China

Koenigsegg Group, the luxury Swedish carmaker, said Wednesday that it would sell a stake to the state-owned Beijing Automotive Industry Holding as part of the Swedish company’s purchase of General Motor’s Saab unit, in the latest push by a Chinese automaker expand outside its domestic base, The New York Times reported. The agreement came just hours after another Chinese carmaker, Geely Automotive, said its parent company planned to bid for Volvo Cars, the Swedish brand that is being sold by Ford Motor.

Luxury sportscar maker Koenigsegg has presented the Swedish government with a new plan for financing its purchase of Saab Automobile, a government official said on Monday. State Secretary Joran Hagglund told Reuters the plan no longer involved any extra loan from the Swedish state on top of guarantees for funding from the European Investment Bank (EIB). He declined to comment on the details of the plan.

The Chinese Ministry of Finance said Tuesday that it would issue 6 billion yuan worth of government bonds in Hong Kong, a major step to internationalize its currency at a time of concern about the dollar, The New York Times reported. The yuan bond issue, worth about $879 million, will “promote the yuan in neighboring countries,” the Finance Ministry said on its Web site, and "improve the yuan’s international status.” “The first step toward internationalization is regionalization,” Shi Lei, a foreign currency analyst at Bank of China in Beijing, said in an interview.

The World Trade Organisation is expected to rule on Friday that billions of dollars in European government subsidies for Airbus aircraft are illegal, the Financial Times reported. That would hand victory to the US and Boeing, in the first round of a WTO dogfight between the world’s biggest aircraft manufacturers. The preliminary ruling, is likely to spur Washington to launch a WTO challenge to further government loans for Airbus to develop its new €11 billion ($16 billion, £10 billion) A350 extra wide-bodied airliner which will compete with Boeing’s long-delayed 787 Dreamliner.

Creditors have come to an agreement about how to wind up FerroChina Ltd. and are awaiting approval by a mainland China court, said people familiar with the agreement, in a decision that many foreign investors view as a significant test of China's 2007 bankruptcy law, The Wall Street Journal reported. Under the restructuring agreement, the people say, China Minmetals Corp. will acquire five operating subsidiaries of the galvanized-steel maker for 3.2 billion yuan ($468.5 million). Some foreign creditors will recoup as much as 60 cents on the dollar.

Yu Yongding, the Chinese economist whose calls for liberalizing the yuan heralded its 21 percent gain since 2005, said the government should reduce sales aimed at keeping the currency weak so it can someday float freely, Bloomberg reported. “The People’s Bank of China should try to reduce intervention on the exchange rate as much as possible,” Yu, a member of the central bank’s monetary policy committee from 2004 to 2006, said in an interview.

A new article published in the latest overseas edition of China's Communist Party flagship newspaper addresses an issue of growing urgency in global financial markets: how to best manage the world's largest pile of foreign reserves, The Australian reported. With more than $US2 trillion in stock, China faces a number of challenges as it seeks to diversify its foreign reserves without hurting the value of its massive US dollar assets, including Treasuries. The commentary highlighted two major problems.

The author of an editorial linking Rio Tinto Group’s actions in China to 700 billion yuan ($102 billion) in excess charges for the steel industry said the article was his own opinion and used previously published data, Bloomberg reported. Jiang Ruqin, an employee with the Jiangsu Province Administration for the Protection of State Secrets, said he has no involvement in a legal case against four Rio employees detained last month, and that no “leaders” assigned him to write the essay or reviewed the piece before publication.

The world economy cannot sustain any further rise in the oil price, the International Energy Agency’s chief economist warned as oil prices rose toward a record high for the year. Fatih Birol told the Financial Times that prices higher than about $70 could dampen a world economic recovery. “If we go one step further, if we see prices go much higher than that, we may see it slow down and strangle economic recovery,” he said of oil prices on Friday, when the European benchmark was around $70.

Ford Motor Co. has slowed the bidding process for its Volvo unit in an effort to get a better price for the Swedish car brand, according to a person close to the U.S. company, The Wall Street Journal reported. The knowledgeable person said Ford has decided to wait for General Motors Co. to wrap up the sale of its Opel unit in Germany, and is hoping to invite a loser in that two-way bidding race to bid for Volvo. The person added there currently are three bidders for Volvo: a group led by China's Geely Holding Group Co., Beijing Automotive Industry Holding Co.