Posts tagged ‘PetroChina’

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14/04/2015

Why the Trial of Former Chinese Oil Executive Jiang Jiemin Matters – China Real Time Report – WSJ

A court in central China’s Hubei province today began hearing the case of Jiang Jiemin, the former chairman of China’s biggest oil company who also briefly headed a government commission that oversees state-owned firms.

Though Mr. Jiang may not be a household name, his trial marks the most senior-level prosecution of a Communist Party official in President Xi Jinping’s anticorruption drive, which has targeted both large state industries and their political backers over the past two years.

Far more important than his past role as head of the State-owned Assets Supervision and Administration Commission was Mr. Jiang’s previous tenure as chairman of China National Petroleum Corp. Following his appointment to that role in 2011, CNPC’s revenue rose, and it grew to rival Exxon Mobil Corp. in total market value.

Mr. Jiang was tapped to head Sasac in 2013, just as several other oil-company executives were becoming ensnared in corruption allegations or disappeared from view.

While Sasac oversees state-owned companies, in practice analysts say it is weaker than the larger, clout-wielding companies it supervises.

Mr. Jiang’s trial is being closely watched in part to see if it yields any details about the circumstances surrounding the downfall of Zhou Yongkang, the country’s granite-faced former security chief, who was formally charged with bribery and abuse of power earlier this month. Mr. Jiang had risen through the ranks of the country’s oil industry under Mr. Zhou.

It is also being watched for further details of corruption investigations involving other politicians and officials in the country’s oil industry, a key target for Mr. Xi’s campaign. The trial began at 8:30 a.m. Monday and was announced in a brief notice on the Hubei Hanjiang Intermediate People’s Court Weibo account. Without elaborating, the court said Mr. Jiang faces charges in connection to bribe-taking, holding a large amount of property that came from unidentified sources and abuse of power.

The court said Mr. Jiang has a lawyer and didn’t object to the charges that include taking bribes, holding assets from unexplained sources and abusing his power.

Like Mr. Jiang, Mr. Zhou had previously served as the head of CNPC. A wide network of Mr. Zhou’s acquaintances and family members have been caught up in a far-flung investigation involving deals in areas where Mr. Zhou oversaw power, involving deals worth tens of millions or more.

Officials of Mr. Zhou’s standing have traditionally been considered off limits, but under Mr. Xi, that is changing.

Mr. Zhou is expected to face trial as are other associates, including Li Chuncheng, former deputy party secretary of Sichuan, who worked under Mr. Zhou from 1999-2002

via Why the Trial of Former Chinese Oil Executive Jiang Jiemin Matters – China Real Time Report – WSJ.

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01/09/2014

State-owned enterprises: Fixing China Inc | The Economist

JIN JIANG is one of the world’s biggest hotel groups, managing five-star properties across China, a budget motel chain and a travel agency. It is also a state-owned enterprise (SOE), controlled by the Shanghai government. It has seen better days. The company’s best hotels played host to hundreds of foreign leaders in the past century, including Richard Nixon in 1972, when America and China began their historic rapprochement. But in recent years visiting dignitaries have opted for newer hotels over Jin Jiang’s musty rooms and tired furnishings.

When people think of Chinese state companies, they often have its giant banks or oil companies in mind. But most of the 155,000 enterprises still owned by the central and local governments are more akin to Jin Jiang: they are businesses that have little to do with the country’s economic or political priorities, and they have had a run of bad years, losing ground to private-sector rivals. That may be about to change. China is in the midst of the biggest attempt in more than a decade to fix the country’s brand of state capitalism, attempting to breathe new life into Jin Jiang and dozens, if not hundreds or even thousands, more like it.

There are two main problems with China’s SOEs today. First, they have failed to comply with the government’s order to focus on what are deemed to be “strategic sectors” such as aviation, power and telecommunications. These are industries that the Communist Party believes it must dominate in order to maintain control of an increasingly complex economy. But fewer than half of state companies occupy these commanding heights. Some 80,000 are instead in the economic lowlands: they run hotels, build property developments, manage restaurants and operate shopping malls. The temptations to branch out have been too great: relative to their private-sector peers, they have benefited from cheaper financing from state-owned banks, favouritism from local governments in land sales and a lighter touch from regulators.

Second, despite these advantages, SOEs have given progressively less bang for their buck. Faced with mounting losses in the 1990s, China undertook a first round of drastic reforms of its state-owned companies. There were mass closures of the weakest firms, tens of millions of lay-offs and stockmarket listings for many of the biggest which made them run a little more like private companies. That initially paid dividends. SOEs’ return on assets, a gauge of their productivity, rose from barely higher than zero in 1998 to nearly 7% a decade later, just shy of the private-sector average. But over the past five years, their fortunes have ebbed. Profitability of state companies has fallen, even as private firms have grown in strength. SOE returns are now about half those of their non-state peers. For an economy that, inevitably, is slowing as it matures, inefficient state companies are a dangerous extra drag. Jian Chang of Barclays says that putting SOEs right is “the most critical reform area for China in the coming decade”.

Until recently, however, few analysts thought that China had the desire or the ability to get back into the muck of SOE reform. Companies under the central government, such as PetroChina, the country’s biggest oil producer, were believed to be strong enough to resist the changes that would erode their privileges. At the provincial and municipal levels, local officials were thought bound to government-owned companies by ties of power, patronage and money. China was not expected to sit entirely still: gradual deregulation of interest rates and energy pricing was placing indirect pressure on state companies to operate more efficiently. But a direct, frontal assault on them of the kind waged by Zhu Rongji, then prime minister, in the 1990s seemed out of the question. Even when the party unveiled a much-ballyhooed reform plan last November and vowed to target SOEs, there were doubts about how far Xi Jinping, China’s president, could go. People close to the State-owned Assets Supervision and Administration Commission (SASAC), the agency that oversees China’s biggest SOEs, say that it was still dragging its feet at the start of this year.

But a flurry of announcements in the past few months shows that reforms are getting on track. There is no one-size-fits-all approach. Sinopec, Asia’s biggest refiner, is close to selling a $16 billion stake in its retail unit, a potentially lucrative opening for private investors. CITIC Group, China’s biggest conglomerate, is poised to become a publicly traded company by injecting its assets into a subsidiary on the Hong Kong stock exchange, for $37 billion. After its initial reluctance, SASAC announced reforms at six companies. They are to experiment with larger private stakes and greater independence for directors.

via State-owned enterprises: Fixing China Inc | The Economist.

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23/11/2013

Property in China: Haunted housing | The Economist

IN CHINA, property prices can keep going up forever. At least, that is what optimists seem to think. They point out that the country is undergoing the largest urbanisation in history. The throngs of migrants from the countryside all need homes, the argument runs. China’s swelling middle classes, many of whom live in shoddy 1980s housing, are also eagerly moving to fancier flats or McMansions. The result has been a spectacular property boom over the past decade.

At first glance, it seems the good times are still rolling (see chart). During the first three quarters of this year residential sales shot up by 35% versus the same period a year ago. Prices for new homes rose year-on-year in September in 69 of the 70 biggest cities. In Shanghai, Shenzhen and Beijing prices jumped by more than 20%; in slightly smaller cities, such as Nanjing and Xiamen, they rose by around 15%.

Despite these signs of rude health, even some of China’s biggest property moguls appear to be growing uneasy. Wang Shi, the chairman of China Vanke, the country’s largest residential-property firm by volume, has called the market a bubble. Wang Jianlin, the country’s richest man and the chairman of Dalian Wanda, a property giant turned entertainment firm, acknowledges that parts of the country may be experiencing a property bubble, though he thinks it “controllable”. Li Ka-Shing, a Hong Kong tycoon who has long been bullish on China, has started to sell his mainland holdings.

The problem is not the wealthiest cities with the most vertiginous valuations. Indeed, in those markets prices may yet go higher. People from all over China buy trophy apartments in Shanghai and Beijing, making their markets as resilient as those of Manhattan and central London. In fact, policies aimed at squelching speculation may be artificially suppressing demand in those places.

Shanghai and Shenzhen recently followed Beijing’s lead by requiring that buyers of second homes put up 70% of the purchase price as a deposit. In Beijing, the sale of a second home incurs a 20% capital-gains tax. (This is supposedly a nationwide policy, but is not always enforced in other cities.) Couples with two homes are reportedly divorcing to avoid the tax, since once officially single they can each own a primary residence, and thus sell either one without penalty.

Demand does not look so robust, however, in places like Yingkou Coastal Industrial Base, in north-eastern China. This development was promoted by the local government as a future hub of economic activity, but the future has not yet arrived. There are rows of empty buildings and few people on the streets. Property salesmen claim that big companies ranging from Coca-Cola to PetroChina are building factories nearby. But even Xinhua, an official media outlet, is sceptical: except for street lamps and the occasional passing vehicle, it reported recently, “at night the base was completely dark.”

Many property developments outside the big cities appear to be ghost towns of this sort. Moody’s, a credit-rating agency, laments that a large and rising share of new supply has gone to smaller cities. People’s Daily, another official organ, recently fulminated against the “huge waste of resources” such construction represents. Nonetheless, by the government’s count, 144 cities in 12 provinces are planning 200 new towns.

via Property in China: Haunted housing | The Economist.

Posted in China alert, Construction, debt, Economics, Housing, housing, local government debt, Politics, real estate | Leave a Comment »

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04/11/2013

China sends graft busters to more provinces, government departments | Reuters

As the anti-corruption campaign gathers pace, one cannot but be reminded of the Joe McCarthy ‘red under every bed’ anti-communist ‘witch hunt’ of the 50s in the US. See – http://www.coldwar.org/articles/50s/senatorjosephmccarthy.asp.  

The main difference, I suppose, is that there were far fewer ‘commies’ than McCarthy suspected; but one wonders if there will be far more corrupt officials than the Chinese Watchdog suspects.

“China has sent anti-corruption investigators to six more provinces and four government departments, the Chinese Communist Party\’s corruption watchdog said on Monday, in the government\’s latest move to tackle graft.

The Central Commission for Discipline Inspection has dispatched inspectors to government departments that include official news agency Xinhua and the Commerce Ministry, the watchdog said in a statement on its website.

Other targets include the southern economic powerhouse of Guangdong, coal-rich Shanxi and the Ministry of Land and Resources.

Since taking office in March, Chinese President Xi Jinping has called corruption a threat to the ruling Communist Party\’s survival and vowed to go after powerful \”tigers\” as well as lowly \”flies\”.

Authorities have already announced the investigation or arrest of a handful of senior officials. Among them, former executives from oil giant PetroChina are being investigated in what appears to be the biggest graft probe into a state-run firm in years. These investigations are unrelated to this new round of probes, or the previous one, which began in May.

The May probes, which lasted through the summer and reported back in September, targeted five regions and five departments, including the poor southern province of Guizhou, the southeastern province of Jiangxi and coal-rich Inner Mongolia, as well as the state-owned China Grain Reserves Corporation and the China Publishing Group Corp.

The party has so far given few details of the outcome of the first round of investigations, in line with its secretive nature, though the anti-corruption watchdog publishes website reports of a steady stream of minor officials being probed.

Speaking to officials in October ahead of this new round of probes, Wang Qishan, the head of the Central Commission for Discipline Inspection, urged colleagues to spare no effort in rooting out corruption.”

via China sends graft busters to more provinces, government departments | Reuters.

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07/09/2013

China’s Sinopec to produce cleaner gasoline from October

Reuters: “China‘s Sinopec Corp will produce lower sulfur gasoline from October, three months ahead of an official mandate, as part of a national effort to clear up the smoggy air of Chinese cities.

Except for two subsidiary plants that are undergoing maintenance, the top Asian refiner will cut sulfur in all its gasoline production from 150 parts per million (ppm) to 50 ppm from October 1, a company official said.

The new standard, national IV, is similar to Euro IV.

China, the world’s second-largest oil consumer that burns roughly two million barrels per day of gasoline, rolled out in 2011 the national IV standard for gasoline and set a January 2014 deadline to make it applicable nationally.

Despite slowing economic growth, Chinese demand for gasoline has expanded much faster than diesel this year, thanks to strong growth in car sales.

Subsidiary plants in Fujian and Hainan will move to the new grade in November after overhauls, the company official said.”

via China’s Sinopec to produce cleaner gasoline from October | Reuters.

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29/08/2013

China environment min suspends some approvals for Sinopec, CNPC

Reuters: “China’s environment ministry will stop approving some new refining projects and upgrades of existing facilities by the country’s top state-owned oil firms after the two failed to meet key pollution targets in 2012, it said on Thursday.

Workers walk inside China National Petroleum Corporation (CNPC) Lanzhou Chemical Company in Lanzhou, capital of northwest China's Gansu province April 27, 2007. REUTERS/Jason Lee

The Ministry of Environmental Protection (MEP) said China National Petroleum Corporation (CNPC) failed to meet targets to cut chemical oxygen demand in 2012, while Sinopec Group failed to meet a target to cut nitrogen oxide emissions.

Officials from the companies were not immediately available for comment, although the Communist Party mouthpiece People’s Daily said the MEP’s move would have no impact on 790,000 barrels per day of refining capacity now under construction.

The ministry said in a notice posted on its website (www.mep.gov.cn) that it would suspend approvals of environment impact assessments for all new refining projects from the two oil giants, apart from any upgrades that target fuel pollution specifications or other environmental renovations.

“Such tough punishment on the two oil majors is unprecedented – it is a warning to others,” said Wang Tao, resident scholar at the Energy & Climate Program of the Carnegie-Tsinghua Center for Global Policy in Beijing.

“But the MEP has only suspended approval for their new refineries, and what we really need is for them to take strong measures to curb pollution from existing refineries,” said Wang.

CNPC is the parent of PetroChina, China’s dominant oil and gas producer. Sinopec Group is the parent of top Asian refiner Sinopec Corp.

The MEP and its local branches have struggled to impose their will on state-owned industrial enterprises, which are big sources of economic growth as well as pollution. But Beijing has promised to get tough on firms accused of ignoring environmental rules or approval procedures.

People’s Daily said on Thursday the decision “demonstrated China’s determination when it comes to pollution emissions.””

via China environment min suspends some approvals for Sinopec, CNPC | Reuters.

See also: https://chindia-alert.org/economic-factors/greening-of-china/

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