Trust Sector

China’s banking regulator has asked trust companies to strengthen risk management, underlining the responsibility of shareholders and forbidding shadow banking business. Trust companies are required to implement comprehensive risk control in product design, risk supervision and information disclosure, according to a guideline released by the China Banking Regulatory Commission. The guideline contains specific stipulations for the companies’ shareholders, who are obliged to provide liquidity support in the case of liquidity risk. The guideline also ruled out non-standardized investment business related to shadow banking, such as cash pooling, and asked companies providing similar services to draft and submit plans to regulators to rectify their products by the end of June.

Supporting Trade

The Chinese Government on May 15 announced support for stable growth of foreign trade and job creation. Optimizing the foreign trade structure, including encouraging imports of technology and key parts, maintaining stable growth of goods trade and supporting service trade, is the central issues of a policy document issued by the State Council, China’s cabinet. The export tax rebates should be accelerated, and companies are encouraged to merge and acquire foreign brands and production lines to improve their global competitiveness.

Pricing Autonomy

Telecom companies can freely design service packages and price them based on consumer needs and market situations as long as the pricing abides by the law and regulations, according to an announcement released by China’s Ministry of Industry and Information Technology and the National Development and Reform Commission. Companies are asked to make simple and clear descriptions of their service packages, including charges of each service and how subscribers will be charged. They are prohibited from exaggerating their services and misleading consumers, and they are encouraged to provide special offers to low-income subscribers. Insiders say the relaxing will increase competition and improve efficiency in the sector.

Dairy Imports

On May 1 China’s quality watchdog put into effect a regulation authorizing only those who have registered with the Chinese authorities to sell dairy products into the country. Overseas dairy producers must meet Chinese rules and standards on sanitary conditions and get approval from authorities to sell dairy products, according to the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ). The first batch of registered overseas dairy producers involve 1,122 companies, including 41 makers of baby formula. More companies will be publicized after their registration, according to the AQSIQ.

Tax Break

Business startups and employers willing to hire the jobless will receive tax breaks as the Chinese Central Government looks to encourage employment amid the economic slowdown. Businesses established by registered unemployed workers are allowed a maximum annual tax reduction of 9,600 yuan ($1,559), according to a joint statement led by the Ministry of Finance (MOF). Companies set up by new graduates, people who have been out of work for over six months and those living on government aid, as well as residents from zero-income families also qualify for the policy. Firms that hire the jobless for over a year will enjoy an annual reduction of 5,200 yuan ($838) for every job opportunity provided, the statement said. The move was a renewal of previous pro-employment measures that expired at the end of last year, with wider coverage, no restrictions on industries and simplified administrative procedures. The new policy will stay effective until December 31, 2016.

Service Industry

China will accelerate the development of production-oriented service industries in a bid to step up industrial restructuring and prop up economic growth. Priorities will be given to the development of research and design, commercial services, marketing and after-sales services, and will be driven by the market and innovation, according to an executive meeting of the State Council on May 14. The move is expected to stimulate domestic demand, boost social employment and improve people’s livelihoods, as well as stabilize economic growth, according to the meeting. CA

Numbers

47%

Year-on-year growth of the Cross-border RMB Index, an indicator of the currency’s activities in cross-border and overseas transactions, in the first quarter

$8.7 billion

China’s FDI inflow in April

11.9%

Year-on-year growth in China’s retail sales in April

17.3%

Year-on-year growth in China’s fixed-asset investment in the first four months

$260.7 million

Zambia’s deficit in balance of payment in Q1 of 2014