NEW SLETTER |6 F E B R U A R Y 2 0 1 7

FCCC/EUCBA activities FCCC Chinese New Year Reception – 6 February 2017 – BrusselsExclusive Dialogue with European Commissioner Malmström – 6 February 2017 – BrusselsChina Seminar: Update on the Economic & Financial Landscape and the Internationalization of the RMB – 12h00, 14 February 2017 – Ghent Getting Your Food & Beverages into China – What it Takes – 22 February 2017 – Ghent

Advertisement and sponsorship Advertisement and sponsorship opportunities 2017Activities supported by FCCC Group business trip ‘E-commerce China’ – 12-17 March 2017

– Hangzhou and ShanghaiFor other activities supported by FCCC, see the FCCC website

Advertisement Hainan Airlines, Business Class Promotion to China: only € 2049!

Automotive Jianghuai to manufacture SUVs in MexicoExpat corner Chinese professionals worry about U.S. work visa

Number of new green card holders rises 163% in 2016Finance PBOC raises interest rates on open market operations

Chinese banks global leaders by assets and brand valueForeign investment Lower U.S. taxes could attract Chinese manufacturers

Foreign trade Belt and Road gathering to be year's diplomatic highlightChina angry at U.S. import duties on steel productsForeign producers of ball sockets for pens to face Chinese competition

Health Chinese vaccines gaining popularity abroadMacro-economy China to become biggest nuclear power market

Mergers & acquisitions Innovative technology and robotics become M&A focusReal estate Drop in homes sold in Shanghai in January

Retail iPhone no longer best-selling smartphone in ChinaConsumer spending up more than 11% during holiday

FCCC Newsletter No 497, February 6, 2017 Page 1

Science & technology HKU ranks first in Asia on ‘most international’ universities listTravel Number of trips during holiday rises by 7%

One-line news

FCCC Chinese New Year Reception – 6 February 2017 – Brussels

On 6 February 2017, the Flanders-China Chamber of Commerce will celebrate Chinese New Year. The programme of the FCCC New Year Reception is as follows:

6 February 2017 – 18h00 – KBC Bank, Havenlaan 2, 1080 Brussels

FCCC Newsletter No 497, February 6, 2017 Page 2

Speakers:

• Mr Stefaan Vanhooren, Chairman, Flanders-China Chamber of Commerce• His Excellency Mr Qu Xing, Ambassador of the People's Republic of China in Belgium• Mr Jochum Haakma, Chairman, EU-China Business Association• Mr Philippe Muyters, Flemish Minister for Work, Economy, Innovation and Sport

Register here

Members: €24,2 (incl. 21% VAT), Non-Members: €54,45 (incl. 21% VAT)

Special thanks to KBC Bank.

Golden Sponsors: ZTE, Maasmechelen Village

We would like to give your company the opportunity to give more exposure to Belgian companies active on the Chinese market and Chinese companies present in Belgium. You will find more details on the sponsorship opportunities for the Chinese New Year Reception below. If you are interested in sponsorship, please send an e-mail to info@flanders-china.be

Exclusive Dialogue with European Commissioner Malmström – 6 February 2017 – BrusselsEU-CHINA CONFERENCEDate: Monday, 6 February 2017 - 14:15-16:00 – BusinessEurope, BrusselsLocation: BusinessEurope, Avenue de Cortenbergh 168, 1000 Brussels

BUSINESSEUROPE, the European Union Chamber of Commerce in China and the EU-China Business Association are organizing an exclusive dialogue with the European Commissioner for Trade Cecilia Malmström and the European Chamber of Commerce in China President Jörg Wuttke.

The purpose of this event is to take stock of the most important developments in the EU-China relations and how this affects EU businesses. Concurrently, this event serves as an opportunity for the Chamber to present its annual position paper on China.

Agenda

14h15 – 15h0015h00 – 15h10 15h10 – 15h20

15h20 – 15h30

15h30 – 15h5015h50 – 16h00

Registration and networkingIntroduction by Mr Markus J. Beyrer, Director General, BUSINESSEUROPESpeech on EU-China trade and investment relations by Ms Cecilia Malmström, European Commissioner for TradeSpeech by Mr Jörg Wuttke, President, European Union Chamber of Commerce in ChinaModerated panel Discussion and Q&AConclusions by Mr. Jochum Haakma, Chairman of the EU-China Business Association

Please register using this link. The cost of participation is €60 and you can pay online using credit card. If you would like to pay by wire transfer, please contact Julia Navarro at j.navarro@businesseurope.eu

The EU-China Business Association is the EU-wide federation of business organisations in the EU promoting business relations with China. The Flanders-China Chamber of Commerce holds the secretariat-general and vice-chairmanship of the EUCBA.

The Dialogue will be followed by the Chinese New Year Reception of the Flanders-China Chamber of Commerce.

FCCC Newsletter No 497, February 6, 2017 Page 3

China Seminar: Update on the Economic & Financial Landscape and the Internationalization of the RMB – 12h00, 14 February 2017 – Ghent

The Flanders-China Chamber of Commerce (FCCC) and the Province of East-Flanders are organizing a seminar focusing on ‘An Update on the Economic & Financial Landscape and the Internationalization of the RMB’. This seminar will take place from 12h00 to 14h00 on 14 February 2017 at het Provinciehuis, Gouvernementstraat 1, 9000 Ghent.

Speakers: Jason Lee, General Manager KBC Bank NV Shanghai BranchBernard Van Hees, General Manager KBC Bank NV Hong Kong Branch

In the recent months, the growth of the Chinese economy appears to have stabilized, albeit that growth is not even across all sectors. Jason Lee will provide his views regarding the outlook for the China economy and how various sectors are affected differently. He will also provide an update of the financial landscape and the related impact for foreign companies active in China. To conclude, Bernard Van Hees will provide an update on the internationalization of the RMB and the related opportunities or threats.

Programme:

12h0012h30

12h35

14h00

Registration & Sandwich lunchWelcome by Ms Gwenn Sonck, Executive Director, Flanders-China Chamber of CommerceUpdate on the Economic & Financial Landscape and the Internationalization of the RMB by:Mr Jason Lee, General Manager KBC Bank BV Shanghai BranchMr Bernard Van Hees, General Manager KBC Bank NV Hong Kong BranchFollowed by question and answer sessionEnd of seminar

If you are interested in attending this seminar, we kindly invite you to sign up here.

Participation fee (incl. 21% VAT):Members: 66,55 €Non-members: 90,75 €

Getting Your Food & Beverages into China – What it Takes – 22 February 2017 – GhentThe Flanders-China Chamber of Commerce (FCCC) and the EU SME Center in Beijing are organizing a seminar on ‘Getting Your Food & Beverages into China – What it Takes’ on 22 February 2017 from 09h00 to 12h00 at Het Pand, Onderbergen 1, 9000 Ghent.

Get to grips with what it takes to prepare your market approach and start selling your food and beverage (F&B) products in China. Learn how to navigate China’s import regulations and how to build and maintain a strong distribution network. Understand the regulations governing the food and drink market in China and the impact of the new Food Safety Law. Put into practice useful tips and work out your own cross-border strategy for China.

This half-day workshop will focus on:• Consumer behaviour, trends in the F&B market. • Distribution channels. • How to develop a business plan to get your F&B products onto Chinese shelves. • The New Food Safety Law – what this means for your business.

Tentative Agenda

08:30 – 09:00 Registration09:00 – 09:10 Opening remarks by Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce09:10 – 09:30 Insights into the world’s largest F&B market

• Chinese consumers and tastes • Growing trends

FCCC Newsletter No 497, February 6, 2017 Page 4

09:30 – 10:20 Getting ready for export• Preparing your market approach – the 10 steps you should follow • Understanding the registration process • On-trade vs. Off-trade • Cross-border commerce

10:20 – 10:50 Coffee Break10:50 – 11:15 How to find the right importer and distributor?

• The role of each player in the supply chain • Expanding distribution networks in China

11:15 – 11:45 Food safety in China• The new food safety law – status update • The real impact for exporters

11:45 – 12:00 Case studies showing the do’s and don’ts of selling F&B in China• Q&A + wrap up

Registration feeMembers of the Flanders-China Chamber of Commerce: 180 € (excl. VAT)Non-members: 240 € (excl. VAT)

Click here to sign up for this event.

About the SpeakerRafael Jimenez, Business Development AdvisorChina expertise: market entry strategy, start-ups, SME business planning, streamlining costs, new business channels and local partners. With more than six years’ hands-on experience in managing businesses in China, Rafael offers advice for European SMEs in developing practical market entry strategies in the country. Following a career at a senior level within the F&B and ICT industry, he arrived in China in 2009 as Director of a Spanish F&B company involved in the restaurant and trade business. He helped the company set up a Wholly Foreign Owned Enterprise (WFOE) in China, ran

operations for three years and led a team of more than 100 employees. More recently he was Shanghai Office Director at a Management Consultancy Firm. Born in Spain, Rafael holds a Bachelor of Physics and has three sons.

ADVERTISEMENT AND SPONSORSHIPAdvertisement and sponsorship opportunities 2017

The Flanders-China Chamber of Commerce offers several advertising and sponsorship opportunities in order to give your activities more exposure to potential new clients and collaboration.

If you are interested in advertising or sponsoring or need more information, please send an e-mail to: gwenn.sonck@flanders-china.bewww.flanders-china.be

The sponsoring opportunities are the following:

1. SPONSORING OF ACTIVITIES

During FCCC activities, you can put a banner of your company at the event and distribute documentation of your company and obtain free invitations.

Invitations are distributed via E-mail and the FCCC website and newsletters. The events are announced in different media channels.The fee is according to each different event.

2. SPONSORING AT THE FCCC WEBSITE

Your logo will be displayed on the FCCC home page with click through to your own website or

FCCC Newsletter No 497, February 6, 2017 Page 5

to your own page on the FCCC-website

GOLDEN SPONSOR (12 months): 1.950 €SILVER SPONSOR (6 months): 1.450 €

3. SPONSORING IN THE FCCC WEEKLY NEWSLETTER

Every Monday, the weekly Newsletters are sent and posted on the FCCC website.

Number of recipients every week: 1200 executives dealing with China

GOLDEN SPONSOR (12 months): 1.950 €SILVER SPONSOR (6 months): 1.550 €SPONSOR (3 months): 895 €

4. SPONSORING IN THE QUARTERLY E-NEWSLETTER IN CHINESE AND ENGLISH LANGUAGE: “NEWS FROM THE HEART OF EUROPE: FLANDERS”

# Newsletters are also posted online at the FCCC website# 1 issue every quarter# Number of direct recipients: +/- 2000 Chinese and Belgian business leaders, local

authorities and institutions# Distributed through the different Chambers of Commerce in China# Your logo on the electronic newsletter and a 200-word profile of China activities

GOLDEN SPONSOR: 1.650 € -3 issues SILVER SPONSOR: 1.250 € - 2 issues

Amounts are excl. VAT.

5. SPONSORING EU-CHINA ACTIVITIES

The EU-China Business Association (EUCBA) is an association of Associations in the European Union countries promoting business relations between European enterprises, institutions and their Chinese counterparts. It is an International non-profit organisation registered in Belgium.The FCCC holds the secretariat-general of the EUCBA.

The EUCBA organises high-level EU-China events and also publishes a Quarterly newsbulletin.www.eucba.org

If you are interested in advertising or sponsoring or need more information, please send an e-mail to: gwenn.sonck@flanders-china.be

ACTIVITIES SUPPORTED BY FCCCGroup business trip ‘E-commerce China’ – 12-17 March 2017 – Hangzhou and Shanghai

Flanders Investment & Trade (FIT) is organizing a group business trip focused on e-commerce to Hangzhou and Shanghai on 12-17 March 2017. Discover the possibilities of your company in China through the e-commerce platform of Alibaba.

What: Group business tripTarget sectors: all sectorsTarget market: ChinaWhen: From Sunday 12 March 2017 till Friday 17 March 2017Where: Hangzhou and Shanghai, ChinaWho can join: companies and organizations having a Belgian enterprise numberOrganization: Flanders Investment & Trade, together with AWEX, Brussels Invest & Export and Alibaba.

E-commerce is booming in China. Discover the advantages of exporting to China through

FCCC Newsletter No 497, February 6, 2017 Page 6

Alibaba as supplementary or only distribution channel. Selected companies are invited to B2B-meetings with Alibaba’s sourcing team at its headquarters in Hangzhou. The FIT office will provide tailor-made programs for all participants joining the trip to Shanghai.

Prices: €600 for the first participant of your company; additional representatives €300.If you are only joining the trip to one location: first representative of your company: €300; additional representatives: €150.

Joining the trip to Hangzhou is only possible for those participants accepted by Alibaba to join the meeting. Non-selected participants can join the Shanghai part of the trip at a cost of €300. Selection by Alibaba will take place in December – early January. Flemish SMEs may apply for a subsidy at FIT.

Additional information: Programme website.docx

Contact: Michèle Surinx, e-mail: michele.surinx@fitagency.be tel.: 02-5048791.

Register as soon as possible before 1 December 2016, as the number of participants is limited.

For other activities supported by FCCC, see the FCCC website: www.flanders-china.be

ADVERTISEMENTHainan Airlines Business Class Promotion to China: only from €2049!

We are pleased to inform you that from now on until 31 March 2017, Hainan Airlines’ Business Class return fare from Brussels to Beijing will only cost €2250, through fare to Hongkong, Shanghai, Shenzhen, Guangzhou, Taipei from only €2049. Hainan Airlines’ Brussels to Beijing aircraft offers comfortable seats in business class that recline to a fully-flat bed. Passengers are provided with home-like bedding services, including pyjamas, slippers and thoughtful Bulgaria amenity kits. Business Class passengers from Belgium, the Netherlands, Luxembourg, Germany and France are offered a complimentary, pre-arranged private limousine service to Brussels Airport (certain conditions apply) Terms and Conditions 1. Fares shown include taxes and fuel surcharges. (Route origin PEK is not available) 2. Travel Date:

FCCC Newsletter No 497, February 6, 2017 Page 7

01.11.2016-31.03.2017. 3. Fare is subject to seat availability. 4. Special fare restrictions may apply. 5. Purchase by: 31.03.2017. More information about this promotion fare, please visit our website: www.hainanairlines.com

AUTOMOTIVEJianghuai to manufacture SUVs in Mexico

China's Anhui Jianghuai Automobile Co (JAC) is teaming up with Mexican company Giant Motors Latinoamerica to localize its sport utility vehicles (SUVs), but analysts doubt the wisdom of a move which will target customers in Mexico, and Central and South America. The two companies will invest a total of USD212 million to expand the capacity of a plant owned by Giant Motors in Ciudad Sahagun, Hidalgo province. Giant Motors will start producing SUVs at the plant within two months, with 1,000 vehicles in the first year and the goal of making 10,000 per year by 2021. JAC sold 367,300 passenger vehicles in 2016, a year-on-year increase of 6.09%, including 27,500 SUVs. John Zeng, Managing Director of LMC Automotive Consulting Shanghai, said it would be cheaper to export cars to those countries from Mexico than from China, adding that JAC could have built a plant in South America instead of Mexico. Yale Zhang, Managing Director of consulting firm Automotive Foresight, said several other Chinese automakers had contemplated building plants in Mexico, but all of them saw it as a natural gateway to the United States and Canada, a much larger market than South America. Mexico is the world's fourth-biggest car exporter. It produced 3.46 million cars in 2016, exporting 2.77 million, with three quarters of them to the U.S., according to local industry association AMIA.

• Geely Automobile Holdings, the Chinese owner of the Volvo brand of passenger vehicles, is the leading contender to buy a 51% controlling stake in Malaysia’s largest carmaker Proton Holdings. The other contender is Groupe PSA, which owns the Peugeot and Citroen brands globally. The successful bidder will get access to Proton’s Tanjung Malim assembly, with an annual production capacity of 150,000 vehicles in two shifts. Proton is loss-making, so it would take Geely at least one or two years to turn it around. Geely’s sales target for 2017 is one million vehicles, an increase of 34% from last year.

• The Ministry of Industry and Information Technology (MIIT) has banned seven Chinese automakers from getting subsidies because they had been cheating with subsidies. Chongqing Lifan Automobile Co, one of the penalized parties, was accused of equipping 1,353 new-energy cars with a sub par number of battery cells in 2015, when it applied for financial subsidies. The government awarded CNY33 billion of subsidies between 2009 and 2015. China sold 507,000 new-energy vehicles last year, a rise of 53% year-on-year.

EXPAT CORNERChinese professionals worry about U.S. work visa

U.S. President Donald Trump’s determination to expand employment by discouraging U.S. companies from investing overseas has been welcomed by some, but might affect professionals from China and other countries hoping to secure a job in the U.S. Reports said the H1-B work visa program that allows U.S. employers, particularly in Silicon Valley, to hire top foreign professionals also faces changes as part of a larger immigration effort, said Wang Dong, Associate Professor of International Studies at Peking University and Secretary General of the Beijing-based think tank Pangoal Institution. Trump’s administration might lower the number of work visa applications from the annual quota of 65,000 set aside for “specialty positions”, Wang said. “A renegotiation is also likely, but the pain will soon be felt by U.S. companies and work-visa applicants, a lot of whom are Chinese. How far Trump will push the envelope on immigration and what he might do to bypass institutional barriers remains unpredictable,” Wang added.

FCCC Newsletter No 497, February 6, 2017 Page 8

Number of new green card holders rises 163% in 2016The number of foreigners who became permanent Chinese residents in 2016 jumped 163% from the previous year to 1,576, according to the Ministry of Public Security. Foreigners with permanent residence enjoy the same rights as Chinese citizens in areas such as investment, housing purchases and schooling. Shanghai saw six times more green card applications from foreigners and their families. The number of such applications in Beijing last year soared 426% from that of 2015. Foreigners made over 56.5 million trips to China last year, up 8.9% from 2015. At present, 15 Chinese cities allow a 72-hour visa-free entry for nationals of certain countries. Shanghai, as well as Jiangsu and Zhejiang provinces, offer 144-hour visa-free stay for transit passengers from certain countries, the Shanghai Daily reports.

FINANCEPBOC raises interest rates on open market operations

The People’s Bank of China (PBOC) raised short-term interest rates on the first day after the Spring Festival holiday, a further sign of policy tightening. Higher interest rates could prod debt-laden firms into de-leveraging, though at the risk of stunting growth.“It appears to be aimed at controlling a real estate bubble. It could also be aimed at arresting the yuan’s depreciation, although it is the reverse repo they adjusted and the impact remains to be seen,” said Naoto Saito, Chief Economic Researcher at the Daiwa Institute of Research in Tokyo. The PBOC raised the interest rate on open market operation reverse repurchase agreements (repos) by 10 basis points. It also raised the lending rates on its standing lending facility (SLF) short-term loans. Assistant Governor Zhang Xiaohui said that monetary policy will be kept generally prudent and stable, while also avoiding either a rapid slowdown in economic growth or excessive liquidity injections. Zhang also said China will keep the yuan basically stable and avoid large volatility in interest rates and foreign exchange rates. Analysts said the tightening of primarily money market rates suggested the bank wanted to retain policy flexibility as it balances the need to keep the economy from slowing again. The central bank raised the seven-day open market operations rate to 2.35% from 2.25%, while also lifting rates for SLF loans. The SLF rate acts as a de facto ceiling for interbank lending, the Shanghai Daily reports.

Chinese banks global leaders by assets and brand valueChinese banks are now global leaders not just by asset base but also by brand value, according to the latest Brand Finance Banking 500 report, which says the combined value of Chinese banks has surpassed that of U.S. banks for the first time. Industrial and Commercial Bank of China (ICBC) is the world's most valuable bank, with a brand value of USD47.8 billion, representing a 32% year-on-year growth. The report also said Chinese banks have an aggregate total brand value of USD258 billion, accounting for 24% of the total brand value of the top 500 global banks, compared with 23% for U.S. banks. Zhou Jingtong, Professor at the Bank of China's Institute of International Finance, said: “The brand value growth of Chinese banks is closely related to the continuous rise of China's contribution to the global economy. During the process, the Chinese banking sector maintained steady development in various aspects, including asset growth, asset quality, provision coverage ratio and capital adequacy ratio.” The internationalization of Chinese banks, particularly in recent years, also contributed to the growth of their brand value. China Construction Bank (CCB) registered rapid brand value growth of 17%, and Bank of China (BOC) 13%. Harbin Bank's brand tripled in value in 2016 to USD811 million, representing the fastest-growing bank by brand value last year. The success of Chinese banks came at the expense of U.S. banks, such as Wells Fargo, which once topped the list, the China Daily reports.

• U.S. President Donald Trump criticized Japan and China for devaluing their currencies, a clear signal of his belief that the two countries are currency manipulators. “They play the money market, they play the devaluation market and we sit there like a bunch of dummies,” Trump said in a meeting with pharmaceutical company executives.

• Sending virtual red packets with money via WeChat has become a popular activity during the Spring Festival. Tencent Holdings, the operator of the WeChat services, announced that 46 billion red packets were sent and received during the six days from

FCCC Newsletter No 497, February 6, 2017 Page 9

lunar New Year's Eve to the fifth day of the first lunar month (January 27 to February 1), up 43.3% year-on-year. Lunar New Year's Eve was the peak for the red packets, when a total of 14.2 billion red packets were sent and received on that day, up 75.7% year-on-year.

• JD.com, China's second-biggest e-commerce player, is seeking a banking license to establish a direct bank – a bank without any branch network that offers its services via online banking and telephone banking – and it may also provide access via ATMs.

• Chinese shoppers can now enjoy real-time VAT refunds via their mobile phones at airports in three European cities: Milan, Munich and Helsinki. Payments facilitator Alipay is also collaborating with Finnish mobile payment provider ePassi to offer a mobile payments service for inflight shopping on Finnair's flights, marking the first ever mobile payment service in the air.

• A 2016 report by KPMG and Australian investment firm H2 Ventures notes that five of the world's top 10 fintech companies are Chinese. Ant Financial topped the list. Another report by EY noted China has eight of the world's 27 fintech unicorns – startups worth more than USD1 billion.

• China will severely punish anyone involved in illegal financing activities, especially targeting underground banks and stock market manipulation, after a series of scandals, China’s State Prosecutor said.

FOREIGN INVESTMENTLower U.S. taxes could attract Chinese manufacturers

U.S. President Donald Trump’s plan to slash corporate taxes may become a magnet for many Chinese manufacturers, who have been facing rising taxes and wages at home, according to a recruiter who helped bring thousands of jobs from China to the United States. “If Trump lowers the business tax rate from 35% to 15% as he promised, it’s almost beyond question that more Chinese manufacturers will consider coming to America,” John Ling, the man responsible for attracting hundreds of millions of dollars of Chinese manufacturing investments into South Carolina over the past decade, told the South China Morning Post. The 47-year-old Chongqing native, who previously ran South Carolina’s representative office in Shanghai, has persuaded leading Chinese manufacturers like Haier to build factories in the U.S. southern industrial heartland. That has translated into nearly USD800 million of planned investments and created more than 2,200 jobs – roughly 1% of the total manufacturing labor force across the entire state of South Carolina. Among the biggest Chinese investors in South Carolina are Geely-owned Volvo Car Group, which aims to pour USD500 million into a new vehicle plant, and Jushi, the world’s largest fibre glass manufacturer, which has started construction of a USD300 million factory, the South China Morning Post reports. However, companies which rely on a supply chain of parts suppliers will have more difficulties relocating to the U.S.

FOREIGN TRADEBelt and Road gathering to be year's diplomatic highlight

By hosting a high-level forum on the Belt and Road Initiative (OBOR) in May, China aims to boost an open and inclusive economy amid rising protectionism and opposition to globalization, State Councilor Yang Jiechi said in an interview with China Daily and People's Daily. The Belt and Road Forum for International Cooperation, which will be held in Beijing on May 14 and 15, will “explore ways to address problems facing the global and regional economies”, he said. The forum will be the biggest diplomatic event hosted by China this year amid Beijing's efforts to advocate interconnectivity and cooperation to invigorate the global economy. Leaders from about 20 countries have confirmed their participation. The agenda for the forum, which will have the theme “Belt and Road: Cooperation for Common Prosperity”, will focus on connectivity of policy, transportation, trade, finance and people. Ruan Zongze, Vice President of the China Institute of International Studies, said that the Belt and Road Initiative is a public service provided by China for the world.

FCCC Newsletter No 497, February 6, 2017 Page 10

China angry at U.S. import duties on steel productsThe U.S. Commerce Department issued a final determination that Chinese imports of stainless steel sheet and strip were being subsidized and dumped in the U.S. market at below fair value and affirmed anti-dumping duties ranging from 63.86% to 76.64% on the imports, and an anti-subsidy rate of 75.60% for mandatory respondent Shanxi Taigang Stainless Steel Co. The duties will go into effect for five years if the U.S. Trade Commission (USTR) subsequently affirms its earlier finding that U.S. producers were being harmed. AK Steel Corp, Allegheny Ludlum IPO, North American Stainless and Outokumpu Stainless USA had brought the case seeking relief. Imports of the products from China were estimated at USD302 million in 2015. The USTC is scheduled to make its final determination on or about March 20. Chen Xin, Director of the Business Department of the Chinese Academy of Social Sciences' Institute of European Studies, said that China has been actively cutting back steel capacity in recent years to ease the global overcapacity. “China's steel exports are competitive in quality and price because of economies of scale,” Chen said. China has voiced discontent at the high punitive tariffs.

Foreign producers of ball sockets for pens to face Chinese competitionTaiyuan Iron & Steel Group has succeeded in producing the metal ball casing for ball-point pens. The ball sockets in which the tiny balls at the tip of pens rotate to dispense ink were until now imported from abroad. As the world’s biggest ball-point pen maker, China’s more than 3,000 pen manufacturers have been producing more than 40 billion pens annually. While China’s industry has been able to produce the tiny steel balls, it had previously not been able to produce the sockets with the quality to match imports. Mass domestic production of the steel wire used to make the sockets, of 2.3 millimetres in diameter, is expected to be able to replace imports in two years, according to Taiyuan Steel. China imports more than 1,000 tons of special steel used to make ball-point pen nib sockets at about CNY120,000 per ton, costing more than CNY120 million annually. Foreign manufacturers of the ball point sockets will face reduced orders and increased competition of Chinese companies in the near future. The secret to the breakthrough lay in the right thinness of the “additives”, including lead and tellurium, mixed into the steel to give it the suitable degree of hardness and enhanced “free-cutting” property, Wang Huijin, Senior Engineer of Taiyuan Steel’s Technology Center said. About 90% of the steel used in sockets and 80% of ink used in ball-point pens made in China was either imported or made with foreign-made machines, while Chinese pen makers only made a profit of USD0.1 for each pen sold for USD1.99 in the United States, Minister of Science and Technology Wan Gang was quoted by Xinhua as saying in 2011. The pen industry’s reliance on foreign precision parts has long been a source of embarrassment to China, the South China Morning Post reports.

• China’s gold imports from Switzerland soared at the end of last year when Beijing was struggling to defend the yuan. The Swiss Federal Customs Administration said in January that its gold bullion exports to China rose to 158 tons in December from 30.6 tons in November, according to GoldSeek.com, a website for gold investors. Switzerland owns the world’s major gold refineries, with India and China its top export destinations. China’s gold consumption has dropped 6.7% to 975.4 tons in 2016 from the previous year, though it still remains the world’s top gold consumer and largest producer. According to the World Gold Council, China’s official gold holdings amounted to 1,843 tons at the end of 2016, with its value accounting for 2.2% of China’s foreign exchange reserves.

• Sri Lanka aims to finalize a free trade agreement (FTA) with China this year and Prime Minister Ranil Wickremesinghe plans to visit Beijing in May, the Sri Lankan Ambassador announced.

• The trade volume between the Chinese mainland and Taiwan totaled USD179.6 billion in 2016, down 4.5% from 2015, according to the Ministry of Commerce (MOFCOM). Mainland exports to Taiwan were USD40.4 billion last year, a 10.1% year-on-year drop, and imports from Taiwan stood at USD139.2 billion, down 2.8%. Taiwan is the mainland’s seventh largest trade partner and sixth biggest source of imports. In 2016, the mainland approved 3,517 Taiwan-invested projects, with the actual use of Taiwan capital worth USD1.96 billion, up 27.7% from the previous year.

• In 2016, trade with Hong Kong fell 11.1% year-on-year to USD305.3 billion. Mainland

FCCC Newsletter No 497, February 6, 2017 Page 11

exports to Hong Kong stood at USD288.4 billion in 2016, down 12.7% from the previous year, while the mainland’s imports from the city rose 32.4% to USD16.9 billion. Hong Kong is the mainland’s fourth-largest trading partner and third-largest export market. The mainland approved 12,753 Hong Kong-invested projects in 2016, with the actual use of Hong Kong capital at USD81.5 billion, down 5.7% from 2015.

HEALTHChinese vaccines gaining popularity abroad

Seth Berkley, CEO of the Global Alliance for Vaccines and Immunization, said Chinese vaccines are “significantly cheaper” than those made by many other countries. The Chinese-made vaccine for Japanese encephalitis, for example, is up to 95% less expensive than those produced in the West, he said. With an average price of USD0.42 a dose, the live attenuated vaccine made by the Chengdu Institute of Biological Products is providing lifesaving protection to millions of children in low-income countries, including Laos, Nepal and Cambodia, under the Alliance's program, which has committed to using 27.7 million doses of the vaccine. Berkley hailed China's efforts to move on from being an alliance recipient of vaccines to being a key supplier. China's Japanese encephalitis vaccine became available on the global market after the World Health Organization (WHO) endorsed China's vaccine regulatory body in 2011. Two years later, the product became the first prequalified Chinese vaccine to be licensed for use on children, the China Daily reports.

MACRO-ECONOMYChina to become biggest nuclear power market

China’s rapid nuclear expansion will result in it overtaking the United States as the nation with the largest nuclear power capacity by 2026, according to BMI Research. China plans to almost triple its nuclear capacity to nearly 100 gigawatt (GW) by 2026, making it the biggest market globally. The nation added about 8 GW of nuclear power in 2016, boosting its installed capacity to about 34 million kW, BMI said. China has committed to boosting nuclear power, which accounted for about 1.7% of its total generation in 2015, to help reduce its reliance on coal, which accounts for about two-thirds of the country’s primary energy. The nation has 20 reactors currently under construction, according to the International Atomic Energy Agency (IAEA). Another 176 were either planned or proposed, far more than any other nation, the World Nuclear Association has reported. “We expect growth to continue and China to emerge as one of the largest nuclear markets globally in terms of total installed capacity over the coming decade, as the huge pipeline of reactors that are planned, proposed or under construction gradually comes online,” Georgina Hayden, Director of energy and renewable research at BMI, said. Coal’s share in the nation’s energy mix would gradually fall to just less than 54% by 2026 from its current 70%, BMI said. China General Nuclear Power Corp and China National Nuclear Corp are also developing the expertise to export nuclear technology abroad, the South China Morning Post reports.

• Manufacturing activity in China’s private sector grew at a slower pace in January as output and new orders weakened. The Caixin China General Manufacturing PMI dipped to 51 last month from a 47-month high of 51.9 in December. New orders continued to increase but the rate of expansion slowed from December and was moderate overall. Production recorded its slowest expansion since September, while the rate of job losses was the highest for three months due to firms cutting costs.

• China will launch the trading of green certificates for solar and wind power on July 1 in a bid to help reduce government subsidies to the renewables sector, the National Development and Reform Commission (NDRC) said. The tradable certificates would prove that electricity had been generated through renewable energy sources. Each certificate would represent 1 megawatt/hour of power. Solar and wind power producers who had sold their certificates would no longer receive a direct subsidy for electricity production. Renewable energy makes up about 11% of China’s energy consumption.

• China will deepen supply-side structural reform in agriculture to develop the sector, according to a new policy document, which called for “improving structures in the

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industry, promoting “green” production, extending the sector’s industrial and value chain, boosting innovation, consolidating shared rural development, and enhancing rural reforms. This is the 14th year in a row that the “no.1 central document” has been devoted to agriculture, farmers and rural areas. China’s grain output dropped slightly by 0.8% in 2016 to 615 million tons, ending 12 years of growth.

MERGERS & ACQUISITIONSInnovative technology and robotics become M&A focus

Chinese companies have shifted the focus of their overseas acquisitions away from natural resources toward innovative technology and robotics, according to the annual M&A Trends report by Clifford Chance. The report noted Chinese private and state-owned enterprises (SOEs) were increasingly interested in technology companies to gain commercial and technical know-how. Neeraj Budhwani, Clifford Chance Partner in Hong Kong, said: “China's appetite for offshore assets remains voracious, but we're seeing a shift of focus.Technology companies are actively seeking out opportunities in the fintech sector, with a view to bringing more innovative technology back to the country.” The report found Chinese outbound mergers and acquisitions (M&As) rose 114% globally in 2016 in comparison with the previous year. Chinese bidders spent USD208.6 billion last year. The report noted Chinese investment into Europe was up 201%, and in North America, it rose by 412%. Terence Foo, M&A Partner based in Beijing, added: “Despite the introduction of restrictions on capital outflows in China, we are helping Chinese buyers explore more innovative funding structures,” the China Daily reports.

• ChemChina is set to secure conditional EU anti-trust approval for its USD43 billion bid for Swiss pesticides and seeds group Syngenta, the largest foreign acquisition by a Chinese company. The Chinese state-owned company has agreed to minor concessions to allay the European Commission’s concerns about higher prices and fewer choices for farmers. ChemChina will divest a couple of national product registrations in more than a dozen EU countries. The Commission may announce its approval next month, ahead of its scheduled April 12 deadline.

• China emerged as an aggressive investor in overseas electricity projects in 2016. Analysts said they expect more oil and gas deals to be done this year as oil prices are likely to see moderate gains. According to data provider Mergermarket, Chinese outbound energy M&A deals amounted to USD25 billion in 2016, up from USD12.3 billion in 2015 and USD3.7 billion in 2014, but well short of USD27.4 billion in 2013 and USD31.7 billion in 2012. Last year’s volume was skewed by the USD12.4 billion takeover in September of Brazilian group CPFL Energia by State Grid Corporation of China.

REAL ESTATEDrop in homes sold in Shanghai in January

Market sentiment in Shanghai’s residential market in the first month of the new year was sluggish even though home prices continued to climb. The area of new residential properties sold, excluding government-funded affordable housing, totaled 388,700 square meters in January, a month-on-month drop of 40% and a year-on-year plunge of 71%, Shanghai Uwin Real Estate Information Services Co said in a report. New homes were sold for an average CNY46,782 per sq m, an increase of 13.6% from December, and a rise of 30.2% from the same period a year ago. A residential project in Baoshan district registered monthly sales of 225 units at an average cost of CNY52,800 per sq m. Three other projects in last month’s top-10 list also cost more than CNY50,000 per sq m – major reasons for the double-digit price increase. The momentum among real estate developers was lackluster too last month when just around 371,000 sq m of new houses were released in the local market, compared with some 675,300 sq m launched in December. “Such weakness will likely extend through the first half of February before strength picks up again in March,” said Lu Wenxi, Senior Manager of Research at Shanghai Centaline Property Consultants Co. During the week-long Spring Festival holiday only 949 sq m of new houses, or eight units in total, were sold across the city, a drop of 71.1% from the same holiday period in 2016, the Shanghai Daily reports.

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• Beijing’s focus on deflating China’s asset bubbles and eliminating financial risks is hurting one of its key growth drivers, the property sector, analysts said. Property attracts nearly one-fifth of China’s fixed-asset investment (FAI) and directly contributed to 6.5% of last year’s gross domestic product (GDP). It is seen as one of the key drivers of last year’s economic stabilization. “Mortgage rates face the risk of a large increase,” Jiang Chao, Chief Macro Analyst at Shanghai-based Haitong Securities, wrote in a research report. China’s benchmark mortgage rate is 4.9%, but banks still offer discounts in smaller cities. Total mortgage loans almost doubled to CNY4.96 trillion last year, accounting for 39.2% of all new loans.

RETAILiPhone no longer best-selling smartphone in China

Apple’s iPhone last year lost the title of the best-selling smartphone in China for the first time in four years. Apple’s sales in China dropped 12% in the quarter ending December to USD16.2 billion. According to Counterpoint Technology Market Research, Oppo Electronics' middle-end R9 handset was China's most popular model in 2016, with an annual shipment of 17 million units and a market share of 4%. Apple's iPhone 6s, ranked second with a market share of 2%. Huawei Technologies Co, which aims to outcompete Apple in the premium segment, secured the third spot with its affordable Honor Joy 5S model. “Oppo's omnipresent distribution channels from big to small cities across China and its aggressive marketing strategy are giving its products an edge,” said Tarun Pathak, Associate Director at Counterpoint. China’s phone makers gained a record 24% market share in the global smartphone market in the fourth quarter. Apple, Samsung, Huawei, Oppo and Vivo were the five biggest sellers in the global market.

Consumer spending up more than 11% during holidayConsumer spending during China’s week-long Spring Festival holiday was brisk with overall expenditure topping CNY840 billion, a rise of 11.4% from a year ago. Anhui, Yunnan, Guangxi and Hunan recorded the fastest growing consumer spending, the Ministry of Commerce (MOFCOM) said. Last year, retail sales rose 11.2% during the same holiday period. Shanghai’s retail sales increased 10.6% from a year ago during the January 27 to February 2 period. Healthier eating habits pushed up sales of fruits and nutritional supplements as well as local specialty foods. China’s biggest payment card issuer China UnionPay said that transactions at home and abroad through UnionPay cards totaled CNY462 billion during the seven-day holiday, a surge of 48.1% from a year earlier. Chen Han, Data Analyst of UnionPay, said the biggest spending categories were dining, shopping, traveling and transportation.The number of UnionPay’s overseas transactions grew nearly 40% year-on-year. The number of overseas transactions surged in Asia, Europe and north America, the most popular travel destinations for Chinese people.

• Hong Kong retail sales dropped to a 17-year-low of HKD436.6 billion in 2016, down 8% compared to 2015. The figure was HKD42.4 billion in December alone – a 2.9% drop year-on-year. The drop in mainland visitors was the main reason for the retail slump. “The drop in retail sales serves as a reminder that we can no longer sit and wait for tourists to come and spend in Hong Kong,” Peter Hopper, Asia Pacific Managing Director of consulting firm Strategic Decisions Group said. Visitor numbers from mainland China dropped 6.7% in 2016, compared to 2015, dragging the overall visitor numbers down by 4.5%.

SCIENCE & TECHNOLOGYHKU ranks first in Asia on ‘most international’ universities list

The University of Hong Kong has been ranked the world’s third most international university, according to a recent ranking of 150 institutions around the world. While HKU retained the position it scored previously on the annual list, Chinese University saw a great leap upward to 28th from 108th last year, as the ranking changed its methodology to factor in for the first time a university’s global reputation. HKU was highest among all Asian universities in the ranking

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published by London-based Times Higher Education. The new fourth element for evaluation – a university’s international reputation – comprises 25% of the total score.The other factors were proportions of the following: the university’s international students, its international staff, and its journal publications with at least one international co-author. Internationalization is a key part of Hong Kong institutions’ strategies to attract the best students, scholars and staff, Phil Baty of Times Higher Education said. ETH Zurich and École Polytechnique Fédérale de Lausanne, both located in Switzerland, came first and second in the rankings. The National University of Singapore was one place after HKU at fourth, followed by Britain’s Imperial College London and Oxford University at fifth and sixth. Five mainland universities appeared in the top 150: Peking University (121), Nanjing University (129), Renmin University (137), Tsinghua University (143) and Fudan University (146).

TRAVELNumber of trips during holiday rises by 7%

A record 6.15 million trips were made by Chinese tourists to overseas destinations during the seven-day Spring Festival holiday, which ended on February 2, according to the China National Tourism Administration (CNTA). That is an increase of 7% compared with last year's Spring Festival. About 374,000 trips were organized by travel agencies, a 2.5% increase. With many Chinese now traveling abroad for Spring Festival, their choice of destinations has expanded along with their growing interest in exotic cultures and services. Those traveling to Japan, previously mainly a shopping destination, now prefer a physical checkup or experiencing Japanese culture, while Britain is famous for its history and education. China’s tourism industry raked in CNY423.3 billion in revenue during the holiday, a year-on-year increase of 15.9%. Some 344 million visitor trips were made, up 13.8% from the same period last year. Some 6.15 million Chinese people traveled abroad during the holiday, up 7% year-on-year. The travel peak fell on January 27, the first day of the seven-day holiday, which saw 50.5 million visitor trips, up 10.4% year-on-year.

• Regal Hotels Group announced it had won a contract for the development of a new hotel project at Hong Kong’s airport. The HKD2.19 billion hotel will have 1,000 guest rooms and suites, and is expected to be completed by 2020. It will become part of SkyCity, Hong Kong’s new entertainment and leisure spot. Poman Lo, Regal Hotels’ Vice Chairman and Managing Director, said the new hotel would be an “iconic landmark for Hong Kong”. Regal already manages an existing Regal Airport Hotel, 10 other hotels in Hong Kong, and a further 22 in mainland China.

ONE-LINE NEWS• Chinese billionaire Xiao Jianhua, Founder of the Beijing-based Tomorrow Group, was

assisting mainland investigators in a corruption investigation after disappearing from the Four Seasons hotel in Hong Kong. He is reported to be a Canadian citizen and Hong Kong permanent resident. Shares in listed firms controlled by Tomorrow Holdings slumped, despite the parent group saying its businesses were all operating normally. The shares of sugar producer Baotou Huazi Industry Co and cement producer Xishui Strong Year Co both were down the maximum 10% in Shanghai trading.

• John McCallum, Canada’s former Immigration Minister, has been appointed Ambassador to China, where he is to spearhead preliminary talks on a possible free trade agreement (FTA).

• Ivanka Trump, daughter of U.S. President Donald Trump, attended a Lunar New Year reception at the Chinese Embassy in Washington, although her father broke with tradition by not sending Lunar New Year greetings to people of Chinese origin in the U.S.

• A lawsuit brought by villagers in Yangchun, Fujian province, against Dutch antiques collector Oscar van Overeem, who refuses to return what they claim is a 1,000-year-old statue containing the mummified remains of a Buddhist monk stolen in 1995, will take place in the Netherlands in July. Overeem has claimed he bought the statue for about CNY150,000 in 1996 from another collector.

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