Economy & Trade

China Market Watch: Forestry Sector Output Flourishes and China Railway Corp Releases Construction Plan and Budget for 2017

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China looks to increase green energy consumption by 2020

China is aiming to build a clean, low carbon, safe, and modern energy system by 2020. Attention will be paid to the quality of the energy sector’s development by dealing with the country’s overcapacity problems and promoting green energy development. Efforts will also be made to increase market competition among energy and related sectors. This will mean a 15 percent reduction of energy use per unit of GDP by the year 2020, and that non-fossil fuel share will increase to more than 15 percent, with natural gas occupying 10 percent. Persistent air pollution has foregrounded this target, with 62 percent of 338 cities suffering bad air quality last week, according to the Ministry of Environmental Protection. In 2015, 64 percent of energy consumption in China derived from coal, the main source of breathable particulate matter (PM 2.5) which causes smog.

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China-Mongolia Relations: Challenges and Opportunities

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By Zolzaya Erdenebileg

With the signing of the China-Mongolia-Russia corridor in June 2016, Sino-Mongolian relations entered a new era of economic cooperation that will be vital to Mongolia’s economic recovery and long term stability. Mongolia has long aspired to become a logistics and financial center, using its location in North Asia and proximity to Chinese and Russian markets to its advantage. However, a recent visit by the Dalai Lama to Mongolia, and the resulting Chinese backlash, has once again revealed that economic partnership and recovery for Mongolia will be more difficult than the government expects.

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China Market Watch: Growth in Postal Sector and New Auto Sales Records Set

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China’s postal sector projected to reach RMB 1 trillion in revenue in 2020

China’s State Post Bureau has estimated that the country’s postal sector will make over RMB 1 trillion in revenue in 2020, the Bureau said. Around one million jobs will be created from 2016 to 2020 in the sector, mostly in China’s more rural regions, thereby generating quality postal services in underserved parts of the country. China’s postal system is the largest delivery network in the world, and has delivered more than 30 billion parcels this year.

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China’s Foreign Trade in 2016: Identifying Trends and Opportunities

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By Tongyu Zhang

After downward pressure in foreign trade at the beginning of 2016, China has managed to recover with an upswing in the third quarter of the year, according to the latest Report on Chinese Foreign Trade by the Ministry of Commerce (MOFCOM). By September, China’s foreign trade for the year totaled RMB 17.53 trillion, a decrease of 1.9 percent year-on-year. Exports decreased by 1.6 percent to RMB 10.06 trillion, and imports decreased by 2.3 percent to RMB 7.47 trillion, while the trade surplus expanded by 0.6 percent to RMB 2.6 trillion. Declines in import and export activity narrowed quarter-on-quarter. Due to the weak exchange rate performance of the RMB against the US dollar, the decline in Chinese foreign trade (about 7.8 percent) was intensified when represented in US dollars.

The latest Report on Chinese Foreign Trade, as summarized below, highlights the changing nature of China’s economy, and offers insights into emerging growth areas benefiting from government support.

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Preventing Insolvency: How to Plan the Cash Flow and Financing of a WFOE in China

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By Thibaut Minot,
Associate, International Business Advisory, Dezan Shira & Associates

Forecasting the financial performance of a proposed business and accurately assessing the investment required to launch operations is always a complex affair. In China, where foreign currency restrictions significantly complicate cross-border transactions, the strategic planning of funding foreign-invested entities (FIEs) is of particular importance.

This is well illustrated in the case study explored in this article, a scenario that Dezan Shira & Associates commonly encounters while advising clients that have an entity in China or are in the process of setting one up. The case study will not only aim to illustrate the common pitfalls associated with funding a Chinese business, but will also be used to introduce five different strategies available to investors contemplating the funding of a wholly foreign owned enterprise (WFOE).

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China Market Watch: China Reaches Five Year PPI High, and Digitization of Manufacturing Sector

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China’s PPI reaches five year high

The National Bureau of Statistics (NBS) released a statement that China’s producer price index (PPI) reached 3.3 percent in November – its highest reading since October 2011, when it recorded five percent. In a separate statement also made by the NBS, the consumer price index (CPI) rose by 2.3 percent in the same month year on year, the third consecutive month in which the index recorded an increase. China’s PPI had been shrinking for 42 consecutive months prior to the spike, which analysts have put down to soaring prices in the coal and steel sectors, as opposed to a rise in domestic demand.

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Dezan Shira Partners Plan New Asian & Silk Road Development Strategy

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DSA Partners

Dezan Shira & Associates Partners planning new adventures. From left to right: Alberto Vettoretti, Sabrina Zhang, Chris Devonshire-Ellis, Rohit Kapur, Adam Livermore.

The Dezan Shira & Associates equity partners have been holding their annual partners meetings in Sri Lanka these past few days, focusing on their planning, strategy, and budgeting sessions for the year ahead. The firm is one of the largest consulting practices in Asia, providing legal, tax, and related advice to foreign SMEs and MNCs investing in China, India, and Southeast Asia. With the Dezan Shira Asian Alliance, the practice includes some 28 offices across 10 countries and about 600 staff.

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Is the TPP Dead, or Will it Merge into the Free Trade Area of the Asia-Pacific?

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CDE Op-Ed Commentary

American President-elect Donald Trump’s announcement confirming his intention to dump the proposed “Trans-Pacific Partnership Agreement” (TPP) does not come as a surprise. Although the agreement, which we have written extensively about here, took seven years to negotiate and promised to open up sectors of the US market to a handful of Asian and South American nations was sound in principle, its apparent demise is not entirely unannounced. It is also possible that Trump himself, when fully introduced to its benefits, may yet decide to resurrect the deal.

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