AUTO SHOW: Visitors observe a domestically made SUV at the 2014 China (Shenyang) Auto Fair Expo in Shenyang, capital of northeast China's Liaoning Province on May 7. The expo attracted 138 auto makers from home and abroad to showcase their latest car models (YAO JIANFENG)

Rising Bad Loans

Non-performing loans (NPL) of major Chinese commercial banks edged up in the first quarter, fresh evidence of growing pressure for industry titans to improve the quality of their loans after years of lending sprees.

The NPL of China's four largest state-owned commercial banks all rose in the first quarter according to their quarterly financial reports. Agricultural Bank of China has the highest NPL ratio, which is hovering at 1.22 percent.

The NPL ratio of the Industrial and Commercial Bank of China, the country's largest bank, rose by 0.03 percentage points to 0.97 percent by the end of March.

The NPL ratio of Bank of China inched up 0.02 percentage points from three months ago to 0.98 percent by the end of March, and that of China Construction Bank edged up 0.03 percentage points to 1.02 percent during the period.

Non-performing loans refer to loans that are in default or close to being in default, while the NPL ratio is the ratio of NPL to a lender's total loans.

Polysilicon Duties

China's Ministry of Commerce (MOFCOM) started to impose two-year anti-dumping and anti-subsidy duties on imports of solar-grade polysilicon from the EU from May 1.

A final ruling by the MOFCOM found that the EU products were dumped and subsidized in the Chinese market and caused substantial damage to domestic producers during the period of investigation.

The MOFCOM launched the probe on November 1, 2012, in response to requests filed by Chinese polysilicon manufacturers amid an import surge and price decline of the EU products. On October 31, 2013, the MOFCOM announced that it would extend the probe by another six months to May 1, 2014.

Solar-grade polysilicon is a key material for making solar cells.

Expanding VAT Trial

China is to replace turnover tax with value-added tax (VAT) in the telecom sector, following similar changes in transport and some service sectors.

The new rules become effective on June 1, the MOF and the State Administration of Taxation announced on April 30.

Basic telecom services such as voice calls and bandwidth leasing or sales will be subject to 11-percent VAT while value-added services such as messaging, data transfer and Internet access will be subject to a 6-percent rate. Telecom services for overseas clients will be exempt.

China has been pushing VAT reform since the beginning of 2012. The reform started with transportation and some modern service sectors, and expanded to railway transportation and postal service sectors before it was introduced in the telecom industry.

Turnover tax refers to a tax on the gross revenue of a business, while a VAT refers to a tax levied on the difference between a commodity's price before taxes and its cost of production.