Central Bank Mulls Mechanisms for Prime Lending Rate
News, cover
~The central bank is considering the introduction of the prime lending rate, a reference rate that in many countries indicates the price at which commercial banks lend to their most reliable customers.
~ The central bank, which is called the People’s Bank of China, sought advice from some commercial banks at the end of June and in early July.
~The EO tried to contact the central bank for an interview, but had not received an answer when the newspaper went to print on Friday (July 13).
~ Currently, the central bank is trying to work out a Chinese model for the prime rate, considering the examples of the United States, Canada, Japan, the euro zone, India, South Africa, Hong Kong and Singapore.
~Some commercial banks have already submitted to the central bank their recommendations, and the American model has became the preferred one.
~“It will be an experiment with the prime rate. In the end, the model that suits China needs to be worked out through trials,” a top executive from China Construction Bank told the EO
~The opponents of a Chinese prime rate mechanism say that it’s hard to reach a consensus within the industry because different parts of the country have different economic development situations and the regional differences are very significant.
~Most commercial banks are in favor of the prime rate, which they see as a market-based mechanism.
~ “I think it is a very good mechanism. It can avoid malign competition,” a person working in the planning and finance department at the head office of China Merchants Bank told the EO.
~ If the prime rate mechanism is established, then China will simultaneously have a benchmark interest rate and the prime rate.
Original article: [Chinese]

Coal Price Expected to Stabilize After Recent Falls
News, page 4
~The latest data from Qinhuangdao, the country’s largest coal shipping port, shows that the average price of 5,500 kcal steam coal in the Bohai Area dropped for 10 consecutive weeks, with the per ton price falling by a total of 135 yuan since May 9, to close at 650 yuan on July 11.
~ The National Development and Reform Commission jointly with the railway and transport ministries, the National Energy Administration and the China National Coal Association went to Shanxi and Inner Mongolia with the aim of understanding the operation of the coal market.
~ Several provincial governments have also begun to intervene in the coal market. For example, Henan has canceled the coal price adjustment fund and Shandong has said that it will take action to limit output if coal prices continue to fall.
~ “…the coal price is likely to stabilize and then rebound in the second half of the year,” said Lin Boqiang (林伯强), an energy researcher at Xiamen University, predicting that government intervention will lift economic output.
Original article: [Chinese]

 
Surge in Mainland Applications to Hong Kong Universities
Nation, page 9-10
~ The University of Hong Kong this year received 12,000 applications from mainland students. That’s 16 percent more than last year. Of those applications, 21 came from mainlanders who had finished top of their province’s ranking in the gaokao, or university entrance exam.
~Successful applicants from the mainland say they’re attracted by the international environment, broad curriculum and English-language teaching.
~ Hong Kong universities say that it helps if mainland applicants are optimistic and cheerful so that they can overcome obstacles that they may come across in Hong Kong.
~Most of the mainland students study finance or business management in Hong Kong and work in the city’s banks after graduation.The downturn in the financial industry means that this year’s graduates are now more likely to return to the mainland.
~ Because of differences in culture and lifestyle, many mainlanders are unable to get on with the Hong Kong students.
Original article: [Chinese]

 
HSBC, Citi Trying to grasp Chinese Home Buyers
Market, page 20
~ Chinese banks and their foreign counterparts are now offering preferential interest rates for first-time home buyers.
~ Aside from matching the 15 percent discount which has been provided by Chinese banks, foreign banking giants such as Citi and HSBC, are also reducing transaction fees for first-time home buyers.
~ The preferential rate for mortgages is an indicator that banks are predicting an imminent recovery of China’s property market as home prices in ten large cities rose slightly in June, according to data released by the China Index Academy.
~ International banks are more enthusiastic about attracting Chinese home buyers because, in the words of one unnamed Chinese bank employee, this might represent their best opportunity since Chinese banks are showing less interest in mortgage lending.
Original article: [Chinese]

 
Ctrip’s Aggressive Growth
Corporation, page 25
~ Ctrip, China’s leading online tourism service provider, plans to spend $500 million on a marketing campaign. That’s equivalent to around 3.2 billion yuan, which is almost triple the company’s 1.08 billion yuan profit in 2011.
~ The $500 million will be mainly used to provide coupons and discounts.
~ Before 2009, Ctrip enjoyed an annual net profit margin of around 30 percent for almost ten years, but the online travel sector has since become highly competitive.
~ In 2010, Taobao entered the market; in 2011, Tencent bought 16% of Elong for 84.40 million yuan; also in 2011, retailers 360buy and Suning began to provide online booking services for hotels and air tickets.
~ “If we invest $500 million, we’ll have less profits but much bigger sales volumes. The market volume is fixed. You can imagine, if Ctrip gets more, it means our competitors, Elong and Mango will have to lose,” said Ctrip vice-president Tang Lan (汤澜).  
Original article: [Chinese]