China Market Watch: Funding for Key Manufacturing Projects, Australia and Hong Kong Enter Free Trade Talks
AirAsia sets up budget airline joint venture based in Zhengzhou with Everbright Group
Malaysian airline AirAsia has signed a memorandum with state-owned financial service provider China Everbright and the Henan Government Working Group to form a joint venture in Henan province’s Zhengzhou.
The low cost carrier chose Zhengzhou as its base due to its strategic positioning and status as a logistics hub for China’s burgeoning western regions, and is a city that will undoubtedly become even more important as the One Belt, One Road project matures.
AirAsia is Asia’s biggest budget airline, and already flies to 19 cities within China, making it the country’s largest foreign low cost airline. In its 16 years of history, AirAsia has set up a presence in Malaysia, Thailand, Indonesia, Philippines, India, and Japan.
The company will invest in aviation infrastructure, maintenance, repair, and overhaul facilities, and an aviation academy for pilots, flight attendants, and engineers.
However, domestic competition is already fierce, with many carriers such as West Airlines Co., China United Airlines Co., and 9 Air having already announced plans to transition to budget airline business models.
Key manufacturing projects to get funding assistance
The Ministry of Industry and Information Technology (MIIT) has released plans to raise funds for key manufacturing projects after a series of breakthroughs in equipment development for aviation and other sectors were made.
A platform for cooperation between government institutions, banks, and enterprises will be established to correctly allocate funds to the right projects.
The list of financing partners includes the China Development Bank, State Development and Investment Corp, Industrial and Commercial Bank of China (ICBC), and China CITIC Bank.
The scheme fits in to the country’s larger Made in China 2025 initiative, which aims to transform the manufacturing sector to focus on more innovative and high-tech industries such as robotics and big data.
The MIIT will focus on development of equipment and projects that have established backgrounds so that breakthroughs in cutting edge technology will be made quicker.
Australia and Hong Kong enter free trade talks
The trade ministers of Hong Kong and Australia have entered into negotiations for a Free Trade Agreement (FTA) between the two countries. Reports state that officials from both countries are interested in an FTA that will improve Australian service exports to Hong Kong.
Any such FTA would allow Australian law and accounting firms – as well as fintech and educational institutions – to operate in Hong Kong without a physical presence. The media has reported that Australian representatives may seek to address non-tariff trade barriers and customs procedures, which would improve upon the zero-tariff treatment Hong Kong authorities grant Australian goods.
Bilateral trade in goods and services between Hong Kong and Australia was valued at over US$11 billion last financial year. Hong Kong is Australia’s eighth largest export destination: transport, travel, education, financial, and business services are Australia’s largest exports to Hong Kong. Approximately 600 Australian businesses maintain offices in Hong Kong.
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