Weber Shandwick Daily China News Brief: April 19th, 2017

In Today’s Brief:

• IMF raises forecasts China’s 2017 and 2018 growth 

• Belt and Road summit to be attended by 28 heads of state

• United CEO met Chinese officials over dragged passenger

• Sources: Nation to ease yuan outflow controls

• Electric automakers buck slowing policy momentum

• CMC invests in Hollywood talent agency

IMF raises China’s 2017 and 2018 growth forecasts

Source: Xinhua

The International Monetary Fund (IMF) yesterday raised its estimate for China’s 2017 growth to 6.6%, and its forecast for China’s 2018 growth to 6.2%. In its report, the IMF cited China’s “policy preference for maintaining relatively high GDP growth,” but warned of the consequences of unbalanced growth in the medium term. “The resulting persistent resource misallocation, however, raises the risk of a disruptive adjustment in China in the medium term,” which could also be exacerbated by continued capital outflows, the report said. 

Previously the IMF had estimated that China’s economy would grow by 6.5% in 2017, and 6% in 2018. The new forecasts, while higher, would equate to a slowdown from current growth rates.

Belt and Road summit to be attended 28 heads of state

Source: South China Morning Post

Heads of state from more than two dozen countries will attend a major summit in May to discuss China’s new Silk Road initiative, said foreign minister Wang Yi, although there is a notable absence of leaders from major Western countries. The summit, scheduled for May 14 and 15 in Beijing, will see China push ahead with President Xi Jinping’s flagship “Belt and Road Initiative” to launch a series of infrastructure projects across Asia, Europe and Africa. Among the confirmed heads of state are Russian President Vladimir Putin, Philippine President Rodrigo Duterte, Turkish President Recep Tayyip Erdogan, Indonesian President Joko Widodo, and Myanmar’s leader Aung San Suu Kyi. The attendance list for the summit is marked by the notable absence of heads of state from major Western countries such as the United States, the United Kingdom, Australia, Germany and Canada.

“Today’s world requires an open and inclusive platform, to gather our resources and to face the challenges of globalization,” Foreign Minister Wang Yi said while providing the attendance update. “The ‘One Belt, One Road’ initiative was born against this background,” he added, using the former name for the plan.

United CEO met Chinese officials over dragged passenger

Source: Reuters

The head of United Airlines met with the Chinese consulate in Chicago over the incident in which the passenger Dr. David Dao was dragged off a United flight, but it was too early to tell if business in China had been hit by the event, the company said during its first quarter earnings all. On the call, United CEO Oscar Munoz said he would have "further conversations with customers and related governmental officials" in an upcoming trip to China that had been planned prior to the incident. United did not say when Munoz had met with the Chinese consulate officials.

United has about 20% of total U.S.-China traffic and a partnership with Air China, the country's third-largest airline. Shares of United Continental Holdings Inc. were down 4.12% in afternoon trading following the call.

Sources: Nation to ease yuan outflow controls

Source: South China Morning Post

China has taken a small step to relax its controls over yuan outflows, sources state, reflecting official confidence over the receding risk of capital exodus and the rallying value of the yuan. After the policy relaxation, banks can now freely process outbound yuan payment and remittance requests from corporate and individual clients, which will help boost liquidity in offshore yuan markets. It was the first relaxation of outbound capital control in nearly two years, the sources said.

China imposed capital account measures in late 2016 to curb money outflows, but the measures are widely viewed as counterproductive to China’s long-term strategy of boosting the yuan’s global use, and have suffocated the development of offshore yuan markets. Yuan deposits in Hong Kong at the end of 2016 dropped 35.8% from a year earlier to RMB 546.7 b (USD 79.4 b), but banks in Hong Kong have started to seek yuan deposits again in recent weeks as the yuan exchange rate has stabilized, and Chinese Premier Li Keqiang said in comments published on Tuesday that market confidence in the yuan had “significantly improved”.

Cnooc shakes up management

Source: The Wall Street Journal

Chinese oil-and-gas driller Cnooc shook up management following the resignation of Chief Executive Yang Hua, one of China’s best-known oil executives globally. In a filing Tuesday with the Hong Kong stock exchange, Cnooc said Mr. Yang—who had steered the company through a period of aggressive cost-cutting—is remaining as chairman, while President Yuan Guangyu takes over as CEO and Vice President Xu Keqiang as president. The company didn’t give a reason for the shake-up, and Mr. Yang, a Cnooc veteran who had been CEO for less than a year, couldn't be reached. 

The company says Mr. Yang was born in 1961, making him short of standard retirement age for officials and state-owned company executives. Many top oil executives go on to serve as senior officials in China’s government after leaving major state-owned companies; Mr. Yang’s predecessor as CEO, Li Fanrong, is now deputy head of China’s National Energy Administration.

Electric automakers buck slowing policy momentum

Source: Reuters

China's auto industry is charging ahead with aggressive plans to electrify cars, even as policymakers scale back related subsidies and consider suspending sales quotas for plug-in cars. On the eve of this Friday’s Shanghai Motor Show, figures show that while green energy car sales have risen dramatically on the back of government policies, making China the world's leading market in this segment, electric cars still make up less than 2% of China's overall auto market of 28 million vehicles sold last year.

Policymakers say reducing subsidies gradually will wean automakers off government support and create a self-sustained market for electric vehicles by 2020. Either way, industry executives state that they expect China will insist on more electric vehicles, and to be ready, they must invest in developing those vehicles now. "The requirements whether they get changed or adjusted or whatever, the bottom line is clear that electrification is going to play a bigger and bigger role… in China and other markets as well," Ford Motor Co. CEO Mark Fields told reporters at a pre-show event this month.

CMC invests in Hollywood talent agency

Source: Xinhua

China Media Capital, an investment fund in media and entertainment, has bought a minority stake in Creative Artists Agency, the world’s leading entertainment and sports agency. Li will join CAA’s board of directors, and the two partners will also form a Chinese media and entertainment joint venture called China CAA as a part of the collaboration deal, said a joint statement. CAA China, majority-owned by the US partner, will focus on talent representation and endorsement, focusing on sports, digital media, music and content production.

“Our deep partnership will benefit the development of both the US and Chinese markets, with CAA helping CMC enter the US market and CMC assisting CAA to upgrade its agency business in China in today’s digital world,” CMC Chairman Li Ruigang said in an announcement yesterday.

The content of this news report is a summary of publicly available news articles from domestic Chinese media in both Chinese and English. Weber Shandwick makes no comment or claims about the accuracy of information in these articles. The views and opinions reflected in these articles do not necessarily represent those of Weber Shandwick.

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