China Market Watch: Salt Prices Stable After End of State Monopoly, and RMB 30 Billion Fund for Services Industry
Salt prices stable and low following end of monopoly
China’s National Development and Reform Commission has said that the price of salt commodities will remain stable and low due to salt stockpiles and overcapacity. There is so much salt in fact that, at the end of 2016, reserves of table salt reached 1.55 million tons. Rock salt reserves reached 1.3 trillion tons, enough to supply 26,000 years of continuous consumption at the current annual output, which is 50 million tons. In 2015, 10.5 million tons of table salt were sold. Starting from the first day of this year, China ended its 2000 year monopoly of the production and sale of salt, in which salt bureaus exploited the market to gain significant profit.
RMB 30 billion fund for China’s services industry
The Chinese government plans to set up an RMB 30 billion fund aimed at boosting high value service exports such as finance, technology and culture. The majority of the fund will derive from private investors, with the Ministry of Finance contributing RMB 5 billion. The fund will be made available for all sorts of companies, including state owned and private enterprises. The fund is the first of its kind in China, and forms part of the country’s drive to shift towards an economy based on service exports. According to the Ministry of Commerce, China’s import and export and services reached RMB 4.29 trillion in 2016, with the tourism industry the biggest contributor. However, China only accounts for six percent of the world’s service trade.
New energy vehicles forecast good growth after subsidies cuts
January sales of new energy vehicles (NEVs) plummeted by 74.4 percent in January following a tightening in subsidies policies, after some companies were exploiting them. However, according to the China Association of Automobile Manufacturers, sales previous to this reached 507,000 in 2016, up 53 percent in 2015, and sales of NEVs are expected to maintain good growth this year. Although subsidies will be cut by 20 to 30 percent during 2017-2018, China’s development of NEVs is keeping up with the global market. Research and development is increasing with the inflow of investment, meaning that new products will come onto the market this year.
Mechanical industry reports strong growth
China’s Machinery Industry Federation has reported that the country’s mechanical industry grew rapidly last year, mainly due to the fast developing automobile and electrical appliance segments. The automobile segment comprised nearly 60 percent of the industry’s revenue, recording increased profits of RMB 688.6 billion last year, up RMB 66.27 from 2015. Domestically produced cars sales increased by 20 percent, accounting for more than 40 percent of China’s overall car sales. The electrical appliance segment comprised 20 percent of the overall machinery industry. This year, particular attention will be paid to high end numerical control machine tools and intelligent equipment.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Dezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
An Introduction to Doing Business in China 2017
Doing Business in China 2017 is designed to introduce the fundamentals of investing in China. Compiled by the professionals at Dezan Shira & Associates in January 2017, this comprehensive guide is ideal not only for businesses looking to enter the Chinese market, but also for companies who already have a presence here and want to keep up-to-date with the most recent and relevant policy changes.
Navigating HR Audits in China
Recent changes in China’s labor market have underscored the importance of having both an efficient HR system and a satisfied and reliable workforce, and the HR audit is a useful tool to ensure this. In this issue of China Briefing magazine, we provide a guide for conducting HR audits in China. We analyze why the HR audit is especially important for foreign companies operating in the country, and then detail the different HR audit models and procedures that are available to firms.