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The Daily China News Update is produced by Charles Silverman
(03/05/13)
Business & Economics
Newswire
China Seen Creating Its Own BHP to Boost Purchases Abroad (Bloomberg) 3
China Bankers Earn Less Than New York Peers as Pay Drops (Bloomberg) 4
Wall Street Defies China Concerns (Reuters) 6
China becomes world’s top oil importer (The Financial Times) 7
Wall Street stages late rebound (The Financial Times) 8
China Housing Move Sends a Jolt (The Wall Street Journal) 9
Scooters Rule as E-Commerce Grows in China (The Wall Street Journal) 11
Pollution Is Costing China's Economy Over $100 Billion A Year (businessinsider.com) 12
China Internet Executives Get a Seat at the Table in Beijing (THE WSJ CHINA REAL TIME REPORT BLOG) 13
China’s Youth Tell Employers: I Quit (THE WSJ CHINA REAL TIME REPORT BLOG) 14
China Mobile, NTT DoCoMo, Korea Telecom Launch Global NFC Roaming Service (chinatechnews.com) 15
Nowhere fast: KFC’s China future (buybuychina.com) 16
Luxury Brands Hit Hard By China’s Anti-Corruption Drive (beijingcream.com) 16
HSBC: “difficult” year ahead, but growth coming from China’s recovery (The FT Beyond BRICs Blog) 17
China: property curbs hit stocks (The FT Beyond BRICs Blog) 18
China Search Engine Market Share in 2012 (chinainternetwatch.com) 19
Makers of WeChat App Promise That BlackBerry 10 Version is Coming Soon (techinasia.com) 19
Baidu Looks Overseas Again, Offers Antivirus App in English (techinasia.com) 19
Next-Gen Gaming Consoles Like PlayStation 4 Are Leaving Chinese Players Behind (techinasia.com) 20
Huawei’s Executive Management Structure is Based on Bird Migration (Seriously) (techinasia.com) 21
Better Product Quality Part Of HP's Focus In China (chinasourcingnews.com) 21
Auf Wiedersehen: Media Markt Drops China Business (chinasourcingnews.com) 22
Luxury Cars: The Non-China Chinese Market (siliconhutong.com) 22
Cause What Happens In China Doesn’t Stay In China. (chinalawblog.com) 23
Marketers Heed China's Social Media Explosion (adage.com) 24
China Defends Massive Growth in Military Spending (The Associated Press) 25
China to dismantle bloated rail ministry: sources (Reuters) 25
China's leader says must support privatisation -Xinhua (Reuters) 27
Special Report: Freedom fizzles out in China's rebel town of Wukan (Reuters) 28
Analysis: China's next inner circle (Reuters) 32
China village defies officials to demand democracy (AFP) 34
The rebel Chinese newspaper which dares to challenge the Communist party line (The Telegraph) 35
Before People’s Congress in China, Vows of Change and Raised Hopes (The New York Times) 36
Tensions rise in China’s tiny democracy (The Financial Times) 38
China Opens Parliament With Star-Studded Cast (THE WSJ CHINA REAL TIME REPORT BLOG) 39
“Red descendants” at this year’s “two sessions” (danwei.com) 40
Four Men In Yan’an Sentenced For Selling Stolen Corpses For Ghost Marriage Certificates (beijingcream.com) 41
Chinese ex-police detained while trying to stamp out corruption (NBC Behind The Wall Blog) 42
Yale Brand Wades into China’s Weibo World (The Associated Press) 43
China invokes spirit of humble soldier in effort to improve social harmony (The Guardian) 46
China Backs Tortoise in Race to Protect Endangered Species (THE WSJ CHINA REAL TIME REPORT BLOG) 47
Billionaire Calls on China to Eat Less (THE WSJ CHINA REAL TIME REPORT BLOG) 48
Mitch McConnell Slams ‘Racial Slurs’ by Kentucky Liberals (THE WSJ CHINA REAL TIME REPORT BLOG) 48
Rich New York Woman Gave Up Two Chinese Children She Adopted, Currently Embroiled In Lawsuit (beijingcream.com) 49
Chinese football’s new ambassador: David Beckham (The FT Beyond BRICs Blog) 49
Chinese NPC Rep: “We Must Allow Chinese to Have a Second Child. We Cannot Wait Another Minute.” (tealeafnation.com) 50
How Can a Chinese Woman Born in 1990 Already Be ‘Too Old’ for Marriage? (tealeafnation.com) 51
Business & Economics
Newswire
China Seen Creating Its Own BHP to Boost Purchases Abroad (Bloomberg)
By Bloomberg News - Mar 4, 2013
http://www.bloomberg.com/news/2013-03-04/china-seen-creating-its-own-bhp-to-boost-purchases-abroad.html
A record wave of consolidation in China’s mining industry is creating bigger companies that will have the muscle to compete with the likes of BHP Billiton Ltd. (BHP) for overseas acquisitions.
Even after Chinese domestic mining mergers reached $19.6 billion last year, double the tally for 2011, the government wants to see more. Easier access to capital and less Chinese competition for assets may make companies including China Minmetals Corp. and Aluminum Corp. of China more robust overseas buyers, said Deloitte & Touche LLP.
That’ll help reverse a slump in acquisitions of mining assets outside of China, which fell to a five-year low of $2.9 billion in 2012, data compiled by Bloomberg show. As the world’s biggest importer of iron ore and coal, China relies on foreign sources of the raw materials.
“With stronger and bigger Chinese players emerging, we could see a significant pickup in the volume of overseas acquisitions,” said Richard Tory, Hong Kong-based head of natural resources for the Asia-Pacific region at Morgan Stanley.
China’s mining industry, while one of the world’s largest producers of minerals including gold and tin, is now peppered with thousands of smaller companies. Minmetals, its largest miner by revenue, had assets of $36.6 billion at the end of 2011 -- dwarfed by BHP’s $122.1 billion, according to data compiled by Bloomberg.
Globally Competitive
“China’s mining sector is too fragmented right now,” said Eugene Qian, head of global banking for China at Citigroup Inc., which advised Cnooc Ltd. on its $15.1 billion acquisition of Nexen Inc., the biggest outbound takeover by a Chinese company. “It needs a lot of consolidation to create majors.”
In January, the government said it would promote mergers in nine industries including steel, aluminum and rare earths to create “globally competitive” enterprises, according to a statement by the Ministry of Industry and Information Technology.
The announcement reinforced what’s already begun. Excluding deals between parent companies and their subsidiaries, the largest domestic acquisition last year was Hunan Jiangnan Red Arrow Co.’s $623 million takeover of Zhongnan Diamond Co.
National Champions
“Creating national champions makes sense because mining is very capital-intensive, said Jeremy South, who oversees global mining advisory at Deloitte & Touche. ‘‘It also makes no sense for Chinese companies to be competing with each other for overseas deals.’’
Shenhua Group Corp Ltd. bought China State Grid Corp.’s electric-generation unit for $8.2 billion last year. The Chinese state-owned miner is now studying an investment in Australia’s Whitehaven Coal Ltd. (WHC), two people with knowledge of the matter said. Whitehaven, part owned by Nathan Tinkler, has a market value of A$2.68 billion ($2.7 billion).
An official at Shenhua Group’s press department in Beijing declined to comment. Whitehaven Chairman Mark Vaile said Feb. 21 that the company hasn’t had any recent dialogue with Shenhua.
Other Chinese miners are also searching for deals. Chinalco Mining Corporation International may seek assets in South America, Africa and Asia, Chief Executive Officer Peng Huaisheng said in Hong Kong on Jan. 17. Parent Aluminum Corp. of China was the most active overseas acquirer among Chinese miners in the past decade with $14 billion of deals, data compiled by Bloomberg show.
Deal Hunters
Minmetals could become one of the main Chinese buyers abroad, according to Deloitte’s South. Both Chinalco and Minmetals are state-controlled.
Zhaojin Mining Industry Co., China’s fourth-biggest gold producer, is studying takeovers in South America and other regions and may announce a deal ‘‘in the near future,” Chen He, assistant to the company’s president, said in November.
Two gold companies that could attract Chinese interest are Saracen Mineral Holdings Ltd. (SAR) of Perth and Englewood, Colorado- based Alacer Gold Corp. (AQG), which has assets in Australia and Turkey, according to Troy Irvin, a Perth-based analyst at Argonaut Securities Pty. Their large reserves and production assets typically appeal to Chinese companies, Irvin said. Officials at Saracen and Alacer declined to comment or weren’t immediately available.
“The Chinese see the value of building bigger companies to compete with major mining companies in the world,” said Deloitte’s South.
To contact Bloomberg News staff for this story: Zijing Wu in Hong Kong at zwu17@bloomberg.net; Helen Yuan in Shanghai at hyuan@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net
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