Credit Ratings

Credit ratings will be introduced to a local government bond-issuance pilot in China, in a move to enhance risk prevention. The ratings will come in nine levels, which are AAA, AA, A, BBB, BB, B, CCC, CC and C. The AAA rating indicates an extremely low default risk, with C suggesting inability to repay debts, according to a document released by China's Ministry of Finance. China began to allow local governments to issue bonds in October 2011. The new rule required local governments to publicize credit ratings for their bonds, the local economic development, fiscal income and expenditures, as well as the liabilities. Local governments in the pilot program should also, on an annual basis, conduct comprehensive credit ratings on their bonds issued with different maturity terms, including five years, seven years and 10 years, said the rule. 

Foreign Trade Stimulation

China's central bank said it will encourage financial institutions in the banking sector to broaden funding channels for Chinese enterprises, innovate financial products and services, and further expand financing through export credit insurance to support stable growth of foreign trade. The People's Bank of China will support qualified financial leasing companies to expand funding channels by issuing financial bonds and participating in pilot projects for credit asset securitization. Apart from simplifying cross-border trading and yuan settlement procedure for direct investment, the central bank will also support cooperation among financial institutions and payment service providers on cross-border yuan settlement. Multinational corporations are allowed to carry out centralized cross-border yuan fund operations, including two-way cross-border yuan cash pool business, according to the regulations. 

Easier Approval

China will relax the approval process for foreign companies planning to invest in the country, while strengthening national security reviews, said China's top economic planning body. From June 17 this year, China will adopt a system of "limited approval" and "general registration" instead of the existing "all-round approval" mechanism, the National Development and Reform Commission (NDRC) said. All planned investment projects by foreign firms, excluding those required by the Foreign Investment Industrial Guidance Catalogue to have Chinese stakes, need only registration before proceeding. Projects listed among the first to 11th items in the 2013 catalogue of investment projects requiring government approval still need to obtain government approval, the NDRC said. According to the new regulation, all investment projects exempt from approval can go through the registration process with local authorities, and some of the projects needing NDRC approval can directly apply for approval from local authorities. 

Defense Sector

China will open its defense sector to private enterprises by relaxing market access for military products. Concrete measures will include lowering market access requirements, reducing approval procedures, improving the pricing mechanism for military products and taxation policy, according to the People's Liberation Army's General Armament Department. The department said it will open a website for military procurement, regularly publicizing information on the demand for weapons and other equipment. It will strive to ensure a fair market competition to encourage private enterprises to participate in the research, production and maintenance of military equipment. 

Service Outsourcing

Service outsourcing has become a major industry in China, with its value reaching 1.7 trillion yuan ($272 billion) in 2013, representing about 2.97 percent of the nation's GDP, said a report released by Chinese Academy of International Trade and Economic Cooperation. The industry provides the country with direct and indirect employment of 5.36 million and 17.8 million respectively, said the report. Information technology outsourcing dominates China's service outsourcing industry, which also saw rapid growth in knowledge process outsourcing, according to the report. China has off-shore outsourcing businesses in about 200 countries and regions. 

Cable Firm

China has moved forward to consolidate its hundreds of cable television by establishing a national network company. China Broadcasting Network Ltd., a newly launched firm with a registered capital of 4.5 billion yuan ($728.5 million), will build a unified cable network. It is also expected to be the nation's fourth largest network operator, following China Mobile, China Unicom and China Telecom. There are many cable television networks in China, all run by different operators at various administrative levels. China Broadcasting Network will run businesses in the unified cable network construction, operation and maintenance, as well as some related consulting and technology research and development work.

Numbers

$4 trillion China's foreign exchange reserves in March

3.8% The decrease in the global range of gold prices in May, the biggest monthly loss this year

1.98 mln units China's auto production in May, down 4.4 percent from April

929,000 New companies registered in China from March to May

2.1% Revised South African GDP growth prospect in 2014