Shaanxi Coal $1.6 Billion China IPO to Be Biggest in 2 Years

Shaanxi Coal Industry Co., China’s third-largest producer, plans to raise 9.83 billion yuan ($1.6 billion) in an initial public offering that’s set to be China’s biggest in more than two years.

China, the world’s largest IPO market in 2010 with a record $71 billion raised, hasn’t had an IPO since October 2012 as the securities regulator cracked down on fraud and misconduct among advisers and issuers. Regulators announced the plan to end the freeze on Nov. 30. More than 700 companies have applied to sell shares and are waiting for approval from the China Securities Regulatory Commission.

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Benjamin Haas, Bloomberg News via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/xzLm30R39FU/

China sets targets for curbing air pollution

China has set new targets for its provinces to reduce air pollution by 5 to 25 percent, state media said late on Tuesday, underscoring the government’s concern about a source of public anger.

China regularly issues directives to try to tackle air pollution in major cities, but these have had limited effect.

Former health minister Chen Zhu said air pollution in the country causes premature deaths of 350,000 to 500,000 people yearly, state media reported on Tuesday. Chen wrote the article in a December issue of the Lancet medical journal.

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Sui-Lee Wee, Reuters via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/QL1LjDogffQ/

Guardian Website Blocked in China

The British newspaper The Guardian said on Wednesday that its website had been blocked in China, although the newspaper said it did not know the reason access to the site had been curtailed.

China has blocked the websites of other overseas-based news organizations, including those of The New York Times and Bloomberg News, doing so after they ran exposés on the wealth of the country’s leaders. Recently, it unblocked the websites of The Wall Street Journal and Thomson Reuters after they had been shut down for more than a month.

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Gerry Mullany, New York Times via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/D2r-ERKAG3g/

China’s 2013 Shale Gas Output Rises to 200 Million Cubic Meters

Shale-gas production in China, holding the world’s biggest shale reserves, surged by more than five times last year to 200 million cubic meters, according to the Land and Resources Ministry.

PetroChina Co. (857)’s Changning-Weiyuan and Fushun-Yongchuan areas, along with the Fuling block operated by China Petrochemical Corp., known as Sinopec Group, have built new production capacity of 600 million cubic meters, the ministry said in a statement on its website today. Output was about 30 million cubic meters in 2012, according to Bao Shujing, a director at the ministry’s geological research bureau.

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Jing Yang, Bloomberg News via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/52lW3yAn040/

China aims to ban smoking in public places by end of the year

China aims to impose a nationwide ban on smoking in public places this year, as authorities move to stamp out a widespread practice that has taken a severe toll on citizens’ health.

China, home to some 300 million smokers, is the world’s largest consumer of tobacco, and smoking is a ubiquitous part of social life, particularly for men.

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Megha Rajagopalan, Reuters via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/IE0pAZE_EQw/

The Prospect of the Iran Nuclear Issue and China-Iran Economic Relations

Signing “Joint Plan of Actions” on November 24 certainly marks a major step in resolving the Iran nuclear issue. Interestingly and even ironically, it was generally highly praised in China while complicatedly responded to in the United States. Albeit the optimistic atmosphere, it is still doubtful whether the progress can be sustainable. And China, together with the international community, will have to be prepared for worsened scenarios.

Jin Liangxiang

It is true that the interim deal did achieve something. According to the deal, Iran will have to stop enrichment activities beyond 5% purity, freeze installation of new centrifuges, dilute half of its stockpile of 20% enriched uranium and open sensitive facilities for inspections. Or to put it another way, the other parties had been able to stop the advancement of Iran’s sensitive nuclear capability and to make Iran’s nuclear program more transparent.

In return, the West agreed to remove some modest sanctions, including the release of some of Iran’s overseas assets and the removal of sanctions on Iran’s trade of aircraft parts and metals.

A breakthrough refers to substantial progress in the sticking points, which also implicates that the follow-up process will be much easier than the previous one. Judging by these standards, the deal is far from being a breakthrough since it neither addressed the question what kind of uranium enrichment capability Iran can have nor touched the core of the sanctions against Iran. The latter in particular will decide the prospect of Iran nuclear issue to a great extent.

Among all the sanctions passed by the US against Iran, the ones on Iran’s oil and financial sectors are most biting. The oil sanctions reduced Iran’s oil export from 2.5 million barrels a day to 1 million barrels a day in 2012. The sanctions on Iran’s financial sector even caused the collapse of Iran’s international trade by separating Iran from the international market.

Judging by the throat-cutting nature of sanctions in the two areas, any agreement without removal of these sanctions does not actually make sense for Iran, and any progress without sufficiently addressing Iran’s major concerns cannot be sustainable. Iran’s hardliners can easily sabotage such positive trends.

But can the US remove these sanctions? The possibility, though cannot be excluded, yet truly should not be overestimated. It is actually not a problem between the US and Iran but a domestic one of the US. Barack Obama and John Kerry might be able to get concessions from Iran on the negotiating table but not necessarily able to get what they want at home.

US domestic politics about this issue is too complicated. The time of 34 years has proved to be too short to heal Americans’ psychological trauma of the hostage crisis though the US side also hurt the feelings of Iranians in many events. Evidences are numeral indicating that the US congress has had distorted logic while dealing with any Iran issues as a result of the psyche. Nevertheless, the hostility of the US Congress is also enhanced by anti-Iran Jewish lobbyists.

Shortly after Hassan Rouhani, the famous moderate Iranian politician, was elected as Iran’s new president, the US congress passed an act with new additional sanctions against Iran in late July 2013 while the world was expecting a US-Iran rapprochement; and shortly after the interim agreement was signed on November 24, the US congressmen began their new efforts to push for new sanctions instead of keeping the agreement commitments to hold off new sanctions. They illogically asked why they should not continue since the sanctions worked to push Iran to the table.

The White House expressed explicitly that it would veto such sanctions bill, if passed, in order to keep its commitment. It is easy to veto a new sanction, but can the lamb-ducked While House ask the congress to remove the sanctions on Iran’s oil and financial sectors? Judging by the current distorted logic of the mindset of the congress, the possibility is low.

US sanctions against Cuba might be cited in this regard. Cuba is another country, the US policy toward which is emotional. It seems that the US will not remove the sanctions against Cuba until the Castro brothers leave though the UN general assembly passed resolutions in 22 consecutive years demanding the US to remove the sanctions against Cuba, which have lasted more than half a century.

Iran might be a little bit different from Cuba. Despite animosity, quite a number of decision makers believe that the US should positively approach Iran so as to get Iran’s assistance in dealing various Middle East problems. But it is still doubtful whether the strategic value of Iran can override the widely held anti-Iran psyche.

As a closely relevant party, China will have to be prepared for bad weather while continuously working to promote confidence between the two. Progress of the nuclear issue cannot be described as breakthrough, and US-Iran relations cannot be regarded as stable so long as the US is not able to remove the core sanctions against Iran.

It is in China’s interests to keep the nuclear dispute under control and to promote reconciliation between the US and Iran. As a meaningful partner to both, China has been carefully managing the relations with the two for long due to their hostility. Therefore, China is a victim rather a beneficiary.

That’s not the full story. As a result of the hostility, the danger of another war has been looming in the region. If that happens, China’s interests of maintaining stable supply of energy and stable market of products will be seriously undermined.

Beijing also has reasons to be well aware that its companies should be prudent in increasing business efforts in Iran though such efforts do benefit not only China but also Iran’s quagmire economy and the livelihood of Iranian people. And worsening of US-Iran relations as a result of Iran’s dissatisfaction of the unbalanced concessions will likely put Chinese companies in a more difficult situation.

Dr. Jin Liangxiang is a Research Fellow at the Shanghai Institute for International Studies.

Jin Liangxiang, a Research Fellow with SIIS via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/077U0EFmW1s/

The Internationalization of the Renminbi and the Role of the Euro

With the official launching of the Shanghai free-trade zone (FTZ) at the end of September the Chinese government has set the country off an ambitious plans for economic and financial reforms. If successful after the three-year test period, the FTZ could pave the way – among other things – to the convertibility of the renminbi, creating thus an alternative reserve currency to the dollar.

In an ironic twist of history, the FTZ was launched only a few weeks before the ‘shutdown’ in Washington which basically sent the message that the world’s main reserve currency is not anymore a fully safe haven. An op-ed by Xinhua agency on 22 October 2013 did not hesitate to call for a ‘de-Americanized’ world.

A few weeks earlier, on 10 October, the People’s Bank of China (PBOC) and the European Central Bank (ECB) had signed a bilateral currency swap agreement for a sum of €45billion (RMB350 billion), the largest ever signed by Beijing. Europe is China’s first trading partner and the euro has now become an alternative for Beijing’s growing currency reserves. In Chinese eyes, the European common currency is instrumental for the internationalization of the renminbi and the creation of a multipolar monetary order.

The China-Eurozone connection

Washington’s ‘shutdown’ in October has increased worries in China that the huge sums invested in dollar-denominated assets – a total of around $2 trillion in US government and quasi-government securities – are at risk of evaporating, after having been debased by the various rounds of quantitative easing. Any investment loss abroad would limit the financial flexibility of China at a time when it is most needed for rebalancing its domestic economy and growth model.

The greenback still accounts for more than 60% of global – and around 55% of Chinese – reserves. Yet, the euro provides China with a formidable alternative. Since the creation of the European common currency in 1999, the Chinese government has started a process of diversification of its reserves that continues today. This process has gone hand-in-hand with calls for the reform of the international monetary system. In March 2009, Zhou Xiaochuan, the PBOC governor, explicitly called for the creation of a new international reserve currency while reiterating China’s support for the euro.

In contrast to widespread scepticism vis-à-vis the euro (mainly stemming from Anglo-American banks and hedge funds), Chinese leaders have consistently been more optimistic, intervening on a number of occasions since the beginning of the euro-crisis to reassure financial markets and European leaders that they would continue to buy Eurozone bonds and bolster the common currency. This was and still is driven by the need to find new but safe investments for China’s growing currency reserves and diversify risk away from the dollar. Political considerations have also played a role: Chinese leaders have traditionally supported a stronger and more united Europe that could work alongside Beijing to counterbalance American primacy.

In the last years, China has accelerated the diversification of its holdings of foreign reserves to such an extent that, today, euro-denominated assets represent around one-third of Beijing’s total foreign currency reserves (which, at US$3.7 trillion, are the world’s largest). This means that Beijing has bought around one trillion euro.

Far from being a one-sided process, some Eurozone governments and EU institutions have courted and welcomed Chinese engagement, setting in motion an active monetary diplomacy. Since its establishment in May 2010, the European Financial Stability Facility (EFSF) – replaced in October 2012 by the European Stability Mechanism (ESM) – has actively sought Beijing’s support, obtaining concrete pledges for the purchase of Portuguese, Irish and Greek bailout bonds auctioned by the EFSF/ESM €440 billion rescue fund. Moreover, China has already showed an interest in investing in fully guaranteed and safe euro bonds. This reflects China’s growing optimism vis-à-vis the euro, in particular after Mario Draghi’s declaration in July 2012 that the ECB will do ‘whatever it takes’ to preserve the Eurozone.

Shanghai-Frankfurt monetary axis

By signing their first bilateral currency swap agreement in October 2013, the PBOC and the EBC have cemented a relationship bound to grow in the next years. It is no coincidence that the swap agreement occurred only a few weeks after the official launch of the Shanghai FTZ. The process leading to the internationalization of the renminbi takes place, in fact, in an international monetary environment which has already experienced the emergence of an alternative to the dollar.

The euro is today the world’s second most important reserve currency: by the end of 2013, euro-denominated assets accounted, on average, for around 25-27% of the holdings of the world’s major Central Banks, reaching around one-third in China. The Frankfurt-based European Central Bank is only second to the Fed in terms of assets.

Alongside the euro, there has also been an upsurge in the use of the renminbi. The latter is today the world’s second most used trade finance currency. Since 2009, the PBOC has signed currency swaps agreements with numerous Central Banks around the world. The Shanghai FTZ is but the latest development of a process aimed at the full convertibility of the Chinese currency.

The euro benefits from Chinese support. The internationalization of the renminbi takes advantage from the existence of the European common currency. There is thus a new monetary axis emerging between the Shanghai FTZ – and the Frankfurt-based ECB likely to have significant implications for the dollar.

This new axis is both complementary – and alternative – to Washington-Beijing relations. Hopefully, policy makers from the world’s three largest economies – EU, US, China – will be able to create the conditions for the smooth emergence of an international monetary order where the dollar, the euro and the renmimbi would each have its proper place.

Nicola Casarini is Senior Analyst at the Paris-based European Union Institute for Security Studies (EUISS) and the author of Remaking Global Order: The Evolution of Europe-China Relations and its Implications for East Asia and the United States (Oxford University Press).

Nicola Casarini, senior analyst, Paris-based European Union Institute for Security Studies via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/hAXwUmuYPLA/