Guideline focuses on boosting economy

Date May 31 2013 11:11:53

The National Development and Reform Commission released a guideline covering luxury and property tax, as well as other sectors of the economy.

The guideline, issued on Friday, also promotes energy-saving measures and green development. 

The commission vowed that excessive energy consuming products "will be subject to taxation".

Some items previously categorized as luxury goods will be eliminated from the bracket, said Kong Jingyuan, director-general of the department of comprehensive reform under the commission. 

The guideline said the property tax pilot program, currently in operation in Shanghai and Chongqing, will be expanded to more regions. Kong said authorities are currently studying detailed plans for the expansion. 

A detailed development plan for the urbanization strategy will be formulated, the guideline said. 

Lian Qihua, deputy director-general of the department of comprehensive reform, said the plan will be published "within this year", and a working conference for urbanization will also be held within the year. 

Lian denied an earlier report that the urbanization plan was rejected by top decision makers due to concerns over further expansion of local government debt.

Report by SHMET

Details of China's import ban on low-CV thermal coal

Date May 23 2013 11:02:16
May.23,2013(SHMET)--The precise scope of China's proposed ban on the importation of lower calorific value thermal coal has become clearer after Platts was given sight of a copy of the relevant draft regulation and has been able to publish its contents for concerned market participants.

The draft regulation, originally in Chinese, was published by China's National Energy Administration -- a government body that frames energy policy in the country -- and was circulated earlier this month to market participants in China for comment.

Translated by Platts into English, the draft regulation says the NEA is proposing that to enter China, imports of thermal coal should have a calorific value of at least 4,540 kcal/kg on a net-as-received basis, a maximum sulfur content of 1%, and a maximum limit for ash of 25% on an as-received basis, but does not include any detail on specifications for total moisture.

The proposed ban would be temporary in nature, says the NEA document without giving any more details.

Clarification on the exact details of the proposed imports ban has been sought from Platts by a number of market sources.

They wanted to know if the limits on ash and sulfur were framed on an as-received or air-dried basis as this could seriously affect their business contracts.

The NEA's draft regulation also states that minimum limits should apply to domestic brown coal, or lignite, produced in China, with the minimum acceptable level for this product being 2,870 kcal/kg NAR, maximum sulfur of 3%, a maximum ash content of 40%, and a total moisture content of 40% on an as-received basis.

Other domestic, non-lignite thermal coal should have a minimum calorific value of 3,585 kcal/kg NAR, a maximum sulfur content of 3%, a maximum ash content of 40%, and maximum total moisture of 40% -- on an as-received basis.

In addition, domestically-produced metallurgical coal should have a maximum ash content of 12%, a maximum total moisture content of 12%, and a maximum sulfur content of 1.75% -- on an as-received basis, the NEA document said.

The draft regulation issued by the NEA does not specify any implementation date for its proposals, including the imports ban on low-CV thermal coal.

According to market sources, it is usual practice for the NEA to give a certain grace period before its  regulations are implemented, so as to allow Chinese coal buyers with supply contracts for imported coal and their overseas suppliers time to adjust to the changed requirements.

The NEA said separately, in an explanation of the reasons for its draft regulation setting out its proposed ban on imports of low calorific value thermal coal, that this measure was intended to better regulate the production and distribution of coal products in China.

Another reason given by the NEA for its regulation was that it wanted to improve the utilization of cleaner coal products in China, although the agency does not specifically mention environmental protection as a goal.

Persistent smoggy weather in northern China has been considered by a significant number of market sources in China as a major underlying reason for the regulation's drafting.

Report by SHMET

China plans new quality standards for thermal and coking coal

Date May 21 2013 10:28:48

China is looking to set quality standards for both imported and domestic traded thermal and coking coal and bar the import and domestic delivery of coal that do not meet the new standards, according to a draft regulation from the National Energy Administration obtained by Platts late Thursday.

The NEA is preparing the new regulation with the aim to reduce air pollution, and is now in the process of seeking feedback from the coal industry, market sources said.

Proposed quality standards for imported thermal coal, or thermal coal to be "delivered in long distance," are: maximum 25% ash on dry basis, maximum total sulfur content of 1% on dry basis and net calorific value of no less than 19 mega joule/kg (4,540 Kcal/kg), according to the draft.

The draft however, did not give a definition on "long distance."

As for domestic traded coal, the proposed specifications for domestic traded thermal coal are: maximum 40% ash on dry basis, a maximum total sulfur content of 3% on dry basis, no more than 20% total moisture, and net calorific value no less than 15 MJ/kg (3,584 Kcal/kg).

This means domestically produced thermal coal that do not meet the proposed quality standards for coal imports will need to be traded and consumed locally within its region of production, through the use of clean technology such as desulfurization.

For coking coal, the draft has set the quality standards for all coking coal traded in China at a maximum 12% ash content, no more than 1.75% of total sulfur and maximum 12% total moisture content.

The proposed standards are applicable to both domestic and imported coking coal and is seen as a move to stop Chinese traders from importing un-washed or high-sulfur coking coal, market sources said.

"The draft is generally targeting at thermal coal, so at this early stage, the central government officials are asking for feedback from miners and power plants," a source at large state-owned mining company told Platts.

A purchasing manager at a large state-owned mill and two sources with large international coking coal trading companies said they had not been invited for discussions yet.

An industry analyst who had taken part in the discussion with government officials told Platts that he thought the rules need to be further modified, as "people can just import coking coal under the name of thermal coal," he said, adding that some thermal coal importing companies and power plants were resisting strongly.

"But the government is determined," the mining source said, adding that "the industry can only fight for a lower standard."

The mill purchasing manager said he was not worried about the new proposed standards as they are already buying high-quality coking coal. The two coking coal trade sources however, said they would wait for the new standards to be officially announced and implemented before they can assess the impact.

Report by SHMET

China considers resource tax to include coal

Date May 15 2013 10:26:05

A Chinese government official has signaled that tougher taxes on the use of resources and on emissions would be imposed so the country can achieve greener industrial development.

Writing in China's Qiushi magazine, Vice Premier Ma Kai called for an increase in funds needed to tackle pollution "via taxation measures."

"We will continue to push forward a pricing mechanism by soliciting opinions from multiple parties, including government, enterprises and consumers," he said.

Ma also called for more use of renewable energy such as hydro and nuclear power and suggested an escalating scale for electricity charges, with higher charges imposed for excessive users.

China introduced a round of reforms in November in which the resources tax for oil and gas moved from volume-based to a value-based tax, set at 5 percent of the value of the oil and gas produced. China National Offshore Oil Corp. in its 2012 annual report said the revised tax policy increased oil production costs by nearly 17 percent per barrel.

But those reforms didn't include coal, which is still taxed by volume and accounts for about 70 percent of the country's energy generation. In March the government set a target to cap coal consumption to 4 billion tons by 2015.

Jia Kang, director of the Research Institute of Fiscal Science at the Ministry of Finance, told China Daily the introduction of an all-encompassing resource tax that includes coal would be a "tough fight," although it would force factories to restrict excessive production and adopt more energy-saving technologies.

While there are no exact details about a possible coal tax, analysts say the government likely would follow the oil and gas model and introduce a value-based tax of about 5 percent on coking and thermal coal.

"Implementing a value-based resources tax on coal would have a huge impact on coal and energy prices, so it's a question of whether the economy can withstand that change," Yang Zongxing, an analyst with Donghai securities in Shanghai, was quoted as saying by the Financial Times.

As for emissions, regional pilot emissions trading schemes will soon begin in five cities, including Beijing, Shanghai and Shenzhen and in the provinces of Guangdong and Hubei. Together, the areas cover a population of more than 250 million people.

Shenzhen is scheduled to be the first to begin, on June 17. Shanghai has also said it will launch in June, although no date has been set.

The world's largest emitter of carbon dioxide, China has pledged a 17 percent cut in its emissions per unit of economic output by 2015, compared with 2010 levels.(chinamining)

Report by SHMET

China tightens regulation over wealth management products

Date May 08 2013 11:01:52

China's banking regulator has moved to tighten its regulation over banks' wealth management products to dissolve risks in the shadow banking system that may jeopardize the country's financial stability.

The China Banking Regulatory Commission (CBRC) said on Thursday that it would strictly control the direction of investment by wealth management products to ensure such investments are in line with the state's macro and industrial policies and support the physical economy.

The banking regulator vowed to closely monitor bank operations using money pooled from sales of wealth management products, short-term financial products yielding a much higher rate than bank deposits.

The benchmark interest rate of one-year deposits stands at 3.25 percent.

Such wealth management products are considered an important part of China's shadow banking system, a complex and unregulated sector that has emerged and grown significantly in China in the last few years.

The CBRC ordered banks to fully disclose information on wealth management products and vowed to tighten oversight over sales activities of such products through covert investigations.

Risk warning must be prioritized and unauthorized sales and misleading words are prohibited in sales of such products, according to the CBRC.

The tightening of regulation over wealth management products came after Chinese banks' rushing to sell such off-balance-sheet products in recent years to evade regulatory oversight, raising concerns that they may threaten financial stability in the world's second-largest economy.

Sales of wealth management products have helped channel funds to borrowers or activities explicitly banned by government regulation amid efforts by the State Council, or China's cabinet, to rein in the property sector by limiting bank loans to real estate developers.

Some estimate wealth management businesses have accumulated to a combined level equal to about 5 percent of the banking sector's assets, which stood at 133.6 trillion yuan (about $21.5 trillion) at the end of last year.

The banking regulator also sounded the alarm over loans extended to local government financing vehicles (LGFVs), or financial entities set up by local governments to invest in infrastructure and other projects, which are considered another major source of risk for China.

A CBRC spokesman warned that commercial lenders should calculate their loans to LGFVs that are due each month, make timely communications with local governments and take precautionary measures to prevent major default incidents.

Banks are now banned from extending credit to vehicles with debt-to-asset ratios over 80 percent or a cash-to-debt ratio lower than 100 percent.

Report by SHMET