Krane Funds Advisors is the advisor to the KraneShares CSI Five Year Plan ETF and the KraneShares CSI China Internet ETF. Enclosed is a weekly update of China’s economic and capital markets activity that was assembled by KraneShares and its Shanghai based partner, CapitalVue. Please contact us if you have any questions or comments.
Major News and Events
China Conference Shows Urbanization Remains A Key Economic Priority:
China conducted a major 2 day urbanization conference which included attendance by President Xi and Premier Li. The conference highlighted the importance of urban development as a crucial tool to boost China’s domestic consumption and drive industrial upgrading.
Key initiatives:
• Develop cities in China’s western and northeastern regions into engines for growth.
• Establish diverse and sustainable funding mechanisms to help finance policies.
• Priority will be given to investments in projects such as construction of affordable housing, railway infrastructure in central and western China and major projects to promote energy saving, emissions reduction and environmental improvement.
• Improve the taxation system for local authorities and establish categories of taxes that are “local-government oriented”.
• Encourage private investment to participate in building and running public facilities.
• Allow migrant workers to gain urban residency status in an “orderly manner”.
• Growth targets should be practical and realistic.
The conference reiterated the strategy outlined in the Third Plenum document that urbanization and the reform of the hukou system should first focus on small and medium-sized cities.
Financial Times Names Alibaba’s Jack Ma 2013 Person of the Year:
The FT announced that Jack Ma, godfather of China’s entrepreneurial spirit, is the FT’s 2013 Person of the Year because he personifies the Chinese internet with all its growth opportunity.
Since its inception 10 years ago, Alibaba, the world’s most successful e-commerce company, is preparing to sell shares in a global initial public offering that is expected to value the company at well over $100b.
Mr. Ma has been a cult figure in China for years. But he captured the attention of the world this year as excitement built around the impending IPO, which will let investors own a slice of the fastest-growing internet market on the planet.
Alibaba’s sales now exceed those of eBay and Amazon combined and make up about 2 percent of China’s gross domestic product. Seventy percent of all Chinese package deliveries come from Alibaba sales. Roughly 80 percent of Chinese e-commerce transactions are conducted through Alibaba’s sites. And this is probably just the beginning according to the FT, considering more than half of China is still offline. With 600m people using the internet and counting, China will soon overtake the US as the world’s biggest e-commerce market.
The FT considers Ma a China visionary who has recently taken on a leadership role of helping China improve upon its air, water and food quality.