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Issue 625 24-06-2013
Summary:Summary: Heavy pollution in Hebei, Alipay’s new investment platform, energy giant inks financing deal with insurance groups


Highlights from the EO print edition, No. 625, June 24, 2013

State Energy Giant Inks Financing Deal with Insurance Groups
Page 1, News
~ Despite PetroChina's gas and pipeline division registering losses of over 2 billion yuan in 2012, the company is still able to find investors interested in the sector.
~ On June 14, PetroChina inked a deal with Taikang Asset Management Corp. Ltd (泰康资产管理有限责任公司), a subsidiary of Taikang Life Insurance Corp., Ltd. (泰康人寿) and Beijing Guolian Energy Industry Investment Fund (北京国联能源产业投资基金) to establish a joint venture called PetroChina United Pipelines Company Limited (中石油管道联合有限公司).
~ Taikang AMC is leading a consortium of insurance companies to invest 36 billion yuan for a 30 percent stake in the JV and Beijing Guolian is investing 24 billion yuan for a 20 percent stake in the new company. Each of the parties in the joint venture has agreed that they will not withdraw from the new company by way of equity transfer or otherwise for a period of ten years.
~ The new company will be involved in the construction of oil and natural gas pipelines.
~ Investors will earn a return of 6.2 percent for the first two years and then 6.5 percent a year for the following eight years. After 10 years, PetroChina will have the right to buy out the other two investors if it so wishes, according to what people familiar with the transaction have told the EO.
~ The fact that insurance companies and not commercial banks have entered into the JV with PetroChina is an indication of the pressures that Chinese banks are under and the regulations that restrict the kind of loans they can offer.
~ It's possible that this kind of financing arrangement could be pursued by other companies looking for medium- and long-term financing in the future.
Original article: [Chinese]

NDRC Begins Nationwide Inspection of Local Government Financial Platform Borrowing

News, page 1
~ The National Development and Reform Commission (NDRC), China's top economic planning agency, has launched a new round of inspections into the borrowing practices of local government financing platforms (LGFP) around the country. The economic regulator plans to further tighten the restrictions that apply to financing platforms that are seeking to lend money or issue bonds.
~ On June 20, an official from the relevant department of the NDRC told the EO that an examination of the procedure for approving requests from financing platforms seeking to issue bonds had already begun. On orders from the NDRC, securities companies and LGFP are also conducting internal audits into their practices.
~ During the second quarter of 2011, the NDRC halted all new issuing of bonds. This new investigation marks a second attempt to slow down the issuing of bonds.
Original article: [Chinese]

Heavy Pollution in Hebei
Nation, Page 9
~ Hebei Province isn’t only dealing with serious poverty, but also serious pollution. In June, the Ministry of Environmental Protection announced an air quality report covering 74 cities. Hebei Province, which includes Shijiazhuang (石家庄), Tangshan (唐山), Xingtai (邢台), Handan (邯鄲), Baoding (保定) and Hengshui (衡水), was found to have critical levels of pollution.
~ The Hebei Province Environmental and Resources Protection Committee is concerned since Hebei Province consistently has many cities among the most polluted list.  After several media outlets did reports on the increase in lung cancer rates due to plastic pollution, the city of Shijiazhuang launched a five-year-plan to clean up pollution. The city of Tangshan has taken one of the most significant steps by shutting down199 enterprises within 21 days that were found to be the heaviest polluters.
~ In January, Hebei started to implement tighter standards to evaluate air quality by measuring PM2.5, ozone (臭氧) and carbon monoxide (一氧化碳) in addition to PM10.  
~ Since the Beijing Olympics, the pollution situation has become worse and worse for Hebei, as many highly polluting enterprises were moved there from Beijing in order to mitigate air pollution in the capital.  
~ The main reason for air pollution in the Beijing-Tianjin-Hebei region is coal burning. From 2006 to 2011, coal consumption increased 36 percent.  
Original article: [Chinese]

Alipay’s New Investment Platform
Corporation, page 27
~ When the online payment platform Alipay introduced Yu’ebao (余额宝) to the financial market, it ruffled some feathers and was reprimanded by the China Securities Regulatory Commission (CSRC). 
~ The service allows users to invest through the private Tianhong fund using money from their Alipay accounts. The service is supposed to offer a “personal finance center.” However, the CSRC has told Alipay that it’s so far failed to go through all the proper registration procedures. CSRC has said though that it welcomes the service and just wants to ensure it’s made safe and regulated for investors.
~ Within just a few days of being launched, Yu’ebao’s users numbered in the millions and attracted interest from several large funds. It’s so far collected over 600 million yuan in investment.
~ Alipay says it hopes users can manage their financial assets and payments via this system.
Original article: [Chinese]



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