China Banking Regulatory Commission (CBRC) issued Guidelines on Risk Management of Loans Extended by Commercial Banks for the Purpose of Acquisition (the “Guidelines”) on December, 9th, 2008.  The Guidelines overturn a long-standing restriction on the granting of bank loans for equity investments in China. The initiative will expand the financing channels available to Chinese enterprises and is expected to boost both onshore and outbound mergers and acquisitions (M&A) activity.

The Chinese government has announced a series of macro-adjustment measures recently, promoting industrial upgrade and encouraging promising M&A transactions. More and more companies are involved in M&A activities recently with greater demand for M&A financing. Commercial banks also demonstrate their willingness to make M&A loans. In the meantime, Chinese government has promulgated more policies on boosting domestic demand, and extending stronger support to M&A transactions. It’s just the right time for CBRC to introduce such guidelines. The main idea of the guidelines is to require qualified commercial banks strike the balance between the market demand and their risk appetite. For commercial banks, M&A financing is not only a credit tool to support strategic M&A, but it should also be put under sound risk management framework.  China Banking Regulatory Commission, December 2008.

Under the Guidelines, a commercial bank is required to establish its loan management procedures and information system for the acquisition loan business based on the principle that such procedures and system for the acquisition loan business must be more stringent than other types of loan business.

CBRC stipulates that the following requirements must be met for banks to be qualified for M&A lending: good risk management and internal control mechanism; adequacy ratio of loan loss provision not less than 100%; capital adequacy ratio not less than 10%; and professional teams on M&A due diligence and credit risk assessment.

The Guidelines point out that commercial banks must require the borrower to provide adequate guarantees, including but not limited to asset-backed, equity pledge, and third-party guarantees and other forms of security in compliance with the law.

The Guidelines are expected to be a boost to the local M&A market and would help domestic companies undertake overseas M&A activities. Industry insiders explain that an M&A loan is similar to a bridge loan, which is used as a short-term transition loan. The issuing of an M&A loan is to promote “small risk to large”.  The “snake eating the elephant” approach to M&A transactions contends that once it is backed by funds, is more likely to be successful. However, the actual implementation of the Guidelines remains to be seen.

12/29/2008   Source: Xinhua

Human Resources and Social Security Minister Yin Weimin said here on Monday that China aims to create 9 million new jobs in urban districts next year.

Yin said China wants to keep the registered urban unemployment rate under 4.6 percent next year.

The economic slowdown due to the financial crisis will add difficulties for Chinese [seeking] employment. The job situation in China is grim, so effective measures must be taken to help new graduates, migrant workers or other groups, he said.

The urban unemployment rate in the past five years was below 4.3 percent, but this year’s target was set at 4.5 percent because of the severe employment situation.

The government was trying to reduce the burdens of employers by such methods as deferring payment of social security funds.

Unemployed migrant workers who return home are being encouraged to start businesses. They will get credit extensions, tax breaks, business registration and information consulting service, according to the country’s central rural work conference, which concluded on Sunday.

Ministry of Agriculture figures from 10 provinces and municipalities show that about 7.8 million migrant laborers had returned home earlier than in previous years for the Spring Festival.

(Agencies)
Updated: 2008-12-02 16:19

Chinese gross domestic product (GDP) is likely to grow 9 percent next year thanks to Beijing’s huge stimulus package and an easier monetary policy, the Chinese Academy of Social Sciences (CASS), the government’s top think-tank, said on Tuesday.

At this moment, I still think China’s GDP will rise 9 percent in 2009. The likelihood of this scenario is more than 70 percent,” Wang Tongsan, a senior CASS researcher, said in a news release setting out its forecasts for next year.

But Wang attached two conditions to the scenario: that the US economy touches bottom soon and that China’s pro-growth economic policies have a clear impact.

The central bank slashed borrowing costs by 1.08 percentage points last week, the deepest cut in 11 years, to complement a 4 trillion Yuan ($586 billion) stimulus plan unveiled on November 9.

The CASS’s forecasts for 2009 include:

– Consumer prices to rise 4 percent on average

– Fixed-asset investment to rise 20 percent

– The trade surplus to come out at $236.9 billion

– Retail sales to rise 16 percent

– Broad M2 money supply to grow 16-17 percent

– The urban jobless rate to reach 4.3 percent

http://www.chinadaily.com.cn/bizchina/2008-12/02/content_7262041.htm

(China Daily)
Updated: 2008-12-02 07:25

President Hu Jintao Monday visited a hospital treating AIDS patients, calling for more efforts to raise awareness on the prevention of the fatal disease and help those afflicted with it.

It was the third time in five years that Hu inspected AIDS prevention work by meeting medical staff, researchers and patients, the Xinhua News Agency reported.

At the Beijing Ditan Hospital, Hu shook hands with two women infected with HIV – the virus that causes AIDS – and asked the patients about their health and concerns.

One of the patients, a 28-year-old woman who wanted to be known as Xiao Zheng, told Hu she was found infected with HIV last December when she was pregnant. With the hospital’s help, she received free medication to prevent the virus from being transmitted to her daughter. Her child, now six months old, is in sound health.

The other HIV-positive woman, who wanted to be known as Xiao Xia, later told Xinhua that Hu’s visit gave her “warmth and encouragement”.

The hospital acts as a social community providing HIV carriers with services including psychological treatment, AIDS counseling and legal assistance.

In the infectious disease center of the hospital, which is also the country’s clinical pharmacology base for HIV/AIDS and offers free AIDS management services, Hu examined the facilities and spoke with researchers about issues ranging from their work to the equipment they used.

The president spoke highly of the center’s achievements in the field of anti-viral vaccines and new medicines, stressing that “science and technology must used to conquer the disease”, Xinhua reported.

A joint investigation by a United Nations agency, health officials and the World Health Organization found that there were about 700,000 Chinese in the country living with HIV/AIDS at the end of last year, 85,000 of whom were suffering from full-blown AIDS.

Beijing HIV Infections Down:

A total of 755 people in Beijing were diagnosed with HIV between January and October, latest figures from the municipal health bureau showed.

The number represented a 22.4 percent drop in HIV patients in the capital year-on-year.

Up till October, Beijing authorities registered 5,635 HIV/AIDS patients, of whom 219 were foreigners, 1,184 local residents and 4,232 people from other parts of the country, a report released by the municipal health bureau on Nov 26 showed.

Sexual transmission had overtaken intravenous injections as the main channel of contracting the virus for the first time, the report stated, while cases of HIV infection have reportedly been rising among gay men.

The capital has also set up nine methadone clinics to contain the spread of HIV and stem the use of intravenous drugs, the report said. Anyone aged 20 or older can visit the clinics for 10 yuan ($1.45) a day.

More than 500 methadone clinics have been set up across the country, offering treatment for almost 440,000 HIV carriers and AIDS patients, the report said.

http://www.chinadaily.com.cn/china/2008-12/02/content_7258384.htm

(Agencies)
Updated: 2008-12-02 16:19

Chinese gross domestic product (GDP) is likely to grow 9 percent next year thanks to Beijing’s huge stimulus package and an easier monetary policy, the Chinese Academy of Social Sciences (CASS), the government’s top think-tank, said on Tuesday.

At this moment, I still think China’s GDP will rise 9 percent in 2009. The likelihood of this scenario is more than 70 percent,” Wang Tongsan, a senior CASS researcher, said in a news release setting out its forecasts for next year.

But Wang attached two conditions to the scenario: that the US economy touches bottom soon and that China’s pro-growth economic policies have a clear impact.

The central bank slashed borrowing costs by 1.08 percentage points last week, the deepest cut in 11 years, to complement a 4 trillion Yuan ($586 billion) stimulus plan unveiled on November 9.

The CASS’s forecasts for 2009 include:
– Consumer prices to rise 4 percent on average;
– Fixed-asset investment to rise 20 percent;
– The trade surplus to come out at $236.9 billion;
– Retail sales to rise 16 percent;
– Broad M2 money supply to grow 16-17 percent;
– The urban jobless rate to reach 4.3 percent.

http://www.chinadaily.com.cn/bizchina/2008-12/02/content_7262041.htm

Yang Liwei, China’s first astronaut, will run the opening leg of the Olympic torch relay in Beijing, which starts at 8 am today at the Meridian Gate of the Forbidden City.

Basketball star Yao Ming, who some media said would run the first leg, will be the ninth torchbearer.

“Yang helped China realize its dream to travel in space, and now we are living another dream of hosting the Games,” Sun Xuecai, deputy director of the Beijing sports administration, told a news conference Tuesday.

China became the third country – after the former Soviet Union and the United States – to put a man in space, when in 2003, Yang orbited the Earth in a module of the Shenzhou V spacecraft.

Today’s relay will involve 433 torchbearers, including 29 foreigners and one representative of each of Hong Kong, Macao and Taiwan.

Australian Colin Giles, president of Nokia China, told China Daily Tuesday: “I was born into a sporting family, and participating in the torch relay will be one of the most memorable and important moments of my life.”

The Olympic torch relay is a bridge that connects different countries and cultures, and that, in true Olympic tradition, can help us foster a spirit of peace and friendship, he said.

“My wife is from Taiwan and my two daughters were born in Taipei and Beijing, so our family contains both Western and Asian cultural influences,” Giles said.

Another of today’s runners will be CCTV anchorman Bai Yansong.

“The power of an individual torchbearer is limited, but we are just like matches, and we can light people’s passion for the Games,” he said.

Li Furong, vice-chairman of the Chinese Olympic Committee, will run the final leg and perform the ritual lighting of the cauldron at the Hall of Prayer for Good Harvest in the Temple of Heaven.

BEIJING — A Beijing Olympics official said Monday that the organizers are confident and capable of holding worry-free Olympic Games.

Sun Weide, a media official with the Beijing Organizing Committee of the 29th Olympic Games (BOCOG), said at a press conference that the Chinese government and the BOCOG have paid great attention to the security of the Beijing Games.

“An effective command system has been established and we have strengthened the cooperation in information exchange and anti-terrorism with other countries, especially those which hosted the Games before,” he said.

“We have strengthened security work in all Olympic venues and in the Olympic village. We are well-prepared in security for the upcoming Games,” Sun added.