Asian job seekers find a (first) job and make it easier for Belgian employers to network with these young professionals and introduce them to their businesses in Asia.

Interested in participating in the Asia Job Corner? Please indicate 'Asia Job Corner' in the comments section of the registration form.

Should you have any further questions about the Asia Job Corner, please contact Katrien Daemen-de Gelder (katrien.degelder@UGent.be)

EY panel: 'Doing Business in China' – 1 April 2015 – Ghent

EU is the largest trading partner of China and China is the second largest trading partner of the EU. China is also a dominant trading partner of many other countries.Next to being the biggest factory in the world, China’s economy, when measured by purchasing power parity, surpassed that of the United States to become the world’s largest. China’s global economic power cannot be denied anymore. Many Belgian entrepreneurs have successfully set up businesses in China.

During our panel discussion “Doing Business in China”, Simon Barker, Geert Roelens and Patrick Keereman want to share with you recent China business trends and opportunities, but also some of the pitfalls and challenges they have faced while trying to achieve their endeavours. This forum, which is focusing on mid-sized companies with an ambition to do business in China, will allow you to raise any question you may have.

Date: 1 April 2015, Location: EY, Moutstraat 54 – 9000 Gent

Timing07h3008h0008h15

08h30

08h45

09h00

09h40

Welcome and walking breakfastIntroduction by Pieter De Crem – Secretary of State for Foreign Trade Simon Barker – Head of Why5 Research in China- Developments over the last decade, expectations going forward, and consequences- Brand building in China'Geert Roelens – CEO Beaulieu International Group - Foreign investment in China : lessons learned- Views on the Chinese labour marketPatrick Keereman – CEO Nuscience Group- Foreign investment in China : lessons learned- Intangible protectionPanel debate moderated by Jan Grauls – Senior Advisor EY and former permanent representative at the United NationsQ&A

Registration: To register click here before 23 March 2015.

Legal aspects of doing business with China – 2 April 2015 – Brussels

China’s economic impact is constantly increasing. In that respect, both Belgian and Chinese companies are looking for market opportunities to guaranty their growth.

As an attorney, legal practitioner or business person you are without doubt often confronted with the legal issues of these cross-border developments. In order to make you more confidentwith the different aspects of such cases, the following topics will be dealt with during the seminar organized during two afternoons.

The day 1 theoretical seminar took place on 26 February 2015.

Day 2: practical approach (2 April 2015):14.00 – 14.3014.30 – 14.4514.45 – 15.3015.30 – 16.15

RegistrationWelcome Speech, Joris Roesems, President Vlaams PleitgenootschapM&A in China, Peter Goes, LinklatersChinese Partners and Due Dilligence, Koen Vanheusden, Belgian Foreign Trade Agency

FCCC Newsletter No 401, March 23, 2015 Page 6

16.15 – 17.00

17.00 – 18.00

Technology Transactions and Trade in and with China, Philippe Snel, De Wolf& PartnersReception

4 legal credits per afternoon were asked at the OVB (Association of Flemish Bars).

Venue: Voka – Vlaams Netwerk van Ondernemingen, Koningsstraat 154-158, 1000 Brussel

Price: Members Vlaams Pleitgenootschap, FCCC and Voka KvK Halle-Vilvoorde: half a day – package deal: €80 / €150 Non-members Vlaams Pleitgenootschap, FCCC and Voka KvK Halle-Vilvoorde: half a day – package deal: €95 / €165

Notice: enrolment in the package deal entitles you to receiving a study book, published by Larcier.

Subscription: Subscription can be made by sending an email at info@vlaamspleitgenootschap.be with reference of your name, first name, company references, telephone number, e-mail address and the date or dates for which you would like to subscribe. We’ll send you a debit note.

The Seminar is organized with the support of the Flemish Chinese Chamber of Commerce andVoka – Chamber of Commerce Halle-Vilvoorde; fits in the Brussels Academy of China and European Studies (BACES) and has been realized by the support of the Huawei Chair.

8th China Green Companies Summit (CGCS) – 20-22 April, 2015 – Shenyang

The China Entrepreneur Club (CEC) cordially invites you to attend the 8th China Green Companies Summit (CGCS) held on the 20th-22nd of April, 2015 in Shenyang, Liaoning Province of China. CEC’s annual China Green Companies Summit (CGCS) is committed to creating a platform for the most influential business, academic and government leaders in China and around the world to engage in thought-provoking dialogues, as well as bolstering long-term collaboration between Chinese and global enterprises. The Summit promotes smart and sustainable growth, and builds partnership through matchmaking events with enterprises and organizations. Our era is being changed by drivers of innovation, game changers that put creativity into action to create values and address social challenges. They change themselves,they change others, they change the world. These innovators continuously generate new business models and entire systems, producing new business values. Innovation and change have sparked a dynamic trend that every ambitious individual – old and young – hopes to be apart of, a trend that is viewed as the key to creating new social values. The 2015 Summit will once again gather visionary entrepreneurs, leading representatives of various sectors, and members of the next generation from China and across the world to talk about their new strategies and visions. They will present their thoughts on new technological and strategic hurdles, new business opportunities that address social challenges, and new growth models that will change the future.

Those interested to participate in the Summit, please send an e-mail to gwenn.sonck@flanders-china.be

PAST EVENTS

Seminar: 'China Market Deregulation and Impact on Financing Solutions’ – March 12, 2015 – Gent

The Flanders-China Chamber of Commerce (FCCC) organized a seminar focused on 'China Market Deregulation and Impact on Financing Solutions'. This event took place at the Flanders-China Chamber of Commerce/Voka in Gent.

China is currently going through a transitional phase, moving away from an investment driven to a consumption driven economy. This transition is proving to be disruptive, as it is expected to allow for a greater role for free market forces in the economy. As such, it is impacting China’s economic policies and regulatory framework, not in the least for financial services.

FCCC Newsletter No 401, March 23, 2015 Page 7

During the seminar, Mr Jason Lee, General Manager, KBC Bank NV Shanghai and Mr Yvan Jonckheere, Manager Trade Credit Finance, Picanol, provided further background on recent developments and how it will impact the financing of your operations in China. Mr Constant Pompen, Investment Officer, Belgian Corporation for International Investment, presented alternative financing solutions for foreign investments of Belgian companies in China.

FCCC 10th Anniversary and Chinese New Year Reception – 23 February 2015 – Brussels

The Flanders-China Chamber of Commerce (FCCC) organized the FCCC 10th Anniversary and Chinese New Year Reception on 23 February 2015 at KBC Bank in Brussels.

Speeches were delivered by:Mr Bert De Graeve, Chairman Flanders-China Chamber of CommerceHis Excellency Mr Qu Xing, Ambassador of the People's Republic of China in BelgiumMr Stephen Phillips, Chairman EU-China Business AssociationMr Mark Andries, Chief of Cabinet of the Minister-President of the Government of Flanders

There were over 220 participants.

With special thanks to KBC Bank; the Golden sponsors Ageas, Volvo and Huawei; and the Silver sponsors Cosco, Recticel and Maasmechelen Village. This event was organized with the support of the Government of Flanders.

The Flanders-China Chamber of Commerce has about 250 members. Over the past ten years,it has organized 225 seminars with 23,720 participants. The Chamber has received 126 Chinese delegations in Flanders, and organized or supported 14 economic missions to China. FCCC has organized 50 meetings with Chinese and Belgian Ambassadors, Consuls-General and Trade Commissioners. It has published 398 weekly newsletters, 328 sectoral newsletters and 10 other publications. It’s clear from these statistics that FCCC is one of the most active trade associations in Belgium.

This has been made possible by the support of the Flemish authorities. Minister-President Bourgeois has decided to actively support the FCCC also in 2015 – as China is an important component of the strategy of the Government of Flanders – to put Flanders on the map as an investment area and to support Flemish companies on the Chinese market.

Pictures of the FCCC 10th Anniversary and Chinese New Year Reception

Pictures of the FCCC 10th Anniversary and Chinese New Year Reception are available for viewing on the FCCC website.

This is the link to the pictures on the FCCC website.

AUTOMOTIVE

Land Rover to recall Evoque SUVs

Jaguar Land Rover has decided to recall 36,451 imported Range Rover Evoque SUVs in China after the model’s innovative nine-speed gearbox was revealed to have “life-endangering” problems by China Central Television (CCTV) on Consumers’ Day (March 15). The affected vehicles are the 2014 model made between July 15, 2013 and June 3, 2014 as well as the 2015 model produced between June 3, 2014 and December 24, 2014. The company will upgrade the “unmatching” software that controls the automatic transmission whose performance may weaken. According to CCTV, imported Evoques equipped with the nine-speed transmission experienced a sudden loss of speed and paralysis of the reverse gear, a problem that a previous software upgrade by Land Rover dealerships failed to fix. Range Rover Evoque is the carmaker’s best-selling model in China. The CCTV program also alleged that some repair shops servicing Mercedes, Volkswagen and Nissan cars were cheating consumers by unnecessarily including costly replacements, and that Volkswagen overlooked dangerous engine leaks.

• Xu Jianyi, 61, Chairman of state-owned carmaker FAW Group, has been detained in the country's sweeping crackdown on graft. FAW Group has joint ventures with

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Volkswagen and Toyota in China. Xu was the second Delegate to the National People’s Congress (NPC) to be detained on the closing day of the session, after Yunnan Deputy Party Secretary Qiu He.

• Uxin, one of China's largest online second-hand car marketplaces, announced it had raised USD170 million from a number of investors, including China's online search firm Baidu and U.S. private equity firm KKR. Founded in 2011, the latest round of financing will help the platform expand its business-to-customer (B2C) model of second-hand car sales through its websites and smartphone apps.

• China’s Ministry of Transport announced it aimed to add 200,000 buses and 100,000 taxis powered by alternative fuels by 2020. Last year, the country added 15,000 alternative-fuel-powered buses to its roads. The China Association of Automobile Manufacturers (CAAM) reported that 5,996 electric vehicles were sold in January and February this year, 4.2 times the number sold during the same period last year. Another 6,444 hybrid vehicles were sold during those two months, 2.2 times more than in the same period last year.

• An expected tightening of restrictions on non-local vehicles led to a huge surge in the number of participants at this month’s license plate auction in Shanghai. A total of 132,690 people took part, an increase of 29% from February, and the second-highest number in the auction’s history. With just 7,406 plates on offer, the success rate dropped to 5.6% from 7.4% a month earlier. The mean selling price fell by CNY1,788 from February to CNY74,830.

FINANCE

Germany, France and Italy join AIIB

Germany, France and Italy are to join the new China-led Asian Infrastructure Investment Bank (AIIB) after Britain defied U.S. pressure and became a founder member. German Finance Minister Wolfgang Schaeuble made the announcement at a joint news conference with visitingChinese Vice Premier Ma Kai. A Spokeswoman for the European Commission endorsed member states’ participation in the AIIB as a way of tackling global investment needs and as an opportunity for EU companies. The AIIB was launched in Beijing in October last year. It wasseen as a rival to the Western-dominated World Bank and the Asian Development Bank (ADB). U.S. Treasury Secretary Jack Lew warned the U.S. Congress that rising powers were challenging American leadership in global financial institutions. China's Ministry of Finance confirmed that Britain, Germany, France, Italy, Luxembourg and Switzerland have officially applied to become founder members of the bank. Some 27 countries have now signed up to participate in the AIIB. Chinese Finance Minister Lou Jiwei and Asian Development Bank President Takehiko Nakao have held discussions on how the two banks could cooperate. At least eight more countries may join the lender by the March 31 deadline, Jin Liqun, Secretary General of the interim secretariat of the AIIB, told a conference in Beijing.

Regulations on P2P lending being worked out

The China Banking Regulatory Commission (CBRC) has invited experts to review draft rules to regulate the peer-to-peer (P2P) lending industry which are expected to be unveiled at the end of June. Regulators plan to set CNY30 million as registered capital as one of the criteria for market access. There have been concerns over rising default risks in the P2P lending platforms, that allow individuals to borrow money from other individuals without going through banks. The sector grew to CNY252.8 billion last year. An estimated 275 platforms reported defaults or had difficulties withdrawing cash, while 41% of them turned out to be fraudulent platforms, according to Online Lending House, a website that tracks the sector. “Leverage management is the proper approach to clean up the fraud platforms,” Shi Pengfeng, CEO of Online Lending House, said.

China steps up fight against tax evasion by multinationals

Chinese authorities are targeting tax evasion by multinationals, implementing new regulations aimed at “unreasonable” payments such as for services and royalties to overseas related parties. “The tax administration's nationwide audit has discovered instances of multinationals in China making unreasonable payments to related parties overseas, causing the erosion of our tax base and the loss of tax revenue,” the State Administration of Taxation (SAT) said

FCCC Newsletter No 401, March 23, 2015 Page 9

when announcing the new regulations, which took effect on March 18. The tax administration has strengthened its management of transfer pricing of external payments, promulgating yet another policy to combat international tax evasion to implement the Base Erosion Profit Shifting (BEPS) action plan, according to the SAT’s website. “The BEPS principles are now clearly enshrined in China's transfer pricing regime, and specific scenarios, which are commonwith multinationals, are now categorized as abusive”, said Patrick Yip at Deloitte Touche Tohmatsu.

• China’s fiscal revenue in the first two months of this year grew at its slowest pace in nearly one year. Fiscal revenue rose 3.2% year-on-year to CNY2.57 trillion in the first two months, compared with an 11.1% increase a year earlier and an average gain of 8.6% in 2014, the Ministry of Finance said. Personal income tax receipts fell 7.1% year-on-year to CNY164.6 billion. Revenue from land sales dived 36.2% to CNY455.3 billion.

• The number of online banking users in China rose 19.7% in 2014 from a year ago to 909 million, while mobile banking users jumped 30.5% to 668 million. By transaction value, deals made through websites totaled CNY1,248.9 trillion, up 17% annually, andthose made via mobile phone applications more than doubled to CNY31.74 trillion.

• The State-owned Assets Supervision and Administration Commission (SASAC) is inviting third-party accounting firms to audit overseas assets of central government-owned companies. The move came two weeks after Dong Dasheng, former Deputy Director of the National Audit Office (NAO), said overseas assets of central government-owned companies were not audited. The overseas assets are estimated to exceed CNY4 trillion. In 2013, an NAO report said some SOE investments are prone to insufficient risk evaluation and poor management. The bidders should not have conducted auditing services for SOEs and their overseas subsidiaries over the past three years.

• China’s leadership is considering ways to keep Finance Minister Lou Jiwei in office beyond the retirement age of 65 so that he can continue restructuring local government debt. Lou has overseen efforts to rein in lending and give local governments an officially sanctioned channel for raising money, after provinces and cities took on trillions of yuan of debt through opaque financing vehicles. Making Lou aVice Chairman of the Chinese People's Political Consultative Conference (CPPCC) or a State Councillor would raise the retirement age to 70.

• China International Capital Corp (CICC), the first Sino-foreign joint-venture investmentbank, has appointed its former investment banking chief Bi Mingjian as its Chief Executive and Chairman, paving the way for a much-anticipated initial public offering (IPO) in the second half of this year. Bi takes over the helm of the Beijing-based investment bank from Levin Zhu, the son of former Premier Zhu Rongji.

• The Hong Kong Monetary Authority (HKMA) has designated HSBC, Bank of China (BOC), Hang Seng Bank, Standard Chartered and Bank of East Asia (BEA) as D-SIB (Domestic Systemically Important Bank), or “too big to fail” banks. The tier-one capital ratio of these banks is expected to reach 11.5% by 2019 and HSBC’s to reach 13%.

• China Everbright Bank's shares rose after the mid-tier lender confirmed it was considering a pilot reform that could include the spin-off and listing of its wealth management business, potentially worth more than USD10 billion. In August last year,Everbright Bank said that the government would allow parent Everbright Group to restructure from a wholly state-owned enterprise to a joint stock company.

• China launched its second bond futures product on the China Financial Futures Exchange. “Trading of the 10-year futures will improve risk management in bond markets and diversify arbitrage strategies for institutional investors,” Miyazato Hiroki, Vice President of Haitong Securities, said. The exchange resumed trading in five-year government bond futures in 2013, ending an 18-year ban on bond futures trading.

• Ping An Insurance said its profit rose to CNY39.3 billion last year from CNY28.2 billiona year ago. The strong growth was driven by an increase in net investment income that amounted to CNY66.7 billion, an increase of 25.6% from the previous year. Net investment yield rose to a three-year high of 5.3%. The insurer's net premiums earnedlast year increased 20%.

FCCC Newsletter No 401, March 23, 2015 Page 10

FOREIGN INVESTMENT

FDI rises 17% in first two months

China's foreign direct investment (FDI) rose 17% year-on-year to USD22.48 billion in the first two months of this year, with three countries－ Saudi Arabia, France and Germany－registering the fastest growth rates, the Ministry of Commerce (MOFCOM) said. FDI inflow from Saudi Arabia surged 873.8% year-on-year to USD240 million, and that from France rose 366.7% to USD280 million. Investment from Germany jumped 59% to USD410 million. MOFCOM Spokesman Shen Danyang said the biggest investments were in big-ticket industrial projects in the automobile, power and chemical industries. Germany's Daimler, Arkema Asie of France and Saudi Basic Industries Co (SABIC) all made significant commitments in China on new projects and expansions of existing manufacturing facilities. “The service sector has become the new growth engine driving the inflow of foreign investment,” said Shen. FDI into the nation's service sector hit USD13.73 billion in the first two months, a 30% increase from the same period a year earlier and accounting for 61% of total FDI during the period. The number of newly-registered foreign-funded companies also jumped significantly by 38.6% to 3,831 companies. The Hong Kong Special Administrative Region, Taiwan, South Korea, Singapore and Japan were the next top five sources of investment. The continued depreciation of the euro will attract more outbound direct investment (ODI) from China to the eurozone. China's ODI by non-financial companies into the European Union soared 950% year-on-year to USD3.36 billion during the first two months of the year, the China Daily reports.

• Chinese investment in South Korea is surging ahead of the signing of a free-trade agreement (FTA) between the two countries. Chinese investment in Korea jumped 374% to USD631 million last year from USD133 million in 2013, according to Mergermarket. This compared with just USD28 million in 2010. So far this year, Chinese investment in Korea has nearly doubled compared with the whole of last year, with Anbang Insurance Group's USD1 billion acquisition of 63% of Tong Yang Life Insurance, a Korean insurer, the biggest single transaction.

FOREIGN TRADE

China third largest arms exporter with 5% market share

China has overtaken Germany to become the world’s third largest arms exporter, but its 5% share remains small compared to the combined 58% from the U.S. and Russia, according to the Stockholm International Peace Research Institute (SIPRI) in its annual report. China’s share of the global arms market rose 143% from 2010 to 2014. Three countries accounted for more than two-thirds of Chinese exports: Pakistan, Bangladesh and Myanmar.

• China will impose new restrictions on imports of Norwegian salmon due to worries the fish may carry disease, according to the Norwegian Food Safety Authority. “We believe there is no danger to Chinese salmon of infection with the ISA virus because fish products from Norway go directly to consumption,” the Authority said, adding “the ISA virus is not dangerous for people”.

HEALTH

Target of zero growth in fertilizer and pesticide use

China is targeting zero growth in the use of chemical fertilizers and pesticides by 2020 to avoidfurther contamination of its farmland. Wide use of chemical fertilizers, of which China is the biggest consumer, has boosted its agricultural output, but it has also threatened food safety. China accounts for a little over a fifth of the world’s total grain output, while its use of chemical fertilizer is more than a third of global consumption and equivalent to the total use by the United States and India combined.

FCCC Newsletter No 401, March 23, 2015 Page 11

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IPR PROTECTION

Huawei world’s top patent applicant

Huawei Technologies Co became the world’s No 1 applicant for global patents in 2014. Huawei was followed by chipmaker Qualcomm while Huawei’s rival ZTE Corp, which was the world’s leading applicant in 2012, took third place, the World Intellectual Property Organization(WIPO) said. China was the only country to see double-digit growth in its filings. Huawei has touted its yearly research and development budget – equal to 10% of its revenue – as proportionally higher than many of its peers. Chief Executive Ken Hu said in Barcelona this month that Huawei will spend USD600 million on 5G wireless research and development (R&D) from 2013 to 2018.

• Statistics from the National Copyright Administration (NCA) show that 1.2 million copyrights were registered last year in China, up nearly 20% from the previous year. The number of software registrations surpassed the 200,000 benchmark for the first time. Beijing ranked first in copyright registration, accounting for more than half of the national total. Shanghai ranked second, at 19%.

MACRO-ECONOMY

OECD warns of downside risks for China’s economic growth

FCCC Newsletter No 401, March 23, 2015 Page 12

China’s economic growth will remain “moderate” over the next two years, but faces risks on the downside, while a sharper than projected slowdown would have global spillovers, the Organization for Economic Cooperation and Development (OECD) warned in its 2015 economic survey of China. Economic growth was expected to slow to the official target of around 7% this year and slow further to 6.9% next year, the OECD said. However, it warned that “investment might slow down more than foreseen, for example if stimulus measures fail to counterbalance the effects of the property market correction, shrinking excess capacity and the anti-corruption campaign”. Other risks mentioned in the OECD’s fourth economic survey ofChina included unexpectedly cooling consumption as housing spending eases, a stronger U.S.dollar that might hurt Chinese exports, and potential disorderly defaults among corporate issuers, especially in sectors with excess capacity, or of trust products and local government investment vehicles. In its third survey in March 2013, the OECD forecast China’s economic growth would reach 8.9% in 2014, which turned out to be too high as gross domestic product (GDP) grew only 7.4% last year, the least in 24 years. The slowdown, the OECD said, “has partly reflected the lagged impact of earlier measures to restrain credit and the housing marketboom”, the South China Morning Post reports.

• China’s total electricity consumption for January and February rose 2.5% year-on-year, the National Energy Administration (NEA) said. In the primary industry, electricityconsumption dropped 2.5% year-on-year, while it rose 1.5% in the secondary industry and was up 8.1% in the service industry. In the two months, 13.42 million kilowatt (KW) of hydroelectricity capacity was added, as well as 7.87 million KW of coal-fired electric power.

• Hong Kong jumped from third to second in an annual ranking of the overall competitiveness of Asian economies last year, according to a report by the Boao Forum for Asia. Singapore topped the list for the second consecutive year, with South Korea third and Taiwan fourth. Hong Kong ranked No 1 in 2012 but was overtaken by Singapore and South Korea in 2013 and fell to third place. China remained in ninth place for overall competitiveness for a second year, after moving up one notch in 2013.

• China this year plans to install 17.8 gigawatt (GW) of solar projects, almost 2½ times as much solar capacity as the United States added last year. The National Energy Administration (NEA) previously estimated that 15 GW would be added this year. China aims to more than triple its solar power capacity to 100 GW by 2020. China added 12 GW of solar power in 2014, narrowly missing the target it had set for the year.

• Employees can expect to get a salary increase of between 6% and 8% in China this year, with the internet sector most willing to offer pay rises to attract top talent, human resource agency Morgan McKinley said in a report. Some local internet firms have offered pay rises in excess of 50% for outstanding talent. The report also found that 82% of respondents had a pay increase last year.

• China's GDP growth may slip below 7% in the first quarter, and fall to 6.8% annually－both lower than the government's target－ as momentum in the property sector and infrastructure investment remain weak, Nomura Securities Co said. Goldman Sachs also adjusted its full-year average annual GDP growth forecast to 7% from 7.1% previously, and first quarter growth to 7.2%, down from 7.3% in the fourth quarter of 2014.

• China will work to unleash new vitality in economic growth in an economy under increasing downward pressure, Vice Premier Zhang Gaoli said. “New normal” calls for new thinking and new measures, Zhang said at the opening ceremony of the China Development Forum in Beijing.

MERGERS & ACQUISITIONS

Shandong company acquires stake in Toulouse-Blagnac Airport

The Shandong provincial government has approved the acquisition by Shandong Hi-speed Group Co of a 49.99% share in Toulouse-Blagnac Airport, the fourth-largest in France, for €308 million. Shandong Hi-speed Group formed a consortium with Friedman Pacific Asset Management, a Hong Kong-based investment company, to complete the acquisition. The French government and authorities will retain a 50.01% stake in the airport. The consortium

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has taken into consideration the long-term interests of the European aircraft builder Airbus, which is based in Toulouse, it said in a statement. Airbus said that the new shareholding does not affect its flight operations at the airport. Passenger throughput at the airport was 7.5 millionin 2013, with cargo shipments of 60,000 metric tons. Total assets were about €317 million that year, with operating revenue of €117 million.

• Fonterra Cooperative Group, the world's largest dairy exporter, completed its purchase of 18.8% of equity shares from Chinese infant food maker Beingmate Baby & Child Food Co. The New Zealand dairy firm said it is going to work on increasing its stake to 20%.

REAL ESTATE

Chinese real estate tycoon buys most expensive home in Vancouver

Chen Mailin, a 45-year-old Jiangsu-province businessman, is thought to have made the biggest home purchase in Canadian real estate history. He is now the owner of one of Vancouver’s grandest homes, a 17,000 sq ft Italian mansion on 1.1 ha in Point Grey. The CAD51.8 million price makes it one of the city’s most expensive homes. Chen started out as a factory worker before making his first foray into business in 1992, starting a duck farm with savings of CNY18,000. In 1996 he started a successful hotel and in 2000 he got into construction. In November 2001 Chen founded Jiangpu Dingye Real Estate Development and the Nanjing Dingye Investment Group of which he is Chairman. Among its projects was the CNY180 million Dingye International Building, a 26-story tower in Nanjing boasting a five-star hotel. Nanjing Dingye’s four business arms are devoted to property development, pharmaceuticals, hotel management and garment manufacturing, the South China Morning Post reports.

• Shanghai's housing authority said that the city will not scrap or loosen its home-buyingrestrictions. A website that focuses on property market information had claimed that Shanghai would loosen its four-year-old restrictions on home purchases on April 1, which will allow more residents to buy a first, second or even third home.

• Chinese buyers spent USD39 billion on global real estate in the six years to the end of2014, up from USD92 million in 2008, according to Real Capital Analytics. Such investment is pushing up prices in cities around the world. In Sydney, home prices jumped almost 14% during the past year, prompting an alarmed Australian government to propose tougher rules and fines for foreigners who illegally buy homes.

• Shanghai-listed developer Poly Real Estate announced it would raise CNY10 billion in a private placement to finance expansion and reduce indebtedness. Its controlling shareholder Poly Group would commit up to CNY1.5 billion.

• Guangzhou R&F Properties saw its net profit drop 14.92% to CNY6.5 billion last year due to lower property sales. Turnover fell 4.32% to CNY34.7 billion. Although contract sales registered a year-on-year increase of 29% to CNY54.4 billion, they fell short of the original sales target of CNY60 billion.

• The price of new homes in China continued to fall in February amid weak sales during the Spring Festival holiday. Month-on-month price declines were registered in 66 citiesof the 70 monitored, compared with 64 in January. In Beijing, Shanghai and Guangzhou, new home prices dropped 0.3%, 0.1% and 0.2%, respectively, from January. On an annual basis, new home prices fell in 69 of the 70 cities monitored, unchanged from January. New home sales in China dropped 16.7% by value and 17.8% by volume year-on-year in the first two months of 2015.

• Shui On Land, a developer well known for its Xintiandi projects, said its profit fell 16% to CNY1.78 billion last year, despite a mild 4% rise in turnover to CNY10.25 billion. The drop in profit was blamed on the distribution of CNY224 million to the owners of convertible perpetual securities of China Xintiandi Holdings.

• Fosun International is considering buying commercial property broker Cushman & Wakefield. The Shanghai-based investment firm is among several companies that have expressed interest in Cushman, whose owners are seeking about USD2 billion. Cushman operates in 60 countries employing about 16,000.

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• The Chicago-based Council on Tall Buildings and Urban Habitat (CTBUH) has openedan office in China. In 2014, there were 58 tall buildings – defined as those higher than 200 meters – completed in China, accounting for about 60% of the world's total. A recent CTBUH report said about 130 skyscrapers will be completed in 2015, and about 106 of them will be in China.

• Foreign creditors rejected Kaisa Group Holdings’ proposal to extend its debt by five years and slash coupon rates by up to 66%. Kaisa needed holders of 50% of five high-yield notes and 66% of a convertible bond to back its proposal. Kaisa has USD2.5 billion in offshore debt and USD7.6 billion in domestic debt.

RETAIL

Sony launches PlayStation in China

Japan’s Sony Corp officially released its PlayStation 4 and PlayStation Vita in China. The PS4,which made its global debut in November 2013, has been priced at CNY2,899 and the handheld PS Vita at CNY1,299. The Chinese government lifted a 14-year ban on foreign videogame console sales with the opening of the Shanghai Free Trade Zone (FTZ) in September 2013. The two PS consoles and game software are being produced in China under two separate joint ventures formed in May last year between Sony’s China arm, Sony Computer Entertainment Shanghai, and the state-owned Shanghai Oriental Pearl. Despite this progress, Sony still faces the stiff challenge of providing more game titles and meeting Chinese censorship rules. “Just having the console is only the first step, access to high-quality games remains the biggest driver for console sales,” Jack Chuang, Associate partner at OC&C Strategy Consultants Greater China, told the South China Morning Post.

• French luxury fashion retailer Chanel cut prices on three of its most well-known handbags in China, although they are still more expensive than in Europe. Consideredthe world’s second-biggest luxury brand behind LVMH’s Louis Vuitton, Chanel will progressively standardize prices across other products this year, but worldwide prices will not fluctuate more than 10% above or below the global euro benchmark, Bruno Pavlovsky, the brand’s President of Fashion, told Reuters.

• Private equity group CVC Capital Partners has won a Hong Kong court order to freezethe assets of Chinese businesswoman Zhang Lan. The private equity group bought a 82.7% controlling stake in her high-end restaurant chain South Beauty in April last year.

SCIENCE & TECHNOLOGY

President Xi meets Harvard University President

President Xi Jinping called for more people-to-people exchanges between China and the United States as he received visiting Harvard University President Drew Gilpin Faust. Xi calledfor closer ties between the nations' universities. Faust, the first female President in Harvard history, said the university has established long-term cooperation with China and is willing to strengthen exchanges and cooperation in the education and science sectors.

• Haier Group started operating its largest overseas research and development (R&D) center in Japan. The center will focus on fundamental research, new product planning and key technology design for white goods. Haier invested some USD58 million in the center which will employ 200 researchers.

• 377,054 students went to China from around the world for studies last year, a 5.77% increase over 2013. International students make up less than 1% of the students at Chinese colleges and universities.

STOCK MARKETS

Two OTC indexes launched

Two market indexes to gauge the performance of China’s over-the-counter market were launched. The National Equities Exchange and Quotations and China Securities Index Co

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jointly launched the NEEQ Component Index, which covers 85% of total market capitalization on the OTC market. They also introduced the NEEQ Market Making Component Index to measure the value of stocks that are transacted through market makers. The base date for both indexes is December 31, 2014, with a base value at 1,000. 2,100 companies are listed onthe OTC market, up 32.8% from the end of last year.

• Shanghai is planning to launch a Qualified Domestic Individual Investor (QDII) scheme, also known as QDII2, on a trial basis in the free trade zone (FTZ) this year. The scheme will allow individual investors in the zone to invest in foreign securities markets directly. Currently, only institutional investors can invest in overseas capital markets. The regulator is also considering raising annual quota on individuals’ foreign exchange purchases, which is now limited to USD50,000 per person per year.

• Shanghai stocks rose to their highest in almost seven years last week, as market sentiment remained high. The Shanghai Composite Index has risen 73% during the past 12 months. The Shanghai Composite Index rose for an eighth consecutive trading day, ending up 1% at 3,617.32 points on March 20.

• Small-cap stocks and exchange-traded funds (ETFs) targeting retail investors will be the main features in the Shenzhen-Hong Kong stock connect scheme being launched this year, said Hong Kong's Secretary for Financial Services and the Treasury Chan Ka-keung. This would complement the institutional focus of the city's stock link with Shanghai.

TRAVEL

Chinese airports and airlines worst in punctuality

Among the world's 61 largest airports, the seven worst performers for on-time departures wereall Chinese airports, with Hangzhou's Xiaoshan, Shanghai's Hongqiao and Shanghai's Pudongfacilities taking the bottom three spots, according to FlightStats, a U.S.-based data provider onair travel. Just 37.74% of flights left on time from Xiaoshan, 37.17% from Hongqiao and 37.26% from Pudong. Those three were closely followed in the survey by Shenzhen Bao'an, Guangzhou Baiyun, Chongqing Airport and Beijing Capital International Airport. Out of the world's largest 61 airports, Japan's Haneda Airport was the best with an on-time rate of 89.76%. The best performer among the 374 world airports of all sizes looked at by FlightStats was another Japanese airport, Itami, with an on-time rate of 94.56%. Zou Jianjun, from the Civil Aviation Management Institute of China, said management of China's facilities had not kept up with demand and the network was concentrated in only a few areas. Chinese airports had an average punctuality rate of just 65% last year, with passengers encountering the most delays in July and August, when they waited for more than an hour on average. Joyair, a regional carrier based in Xian, was the best performer among Chinese airlines with about 90%of its flights on time, followed by China Southern Airlines with around 80%. There were no mainland or Hong Kong airlines in the world's top 10 for on-time arrivals last year, FlightStats said. The world leader was KLM Royal Dutch Airlines, which had 88.66% of its flights arrive ontime. About 390 million passengers took flights in China in 2014, double the total for 2009, according to the Civil Aviation Administration of China (CAAC).

• Nasdaq-listed travel website Qunar reported its third-consecutive quarter of more than100% revenue growth for the three months ended December 31. Qunar enables usersto search and compare flights, hotels, travel packages, group-buying deals and other travel-related information via its website and mobile applications. Founded in Beijing in2005, Qunar generates most of its revenue from advertising, as well as marketing and technology support services.

• Cathay Pacific Airways, which includes Cathay Pacific and Dragonair, posted net profitof HKD3.15 billion for 2014, up 20% from HKD2.62 billion in 2013 but missing the market estimate of HKD3.5 billion. Turnover was HKD106 billion, up from HKD100.5 billion, in line with expectations. Load factor increased by 1.1 percentage points to 83.3% for the passenger business.

• Hainan Airlines made China's first passenger flight using biofuel made from cooking oil. It carried more than 100 passengers from Shanghai to Beijing in a Boeing 737 using biofuel made by Sinopec from waste cooking oil collected from restaurants. Boeing China President Ian Thomas called the flight “a significant milestone” in

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China's commercial aviation industry. Dragonair also had a biofuel flight planned. Biofuels emit 50% to 80% less carbon dioxide than conventional fuels.

ONE-LINE NEWS

• Liao Yongyuan, 52, General Manager of China National Petroleum Corp (CNPC), has resigned as Vice Chairman of PetroChina and has been placed under investigation forcorruption.

• Shanghai has officially launched a corruption investigation into the former Director of its first free trade zone (FTZ). Dai Haibo, 53, “seriously violated party discipline and laws”, Xinhua reported, citing Shanghai's Commission for Discipline Inspection. The announcement came six months after Dai was sacked as Executive Deputy Director ofthe Shanghai FTZ Administration Committee.

• China Petrochemical Corp (Sinopec Group) has appointed anti-corruption officials in 28 of its subsidiaries to help root out graft. The move comes after central government anti-corruption investigators carried out an inspection of the company. Investigators found that businesses run by family members of executives at the firm had profited from their connections to the oil producer and refiner.

• Chen Haiju, 65, former Deputy General Manager of China Eastern Airlines, has been sentenced to life in prison for taking bribes totaling almost CNY4.9 million. Prosecutorssaid Chen was a serious gambler and spent millions of yuan in casinos in Las Vegas, Melbourne, Amsterdam and Macao.

• The Foreign Ministers of China, South Korea, and Japan met for the first time in three years and agreed to work on resuming summit talks. There has been no trilateral meeting of the countries' leaders since 2012, the year that Japan nationalized three of the Diaoyu islands.

• Fewer than 850,000 foreigners held working visas in China in 2013, accounting for only 0.06% of the population, the lowest in the world.

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