NEWS BRIEF

ECONOMY

China’s President Xi Jinping and his Russian counterpart Vladimir Putin signed a US$400 billion gas supply deal in Shanghai， Financial Times reported， citing statements from Putin and Russia’s energy minister. Under the deal， which comes after 10 years of negotiations， Russian natural gas giant Gazprom will supply China National Petroleum Corporation with up to 38 billion cubic meters of natural gas per year for 30 years， beginning in 2018. Analysts said the implied price was US$350-$390 per 1，000 cubic meters. Gazprom said it would invest US$55 billion， and China will provide at least US$20 billion of investments.

The price of new homes in 26 cities in China either stalled or fell in April compared to the month before， the biggest slowdown in more than a year and a half， Bloomberg reported. National housing prices climbed 9.1% in April compared to a year earlier， slowing for a fourth month. Home- price growth moderated both in firsttier and less-affluent cities. Prices in Beijing rose 0.1% from March， while Shanghai prices increased 0.3%. “China’s property market is on a very dangerous brink，” said Xu Gao， chief economist at Everbright Securities. The real estate slowdown has prompted local municipal governments to relax property curbs.

China’s exports beat expectations of a slight decline for April by posting a 0.9% increase on a year earlier to US$188.5 billion， reversing a 6.6% decline in March and an 18% nosedive in February， South China Morning Post reported， citing the customs bureau. Imports also reversed to a slight increase of 0.8%， compared with a decline of 11.3% in March. In February， imports rose 10.1% from a year earlier. “China’s export growth will show a marked rebound starting in May， as the high-comparison-base[from last year] factor fades，” HSBC economist Ma Xiaoping said.

FINANCE

The People’s Bank of China will soon let banks offer large-denomination certificates of deposits to individuals and companies， as it continues financial reforms， The Wall Street Journal reported， citing unnamed sources close to the central bank. The minimum investment will be set at around US$16，000 （RMB100，000） and the interest rate offered has been set at 3.4% on one-year CDs， slightly higher than the maximum 3.3% that banks can pay on a one-year fixed deposit. The CDs will be available on a trial basis involving more than 10 banks as early as the end of May.

China’s top economic planning body signaled it would let local governments directly sell municipal bonds for the first time， Reuters reported， citing a statement by the National Development and Reform Commission （NDRC） on its website. Chinese media previously reported that Beijing was set to allow direct bond sales for 10 governments including Beijing， Shanghai， Shenzhen and Guangdong. The NDRC statement did not refer to these plans， but said China will create a financing system for local governments that will let the sale of municipal bonds be a major source of funding. Opaque financing vehicles will also be phased out. China’s broadest measure for new credit fell as senior officials resisted calls for monetary stimulus， Bloomberg reported， citing official data. Aggregate financing fell from RMB1.55 trillion （US$249 billion） in April to RMB2.07 trillion in March. New local-currency bank loans were RMB774.7 billion， down from RMB1.05 trillion the previous month. Even as a bearish property market and poor manufacturing data threaten to slow China’s economy， the reluctance to issue new credit suggests the country’s leaders are willing to accept lower growth rates.

POLITICS & SOCIETY

Vietnam accused China of sinking a Vietnamese fishing ship about 17 nautical miles southwest of an oil rig that China placed in disputed waters off the Vietnamese coast， The Wall Street Journal reported. Chinese officials claimed that the fishermen were behaving recklessly and collided with a Chinese fishing vessel， but have also reiterated that ships will continue to be denied access within a three-mile radius of the rig until it finishes drilling exploration in mid-August. All 10 men aboard the vessel were rescued， according to Vietnam’s coast guard.

The Chinese government plans to decommission as many as 5.33 million cars throughout the country this year that fail to meet domestic fuel standards， Reuters reported， citing a policy document. The bid to improve air quality was announced alongside new targets for the closures of coalfired heating systems and the installation of new equipment to reduce emissions at power stations， steel mills and cement plants. The State Council document did not say how the plan would be implemented， but subsidies previously offered for voluntary scrapping may be extended to "yellow label" vehicles that fail to meet minimum standards.

BUSINESS

China’s Bright Food Group will buy a majority stake in Tnuva， Israel’s largest food company， Reuters reported， citing a spokesman for the Shanghai-based multinational. The spokesman said Bright Food has signed a preliminary agreement to buy 56% of the specialist dairy produce supplier from private equity firm Apax， but did not disclose how much it has agreed to pay. Israeli news websites reported the deal valued all of Tnuva at US$2.5 billion. The spokesman cited Israel’s “highly developed agriculture and animal husbandry techniques” in reference to the acquisition. China’s Sina Corp saw a non-cash loss of about US$40 million in the first quarter， The Wall Street Journal reported. Sina’s net loss was US$33.2 million， or US$0.52 per share， in the three months ended March 31， compared with a loss of US$13.2 million， or US$0.20 a share， in the same period a year earlier. The losses were related to its microblog Weibo Corporation going public in April. Weibo reported a loss of US$47.4 million for the quarter， or US$0.31 a share.

The British former head of drug maker GSK’s China operations and two other company executives have been charged by Chinese police with bribery， Reuters reported， citing a state media report. The three executives were charged with bribing doctors， hospitals and officials in the industry and commerce departments of Beijing and Shanghai to boost sales of the company’s products in China. The crackdown on GSK reflects a growing determination by Chinese authorities to stamp out corporate bribery and corruption， which can drive up pharmaceutical prices.