The Shenzhen bull

CME in talks to enter China derivatives market

(Reuters) — CME Group Inc., operator of the world's leading energy, grains and precious metals markets, is in talks with China's securities regulator to enter the mainland's financial derivatives market, the official China Daily reported on Thursday.

CME President Phupinder Gill told the newspaper that the group was in talks with the China Securities Regulatory Commission (CSRC) about starting a pilot overseas futures trading business that would allow some futures companies from China to buy and sell futures on the Chicago-based international exchange.

CME Group operates the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange.

"Everything is going well so far, and that will be a milestone for CME's global expansion process," Gill was quoted as telling the paper.

China closed offshore futures trading 17 years ago because of heavy speculative trade, but Gill was hoping that would change, the report said.

"During the last decade I have seen China's derivatives markets successfully shake off early challenges. The domestic regulatory institutions and exchanges have improved risk management capacity a lot, which has reached world-class," he was quoted as saying in the report.

Gill said China's exchanges in Dalian, Shanghai and Zhengzhou were "very well-managed" and that China's growth had fuelled the global economy over the past few years.

The firm was also planning to launch a clearing house in Asia and increase the number of employees in the region, the China Daily said.

In October, CME Group said about a fifth of its business came from outside North America and that it aimed to boost that figure, not through acquisitions but by expanding sales of existing products.

Coca-Cola plans to invest $4 billion in China

Atlanta based Coca-Cola (KO) plans to invest $4 billion in China, the company's CEO Muhtar Kent told reporters in Shanghai this week. 

It's the company's biggest planned investment in China since the 2009 investment of $2 billion. The investments will start next year and is part of the company's China capex until 2014.

Kent said the company is even considering listing its shares on the Shanghai Stock Exchange, adding itself to the list of mainstream brands listing their depositary receipts on exchanges outside of their home base. Massachusetts luggage maker Samsonite opted to list in Hong Kong in the second quarter rather than do its initial public offering on the NYSE.  The new China investments will focus on innovation, infrastructure and expansion of its production capacity. The company now has six manufacturing centers in the country.

"U.S. corporations are actually in good shape and a lot of that is due to emerging markets, particularly the BRIC countries," fund manager Paul Dietrich of Foxhall Capital Management in Orange, Conn told Forbes on Friday. The BRIC countries are Brazil, Russia, India and China.

Low growth in the U.S. and Europe have essentially forced the hands of the big multinationals to look for growth elsewhere. "In this low growth environment, we will continue to see European and American multinational companies spending in countries far from home," says Martin Schulz, managing director of international equities at PNC Capital Advisors in Columbus, Ohio.

Chinese "Groupon"

Chinese Groupon

As Groupon eyes China, it faces doppelganger—Groupon

(Crain's) — After expanding into more than 40 countries, Groupon Inc. wants to move into China. Trouble is, Groupon already is there.

Ren Chunlei, a Chinese entrepreneur, bought the Internet domain name www.groupon.cn last year and now claims to have a footprint in 368 cities and 2,000 employees, according to a press release issued Wednesday. The site apes Groupon's look, from its logo to the color scheme and type font.

Mr. Chunlei's company, Mission Po Network, is for sale, according to its website.

Chicago-based Groupon declined to comment on the Chinese company’s footprint claims.

When it launched two years ago, Groupon fueled a worldwide explosion of daily-discount websites offering deals to e-mail subscribers, and China alone has more than 2,000 such sites, the People's Daily reports. For its part, Groupon operates in Hong Kong, Singapore, Philippines and Taiwan.

The original Groupon has yet to launch in China, despite reports that it has joined with Tencent Inc., China's largest web portal, and owns the domain Gaopeng.com.

The Wall Street Journal reported over the weekend that Groupon has opened a Beijing office and has begun to hire a sales staff in China. The People's Daily reports Groupon hopes to have a salesforce of 1,000 within three months.

Chanos Says China Real Estate Boom Goes ‘Unabated’

(Bloomberg) -- China’s property boom continues “unabated” and has even picked up since the government enacted policies to cool speculation, said Jim Chanos, the hedge-fund manager who predicted the market may crash as early as 2010.

Home prices in 70 Chinese cities climbed 7.7 percent in November from a year earlier, even after the government suspended mortgages for third-home purchases and pledged to introduce a property tax. Sales volume jumped 14.5 percent from a year earlier.

“A lot of regulations in China, they are designed to be skirted,” Chanos said in an interview with Carol Massar and Matt Miller on Bloomberg Television’s Street Smart program. “The boom has continued to be unabated. It’s actually even picked up a little bit recently towards the end of year.”

Chanos repeated his view that China is on a “treadmill to hell” because of the country’s reliance on property development for economic growth. Millions of apartments remain empty in the nation as speculators dominate the market, said Chanos, who also described China’s property bubble as “Dubai times 1,000.”

China’s central bank raised bank reserve requirements on Dec. 10 for the third time in five weeks to tame inflation and restrain foreign capital, and increased interest rates for the first time in three years in October.

Further Gains

While the year-on-year advance in November property prices was the slowest in a year, values increased for an 18th straight month, according to government data.

China Vanke Co., the nation’s biggest publicly traded developer, said earlier this month it became the first Chinese developer to post annual sales of 100 billion yuan ($15 billion), reaching a target it had set for 2014 and defying government measures to cool the real-estate market.

Chanos, who was one of the first investors to foresee the 2001 collapse of Houston-based energy company Enron Corp., said some Chinese developers are getting more leveraged and are taking more money from international, providing opportunities for hedge funds. He didn’t name specific stocks.

“They all look very interesting from a short-sellers perspective,” he said. “The western investor is the one who’s going to end up holding the real estate bag here.”

‘A Little Extreme’

Some brokerages remained upbeat about China’s real estate market. Citigroup Inc. said this week the country’s plan to boost social welfare housing should be positive for real estate as the government will want a “stable” property market, and it maintained its “bullish view.”

Chanos’s view is “a little extreme,” Glenn Rufrano, president and chief executive officer of Cushman & Wakefield Inc., the world’s largest privately held real estate services company, said in a Bloomberg Television interview. “The economy is growing and has been growing and the real estate market is increasing in value. The government knows this and they are getting ahead of it.”

Joining Vanke, Shanghai Forte Land Co. said this month its sales volume reached 12.6 billion yuan by November, exceeding its annual revenue target of 11.5 billion. Shimao Property Holdings Ltd. said it achieved 91 percent of this year’s 30 billion yuan sales target by the end of last month.

China’s property stocks have fallen following the government’s policies. A gauge tracking property stocks on the Shanghai Composite Index lost 26 percent this year, more than twice the decline on the benchmark measure and the most among five industry groups.

The Chinese government won’t loosen measures aimed at curbing real estate prices next year because of the continuing risk of a bubble, Vanke Chairman Wang Shi said, Reuters reported yesterday. The measures have made some progress and moderating the pace of property gains would be an achievement, Wang said, the report said.

China will strengthen the controls on the real estate market and curb speculative investment from next year through 2015, Xinhua News Agency reported today, citing China’s Ministry of Housing and Urban-Rural Development.

Goldman Sachs to raise over $2bn from ICBC share sale

Goldman Sachs is looking to raise more than $2 billion by selling its stake in Industrial and Commercial Bank of China (ICBC).

According to the Wall Street Journal, the sale would lead to the investment bank reducing its stake in the firm from 3.9 per cent to 3.1 per cent.

The price of the shares are expected to range from HK$5.70 to HK$5.79 ($0. 73 to $0.75) while 2.75 billion shares will be available as part of the sale.

An unknown source close to the matter told the news provider that Goldman Sachs was undertaking the sale to reduce the bank’s exposure to risk.

The bank initially agreed to keep 80 per cent of its initial share in the bank back from any sale before April of this year.

Meanwhile, news reports have claimed that a team of proprietary traders at Goldman Sachs are currently in discussion with executives from Avenue Capital over potentially joining the firm.

Marc Lasry, manager of the hedge fund, is thought to be looking to take on staff from a team of traders headed up by Bob Howard.

Caterpillar to build plant in China

(Reuters) - Caterpillar Inc. said on Tuesday it will build a production plant in coastal China as part of a long-range plan to expand into that country's economy.

The company, the world's largest maker of earth-moving equipment, plans to use the facility to build mini hydraulic excavator models weighing less than 8 tons.

The plant is planned for Wujiang, a suburb of Shanghai. Construction will begin later this year and the first models are slated to roll off the production line by 2012.

"We want Caterpillar customers to be more successful working with us, than they can be working with anyone else, and this new operation in Wujiang is the latest step in our long term strategy for helping our customers win in China," said Jiming Zhu, a Caterpillar vice president overseeing the company's operations in China.

The Peoria, IL -based company did not disclose costs or revenue expectations for the plant. It has about 6,000 employees in China

China Industrial Output Rises 13.9%; Inflation Quickens to 3.5%

(Bloomberg) -- China’s industrial-production grew at a faster pace than economists estimated and inflation accelerated to the quickest since October 2008.

Output gained 13.9 percent from a year earlier, the National Bureau of Statistics said in Beijing today. Consumer prices rose 3.5 percent, compared with 3.3 percent in July, as food costs climbed.

China’s government has cooled the fastest-growing major economy by clamping down on property speculation, shuttering energy-intensive factories and limiting lending. HSBC Holdings Plc yesterday maintained forecasts for expansions of 9.5 percent in the third quarter and 10 percent this year after rebounding import growth in August highlighted domestic demand.

“China’s growth is gradually moderating from overheated in the first quarter to a more sustainable pace in the second half,” Sun Junwei, a Beijing-based economist at HSBC Holdings Plc, said before today’s release. “Inflation may peak in September.”

The consumer-price gain matched the median forecast in a Bloomberg News survey of 31 economists. The government’s full-year target is 3 percent.

Credit Agricole yesterday estimated a one-in-three chance of China raising the benchmark deposit rate after today’s data if the pace of inflation accelerated “significantly.”

An interest-rate increase is unnecessary because of limited inflation pressure, state economist Fan Jianping said, according to a China Securities Journal report today ahead of the data.

Economists’ Forecast

Economists’ median estimate was for a 13 percent gain in industrial output.

Today’s data follows yesterday’s announcement by the customs bureau of a 35 percent jump in imports and a 34 percent gain in August exports from a year earlier. Increases in property transactions and auto sales in August, led by SAIC Motor Corp. and FAW Car Co., also signaled strength in demand.

The Shanghai Composite Index has rebounded 12 percent from this year’s low on July 5 on speculation that the government may ease tightening measures, which range from restrictions on house purchases to a 7.5 trillion yuan ($1.1 trillion) annual limit for banks’ new lending.

“Rising CPI inflation could make the market nervous about a rate hike, but we don’t see any visible policy change in the near term,” Beijing-based UBS AG economist Wang Tao said ahead of today’s data. She sees inflation peaking at as much as 4 percent, then slowing by year-end.

Retail Sales

Retail sales gained 18.4 percent in August from a year earlier, from 17.9 percent in July, the statistics bureau said today. Producer price inflation slowed to an annual 4.3 percent pace from 4.8 percent.

Urban fixed-asset investment grew 24.8 percent in the first eight months of 2010 from a year earlier, the bureau said. That compared with a 24.9 percent gain for January-through-July.

Standard Chartered Plc. economist Stephen Green this week cited August manufacturing indexes, along with car and apartment sales, as evidence that economic momentum is “healthy.”

Gross domestic roduct rose 10.3 percent in the second quarter from a year earlier after an 11.9 percent gain in the first three months.

Industrial-output growth will continue to moderate in the second half as the government chases energy-efficiency targets and cools the property market, the Ministry of Industry and Information Technology said Sept. 7. The ministry also cited risks to export demand and a limit to growth due to comparisons with higher year-earlier bases.

In China’s north, Hebei, the nation’s largest steelmaking province, is demanding that producers such as Tangshan Iron & Steel Group and Shougang Corp. curb output to save energy, according to a local-government website.

China Favoring Euros Over Greenback as Bernanke Shifts Course

(Bloomberg) -- China, whose $2.45 trillion in foreign-exchange reserves are the world’s largest, is turning bullish on Europe and Japan at the expense of the U.S.

The nation has been buying “quite a lot” of Europe’s bonds, said Yu Yongding, a former adviser to the People’s Bank of China who was part of a foreign-policy advisory committee that visited France, Spain and Germany from June 20 to July 2. Japan’s Ministry of Finance said Aug. 9 that China bought 1.73 trillion yen ($20 billion) more Japanese debt than it sold in the first half of 2010, the fastest pace of purchases in at least five years.

“Diversification should be a basic principle,” Yu said in an interview, adding that a “top-level Chinese central banker” told him to convey to European policy makers China’s confidence in the region’s economy and currency. “We didn’t sell any European bonds or assets, instead we bought quite a lot.”

China’s position may make it harder for the greenback to rebound after falling as much as 10 percent from this year’s peak in June as measured by the trade-weighted U.S. Dollar Index. The Asian nation cut its holdings of U.S. government debt by $72.2 billion, or 7.7 percent, through May from last year’s record of $939.9 billion in July 2009, according to the Treasury Department, which releases fresh data today.

U.S. Concerns

Concern that the U.S. economy may be faltering was underscored by the Federal Reserve on Aug. 10. The central bank, led by Chairman Ben S. Bernanke, said it will reinvest principal payments on its mortgage holdings into Treasury notes to prevent money from being drained out of the financial system, its first expansion of measures to spur growth in more than a year.

“The pace of economic recovery is likely to be more modest in the near term than had been anticipated,” the Federal Open Market Committee said in a statement after meeting in Washington. “The Committee will keep constant the Federal Reserve’s holdings of securities at their current level.”

Asian central banks holding some 60 percent of the world’s foreign-exchange reserves are turning away from the dollar. Concerned by weaker U.S. growth and the Treasury’s record borrowing, they are also switching toward euro assets to safeguard reserves, driving gains in the 16-nation currency. South Korea, Malaysia and India reduced their holdings of Treasury securities, U.S. government data show.

AgBank confirms greenshoe as IPO hits record $22.1 billion

SHANGHAI (Reuters) – Agricultural Bank of China (AgBank) said on Sunday it had fully exercised an over-allotment option for the Shanghai portion of its initial public offering, taking total proceeds from the offer to $22.1 billion, making the IPO the world's biggest.

The statement by AgBank, posted on the website of the Shanghai Stock Exchange, confirmed a Reuters report on Friday.

The exercise of the over-allotment, also known as a greenshoe, pushed AgBank's Hong Kong and Shanghai offering past Industrial and Commercial Bank of China's (ICBC) $21.9 billion IPO four years ago.

Over-allotments are released when demand for the shares in the after-market is heavy. Underwriters release the shares, set aside at the original IPO price, to the allocated holders who then become public stockholders.

AgBank had already exercised a similar option for its Hong Kong portion last month.

The exercise of the over-allotment brings the number of shares sold in AgBank's Hong Kong and Shanghai offerings to 54.79 billion, increasing the original $19.3 billion raised by 15 percent.

($1=6.77 Yuan)

China July Trade Surplus Surges as Imports Soften

China’s trade surplus unexpectedly climbed to an 18-month high and exports grew to a record in July, adding pressure on Premier Wen Jiabao to allow faster appreciation of the yuan.

The gap surged 170 percent from a year earlier to $28.7 billion, the customs bureau said, exceeding the forecasts of all 29 economists in a Bloomberg News survey. Exports rose 38.1 percent to $145.5 billion and imports climbed 22.7 percent to $116.8 billion, the bureau said on its website today.

China surpasses U.S. in energy consumption

China now consumes the most energy worldwide, surpassing the United States which held the global record for more than a century, reports the Wall Street Journal.

The United States used 2,170 million tons of oil equivalent last year, about 4% less than the 2,252 million tons of oil equivalent consumed by China, according to the story, which cites new data from the Paris-based International Energy Agency. The oil-equivalent measure includes all forms of energy such as oil, nuclear, coal, natural gas and renewable sources.

"The global recession hit the U.S. more severely than China and hurt American industrial activity and energy use," the story say, but it also notes that China's energy use has posted annual double-digit growth rates for years. A decade ago, it consumed half as much energy as the United States.

"The fact that China overtook the U.S. as the world's largest energy consumer symbolizes the start of a new age in the history of energy," IEA chief economist Fatih Birol told the Journal. He said the U.S. had been the biggest overall energy consumer since the early 1900s. The story adds:

China's voracious energy demand helps explain why the country—which gets most of its electricity from coal, the dirtiest of fossil-fuel resources—passed the U.S. in 2007 as the world's largest emitter of carbon dioxide emissions and other greenhouse gases.

The U.S. is still by far the biggest energy consumer per capita, with the average American burning five times as much energy annually as the average Chinese citizen, said Mr. Birol, who has been in his current role for six years.

The U.S. also is the biggest oil consumer by a wide margin, going through on average roughly 19 million barrels a day—with China at a distant second at about 9.2 million barrels a day. But many oil analysts believe U.S. crude demand has peaked or is unlikely to grow very much in coming years because of improved energy efficiency and more-stringent vehicle fuel-efficiency regulations.

Prior to the recession, China had been expected to become the biggest energy consumer in about five years, but the economic malaise and energy-efficiency programs in the U.S. brought forward the date of that superlative, Mr. Birol said.

The decreased energy "intensity" of the U.S. economy is a key reason investors, such as General Electric Co., have increasingly looked to China as a driver of future growth. Mr. Birol said China requires total energy investments of some $4 trillion over the next 20 years to keep feeding its economy and to avoid power blackouts and fuel shortages.

China exports up 44 percent in spite of global fears

Beijing, China (FT.com) -- China defied widespread fears about a new slowdown in the global economy to record another surge in exports last month compared to the same period last year, although the figures will also draw attention again to whether the Chinese currency remains undervalued.

A 44 percent increase in exports last month year-on-year led China to rack up another large monthly trade surplus in June, the $20 billion result adding to the surplus of $19.5 billion in May, which could indicate that China's external surplus might balloon again in the second half of the year.

The Chinese central bank announced on June 19 that it was abandoning a near two-year peg to the U.S. dollar. The renminbi has since appreciated 0.77 percent against the dollar.

The Obama administration responded by refraining from labeling China as a "currency manipulator" in a report released last week, although it said the renminbi "remains undervalued".

The June figures showed no signs of an expected slowing in global growth that has gripped investors, with exports to Europe increasing a higher-than-expected 43 percent, year-on-year, and to the U.S. 44 percent. In dollar terms, exports increased from $131.76 billion in May to $137.39 billion.

"China's trade account [is] continuing to defy gravity," said Tom Orlik, an economist at Stone & McCarthy in Beijing. "A resurgent trade surplus will clearly strengthen the argument for rapid appreciation of the renminbi."

Exports of steel -- one of the most politically sensitive sectors -- increased another 14 per cent in June over the month before to 5.6 million tones, although the government did announce in late June an end to export tax rebates for steel and other metals.

Imports grew 34.1 percent in June, year-on-year, down from the 48.3 percent expansion seen in May, which could be an indication that measures to slow the property market were already having an impact on investment in China.

More signs of domestic slowing were evident in other figures released over the weekend, including the M2 measure of money supply whose rate of growth fell to 18.5 percent in June, year-on-year, from 21 per cent in May and 29.7 percent in November.

China's foreign exchange reserves rose only by a relatively modest $7.1 billion in the second quarter to $2,454 billion -- compared to an increase in the whole of last year of $453 billion.
The muted increase was partly explained by a steep drop in the dollar value of China's euro assets, however economists said it could also reflect a significant capital outflow over the period as expectations about currency appreciation were scaled back.

Before the financial crisis, China was running a current account surplus well above 10 percent of GDP. However, the level of the surplus has dropped sharply over the past year -- including a trade deficit in March -- which allowed the authorities to deflect some of the international criticism about the level of its currency.

Going forward, analysts believe that imports could slow further as the property market clampdown and efforts to control borrowing by local governments for infrastructure projects will restrain the demand for imported raw materials.

As a result, the trade surplus is likely to be higher in the second half of the year, although the increase could be held in check if slowing economies in Europe and the U.S. eventually start to cut demand for Chinese exports.

China’s Rules to Curb Property ‘Madness’ Will Take Effect Now

(Bloomberg) -- China’s central bank pledged to immediately implement new lending rules to cool real-estate speculation and one of its policy advisers said the market is having its “last madness.”

The central bank commented in a statement on its Web site last night. Li Daokui, a newly appointed academic adviser to the monetary policy committee, spoke in an interview broadcast by state television on April 15.

Asset-price bubbles inflated by a credit boom could derail the recovery of the world’s fastest-growing major economy, which expanded 11.9 percent in the first quarter from a year earlier. China’s cabinet, the State Council, announced higher mortgage rates and down-payment ratios for second homes on April 15 after property prices jumped by a record in March.

Investors “don’t realize how strong and resolute the political will is among top leaders to curb price gains,” Li said on Central Television. The market is having its “last madness” and speculation may dissipate in a year or 18 months on extra action by local authorities and an increased supply of low-price, so-called policy homes, Li said.

Cheung Kong (Holdings) Ltd., the Hong Kong developer controlled by billionaire Li Ka-shing, said yesterday that efforts to cool the Chinese property market are “timely.”

“You want to take action before the market gets too hot,” Justin Chiu, executive director of Cheung Kong, said in a Bloomberg Television interview. “Prices have gone up really quite a lot; people buying for their own use should do it within their means. If they invest, they need to be cautious about interest rates.”

Stocks Fall

Under the new rules, down payments for second homes must be at least 50 percent, up from 40 percent, and mortgage rates can’t be lower than 110 percent of benchmark rates, the State Council said. Banks should also raise down payment ratios and rates for third homes “by a broad margin,” it said.

The Shanghai Composite Index fell 1.1 percent yesterday on concern that measures to cool the real-estate market may hurt economic growth and companies’ profits.

“We don’t think that’s the end of the policy crackdown on the property market and some shoes have yet to drop,” said Larry Wan, deputy chief investment officer at KBC-Goldstate Fund Management Co., which oversees about $583 million. “Property accounts for a big proportion of fixed-asset investment and if the property industry is down, the whole economy will get hurt. So will related industries such as banking and resources.”

Surging Prices

Property prices in 70 major cities surged 11.7 percent in March from a year earlier, the most since records began in 2005, government data showed last week.

In an April 15 statement after the release of first-quarter numbers for gross domestic product, the State Council said that local governments have failed to control speculation. Besides limiting the risk of price bubbles, policy makers want to keep housing affordable.

The government has yet to take another step which could help to cool the property market: raising benchmark interest rates. Instead, officials are targeting a 22 percent reduction in new loans in 2010 from last year’s record of $1.4 trillion.

In an April 14 statement, the State Council said first- quarter growth was largely driven by stimulus policies and a comparison with a low level a year earlier, signaling that officials may be cautious in withdrawing stimulus.

China’s economy is showing signs of overheating and officials may face a “grim” and difficult task in holding full-year inflation to a targeted maximum of 3 percent, said Li, a professor at Tsinghua University in Beijing. He was appointed as one of three academic advisers to the People’s Bank of China last month.

China becomes biggest importer of Bordeaux wine

China has overtaken the U.S. to become the largest export market for Bordeaux wine outside the E.U., sources reported.

Statistics from the Bordeaux Wine Council showed that China imported 13.7 million liters of bordeaux wine in 2009, which were valued at EUR 74 million.

However, the U.S. and Japan each bought 11.6 million liters. Four million and two hundred thousand liters were sold to Hong Kong for EUR 109 million.

Due to the global financial crisis, the demand for Bordeaux wine from the U.S., UK and Belgium, the major consumers of the wine, decreased by 44%, 33% and 16% year on year, respectively last year.

It is estimated that the export volume of Bordeaux wine to the Greater China region will increase by 50% as more and more Chinese middle class started drinking wine as a fashion.

Reportedly, sales of wine in China amounted to RMB 44 billion at retail price in 2009, up 12% from a year ago.

Chinese firm buys Volvo's car plant for $1.8 bn

China's Geely Holding Group has signed a deal worth $1.8 billion with Ford Motor Co. to acquire the US auto giant's Volvo car manufacturing unit in Sweden.

Under the definitive stock purchase deal, Geely will own 100 per cent of Volvo Cars and its related assets.

The agreement was inked Sundya by Li Shufu, founder and chairman of Geely, and Lewis Booth, chief financial officer of Ford, at Volvo headquarters in Goteborg, Xinhua reported.

The function was attended by Li Yizhong, China's minister of industry and information technology, and Maud Olofsson, Swedish deputy prime minister and minister for enterprise and energy.

The agreement provides a solid foundation for Volvo to continue to build its business under Geely's ownership, Booth said.

"China, the largest car market in the world, will become Volvo's second home market. Volvo will be uniquely-positioned as a world-leading premium brand, tapping into the opportunities in the fast-growing China market," Li said.

Geely has secured all necessary financing to complete the transaction, he said, adding that Geely intends to preserve Volvo Cars' existing manufacturing facilities in Sweden and Belgium, and explore opportunities to manufacture Volvo vehicles in China for the local market.

Li promised that Geely will maintain the strong collaborative relations that Volvo has built with employees, unions, suppliers, dealers and above all, customers.

Volvo Cars will eventually become a separate company with its own management team based in Goteborg and a new board of directors, he told reporters.

Volvo, which has about 22,000 workers around the world including 16,000 in Sweden, was purchased by Ford in 1999 for about $6.4 billion.

But Ford has been attempting to sell Volvo since late 2008, due to its poor market performance. Geely was named as the preferred bidder for the Swedish subsidiary in October 2009.

Geely, which started to manufacture cars in 1998, is a major private automaker in China, with its headquarters based in southeast China's Zhejiang province. Geely Holding Group is the parent company of Geely Automobile Holdings.

64 Chinese billionaires on Forbes list

Zong Qinghou

Forbes Magazine released its 2010 billionaire list Wednesday in New York, and China has 64 billionaires on the list, up from last year's 28, and becomes the country with the second-most billionaires.

Zong Qinghou, founder and chairman of Wahaha, a Zhejiang-based beverage giant, is the richest among Chinese billionaires, ranking 103rd place in the list with a wealth of $7 billion.

Chairman of Suning Appliance Zhang Jindong ranked 176th place with $4.5 billion and Wang Chuanfu, the founder of Chinese battery and electric car maker BYD, followed him closely with $4.4 billion.

Twenty-five billionaires from Hong Kong are also on the list and Li Ka-shing ranked 14th with a wealth of $21 billion.

Mexican Telecom titan Carlos Slim Helu took the title of the world's richest person from Bill Gates' pocket with a total net worth of $53.5 billion.

"For the third time in three years, the world has a new richest man," the magazine said.

Slim's fortune rose $18.5 billion in 12 months and he ranked third in the 2009 rankings. Shares of America Movil, of which Slim owns a $23 billion stake, were up 35 percent in a year.

Gates, the richest man last year, fell to second place with assets worth $53 billion. Master investor Warren Buffett, whose net worth increased by $10 billion to $47 billion, dropped from second to third.

This year's billionaires own a total net worth of $3.6 trillion, 50 percent up from $2.4 trillion in 2009, and their average worth was up $500 million to $3.5 billion.

In addition, the number of billionaires has soared from 793 last year to 1,011 this year.

"The global economy is recovering, and is reflected in what you see in this year's list," said Steve Forbes, chairman, CEO and editor- in-chief of Forbes Magazine.

The rich list still has the most Americans, but their grip is slipping. Americans account for 40 percent of the world's billionaires, down from 45 percent a year ago. The Americans' wealth makes up 38 percent of the collective net worth of the world's richest, down from 44 percent a year ago.

Among this year's 97 newcomers, 62 made their debut from Asia, "a region that saw swelling stock markets and several large public offerings during the past year," Forbes Magazine said.

China Raises Bank Reserve Requirement to Cool Economy

(Bloomberg) -- China ordered banks to set aside more deposits as reserves for the second time in a month to cool the fastest-growing economy after loan growth accelerated and property prices surged.

The reserve requirement will increase 50 basis points, or 0.5 percentage point, effective Feb. 25, the People’s Bank of China said on its Web site today. The current level is 16 percent for big banks and 14 percent for smaller ones.

China's First Eastern set to launch Dubai fund

(ft.com) A leading Chinese financial group is in advanced preparations to launch a Dubai-focused investment fund, highlighting global interest in a rebound in Gulf economies.

Dubai said in November it would call a standstill on billions of dollars in debts, prompting a bail-out loan of $10bn from oil-rich Abu Dhabi to prevent a damaging default.

The crisis of confidence surrounding the city's $100bn-plus debt pile capped a year of deep recession as the overheated real estate sector finally crashed.

First Eastern Investment Group, an independent Hong Kong-based group, is aiming for a $250m fund, of which it will supply anchor capital of $50m.

The fund is testament to ever-closer business ties between China and the Gulf. It would appear to be the first fund to target the troubled Dubai economy in a bet that the city will recover as higher oil prices lift the prospects of the oil-rich Gulf.

First Eastern is in talks with Abu Dhabi-based investors to supply a further $50m, and it plans to tap Chinese and global interest in the fund in the coming weeks.

Victor Chu, First Eastern chairman, told the Financial Times his group believed that the Dubai economy would recover and progress on a more sustainable footing.

The fund would focus on investing in regional business services companies in areas such as shipping and oil, he said.

Some sectors of Dubai's economy, such as aviation and trade, have weathered the crisis better than the harder-hit businesses in finance and real estate. But the loss of liquidity has left many companies - including those in Gulf states less affected by the crisis - short of credit.

The fund would also seek to invest in Gulf hotels, which would be refashioned to cater for the growing number of Chinese visitors.

"We want to support sustainable businesses connected to Dubai as a trading, logistical and financial centre," Mr Chu said. "We would use our contacts to also help them expand in China and across Asia."

A successful fund launch by First Eastern would be the latest in a number of initiatives to capitalise on rising Chinese interest in investing overseas.

The group's securities arm, which holds investment banking licences in Hong Kong, London and Dubai, is looking to acquire a presence in the US. It is also aiming to raise a Rmb6bn ($879m) localcurrency fund in China, after becoming the first foreign private equity group allowed to set up a Shanghai-incorporated subsidiary.

Companies from the Chinese province of Wenzhou are planning a trip to Dubai next month to invest in assets as the market starts to stabilise, but local brokers report that wholesale transactions are still rare. Sellers have been unwilling to lower their offers to reasonable levels in spite of the severe correction.

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U.S. - China disputes

With the two giant nations joined at the hip economically, Sino-U.S. tensions are unlikely to escalate into outright confrontation, but could make cooperating on global economic and security issues all the more difficult.

Here are the main sources of tension:

CURRENCY AND DEBT

The United States complains that China keeps its currency artificially undervalued, thus giving its exporters an unfair advantage.

China has unofficially pegged its currency to the dollar since mid-2008, meaning its currency has weakened against other trade partners as the value of the dollar has slid.

Beijing is concerned the value of its dollar holdings could be eroded by massive debt issuances to fund the U.S. stimulus.

China held $798.9 billion in U.S. Treasuries at end-October, displacing Japan in September 2008 as the largest foreign holder.

TRADE AND INVESTMENT

China is requesting the World Trade Organization open a dispute panel over U.S. duties on tires, after the United States for the first time imposed safeguard duties China had agreed to when it joined the WTO.

Other trade disputes center around steel products, poultry, Chinese tariffs on raw materials exports, and quality and safety concerns over Chinese-made food, toys and other goods that Chinese manufacturers view as a type of protectionism.

U.S. firms investing in China complain about intellectual property theft, murky regulations, corruption and unfair advantages enjoyed by domestic rivals.

China complains about investment barriers on the U.S. side, citing resource investments blocked on national security grounds.

In 2008, U.S. exports to China totaled $69.7 billion, but were dwarfed by $337.8 billion in exports from China to the United States, now Beijing's second biggest trade partner.

DIPLOMATIC AND MILITARY INFLUENCE

As China has grown to the world's third largest economy it is gaining greater clout, especially in Asia and Africa.

It is also upgrading its military and space capability, and Washington has said Beijing should be more open about its defense spending and strategic intentions.

China, however, remains wary of the United States' global military dominance. U.S. patrols in waters China considers its exclusive zone led to minor incidents last year. In 2001 a U.S. spy plane was forced to land in China after colliding with a Chinese fighter.

China hosts stalled six-party talks seeking to end North Korea's nuclear weapons program. But China has also sought to bolster bilateral tries with North Korea.

Washington wants China's stronger cooperation in pressuring North Korea, as well as Iran, over their nuclear activities.

Taiwan also remains a sore point. Beijing has never renounced the use of force to bring self-ruled and democratic Taiwan, which it considers its sovereign territory, under its rule. The United States says it has an obligation to help the island defend itself, and its weapons sales to Taiwan have drawn growing ire from Beijing.

INTERNET

U.S. Internet firms have fared poorly in China, which censors content and blocks many foreign websites, including popular social media such as Twitter and Facebook.

U.S. Secretary of State Hillary Clinton plans to launch an Internet freedom initiative next week, in a move that China -- as well as Iran, Myanmar and North Korea -- could see as threatening its internal controls.

American corporations and military strategists are increasingly concerned over skilled attacks by Chinese hackers, which they fear threaten corporate and national security.