In the news: The U.S. gets $38B RQFII quota, carmakers lobby for electric vehicle tax cuts and China Life invests $600M in Didi

China overhauls cross-border financing regime
Opinion: China's financial markets enter global arena
Provisions on Foreign Exchange Control in Connection with Securities Investments in China by Qualified Foreign Institutional Investors
In the news: U.S.-China BIT talks continue

China car group lobbies for permanent tax cut

The state-backed China Association of Automobile Manufacturers is lobbying the National Development and Reform Commission (NDRC) and Ministry of Industry and Information Technology (MIIT) for a permanent tax cut on small cars to encourage the development of fuel-efficient vehicles. The group's deputy secretary general said the policy will boost consumption. The call to extend a tax break due to expire at the end of this year comes as auto sales largely increased over the past eight months since the levy on small engine vehicles (1.6 liters or less) was cut by half to 5% in October. The push comes as China recently lowered the average fuel consumption requirement to 5 liters per 100km by 2020. All 10 of this year's best-selling cars are models with small engines, namely those made by Volkswagen, GM, Toyota, Nissan and Hyundai. China's new energy passenger car fleet is the second largest in the world after the U.S., and generally encourages investment in green vehicles, offering various financial incentives and even waiving penalties for traditional anti-competitive restrictions. The government said in September that it would build a nationwide car charging-station network by 2020. And in April, the Ministry of Public Security's Traffic Management Bureau introduced green license plates for new energy vehicles to facilitate police enforcement of the preferential road treatment awarded to electric cars.

China Life invests $600 million in Didi

China's biggest life insurer, which earlier invested in Uber Technologies, is now pouring $600 million into its Chinese rival Didi Chuxing Technology. China Life Insurance is the latest addition to the list of Didi's list of powerful investors, which includes Alibaba Group Holding and Tencent Holdings, which are boosting their investments, and Apple, which pledged $1 billion last month. Didi's financing round has accumulated $3.5 billion and would value the ride-sharing company at $25 billion, sources say. This comes after Uber raised $3.5 billion from Saudi Arabia earlier this month as part of a $5 billion financing round—part of this money will go to its China operations. Uber is valued at nearly $68 billion. Looking past the heated rivalry, Didi's cash injections show that market leaders have clear access to capital from strategic investors with deep pockets, even with the slowdown in venture capital investment in smaller PRC startups, which reportedly fell 28% in Q1 this year. But as Didi and Uber both pursue their global expansion plans, dominating the Chinese market is crucial. And as investors integrate the ride-sharing app into their own internet and consumer products and services, they need to make sure they've backed the right winner as well. For instance, Baidu, an UberChina investor, lets users order an Uber ride through its mobile map app, and Tencent's WeChat comes with a Didi-hailing button.

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In the news: Apple invests $1B in Didi

China gives the U.S. $38 billion RQFII quota

China is granting the United States an investment quota of Rmb280 billion ($38 billion) for the first time to buy Chinese stocks, bonds and other assets. China has already allocated quotas to several countries including the UK, France and Singapore, but this would be the largest given to a single jurisdiction after Hong Kong. The move, which allows the PRC to pursue its ambition of globalizing its currency, gives U.S. investors greater access to China's onshore markets under the renminbi qualified foreign institutional investor (RQFII) program. This could also increase the chances of MSCI Inc. including Chinese shares in its index this week, a decision that is projected to help draw as much as $30 billion in inflows in a year's time.* Foreign market participants are generally cautious when it comes to China, especially since investor confidence plummeted after the 2015 stock meltdown. Local debt, under-regulated shadow banking and P2P lending are all lingering concerns as well. China says it will allow foreign firms to take bigger stakes in securities and fund management companies—the help of more mature international institutional investors may be just what it needs to bring more depth to onshore financial markets.

*Update (June 15): MSCI emerging markets index has rejected A-shares.

China car group lobbies for permanent tax cut

The state-backed China Association of Automobile Manufacturers is lobbying the National Development and Reform Commission (NDRC) and Ministry of Industry and Information Technology (MIIT) for a permanent tax cut on small cars to encourage the development of fuel-efficient vehicles. The group's deputy secretary general said the policy will boost consumption. The call to extend a tax break due to expire at the end of this year comes as auto sales largely increased over the past eight months since the levy on small engine vehicles (1.6 liters or less) was cut by half to 5% in October. The push comes as China recently lowered the average fuel consumption requirement to 5 liters per 100km by 2020. All 10 of this year's best-selling cars are models with small engines, namely those made by Volkswagen, GM, Toyota, Nissan and Hyundai. China's new energy passenger car fleet is the second largest in the world after the U.S., and generally encourages investment in green vehicles, offering various financial incentives and even waiving penalties for traditional anti-competitive restrictions. The government said in September that it would build a nationwide car charging-station network by 2020. And in April, the Ministry of Public Security's Traffic Management Bureau introduced green license plates for new energy vehicles to facilitate police enforcement of the preferential road treatment awarded to electric cars.

China Life invests $600 million in Didi

China's biggest life insurer, which earlier invested in Uber Technologies, is now pouring $600 million into its Chinese rival Didi Chuxing Technology. China Life Insurance is the latest addition to the list of Didi's list of powerful investors, which includes Alibaba Group Holding and Tencent Holdings, which are boosting their investments, and Apple, which pledged $1 billion last month. Didi's financing round has accumulated $3.5 billion and would value the ride-sharing company at $25 billion, sources say. This comes after Uber raised $3.5 billion from Saudi Arabia earlier this month as part of a $5 billion financing round—part of this money will go to its China operations. Uber is valued at nearly $68 billion. Looking past the heated rivalry, Didi's cash injections show that market leaders have clear access to capital from strategic investors with deep pockets, even with the slowdown in venture capital investment in smaller PRC startups, which reportedly fell 28% in Q1 this year. But as Didi and Uber both pursue their global expansion plans, dominating the Chinese market is crucial. And as investors integrate the ride-sharing app into their own internet and consumer products and services, they need to make sure they've backed the right winner as well. For instance, Baidu, an UberChina investor, lets users order an Uber ride through its mobile map app, and Tencent's WeChat comes with a Didi-hailing button.

More from CLP:

In the news: Apple invests $1B in Didi

In the news: The U.S. gets $38B RQFII quota, carmakers lobby for electric vehicle tax cuts and China Life invests $600M in Didi

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