China’s First-Quarter Growth Accelerates to 6.9%

China announced growth figures for the first three months of the year that beat market expectations， with expansion in gross domestic product（GDP） accelerating for the second straight quarter， to 6.9%.“The Chinese economy is stabilizing and improving，”Mao Shengyong， a spokesman of the National Bureau of Statistics （NBS）， said at news conference releasing the figures. Industrial output， which gauges production at Chinese factories， mines and energy producers， rose 7.6% yearon-year in March， hitting the highest level since December 2014， when it was 7.9%， the NBS said. Fixed-asset investment excluding rural households， a measure of state and private investment in agriculture， manufacturing， mining， infrastructure， education and other sectors， climbed 9.2% in the first quarter from the same period in 2016， the most robust since a growth of 9.6% in the first five months of last year， NBS data showed. Retail sales， which include spending by households， government departments and business and exclude spending on services， gained 10.9% in March from a year ago， according to the NBS. It was faster than the increase of 9.5% in the first two months of the year and beat the median prediction of an increase of 9.4% by analysts.

Hebei Seeks Support for New Banks， Insurers to Be Branded ‘Xiongan’

The government of Hebei province wants to create 10 financial institutions to serve the fledgling Xiongan New Area and give them a “Xiongan” branding edge. But critics say the step isn’t necessary because plenty of established banks have announced plans to move in. According to the leaked document， the Hebei government also wants to ask the China Securities Regulatory Commission （CSRC） to treat companies located in the Xiongan area favorably by opening a “green channel” to fast-track their applications for a stock listing， for example. Neither the CSRC nor the other two regulators for banking and insurance industries， whose attitudes play a key role in determining whether many of the goals can be achieved， responded to the proposals after the document was leaked. Many established institutions， in- cluding big state-owned banks for example， have already announced plans to set up regional headquarters in the area. The document， dated April 11， shows that Hebei wants to take “financial measures beyond conventions” to support the development of Xiongan， an economic zone about 100 km south of Beijing， which was launched this month to help alleviate Beijing’s urban problems such as pollution and traffic jams. State media has described the new zone as being as significant as the Shenzhen Special Economic Zone， north of Hong Kong， and the Pudong New Area， in the coastal metropolis of Shanghai. The hope of the central government is that the new zone will take over some of Beijing’s“non-capital functions，” including commercial business and education.The document laid out several goals that Hebei wanted to achieve by seeking central government support. They include setting up at least 10 institutions to provide comprehensive financial services， which would include a bank， a trust company， a securities firm， a fund company， an asset management company， insurance firms and a trading center for equities of unlisted firms. All of these companies， as the document specified， would include“Xiongan” in their name to highlight their uniqueness and importance to the economic zone. It also appeals for regulators’ support for consolidating local rural credit cooperatives to establish Xiongan Rural Commercial Bank.

A $17 Billion Bridge Linking Hong Kong， Macau and Chinese Mainland Nears Completion

A $17 billion bridge that could charge up the Pearl River Delta econo-mies of Hong Kong， Macau and the sleepy mainland city of Zhuhai is on track to reach a major milestone later this year， when the Hong Kong portion of the massive project is expected to be complete. An official at the Hong Kong Highways Department said the Hong Kong section of the bridge linking the two special administrative regions with the scenic mainland city of Zhuhai should be complete by the end of this year. That could put the complex project on track to finally open by 2020， after running years behind schedule and costing well over its original budget. When it does open， the bridge could be a game-changer for the region， providing a key link enabling manufacturers to move to the cheaper western side of the Pearl River Delta from their current eastern-bank locations where costs are soaring in cities like Shenzhen and Dongguan. That could result in a renaissance for factories in an area that gave China its earliest moniker as “Workshop of the World.”“This is a relatively significant bridge，” said Christopher Balding， an economics professor in the HSBC Business School at Peking University Shenzhen. “There are still areas where it’s feasible to do low- and mediumend manufacturing in the area， but they have to be out of Shenzhen. The bridge would be a way for manufacturers to locate out of Shenzhen， and still access their suppliers.” In its latest update， the road authority said precast liner segments were nearly all in place for a tun- nel that forms a key part of the Hong Kong part of the project， and that necessary connections were made to an elevated expressway at the end of March. That led officials to say that the entire 12 km Hong Kong section of the project should be linked up by the end of this month. Upon completion， the overall project will include three lanes in either direction， spanning 55 km with a series of roads and bridges， with artificial islands constructed at its two main terminals. Construction for the project began in 2011 and carried an original price of about $10.6 billion， with a target completion date of last year. But delays and overruns have pushed its latest cost up to $17 billion or more， and an official from Guangdong province was quoted in 2015 saying even 2020 could be an optimistic opening date.When it finally is complete， the bridge could reduce travel times between the eastern and western sides of the Pearl River Delta from as much as four hours now to as little as a half hour.

Drone Deliveries Take off

Chinese e-commerce giant said it will build 150 air bases where package-delivering drones can take off and land in southwest China’s Sichuan province， marking a major advance in its development of alternative delivery services. The bases will be open over three years， and should help to reduce freight delivery costs by 70% in mountainous Sichuan. Use of drones will help local products reach their destinations within 24 hours， and delivery efficiency will improve dramatically in hilly areas， said CEO Richard Liu. Drones that can transport packages weighing up to 50 kg have already been put into use， and ones with capacity for up to 500 kg are in development and expected to be ready in three years， Liu told Sichuan provincial Party Secretary Wang Dongming at a meeting. Development of the bases is part of a broader collaboration by and the Sichuan government to develop drone technology. The company， China’s second largest e-commerce firm， has a similar agreement with the government of nearby Shaanxi province. has turned to drones in bid to better serve rural market where complex terrain and poor infrastructure often push up delivery expenses and compromise efficiency.“With JD drones， freight cost in rural areas can be lowered to the same level as Beijing and Shanghai，” said Liu in a forum in 2016.“Rural villagers can enjoy the same high quality of service as living in Beijing and Shanghai.” is the second largest e-commerce company in China after only Alibaba Group Holding Ltd. But unlike Alibaba， which operates online shopping malls populated by thousands of third-party merchants， sells most of its products directly to consumers. That model gives it more control over logistics involving product movement， allowing it to pour big resources into programs like drone development.

Bad Debt Grows Along With Loans to Riskier Borrowers

The demand for consumer finance in China is on the rise as specialized firms compete with online lenders and microfinance companies， but so too is the level of bad debt associated with the increasingly profitable sector.The number of consumer finance firms in China hit 20 on April 12， when Bank of Jiangsu Co. Ltd.， KGI Bank， Jiangsubased clothing retailer Heilan Home Co. Ltd. and internet company Shanghai 2345 Network Holding Group Co. Ltd. pooled 600 million yuan（$87 million） to create a new lender. The first consumer finance companies in China were introduced in 2010 to help wean the economy off exports. These firms have lower requirements for loan guarantees compared with banks， but charge higher interest for the increased risk they assume. The level of risk has increased in recent years. According to statistics from the banking regulator， consumer finance firms saw 4.11% in bad loans by the third quarter of 2016， an increase from 2.85% in 2015 and 1.56% in 2014. Microfinance companies and online personal finance platforms had even higher rates for bad debt at 5% and 10% respectively in 2016， according to estimates from brokerage GF Securities. Of the 20 consumer finance companies， only four are majority-owned by companies， including appliance maker Haier Group Corp. and retailer Suning Commerce Group Co. Ltd.， rather than commercial banks. Performance has been uneven， but bankbacked firms have outperformed those primarily funded by companies， according to annual reports.