Silicon Valley a growing hotbed for Chinese investment

Chinese hi-tech investment continues to grow in the United States, with 148 deals in the last three years occurring in California. The number one destination for Chinese hi-tech money is the San Francisco Bay Area, which includes Silicon Valley. That’s why a group of mayors from the region is banding together for a special trip to China.

Inside these walls of Texas Instrument’s Silicon Valley Headquarters, lies a team that was practically saved by Chinese company TDG.

Jane Wu is on the TDG Board of Directors and knows the story well. She says TDG invested in American company ACT Solar. One year later ACT developed their technology, was acquired by National Semiconductor, which was then acquired by Texas Instruments.

"The company grew by three times after we invested," Wu said. "They got acquired. For national semiconductor it was later acquired by T.I., they get a good technology, and for TDG it’s a good investment because we exit in just 12 months."

TDG is hoping to find more deals like these as it helps sponsor a groundbreaking trip - one of the largest U.S. delegation of mayors to ever visit China. The non-profit group China-Silicon Valley plans to bring around 10 mayors and vice-mayors from California’s Silicon Valley area to Beijing, Shanghai, Wuhan and Shenzhen.

"Hi-tech deals represent 60 percent of Chinese investment in the U.S. About three-quarters of all the hi-tech deals coming into the U.S. from China are in the cities where the mayors will visit," said Tom Shoesmith, a board member of China-Silicon Valley.

Source: CCTV

Internet shapes a Chinese version of Silicon Valley

April the 20th marks the 20th anniversary of China’s first connection with the global Internet. In 20 years, Beijing’s Zhongguancun district has transformed itself from a market selling electronic parts to a breeding ground for high-tech companies. Zhongguancun is known as China’s silicon valley.

20 years ago, when today’s IT tycoon Feng Jun first arrived at Zhongguancun, he was a poor college graduate.

That year, China got itself connected with the global internet.

With just 200 yuan in his pocket, Feng Jun bought a second-hand tricycle, which he used to tow around keyboards he’d try to sell to big multinational companies.

But if it was only with that hard work, he might have never achieved his 16 billion yuan-worth Aigo brand today.

5 years after China got internet access, the IT business suddenly exploded. The Internet literally reshaped Zhongguancun from a low-end electronic goods market to a breeding ground for high-tech companies.

That year was also the time Baidu, Alibaba and Tencent, China’s top three IT companies, came into shape.

Even today, Zhongguancun’s charm is still apparent.

20 years ago, Zhongguancun was all farmland dotted with shabby little houses. Today it’s becoming the Chinese version of the Silicon Valley. Every year, over 3,000 companies are being established in this high-tech area, and hundreds of thousands more youngsters, like Feng Jun, flood here, hoping to start their own businesses.

A small district embedded with dreams and entrepreneurship.Made reality by the Internet.

China's high-speed trains will use "Chinese chips"

China's first 8-inch IGBT (insulated gate bipolar transistor) chip production line, built by CSR (China South Locomotive & Rolling Stock Corporation Limited) Zhuzhou base, will be put in operation in June 2014.

This means that China has broken foreign monopoly on the core technology of high-speed trains, and China's high-speed trains will use the "Chinese chips."

The high-speed trains manufactured by CSR, with the domestic 8-inch IGBT chips installed, achieved a speed of over 600 kilometers per hour in the test run. CSR will become the only company in China which has comprehensively mastered IGBT chip technology R&D, module packaging & testing and system application.

Source: Xinhua

China's 2014 auto sales to surge

China's automobile sales will rise by 8 to 10 percent this year to a new high, a report forecast on Tuesday.

As many as 24.18 million vehicles may be sold in the country this year, according to a report released on Tuesday by the China Association of Automobile Manufacturers (CAAM).

Shi Jianhua, deputy secretary-general of the CAAM, said that demand will be boosted partly by China's urbanization push and upgrades in consumption patterns, though a number of big cities facing congestion and pollution problems have rolled out measures to restrict auto purchase.

China has been the world's largest auto market and producer for five consecutive years, with sales and production both exceeding 20 million units for the first time in 2013. Sales rose 13.9 percent to 21.98 million vehicles.

Source: Xinhua

Top Chinese banks' asset quality declining: PwC

The asset quality of China's top 10 listed banks has clearly declined, according to a report released by PricewaterhouseCoopers (PwC) on Tuesday.

PwC expects the non-performing loan (NPL) balance to rise in the near future as the gap between the average delinquency ratio and average NPL ratio had widened, as part of a continuing trend for divergence. The NPL ratio grew at a significantly slower pace than the delinquency ratio, the report said.

The top 10 listed banks had an NPL balance of 449.4 billion yuan at the end of 2013, up 19.47 percent from the end of 2012. The average NPL ratio increased 0.06 percentage points to 0.99 percent.

This across-the-board increase indicates that the slowdown in economic growth is impacting banks, according to PwC.

Its report noted a surge in NPLs in the Yangtze River Delta, where the NPL balance surged 30.90 percent over the pervious year.

In terms of industry, most corporate NPLs concentrated on manufacturing and retailing.

The NPL balance in the real estate fell, PwC analysis showed. But bank loans to the sector have been closely watched for several years and now shadow banking contributes considerably to property developers' financing.

"In 2014, the banking sector will continue to face a complex financial environment. Banks should focus on the impacts of interest rate liberalization, Internet finance, deposit insurance, and the entrance of privately owned banks," said Raymond Yung, PwC China financial services leader.

Source: Xinhua

China: VAT reform exemption exceeds 220 billion yuan

Chinese businesses saved 220.3 billion yuan (35.5 billion U.S. dollars) as of the end of March, due to a pilot scheme to replace turnover tax with value-added tax (VAT), an official said on Tuesday.

Yang Yimin, a department director of the State Administration of Taxation (SAT), said the VAT reform had covered nearly 3 million businesses so far.

VAT is levied on the margin between production cost and commodity price on the market. It is favored partly because it can reduce double taxation and lift burdens for Chinese firms, especially smaller ones.

Following regional experiments since the beginning of 2012, China began piloting the VAT reform in transportation and some modern service sectors throughout the country on Aug. 1.

The scope of the reform was then expanded to railway transportation and the postal service from Jan. 1.

From January to March, 18,648 businesses in the two sectors benefited from the preferential policy with tax exemption near 2.5 billion yuan, according to Yang.

Yang said the SAT is working with other authorities on plans to expand VAT reform to more sectors, including telecommunications, construction, real estate and living services.

Living services refer to services that meet people's daily needs, such as catering, accommodation, hairdressing and photography.

"China will strive to complete VAT reform covering all merchandise and services by 2015," said Yang.

Source: Xinhua

Novartis, Valeant bids herald new deal-making era for pharma

A series of agreed or proposed drug company deals may herald a new era of acquisitions not seen since last decade as pharmaceutical companies improve their best businesses and exit weaker ones.

Novartis  and GlaxoSmithKline  agreed to trade more than $20 billion (11 billion pounds) worth of assets, boosting Novartis' cancer-drug business and Glaxo's vaccines business. Valeant Pharmaceuticals made a $47 billion unsolicited offer for Allergan Inc , the maker of Botox, to boost its skin care business. Reports that Pfizer Inc  was rebuffed earlier this year in discussions to buy AstraZeneca Inc  for more than $100 billion only fed anticipation that more mergers are ahead.

Linking this activity together is a combination of economic conditions and industry- specific developments including low interest rates, a desire by U.S. firms to make overseas acquisitions to shield foreign profits from U.S. taxes, and the realization that deals can be made to focus on a drugmaker's specific strengths, investors, analysts and investment bankers said on Tuesday.

Large drug companies are focusing on a small number of leading businesses, while smaller specialty and generic producers seek greater scale. Deal values have almost doubled since the start of 2014 to $77.9 billion from a year earlier, according to Thomson Reuters data.

There is also the stock prices of big pharma compared with biotechnology companies to consider. The Nasdaq Biotechnology Index .NBI of more than 100 companies -- many with market values of less than $500 million -- has risen almost 126 percent since the beginning of 2012, even with this year's declines. By contrast, the Standard & Poor's 500 index of pharmaceutical stocks .SPLRCCARG, which contains just 12 members, is up 55 percent in that time.

Valeant's $47 billion bid for Allergan, in which it's being aided by Pershing Square Capital investor Bill Ackman, represents another strategy. Ackman had already acquired almost 10 percent of Allergan, and the Allergan board will consider the offer.

Valeant has been on a buying spree since 2010 and last year acquired contact lens maker Bausch & Lomb Holdings. Chief Executive Michael Pearson said in January the drugmaker wants to become one of the world's top five pharmaceutical companies by market capitalization by the end of 2016, largely through acquisitions.

Lilly's Elanco animal health unit will acquire about 600 animal health brands from Novartis, including vaccines and anti-parasite medicines that will allow it to enter the aquaculture, or fish farming, market.

Last year Elanco had sales of $2.15 billion, compared with $1.1 billion for Novartis Animal Health.

Source: Reuters

China manufacturing activity ticks up in April but still contracts - HSBC PMI

China's manufacturing downturn eased slightly in April as declines in new orders and output slowed, a preliminary survey showed on Wednesday, though factory activity showed an overall contraction for the fourth straight month.

The HSBC/Markit flash Purchasing Managers Index (PMI) for April rose to 48.3 from March's final reading of 48.0, still below the 50 line separating expansion from contraction.

The survey showed contractions in new orders and output moderated somewhat, though new export orders slipped back below the 50 line after a pickup in March, suggesting that the external environment remains difficult for Chinese firms.

"Domestic demand showed mild improvement and deflationary pressures eased, but downside risks to growth are still evident as both new export orders and employment contracted," said Qu Hongbin, chief economist for China at HSBC, in a statement accompanying the PMI.

Signs of a slowdown in the first quarter had been evident in a series of economic indicators, prompting the government to unveil a series of measures to promote growth, although it has ruled out major stimulus.

It has also said that its main focus will be on job creation, and that it did not matter if growth in 2014 came in a little below the official target of 7.5 percent.

The final Markit/HSBC manufacturing PMI for April is due on May 5.

Source: Reuters

Jet Blue pilots elected ALPA as their representative

Lytro Illum changes focus even after you've taken the photo

There's nothing worse than taking what feels like a great photo, then opening it later to discover it's out of focus. The Lytro Illum solves that problem by taking photos that you can focus and re-focus even after you've taken them.

The Illum is a light-field camera, allowing you to adjust focus, perspective and depth of field in an image you've already snapped. It works by absorbing and recording all the information that comes through the lens, then creating pictures that can be altered later by simply tapping on the spot you want to be pin-sharp and in focus.

Although Lytro was first to make a camera that changes focus, you can now do it in phones such as theHTC One M8 -- check out our guide to the One M8's camera features -- which is a real blow to Lytro's prospects in the consumer market.

The first Lytro Light Field Camera was a small block-shaped thing that looked nothing like a camera as we know it. The Illum looks more like a traditional camera, complete with a much bigger screen and a more familiar grip.

The original Lytro had a fixed lens, while the Illum adds an 8x zoom. It has a fixed f/2.0 aperture.

Lytro's new Illum goes on sale in the US in July and costs $1,599 (£950). If you get in early and buy one before 15 July, you get $100 knocked off a special engraved version of the camera. The company hasn't yet announced pricing or availability in the rest of the world.

Source: CNET

WSJ: Russia Will Attempt to Lower Dependence on Imports, Medvedev Says

   The WSJ reports,"Russia won’t change its economic growth strategy because of Western sanctions but will try to lower its dependence on imports", Prime Minister Dmitry Medvedev said Tuesday.

Russia’s economy is in danger of sliding into recession this year for the first time since 2009, the peak of the global financial crisis, as the sanctions war between Moscow and the West has sent the ruble to all-time lows, fueled capital flight and evaporated investment activity.

Mr. Medvedev said Russia may post growth similar to that of the European Union. In early 2014, the International Monetary Fund predicted that the euro area would grow 1% this year, in line with the Russia’s economy ministry’s forecast. However, should net capital outflows remain as strong as in the first quarter and reach $150 billion in the whole of 2014, the economy may contract by 1.8%, the economy ministry said earlier in April.

Mr. Medvedev said that Moscow itself “won’t trigger a reduction of economic ties” with Europe. He said that Moscow actively trades with Europe but is considering widening its trading ties in the East, adding that Russia should aim to make the ruble a global reserve currency and switch its international trade to rubles, particularly commodities trade.

The Prime Minister vowed that despite any possible sanctions the government will fulfill its social obligations and won’t let Russian citizens become “hostages of political games.”

Mr. Medvedev said the government won’t let “unfriendly” actions from outside the country weaken Russia’s defense industry and will aim to bolster its position in the global defense market by increasing its military cooperation with Latin America and Africa.

WSJ: How Putin can Bypass Sanctions

     The Wall Street Journal reports,"one of the lessons Russian President Vladimir Putin is learning during the Ukraine crisis is that if you have oil and gas, you’ll never be lacking for friends and much will be forgiven and much will be forgotten. Although the United States is weighing heavier sanctions across the Russian economy, Mr. Putin has much control over the European energy market, and is a growing supplier with Asian countries, and many countries and companies are indicating they’re not ready to punish Russia".

Google To Offer Mobile App Install Ads In Search And YouTube; Expands App Deep Linking To AdWords

Google is announcing today its plans to offer app install ads on mobile search and YouTube, following moves made by other tech industry companies, including Facebook and more recently Yahoo and Twitter. Google says that businesses looking to promote these app installs across the AdMob network will be able to target consumers based on data Google already has on file, like what apps they use, how often they use them and what purchases they’ve made.

For example, says Google, someone who regularly uses an app to measure their runs and other exercises, might see an app that lets you track your diet.

Google will help marketers target users using insights from Google Play, offering tips as to what keywords worked best to convert searches to downloads.

In addition, Google is also expanding its mobile app deep linking initiative to integrate deep linking with AdWords. What that means is that businesses can buy advertisements that, when clicked, will redirect users directly inside their already-downloaded and installed mobile apps.

The company notes that there’s demand for ads that can get consumers to re-launch their apps because today over 80% of apps are only used once after being downloaded. Businesses are struggling to convert application installs into regular, engaged customers.

The app stores are also ever-expanding, which increases these challenges. For instance, as of May 2013, Google Play had seen 50 billion app downloads of over 1 million applications, the company said this morning, and every day users in 190 countries are downloading apps.

In AdWords, businesses will soon be able to measure conversions across the entire app lifecycle thanks to these changes, says Google, starting from app installation to re-enagement to in-app purchases.

App install ads and deep linking to apps go hand-in-hand, of course, as the former gets the app on consumers’ mobile devices, then the latter points consumers to the right information in their app when searching.

Source: TechCrunch

China's Xi purging corrupt officials to put own men in place-sources

Chinese President Xi Jinping plans to use a purge of senior officials suspected of corruption to put his own men and reform-minded bureaucrats into key positions across the Communist Party, the government and the military, sources said.

Xi hopes that removing corrupt officials and those resisting change will allow him to consolidate his grip on power and implement difficult economic, judicial and military reforms that he believes are vital to perpetuate one-party rule, said the sources, who have ties to the leadership.

In the most far-reaching example of his intentions, Xi plans to promote about 200 progressive officials from the eastern coastal province of Zhejiang, where he served as party boss from 2002 to 2007, to senior positions across the spectrum in the years ahead, two of them said.

"The anti-corruption (drive) is a means to an end. The goal is to promote his own men and like-minded officials to key positions to push through reforms," said one source.

To be sure, Xi is also tackling endemic corruption to try to restore public faith in the party, other sources said.

The seven sources interviewed for this article sought anonymity to avoid repercussions for discussing secretive elite politics.

The biggest investigation Xi has ordered so far revolves around retired domestic security tsar Zhou Yongkang, who is under virtual house arrest. 

Reuters reported on March 30 that more than 300 of Zhou's allies, proteges, staff and relatives had been taken into custody or questioned since late last year as part of China's biggest graft scandal in six decades. 

The government has yet to make any statement about Zhou, who retired in late 2012 from the Politburo Standing Committee, the apex of power in China, or the case against him. It has also not been possible to contact Zhou, his family, associates or staff for comment. It is not clear if any of them have lawyers.

Another source who met Xi in private this year quoted him as saying implementing reforms had been "very difficult" due to opposition from state-owned enterprises along with influential party elders and their children, known as "princelings".

State-owned firms and princelings in business enjoy many privileges and virtually monopolise certain sectors, something at odds with China's efforts to steer its economy away from a reliance on heavy industry and investment to one driven more by consumption and innovation. 

On the judicial front, Xi has overseen reforms that limit the ability of the party to interfere in most court cases - apart from politically sensitive ones - but more still needs to be done to deal with frequent miscarriages of justice that outrage the public, legal experts said. 

While Xi appears set on driving reform on many fronts, human rights activists have said major political change was not on his agenda. For example, authorities have increased controls over the local media and prominent bloggers in the past year. 


RECRUITING FROM ZHEJIANG

In looking for people he can trust, Xi, 60, will also tap reform-minded officials from his alma mater Tsinghua University in Beijing and other provinces, one source said.

But his key recruiting ground will be Zhejiang, south of Shanghai. The province is seen as ideologically progressive and has long been at the forefront of economic reforms thanks to the concentration of private firms there that helped make China the world's factory.

Besides promoting officials from Zhejiang to the party, the central government and the military, Xi would send them to other provinces, said the first two sources. Xi himself comes from northwest Shaanxi province.

Zhejiang party chief Xia Baolong, a Xi ally, is the leading candidate to take the challenging job of running the restive region of Xinjiang this year or next and then possibly becoming a member of the decision-making Politburo in 2017, sources said.

In addition, one of Xi's closest aides, Zhong Shaojun, a native of Zhejiang, was likely to be further promoted in the People's Liberation Army following a late start to his military career, said two sources who have ties to the military.

In an unusual move, Xi made Zhong, a civilian for most of his career, a PLA senior colonel last year when he appointed him deputy director of the General Office of the Central Military Commission.

Source: Reuters

Novartis to Buy Glaxo Cancer Drugs, Sell Animal Health

Novartis AG (NOVN) will focus more on cancer, GlaxoSmithKline Plc (GSK) on vaccines and Eli Lilly & Co. (LLY) on animal health as the drugmakers announced a series of deals for a total of as much as $28.5 billion today.

The transactions, as well as a plan to form a consumer-health joint venture with Glaxo, are part of an overhaul of the pharmaceutical industry spurred by the loss of sales as best-selling medicines lose patent protection. Pfizer Inc., the world’s biggest drugmaker, sold its infant-nutrition business to Nestle SA for $11.9 billion in 2012, and then last year spun off its animal-health unit.

Novartis agreed to buy cancer drugs for as much as $16 billion while selling most of the company’s vaccines division to Glaxo for $7.1 billion and its animal-health unit to Lilly for $5.4 billion.

For Glaxo, the deals shift the company away from prescription drugs and toward consumer products and vaccines, which are less vulnerable to the patent life cycle. The new joint venture with Novartis will be the second-largest consumer health care company by revenue, trailing only Johnson & Johnson, and it will control 29 percent of the global vaccine market. It also signals a willingness to sell off promising drugs that other companies may be better positioned to market.

Glaxo and Novartis’s consumer-health venture will have about 6.5 billion pounds ($10.9 billion) in revenue, Glaxo said. The U.K. company will have majority control, with an equity interest of 63.5 percent.

“What this transaction does for GSK is it takes one of the leading position in consumer health care and truly elevates us to a global leadership position,” Witty said on a conference call. “It gives us a very rare, extremely rare opportunity to substantially strengthen our vaccine business. And it finds a home for our nascent oncology business.”

Glaxo said the transaction will probably be completed during the first half of 2015 subject to approvals. The company said it expects to return 4 billion pounds to shareholders after the completion of the deal and will maintain its commitment to increasing dividends.

Source: Bloomberg

U.S. Existing-home sales decline 0.2% in March

Sales of existing homes ticked down 0.2% in March to a seasonally adjusted annual rate of 4.59 million, the slowest pace since July 2012, theNational Association of Realtors reported Tuesday. Sales rates have trended down since the summer on falling affordability as inventory remained low. Unusually rough weather in recent months likely also curbed demand, NAR said. Economists polled by MarketWatch had expected a March sales rate of 4.55 million, compared with a February rate of 4.6 million. Recent drops in the sales pace of existing homes have been relatively small, signaling that the market may be stabilizing and sales could bounce higher in coming months, said Lawrence Yun, NAR's chief economist. The median sales price of used homes hit $198,500 in March, up 7.9% from the year-earlier period, supported by low inventory. March's inventory was 1.99 million existing homes for sale, a 5.2-month supply at the current sales pace. 

Source: Marketwatch

WSJ:Price of Gas in U.S. Rises as Refiners Export More to Other Countries Nation's Gasoline Stockpiles Are at Lowest Point This Time of Year Since 2011

A new pipeline, built to release a glut of crude oil that was stuck in the middle of the country, is now feeding oil to refineries on the Gulf Coast that churn out gasoline and diesel. While these fuels still make their way to the Southeast and the East Coast, growing amounts are being sold to Mexico, the Netherlands, Brazil and other countries.

The push into these markets has been spurred by the U.S. oil boom. Rising oil output had been flooding the nation's oil market in recent years, keeping U.S. crude prices low relative to world prices. Facing tepid fuel demand in the U.S., refiners have been ramping up exports, creating more global competition for U.S.-produced fuel.

While the construction of pipelines and other transportation infrastructure allows other countries to benefit from the oil boom, it also means the market for motor fuels has become more competitive. The gasoline market now has to reckon with demand from other countries—and the potential impact on prices—during a U.S. economic recovery many economists see as fragile.

"Quite frankly, this is not just a U.S.-centric topic anymore," said Nancy White, a spokeswoman for motor club AAA. "Production is going overseas, so that impacts the supply here, and that will drive prices up."

Gasoline stockpiles nationwide are at their lowest point for this time of year since 2011, according to the U.S. Energy Information Administration. Meantime, the retail price for a gallon of regular gasoline averaged $3.68 on Monday, up 4.2% from a year ago, according to the EIA. That is the highest price since March 2013. AAA had the average price on Monday at $3.67.

Gasoline futures climbed 1.1% to $3.0869 a gallon Monday on the New York Mercantile Exchange and are up 11% for the year. Prices for the futures, which are contracts to buy or sell at a specified price and time, are a leading indicator for prices at the pump and don't reflect the impact of taxes and other components of retail prices.

Total petroleum exports, mostly gasoline and diesel, averaged about 3.6 million barrels a day last week, according to the EIA, up 25% from the same period last year. The figure includes a small amount of oil exports that are allowed by the U.S. government, which effectively banned them in 1975.

"Export demand is still growing," said Jan Stuart, head of energy research at Credit Suisse. And as the U.S. economy improves, "slowly but surely, vehicle miles traveled has begun to rise again," he said. Mr. Stuart expects gasoline-futures prices to be 10 cents higher, on average, in the third quarter compared with the second quarter.

The potentially bad news for consumers is good news for oil bulls, who have been struggling against the rising tide of U.S. oil output since the start of 2011. Citing low levels of gasoline supplies, some fund managers say pump prices are unlikely to weaken until after the summer vacation season.

As a group, hedge funds and other money managers held $9.3 billion of bullish bets on Nymex gasoline prices, the most in a year, according to the U.S. Commodity Futures Trading Commission.