Coal trading system another step to pricing reforms
China’s first official coal exchange, which was approved last month to form a spot market for coal producers, power plants and other industrial buyers, is a major step toward energy pricing liberalization, the China Times reported. The exchange will begin trading in 2009 in Taiyuan, the capital of Shanxi province, which is home to one-third of China’s proven coal reserves. Coal is one of the last remaining commodities still under state control, although some private coal exchanges have been established and power and coal producers are now allowed to set prices more freely, as long as asking prices don’t get out of control. China’s annual coal trading volume is expected to reach 500 million tons, but one industry official said trading activity on the new exchange could be limited as coal producers usually sign yearly contracts with large buyers. It could also be hard to attract domestic coal importers because they tended to be based in coastal China. Industry sources said Qinhuangdao, in Hebei province, is also seeking approval for a similar exchange. Qinhuangdao is China’s biggest coal port connected by rail to mines.

Bonds fall while stock indices rise
Bond issues declined 59.3% in April as stock indices continued to soar, the Shanghai Business Journal reported. Just US$62.32 billion (RMB476.7 billion) worth of bonds were issued on the interbank market last month, down 59.3% from March, but bond prices remained largely stable due to interest rate hikes for deposits and credit extension. However, April's decline was not enough to erode the gains made by a surging bond market in the first quarter. According to central bank sources, US$339.9 billlion (RMB2.6 trillion) worth of bonds were issued on the interbank market in the first four months of this year, up 40.13% year-on-year.

Tax clarification on second-hand houses
The Shanghai Taxation Bureau issued a circular reiterating that there was no change in capital gains tax policies imposed on the sale of second-hand houses, Xinmin Evening News reported. “There are no amendments to the capital gains tax policies on the sale of second-hand houses,” the circular said in response to rumors. “The taxation authorities are supposed to explain it clearly to the taxpayers.”

Gas deposits discovered in Sichuan
Nearly 3.8 trillion cubic meters of natural gas deposits have been discovered in China’s southwestern Sichuan Basin, with verified exploitable reserves topping 600 billion cubic meters, China Economic Daily reported. The reserves were discovered in Dazhou, a gas-rich city in Sichuan province. By 2010, the newly found deposits will raise the city’s gas output to 24 billion cubic meters and sulphur to more than 4.3 million tons, according to a Dazhou official. China National Petroleum Corporation (CNPC), the country’s biggest oil and gas producer, and Sinopec Corporation, China’s largest refiner, plan to build five refineries in Dazhou and are expected to purify a total of 74 million cubic meters of natural gas a day by 2010.

HSBC rakes in capital gains
HSBC Holdings Plc has posted a US$600 million (RMB4.58 billion) gain on its stakes in Chinese companies this year and will prioritize emerging-market investments going forward, Shanghai Securities News reported. HSBC has booked one-time profits on its stakes in Ping An Insurance (Group) Co, China’s second-largest insurer, and Industrial Bank Co, following their share offerings, the London-based company said Monday. “Strong performance” in Hong Kong and Asia are leading HSBC's “good start” this year, it said. “Earlier this year, we incorporated our operations in China, paving the way for us to extend our services to mainland Chinese citizens,” said HSBC Chairman Stephen Green. “Going forward, we will prioritize investments in these fast growing areas.” HSBC shifted its focus to Asia and emerging markets as rising consumer defaults saddled its North American operations.

Sinochem reports surging profits
Sinochem Corp, China’s biggest chemical trader, said its profits rose 62% to a record high in the first four months of the year, bolstered by surging energy demand. Sales climbed 13% during the January-to-April period. “Revenue and profit rose to records,” Sinochem said, without providing figures. China’s energy companies are expanding capacity to benefit from demand in the world’s fastest-growing economy, which expanded by 11% in the first quarter. Sinochem aims to double its profits to more than US$1 billion (RMB7.65 billion) within three years, Bloomberg News reported. The company’s 2006 profit rose 27% year-on-year to US$516 million (RMB4 billion).

Guangdong-Kuwait joint venture talks near end
Kuwait Petrochemical Industries Co said talks with Chinese authorities to build an oil complex in Guangdong province may be concluded by year end, Al-Seyassah newspaper reported. Kuwait Petrochemical has obtained initial approval from the Chinese government for the joint-venture project, including a petrochemical plant and an oil refinery with a processing capacity of 400,000 barrels a day.

Singapore Airlines’ bid for China Eastern supported
Temasek Holdings Pty, a Singaporean state-owned investment company with US$85 billion of assets, may join its unit Singapore Airlines to bid for a stake in China Eastern Airlines Corp, the Shanghai Business Journal reported. A joint investment with Temasek means the carrier could gain strategic control of China Eastern– China's only publicly traded airline - without paying for the stake on its own. Temasek owns 56% of Singapore Airlines – Asia’s most profitable carrier. Both Singapore Airlines and China Eastern suspended the trading of their shares and the Singapore-based carrier said it was in “advanced” talks for a potential investment. Temasek, which was founded three decades ago to promote industry in Singapore, is owned by Singapore’s finance ministry. Profit for the year ended March 2006 jumped 71% to a record US$8.4 billion (RMB64.25 billion). Its investments in China include stakes in China Cosco Holdings Ltd and Air China Ltd.

Baosteel, SKF set up joint venture
SKF – an internationally leading ball bearing maker – has teamed up with Shanghai’s Baosteel Group Corporation to establish a remanufacturing facility to turn used parts into new products, Shanghai Business Journal reported. The facility will be run by a joint venture between the two companies, in which SKF will have a majority stake. The remanufacturing center will be situated in Shanghai, where Baosteel, China’s largest steel maker, is based. The two companies invested US$2.86 million (RMB22 million ) in the center, which will initially employ 30 people. Remanufacturing – still a new and poorly received concept in China – takes scrap goods and re-engineers them into new or improved products, with a warranty to match.

Global hotels increasingly target China
Global hotel operators will keep seeking initiatives to expand their presence in mainland China, Shanghai Daily reported. They are sparing no efforts to solidify their businesses across the country, particularly in key tourism areas, the newspaper said. Europe’s largest hotel operator, Accor SA, this week signed management contracts for its first two hotels in Dalian, northeastern Liaoning province. The two hotels are both scheduled to open in September. Hilton Hotels Corporation, one of the earliest foreign hotel groups to enter the Chinese market, has signed agreements to manage Hilton's Doubletree hotels in Beijing and Kunshan, eastern Jiangsu province. “We’ve seen great potential to introduce several more of our Hilton family brands to Beijing, which will host the 2008 Olympics, from luxury through to mid-market and economy accommodation,” said Koos Klein, area president of Hilton Hotels Asia Pacific. “The Doubletree by Hilton hotel is the first step on that path.”