Foreign investment ‘not leaving China’

BEIJING: China’s commerce minister on Tuesday sought to assuage concerns that foreign investment is leaving the country, saying claims to that effect were “biased.”
In comments made to reporters, Gao did not elaborate on the ministry’s views though data over the past few months have shown a pick up in fund outflows.
“In recent years some products have indeed moved offshore but at the same time many high-end industries have moved to China,” Gao told reporters.
Gao said consumption will continue to grow rapidly this year, while the foreign trade environment will remain complex.
Cooperation is the only option for the US-China trade relations as a healthy relationship is beneficial for both sides, he said.
Although there have been disagreements between the two countries in the past, they were solved through negotiation, Gao added.
Preferential scheme
China’s central bank said on Tuesday that it will extend a preferential scheme for some banks that will free up additional funds for lending, as long as they channel money to weaker, cash-starved sectors of the economy.
But it also warned that some banks will no longer enjoy such preferential treatment after a recent review found they had failed to adhere to “standards” intended to channel loans more directly to rural areas and small companies.
The statement confirmed a Reuters report on Monday that the central bank is extending a program that allows financial institutions that support rural finance and small enterprises to apply for a lower required level of cash reserves.
The People’s Bank of China (PBOC) said on Tuesday it had recently completed an assessment of banks’ compliance with the scheme, and noted that most had met the requirements.
While some banks that failed to meet the official standards will no longer qualify for lower RRR rates this year, others that previously did not enjoy preferential RRR rates will be allowed to join the scheme, the PBOC said.
“The results of the assessment will be both upwards and downwards (adjustments to reserve rates), which is conductive to the establishment of positive incentive mechanism,” it said.
The adjustments will take effect on Feb. 27.
Sinochem-Peregrino deal ‘likely’
China’s Sinochem is exploring the sale of its 40 percent stake in Brazil’s Peregrino offshore oilfield, four people familiar with the matter told Reuters, a deal that could see the state-owned conglomerate walk away from what was once touted as a key overseas asset because of historically low oil prices.
The oil and chemicals firm agreed to buy the stake from Norway’s Statoil for $3.07 billion in 2010 — beating out a raft of Chinese rivals chasing high-quality assets.
“Peregrino has been a success story for Statoil, not just technically but also financially. It provides a lot of value and has a good operator in Statoil,” said Horacio Cuenca, Rio de Janeiro-based research director for upstream Latin America at energy consultancy Wood Mackenzie.
Long term expectations of oil prices, however, and capital expenditure required in the next two to three years to develop the second phase of production will determine the value of any potential stake sale, he said.
Earlier this month, Reuters reported Sinochem was in early talks to buy a stake in Singapore-listed commodity trader Noble Group, a move that would further its ambitions to become more active in global energy trade and also develop China’s gas industry.
The process to sell the Brazilian stake is still at an early stage and a final decision would depend on how the negotiations progress, the people familiar with the matter said.