China Eastern to expand share sale

China Eastern Airlines will raise 7 billion yuan, more than double the amount originally planned, by selling shares to its State-owned parent company.

The plan is the latest government effort to rescue the beleaguered airline after it reshuffled the company's top executives more than two weeks ago.
The Shanghai-based carrier will sell 1.44 billion Shanghai-traded A shares at 3.87 yuan apiece and 1.44 billion Hong Kong-traded H shares at 1.00 yuan to its State-owned parent company, China Eastern Air Holding Co, in exchange for the new capital, the company said yesterday in a notice to the Hong Kong Stock Exchange.
The money raised will increase the airline's cash balance and lower its debt-to-asset ratio by 8.36 percentage points to 90.13 percent.
China Eastern earlier posted a net loss of 2.29 billion yuan in the first nine months of 2008. Its net operating cash flow was 1.66 billion yuan, far short of the 12.8 billion yuan needed to repay its debts.
"The company's operating and financial condition is under enormous pressure. The continuous fluctuations in global financial markets make it extremely difficult for the company to obtain financial support in the short run," the airline said in a statement.

Trading in China Eastern's shares on the Hong Kong and Shanghai bourses, suspended since Dec 24, resumed yesterday. The company's A shares closed at 4.49 yuan, down 3.65 percent from the closing price before the suspension, while its H shares lost 8.53 percent to HK$1.18.
"The capital injection should help improve China Eastern's liquidity in the short term," said Li Lei, an aviation analyst with CITIC China Securities. But what matters to the company's longer-term health will be market demand, he said.
China Eastern announced earlier this month that it would receive a 3-billion-yuan cash injection by selling shares to its parent company shortly after the government injected the same amount of funds into Guangzhou-based China Southern Airlines, also one of the three major State-owned carriers, including Air China.
Guangzhou Daily yesterday cited an unnamed source as saying that the government will inject 9.5 billion yuan into Air China. But Rao Xinyu, Air China's board secretary, denied the report, saying she has not heard such information "up to now".

Chinese airlines booked a combined net loss of about 4.2 billion yuan in the first 10 months of 2008 because of soaring fuel prices earlier this year and falling demand caused by the economic slowdown.
Earlier this month, Liu Shaoyong, former chairman of rival China Southern, took over the helm at China Eastern, and Ma Xulun, former deputy general manager of Air China's parent company, was named president of the ailing airline.

Mixed forecast for China's real estate in 2009

The China Real Estate Index Academy released a report on Dec 30 which forecasted three trends for the real estate market in 2009:

Turnover will rebound when prices are reasonable

The transaction volume in the real estate market will rebound in 2009 as prices are adjusted to more reasonable levels.

According to the report, many residents are willing to buy self-use houses but are blocked by high house prices. It is suggested that developers should adjust prices and enhance promotions, since real estate markets are very sensitive to price changes.

Furthermore, favorable polices also prop up the housing market. On Oct 22, 2008, the central bank announced that the down payment threshold would be lowered from 30 percent to 20 percent. It also allowed financial institutions to offer favorable policies to support those making their first home purchase for self use and those buying self-use housing for improving living conditions. In addition, the loan interest rate has been cut five times since September.

Looking ahead, the report said that second-home buyers will play an important role in the housing market of 2009, since more favorable policies can be expected to reduce the cost of transactions.

Investment will slow but financing moves can boom
Many industry flagships have confidence in the long-term development of the real estate market but they are not optimistic in the short run and will cut investment plans accordingly.

According to the National Bureau of Statistics, real estate investment growth slowed to 22.7 percent in the January-November period of 2008, down from 24.6 percent in the first 10 months.

Investment growth will slow down further in 2009 but can remain positive.
With policy props, the corporate bond market as well as corporate loans will boom in 2009, since their returns are higher than that of deposits and the risks are limited. The capital-intensive real estate industry should make good use of this opportunity to raise funds through issuing bonds.

However, some small and medium-sized enterprises will continue to find it difficult to raise funds from the equity market and financial institutions. Therefore, following the jungle law, the real estate industry will be further integrated in 2009.

Flexible policies to prop up market in 2009
The government will make more efforts to "rescue the market," as the property sector is one of the biggest drivers of China's domestic consumption, contributing one-tenth of the gross domestic product.

The measures imposed in 2009 will be more flexible and prudent, including reducing taxes and fees at the transaction stage, lowering loan interest rate and offering tax rebates for home buyers.

The government will try to stabilize the housing price and rescue the market if prices dive, including using fiscal revenue to buy low-cost houses.

China SOEs see double-digit profit decline by Nov

Profits of China's state-owned enterprises declined for four consecutive months since August, due largely to high stockpiles and weaker demand during the global financial crisis.

State-owned enterprises nationwide saw 19.09 trillion yuan (US$2.79 trillion) in business revenues between January and November, a growth of 20.3 percent year-on-year. But the growth was 3.1 percentage points lower than the January-October period.

The total included 1.2 trillion yuan in profits, down 15.7 percent from the same period last year. The decline rate was 7.4 percentage points bigger than the January-October period.

The downward trend was led by the power, nonferrous metal and automotive sectors.

The slowdown for heavy industries was not as serious as light industries, but the impact from the financial crisis has been transferred to heavy industries at a quicker pace than expected.

In August, when light industries had output value growth slowed to 11 percent, the heavy industry still kept a growth of more than 13 percent. However, the output value growth for heavy industries slowed to 7.3 percent in October, then to 3.4 percent in November.
An unsatisfactory performance by the light industry helped diminish demand from downstream sectors for heavy industrial products.

The third quarter of next year, state-owned enterprises would begin to step out of the shadow of the financial crisis, acording the China gouvernment.
An unsatisfactory performance by the light industry helped diminish demand from downstream sectors for heavy industrial products.

Moreover, upstream enterprises rushed to buy more raw materials when prices rose weeks earlier and it took time for them to eat up those overstocks.

Recent government economic stimuli, more money will go towards capital construction, would help heavy industries to recover faster than the light industry.

After 10 years of discussion and planning, China will launch fuel tax reforms in the New Year, part of an effort to streamline its price systems.

It will be just the latest market-oriented major policy move that China has undertaken in its three decades of reform and opening up.

Last week was the 30th anniversary of that drive, and during those three decades gross domestic product (GDP) grew by more than 9 percent on average annually, a rare feat in global economic history.
But the celebration of these achievements was overshadowed by the world financial crisis, which is deepening and spreading globally, devastating financial systems in developed countries and darkening world economic prospects.

Many economists and commentators have expressed worries that China might overreact to the crisis and veer away from reform and opening up. For example, this point of view was expressed by Fred Hu of Goldman Sachs, who wrote in the Wall Street Journal Asia of the "danger" that "Beijing is extracting the wrong lesson from recent events at home and abroad."

Judging from China's recent macroeconomic moves, especially speeches by its top leaders, it is unlikely that China will change course.

At a ceremony on Thursday marking the 30 years of reforms, President Hu Jintao attributed all the country's achievements in economic and social development to the policies, which he vowed to continue.

"The experience of the past three decades tells us," Hu said, that "the decision to adopt reform and opening-up has been in agreement with the people's thoughts, compatible with modern tides, and completely right."

The just-concluded Central Economic Work Conference stressed that China must stick to the basic principles of building a socialist market economy and opening up to the outside world.

China deeds match its words. In November, when the economy felt the chill of the financial crisis, the State Council decided to invest 4 trillion yuan (about US$588 billion) by 2010 to stimulate domestic demand and maintain GDP growth at 8 percent.

China's economy heavily depends on exports, and so far the most serious impact of the crisis on China is shrinking external demand. The government has recognized the danger of over-reliance on exports and has been making efforts to transform the structure of economic growth.

Seen in this light, the crisis is more of an opportunity than a risk. The freshly promulgated policies indicate that the government is paying serious attention to stimulating domestic consumption, especially in rural areas. This move can also narrow the gap between rural and urban areas and income groups.

There is no sign that China will let up on reform. For example, the fuel tax reform, which is to be implemented on January 1, is actually a bold attack on the last two price strongholds that are still under the strict control of the government: fuel and electricity.

Farmers get right use of land

Farmers can transfer their land-use rights under a new policy to boost agricultural production and rural incomes, according to a landmark policy.

The Communist Party of China (CPC) yesterday unveiled its broad policy document - approved by a plenary session of the CPC Central Committee on Oct 12 - to revitalize the countryside.
Rural residents, who number more than 730 million according to the 2006 census, have ownership of the produce of their land but not the land itself, and are barred from trading land-use rights under current laws.
The document said markets shall be set up to allow farmers to sub-contract, lease, exchange and swap their land use rights, or join share holding entities with their farmland.
Such transfers of land-use rights must be voluntary with adequate payment and in accordance with the law, the CPC Central Committee said.
Under current law, farmland is collectively owned, but given to farmers in small plots under long-term leasing contracts.
Local governments have seized rural plots to sell to factories and property developers, paying compensation to farmers.
Thousands of protests against land grabs every year have alarmed Beijing, prompting discussion on ensuring that farmers have greater security in land rights, if not outright ownership.
Such land transfers have already been taking place, formally and informally, in recent years.
When the document was being drafted, some argued that the new policy might create a few landlords and many landless farmers who will have no means to make living. Another concern was that arable land could be used for non-farming purposes, threatening the country's food security.
To allay such fears, the document said that the country would have in place "the most stringent farmland protection system" and urged local authorities to firmly safeguard the 1.8 billion mu (120 million hectares) deemed as a minimum.
The area of arable land shrank 610,100 mu last year to 1.826 billion mu, only slightly above the government's set target.

The CPC document also:
- said the government will strive to double the per-capita disposable income of rural residents from the 2008 level to more than $1,200 by 2020.
- urged more support be given to hasten the development of special rural cooperatives and turn them into modern agricultural organizations so that farmers are competitive in the domestic and overseas markets.
- promised to revise laws to regulate and push forward rural land management reform in "a normative manner".
- said the government wants to spend more on rural infrastructure and increase crop production. Farmers are encouraged to collectively raise cotton, sugarcane and potatoes in areas with suitable resources and environment, as well as raise production of edible-oil plants. The plan also aims to ensure grain output stays above 500 million tons until 2010, and reaches 540 million tons by 2020.
- loans and subsidies will be made available to companies which process produce such as frozen vegetables.

The rights and interests of migrant workers are also given priority in the document, which promised the CPC Central Committee will take effective measures to ensure they have same access to social welfare as urban residents in areas such as education, public health care and housing.
The Central Committee said it would further reform the household management system to reduce residency requirements for migrants working in more small- and medium-sized cities.
This way, ex-farmers who live in towns and cities with stable jobs could become urban resident

LA CHINE DANS UN PAYS TROP GRAND

Lin Yutang écrivait déjà, en 1937 : «La Chine aurait préféré être comprise plutôt que d'être qualifiée de grande, et cela aurait mieux valu pour tout le monde.»

Qui donc nous expliquera la Chine autrement que par le «péril jaune» ? Qui pourrait en être l'interprète ? «Certainement pas les sinologues», assurait Lin Yutang, qui se dépensa pour faire aimer son pays à l'étranger
A peine sortie des années Mao, la République populaire, proclamée le 1er octobre 1949, s'engage au pas de charge sur la voie du capitalisme. La Chine rêve de son avenir, mais n'en oublie pas pour autant son passé et reste très attachée à ses traditions.
Les Chinois viennent de célébrer la fête de la Lune et les Chinois baignent dans leur histoire. Les gens s'offraient des «gâteaux de lune» dont la pâte épaisse renferme, outre des graines de sésame, des billets de voeux rappelant une coutume datant du XIVe siècle mais encore d'actualité : espionnés de près par les agents des Yuan, dynastie d'envahisseurs mongols, le peuple de la capitale cachait dans ces gâteaux des petits papiers de rébellion contre le joug impérial.

En Chine, il convient d'observer la célébration des anniversaires et des non anniversaires, ainsi que la non célébration des anniversaires. Gavés quant à eux de célébrations officielles, les Chinois préfèrent leurs liesses populaires.

Nous autres, Occidentaux, nous nous gargarisons d'avenir, quand les Chinois baignent dans leur histoire. Ils la connaissent par coeur, au sens propre, avec la même précision et la même innocence que s'ils avaient été enfants sous une très ancienne dynastie.

Guidés et protégés d'un séisme à l'autre par leur long et lourd passé, les Chinois ne s'étonnent de rien. Depuis vingt siècles, ils ont vu passer ministres et souverains attachés à réformer leur pays. Le monde extérieur avait le tort de ne pas être chinois : comment respecter au nord, des gens vêtus de peaux de bête ; à l'ouest des nomades nourris de viande crue ; à l'est, un pays de nains ; au sud, des sauvages incultes ? Tandis qu'à la fin de l'empire, les canonnières de l'Occident enfonçaient l'«homme malade de l'Orient», les princes mandchous (Qing) s'accrochaient à la grande tradition du «non agir» et campaient sur un constat érigé en principe : «Que la réalité soit la réalité», le fameux «She Shi Qiu Shi», «Chercher la vérité dans les faits», dont Deng Xiaoping fera cent ans plus tard la clef de sa politique pragmatique.

Au printemps de 1989, tandis que les manifestants de Tian'anmen s'époumonaient aux cris de «Démocratie !», un jeune homme fit irruption sur la place avec ce slogan : «Pourquoi la Chine est-elle encore pauvre ?» Oui, pourquoi les inventeurs de la boussole, du gouvernail, de l'imprimerie, de la poudre, de la ciboulette, sont-ils à la traîne derrière les pionniers de l'automobile et de l’informatique ?

Ce monde rural entre dans l’OMC au prix d'acrobaties défiant toute dialectique. A peine sorti des années Mao, quand l'annuaire des téléphones était secret d'Etat, il est devenu le plus gros consommateur mondial d'appareils portables. Pétrie de taoïsme, de confucianisme, puis de bouddhisme, la Chine doit retrouver sa vocation originelle d'ouverture pour sortir de cinquante années de glaciation communiste, mais elle fonce sur la voie d'un capitalisme sans bornes.


Aimer la Chine avant qu'il ne soit trop tard
Il y a la Chine officielle : sérieuse et austère, elle a le sens de l'Etat. Et puis il y a cette autre Chine, celle qui veut faire fortune vite. Elle est boulimique et excessive.
«La Chine qui va», forte de son milliard et demi d'habitants, est en train de vivre cette aventure unique de la plongée dans la modernité du quart des habitants de la Terre. C'est la Chine de jeunes aux cheveux rouges et au piercing dans l'arcade sourcilière, y compris dans le fin fond du Ningxia ou du Shandong ; c'est la Chine de l'hyper capitalisme où les inégalités s'accroissent ; cette Chine où chacun rêve de s'enrichir et table sur le fait que son enfant vivra mieux que soi (Ah ! si nous autres, Européens, pouvions en être là !) ; cette Chine où chaque jour il y a cinquante mille abonnés supplémentaires au téléphone portable et où un gratte-ciel de cent étages se construit en quatre fois moins de temps qu'il n'en faut en France.

La Chine, qui est déjà l'atelier du monde, deviendra-t-elle l'eldorado des entreprises occidentales ? Là également, ce n'est pas si simple. Car la Chine sait fort bien que, dans tout marché, le pouvoir est du côté de celui qui achète et consomme. D'atelier du monde qu'elle est aujourd'hui, elle pourrait fort bien passer au stade d'usine du monde pour les voitures et les portables et, un peu plus tard, de laboratoire du monde pour les inventions, alors que pendant des millénaires elle les a négligées au point de se les faire voler. Nous, les Occidentaux, nous jouons gros...

Mais surtout, que sera donc la Chine dans vingt ans ? L'auteur de ces lignes est bien incapable de répondre, si ce n'est qu'il conseille à chacun d'aller en Chine très vite, avant que, peut-être, il ne soit aussi trop tard.

Considerez au plus vite à quoi ressemble ce grand dragon. A coup sûr, vous aimerez.

CE PAYS CONTINUE D'ATTIRER LES INVESTISSEURS DU MONDE ENTIER

Le potentiel des entreprises étrangères est énorme. Ne pas être présent, c'est passer à côté de nombreuses opportunités de développement.Cependant la Chine est d'approche complexe ; y réussir son développement commercial et industriel exige, plus qu'ailleurs, de comprendre et de maîtriser les spécificités locales.

Certaines difficultés ne sont pas à sous-estimer.

Du projet à sa réalisation en Chine
Nous vous proposons "Une trajectoire gagnante".

Vous voulez : Connaître un marché, développer une activité - Valoriser un savoir-faire - Implanter une entité industrielle ou commerciale.

Notre vocation: Accompagner les opérations des entreprises en Chine.

Nos services:
Concrétiser les projets en phase avec la stratégie de l’entreprise et identifier les facteurs qui
sécuriseront le lancement de l’activité;
Préparer les éléments contractuels;
Accélérer les projets en cours, si l’entreprise ne dispose pas de ressources nécessaires.

Notre savoir Faire :
une expérience de plus de 15 ans en négociation, audit, transfert de technologie, fusion - acquisition et autres transactions stratégiques et opérationnelles

Nos Expertises :
La faisabilité du projet - Le choix du partenaire - L’environnement juridique (propriété intellectuelle, situation immobilière,…) - Les composantes financières et fiscales - La rédaction des statuts et des contrats - Le support aux négociations - Le suivi du processus d’approbation, des formalités d’enregistrement et le démarrage de l’opération. Les relations commerciales, le droit des contrats, des sociétés, du travail, de l’immobilier, et de la propriété intellectuelle.

Contacts :
CD@C [*] Conseil Développement en Chine
Christian DIDIER
+33 6 72 48 26 75

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