PBOC continues liquidity injection

China's central bank continued net cash injections into the money market on Oct 31 to ease liquidity strain. The People's Bank of China conducted 300 billion yuan ($45.2 billion; 38.8 billion euros; ￡34 billion) of reverse repos, pumping a net 80 billion yuan into the market as 220 billion yuan of reverse repos matured. Reverse repo is a process by which the central bank purchases securities from commercial banks through bidding with an agreement to sell them back in the future. This week's operation came after a net injection of 40 billion yuan on Oct 30, 90 billion yuan on Oct 29 and 20 billion yuan on Oct 28, as maturing reverse repos and tax payments put pressure on liquidity near the end of the month.

Cross-border M&As set to gather momentum

Cross-border mergers and acquisitions are expected to pick up despite current sluggish turnover, with China and the United States being the driving forces, an industry report said. According to the report by Brunswick Group, a global public relations company, 58 percent of the interviewees, among the more than 100 professionals interviewed, anticipated an increase in the number of cross-border deals in the next 12 months, while 31 percent of them expected it to be the same as last year. More than 70 percent of interviewees believed that China and the US will be the most active countries driving outbound acquisitions, with Europe in third place. Currently, global cross-border mergers and acquisitions are experiencing a depression. Data from financial markets platform Dialogic showed that global cross-border mergers and acquisitions declined by 7 percent in the first three quarters of 2017.

Ethanolamine dumping probed

The Chinese Ministry of Commerce said on Oct 31 that it has started an anti-dumping investigation into ethanolamine imported from the United States, Saudi Arabia, Malaysia and Thailand. The ministry received a joint application demanding an inquiry from six domestic producers, who accused foreign manufacturers of dumping the products on the Chinese market, according to an official statement. The combined ethanolamine output of six applicants accounted for more than half of the country's total from 2014 to 2016. The ministry will investigate whether foreign companies from the four countries have sold their products in China at an artificially low price.

Manufacturing PMI unchanged at 51

China's manufacturing activities continued to expand in a stable manner, according to the Caixin China Purchasing Managers' Index for manufacturing sectors, released on Nov 1. The reading was 51 in October, unchanged from September. It has been above 50 for five consecutive months. A reading above 50 indicates expansion while a figure below that indicates contraction. It shows that China's manufacturing industries expanded in a stable manner during October, but the country's strict production reduction measures aimed at environmental protection and low corporate stock levels may affect production in the coming months, said Zhong Zhengsheng, chief economist of Caixin Insight Group, which compiled the index. China's industrial output growth may slow in October and investment growth may also be affected by the restrictive property market measures, Zhong said.

Youon net up 9.38% in first nine months

China's bike-sharing company Youon reported a profit surge for the first three quarters on Oct 30. Changzhou Youon Public Bicycle System Co generated revenue of 751 million yuan ($113 million; 97.7 million euros; ￡85.7 million) in the first three quarters, up 44.11 percent year-on-year. The company reported a net profit rise of 9.38 percent, to 79.27 million yuan from January to September, according to a quarterly report filed with the Shanghai Stock Exchange. Youon saw its fixed assets surge 496.8 percent from the beginning of the year to 114 million yuan by the end of the third quarter, as the company increased its number of shared-bikes. Youon went public on the Shanghai Stock Exchange on Aug 17 this year, the first initial public offering by a bike-sharing company.

Innovation flourishing in China, says UBS report

China is transforming from being the world factory to an innovation-driven nation by embracing a fresh wave of innovation, a new report said. According to the report from Swiss financial firm UBS, China's total research and development investment registered an 18 percent compound average growth rate between 2006 and 2016. If the same momentum is maintained, China will become the world's second-largest R&D investor after the United States by 2020, with such investments accounting for 2.5 percent of the total GDP by then. The country is also home to the second-largest number of so-called unicorn companies, next only to the US. Such companies have a market value over $1 billion each and have been operating for over 10 years.

China Telecom reports growth in mobile users

China Telecom, one of China's three largest telecom service operators, reported a 5.5-percent net profit growth in the first three quarters of the year. Net profit attributable to shareholders stood at 18.5 billion yuan ($2.8 billion; 2.4 billion euros; ￡2.1 billion) during the period, according to a statement on the company's website. Operating revenue also rose 4.1 percent year-on-year to 275 billion yuan from January to September. China Telecom added 25.56 million users in the first nine months of this year, bringing total users to 241 million, of which more than half are 4G network customers. Mobile data traffic surged 142 percent in the first three quarters, with every 4G subscriber using data plans of 1.5 gigabytes on average each month.

Russia, Pakistan lead B&R cooperation

Russia and Pakistan rank first and second on a list of 64 countries and regions in terms of cooperation with China under the Belt and Road Initiative, according to a report released by the State Information Center. Based on more than 500 billion items of information collected by major statistical organizations and internet channels, the Belt and Road Initiative Big Data Report 2017 analyzed five aspects of cooperation between China and the 64 countries and regions - policy communication, connectivity, trade, finance and public support - and used eight indicators to evaluate the cooperation level. Domestically, Guangdong, Fujian, Shanghai, Zhejiang and Shandong are the top five provinces and municipalities regarded as "highly participating" in the initiative, according to the report. Participation by Western regions will soon intensify, as those regions have high potential, the report said.

Baidu, Shouqi team up for driverless cars

Chinese internet giant Baidu and Shouqi Limousine & Chauffeur, an online car rental company, have entered a strategic partnership to speed up the development of driverless vehicles. Baidu will provide Shouqi with its Baidu Map service, while Shouqi will help Baidu develop high-precision maps for self-driving cars. Baidu will also offer software and hardware solutions such as the "DuerOS" and "Apollo platform" to Shouqi to help it develop autonomous vehicles. "DuerOS is an AI platform that provides tools for developers looking to quickly build intelligent devices that anyone can interact with, primarily through voice and natural language conversation," according to Lu Qi, Baidu's chief operating officer. "The Apollo platform provides a software and hardware solution to specific partners and will help their vehicles navigate the roads using AI technology," Lu says. "In the future, customers will enjoy a smart travel experience brought by the self-driving cars."

(China Daily European Weekly 11/03/2017 page26)