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News from China

Pressure piles on VW CEO in US test scandal

22nd September 2015

Pressure piled on the head of Volkswagen yesterday in the wake of an emissions-testing scandal that’s seen 15 billion euros (US$16.9 billion) wiped off the company’s market value.

Following revelations that the German carmaker had rigged US emissions tests for about 500,000 diesel cars, VW CEO Martin Winterkorn apologized on Sunday for the fact that his company had “broken the trust of our customers and the public.”

But saying sorry wasn’t enough for investors as they digested the financial and reputational implications of the scandal on the world’s biggest carmaker by sales — VW’s share price fell by a stunning 17.14 percent to close at 133.70 euros in Frankfurt. Earlier it had tumbled by more than 20 percent.

In the wake of Friday’s revelations from the US’s Environmental Protection Agency, VW has already halted sales of some vehicles in the United States and pledged to cooperate with regulators in an investigation that could, in theory, see the company fined up to US$18 billion.

Industry analysts said Winterkorn faces difficult questions in the coming days, particularly when the company’s board is scheduled to meet on Friday.

“At the moment, I’d be surprised if Winterkorn can ride this out, but in Germany there’s often a slightly slower process in these matters,” said Christian Stadler, a professor of strategic management at Warwick Business School.

Stadler said that if VW were a US company, then the CEO would have gone more or less immediately.

In essence, VW stands accused of skirting the US’s clean air rules. The EPA said VW used a device programed to detect when the cars are undergoing official emissions testing. The software device then turns off the emissions controls during normal driving situations, allowing the cars to emit over the legal limit of pollutants.

Guido Reinking, a German auto expert, said that for a company to engage in such blatant trickery its top executives would have to be informed.

Winterkorn led research and development across the VW group from 2007. He became chairman of the management board the same year.

“It’s almost impossible to imagine that he didn’t know about this special way of programing the engine,” Reinking told German television station n-tv.

Source: Shanghai Daily, September 22, 2015

Israel eyes 20,000 Chinese workers

21st September 2015

ISRAEL plans to bring in 20,000 Chinese construction workers to help build new apartments as part of efforts to lower housing costs, Prime Minister Benjamin Netanyahu said yesterday.

Netanyahu announced the plan at the start of a cabinet meeting, his office said. The finance ministry later said the cabinet had approved it.

Israeli attorney general Yehuda Weinstein has opposed the move because the two countries lack a formal agreement related to such cooperation.

The lack of an agreement can lead to immigrant workers paying middlemen hundreds or even thousands of dollars to obtain permits.

Chinese workers are currently brought into Israel under private contracts between Israeli and Chinese companies. The two countries have been engaged in negotiating working conditions, but have not yet reached an accord.

A statement from the ministry said that because of the urgency of the matter, the workers would be brought without a bilateral agreement, while creating mechanisms to ensure their rights were protected and prevent them from paying middlemen for permits.

Netanyahu said that it was important to move forward despite “side costs,” with the cost of living a major issue in Israel.

“In my view, this is a necessary and important step to lower housing prices,” Netanyahu said.

Source: Shanghai Daily, September 21, 2015

China's housing market continues recovery

18th September 2015

China's housing market continued to pick up in August, with new home prices in an increasing number of surveyed cities registering month-on-month rises.

Of the 70 large and medium-sized cities surveyed, new home prices climbed month on month in 35, up from 31 the previous month, with 26 reporting month-on-month price declines, down from July's 29, according to data released on Friday by the National Bureau of Statistics (NBS).

Year on year, 62 cities reported new home price drops, down from July's 67, with Shenzhen posting a sharp rise of 31.8 percent in home prices.

For existing homes, 16 cities saw price declines in August on a monthly basis, 11 reported flat prices, while 43 cities posted gains.

According to NBS statistician Liu Jianwei, the number of cities with price increases in both new houses and second-hand houses grew in August on a monthly basis but with a smaller margin due to narrowing rise in first-tier cities.

Home prices in top-tier cities, where demand is high, saw strong growth year on year. While in second-tier cities, both new and existing home prices recorded mixed performances and for third-tier cities, home prices continued to decline.

China's housing market took a downturn in 2014 due to weak demand and a surplus of unsold homes. The cooling has continued into 2015, with both sales and prices falling and investment slowing.

The central bank has moved to combat the slowdown, cutting benchmark interest rates four times since November and lowering banks' reserve requirement ratio twice since February.

To help the emerging signs of improvement in the property sector, the country also eased down payment requirements for second-home purchases and some local governments have rolled back their restrictions on home purchases.

Source: Xinhua

Xi's U.S. tour to set tone for bilateral ties: Chinese experts

17th September 2015

President Xi Jinping's visit to the United States coincides with the reconstruction of bilateral ties and it will be an important forum to discuss the future path of relations, according to Chinese experts on Wednesday.

The Foreign Ministry announced on Wednesday that Xi will pay his first state visit to the U.S. from Sept. 22 to 25.

"The visit will be a milestone of great significance," said Su Ge, president of the China Institute of International Studies (CIIS), at the Foreign Ministry's 14th Lanting Forum.

He said this visit will be on par with one made by late Chinese leader Deng Xiaoping in 1979, who showed China's resolve to open the nation to the world shortly after the two countries established formal diplomatic ties.

Su expects Xi's visit to set the tone for the future direction of the relations between the two major countries.

Foreign Minister Wang Yi said at the forum that both sides will use the opportunity to reaffirm their respective development direction and strategic intentions, their growing common interests and their common responsibility for peace, stability and development.

Wang Yizhou, a Peking University professor, said China-U.S. relations were "in a state of reconstruction."

The United States' engagement with China over 40 yeas ago was based on the common threat the two sides were facing -- the Soviet Union, and at that time China was weak, Wang noted.

This situation, however, has now changed. China and the United States have no common threat, instead they face different challenges and differences.

"The current scenario has no precedent, so both countries must revisit their relations," Wang added.

Despite ever-growing economic ties, China and the United States have differences in a series of issues concerning cyberspace security, the South China Seas and others.

"China-U.S. relations are at a turning point," said Yuan Peng, deputy president of China Institute of Contemporary International Relations, who added that due to a change in balance of power between the two countries, and the profound transformation of the world, it is not unusual that some negative views about China-U.S. relations have emerged.

Xi's visit can bring positive elements together with his U.S. counterpart Barack Obama, and in addition, Xi can explain China's new round of reform in a bid to strengthen mutual understanding, Yuan said.

Ruan Zongze, executive deputy of CIIS, said Xi's U.S. tour during the period of reconstruction of the bilateral ties will be important over the next years.

"It is a historical period of mutual construction, which means that China is no longer has a passive role in bilateral ties, as it has put forward concepts and ideas of its view of the future," Ruan said, referring to the new relationship between the great powers.

Ruan added that the U.S. should take a positive attitude toward the rise of China, because China's development will brings bigger opportunity for China-U.S. cooperation.

Source: Xinhua

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