In The News

In The News: China’s Property Bubble and much more

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Hi everyone! Simply CSOFT is back to get you up to speed with the news stories making headlines this week in China. With China’s property sales down 7.7 percent in the first quarter, many investors fear that the country’s property bubble could burst at anytime. Read on to find out about Moody’s take on China’s real estate and the potential property bubble. You’ll also read about China and Russia’s $400 billion gas supply deal and the success story of China’s biggest online retailer, JD.com, on its first day of trading.

  • Concerns over China’s Property Bubble Loom

Concerns that China’s restate market is a popping property bubble recently moved to the fore, with home sales down 9.9 percent in the first quarter and 7.7 percent compared to the same period last year. Property is estimated to account for around 20 percent of the mainland’s gross domestic product (GDP).  Moody’s Investor Service joined the chorus of pessimism on China’s property market, cutting its outlook from stable to negative.”We expect a significant slowdown in residential property sales growth, high inventory levels and weakening liquidity over the coming 12 months,” Moody’s said in a report. (CNBC)

  • China’s Amazon Soars on First Day of Trading

The biggest test yet of American investors’ appetite for a Chinese Internet company has passed with flying colors—and it doesn’t involve China’s e-commerce giant, the Alibaba Group. Instead, JD.com, an online retailer aspiring to become China’s answer to Amazon.com, exceeded expectations for its initial public offering on Wednesday, raising $1.78 billion. Even though the company has lost money for the last several years, its stock sale valued the company at $25.7 billion, a valuation even higher than Twitter’s at its market debut last fall. The warm reception for JD.com reflects investor hunger for the wave of fast-growing Chinese companies that are going public in the United States to stake their claim as global technology powerhouses. (NY Times)

  • Russia, China Signs 30-year Gas Deal

Russia’s President Vladimir Putin has signed a multi-billion dollar, 30-year gas deal with China. The deal between Russia’s Gazprom and China National Petroleum Corp (CNPC) has been 10 years in the making. No official price has been given but it is estimated to be worth over $400bn. The agreement is expected to deliver some 38 billion cubic meters of natural gas a year to China’s burgeoning economy, starting around 2018. Alexei Miller, Chief Executive of Gazprom said the new deal was “the biggest contract in the entire history of the USSR and Gazprom—over 1 trillion cubic meters of gas will be supplied during a whole contractual period.” (BBC)

  • China Mobile Rewards ZTE and Huawei with 4G Contracts

China Mobile, the world’s largest phone company in terms of users, has awarded its second batch of 4G telecom equipment contracts with ZTE Corp and rival Huawei Technologies Ltd securing the bulk of the deal. Telecom equipment makers, such as global leader Ericsson and Huawei, have been vying for a larger share of China Mobile’s 4G tender. The company reportedly awarded ZTE and Huawei 34 percent and 31 percent of the batch, respectively. China Mobile boasted more than 784 million mobile customers and 4.8 million 4G subscribers as of April. The current batch represents 40 percent of China Mobile’s quota of 4G contracts to be sold this year. The additional 60 percent of the contracts in the batch will be decided later this year. (Reuters)

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