Economy

　　Financing SMEs

　　China will provide better support for small and medium-sized enterprises (SMEs) by simplifying how funds are allocated， the Ministry of Finance (MOF) said on April 14.

　　The ministry， along with the ministries of industry and information technology， science and technology， and commerce， issued a notice to improve the efficiency in the way funds are allocated to SMEs.

　　According to the notice， funds will be allocated to SMEs to help improve technological innovation， financing， services， and international cooperation.

　　The notice also highlighted more support for SME innovation in information technology， resource saving， new energy development， the biomedical industry and modern agriculture.

　　A subsidy for each new innovative project will stand at no more than 3 million yuan ($487，560)， or 40 percent of the research and development cost at most， according to the notice.

　　Corporate Defaults

　　Chinese banks have the means to deal with corporate bond and trust defaults， Deutsche Bank said in a research note on April 15.

　　A study by the bank found that listed Chinese banks hold 37 percent of outstanding debts in China’s corporate bond market and have provided 36 percent of the funding for the country’s trust sector.

　　That puts 88 billion yuan ($14.14 billion) worth of bank assets at risk. But according to Deutsche Bank， they are well covered by the 819 billion yuan ($132 billion) the banks have set aside to cover bad assets.

　　The bank said its study covers 2，400 corporate bond issuers and 13，000 trust products， with a total credit balance of 237 billion yuan ($38 billion).

　　The bank said only 22 out of 2，400 bond-issuing firms are highly risky. Sixty-five percent of these firms are from industries saddled with overcapacity， including the steel， mining， metal and solar sectors.

　　China also witnessed the first onshore corporate default in March when a Shanghai-based solar firm failed to pay 89.8 million yuan ($14.4 million) in interest.

　　Meanwhile， authorities and banks have shown growing reluctance to bail out troubled assets， which analysts said could help correct distortion in risk pricing but could also stoke fear of more defaults to come.

　　Deutsche Bank said while May and June could see a peak number of bonds and trust products come due， investors could learn that actual defaults are less than they thought， regaining confidence in Chinese banks.

　　The report also added that it is normal for defaults to rise steadily as a way to correct distortions in pricing credit risks and improve the efficiency of capital allocation.

　　Simplifying Approval

　　The review and approval process for foreign-funded enterprises to operate telecom value-added services in the Shanghai Free Trade Zone (FTZ) has been simplified， the Ministry of Industry and Information Technology (MIIT) announced on April 15.

　　The review and approval authority has been delegated from the MIIT to the Shanghai Communications Administration， said the MIIT in a document.

　　The length of time from submission of application to approval has been shortened to no more than 60 days down from five months.

　　Telecom value-added service providers refer to those using public telecom network infrastructure and providing value-added services including call centers and smartphone app stores rather than traditional voice telephony services.

　　IPO Market

　　China’s securities regulator on April 11 denied rumors that the country’s initial public offering (IPO) market has been shut down.

　　The clarification came after the China Securities Regulatory Commission (CSRC) in late March suggested companies planning an IPO should “choose a reasonable timing” for IPO application.

　　The CSRC urged the companies to go to the New Third Board， a national share transfer system for SMEs to transfer shares and raise funds， or seek IPOs overseas.

　　“This is just a suggestion by the CSRC in response to questions raised by the market. This is neither mandatory nor does it mean the IPO application window is shut down，” said Zhang Xiaojun， spokesman of the CSRC.

　　The suggestions were made in March because， in the words of the regulator， “a large number of IPO applications were still pending approval and new applicants would have to wait for a relatively long period.”

　　New rules governing IPOs would also result in stricter requirements for information disclosure and more responsibilities for the issuer and sponsor， the CSRC said.

　　Zhang said the CSRC was just reminding issuers and sponsors of the current special circumstances and suggesting they choose the right equity trading market.

　　“This would help avoid worsening the already crowded IPO channel. For those companies who have decided to file an IPO application， they should time it reasonably to avoid extra cost and burden on themselves.”

　　China imposed a moratorium on IPOs in October 2012 as the country worked to reform a market featuring a pricing system that had led to consistently excessive offering prices. The authorities reopened the market for IPOs at the end of 2013.

　　FTA Talks

　　China and Australia on April 12 voiced hopes to hasten negotiations on a Free Trade Agreement (FTA) and strike a deal as soon as possible.

　　Meeting with entrepreneurs together with visiting Australian Prime Minister Tony Abbott， Chinese Vice Premier Wang Yang said economic and trade cooperation between the two countries is now on the fast track.

　　“It is a common aspiration of businessmen from both countries and also an important consensus reached by leaders of the two countries to speed up the FTA negotiations，” Wang said.

　　The role of the government， Wang said， is to “build roads and bridges” for enterprises and provide them with convenient， safe and efficient services.

　　Wang called on both governments to meet halfway and show flexibility in the FTA negotiations to make tangible progress at an early date.

　　For his part， Abbott said development of economic and trade relations between Australia and China had moved rapidly in recent years and he expected an FTA deal at the earliest possible opportunity.

　　Initiated in 2005， talks between Australia and China on the FTA have gone through 19 rounds so far. If a deal is signed， it would be the first FTA between China and a major developed economy， giving Australian agricultural produce easier access to the enormous Chinese market.

　　China is Australia’s largest trade partner and biggest export market， while Australia is Chinese enterprises’ largest overseas investment destination country.

　　According to statistics from the Chinese Ministry of Commerce， bilateral trade reached $136.4 billion in 2013， up 11.5 percent from 2012.

　　Abbott said Australia would like to be a long-term， stable provider of energy， resources and food to China， adding that he hopes to see more and more Chinese enterprises invest in Australia and promising to facilitate their business.

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