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Analysts divided over government’s next steps
to raise stake
in milk maker
Danone, the world’s largest
yoghurt maker, w ill spend €486
million to raise its shareholding
in China’s largest milk producer,
China Mengniu Dairy Co., which
w ill boost the group’s holding
to 9.9 percent from 4 percent,
media reported last month.
The move will help the French
group expand its presence in
the Mainland, noted a Danone
“ This transaction is consistent
with Danone’s strategy to increase
our interest in and join hands
with Mengniu to capture the huge
growth potential of the chilled
dairy products market in China,”
Chief Executive of Danone, Franck
Riboud, said in a statement.
The purchase will be made
through a joint venture with
Mengniu’s state-owned parent
company COFCO Dairy Invest-
ment and Denmark’s Arla Foods.
Manufacturing activities shrink to
seven-month low, index indicates
Manufacturing in China
U.S. technology companies face probe over patent licence costs
The National Development and
Reform Commission, which acts
as China’s price regulator, said
last month that it was conducting
an investigation into whether
technology companies Qual-
comm and InterDigital, both based
in the United States, violated
China’s antimonopoly law by
overcharging for patent licences.
The NDRC began separate
investigations of the two compa-
nies in November 2013 following
complaints from unspecified
Chinese industry associations and
companies, a commission official,
Xu Kunlin, told a news conference
in what was the regulator’s first
public remarks about the probe.
He added that both companies
were suspected of “abusing their
dominant market position” and
charging “discriminatorily high
fees” but gave no further details.
Qualcomm, which manu-
factures and designs micro-
chips, said last year that it was
unaware of any activity that
violates China’s 2008 antimo-
nopoly law and will cooperate
with the NDRC.
According to Xu, authorities
are considering a proposal by
InterDigital, a wireless-research
and development company based
in Delaware, to resolve the inves-
tigation in exchange for making
changes to its business practices.
The government, Xu said, is
considering this proposal. The
investigation of Qualcomm con-
tinues, he added.
The Qualcomm probe comes
amid efforts by the Chinese
government to build a domestic
microchip industry, with officials
vowing to invest billions of U.S.
dollars in design and production.
activities dropped in February,
according to a preliminary
sur vey released last month,
signalling a continued slow-
down of the economy.
The Flash Markit/HSBC
Purchasing Managers’ Index
fell to a seven-month low of
48.3 in February, compared to
January ’s final reading of 49.5.
A reading below 50 indicates a
“ There is continued dow n-
ward pressure on the economy,”
Ding Shuang, Economist at
Citigroup told The Wall Street
Journal. “Economic growth will
continue to decline to 7 percent
over the next t wo quarters.”
China’s full-year growth for 2013
was 7.7 percent, steady from 2012.
Analysts expect further
disappointment from indexes in
the near future. “China’s PMIs
have been edging lower in recent
months and this may continue,”
Greg Gibbs, a strategist at Royal
Bank of Scotland in Singapore,
Some analysts called for more
support from policymakers to
ensure sufficient momentum in
the economy. “We believe Beijing
policy makers should and can
fine-tune policy to keep growth at
a steady pace in the coming year,”
HSBC Economist Qu Hongbin was
quoted as saying by the Jour nal.
Other analysts speculate that
the government may be comfort-
able with slightly slower growth,
as it seeks to focus on longer-term
structural changes that will
reduce the reliance on export-led
manufacturing for growth, the
Jour nal reported.
It was also suggested that the
disappointing PMI reading was a
result of the timing of the Lunar
New Year holiday, which saw
many businesses shut down.
The PMI’s employment
sub-index fell for a fourth
straight month to 46.9, its lowest
point since February 2009.
Beijing has expressed a desire
to keep unemployment low to
maintain social stability.
Earlier last month, Mao Wei-
ming, Vice Minister of Industry
and Information Technology,
said that the government was
aiming for around 9.5 percent
annual growth in industrial
output in 2014, dow n from last
year’s 9.7 percent.
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