China laments slow development of its wild west

BEIJING, March 1 (Reuters) - Lack of funds, poor transport infrastructure, illiteracy and badly thought out schemes which have angered residents are hampering the development of China's vast, poor western regions, officials said on Thursday.

There had been some notable achievements in the last seven years of the "Go West" policy, they said, but they appealed for more government money and support, adding that the door to foreign investment was also wide open.

"The state cannot reduce the preferential policies nor investment for the development of the west," Cao Yushu, spokesman for the powerful National Development and Reform Commission, told a news conference. "We must recognise that more efforts are needed for the country's balanced development."

The differences between China's west and its booming coastal regions in the east are stark.

The west -- which straddles a vast area stretching from the plains of Inner Mongolia to the forests of Yunnan and deserts of Xinjiang -- attracts just 3 percent of foreign direct investment.

The estimated 360 million people in this area, who include many ethnic minorities, had a per capita GDP some 6,000 yuan ($775) less than the national average in 2005.

"Some cities and towns have historically never had enough money, and the central government cannot given them as much as they'd like," Cao said, adding that in some areas safe drinking water access and sewage treatment were problems.

Those problems extended to the education sector, and some ethnic minorities were not even able to speak Chinese, said Wang Jinxiang, the development commission's vice chairman.

"I know that some teachers teaching second grade cannot pass the second grade exams, so how can they churn out good students?" he asked.

And despite the billions of yuan invested in road, rail, river and air transport, infrastructure remained poor.

"Some counties in the west are still not connected to highways, and this plan is still a long way from being fulfilled," said Cao.

The area contains vast mineral deposits, including oil and gas, and is home to 70 percent of China's hydropower facilities.

Yet some development has been controversial. In 2004, thousands took to the streets in Sichuan province in anger over a hydropower project that would flood 100,000 people out of their homes.

"In the past, we paid rather more attention to the building of dams and power projects, and did not pay enough attention to the hardships of people who had to move," said Wang.

That attitude had now changed, he said, pointing to a new policy where every person forced to make way for a dam would receive a 600 yuan subsidy annually. ($1=7.736 Yuan)

How much money does it require yearly and for how many year require to fully develop the Western part of China?

I have read in Yahoo news in the past that China need to invest close to $200 billion of dollar every year for 20 years straight before it could fully developed the Western Region of China. I know that China is accumulating a lot of American bond every year and if China spend more of the money to develop the Western region rather than buying bond, then it would accelarate the western development.

Money is not enough since it need time and technology to develop it.
I wonder how was is growing the Western region of China.

------------------------------------------------------------------------

This thread is all about China's Economic News and Projects. It should be related to China's Business, Finance, Investments, Jobs, Entrepreneurship and any industries related to this country and of course, the relation of China and the World economy including praise and criticism. I suggest to post any important news or projects related to this thread.

NOTE: Any news or articles posted here should include a link, source or reference.

News, Opinions and Documentary are allowed as long as it is valid, genuine, accurate, authentic, dependable, legit and honest.



================================================================



Chinese Economy Full Steam Ahead
2007-09-19 09:53:40

BEIJING, Sept. 19 -- China has registered a solid growth track since 2003, and its economy has expanded quickly and in a stable manner, the National Bureau of Statistics (NBS) said yesterday.

Living standards have also improved considerably, as income levels have steadily increased since the 16th National Congress of the Communist Party of China convened in 2002, according to the NBS.

The economy expanded by more than 10 percent in each of the last four years, at an average of 10.4 percent. That is more than double the average growth rate of the world economy during the same period, and is higher than any period in China since reform and opening-up in the late 1970s.

The economy remained stable as it steamed ahead. In the last four years, the growth rate never fluctuated by more than 1.1 percentage points. Meanwhile, consumer prices have also remained stable at about 2.1 percent per year.

China's overall economic volume was the world's fourth largest in 2005. It was the sixth largest in 2002. The gap between China and the U.S., Japan and Germany - the top three world economies - has also narrowed in terms of gross domestic product (GDP).

As its economy has grown, China now contributes more than 5.5 percent of the world's GDP, up from 4.4 percent in 2002.

China's booming economy also saw its per capita income cross the threshold of 2,000 U.S. dollars for the first time in 2006. According to World Bank standards, China should no longer be considered a low-income nation, as its per capita income now resembles that of a middle-income country.

While enjoying such rapid and stable economic growth, China has restructured its economy to increase the weight of its service sector in poorer western regions, the NBS said.

By 2006, the service industry accounted for 40.1 percent of the economy, as retail sales increased by an average of 12.2 percent each year in the four years.

Rural development

China has found it easier to develop its rural regions due to the growth of fixed-assets investment. These investments often reflect the potential for development in a region, and have increased faster in the middle, western and northeast regions. In 2006, for example, fixed-assets investment in the middle provinces accounted for 19.3 percent of the national total, 1.6 percentage points higher than in 2002.

This indicates that those regions that are lagging behind economically are gaining greater potential for future development.

Overall national fixed-assets investment reached 32.5 trillion yuan (4.32 trillion dollars) between 2003 and 2006, more than during the period between 1981 and 2002. Fixed-assets investment grew at an average rate of 26.6 percent over the last four years, 6.2 percentage points higher than the period between 1981 and 2002.

China has also seen its urban population grow steadily in the past four years as its rural population has decreased, which helps balance national development, the NBS said.

The bureau predicted that as the State puts in more resources to build a new countryside and further increases its subsidies to farmers, the income of farmers will continue to grow, which will further promote the balanced development of urban and rural areas.

In 2006, rural residents saw their incomes grow by 7.4 percent to an average of 3,587 yuan. Their income increased by more than 6 percent for three consecutive years, which was rare in the past, the NBS said.

The average income of urban residents was 11,759 yuan in 2006, up 10.4 percent from 2005. It was the fourth consecutive year that urban income increased by more than 7 percent.


Booming coffers

Chinese enterprises have registered impressive profit records, bolstering the national economic growth.

Corporate profits as a whole grew at an average of more than 20 percent each year in the past four years.

Meanwhile, the national coffers have reaped more revenue. They reached 3.87 trillion yuan in 2006, which is more than double the total in 2002. It represents an average annual growth of 19.6 percent.

Increased fiscal revenue has also made it possible to make more payment transfers to the economically backward regions, the NBS said.

The national drive to conserve energy and reduce emissions has also progressed over the past four years. While the energy consumption per unit of GDP increased for three consecutive years by 2005, the index finally decreased in 2006. This has been a hard-won result, the NBS said.

The growth of major polluting emissions, meanwhile, has been slowing, the NBS said, indicating strengthened policy enforcement.

China has also built up its infrastructure and has enhanced its industrial equipment to back up the development of core industries, such as energy production, the NBS said.

In 2006, the NBS said, China produced energy in amounts equivalent to 2.2 billion tons of coal, up by 53.7 percent from 2002.

China also saw rapid progress in trade. Its trade volume reached 1.76 trillion dollars in 2006, the third largest in the world. In 2002, it was the sixth largest.

China's income from international tourism has also grown rapidly, the NBS said.

In 2006, there were 35.6 percent more tourists in China than in 2002. The country recorded 33.9 billion dollars in revenue from international tourism, 66.5 percent more than in 2002.


(Source: China Daily)
Editor: Mo Honge

http://news.xinhuanet.com/english/2007-09/19/content_6751904.htm

ADB: China's GDP growth to hit 11.2%, CPI to top 4% in 2007
2007-09-17 13:35:34

BEIJING, Sept. 17 (Xinhua) -- Brisk exports, strong investment and buoyant consumption will lift economic growth in China to 11.2percent this year, up from an earlier estimate of 10 percent, with the inflation rate breaking 4 percent, says an Asian Development Bank (ADB) report released here on Monday.

"The faster than expected growth momentum built up this year is expected to carry into 2008," Zhuang Jian, senior economist of ADB's China Resident Mission, at a press conference in Beijing.

The new ADB report also forecasts that China's GDP growth in 2008 will reach 10.8 percent, an upward revision from the 9.8 percent projection in March when ADB launched the flagship annual forecasting publication ADB 2007.

Zhuang said China's economy grew at a faster-than-expected 11.5percent in the first half of 2007, which is the highest rate since1994.

According to Zhuang, China's fast economic growth was led by industry, especially in such sectors as steel, electricity, chemicals, and oil processing.

Strong profitability, buoyant sales and still-low lending rates also drove investment during the period.

The ADB report said investment administered by local governments grew by 28.1 percent in the first six months, nearly doubling the equivalent central government rate. It suggests the efforts made by the central government to tighten local investment have not had lasting effects.

China's inflation barometer, the Consumer Price Index (CPI), is estimated to be 4.2 percent this year and 3.8 percent in 2008 against the previous forecasts of 1.8 percent and 2.2 percent, respectively, according to the ADB report.

Zhuang said rising global grain prices and the outbreak of blue ear pig disease led to sharply higher food prices, but this is expected to ease next year, paving the way for the implementation of planned reforms in the pricing of state-controlled sectors such as water, power and natural gas.

The ADB report also forecasts that China's exports are forecast to grow by 20 percent and imports by 16 percent in the second half of 2007, resulting in a full-year trade surplus of around 300 billion U.S. dollars, up more than 60 percent from 2006.

China's exports rose by 27.6 percent in the first half, exceeding imports growth of 18.2 percent, lifting the trade surplus to 112.5 billion dollars.

Zhuang said the growth rate of some exports could slow in the second half due to some macro-control policies. From June 1, an export tariff was imposed on 142 products, while export tax rebates were reduced or abolished in July for 2,831 items.

The aim is to rein back the growing trade surplus and at the same time ease strains on the environment by reducing goods production that requires high inputs of energy and natural resources, and that causes high levels of pollution, said Zhuang.

Persistently high trade surpluses and capital inflows have further boosted foreign exchange reserves, complicating monetary policy. The ADB report said China's current account surplus is expected to swell to 10.9 percent of GDP this year and 10.5 percent in 2008, revised up from the 8.8 percent and 8.9 percent projected earlier this year.

The gap between export and import growth will probably narrow slightly as the changes to export tariffs and export tax rebates take effect, said Zhuang.

The ADB reports forecasts that China will face three major challenges in the future economic growth.

One is the higher than expected inflation, which poses a risk to the outlook. Zhuang said adverse weather would lower domestic grain production at a time when imported grain prices are high.

The other challenge is that the excessive liquidity in the financial system and relatively unattractive bank deposit rates helped boost stock and property prices. Zhuang said a major adjustment in stock prices could hurt bank balance sheets, and faced with rising non-performing loan ratios, banks would likely curtail lending with knock-on effects on the broader economy.

In addition, the key challenge for China is to reduce the country's reliance on exports and investment for growth in favor of private consumption.

"Such a switch could lessen vulnerability to external shocks and ease environmental strains caused by the emphasis on export and investment-led heavy industry." said Zhuang.


Editor: Sun Yunlong

http://news.xinhuanet.com/english/2007-09/17/content_6739427.htm

Needed in China: Many More Planes
By JEFFREY NG
September 19, 2007

HONG KONG -- Boeing Co. said Chinese airlines will need 3,400 new planes valued at about $340 billion in the next 20 years on the expectation passenger demand in China will continue to soar.

The forecast is 18% higher than the estimate the aircraft maker made last year, when it said China would need 2,880 new planes, valued at nearly $280 billion, over the next 20 years.

Boeing said China will likely have the world's fastest growing commercial aviation market in the next 20 years, making it the largest market outside the U.S. for new commercial airplanes.

The company forecast China's domestic passenger airline market will rise about 9% each year over the same period. By 2026, China's domestic market will become slightly larger than today's intra-North American market, Boeing said.

By the end of 2026, China's total fleet of aircraft will nearly quadruple to 4,460, according to Boeing's forecast. Of the new planes the company expects China to add, 2,200, or 65%, will be single-aisle, such as the Boeing 737.

"China domestic frequencies have increased more than 16-fold since 1990 while airplane sizes have remained about the same," Randy Tinseth, vice president of marketing for Boeing's Seattle-based commercial airplane division, said. "Boeing believes the current trend of more frequencies and nonstop flights will continue to accommodate this growth through a focus on single-aisle airplanes," he added.

Apart from the strong forecast growth in new airplane demand, Boeing said it expects Chinese carriers to add about 300 cargo jets by 2026. However, most of these jets will be used aircraft converted from passenger variants, Boeing executives said earlier.

Write to Jeffrey Ng at jeffrey.ng@dowjones.com

Coca Cola To Make China Its Largest Market
Updated: 2007-09-16 11:20

Coca Cola expects China to be its largest market, said E. Neville Isdell, chairman and chief executive officer of the Coca Cola Company.

Although China's economy has been growing rapidly for more than two decades, Isdell noted that he had confidence in its further growth. "China is currently our fourth largest market, but I hope it could become No 1."

Coca-Cola built two new bottling factories in East China's Jiangxi Province last July and in Northwest China's Xinjiang Uygur Autonomous Region in August, bringing the total number of its factories in China to 37.

A new complex including the Global Innovation and Technology Center and the new Coca Cola China Headquarters, costing US$80 million, broke ground in Shanghai, China's largest industrial center, according to Isdell.

"The 2008 Olympic Games would be a great opportunity for China, " he said.

Coca Cola, the world's biggest soda supplier, now owns a wide variety of soft drinks in China, ranging from mineral water and fruit juice, to tea and coffee. It owns more than half of the shares in the soda beverage market.

Entering China in 1928, Coca Cola became sponsor for the Olympics in the same year and now helps the national selection of torchbearers and escort runners for the Beijing Olympics.

Talking about the success in China, Isdell underlined social responsibility and innovation.

As for innovation, Isdell cited the example of tea drinks it developed for the Chinese market. "You should discover the new flavors suitable for the market," he said.

Confidence is equally important. The two-meter-tall chairman said that he had been drinking Coca Cola with his wife every day for ages and the beverage was still their favorite.

"You should believe in what you sell and be totally committed," he said.

http://www.chinadaily.com.cn/bizchina/2007-09/16/content_6110146.htm

China could see GDP per capita rise to $3000 as early as 2008 I think.

Property Investment Soars In First Eight Months
Updated: 2007-09-19 16:38

Investment in China's property sector soared to 1.43 trillion yuan (US$189.9 billion) in the first eight months, 29 percent up from the same period last year, according to the National Bureau of Statistics (NBS).

Of the total, 1.02 trillion yuan went to commercial housing, an increase of 30.9 percent while 44.9 billion yuan went to economically affordable housing, an increase of 28.8 percent.

By the end of August, China had 119 million square meters of vacant commercial buildings, down two percent over the same period last year.

In the first eight months, developments on 162 million square meters of land were completed, an increase of 15.3 percent, according to the NBS.

China's real estate climate index rose to 104.48 points, up 0.48 points from last month and 1.17 points from a year ago.

The index, reflecting the nation's current property market situation and development trends, includes sub-indices such as investment, sources of capital, floor space of marketable yet unsold buildings, areas of land developed and the floor space of buildings under construction.

The market is considered to be heating up when the index exceeds 100.

China's housing price hikes accelerated last month despite a spate of government control measures.

Prices in 70 large and medium-sized cities were up 8.2 percent in August over the same month last year, or 0.7 percentage points higher than the July rate.

http://www.chinadaily.com.cn/bizchina/2007-09/19/content_6119256.htm

China starts building world's largest software, IT service hub

Beijing, Sept. 18 (PTI): Seeking to pose a stiff challenge to India's booming software industry, China has started constructing the world's largest software and IT service hub in Dalian, a coastal city in Northeast China's Liaoning Province.

"Stretching over 40 kilometres, we'll build Lushun South Road into not only China's Silicon Valley, but the world's leading IT city with a first-class environment," Mayor of Dalian, Xia Deren said at the launch ceremony.

The development of the Dalian Tiandi Software Hub will involve a total investment of 15 billion yuan from Hong Kong-based Shui On Group and Dalian-based Yida Group.

The city plans to increase its software exports almost eightfold to USD 3.5 billion by 2012. In 2006, Dalian exported 450 million US dollars worth of software products and IT services, accounting for almost one-third of the country's software outsourcing revenue.

The software hub is a mixed project comprising office buildings, residential and commercial properties, as well as recreational and educational facilities, chairman of Shui On Group, Vincent Lo said.

Occupying more than four million square metres of ground floor area, the hub will take 7 to 10 years to complete, he said.

Phase I of the project will mainly cater to the needs of Japanese and South Korean companies, while its master planning will take into consideration target tenants like IBM and Oracle, he said.

"We are keen to support Dalian in its bid to become the leading IT outsourcing and service centre in Northeast Asia," he said.

The software hub is part of the phase II development of the Dalian Software Park being developed by Shui On's local partner Yida Group.

The software park, with a total floor area of 1.6 million sqm, has been leased out to more than 340 tenants, including 32 Fortune 500 companies.

Yida is partnering with firms like China's IT giant Neosoft and Singapore-based Ascendas for the phase II project.

World's largest chip maker, Intel has started building its first 300mm wafer fabrication facility in Asia in Dalian early this month with an initial investment of 2.5 billion US dollars.

While Satyam has a base in Dalian, HCL has plans to open a centre in the city.

http://www.hindu.com/thehindu/holnus/008200709181440.htm

China's Wasion expects robust growth

HONG KONG, Sept 13 (Reuters) - China's leading power measurement firm, Wasion Meters Group Ltd (3393.HK: Quote, Profile, Research), expects revenue to grow at least 30 percent a year until 2010, banking on robust demand for electronic power meters across the country.

The firm enjoys a dominant position in its niche market in China, the world's largest energy consumer after the United States, which is pouring billions of dollars into power infrastructure and energy conservation to reduce a worrying reliance on crude imports.

The country's two power transmission firms -- State Grid Corp and China Southern Power Grid -- plan to invest 200 billion yuan ($27 billion) each year on upgrading and building networks till 2010, with an estimated 6 to 8 percent of that amount going towards power measurement.

"That means there will be more than 10 billion yuan investment in our sector," Wasion's chairman, Ji Wei, told Reuters in an interview on Thursday.

"I'm confident that we could keep at least 30 percent sales growth until 2010," he said, adding that the company now derives 85 percent of its sales from the two grid firms.

Ji's forecast fell broadly in line with a mean forecast of 31 percent growth in 2007, 40 percent in 2008 and 27 percent in 2009 from three analysts polled by Reuters Estimates.

Sales of Wasion, based in the central province of Hunan, rose 34 percent to 597 million yuan ($79.5 million) in 2006 and surged 43 percent to 292 million yuan in the first half of 2007.

It posted a 44 percent jump in net profit 59 million yuan in the January to June period.

The company plans 300 to 350 million yuan in capital expenditure in 2008, up from 190 million yuan this year, to expand capacity and buy firms.

Part of that would go towards a new production base now under construction and due to come onstream in the first half of 2008.

Wasion expects to boost annual capacity for three-phase electronic power meters to 1.2 million units in 2009 from 450,000 units in 2006, and that of single-phase meters will double to 4 million units in 2009.

BEYOND POWER

Shares in Wasion jumped nearly 5 percent on Thursday after it unveiled interim results, outperforming the Hong Kong market's (.HSI: Quote, Profile, Research) 0.9 percent rise.

Wasion also hopes at least one-tenth of total sales will come from abroad this year or next, up from 7 percent last year, through forays into southeast Asia, the Middle East, and even North America and Europe, Ji said.

However, that would mean going up against the likes of Swiss engineering conglomerate ABB (ABBN.VX: Quote, Profile, Research), which Ji said could be done by providing low-cost products.

Wasion plans to set up five overseas sales offices this year, including in Dubai, Egypt and the United States, but may consider more direct means of ramping up its international footprint.

"We don't rule out the possibility of building plants or making acquisitions abroad," he added.

Beijing has called for energy conservation to help build a sustainable and environmentally friendly economy. The government aims to reduce energy consumption, granting new impetus for advanced energy measurement devices.

Now, Wasion is looking at providing solutions -- including power, heat, water and gas for large state-owned enterprises -- to help save energy. It signed a 60 million yuan contract with an auto maker last year.

"We are very excited about this new market. It will be a bright spot for us in the future," Ji said.

http://uk.reuters.com/article/oilRpt/idUKL1387615320070913?pageNumber=1

China should stabilize RMB: Nobel Laureate

(Xinhua)
Updated: 2007-09-20 10:24

China should stabilize the exchange rate of renminbi (RMB) against the US dollar to study the effect of its accumulated appreciation of close to 10 percent over the past two years, 1999 Nobel Laureate in economic sciences Robert Mundell said in Hong Kong on Wednesday.

Speaking at a lecture at the Chinese University of Hong Kong, Mundell said "it is time to pause the appreciation of RMB and let it stay at a stable level."

China abandoned its policy of pegging the renminbi to the US dollar in 2005 and the currency's exchange rate against the dollar has rose close to ten percent since then.

Refuting an argument that says the RMB is undervalued, thereby leading to the US trade deficit, the father of the euro cited figures to note that China's trade surplus against the United States only contributed a small portion of the US deficit.

Number megatrends in the world economy, including the unprecedented global expansion, globalization, the IT revolution, the success of the euro, the rise of China, among others, have led to "global imbalances, reflected in a huge current account deficit of the US," Mundell said.

The dollar deficit is "endemic in the dollar system" and cannot be explained by the fixed rate of the RMB or the Japanese yen, Mundell said, adding that the dollar deficit has persisted since the end of the dollar shortage in the 1950s.

The 2005 Nobel Laureate in economic sciences Thomas Schelling, along side Mundell at the Chinese University of Hong Kong, lectured on nuclear nonproliferation, and Edmund Phelps, winner of the 2006 Nobel Prize in economic sciences, lectured on the importance of finance professionals in the development of modern economies.

http://www.chinadaily.com.cn/bizchina/2007-09/20/content_6121211.htm

^^
This is a unique view among western scholars

Yuan strengthens after US rate cut
By Dong Zhixin
Updated: 2007-09-20 10:36

RMB strengthened against the US dollar on Wednesday after the Federal Reserve cut the prime interest rate by 50 basis points on Tuesday.

Before trading started on Wednesday morning, the People's Bank of China (PBOC) set the yuan midpoint at 7.5170 against the greenback, compared with 7.5266 on the previous day. The yuan may rise or fall 0.5 percent from the mid-point each day.

Analysts attributed the rise in the yuan's value to a weaker US dollar. The Fed cut the federal funds rate charged on overnight loans between banks to 4.75 percent from 5.25 percent, exerting a downward pressure on the US currency.

The Fed's move put China's central bank in a difficult position, some analysts said.

The PBOC is under pressure to raise the interest rate one or two more times by the end of this year to put inflation in check, while the Fed is widely expected to further cut the federal funds rate at its next policy meeting in October, to prevent the credit crunch from derailing the overall economy.

If both central banks do as they are expected, then the interest spread between the two countries will grow wider. That will lead to a new wave of hot money flowing into China, increasing the pressure on the yuan to appreciate.

The difference in interest rate policies reinforced the dollar's weakening trend and the strengthening trend of Chinese yuan, central bank vice governor Wu Xiaoling said in an interview early this year.

She made the remarks while predicting the Fed would cut interest rate next year and saying the market strongly expected more interest rate hikes by China.

Wu also expressed confidence in the world's largest economy during the interview.

"We believe the consumption-focused US economy has a relatively large amount of flexibility and that the adjustment in the property market will last a long time (but) the US economy will return to a more sustainable level in the coming one to two years."

China's trade surplus jumped nearly 33 percent year-on-year to US$24.98 billion in August, the second highest on record. That surge came even after China took a series of measures, including cutting tax rebates for thousands of export items.

To address this issue, as well as the influx of hot money, some economists have called for faster increases in revaluing the yuan. However, others argued that move would further cut the profit margins of Chinese exporters and might lead to millions of job losses.

Across the Pacific, US lawmakers are threatening trade sanctions unless China revalues the yuan at a faster pace. But the Bush administration has voiced opposition to any unilateral action, while calling for further talks between the two major economies.

China insisted on the gradual reform of the yuan exchange rate and said a stronger renminbi alone could not put an end to the high-flying trade surplus.

The yuan has now appreciated more than 9 percent since RMB ended its peg to the US dollar in July 2005.

http://www.chinadaily.com.cn/bizchina/2007-09/20/content_6121291.htm

Beijing Imposes Price Freeze
By Richard McGregor of Financial Times in Beijing

Published: September 19 2007 06:10 | Last updated: September 19 2007 18:21

China is to enforce a freeze on all government-controlled prices in a sign of Beijing’s alarm about rising popular anger over inflation, now at its highest rate in more than a decade.

The order freezes a vast array of prices still under the control of government in China, ranging from oil, electricity and water to the cost of parking and park entrance fees.

The order, issued jointly by six ministries on Wednesday, comes after a vaguely worded announcement on the need to prevent price rises by the State Council, or cabinet.

“Any unauthorised price rises are strictly forbidden . . . and in principle there will be no new price-raising measures this year,” the ministries said. Events since the initial State Council announcement that inflation in August hit an 11-year high of 6.5 per cent appear to have galvanised the bureaucracy into a tougher stance.

Qing Wang, of Morgan Stanley, said in Hong Kong: “As inflation has gotten worse, the government may have felt it had to toughen its stand.”

Rising inflation is sensitive in the run-up to the five-yearly meeting of the Communist party, which is due to open on October 15 in Beijing and will choose the senior leadership until 2012. The sharp spike in inflation is largely due to higher food prices due to a shortage of pigs after a disease killed millions and the rising cost of feed – a global phenomenon.

But Chinese leaders and economists are increasingly worried that the impact of inflation and the subsequent government policy response, could cause severe problems for the economy.

Though they were once solely a domestic concern, Chinese prices are now an international issue because of the possibility of the higher cost of consumer goods produced in China fuelling inflation in large export markets such as the US and Europe.

Beijing has raised borrowing costs five times this year, both to cool lending and to prevent negative real interest rates, which provide an extra incentive for people to take money out of banks to buy shares.

China has raised the one-year deposit rate to 3.87 per cent, which is about equal to the eight-month average for inflation but well below August’s 6.5 per cent.

The price freeze is the kind of administrative measure redolent of China’s former planned economy but it may be less effective in China today, economists said.

“They will not be able to control the price of everything,” said Chen Xingdong, of BNP Paribas, in Beijing.

http://www.ft.com/cms/s/0/ff229506-666c-11dc-a218-0000779fd2ac,dwp_uuid=f6e7043e-6d68-11da-a4df-0000779e2340.html

Private company eyes key aircraft project

A private Chinese company is looking to take a share of the nation's large commercial aircraft project being developed in a sector that's usually monopolized by State-owned firms.

Guangdong Changsheng Aircraft Design Co Ltd, a private company backed by a real estate developer, plans to become a shareholder in a joint stock company that will take charge of China's large commercial aircraft project. The private company wants to do the conceptual and aerodynamic design of the new aircraft.

The company brought six 1:50 aircraft models to the Aviation Expo/China 2007 that opened in Beijing on Wednesday. The models include three 150- to 200-seat single-aisle aircraft and three 200- to 300-seat twin-aisle airplanes.

It has completed the conceptual aircraft design process, said Zhou Jisheng, general manager of Guangdong Changsheng.

The government said in March that a joint stock company would be established to take charge of the development of China's own large commercial airplane. The country plans to make large aircraft by 2020 and the design process will start during the 11th Five-Year Plan period (2006-10). The government has not released details of the design, including size, cruise speed or range.

Guangdong Changsheng Chairman Zou Xichang said he would like to invest "several hundred million yuan" in the new company. Zou was ranked 70th on Forbes' list of the richest Chinese in 2005.

"We also hope to invest with the technologies we have," Zou said.

Guangdong Changsheng has about 30 aircraft designers and engineers. Eight of them used to be major designers of China's Y-10 passenger jet and the ARJ21 regional jet. The Y-10 was developed by China in the 1970s, but never entered commercial service. The ARJ21 is now in final assembly and will begin service in late 2009.

http://www.chinadaily.com.cn/bizchina/2007-09/21/content_6124508.htm

Four Chinese banks want to set up aircraft leasing companies

BEIJING (AFP) — Four Chinese lenders, including the Industrial and Commercial Bank of China, the nation's largest, plan to set up their own aircraft leasing companies, state media said Tuesday.

The move is aimed at getting a slice of a huge and growing business which so far has largely been dominated by foreigners, the People's Daily reported on its website.

"In the Chinese airline sector, about 70 percent of aircraft are leased and 90 percent of them are leased through overseas companies," Yang Boqin, an official with Shanghai Ronglian Finance Leasing Share, was quoted as saying.

"Given the numbers, you can understand why the banks want to set up their companies," he said.

The other three banks include Bank of Communications, Minsheng Banking Corp. and China Merchants Bank, according to the report.

Minsheng Bank is expected to invest 3.2 billion yuan (425 million dollars) in the new venture while the others are thought to be investing two billion yuan each, the report said.

"China is expected to approve the four leasing companies by year end or early next year," Yang said according to the report. "More banks and financial institutions will join if they prove successful."

The business has been opened to the banks since Measures for the Administration of Finance Leasing Companies took effect on March 1, allowing them to hold stakes in finance leasing companies.

European aircraft maker Airbus said earlier this month it expected China to order 100 to 150 planes per year from the company over the next five years to meet heavy demand from its booming aviation market.

http://afp.google.com/article/ALeqM5jPa2_FPnhHWCIDQLotHlPFsLI6pA

Deutsche Bank lifts China's GDP growth prediction for 2007 and 2008
2007-09-22 11:01:26

BEIJING, Sept. 22 (Xinhua) -- Deutsche Bank lifts China's GDP growth prediction from the previous 10.7 percent and 9.7 percent to 11.4 percent and 10.2 percent in 2007 and 2008 respectively.

Deutsche Bank chief economist in China Ma Jun said they lifted the figures because China's GDP growth in the second quarter reached 11.9 percent, 0.7 percentage points than their previous prediction.

Moreover, China's National Bureau of Statistics had changed the GDP growth rate for 2006 from 10.7 percent to 11 percent, implying China's potential growth rate was underestimated.

On the other hand, in the second quarter, China's fixed-asset investment growth rate, two percentage points higher than the corresponding period last year, might reach 25 percent in the second half of 2007, he said.

"We lifted the prediction for 2008 mildly from 9.7 percent to 10.2 percent because we are concerned about the U.S. economy," Ma said.

Ma pointed out that if the U.S. economy slowed down, China's exports, particularly in furniture, electronic appliances and textile sectors, might decline.

He also forecasted industries driven by domestic demands, such as banking, cement, coal and retail business, will continue with their momentum.

http://news.xinhuanet.com/english/2007-09/22/content_6767624.htm

Service industry development to be accelerated

China will accelerate the development of service industry and turn it into the pillar industry of national economy, Chinese Vice-Premier Zeng Peiyan told a national conference closed in Hefei, a eastern Chinese city, on Sunday.



"For years, China's booming service trade has been creating many new jobs and becomes all the more important in our lives," Zeng said. "Under the new situation, we should pursue a scientific strategy of development, alter the mode of economic development and promote service trade and public service," he said.



Zeng considered it a priority to develop modern services including logistics, finance, information, technology, business, environment protection, service outsourcing.



Zeng called for more policy, financial and intelligence support to this sector and lower the threshold of the service trade.



Official statistics show, China's service industry employs 246 million people, making up 32 percent of the country's employees, and the sector's added value totaled 8.2 trillion yuan (1,09 tillion US dollars) last year, accounting for almost 40 percent of the gross domestic product.



China plans to raise the proportion of service industry to half the country's total output value by 2020.

http://www.china.org.cn/english/business/225570.htm

Why China Won't Save the World Economy
The Butterfly Effect
China—the Other Growth Engine—was supposed to save the world from U.S. financial woes. It won't.
By George Wehrfritz
Newsweek International
Updated: 8:00 p.m. ET Sept 30, 2007

Oct. 1, 2007 issue - You've probably heard of the butterfly effect—inspired by legendary sci-fi writer Ray Bradbury back in 1952—which posits that minute changes in one place can lead to massive impacts elsewhere, as when a fluttering insect triggers atmospheric disturbance that causes a distant tempest. The past few weeks of global market turbulence are a perfect illustration of the effect, as American mortgage troubles have led to Continental bank collapses, emerging-market stock plummets and, most recently, a Great Depression-like run on a British bank. In Hong Kong last week, CLSA's chief economist Jim Walker issued a new warning, predicting that "butterfly wings in America's unfolding subprime-debt debacle ... will blow like a hurricane through China's rust belt." Walker is a well-known China bear, but his thesis is no work of dismal science fiction. Until quite recently, economists worldwide had hoped that America's subprime-induced slowdown would be offset by robust growth elsewhere in the world. After all, Europe had a stellar 2006, and Japan was recovering. Most important, there was China, a new global engine expected to contribute more to world GDP growth this year than any other economy.

Unfortunately, recent weeks have proved that the global economy hasn't decoupled from the American consumer nearly as much as many theorized it would. Mirroring the U.S. slowdown earlier this year, both Euroland and Japan are seeing their own expansions wind down—suggesting more synchronization, not less. Five months ago, a Merrill Lynch report on Japan was titled "Smiles and Enthusiasm." Earlier this month, the header from the same Merrill economist was "Nightmare," as the country slipped into negative growth. Europe, which was poised to challenge the United States with 3 percent GDP growth, is slipping back to its usual lethargic 2 percent.

Could China be next? Walker predicts that growth may shrink from 12 to 5 percent by the end of next year, as the downturn in developed countries takes its toll on the Chinese rust belt. It wasn't supposed to happen that way. In a newly "rebalanced" global economy, the emergence of a new Chinese consumer class was going to make up for weaker Western spending. But despite Beijing's efforts to boost consumer spending, domestic consumption as a share of GDP is actually decreasing, making the Middle Kingdom more dependent on exports than ever before. In Walker's forecast, demand for all the goods churned out by China will slacken just as thousands of new factories come online next year, collapsing profits inside China Inc. and exposing mountains of problem loans at state banks. The ultimate result will almost surely be a global slowdown. "This is the biggest credit crunch we've ever seen," says Walker.

Already Chinese stocks have rallied into uncharted territory, housing prices in major cities hang in the stratosphere and glittery developments are rising everywhere. If that scenario has a familiar feel, it should. Even as it encapsulates China's ongoing boom, it also aptly describes an earlier pre-bust frenzy some two decades ago in Japan. "It's shockingly similar," says Richard Katz, whose seminal 1998 book "Japan: The System That Soured" dissects the stagnation that crippled the world's second largest economy in the 1990s, following a late-'80s bubble. "Looking at these numbers [from China], I was stunned by how much they resembled some of the imbalances we saw in Japan in the 1980s, except that they're more severe."

The passage of time and globalization's sweeping impact make any comparisons with the Japan of two decades past inexact, to be sure. Yet there's no denying that Beijing is now struggling to engineer the same transition from an export- and investment-led growth model to one in which domestic consumption is the key driver—precisely the shift Tokyo botched so miserably. The difference is that while Japan's adjustment problems were mostly an internal affair, Asia's future prosperity, and possibly even the world's, hangs on China's ability to rejigger its economy.

The quantitative similarities between the two countries are alarming. Fixed- asset investment (construction of ports, factories, condos, etc.) now accounts for about 45 percent of China's GDP. Its trade surplus has grown from almost nothing in the late 1990s to 9 percent of GDP today. Meanwhile, private consumption has shrunk from half of total economic activity in the late 1990s to just 35 percent this year. By comparison, Japan's investment component averaged 30 percent of GDP during its peak growth years, its trade surplus topped out at 4.5 percent of GDP and its consumption levels never dipped below 58 percent of GDP. Conclusion: China's economy is currently more out of kilter than Japan's ever was.

Katz has coined a term for the problem: economic anorexia. He defines it as a nation's chronic inability to consume all that it produces—a malady that leads to bloated trade surpluses, asset bubbles and ultimately collapse. In China today, "you have a pace of investment that is not sustainable and [export growth] that comes at the expense of other countries," he argues. "Really smart people in China know this is a very risky course, but the problem is how to get off the tiger's back." The first casualties of any downturn in China would likely appear at brokerages and on trading floors across the country. Last week David Webb, a shareholder-rights advocate and nonexecutive director of Hong Kong's main stock exchange, called China's stock market "a giant Ponzi scheme" and warned that a correction to reasonable valuations would entail a fall of 78 percent.

Events now playing out in Europe and the United States may soon force a resolution. Since early August, banking woes have prompted central banks to inject in the neighborhood of $400 billion into the financial system to prevent a total freeze-up. U.S. Federal Reserve chairman Ben Bernanke lowered interest rates by 0.5 percent, sparking a stock rally but raising questions as to whether more liquidity is a cure or merely a painkiller. The core problem is no longer subprime, but rather the resultant crimping of the credit pipeline that now undermines the increasingly complex "structured finance" on which much of the modern economy runs. According to Fed data, the current credit downturn has been the sharpest since the Great Depression.

One disturbing result has been a massive falloff in interbank lending. Case in point: Northern Rock, the U.K.'s fifth largest mortgage lender, found itself unable to finance mortgages by borrowing from other banks last week, which led to whispers of impending insolvency, then a 1930s-style bank run that prompted the British government to guarantee the savings at not only Northern Rock but all other banks.

Why has interbank lending fallen? The generic answer—heightened risk aversion—is correct but incomplete. The specific terror that grips bankers in New York, London and Tokyo today is based on what they know but outsiders as of yet merely suspect: that billions in subprime debt remain still untallied, parked off the balance sheets in collateralized debt obligations (CDOs) and structured investment vehicles (SIVs). "There's very little difference between what these banks have been doing and Enron," says CLSA equity strategist Christopher Wood, referring to the American energy giant that collapsed under the weight of its hidden debt. Given this, it's no surprise that banks aren't keen to lend to their peers that might be holding equally explosive bags of highly complex debt products.

The sanguine view maintains that today's financial woes can be overcome by deft central-bank interventions. Others say the real limits are on what the Fed and its counterparts can do. Indeed, last week's rate cut further widened the already large spread between what the government charges banks for money and the interbank rate, at which they lend to each other. To be effective, liquidity injections must reach the real economy. But they won't so long as "banks don't want to lend to anyone," says Wood, adding that the result of the drama now playing out in Europe could be "an unwinding of [risk] securitization" globally.

And that brings us back to Asia, and China's case of anorexia.

In today's China, the government's weak yuan policy and myriad subsidies make its export sector hypercompetitive, yet government efforts to awaken a domestic consumption habit have yet to take hold. As in Japan two decades ago, China's export bias has led to overinvestment, asset bubbles in stocks and real estate, and a politically explosive trade imbalance. The key actors are the same, too, including out-of-their-depths government planners, wobbly state banks, myopic business groups and political leaders who have come to believe their own good press. Dong Tao, chief regional economist for Credit Suisse in Hong Kong, warns that all this "could intensify resource misallocation and cause long-term damage to China's competitiveness."

Just like Japan in the 1970s, China is overbuilding heavy industry with export subsidies, cheap energy and easy credit. The result in steel, for example, is that smelting capacity tripled between 2001 and 2005, making China the world's leading producer, but also driving down domestic steel prices to 30 percent below the international average. The same is true of many Chinese industries, making the country ever more dependent on exports for growth, and therefore vulnerable to an export shock of the sort that could now be coming.

The problems, of course, are compounded by China's size. A slowdown in Chinese exports would have a huge impact on players ranging from resource providers in Africa, to East Asian components makers, to German heavy-machinery manufacturers. Meanwhile, the country's shaky banking system is likely the next global financial bubble to burst. China's banks—all of them state-owned behemoths—are products of a command economy. The yuan is undervalued and not convertible. The mountains of savings amassed over a 27-year economic boom remain locked inside the country, where negative real interest rates push ever larger portions into speculative asset markets.

Policymakers in Beijing have been cautious in their efforts to cool Shanghai's sizzling bourse, stabilize real-estate prices (up thirteen-fold in some cities since 2000) or change the growth equation to de-emphasize exports. With an eye on next year's Olympics, Beijing's top priority has been to keep the party going.

That slow and steady approach is good—to a point. But Beijing should avoid "the false impression that China has time on its side," argue Jahangir Aziz and Steven Dunaway in a study published by the International Monetary Fund this month. "Unchecked, the imbalances [in China] will continue to grow and, with them, the rising probability of a large correction." CLSA's Walker says leaders in Beijing are now powerless to avert a major shock. "What you do to avoid a Japan situation is take actions before things get to this stage," he says. "They've already failed."

Does that mean China is in for a bigger version of Japan's "lost decade"? Not necessarily, says Katz. Even at half of today's growth rate, China would have more forward momentum than Japan did in the 1990s. The Chinese are also far less likely to experience a long denial phase prior to enacting reforms. That said, change won't be easy. Millions could lose manufacturing jobs, and curing the bad-loan problem will cost taxpayers dearly. Such fixes are always best made before—not during—a crisis. Says Katz, "The longer they wait, the harder it gets."

Until that waiting game ends, however, China will remain geared to ship ever more product to increasingly beleaguered Western markets, but unable to consume what the rest of the world makes with the appetite its economic girth would suggest. Whether China's rust-belt crisis will trigger a full-blown global recession remains to be seen, of course. What's clear is that butterflies in the United States still have the power to stir up global tempests from which no country is sheltered.

With Sonia Kolesnikov-Jessop in Singapore and Emily Flynn Vencat in London
© 2007 Newsweek, Inc.

URL: http://www.msnbc.msn.com/id/20919946/site/newsweek/page/0/

------------------------

Feel free to discuss about this.

^^

Well, it is just another "China's growth will end tomorrow" article. They have been publishing them for 20 years. I've been reading such predictions since I began to read the headlines when I was a kid.

They say once and again that growth depends on exports, which is a big lie...

http://www.economist.com/images/20061021/CSF420.gif

Check this article: http://www.economist.com/business/displaystory.cfm?story_id=8049652

They criticize the real estate boom in every article, but as far as I know, housing prices are growing slower than wages...

And they always compare China's coming crisis with Japan's, that's simply stupid. Japan is a highly developed nation while China is not...

that is what always bugs me as well, in the 80s and 90s, when Japan's bubble burst, Japan was (and still) already a developed country, so american investors were pulling out of Japan leaving it to burst but in this case China is still a developing country and I am wondering what will make the foreign investors pull out of China now, when the flow of FDI itself does not show any signs of slowing down. And China now is turning attention to domestic consumption driven growth.

But anyway I don't mind if they keep writing these up because I have seen these articles a lot of time and the "experts" had been predicting this since the 90s, and I don't know when their hypothesis will be proven true.

It is like a repetition to remind the world that "China's economy will collapse, collapse, collapse, collapse........... in the year xxxx, remember that , do not forget..."

haha, exactly. I remember such predictions emerge once in a while: During 1985 inflation ... 1989 Tian'anmen Square ... HONGKONG turnover (prediction on HK) ... SARS ...
amazingly, China's economy is becoming more and more robust and healthy, really amusing.

Back 10 years ago, those so called experts and the "famous" Time Magazine said about Hong Kong handover "oh no look, that is the end of Hong Kong, her economy will down to third world, communist hand, bye bye Hong Kong". Yup and look at it now, highest living standards GDP per capita in Asia, and the Time magazine opened apologised for their mistake.

Chinese economy will not collapse, it's becoming too important for the world economy and many economies are linking into China just like the American company, all economies are linked into the American economy if American collapse then everyone will collapse worldwide which is how China is becoming, more more economies are becoming dependent on China and central banks worldwide will always find a way to keep the Chinese economy rolling.

China has 1.3 billion and that is very important because all of them in the future will become rich soon and that will change the world economy.

There is nothing that will stop the Chinese economy, it will keep on impressing us every year for the next 50 years.

.............
Citic Surpasses Lehman, Schwab as Savings Lift Stocks
By Chua Kong Ho
Sept. 26 (Bloomberg) -- Citic Securities Co. is the world's fastest-growing brokerage firm thanks to the booming market for Chinese stocks, and Wall Street may have to get used to the industry neophyte challenging Goldman Sachs Group Inc., Morgan Stanley and Merrill Lynch & Co. as the biggest.

Founded just 12 years ago, Beijing-based Citic now has a market capitalization of $40.7 billion, or $8.8 billion more than Lehman Brothers Holdings Inc., $24.4 billion more than Bear Stearns Cos. and $16.4 billion more than Charles Schwab Corp., after more than tripling in 2007. Haitong Securities Co., China's No. 2, also eclipsed Bear Stearns as the seven largest U.S. brokers lost $37 billion in value this year.

Chinese firms will keep growing as investors pour more of their $2.2 trillion savings into stocks, said Chan Kum Kong, who helps manage $15 billion at DBS Asset Management in Singapore.

``The prospects are definitely bright for Chinese brokerages, which will continue to grow with the market,'' said Chan, whose holdings include Citic shares. ``A few will be able to move out of their domestic markets to compete internationally.''

While Chinese securities firms only operate at home for now, their rise has already reshaped the list of the world's biggest brokers by market capitalization. A year ago, Wall Street firms occupied the top five slots while China had none among the first 10. Citic has now claimed the No. 4 position while Haitong, at $22.1 billion, is eighth. Only Goldman, Morgan Stanley and Merrill Lynch remain larger than Citic.

Rankings

When global banks with securities arms are added, Citic ranks No. 8 on a list that includes Citigroup Inc., JPMorgan Chase & Co., Zurich-based UBS AG and Credit Suisse Group. Citigroup, the largest U.S. bank, has a capitalization of $230 billion; Goldman, the most profitable securities firm, has a value of $91.2 billion, making it the U.S.'s biggest brokerage company.

China's benchmark CSI 300 Index has climbed 163 percent in 2007, the best performer among 89 global equity indexes tracked by Bloomberg. Investors in China have opened 46 million trading accounts this year alone, nine times 2006's amount. Total accounts have swelled to 125 million.

In the U.S., brokerages manage more than 83 million accounts with total assets of $3.85 trillion, according to 2006 statistics from the Securities Industry and Financial Markets Association.

World Beaters

Citic's rise is reminiscent of that achieved by Nomura Holdings Inc. in the late 1980s when the Tokyo-based company became the world's largest securities firm with a value of $76 billion, 18 times that of Merrill. Nomura's shares plunged 86 percent in the 11 1/2 years after its April 1987 high as Japan's bubble economy burst. Its market size is now $31.7 billion.

The rally in China has propelled Beijing-based Industrial & Commercial Bank of China Ltd. past New York-based Citigroup as the world's largest bank by market value, and Air China Ltd. past Singapore Airlines Ltd. as the largest carrier.

China's four listed brokers -- Citic, Haitong, Hong Yuan Securities Co. and Northeast Securities Co. -- have soared an average of 526 percent this year. Citic's market value has climbed $29.7 billion in 2007.

Citic's shares rose 3.2 percent in Shanghai today, while Haitong jumped 9.5 percent, after official media reported that the central bank plans to increase mortgage rates in a move that may prompt a switch by investors from property to equities.

Expensive Shares

U.S. securities firms have struggled as subprime mortgage lending ground to a halt, with foreclosures on home loans rising to a record. Revenue from packaging loans into bonds fell as investor appetite for such securities dwindled. Bear Stearns lost almost a third of its value this year after two of its hedge funds failed in July because of subprime mortgage losses.

A measure of the share performance of securities firms in the Standard & Poor's 500 Index has fallen 11 percent in 2007. Lehman, Bear Stearns and Morgan Stanley last week reported declines in profit as trading in fixed-income faltered. Shares of all three dropped. The banks have market values of $31.8 billion, $16.3 billion and $65.2 billion, respectively.

The news wasn't all bad. Goldman reported the third-best profit in its history while Schwab, the largest discount broker, said last week that third-quarter profit will rise as much as 35 percent. Merrill reports next month.

Chinese securities stocks could plunge as quickly as they've risen if a downturn were to hit Asia's most expensive share market, said James Liu, who helps manage $1 billion at APS Asset Management. Incomes at brokers suffer during declines because of fewer trades.

`Won't Touch'

The S&P 500's measure of seven U.S. securities firms is valued at 8.8 times estimated profit, about a quarter of the 38 times for their four listed Chinese peers. Citic trades at 34 times estimated earnings, compared with 10 times profit for Bear Stearns, 7.9 times for Morgan Stanley, and Lehman's 8 times. Haitong Securities trades at 52 times estimated profit, Hong Yuan is at 39 times, while Northeast Securities is at 28 times profit.

Shanghai-based Liu sold all his Citic holdings in August.

``I won't touch them at these valuations,'' he said. ``When the market turnover falls, they'll all be hit.''

Competition is also set to increase. China's securities regulator said this month it will soon lift a one-year moratorium on foreign investment in the securities industry, allowing firms such as Citigroup to go head-to-head with the local firms to attract clients in China.

First-Half Profit

At least nine securities firms are seeking to list on China's two bourses even as stock trading volumes showed signs of flagging after hitting a record June 5. An average 15.2 billion shares have traded daily so far this month, compared with a record 25.7 billion traded daily in May.

Chris Tang, who owns Citic among the $160 million of Chinese equities she manages at Marco Polo Pure Asset Management in Hong Kong, is betting the premium paid for Citic's shares is justified.

``I don't think valuations are high for Citic, which among the brokerages has the ability to become an international bank,'' said Tang. ``Morgan Stanley can't give you 300 percent growth.''

Citic, which has offices in 22 cities in China plus Hong Kong, said last month first-half profit jumped more than fivefold to 4.2 billion yuan ($559 million), buoyed by trading commissions and underwriting fees. China accounted for all its sales.

`Leaps and Bounds'

Morgan Stanley, the world's No. 2 securities firm by market value, last week said third-quarter profit from continuing operations dropped 7 percent to $1.47 billion. Lehman, overtaken by Citic in July, posted a 3 percent decline in third-quarter net income, while profit at Bear Stearns fell 61 percent, the biggest decline in a decade.

China's smaller brokerages are posting profit growth that surpasses Citic's. Haitong Securities' earnings surged almost ninefold to 2 billion yuan in the first half. Hong Yuan, based in China's western Xinjiang Province, said in July first-half profit may jump 22-fold. Neither operates outside China.

Northeast Securities, the smallest of the four publicly traded firms, doesn't provide up-to-date financial reports.

``Citic Securities is a proxy for China's stock markets, whose values have grown by leaps and bounds,'' said Fan Dizhao, who helps manage the equivalent of $1.8 billion at Guotai Asset Management Co. in Shanghai, including Citic shares. ``As the best domestic brokerage and given the boom on the equity markets, Citic Securities deserves to enjoy a premium over its peers.''

Share Sales

Citic is the top-ranked underwriter for equity issues in China this year, with 29 percent of the market, according to Bloomberg data. Last year, it was one of the financial institutions that arranged the stock sale for China's two largest banks: the $13.7 billion initial public offer of Bank of China Ltd. and the $22 billion initial offering by Industrial & Commercial Bank of China, the world's biggest IPO.

Analysts at nine of the 10 brokerages covering Citic Securities, including UBS, recommend investors buy the shares and one rates the stock a hold. Lehman Brothers raised its price estimate on Citic by 21 percent on Sept. 25, citing improved earnings prospects.

Citic has also taken steps to reduce a reliance on trading income. The brokerage firm received approval this month to buy the country's third-largest fund manager by assets and also won regulatory go-ahead to set up a private-equity fund. A share sale last month raised 25 billion yuan to finance acquisitions.

Leslie Phang, who helps oversee $1 billion at Commonwealth Private Bank in Singapore, expects Chinese brokers to continue their emergence onto the global stage.

``The growth dynamics are shifting away from the U.S. to Asia, with China as its engine,'' said Phang. ``Wall Street is preoccupied with what's lurking in the subprime mortgage closet and what that might do to mergers and acquisitions, but it's all-systems go for China.''

To contact the reporter on this story: Chua Kong Ho in Singapore at kchua6@bloomberg.net
Last Updated: September 26, 2007 11:06 EDT

Back 10 years ago, those so called experts and the "famous" Time Magazine said about Hong Kong handover "oh no look, that is the end of Hong Kong, her economy will down to third world, communist hand, bye bye Hong Kong". Yup and look at it now, highest living standards GDP per capita in Asia, and the Time magazine opened apologised for their mistake.

"Time" is at least a responsible magazine because it has the courage to admit its blunder statements. But where are the other so-called economists and famous observers? They should stand up and admit their bull-shitting because they were all simply W R O N G :lol:

yes its true many usa uk observers made mistakes probably "intentionally" they just wanted to sow distrust and fear about china in general public's eyes.
but they failed

The renminbi has weakened substantially against the euro over the past year, in the middle of January one euro cost 10.1 yuan, now one euro is over 10.6 yuan. I don't think this is good for China. The yuan is already grealy undervalued against the euro, it shouldn't depreciate further.

The western economists just simply never saw such an economic miracle like what happening in China..that's why they always refer to other economic system when make predictions about China..and time (not Time :lol: ) has proven that they are wrong..

Shipbuilding: China to build deep water oil exploration fleet
(People's Daily Online)

China will build its own deep water oil exploration fleet in three to four years. The fleet will be able to work in deep waters all over the world, except for the north pole.

China's Offshore Oil Company has launched the strategy for building such a fleet. The company's spokesman, Liu Junshan, said one of their future targets would be deep sea oil exploration. They will invest up to ten billion yuan (US$1.33 billion) in the construction of modern equipment for deep sea drilling, a laboratory, and a working fleet.
http://www.chinadaily.com.cn/bizchina/2007-09/29/content_6146200.htm

SHANGHAI has built China's biggest tunnel machine - and it will be used to build a vehicle tunnel across the Huangpu River within the World Expo site, the project managers announced yesterday.

The tunnel shield, named Tercel No. 2, has a diameter of 11.58 meters, 5.28 meters bigger than the biggest locally made shield, now in use for Shanghai's subway construction.

A tunnel shield holds up the weight of a tunnel while it is being dug. "This costs less than imported ones and will be easier for our maintenance," Chen Hongzhang, board chairman of Shanghai No. 2 Municipal Engineering Company, said yesterday.

The company is government-backed, and not only makes tunnel shields but also has the tunnel contract for the 2010 World Expo.

Chen said the company's new tunnel shield costs about three-quarters of the price of imported models but has similar efficiency.

So far, most shields used locally are imported from advanced countries, mostly Japan and Germany. The one used for a giant tunnel from Pudong to Chongming Island is from Germany and has a diameter of 15.3 meters, hailed as the world's biggest.

The new Tercel shield will be used to dig one of the two parallel shafts of Xizang Road S. Tunnel. Construction of the other shaft started in July with a Japanese-made shield.

Located in the center of the 5.28-square-kilometer Expo site between the Nanpu and Lupu bridges, the tunnel will span 2.67 kilometers and link Xizang Road S. in Puxi with Pudong Road S. on the river's eastern bank.

Unlike the city's other tunnels, the Expo tunnel will have its lighting partly powered by solar energy when it opens at the end of 2009.

During the six-month World Expo from May 1, 2010, the tunnel will carry only Expo traffic but will open to the general public afterwards.

City officials expect 70,000 people to cross the Huangpu River every hour during the World Expo.

http://www.shanghaidaily.com/sp/article/2007/200710/20071001/article_333180.htm

................
China's external debts reach US$327.8b
2007-09-30 09:59:25

Sept. 30 - Outstanding of China's external debts rose from US$4.8 billion in six months to US$327.8 billion by the end of June 2007, according to statistics released by the State Administration of Foreign Exchange (SAFE) Saturday.

The statistics showed that outstanding of China's registered external debt in the first half of this year, which stood at US$216.7 billion, experienced first negative growth for the past five years.

The SAFE declined to give further details or comments.

During the period, China borrowed mid- and long-term foreign debts of US$15.37 billion, an increase of 55.6 percent, 5.49 billion dollars, over the same period last year.

Meanwhile, China has paid 11 billion dollars of debt principal and 1.74 billion dollars of interest, up 31.76 percent and 55.64 percent compared with the corresponding period last year respectively.

(Source: Xinhua)

China desperate for financial talents
www.chinaview.cn 2007-10-02 08:34:26
By Xinhua writer Xu Bo

BEIJING, Oct. 2 (Xinhua) -- "When I hit the big time, I will buy a BMW7 series car as my marriage dowry," said sparkling 22-year-old Jian Jingtao." I'll give it to my fiance to show him how much I love him."

In China, the cheapest BMW7 series model costs nearly 1 million yuan (133,000 U.S. dollars) while the average annual income for urban residents, nationwide, was only 12,000 yuan (1,600 U.S. dollars) in 2006.

Jian, a civil servant in the southwestern province of Sichuan, makes about 1,200 yuan (160 U.S. dollars) a month, and she also works as a part-time weatherwoman in a TV station in Liangshan Yi Autonomous Prefecture, an impoverished area of the province, where most people haven't even heard of BMW. The part-time job doesn't bring her much money.

Then, how can she possibly realize her dream? Well, instead of counting on her part-time job, she has other ideas.

"I'm taking the Chartered Financial Analyst (CFA) test and I've passed Level II," says Jian, her eyes shining with hope. "Just one step away from the best financial institutions!"

She believed getting a job in such institutions would mean she is one step closer to her dream car.

Official data suggested that staff workers in China's well-known financial institutions are making 15,000 yuan (2,000 U.S. dollars) a month and more. And jobs in the financial sector have being taking the lead, driven by the basic principle of a market economy's supply and demand.

Around 45 million people will join the labor force in the next five years in China, but many of them will have to take jobs as laborers and construction workers and make just 800 yuan (107 U.S. dollars) a month.

When lecturing in China's leading Tsinghua University, China Construction Bank (CCB) Chairman Guo Shuqing testified that the most troubling problem facing his bank in its "go overseas" strategy is a shortage of talented professionals.

CCB, one of China's four biggest commercial banks, wants to set up branches in New York and London, Guo told the students, adding that the bank is "hungry for people specialized in financial accounting, securities analysis, portfolio management, interest rate pricing and foreign exchange pricing".

China, the world's fastest-growing economy with an annual GDP growth of almost 10 percent for the last 10 years, has long been considered the world's factory, producing about 75 percent of the world's home appliances for example.

But as the country moves to a more market-oriented financial system, financial talents are at a premium because there are so many issues to deal with.

As a major reform in the financial sector, China dropped its currency peg to the U.S. dollar in July 2005 and linked the yuan to a basket of foreign currencies, allowing it to float in a 0.3 percent band around the official central parity.

"Everything changed when they expanded the fluctuation range to0.5 percent," says textile trader Wei Changshan from Beijing-based Dongxing Textile Co. "I'd really like to hire someone to tell me about how to manage it."

In July 2005, 8.28 yuan could be exchanged for one U.S. dollar. On July 10, 2007, the same dollar could be bought for just7.58 yuan.

Hearkening to overseas comments, Yi Gang, assistant governor of the People's Bank of China, the country's central bank, said that the exchange rate of the Chinese currency would gradually become more flexible.

As for the stock market, the benchmark Shanghai Composite Index surged by more than 130 percent year on year in 2006 after afive-year bearish market, thanks to reformed securities regulations and continuing strong economic growth.

China's stock market may become the third biggest in Asia by the end of next year, according to a January forecast by Shanghai Stock Exchange Executive Vice President Zhou Qinye.

As new regulations come into play concerning foreign investments, Chinese fund managers and securities traders would like to foot it out with overseas competitors. The lack of financial talents seems rather serious.

A recent government document on qualified domestic institutional investors (QDII) allows domestic fund management and securities companies to follow commercial banks into the arena of overseas securities.

"We started preparing for QDII products nearly six months ago," said Xu Xiaosong, vice general manager of China Southern Fund Management Co., Ltd.

"So we are recruiting. Unfortunately we are not the only ones. A number of big securities companies are looking for people," said a fund manager who asked to remain anonymous. "It's simple. If we want to win the competition we need the best team."

Not surprisingly, foreign banks are also on the lookout for qualified people in China. In 2005, the Bank of East Asia opened personal services, the first to do so in China.

In the China-U.S. Strategic Economic Dialogue held in May, China agreed to allow foreign banks to issue their own yuan-dominated credit and debit cards.

The move is seen as a way of boosting fair competition between local and foreign financial institutions.

At the Third National Conference on Financial Work in early 2007, Chinese Premier Wen Jiabao said that China would facilitate fair competition between domestic and foreign financial institutions.

As the government opens the banking sector to meet its World Trade Organization commitments, the human resources battle for thebest and brightest in the financial sector has escalated as well.

HSBC expects to grow its headcount from 3,000 to 4,000 in China this year and Citigroup plans to hire about 1,000 extra people. Standard Chartered said it did not have a specific target this year but hired 1,000 in 2006.

Finding enough experienced staff and training them adequately was the toughest issue confronting the bank, HSBC China Chief Executive Richard Yorke said earlier this year.

"There is no real finance education in Chinese colleges," noticed Wang Zhao, an economist with Beijing University's China Center for Economic Research.

"The so-called finance (education) in colleges only consisted of macro-control measures, such as monetary policy, that hark back to the days of the planned economy. What Chinese students want now is courses on securities analysis and portfolio management," he said.

A recent international survey released by Deloitte Consulting found that two-thirds of the 636 senior finance executives surveyed thought the supply of high-quality talent in Asia was limited or inadequate.

"The crucial but tricky part is that you have to master international practice as well as the local reality," Managing Director for Asia Pacific Operations CFA Institute Jane Squires commented.

"This year 10,200 people signed up to take the CFA test in China, up 30 percent from last year," Squires said. "We can reasonably project that there will be 600 more CFA holders at the end of 2007."

"I can't say how many financial experts China needs but one thing is certain, there is plenty of room for those who have the capacities. The United States currently has 44,220 people who hold the CFA qualifications. In comparison there are 3,650 in Hong Kong,2,133 in Singapore and just 1,086 in China," she said.

China has outlined its new policies for the financial sector, including deepening the reform of state-owned banks, facilitating rural financial reforms, and steadily pushing forward the reform of foreign exchange rate.

The country's financial sector is set to speed up as the market continues to swing open.

In that case, Jian Jingtao, the young lady with so many traditional Chinese virtues, has an excellent chance of realizing her dream and the dream of her lucky boyfriend, probably with a little help in the shape of a bank loan.

http://news.xinhuanet.com/english/2007-10/02/content_6821773.htm

...................
The Chinese and Congo take a giant leap of faith
By Howard W. French
New York Times
September 21, 2007

SHANGHAI: The entire world may not have sat up and taken notice in the last week, and that is probably just fine with China, which has just made a major move into central Africa.

With its agreement to lend $5 billion to Congo, what might have often looked like a grab-bag approach to the African continent by a country with only sporadic involvement there has finally taken on a distinct outline.

It turns out that China, which since the time of Deng Xiaoping has discouraged talk about its rise or its might, has a blueprint for Africa, and with the Congo deal, what we are witnessing is the shift of the Chinese embrace into high gear.

What will $5 billion buy? Quite a lot, should all of the projects in the announced deal materialize. Imagine Western Europe without practicable roads or functioning trains and you will begin to get a sense of Congo and its realities.

For half of the year, when the rains are heavy, the grandly named Route Nationale 1, which follows a path of about 260 kilometers, or 160 miles, between the capital, Kinshasa, and the country's sole ocean port, Matadi, cannot be said to connect the two cities.

Trucks sink up to their cabin doors in mud and must wait for weeks to be winched out. Mind you, this is arguably the most important road in the country.

Add to the lack of infrastructure an equatorial climate in which tropical diseases proliferate and thrive, and no education system worthy of name, forcing children by the millions to grow up without proper schools.

It is a dark picture, made all the more dire for the persistence of a low-grade civil war affecting large swaths of the country.

The $5 billion that China is plunking down promises a great leap forward for Congo, and this begins with about 3,200 kilometers of new rail lines and an equivalent amount of new roads. The money will also pay for 31 hospitals and 145 smaller health care centers, along with two large new universities and 5,000 new government housing units.

The Chinese promise not to dilly-dally, too. Most of this will be accomplished in a mere 36 months, they say, and I for one believe them, having seen the pace of change even in the most remote Chinese backwaters. If war or political upheaval doesn't get in the way, Congo stands to experience more progress in 36 months than it has in 47 years of independence from Belgium, or as a colony of Brussels for that matter.

The Chinese move is impressive on many levels, none more so than the fact of the immense vacuum in Africa they are moving to fill, and there are few characteristics more distinctive of an emerging superpower than filling vacuums.

When Laurent Kabila overthrow Mobutu Sese Seko in 1997, American companies like Bechtel rushed up blueprints for Congo's reconstruction, anticipating huge civil engineering deals.

No country is more richly endowed in minerals, and the world's mining giants, too, flew executives in on private jets, hoping to win big contracts. More war intervened, though, and all of this came to naught, leaving Congo's 65 million people mired in poverty, with little real development ever since.

China now has its eyes on the same prize: the world's richest assortment of minerals, from copper to cobalt to uranium to diamonds and gold and on and on, but its game plan reflects a truly Chinese perspective on the world.

The new roads and rails are meant not merely to revive Congo's prospects. Nor are they simply intended to facilitate extraction, as much as that remains part of the plan. China is redrawing the economic map in central and southern Africa, linking the copper zone of the south with the port at Matadi, and redirecting other portions of the country's huge mineral potential to Chinese-built networks in Zambia and Angola.

In doing so, it is largely avoiding South Africa, a potential but now badly outstripped competitor that is perhaps seen as too deeply involved with the West.

It must be said that China has chosen a daunting proving ground for its long-held ideas about engagement with the developing world, which could be summed up as "it's the economy, stupid." It is not merely for lack of good faith that the West has nearly abandoned this part of the world, despite its immense riches. History has shown this to be an extremely hard place to build lasting, productive enterprises.

Lest anyone assume anything different, I hasten to wish the Chinese and their new Congolese partners well. Africa desperately needs a hundred flowers to bloom.

The hard questions that merit posing, however, just won't go away. They will be proven one way or another. China's mastery of infrastructure is unquestioned, but can there be lasting development in Africa without big strides in political development, and without the emergence of strong civil societies?

What is the good of a university without books, or hospitals without medicines? Africa, sadly, has plenty of experience with this question, and nowhere more so than Congo, where foreigners with a hunger for the country's minerals, dreams of riches and a willingness to turn a blind eye to ugly political realities have visited before.

I think of the Inga Dam, built by the United States in the early part of Mobutu's regime and said to be able to power most of Africa, but now unable to keep even the capital lighted. I think of a towering Information Ministry tower built by the French, where one must walk up countless stairs for lack of a functioning elevator.

I think of V.S. Naipaul, who wrote unforgettably about this same country in "A Bend on the River": "Neither the president who had called it into being nor the foreigners who had made a fortune building it had faith in what they were creating. But had there been greater faith before?"

This article has a surprisingly positive tone against China, its good news though.

Not really economic news but an interesting article:
Rich Chinese leave a bad image to many youths
www.chinanews.cn
2007-09-11 17:09:55

Chinanews, Beijing, September 11 – According to a survey about the image of rich Chinese in the minds of young people, jointly conducted by the Social Investigation Center of China Youth Daily and Sina.com, 66.75% of the respondents think that most rich people in China deserve no respect due to their bad behavior, while only 3.95% of the respondents think differently.

“The bad social image of rich Chinese suggests that they have to improve their behavior,” said Xia Xueluan, a sociologist from Peking University.

Most youths don’t have prejudices against rich people. It is the primitive accumulation of the wealth of many rich people that has caused the antipathy towards them. Besides, quite a large number of rich Chinese are poor morally.

Of course, there are rich people who have won wide respect with their strong sense of responsibility. 56.92% of the respondents admit that there are many respectable rich people around them.

“Successful businesspeople in the US are considered as heroes, and more and more youths in China have accepted this idea, ” said Xia.

China's Rocket Service
Makes Inroads, Irks U.S.
By ANDY PASZTOR
October 5, 2007


China's growing prominence in launching European-built commercial satellites is sparking criticism and even tentative calls for retaliation from some U.S. lawmakers and aerospace-industry officials.

The criticism is focused on the thriving partnership between Thales SA, a French commercial-satellite manufacturer, and China's state-run rocket industry, which aims to become a major launch provider for civilian spacecraft. In addition to questions about competition, the debate has stirred broader U.S. national-security and export-control issues because Thales has a dual role as a subcontractor on certain sensitive Pentagon programs. Critics of the alliance say China could end up with U.S. technology though the relationship.

Thales, which has erected internal firewalls and other safeguards to protect U.S. technology, said it "continues to be fully transparent with U.S. government officials" regarding the company's commercial-space activities world-wide. It said all units doing business with U.S. customers "work closely with government officials to adhere" to U.S. export controls.

China's embassy in Washington declined to comment. In the past, Chinese space officials have emphasized the importance of foreign cooperation but also laid out plans to become a commercial-space superpower partly through launching dozens of domestic satellites on improved boosters.

Working with Beijing, Thales unit Thales Alenia Space is offering small communications satellites that don't include U.S. parts and therefore are exempt from a complex web of U.S. technology-export controls. They are as much as 40% cheaper to assemble, test and launch than rival American models.

The launch portion costs less than $50 million per rocket versus about $100 million for the average U.S. or European rocket launch.

Such low-cost package deals, when other satellite-launch providers are raising prices, have helped China's rocket arm and Thales gain prominent commercial orders, to the concern of Western rivals. Customers include civilian organizations in Indonesia, Nigeria and Venezuela. Since 2006, China has launched or agreed to put into orbit a total of at least six Thales satellites.

China's commercial space-launch ambitions have sparked complaints from U.S. satellite builders Loral Space & Communications Inc. and Orbital Sciences Corp. The Senate Appropriations Committee has asked for a swift Pentagon study assessing Chinese rocket programs and "identifying non-Chinese companies which are contracting to use Chinese launch vehicles." The report language was championed by Sen. Daniel Inouye, the veteran Democrat from Hawaii, who chairs the defense subcommittee. Loral, Orbital and the Pentagon declined to comment.

Rep. Mark Kirk, an Illinois Republican who co-chairs a bipartisan study panel dealing with China, says Beijing is intent on using its nascent space program to strengthen its ties with developing countries that would be customers for the rockets.

While Thales and Beijing are generally selling "stripped-down and slightly less capable systems" than those marketed by U.S. rivals, Rep. Kirk says, a likely result will be improved reliability and capability of next-generation Chinese rockets.

Write to Andy Pasztor at andy.pasztor@wsj.com

Source (http://online.wsj.com/article/SB119154666486349753.html?mod=hps_asia_whats_news)

China has 1.3 billion and that is very important because all of them in the future will become rich soon and that will change the world economy.


Not all of them, LOL!

Not all of them, LOL!

I was trying to say most.

@Huhu
I have only one gripe about the rich: Stop pushing real estate prices up so that poor folks like me can afford to buy a house! :rant:

It's all I ask for really. I have no interest in a car, the stock market or other luxuries. :fiddle:

China's software revenue up 22.9% in first eight months
www.chinaview.cn 2007-10-06 14:26


BEIJING, Oct. 6 (Xinhua) -- China's software industry reported a revenue of 343.89 billion yuan (45.73 billion U.S. dollars) for the first eight months of this year, up 22.9 percent year-on-year, according to the latest statistics from the Ministry of Information Industry.

Of the total revenue, software products accounted for 121.25 billion yuan, up 24.1 percent; system integration made up 84.05 billion yuan, up 18.5 percent; software technological services was 55.81 billion yuan, up 23.9 percent; embedded system software was 74.26 billion yuan, up 24.5 percent; and IC design collected 8.52 billion yuan, up 27.6 percent.

A spokesman of the ministry said this year a series of policies would be promulgated to further encourage the development of software and integrated circuits. Efforts will also be made to foster and regulate domestic software market, and support products with self-owned intellectual property rights through government purchasing.

He said that currently China's software industry lags far behind the international advanced level, with less than six percent of the global software market share, and it even can not match the development of hardware manufacturing in the country.

Source (http://news.xinhuanet.com/english/2007-10/06/content_6836177.htm)

Mainland reports booming trade with HK, Macao & Taiwan
www.chinaview.cn 2007-10-07 15:41

BEIJING, Oct. 7 (Xinhua) -- The Chinese mainland saw its trade with Hong Kong, Macao and Taiwan maintain a strong momentum in the first eight months of the year, according to the Ministry of Commerce.

The mainland's exports to Hong Kong in the January-August period surged 23.1 percent from a year ago to 115.4 billion U.S. dollars, while imports rose 15.3 percent to 7.99 billion U.S. dollars.

Hong Kong had invested an accumulative 293.9 billion U.S. dollars on the mainland by the end of August, taking a 40.4-percent share in the total investment the mainland had received from overseas since 1978.

Trade across the Taiwan Straits rose 13 percent to 77.5 billion U.S. dollars in the first eight months, with the mainland's exports up 14.4 percent to 15.2 billion U.S. dollars and imports up 12.6 percent to 62.4 billion U.S. dollars.

Taiwan remained the fifth largest investor on the mainland, with its investment adding up to 44.8 billion U.S. dollars by the end of August.

But ministry statistics show that the number of Taiwan-invested projects on the mainland decreased 5.5 percent to 2,216 in the first eight months, with direct investment shrinking 29.3 percent to 950 million U.S. dollars.

The mainland's exports to Macao reached 1.7 billion U.S. dollars in the eight months, up 21.9 percent, while its imports declined 3.5 percent to 180 million U.S. dollars.

Source (http://news.xinhuanet.com/english/2007-10/07/content_6840481.htm)

Mainland reports booming trade with HK, Macao & Taiwan


Most Chinese exports to Hong Kong are re-exported to other markets around the world.

Most Chinese exports to Hong Kong are re-exported to other markets around the world.

Do you have a source to that?

Do you have a source to that?

There are many sources.

"Much of Hong Kong's exports consists of re-exports, which are products made outside of the territory, especially in mainland China, and distributed through Hong Kong."

http://en.wikipedia.org/wiki/Economy_of_Hong_Kong

"Hong Kong's role in intermediating trade between China and the rest of the world. Hong Kong distributes a large fraction of China's exports. Net of customs, insurance, and freight charges, re-exports of Chinese goods are much more expensive when they leave Hong Kong than when they enter. Hong Kong markups on re-exports of Chinese goods are higher for differentiated products, products with higher variance in export prices."

http://www.nber.org/papers/w8088

There are many sources.

"Much of Hong Kong's exports consists of re-exports, which are products made outside of the territory, especially in mainland China, and distributed through Hong Kong."

http://en.wikipedia.org/wiki/Economy_of_Hong_Kong

"Hong Kong's role in intermediating trade between China and the rest of the world. Hong Kong distributes a large fraction of China's exports. Net of customs, insurance, and freight charges, re-exports of Chinese goods are much more expensive when they leave Hong Kong than when they enter. Hong Kong markups on re-exports of Chinese goods are higher for differentiated products, products with higher variance in export prices."

http://www.nber.org/papers/w8088

Thanks. It is probably true but I still recon the accuracy of Wikipedia. Plus, the report coming from NBER was on 2001. However, this will actually benefit Hong Kong because many of China's Companies Headquarters still resides there since the Chinese Takeover on 1997. Plus, they are still using the same operation since the British Colonial Days.

China's Patent Applications Exceed 268,000 in First Half of 2007
www.chinaview.cn 2007-10-06 18:00:56

BEIJING, Oct. 6 (Xinhua) -- China received 268,926 patent applications in the first six months of 2007, up 7.3 percent from the corresponding period last year, according to China Council for the Promotion of International Trade (CCPIT).

These patent applications involved inventions, utility models and designs, according to the CCPIT.

According to official statistics, China's patent applications had exceeded 3 million by the end of June, 2006.

China had received more than 4.98 million applications for registering trade marks by the end of 2006, with the number of registered trade marks exceeding 2.77 million.

Currently, China has more than 600 patent agent organizations.The Patent and Trademark Law Office under the CCPIT remains the largest agency authorized to manage overseas-related intellectual property.


Source (http://news.xinhuanet.com/english/2007-10/06/content_6837183.htm)

Retail Sales of Consumer Goods Approach 350 Billion Yuan in National Day Holidays
www.chinaview.cn 2007-10-07 23:02:06

BEIJING, Oct. 7 (Xinhua) -- The retail sales of consumer goods in China rose 16 percent year-on-year to almost 350 billion yuan (46.7 billion U.S. dollars) during the week-long National Day holiday, said sources with the Ministry of Commerce on Sunday.

The retail sales were boosted as more Chinese people travel, gather for family reunions, buy more commodities, and hold weddings during the seven-day holiday known as the "golden week".

Prices of daily necessities maintained stable as there was a sufficient supply in the market, according to the ministry.

Many people in rural areas joined urban dwellers in shopping, traveling and dining out while some city residents waved goodbye to busy urban lives and traveled to suburbs or remote villages to enjoy leisure time.

Sales of garments, home appliances, jewelries and autos rose in Chongqing, Shanghai, Jiangsu, Liaoning, Shanxi, Jilin and Heilongjiang, said the ministry.

In Shanghai alone some 30,000 weddings were held around the holiday period. Famous restaurants were crowded during the holidays, according to surveys, said the ministry.

China has three Golden Week holidays every year, including the Spring Festival holiday, May 1 Labor Day holiday and October 1 National Day holiday.

The Chinese government launched Golden Week holidays in 1999, in the hope of encouraging people to spend more money for the benefit of economic growth.

In 2006, the retail sales of China's consumer goods rose 14.5 percent over that in 2005 to 300 billion yuan during the National Day holiday.

Source (http://news.xinhuanet.com/english/2007-10/07/content_6842409.htm)

China's 40 Richest

10.08.07, 2:20 PM ET

So much for government meddling. China's efforts to put the brakes on the country's booming property market this year didn't stop the 26-year-old daughter of one of China's largest property developers from coming in on top in our annual survey of China's richest.

Yang Huiyan tops this year's list with a net worth of $16.2 billion, nearly seven times the $2.3 billion that retailer Wong Kwong Yu needed to rank No. 1 in 2006. Yang's father, the low-profile chairman of Country Gardens, turned over his shares to his daughter in 2005, and her wealth has soared with the company's stock price since the company went public in Hong Kong in April.

Yang, an alumnus of Ohio State University, is hardly alone in getting very rich, very quick. All 40 members of the Forbes Asia list of China's richest this year are billionaires, up from just 15 last year. The total wealth held by members of the list vaulted to $120 billion, from $38 billion last year. By comparison, the 40 richest Americans are worth $628 billion. Once poor, China is hardly hopelessly behind the world's richest country.
Table: China's 40 Richest

Behind the trend: China's double-digit economic growth and the rising value of its stock market. Fat valuations are attracting low-key companies like Country Gardens into the public markets in search of capital and riches. There, investment banks like Morgan Stanley (nyse: MS - news - people ), hungry for investment banking fees, are finding happy customers even hungrier to get a piece of booming China into their portfolios.

One of the biggest beneficiaries of all: property owners. China's government has been trying to slow demand with higher taxes, worried about income distribution and high prices.

Yet the country's well-off upper class and nascent middle class are both splurging on better digs during a time of prosperity. Urbanization is also propelling demand for new apartments, homes, and office and retail space, as the country's once-overwhelming rural population moves to the city. Shares in property developers that are listed on international exchanges are in strong demand because foreigners see property as a good way to play the slow-motion, one-way direction of China's mighty renminbi against just about all other currencies.

More than a dozen developers made the list. Among them were five spawned by Country Garden's IPO: Yang Erzhu, Su Rubo, Zhang Yaoyuan and Ou Xueming, in addition to Yang. Just today, Beijing celebrity developer Zhang Xin cashed in by listing SOHO China in Hong Kong.

The new list showcases a boom across all industries. Nasdaq-listed Baidu.com's (nasdaq: BIDU - news - people ) founder, Robin Li, returned this year. Newcomers, who account for half of the 40 places, include private entrepreneurs who are gaining ground in a China energy industry long dominated by the state. Among them, Xiaofeng Peng of LDK Solar (nyse: LDK - news - people ) and Liansheng Miao of Yingli Green Energy (nyse: YGE - news - people ); both companies are U.S.-listed solar energy upstarts. Returnees included Cho Tak Wong (last year listed as Cao Dewang), whose auto parts maker Fuyao is being courted as an investment target by Goldman Sachs (nyse: GS - news - people ).

Last year's No. 1, Wong Kwong Yu, fell nine places to No. 10 even though his wealth increased by 56%, to $3.6 billion. Yan Cheung, the chairman of Nine Dragons, who was last year's richest woman, also saw her wealth increase by 126% from $3.4 billion, though her rank slipped to No. 11.
http://www.forbes.com/home/entrepreneurs/2007/10/08/china-40-richest-ent-cx_rf_1008chinasrich.html

Ranking of China's 40 richest people
http://www.forbes.com/home/entrepreneurs/2007/10/08/china-40-richest-ent-cx_rf_1008chinasrich_2.html

China leads way of reducing poverty - report
(Xinhua)
Updated: 2007-10-09 06:52


MANILA -- China is leading the way of reducing poverty in Asia and the Pacific region, and contributing to other regional efforts like reforestation and energy efficiency to achieve the Millennium Development Goals (MDGs), said an international report released here on Monday.

In 1990 one person out of three in China lived in poverty, while today the number is below one in ten, said "The Millennium Development Goals: Progress in Asia and the Pacific 2007" (MDG 2007), a joint report by the United Nations and Asian Development Bank (ADB).

The MDGs range from halving extreme poverty to reducing child mortality, halting the spread of HIV/AIDS, providing universal primary education, and providing access to clean drinking water and sanitation facilities by the target date of 2015. It formed a blueprint in 2000 which was agreed upon by all nations and international development institutions.

According to MDG 2007, a landmark report issued half way toward the target date of 2015, China has reduced its level of hunger and nutrition below the regional average, and in some Chinese cities the rate is close to zero.

The reforestation in China also has helped Asia Pacific region registering an increase of forests, and the country has managed to double its energy efficiency since 1990, said the report.

China is also well on track for some other indicators like promoting gender equality and empowering women, improving maternal health and reducing child mortality, said the report.

However, China still has a lot to do to attain the goal of halving the proportion of rural population without access to safe drinking water, while the number of HIV infections is rising faster in the country than the average figure of the Asia-Pacific region, said the report.

http://www.chinadaily.com.cn/china/2007-10/09/content_6158286.htm

China's forex reserve tops US$1.43 trillion
(Xinhua)
Updated: 2007-10-12 19:17


China's foreign exchange reserve had reached 1.43 trillion U.S. dollars by the end of September, up 45.1 percent year-on-year, the People's Bank of China announced on Friday.

A total of 367.3 billion U.S. dollars were added to the country's foreign exchange reserve in the first nine months of 2007, said the central bank.

In September alone, the forex reserve rose by 25 billion U.S. dollars.

China's soaring trade surplus is still the major contributing factor to the forex reserve boom.

Data newly released by the General Administration of Customs shows that China's trade surplus for the first nine months of the year has reached185.7 billion U.S. dollars, exceeding the total trade surplus of 177.47 billion U.S. dollars for 2006.

The huge forex reserve is considered the main reason for excess liquidity in China, as the central bank has to spend quantities of basic money to purchase foreign exchange, thus aggravating the problem of surplus fluidity.

By the end of September, the M2 -- a broad measure of money supply, which indicates the monetary demand of the whole of country and possible inflation -- grew by 18.45 percent from a year ago to 39.31 trillion yuan.

The growth rate is 1.39 percentage points higher than the end of June and still higher than the target growth of 16 percent set by the central bank at the beginning of this year.

A total amount of 195.8 billion yuan was poured into the market during the first nine months, 30.2 billion yuan more than the same period of last year.

On the other hand, continuous growth of the forex reserve has in fact increased the pressure on appreciation of the Chinese currency, which in turn has exerted greater pressure on value preservation of China's forex reserve.

The central parity rate of the RMB was 7.5114 to the U.S. dollar on Friday.

In a move to make better use of the country's huge forex reserve, China announced the establishment of the China Investment Corporate Ltd. (CIC), the country's state forex investment company at the end of September.

The state-owned investment company will invest in overseas financial markets.

The registered capital of 200 billion U.S. dollars of the CIC all comes from the forex reserve of the country, which will be obtained by issuing a total of 1.55 trillion yuan special treasury bonds by the Ministry of Finance (MOF).

So far, the ministry has issued more than 700 billion yuan (93.3 billion U.S. dollars) of special treasury bonds, with 600 billion yuan to the central bank and 100 billion yuan targeting the general public. It will issue another 100 billion yuan of treasury bonds by the end of this year

http://www.chinadaily.com.cn/china/2007-10/12/content_6171030.htm

PetroChina finds major gas field in Xinjiang region

PetroChina, China's largest oil and gas company, has discovered a major gas field in the nation's northwest Xinjiang region, state media reported Thursday.

The field, known as Dabei III, boasts an estimated reserve of up to 130 billion cubic metres (4.3 trillion cubic feet), the China Daily newspaper reported citing an unnamed source with the company.

'It will serve as an important back up supply source for the west-east gas pipelines,' the source said, adding that the company will drill more appraisal wells to determine the final reserve.

The announcement of the discovery comes after PetroChina (nyse: PTR - news - people ), already listed in Hong Kong and New York, won approval last month for a domestic listing expected this year which could raise up to 40 billion yuan (5.3 billion US dollars).

PetroChina's parent said in August it will start building its second west-east natural gas pipeline in 2008, with gas transmission to come on stream in 2010.

The new pipeline will annually transport 30 billion cubic metres of natural gas imported from central Asian countries such as Turkmenistan and Kazakhstan, as well as gas produced in the Xinjiang region, the company said.

The newly discovered gas field is potentially the third largest in Xinjiang, after the Kela II and Dina II gas fields, said Dai Jinxin, a researcher with an institute affiliated with PetroChina.

Kela II and Dina II have proven reserves of 250 billion and 170 billion cubic metres respectively, the report said.

http://www.forbes.com/markets/feeds/afx/2007/10/11/afx4208755.html

China to allocate 80b yuan for high-tech development

The China Development Bank (CDB) will provide 80 billion yuan (US$10.7 billion) to support the development and innovation of high-tech enterprises in upcoming five years.

According to a memorandums of understanding recently signed by the National Development and Reform Commission (NDRC) and CDB, the fund will be used in high-tech innovation, key projects, small-and medium-sized high-tech firm development and etc.

It is an effort initiated by NDRC to formulate efficient finance channels for the high-tech industry at China Hi-tech Fair being held in Shenzhen.

Apart from government supportive policies, the industry still needs other effective financing methods such as venture capital investment, bank loans and public listing.

The NDRC will work with the CDB and Shenzhen Stock Exchange to promote cooperation between high-tech enterprises and the capital market in a bid to solve financial difficulties of high-tech enterprises.

http://www.chinadaily.com.cn/bizchina/2007-10/13/content_6172333.htm


Ranbaxy to make China a major sourcing hub

Pharmaceuticals major Ranbaxy Laboratories plans to leverage the cost advantage of Chinese raw materials by making China its major active pharmaceutical ingredient (API) sourcing hub.

The company, which already has a Chinese presence through a joint venture named Ranbaxy Guangzhou China (RGCL), will explore new partnership options to facilitate raw material outsourcing.

RGCL would continue to focus on manufacturing medicines for exclusive supplies to the Chinese market, Malvinder Mohan Singh, CMD, Ranbaxy said.

Speaking to reporters on the sidelines of a CII conference on life sciences today, Singh said that Ranbaxy saw China’s low-cost raw material manufacturing ability not as a threat, but as an opportunity for reducing its manufacturing expenses. “The company’s interest in API manufacturing will continue to be strong. However, we will try to maximise our profits by importing huge quantities of APIs from China,” he explained.

The company is also expecting to expand its bio-similar drugs (low cost biotechnology medicines) business in a big way. “Bio-similars have a great future. Lot of capabilities and knowledge have to be unlocked in this segment,” he added.

According to Singh, Ranbaxy plans to create a lot of value by leveraging on the strength of its newly acquired biotech company, Zenotech Laboratories. Zenotech has two biotechnology-based cancer offerings in India and eight more are being developed. Its medicines are expected to be cleared for shipping to Europe by 2011.

Singh also hinted that Ranbaxy would continue to explore business opportunities in areas where there are high entry barriers. “We are evaluating speciality areas where there is less competition. Ranbaxy may enter such areas, oncology for instance, in future,” he said.

http://www.business-standard.com/compindustry/storypage.php?leftnm=1&subLeft=1&chklogin=N&autono=301171&tab=r


Shanghai GM to set up vehicle testing ground

Shanghai General Motors, GM's joint venture with Shanghai Automotive, plans to build a Yuan 1.6bn (US$213.05m) vehicle testing ground in China's eastern province of Anhui.
http://www.automotiveworld.com/AEM/content.asp?contentid=64162

China's Rapid Economic Growth
Remains High on Hu's Agenda
By Andrew Batson and Jason Leow of Wall Street Journal
October 15, 2007 10:57 a.m.

BEIJING -- Chinese leader Hu Jintao is embarking on his second five-year term engaged in a difficult balancing act, as he keeps the government's focus on fast economic growth while also promising to deliver a more equitable society and a better natural environment.

In a major speech Monday to open the Communist Party's twice-a-decade National Congress, Mr. Hu said economic growth must remain the party's "central task." China's per-capita gross domestic product, a broad measure of the nation's prosperity, has nearly doubled over the past five years, and was just over $2,000 in 2006. Mr. Hu said the government's goal is to double that figure again by 2020, and "basically eliminate" absolute poverty

While the rapid gains of recent years -- China's economy has grown by 10% or more every year since 2003 -- have made many Chinese better off, inequality is on the rise and environmental damage has been severe. "Our growth is realized at an excessively high cost of resources and the environment," Mr. Hu, who is both the party's chief and China's president, told more than 2,000 delegates to the party congress in Beijing's Great Hall of the People.

In order to maintain that expansion without using as many resources, China's growth in the future will need to be driven more by improvements in technology and productivity, Mr. Hu said. He outlined a vision for a major restructuring of the world's fourth-largest economy, one that would emphasize high technology rather heavy industry, services rather than manufacturing, and local consumer spending rather than exports. And to ensure that more people benefit from economic growth, Mr. Hu said the government will raise minimum wages, expand health care and the social safety net, and stimulate the creation of new jobs in the private sector.

Delivering an overall strategy rather than a list of new policies, Hu spent little time on shorter-term economic issues such as the direction of China's tightly-controlled exchange rate, or recent surges in real estate and stock prices. China's benchmark stock market index, the Shanghai Composite, closed yesterday at a new record high of 6,030.086 points, up 125% so far this year. Analysts say government agencies will be rolling out specific policy measures in coming months, now that the leadership has reached a consensus on the priorities laid out in Mr. Hu's speech.

"From his focus, you can conclude that the economy, more than any other issue, will stand foremost in policy-making in the next few years," said Zhao Xijun, a professor of finance at Renmin University in Beijing. The emphasis on the environment could mean heavier financial penalties on polluters, as well as tax incentives for energy-saving technology, Mr. Zhao said, while the stated desire to boost household incomes could lead to lower personal tax rates.

Write to Andrew Batson at andrew.batson@wsj.com2 and Jason Leow at jason.leow@wsj.com3


Source (http://online.wsj.com/article_print/SB119242440652458979.html)

http://en.ce.cn/Industries/Property/200710/18/t20071018_13288410.shtml


Last Updated(Beijing Time):2007-10-18 10:25

Apartment prices in the city have fallen by 7.8 percent from last month as the supply of residential properties exceeded the demand for the first time since June this year, with a ratio of one unit on sale to 0.99 units wanted, the Shanghai Morning Post reported yesterday.

The average price for apartments fell to 10,266 yuan (US$1368.8) a square meter in the second week of October, the report said, citing the E-House China Institute.

The new supply of properties, including apartments, offices and garages, in the past week hit 785,900 square meters, 232.4 percent higher than the previous week, said the E-House China Institute affiliated with the property developer E-House Co.

Analysts attributed the trend to recent policies, such as raising minimum down payments for second home buyers and forcing developers to sell completed projects as soon as possible.

These policies will further boost the supply in the rest of this month, analysts added.

Shanghai's supply of residential properties dropped below six million square meters on October 9, its lowest level since the second half of 2005.

^^ As part of the real estate industry I'll have to say: "Boo! Hiss..."

But on a personal level I say "Yay!" :cheer: If this trend goes on I'll finally be able to buy a house for myself.

China's registered SMEs surpass 4.3 mln


www.chinaview.cn 2007-10-21 12:37:35 Print

SHANGHAI, Oct. 21 (Xinhua) -- China's registered small- and medium-sized enterprises (SMEs) have exceeded 4.3 million and contributed to 58.5 percent of gross domestic production, according to the SMEs association.

The 4.3 million SMEs, more than 95 percent of which are privately owned, contributed to 50.2 percent the country's total tax revenue, said China Association of Small and Medium Enterprises Chairman Li Zibin.

SMEs make 66 percent of the country's patent applications and develop about 82 percent of its new products.

However, Li said that SMEs still have to cope with a number of difficulties, including inadequate laws and regulations, difficulty in obtaining financing and immature public services and attracting talents.

To solve the problem, China has come up with a series of measures, including a law on the promotion of SMEs.

Following the promotion, the outstanding loans granted to SMEs had risen to 5.35 trillion yuan by the end of 2006, an increase of539.6 billion yuan or 15.8 percent from the year beginning, according to official data.

By the end of June this year, China's five large commercial banks including Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank and Bank of Communications have granted 1.5 trillion yuan to 535,900 SMEs, 120 billion yuan or 8.3 percent more than that at the beginning of this year.

Social conditions for SMEs development are getting better while the SMEs have to optimize its structure, establish modern enterprise mechanisms as well as improve product quality, enterprise credit and social responsibility, said Bao Yujun, an expert in SMEs. (One U.S. dollar equals 7.51 yuan)

http://news.xinhuanet.com/english/2007-10/21/content_6917493.htm

Shanghai ports post 21% growth in external trade volume


www.chinaview.cn 2007-10-20 10:16:57 Print

SHANGHAI, Oct. 20 (Xinhua) -- Ports at Shanghai reported 378.17 billion U.S. dollars in foreign trade in the first three quarters of this year, a growth of 20.9 percent on the same period of last year, local customs sources said Saturday.
The total included 238.5 billion U.S. dollars in export value, up 22.8 percent, and 139.68 billion dollars in import value, up 17.8 percent.

The sources said the imports reached a record high at 17.63 billion dollars in September, up 15 percent year-on-year.

Between January and September, Shanghai saw the European Union and the Republic of Korea (ROK) as its two major trade partners.

Bilateral trade between Shanghai and the European Union ports amounted to 81.88 billion U.S. dollars, or 21.7 percent of Shanghai's total external trade volume, in the nine months, up 30.2 percent. The growth rate was 9.3 percentage points higher than the year-earlier level.

The exports from Shanghai ports to the EU stood at 55.47 billion dollars, up 32.4 percent, and imports from the EU, at 26.4billion dollars, up 25.9 percent.

From January to September, the ports imported 14.78 billion dollars worth of goods from ROK, up 15.2 percent. The growth rate was 10 percentage points higher than the year-earlier level.

According to the local customs sources, foreign-funded businesses made up for 74 percent of the external trade through Shanghai ports in the first three quarters, with a volume of 240.81 billion U.S. dollars, up 20.7 percent.


http://news.xinhuanet.com/english/2007-10/20/content_6912284.htm

It seems like China is much poorer than first anticipated. The ICP program will deliver it's result of updated PPP numbers at the end of the year and the preliminary figures are here. It shows that China is at the level of Fiji and Bhutan. HK is 9 times richer than China on a per capita PPP basis and Malaysia more than twice as rich. Will be interesting to see the final numbers, but it seems like it will be hard to deny the fact that the growth rates for the last 30 years have been exaggerated.

It seems like China is much poorer than first anticipated. The ICP program will deliver it's result of updated PPP numbers at the end of the year and the preliminary figures are here. It shows that China is at the level of Fiji and Bhutan. HK is 9 times richer than China on a per capita PPP basis and Malaysia more than twice as rich. Will be interesting to see the final numbers, but it seems like it will be hard to deny the fact that the growth rates for the last 30 years have been exaggerated.

Hi!
Do you have a link or webpage where I can read more about it?
Yes, there is a possibility of data manipulation either purposely or just erroneous data collection.
However, if we look at China export/Import, dollar reserve, urbanization rate, patent files, advancement in high value product such as ship, machinery, semiconductor seems to indicate that China still growing fast but maybe not as fast as it was believed.
Thank

Hi!
Do you have a link or webpage where I can read more about it?
Yes, there is a possibility of data manipulation either purposely or just erroneous data collection.
However, if we look at China export/Import, dollar reserve, urbanization rate, patent files, advancement in high value product such as ship, machinery, semiconductor seems to indicate that China still growing fast but maybe not as fast as it was believed.
Thank

Yes, you can read about the IPC project here and the rankings among the different Asian economies:

http://www.adb.org/statistics/icp/PPP-preliminary-report.asp

It seems like China is much poorer than first anticipated. The ICP program will deliver it's result of updated PPP numbers at the end of the year and the preliminary figures are here. It shows that China is at the level of Fiji and Bhutan. HK is 9 times richer than China on a per capita PPP basis and Malaysia more than twice as rich. Will be interesting to see the final numbers, but it seems like it will be hard to deny the fact that the growth rates for the last 30 years have been exaggerated.

http://www.imf.org/external/pubs/ft/weo/2007/02/weodata/weorept.aspx?sy=2004&ey=2006&scsm=1&ssd=1&sort=country&ds=.&br=1&c=924&s=PPPPC&grp=0&a=&pr1.x=60&pr1.y=10


http://www.imf.org/external/pubs/ft/weo/2007/02/weodata/weorept.aspx?sy=2004&ey=2006&scsm=1&ssd=1&sort=country&ds=.&br=1&c=532&s=PPPPC&grp=0&a=&pr1.x=68&pr1.y=17

http://www.imf.org/external/pubs/ft/weo/2007/02/weodata/weorept.aspx?sy=2004&ey=2006&scsm=1&ssd=1&sort=country&ds=.&br=1&c=548&s=PPPPC&grp=0&a=&pr1.x=52&pr1.y=9


IMF latest figures (updated on 17th of October 2007) in term of PPP per capita

China : $ 7,721.901

Hong Kong : $ 38,713.615

Malaysia : $ 11,957.354


Now how many times can 7,721.901 go into 38,713.615 ?

How many times can 7,721.901 go into 11,957.354 ?

http://www.imf.org/external/pubs/ft/weo/2007/02/weodata/weorept.aspx?sy=2004&ey=2006&scsm=1&ssd=1&sort=country&ds=.&br=1&c=924&s=PPPPC&grp=0&a=&pr1.x=60&pr1.y=10


http://www.imf.org/external/pubs/ft/weo/2007/02/weodata/weorept.aspx?sy=2004&ey=2006&scsm=1&ssd=1&sort=country&ds=.&br=1&c=532&s=PPPPC&grp=0&a=&pr1.x=68&pr1.y=17

http://www.imf.org/external/pubs/ft/weo/2007/02/weodata/weorept.aspx?sy=2004&ey=2006&scsm=1&ssd=1&sort=country&ds=.&br=1&c=548&s=PPPPC&grp=0&a=&pr1.x=52&pr1.y=9


IMF latest figures (updated on 17th of October 2007) in term of PPP per capita

China : $ 7,721.901

Hong Kong : $ 38,713.615

Malaysia : $ 11,957.354


Now how many times can 7,721.901 go into 38,713.615 ?

How many times can 7,721.901 go into 11,957.354 ?


Yes, I know but these figures will most likely be revised downwards sharply for China, when the ICP releases it's findings. Look at the ADB link I posted, it tells you the findings for Asia.

AFX News Limited
China Q3 GDP up 11.5 pct yr-on-yr -

BEIJING (XFN-ASIA) - China's third quarter gross domestic product rose 11.5 pct year-on-year, the National Bureau of Statistics said.

The bureau said in a statement that GDP growth for the first nine months also came in at 11.5 pct.

The third quarter and nine months figures were expected to show a slight slowdown from the decade-high growth of 11.9 pct in the second quarter of this year. Most analysts expected third quarter GDP to come in at 11.0-11.5 pct, reflecting easing exports because of faltering demand in key markets such as the US.

Still, the third quarter figure shows that the Chinese economy continues to power ahead, despite tightening efforts by policymakers in Beijing.

In the first half, China's GDP grew 11.5 pct year-on-year. In the third quarter of 2006 it was up 10.6 pct.

Other data was also robust, with the consumer price index (CPI) up 6.2 pct year-on-year in September compared to a high of 6.5 pct in August. For the first nine months, CPI was up 4.1 pct. The food component of the CPI was up 10.6 pct in the first nine months.

The central bank has raised interest rates five times this year, but inflationary pressures have remained unabated. That was most notable over the summer when rising prices for food, particularly pork, pushed up the CPI.

The government had set a full-year inflation target of three pct, but later conceded this was unlikely to be met.

Most analysts expect the central bank to hike interest rates once again before the year is out.

(1 usd = 7.5 yuan)

http://www.forbes.com/markets/feeds/afx/2007/10/24/afx4259423.html

Yes, I know but these figures will most likely be revised downwards sharply for China, when the ICP releases it's findings. Look at the ADB link I posted, it tells you the findings for Asia.

Wasn't everybody supposed to think that the size China's economy is freaking underestimated, especially services sector?

This article claims that urban residents might be as far as 75% richer than official, rural residents 53% richer.
http://www.atimes.com/atimes/China_Business/IG11Cb01.html

China's Economy Expands 11.5%, Adding Yuan Pressure
By Nipa Piboontanasawat and Li Yanping

Oct. 25 (Bloomberg) -- China's economy, the biggest contributor to global growth, expanded 11.5 percent in the third quarter, adding pressure for faster currency appreciation and higher borrowing costs to curb inflation and asset bubbles.

The increase in gross domestic product from a year earlier matched the median estimate of 26 economists surveyed by Bloomberg News and compared with an 11.9 percent gain in the second quarter, the fastest pace in 12 years. The statistics bureau released the figures in Beijing.

The CSI 300 Index of stocks fell the most in six weeks on speculation the central bank will raise interest rates for the sixth time this year. The record trade surplus helped drive a 26.4 percent surge in factory and property spending in the first nine months, raising the risk of idle plants and bad loans as the global economy slows.

``The central bank may raise interest rates immediately,'' said Wang Qing, chief China economist at Morgan Stanley in Hong Kong. ``We expect the yuan to appreciate more quickly over the next three months as part of measures to cool the economy.''

The CSI 300 fell 4.6 percent at the 3 p.m. close of trading. The yuan rose to as much as 7.4823 versus the dollar from 7.4926 yesterday, heading for the biggest weekly gain in five weeks.

Central bank governor Zhou Xiaochuan said last week that steeper or more frequent interest-rate increases are possible and expressed concern at rising asset prices. The stock market added $2.5 trillion in value this year -- the equivalent of GDP in 2006 -- as the benchmark index climbed 161 percent.

Oil Prices, Housing Recession

The government confirmed today that inflation cooled in September to 6.2 percent from an almost 11-year high of 6.5 percent in the previous month after food-price gains slowed.

``The surging economy has stabilized, while rising prices have been brought under control through a combination of monetary, fiscal policies and administrative measures,'' said Li Xiaochao, the statistics bureau spokesman. Oil prices, the U.S. housing recession and weaker U.S. consumption pose uncertainties, he said.

The pace of consumer-price gains was still more than double the central bank's annual target of 3 percent and higher than the key one-year deposit rate of 3.87 percent, encouraging stock and property speculation.

``Inflation will begin to stabilize,'' said Ben Simpfendorfer, a strategist at Royal Bank of Scotland Plc in Hong Kong. ``But if grain prices start to rise again, there is a risk that inflation may accelerate.''

Factory Spending Climbs

Urban fixed-asset investment growth is outpacing the 24.5 percent gain for all of 2006. Investment accounted for 42 percent of GDP expansion in the first nine months, versus the 37 percent share for domestic consumption, the statistics bureau said. External demand made up 21 percent.

Industrial production increased 18.9 percent in September from a year earlier, the fastest pace in three months and up from 17.5 percent in August, the government said. Retail sales climbed 17 percent after gaining 17.1 percent.

China's taken six years to achieve 40 percent of a 20-year target of quadrupling per-capita GDP by 2020, spokesman Li said, citing an increase to 16,084 yuan this year.

A 69 percent surge in the trade surplus in the first nine months to $185.7 billion has flooded the economy with cash. It's also prompted calls by U.S. Treasury Secretary Henry Paulson and the Group of Seven nations for a stronger Chinese currency, which would ease trade tensions and the inflow of money by making exports more expensive.

Revaluation Proposal

A report circulated last week within the National Development and Reform Commission, China's top economic planning agency, called for a 15 percent to 20 percent one-off revaluation, Market News reported yesterday.

The yuan has climbed more than 10 percent versus the U.S. currency since the end of a fixed exchange rate in July 2005 and fallen 7 percent against the euro.

China is the ``most important economy in the world,'' as this year's biggest contributor to growth, according to Rodrigo de Rato, managing director of the International Monetary Fund. The IMF last week cut its forecast for next year's global expansion to 4.8 percent from a July estimate of 5.2 percent, citing a weaker outlook for the U.S.

For China, a slowdown ``may expose a severe overcapacity problem, leading to excessive inventory, unemployment, a pile-up of non-performing loans and sharp declines in corporate earnings,'' said Sun Mingchun, an economist at Lehman Brothers Holdings Inc. in Hong Kong. ``The government needs to add investment restrictions and boost consumption.''

Investment Curbs

Premier Wen Jiabao said yesterday that the government would restrict land use and new projects, curb bank lending and target excessive gains in inflation and house prices.

The benchmark one-year lending rate is at a nine-year high of 7.29 percent. The government has ordered lenders to set aside larger reserves, sold bills to soak up cash, and eased capital controls to let more money flow abroad.

``Monetary policy tightening has slowed the economy a bit, but it hasn't solved the root problem,'' said Shen Minggao, an economist at Citigroup Inc. in Beijing. ``It is a structural problem -- the economy is too reliant on external demand and investment and not enough on consumption.''
.......................

Wasn't everybody supposed to think that the size China's economy is freaking underestimated, especially services sector?

This article claims that urban residents might be as far as 75% richer than official, rural residents 53% richer.
http://www.atimes.com/atimes/China_Business/IG11Cb01.html

That's a measurement of the gray/informal economy though. China can still have an informal economy of 24% of GDP even if the purchasing parity is revised downwards.

PPP is the number of currency units of another country that is required to purchase the amount of goods and services equivalent to what can be bought with one unit of currency in the base country.


The program is organized by regions & managed by regional agencies. The ICP surveys are carried out in Latin America, Western Asia, Asia-Pacific, Africa, Commonwealth of Independent States, OECD/EU countries.

The ICP is the world’s largest statistical initiative, involving 107 countries. It produces internationally comparable price levels, economic aggregates in real terms, and Purchasing Power Parity (PPP) estimates that inform users about the relative sizes of markets, the size and structure of economies, and the relative purchasing power of currencies. An ICP Global Office, housed in the World Bank, manages the global program. National Statistical Offices implement the program on the ground, under the general guidance and coordination of regional agencies. The Global Office works in close collaboration with the OECD/Eurostat’s program for 43 countries, and publishes global data linking ICP and OECD/Eurostat results for 150 benchmark countries.


Asian Development Bank is the regional coordinator for Asia and the Pacific. At the global level, the 2003-2007 ICP Round is managed by the World Bank.


The currency unit used for Asia and the Pacific region comparison is the Hong Kong dollar:
- Broad-based economy: prices are available for many products
- Strong statistical system for both prices and national accounts
- HK$ well-recognized in the region
- Relativities between countries are not affected by the reference or numeraire currency chosen.


Final Report on ICP Asia and the Pacific PPPs to be released by end 2007
- Link HK$ to the US$: ring comparison
- Global results to be released by end 2007


Country Per Capita Real (PPP) GDP (HK$)
Bangladesh
7,245
Bhutan
20,903
Brunei Darussalam
269,581
Cambodia
8,269
China, People's Republic of
23,556
Fiji Islands
23,583
Hong Kong, China
202,941
India
12,070
Indonesia
18,427
Iran, Islamic Republic of
60,857
Lao, PDR
10,361
Macao, China
212,617
Malaysia
65,136
Maldives*
14,360
Mongolia
15,104
Nepal
6,177
Pakistan
13,658
Philippines
16,663
Singapore
236,336
Sri Lanka
19,839
Taipei,China
147,971
Thailand
39,086
Viet Nam
12,295

Gurus place China bets
Gita Dhungana and Victor Cheung
Thursday, October 25, 2007

As the mainland market continues its bull run, two heavyweights in the world of investing have expressed contrasting views about where they may unlock potential value in the country.

Commodities guru Jim Rogers declared yesterday he is pulling out of all his US dollar assets and buying the yuan. Billionaire Warren Buffett, meanwhile, warned of overstretched valuations of mainland stocks - and urged investors not to lose their shirts.

Rogers, who has consistently been bearish on the US dollar, said the yuan is the best currency to buy, predicting the value of the currency to quadruple in the next decade.

"I don't see how one can really lose on the [yuan] in the next decade or so. It's gotta go. It's gotta triple. It's gotta quadruple," he was quoted by Bloomberg as saying during a presentation in Amsterdam late yesterday.

The yuan yesterday broke through the psychologically important level of 7.5 to the greenback for the first time. It closed at 7.4926, up from Tuesday's close of 7.5047.

Reiterating his bearish view on the US dollar, Rogers said the value of the greenback will further erode.

"I am in the process of - I hope in the next few months - getting all of my assets out of US dollars.

"I am that pessimistic about what's happening in the US," said the chairman of Beeland Interests and former partner of George Soros.

The US dollar has fallen against major currencies as concern mounts over economic growth in the United States, while last month's 50-basis point interest rate cut has prompted investors to dump US dollar assets.

Meanwhile, billionaire Buffett said although the fundamentals of the mainland economy remains positive, investors should be "cautious about mainland stocks as the market is too hot.

But last week, after his investment vehicle offloaded shares in PetroChina (0857), he noted it was "too soon to have sold the entire stake as the shares had risen since.

"We never buy stocks when we see prices soaring, Buffett told Bloomberg in Dalian, where he was visiting a subsidiary of a company held through Berkshire Hathaway. "We buy stocks because we're confident of the company's growth. People should be cautious when they see prices rising."

The world's second wealthiest man said he was looking elsewhere in Asia to buy large businesses that he understands, but that he was doubtful of finding a good buy in the mainland now that the benchmark index has more than doubled this year.

"If you understand a business and buy at a reasonable price, there's no risk.We've never realized a loss because we understand the businesses that we buy in," he said.

He denied media reports that Berkshire will invest in China Life Insurance (2628).

The CSI 300 index, which tracks major mainland-listed stocks, has jumped more than 170 percent this year. It gained 0.87 percent to close at 5,588.01 yesterday. The Shanghai Composite Index rose 1.21 percent to 5,843.11.

Meanwhile, Buffett, 77, said he was "appreciative of the performance of PetroChina."

Buying PetroChina had been "an easy decision, he said, but he doubted if he can find "another PetroChina, given the high valuation of mainland listed companies."
..........................

China Economy To Exceed Germany's


Story Highlights

China's economy grows 11.5 percent in third quarter

Economy on track to overtake Germany as world's third largest

Growth for the first nine months of the year also came in at 11.5 percent

Numbers beat analysts' forecasts amid boom in exports

BEIJING, China (AP) -- China's supercharged economy grew by a stunning 11.5 percent in the third quarter, surging ahead despite official efforts to cool the boom and putting it on track to overtake Germany as the world's third-largest within weeks, according to data reported Thursday.

Growth exceeded forecasts, but was below the 11.9 percent rate reported in the previous quarter.

It was driven by a double-digit surge in exports and investment in factories and other fixed assets despite repeated interest rate hikes.

Growth for the first nine months of the year was 11.5 percent, the same rate recorded for the first half of the year, the National Bureau of Statistics reported.

But a spokesman said the government has succeeded in keeping the rapid expansion under control.

"Due to macro-economic controls, we have turned the economy from being an overheating one to being one of speedy growth," bureau spokesman Li Xiaochao said.

The communist government wants to maintain fast growth to ease poverty but worries that a runaway expansion or overspending on real estate and other assets could ignite a financial crisis.

Beijing has raised interest rates five times this year to tamp down investment, and economists expect another hike later in the year.

Source (http://edition.cnn.com/2007/BUSINESS/10/24/china.economy.ap/index.html#cnnSTCText)

China's Yuan Rises Most Since Dollar Link Ended; Bonds Decline
By Kim Kyoungwha and Jian Guo Jiang

Oct. 29 (Bloomberg) -- The yuan rose the most in two years after China's central bank signaled it will tolerate faster appreciation to narrow a record trade surplus and slow inflation.

The currency climbed 0.3 percent after the People's Bank of China set the strongest daily reference rate since it ended a fixed link to the dollar in July 2005. Deputy Governor Liu Shiyu on Oct. 26 said foreign exchange markets have ``a role to play in correcting'' trade imbalances, reacting to calls for more rapid gains by the Group of Seven nations.

China's record $185.7 billion trade surplus in the first nine months has flooded the economy with cash, fueling an 11.9 percent annual rate of growth in the second quarter. The central bank has raised interest rates five times this year after inflation accelerated to a 10-year high. By contrast, the Federal Reserve is lowering borrowing costs.

``Authorities will use the exchange rate in its monetary tightening bias,'' said Craig Chan, a currency strategist with Lehman Brothers Asian Ltd. in Singapore. ``Strong credit growth, investment and inflationary pressures are still apparent.''

The yuan rose to 7.4750 versus the dollar as of 3:35 p.m. in Shanghai, the biggest gain since the peg ended in July 2005, according to data compiled by Bloomberg. The yuan will strengthen to 7.4 by the end of the year, according to the median forecast of 28 economists.

The yuan, a denomination of the renminbi, is not allowed to fluctuate more than 0.5 percent against the dollar from a rate set daily by the central bank. The currency traded little changed compared with the record reference rate today.

`Appreciate More Quickly'

``They need to have the renminbi appreciate more quickly so it reflects economic fundamentals,'' said U.S. Treasury Secretary Henry Paulson at a conference in Mumbai today. He'll visit Beijing in December for the third round of the Strategic Economic Dialogue talks.

China will raise the benchmark one-year lending rate to 7.56 percent from 7.29 percent this year, according to 16 of 17 economists surveyed by Bloomberg News last week. The deposit rate will likely rise to 4.14 percent from 3.87 percent.

China's economy will see ``big growth and the Chinese authorities will continue to allow the yuan to appreciate,'' said Thio Chin Loo, a currency strategist with BNP Paribas in Singapore. The yuan will rise as high as 7.40 versus the dollar by the end of 2007, Thio said.

The G-7 countries called for ``an accelerated appreciation'' in the yuan in a communique following an Oct. 19 meeting in Washington. Pressure for yuan gains also increased after the Fed cut borrowing costs and the dollar sank to an all- time low against currencies of six U.S. trading partners.

Higher Rates

The New York Board of Trade's Dollar Index measuring its value against the euro, yen, British pound, Canadian dollar, Swedish krona and Swiss franc, fell to 76.85, the lowest since the index started in March 1973.

China's yuan has gained more than 10 percent since the central bank started managing the currency against a basket of currencies including the euro, yen, South Korea's won and the British pound.

Chinese bonds fell on speculation the central bank will raise interest rates.

The yield on the 10-year bond rose 3 basis points, or 0.03 percentage point, to 4.49 percent, according to the China Interbank bond market. The price of the 4.46 percent securities due in September 2017 fell 0.22, or 2.2 yuan per 100 yuan face amount, to 99.78.

``Demand for bonds is weak as concerns linger that interest rates will rise again,'' said Li Haijun, a fixed-income trader at Jinzhou City Commercial Bank in the northeastern Chinese city of Jinzhou.
.............................

China Passes U.S. in Top 10 List as China Life Surges
By Chua Kong Ho

Oct. 29 (Bloomberg) -- China Life Insurance Co. surpassed AT&T Inc. in market value, giving China five of the world's 10 largest companies, compared to three for the U.S.

China's stock rally has almost tripled its benchmark index this year, prompting securities regulators to say on Oct. 16 that the market holds ``great risks.'' The nation's households are pouring more of their $2.3 trillion savings into shares to beat inflation, which exceeds the return on bank deposits, and to profit from the world's fastest growth rate among major economies.

``China is one of the most exciting economies,'' said Jim Rogers, the chairman of New York-based Beeland Interests Inc. ``The market is willing to pay a lot more for future growth.''

Beijing-based China Life, the nation's largest insurer, gained 2.2 percent in Hong Kong and added 5.3 percent in Shanghai as of 11:29 a.m., valuing the company at 1.92 trillion yuan, or $256.8 billion. San Antonio-based AT&T, the biggest U.S. phone company, is valued at $252.9 billion.

The People's Bank of China has told lenders to set aside more reserves eight times this year, most recently on Oct. 13, and has raised interest rates five times to help cool the economy.

China Life, PetroChina Co., China Mobile Ltd., Industrial and Commercial Bank of China Ltd. and China Petroleum and Chemical Corp. are now in the list of the world's 10 biggest companies by market value. Only two of those are in the top 50 by sales.

The three U.S. companies in the top 10 by market value are Exxon Mobil Corp., General Electric Co. and Microsoft Corp. Russia's Gazprom OAO and The Hague-based Royal Dutch Shell Plc complete the list. Exxon Mobil retains its No. 1 place.

Best Performer

The CSI 300 Index, which tracks yuan-denominated shares traded on the Shanghai and Shenzhen stock exchanges, has risen 169 percent this year, the best-performing of the 91 global indexes tracked by Bloomberg. Hong Kong's Hang Seng Index, which is dominated by Chinese companies, has gained 57 percent.

Shares in Hong Kong, where the five biggest Chinese companies are listed, have surged 45 percent since China's government said on Aug. 20 that some of its 1.3 billion citizens will be allowed to invest in the city's stock market. Chinese companies list in Hong Kong to lure international investors, who are prohibited from buying shares on mainland exchanges.

In the U.S., the Standard & Poor's 500 index has climbed 8.2 percent in 2007. The 1,856-member Morgan Stanley Capital International World Index has gained 12 percent this year.

World Beaters

The rally in Hong Kong and mainland Chinese markets has boosted valuations for Chinese companies past their global peers. Citic Securities Co., China's biggest publicly-traded brokerage, trails only Goldman Sachs Group Inc., Morgan Stanley and Merrill Lynch & Co. in market value among securities firms. Air China Ltd. is now the world's biggest airline by the value of shares, outranking Singapore Airlines Ltd. and Deutsche Lufthansa AG.

China's new giants are now setting their sights on overseas acquisitions as they put to use cash raised from stock sales.

Citic Securities said Oct. 22 it will pay $1 billion for the equivalent of 6 percent of New York-based Bear Stearns Cos.' shares, which is reeling from mortgage-related losses. The U.S. brokerage is investing the same amount in Citic.

ICBC, now the world's largest bank by market value, will set up branches in cities including New York and Moscow and make acquisitions to speed up its overseas expansion, Chairman Jiang Jianqing said in an interview on Oct. 17.

More global acquisitions by Chinese companies are likely, said Mark Mobius, who oversees $45 billion at Templeton Asset Management Ltd. in Singapore.

Lagging Sales

``This has already been happening and it's just a matter of time until we see the trend accelerate further,'' he said.

While Chinese companies have made strides in terms of market size, only China Petroleum and Chemical, or Sinopec, and PetroChina are among the world's biggest 50 companies by revenue.

PetroChina, the nation's largest oil company, passed General Electric Co. on Oct. 15 to become the world's second-biggest company, behind Exxon Mobil. PetroChina on Aug. 23 reported first- half net income rose 1.4 percent to a record 81.83 billion yuan ($10.9 billion). It is the world's 44th biggest company in terms of sales, according to Bloomberg data.

China's CSI 300 benchmark is valued at 43 times estimated earnings, compared with the average 29 times for Chinese companies on the Hang Seng China Enterprises Index. The U.S. S&P 500 Index, in contrast, is valued at 16 times estimated profit.

`Too Expensive'

``Chinese companies are far too expensive from any rational measure,'' said Fraser Howie, co-author of the book ``Privatizing China: The Stock Markets and Their Role in Corporate Reform,'' in Singapore. ``It's a bubble and in a bubble things are priced wrongly.''

Investors pay 76 times estimated full-year profit for China Life in Shanghai and 42 times in Hong Kong, according to Bloomberg data. That compares to 9.3 times for New-York-based American International Group, the biggest U.S. insurer, and 8.4 times for Europe's largest, Munich-based Allianz SE.

China Life said in August first-half profit more than doubled to 23.3 billion yuan, on soaring returns from the stock market. Its shares have jumped 90 percent in Shanghai since they started trading there on Jan. 9, and 98 percent in Hong Kong this year.

Chinese investors opened about 49 million trading accounts this year alone, nine times the total for 2006. Total accounts in China have swelled to 127.8 million. In the U.S., brokerages manage more than 83 million accounts, according to 2006 statistics from the Securities Industry and Financial Markets Association.

`Big Bubble'

``It's pretty unnerving,'' said Leslie Phang, who helps manage $1 billion at Commonwealth Private Bank in Singapore. ``It's all building into one big bubble. The Chinese companies are trading on euphoria.''

Gross domestic product in China rose 11.5 percent from a year earlier in the third quarter. Inflation surged to a 10-year high of 6.5 percent in August and was at 6.2 percent in September. That's more than double the central bank's annual target of 3 percent and higher than the key one-year deposit rate of 3.87 percent, encouraging speculation in stocks.

The China Securities Regulatory Commission must protect investors and prevent market risks, Vice Chairman Tu Guangshao said at the Communist Party congress in Beijing on Oct. 16. Investors should be ``more rational'' since ``the higher the share prices, the greater the risk,'' Chairman Shang Fulin said.

The rise of China's companies has drawn comparisons to the ascent of Japanese firms during its stock market bubble two decades ago.

Japan Redux?

``Japanese companies in the late 1980s traded at similar P/E multiples to Chinese companies today,'' said Elan Cohen, a Singapore-based portfolio manager at JPMorgan Private Bank, which has $350 billion in assets. ``The parallels end there. Japanese companies' earnings growth in the 1980's was anemic, whereas Chinese companies' earnings growth today is astronomical.''

Marc Faber, who manages $300 million at Marc Faber Ltd. in Hong Kong and who told clients to sell stocks one week before the 1987 Black Monday stock market crash, said it may only be a matter of time before some of China's biggest companies become household names throughout the world.

``European countries were also surprised at the beginning of the 20th century when American companies overtook European companies,'' he said. ``The world better get used to it.''
............................

China's Listed Companies See Profits Up 64% in 1st 3 Quarters


BEIJING, Oct. 31 (Xinhua) -- China's listed companies reported combined net profits in the first three quarters up by 64.18 percent from the same period last year, China Securities Journal, a newspaper run by Xinhua News Agency, reported on Wednesday.

All 1,512 listed companies on China's Shanghai and Shenzhen stock exchanges, except China Shenhua Group, had published their earnings for the period, the paper reported.

Together they earned 562.3 billion yuan (75.29 billion U.S. dollars) in net profits. Their combined takings amounted to 5.76 trillion yuan, up 24.5 percent compared with the same period last year.

The Industrial and Commercial Bank of China, the country's largest commercial bank, reported a net profit of 63.3 billion yuan, the highest of the 66 listed companies whose net profits surpassed one billion yuan.

China Construction Bank, the country's second largest lender, posted a net profit of 57 billion yuan in the first three quarters.

Among the top ten profit-making companies, seven were from the banking and insurance industries. The other five were Bank of China, China Life, the Bank of Communications, Ping An Insurance and China Merchants Bank.

By Tuesday, 396 listed companies had published annual earnings prospects, with 261 companies predicting increased net profits.

The Investor Relations Department of China Shenhua, the country's largest coal producer listed on Oct. 9, told Xinhua that as a newly listed company, Shenhua was not required to reveal the third quarter report according to the regulations of the industry watchdog.

Source (http://news.xinhuanet.com/english/2007-10/31/content_6982922.htm)

............................

Oh darn!

I wonder how many Global Fortune 500 companies will Chnia get at the end of this year. I will not be surprise if they will have more than 30.

Oh darn!

I wonder how many Global Fortune 500 companies will Chnia get at the end of this year. I will not be surprise if they will have more than 30.

That list is based on Prime operating revenue,not on market value.

Oh darn!

I wonder how many Global Fortune 500 companies will Chnia get at the end of this year. I will not be surprise if they will have more than 30.

The ranking is published around July 1st, China got 24 this year. However, the ranking is measured by revenue, not by profit or market value.

The Forbes 2000 list is more interesting I think. It mixes sales, profit, market value and assets. It is also published around July 1st. China Mainland + Hong Kong got 88 this year, up from 64 in 2006 and 55 in 2005. 6 of them scored at the top 100, up from 3 in 2006. The next edition should be crazy for China due to the stocks boom.

That list is based on Prime operating revenue,not on market value.

Oh I forgot how Fortune makes their listings. That's a bit of issue because only US and some European companies depend upon the market value. Revenue and Earnings are always the key factor on how strong the company really is. I'll just wait for the listings next year then.

Mexican wave may rock mainland banks
29 October 2007
South China Morning Post

How times change. As recently as two years ago, mainland banks looked desperately enfeebled. Burdened by sky-high levels of non-performing loans and hobbled by old-style command-economy management structures, they appeared technically insolvent and close to collapse.

To pull them back from the brink, mainland bank bosses scoured the world for foreign banks prepared to come in as investors and help shore up their crumbling capital bases and introduce much-needed commercial management techniques and technological know-how.

In turn, three of the four big state-owned banks and a clutch of smaller institutions signed up foreign partners including Bank of America, Royal Bank of Scotland, HSBC and Citigroup, selling them equity stakes of up to 20 per cent, often at only a small premium to their book value. Among foreign financial services companies, expectations were high that China's similarly stricken brokerage houses would soon be allowed to follow suit.

Now the boot is firmly on the other foot. Today, mainland banks are no longer desperate to sell chunks of their equity to foreigners. Just last week, Shenzhen Development Bank walked away from a long-standing deal to sell a 5 per cent stake to General Electric of the United States on the grounds that the price agreed two years ago is now far too low. Earlier this year an agreement between Bank of Chongqing and a US private equity firm fell through for similar reasons.

Far from searching for capital-rich saviours from abroad, today mainland banks are hunting for overseas acquisitions of their own. Last week, in the mother of all such deals so far, Industrial and Commercial Bank of China spent US$5.6 billion to buy a 20 per cent slice of South Africa's Standard Bank.

The ICBC-Standard transaction is the biggest outward investment by a Chinese bank, but it was not the first. Earlier this month, China Minsheng Bank bought 10 per cent of San Francisco-based UCBH Holdings for more than US$200 million. Last week, mainland brokerage company Citic Securities spent US$1 billion to buy 6 per cent of troubled Wall Street investment bank Bear Stearns. Nor will ICBC's purchase be the last such deal. Last week, Bank of China said it was on the look-out for potential acquisitions in Europe.

The remarkable turnaround in the fortunes of the country's banking sector owes a great deal to the power of international and mainland stock markets. Recapitalised by international and domestic stock offerings, mainland banks are far stronger today than two years ago, and very cash-rich. Its H-share offering in Hong Kong in October last year, for example, left ICBC sitting on a foreign currency cash pile worth some US$15 billion.

Even so, the first foreign purchases by Chinese banks looked relatively small and cautious. In recent months, however, mainland banks have gained in confidence, in large part as a result of the massive bull market in the domestic A-share stock markets.

The rapid rise in A-share prices has heavily bumped mainland banks' profits from fee-earning activities like asset management and custodial services. On top of that, the wealth effect created by buoyant equity markets has encouraged individuals and corporations alike to borrow more. For example, ICBC's mortgage business has grown 20 per cent this year, contributing to a 76 per cent year-on-year rise in third-quarter earnings.

And mainland banks' own share prices have benefited mightily from the bull market. ICBC's A shares are up 140 per cent from their offering price a year ago. That gives it a market capitalisation of nearly 2.5 trillion yuan, the largest in the world.

To put that into perspective, it means ICBC is now worth 50 per cent more than HSBC. That is a sobering thought, considering that at the end of last year ICBC had only around half the assets of HSBC. Even considering HSBC's exposure to the US subprime mortgage market, there can be few analysts or investors who believe that ICBC's assets are really that much better quality than those of the venerable London-based giant.

To Michael Pettis, professor of finance at Peking University, the frenzy surrounding Chinese banks brings back some uneasy memories. To him it recalls the bubble that followed the privatisation of Mexico's bad loan-burdened state-owned commercial banks in the early 1990s. He remembers how, following its listing, stock in Mexico's largest bank Banamex soared, giving it a price to book ratio double that of US giant Citibank.

It could not last. Buffeted by the successive shocks of the Tequila crisis and the Asian financial crisis, shares in Banamex collapsed. In 2001 it was taken over by Citibank.

ICBC is unlikely to suffer exactly the same fate. Even so, the Mexican example serves as a salutary reminder that while the position of mainland banks has been turned around in the last two years, it could well be reversed once again in the future.

I didn't know ICBC has become the largest share holder of Africa's largest bank.

China raises fuel prices amid shortages
The Associated Press
Published: October 31, 2007

BEIJING: China raised gasoline and diesel prices Thursday by about 10 percent to curb demand amid shortages that have caused long lines at filling staions and disrupted trucking in key export areas.

Oil companies have blamed the shortages, which began last week, on a lack of refining capacity. Government controls have forced refiners to pay the difference between soaring market prices for crude and lower retail prices at the pump. Some refiners responded by cutting output.

Consumers and some Chinese media have accused suppliers of creating a phony crisis to force Beijing to raise prices.

Thursday's price increases are meant to narrow the gap with soaring crude costs, according to the National Development and Reform Commission, the country's main planning agency. It was the government's first fuel price hike in 18 months.

The NDRC statement said prices would rise by 9.1 percent for gasoline and 9.9 percent for diesel, but said prices at some retailers could be up to 8 percent more than that.

"To ensure the supply of domestic oil products and the promotion of energy conservation, the state decided to properly increase the prices of oil products," the NDRC said. It said the price rise also would apply to aviation fuel.

Trucking companies say diesel rationing has slowed deliveries in Shanghai and areas along China's southeast coast that export manufactured goods to the United States and other foreign markets. A man was killed in a fight Wednesday after he tried to cut in line for gas in the central province of Henan, police said.

Thursday's price increase marked the reversal of a September government order that froze prices of gasoline and other basic consumer goods to rein in rising inflation.

The commission said it would try to shield the public from some of the increases.

"Prices of railway tickets, natural gas for civilian use and public transportation will not be raised to reduce the impact of the price hikes on the public, and the government will provide subsidies for taxi drivers," the commission said.

Chinese oil refiners are losing money due to low government-set retail prices for gasoline and diesel that prevent them from passing on record-high crude costs to consumers. Oil prices rose to new records above US$96 a barrel in Asian trading Thursday.

Some refineries have stopped processing to avoid losses. It was unclear whether the price increase would be big enough to make refiners profitable and open to increasing production.

The government had resisted appeals by oil companies to boost prices, saying it wanted to avoid hurting China's poor, who already are struggling with a sharp rise in food costs.

After Thursday's increase, Chinese motorists will pay up to 6.27 yuan (84 U.S. cents; 58 euro cents) per liter (23.83 yuan; US$3.20; €2.20 per gallon) for gasoline. Diesel prices rose to 5.29 yuan (71 U.S. cents; 49 euro cents) per liter (20.10 yuan; US$2.69; €1.86 per gallon).

The NDRC said the price hike was likely to add 0.05 percent to the country's monthly consumer inflation rate.

Inflation hit an 11-year monthly high of 6.5 percent in August. It eased to 6.2 percent in September but the full-year rate is expected to be well above the official target of 3 percent.

It said prices for railway cargo and airlines "need to be adjusted properly."

The agency said it also plans to raise natural gas prices, but did not say when or by how much.

China's No. 2 oil company, China Petroleum & Chemical Corp., known as Sinopec, defended its supply efforts Wednesday, saying in a statement that producers were "painstakingly organizing resources to get them to market" and also importing fuel.

Sinopec said it would import more oil this month to "stabilize the domestic market" but gave no information on when the crunch might ease.

China has risen in recent years to become the world's second-biggest oil consumer after the United States, propelled by economic growth that is expected to top 10 percent this year for a fifth straight year.

Government oil companies have spent billions of dollars to secure access to foreign oil and gas, leading to criticism of their willingness to deal with such isolated governments as Iran and Sudan.

Sinopec acknowledged that refiners that have suspended operations due to rising costs were partly to blame for the shortages. But it said they also were caused by mounting demand.
Hmmm, inflation rises to high levels, domestic consumption lags along with wages, foreign trade protectionism looms, the stock market balloons defying all economic logic, the banks are awash in speculative loans; I'm no economics major but this all looks a little familiar...

Inflation isn't high at all, especially the relevant core inflation (excluding food and energy), take a look at statistics for the last few decades and also compare with other developing countries today. Chinese comanies have huge earnings growth, compared to Japanese companies in the 80s for example. Trade protection, it's a paper tiger, there's way too much at stake for everybody involved to follow that sort of stupidity.

^^ Core inflation hits the poor the hardest, it could prove destabilizing if wages don't keep pace.

Everyone is always surprised when protectionism actually hits and distorts global trade.

Chinese comanies have huge earnings growth, compared to Japanese companies in the 80s for example.

Why should be compared with Japan in the 80s?

Why should be compared with Japan in the 80s?

Because the Japanese companies in the 80s who borrowed more money and earning less leads to a downfall of the country as the fastest, biggest but fragile economy (the only country that surpasses United States as the biggest economy since the British Empire and Germany on early 20th century).

Because the Japanese companies in the 80s who borrowed more money and earning less leads to a downfall of the country as the fastest, biggest but fragile economy (the only country that surpasses United States as the biggest economy since the British Empire and Germany on early 20th century).

Thanks for the explanation.:)

PetroChina Expected To Surpass Exxon Mobil As Largest Company
By Donald Greenlees and David Lague
International Herald Tribune (www.iht.com)
Sunday, November 4, 2007

HONG KONG: When the state oil and natural gas company PetroChina makes its debut Monday on the Shanghai Stock Exchange, China's booming stock markets will be on the verge of another milestone. Soon after the Shanghai listing, analysts expect PetroChina to surpass the U.S. energy behemoth Exxon Mobil as the world's largest company by market value.

PetroChina shares, already traded in New York and Hong Kong, are expected to be seized on by a market awash with cash and investors eager for new opportunities. At the close of markets Friday, PetroChina was valued at $460 billion, making it the world's second-most-valuable company, worth about $26 billion less than Exxon Mobil.

The ebullience with which Chinese investors have dived into the markets of Shanghai and Shenzhen, unleashing the huge savings in personal bank accounts, has made China home to the world's most expensive companies. China has the biggest bank, insurance company, telecommunications carrier and airline by market value.

By that measure, it has five of the world's 10 largest companies.

The prices set on the Chinese exchanges, still largely isolated from the rest of the world by regulatory barriers that limit the amount of foreign money going into the stock markets and domestic money permitted to go out, bear little relation to company performance or to markets elsewhere.

Despite the prospect of PetroChina's share price doubling on its debut in Shanghai and overtaking Exxon Mobil in value, it is about half as profitable as its rival. In the first half of 2007, PetroChina's net income was $10.9 billion, compared with $19.5 billion for Exxon.

With China's economy continuing to grow at double-digit rates and no sign that investors are losing their appetite for the share markets, the price bubble has so far been unaffected by issues that have shaken other markets, like mortgage defaults by low-credit-rated borrowers in the United States.

"It could continue for a while longer yet," said Warren Blight, a market analyst with Fox-Pitt, Kelton in Hong Kong. "Everyone agrees that at some point the stock market bubble will burst. The issue is when that will happen and what will cause it."

While times are good, PetroChina and a string of other state-controlled companies are cashing in on the euphoria with so-called A-share mainland listings. The oil and gas company raised 66.8 billion yuan, or $8.9 billion, before its listing Monday by selling four billion shares at 16.70 yuan a share, the largest amount ever raised in a mainland initial offering.

But only 13 percent of the company has been floated. The rest is in the hands of its state-owned parent, China National Petroleum.

Analysts forecast that the shares will trade from 30 yuan to 50 yuan, or $4 to $6.70, on its first day, enough for PetroChina to achieve the largest market value in the world. That compares with the Friday closing price of its Hong Kong-listed H share of 19.60 Hong Kong dollars, or $2.53. Mainland shares typically trade at a big discount in Hong Kong compared with their mainland prices.

Weighed down by government-imposed price caps on gasoline, PetroChina's refinery business is losing tens of millions of dollars a day, according to petroleum analysts.

"They are not of the strength of Exxon Mobil," said John Vautrain, senior vice president of the energy economics consultancy Purvin & Gertz in Singapore. "They are very strong in China, and that is good if you make money, but China is not a good place to be a refiner at the moment. They are deeply under water, losing a lot of money in refining."

The fine details of balance sheets and comparative values of shares elsewhere in the world have done nothing to dampen the high spirits of Chinese investors. After decades where low-interest-rate-bearing accounts in state-owned banks were virtually the only outlet for savings, the soaring stock market has become irresistible to a new generation of Chinese.

"There is an accumulated desire to invest," said Li Hongtao, a futures analyst in Beijing with Zhejiang Yongan Futures, and an active investor. "People are heavily influenced by their families, friends and colleagues at work. A lot of them don't have any knowledge of the market or any idea of the risk."

Earlier this year, state media reported that the number of share trading accounts had exceeded 100 million. For millions of retirees, students, teachers, public servants and office workers, logging on to the Internet and experiencing the instant gratification of rising portfolio values has become part of their daily routine.

In Wenzhou, one of China's wealthiest cities, the city government this year banned public officials from conducting transactions at work or leaving the office to trade stocks, the state-run Legal Daily reported. Officials caught neglecting their duties would be punished, the report said.

As China's economic boom continues to lift living standards, the stock market is contributing to a widespread sense of well-being for many investors. This is fed by blanket coverage in the media with newspapers, magazines and business Web sites carrying prominent stories about stock market winners.

"It is now the major topic at any dinner table," said Li, the Beijing-based investor. "China's economic growth has been incredible over the past 10 years, and the stock market is a measure of that." Investors rattle off the names and stock code numbers of hot market performers in the same way sports fans know their favorite players.

"Wangfujing Department Store Company, 600859," said Li's office colleague Zhang Guangming, when asked about the best-performing stock in his portfolio. "I buy for long-term value, and this stock has gone from 5 yuan to 50 yuan in 10 years."

The big unknowns are when this free-market revelry in Communist China will come unstuck and the consequences of such a crash.

Some economists say that a major retreat would have a limited impact on the health of China's overall economy. Others warn that a sharp decline that hurts business and investors could be the catalyst for a financial crisis, with a fresh wave of bad loans undermining the balance sheets of China's fragile, state-controlled banks. In a report on the Chinese economy earlier this year, the World Bank said that China's banks appeared to have limited exposure to the stock market, although the report acknowledged there was insufficient data to make an accurate assessment.

Blight, the Hong Kong analyst, who specializes in analyzing Asian banks, said China's banks had benefited from a "perfect storm of good news" arising from strong loan growth, widening profit margins on loans, room to increase fee income, a tight control on expenses and lower provisions for bad loans.

That has helped drive up the share price of the banks. The Industrial and Commercial Bank of China has become the biggest bank in the world by market capitalization, although it is less profitable than global competitors like Citigroup and HSBC.

Blight said there would be pain for the banks in a stock market crash, in part because "people borrow for working capital" and then bet it on stocks. "If the market does collapse, there will be a lot of pain, and the banks will end up being exposed in some way," he said. "It won't be disastrous but it will hurt them."

In a clear indication that the authorities worry about the social and political consequences of millions of first-time investors suffering heavy losses, senior Chinese officials have issued periodic pleas for investors to show caution.

Shang Fulin, chairman of the China Securities Regulatory Commission, warned twice last month that investors needed to be aware of the risks as the market continued to climb.

There are concerns the impact of a collapse could reach well beyond mainland China.

Joseph Yam, head of the Hong Kong Monetary Authority, which invests the city's foreign reserves, warned that the fallout from a bursting of the bubble could hit markets outside China. "The inevitable market adjustment, if sharp and destabilizing, would have serious implications for monetary and financial stability, not just for the mainland but also for others, including of course Hong Kong," he wrote in a commentary posted on the agency's Web site Oct. 25.

These warnings have seemingly had minimal impact with many investors convinced that the government will not allow a crash, particularly before the Beijing Olympics in August 2008.

Gordon Kwan, an analyst at CLSA Asia Pacific Markets, said the Chinese government had the tools to exercise considerable influence over the performance of the share markets. Kwan, who analyzes oil stocks, cited a decision by the government last week to increase prices at the pump, just ahead of PetroChina's Shanghai listing.

"It might be why the government timed the price hike, so PetroChina could squeeze past Exxon Mobil," he said. "I think China wants to win all the gold medals. Face is very important for China."

Source (http://www.iht.com/articles/2007/11/04/business/bubble.php)

---------------

This is definitely a must see for Global Fortune 500 and Forbes Global 2000 next year.

ChemChina to Buy Australia's Nufarm for A$3 Billion (Update1)

By Jesse Riseborough

Nov. 5 (Bloomberg) -- China National Chemical Corp., backed by the world's biggest buyout fund Blackstone Group LP, agreed to pay A$3 billion ($2.8 billion) in cash for Nufarm Ltd., Australia's largest supplier of farm chemicals.

The offer by China National, known as ChemChina Group, values the Melbourne-based company at A$17.55 a share, 27 percent higher than the its closing price on Oct. 30, Nufarm said today in a statement to the Australian Stock Exchange. The price includes the payment of a 30 cent a share dividend by Nufarm, it said.

ChemChina is the first state-owned Chinese company to team up with buyout firms for an overseas acquisition. Buying Nufarm gives ChemChina entry to the $36 billion global market for herbicides and pesticides as a worldwide agricultural boom spurs acquisitions.

``The global backdrop for the agricultural sector remains very positive, driven by strong demand from China and India,'' Macquarie Group Ltd. analysts led by John Purtell said in a report Nov. 1.

Nufarm jumped A$1.74, or 13 percent, to close at A$15.60 on Oct. 31 on the exchange, its biggest gain since July 1998. It has risen 51 percent this year, giving the company a market value of A$2.7 billion.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPWuhKMYYQAg&refer=home

Chinese companies
Trojan dragons

http://www.economist.com/images/20071103/CWB280.gif

Nov 1st 2007
From The Economist print edition
Chinese firms are taking a new approach to foreign acquisitions

THE announcement on October 25th that Industrial and Commercial Bank of China (ICBC) would buy 20% of Standard Bank in South Africa for $5.6 billion was a telling example of China's new foreign-investment strategy. It achieved many objectives simultaneously, some of which are not immediately obvious. If the progress of foreign firms in China sometimes seems a bit like a game of draughts, with companies jumping over themselves to gain better positions, the advance of Chinese firms abroad is more like a game of chess. They are taking calculated steps as part of a long-term strategy.

Until recently Chinese foreign acquisitions generally involved taking majority stakes in oil, gas and commodities companies in developing markets. The largest deal, two years ago, was the acquisition of PetroKazakhstan for $4 billion. Forays into the developed world either failed or succeeded only in picking up ailing businesses, as in Lenovo's acquisition of IBM's shrinking personal-computer division. Attempts to buy stronger firms such as Unocal and Maytag in America ran aground, mostly for political reasons.

But Beijing wants Chinese firms to gain access to foreign technologies, raw materials and skills. It also has lots of money to spend. In September the government established China Investment Corp (CIC) with $200 billion of the country's $1.4 trillion in foreign reserves, mostly to make purchases abroad. Chinese-listed firms have also benefited from a surging stockmarket and are flush with credit.

So the Chinese have adopted a new approach. Majority control is now less important. China Minsheng, the country's first privately owned bank, bought 9.9% of UCBH, an American bank, in September, and China Development Bank has acquired 3.1% of Barclays, a British bank. Influence and access to skills are regarded as more valuable than control. Small stakes are both educational and more feasible politically.

Direct holdings are also less important. Chinese buyers are happy to make investments in intermediate companies, which can be used to take other, less obvious stakes in other businesses. CIC has already invested in Blackstone, an American private-equity group. This week China's social-security fund said it was in talks with three other private-equity firms—Kohlberg Kravis Roberts, Carlyle Group and TPG—to take a minority stake in one of them. CITIC, China's largest securities firm, said on October 22nd that it would take a 6% stake in Bear Stearns, an embattled American investment bank, via a capital and equity swap; Bear Stearns will get 2% of CITIC in return.

Chinese firms are also accelerating their investments in countries where there is less political resistance, where there is good access to other markets or where they can acquire resources or skills. CIC is said to want to take minority stakes in BHP Billiton and Rio Tinto, two mining giants, to make its supply of raw materials more secure. Cash-rich Chinese insurers are said to be hunting for minority stakes in foreign rivals to obtain management skills.

The ICBC/Standard Bank deal fits snugly into this new mould. Instead of trying to buy a global rival, ICBC has taken a minority stake in Africa's largest bank. This way, it can better (and less obviously) direct Chinese investments in a key continent for future energy and commodity supplies. Through further acquisitions of this sort ICBC will become a bank with global capabilities, says ICBC's chairman, Jiang Jianqing. The deal is a small but important step towards making China a country with global capabilities, too.

http://www.economist.com/displayStory.cfm?story_id=10064501

China Has More Than 1.3 Billion Bank Cards
2007-11-06 08:45:14 Xinhua English

BEIJING, Nov. 6 (Xinhua) -- Chinese banks had issued more than 1.3 billion debit, credit and semi-credit cards by the end of September, roughly one for every person in China, according to China UnionPay.

Bank card consumption as a percentage of China's total retail sales exceeded 18 percent in the first nine months as more Chinese opt for cards over cash, China UnionPay President Xu Luode told a forum on local finance.

China had 183 banks issuing cards that could be used at 1.08 million points of sale of 650,000 specially endorsed outlets and 120,000 automatic teller machines.

But the bank card market is dominated by large national banks as regional financial institutions controlled just nine percent of the market with 190 million bank cards issued over the first half of this year.

A survey released by the Nielsen Company on Saturday showed the use of bank cards was spreading quickly and reshaping the shopping habits of the Chinese although cash remained the main form of payment.

The report, based on 11,500 Chinese consumers in 18 cities, including Shanghai, Beijing, Guangzhou, Chengdu, Shenzhen and Shenyang, revealed that urban card holders were gradually adopting Western consumption habits of using cards not only for shopping, but also cash withdrawals and even installment payments.

China UnionPay, the country's only bank card network operator, planned to complete its national payment network next year by setting up branches in northwestern Xinjiang Uygur and Ningxia Huiautonomous regions as well as Gansu and Qinghai provinces that are less developed compared with the eastern coastal areas.

Source (http://english.sina.com/business/1/2007/1106/130853.html)

Yellow Light Warning For Chinese Economy
www.chinaview.cn
2007-11-06 15:54:07

BEIJING, Nov. 6 (Xinhua) -- China's macroeconomic performance index rose four points from August to hit 121.3 points in September, with some sectors entering the red and yellow light zones, meaning they are going a bit too fast, according to the National Bureau of Statistics (NBS).

The macroeconomic performance index pre-warning chart published by NBS Tuesday show that the overall index was marked by a yellow light, with two sectors, the industrial output and fiscal income, entering red light zones. The industrial output was for the first time labeled red after lingering at the yellow light zone for seven months in a row.

"This year, the industrial sector has been boosted by robust export demands and the fast development of the real estate industry, while the investment and output of iron and steel, nonferrous metals and cement industries was heated," said Wang Xiaoguang, a macro-economist with the Institute of Economic Research of the National Development and Reform Commission.

Two other sectors, namely residents' disposable income and consumer prices, were in the yellow light zone, while the remaining sectors including fixed asset investment, consumer goods sales, foreign trade, profits from industrial enterprises, loans by financial institutions and broad money supply (M2) were all in the green light zone, indicating that they are stable.

In a separate release, the NBS said that the September consumer confidence index was down 0.3 points from August to 97, indicating that consumers are less optimistic about economic prospects.

The macroeconomic performance index published monthly by the NBS reflects trend of the country's economy, the index for September is the latest.

"The government is and will be taking measures to tackle the slightly overheated economic trend, including curbing credit growth and rein in excess investment to cool the country's booming economy," said Wang.

Wang also predicted a possible interest rate rise by the end of this year. In support of his prediction he said that the actual interest rate is relatively low as the country's consumer price index (CPI), a key inflation indicator, rose by 4.1 percent in the first nine months over the same period last year.

Source (http://news.xinhuanet.com/english/2007-11/06/content_7020779.htm)

Paulson: U.S. Not Fear Economically Stronger China
2007-11-08 23:27:28 Xinhua English

NEW YORK, Nov. 8 (Xinhua) -- The United States does not fear an economically stronger China, U.S. Treasury Secretary Henry M. Paulson said Thursday.

"We do not fear an economically stronger and more competitive China, which benefits the Chinese people, the American people, and the prosperity of the global economy." Paulson said when addressing the Fourth Annual China Institute Executive Summit.

"The U.S.-China economic relationship is among my highest priorities," he said, adding that it is also among the most challenging.

"The United States and China have a unique role to play in the coming decades in assuring a strong global economy and shaping the global economic agenda," he noted.

Paulson spoke highly of the Strategic Economic Dialogue (SED) between the two countries, which was initiated in 2006.

"They have established a forum that allows both governments to communicate at the highest levels on issues of long-term and strategic importance to ensure bilateral economic stability and prosperity, " he said.

His speech covers several parts, including A Strategy for Economic Engagement with China, Understanding Shared Responsibilities and Realizing Shared Benefits, Shared Responsibility for Open Economies, Shared Responsibility for a Healthy Global Economy, Shared Responsibility for the Integrity of Trade, Shared Energy and Environmental Responsibilities, and Advancing U.S.-China Economic Relations at SED III.

Paulson also touched upon a number of specific issues as RMB appreciation and China's economic reform.

Founded in 1926, China Institute in America is a nonprofit educational and cultural institution that promotes the understanding, appreciation and enjoyment of traditional and contemporary Chinese civilization, culture and heritage and provides the cultural and historical context for understanding contemporary China.

Source (http://english.sina.com/china/1/2007/1108/131270.html)

China 'Out of Step' With World, Paulson Says
Beijing Must Step Up Reforms or Face Backlash from Other Countries
By Rex Nutting, MarketWatch
Last Update: 6:20 PM ET Nov 8, 2007

WASHINGTON (MarketWatch) -- China's economic and exchange-rate policies are increasingly being viewed as "out of step" with global norms, Treasury Secretary Henry Paulson said Thursday in a speech at the China Institute in New York.

China's policy of undervaluing its currency "is increasingly being viewed by many countries as a source of unfair competition," Paulson said, keeping up the rhetorical pressure on China to let the value of the renminbi, also known as the yuan, be set freely by market forces.

China has promised to keep moving on economic reforms, including opening up the financial services sector. But, Paulson said, "implementation is the name of the game."

"China may confront a backlash from other nations" if the pace of economic reforms slows, he warned.
At the Group of Seven summit in mid-October, the finance ministers of the seven industrialized nations called on China to accelerate the "appreciation of its effective exchange rate."

On Thursday, Paulson told the Chinese that he can't hold back the forces of protectionism by himself. "Frankly, it is easier to keep the U.S. economy open if the American public sees China continuing to open up their markets," Paulson said.

He said the Bush administration remains committed to an open economy, "even in the face of rising protectionist sentiments in the U.S."
He said China has its own protectionist lobby to contend with.

Paulson said the United States will work with the Chinese to improve product safety and to fight global warming. End of Story

Rex Nutting is Washington bureau chief of MarketWatch.

Source (http://www.marketwatch.com/news/story/china-out-step-world-paulson/story.aspx?guid=%7B1851B1FB%2D2D84%2D4B36%2DBA1D%2D9918AF9D5FB2%7D)

Big Surplus But Gain For Yuan Fast

BEIJING, Nov. 10 -- China's monthly trade surplus probably topped 30 billion U.S. dollars for the first time, despite drastic gain in value for yuan against the US dollar.

The gap widened 29 percent in October from a year earlier to 30.8 billion dollars, according to the median estimate of 14 economists surveyed by Bloomberg. The government may release the figure as early as today.

Exports likely rose 22.8 percent in October from a year earlier, the same pace as in September, the Bloomberg News survey showed. Imports probably increased 19.2 percent after a 16.1-percent gain in the previous month.

The yuan headed for its biggest weekly advance against the dollar since 2005, gaining more than 0.60 percent. Faster yuan appreciation could reduce the inflow of money by making exports more expensive.

"Faster exchange-rate appreciation would be the best way to manage the excess liquidity," said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong.

China's central bank said on Thursday in a monetary-policy report that it will "strengthen the role of prices in managing the economy" and improve the coordination of interest-rate and exchange-rate policies.

It also said moderate currency appreciation may help to ease inflation pressures.

Consumer prices rose 6.2 percent in September from a year earlier, almost the fastest pace in a decade.

The predicted October surplus would bring the 10-month total to a record 216.4 billion dollars, up 62 percent from a year earlier. Export volumes are biggest in the final quarter because of Christmas shipments.

"The level of exports is so far above the level of imports that imports would have to grow considerably faster than exports just to stop the surplus growing any more," said Mark Williams, an economist at Capital Economics Ltd in London.

The expected 29 percent growth in the surplus in October compares with a 56-percent gain in the previous month to almost 24 billion dollars.

(Source: Shanghai Daily)

Source (http://news.xinhuanet.com/english/2007-11/10/content_7043554.htm)

The yuan is already rising very fast this month against the greenback and how come this still happen.

China's trade surplus rises 13.5% in Oct
(chinadaily.com.cn/Xinhua)
Updated: 2007-11-12 10:53


China's wholesale food prices rose 8.6% in October, the highest monthly growth rate so far this year, according to statistics released by the National Bureau of Statistics on Monday.

According to the NBS statement, the producer price index (PPI), a measure of inflation at the wholesale level, rose 3.2 percent year-on-year in October, the highest level in nine months.

In a breakdown, clothing prices rose 1.3%, and the prices of general daily necessities grew 1.9% in the month.

In the first 10 months, wholesale food prices were on a rising trend, growing 4.8% in January, 5% in February, 5.2% in March, 5.5% in April, 6.3% in May, 6.7% in June, 7.8% in July, 8.6% in August, 8.2% in September, and 8.6% in October.

Trade surplus rises 13.5% in October

China's trade surplus in October rose 13.5 percent over the same month last year to US$27.05 billion, the General Administration of Customs said on Monday.

The figure was slightly higher than the US$ 23.91 billion in September and lower than the average US$30.6 billion predicted by large financial institutions such as Bank of China (Hong Kong) and JP Morgan Chase.

In October, exports reached US$107.73 billion, up 22.3 percent year-on-year yet down 0.5 percentage points over September. Imports grew to US$80.67 billion, up 25.5 percent or 9.4 percentage points higher than September.

Trade surplus in the first ten months amounted to US$212.36 billion, up 59 percent. The growth rate was 10.2 percentage points lower than the first nine months.

China's trade volume totaled US$1.76 trillion for the first ten months of 2007, up 23.5 percent on last year. The growth rate was the same as September, according to the report.

The administration said in its monthly report, "The slowdown in export growth and a steady increase in import reflected the country's efforts to improve foreign trade have begun to pay off."

Exports in the first ten months reached US$985.84 billion, up 26.5 percent year-on-year and imports grew 19.8 percent to US$773.48 billion.

http://www.chinadaily.com.cn/china/2007-11/12/content_6247628.htm

But we should not forget that China does suffer a big trade deficit with East Asia

The yuan is already rising very fast this month against the greenback and how come this still happen.

The exports increased by more than 20% so far this year. But speculators think that it may downgrade this 4th quarter due to loosing consumer confidence in United States and mortgage / credit crunch crisis. So expect the surplus to go down.

But according to Chinese state media, the 4th quarter is always the one with the highest surplus due to Christmas shopping and this happens every year.

But according to Chinese state media, the 4th quarter is always the one with the highest surplus due to Christmas shopping and this happens every year.

November and december will probably register the widest surpluses once again, but the y/y growth will be much slower. You can see this trend in october already, the y/y surplus has grown just 13.5%. This slowdown is likely to be caused by external factors, primaly the US "crisis". The RMB appreciation is too modest to cause a slowdown in trade surplus.

On the other hand, since the monthly progress of foreign trade is too volatile, we shouldn't read trends in one single month data, especially since october is affected by a golden week, it is a "rare" month.

China Bans Time-Limited Sales Promotions
(Xinhua)
Updated: 2007-11-13 11:32

China's Ministry of Commerce issued an urgent circular on Monday banning time-limited sales promotions in shops following a deadly stampede at a Carrefour outlet.

Three people died and 31 were injured in a stampede triggered by a sales promotion at a Carrefour outlet on November10 in the country's southwestern Chongqing Municipality.

The three-day promotion at a hypermarket in the city's Shapingba District was launched to celebrate the 10th anniversary of the French retail giant's entry into the city.

The shop offered an 11.5 yuan ($1.5) savings from the original price of 51.4 yuan for a five-liter bottle of edible oil. When it opened its doors for business throngs of people swarmed in and a mass stampede began.

"The outlet has been ordered to suspend operation and the work safety watchdog has started an investigation," said Gao Chang, spokesman for the Shapingba District government.

The ministry has ordered local commercial authorities and public security departments to launch an overhaul of retail stores to prevent similar incidents from happening again.

It also ordered local branches to help store managers foster safety awareness and establish emergency-response procedures.

Source (http://www.chinadaily.com.cn/bizchina/2007-11/13/content_6250966.htm)

CPI Rebounds to Highest Level in 11 years
By Dong Zhixin (chinadaily.com.cn)
Updated: 2007-11-13 10:36

Consumer inflation in China rebounded to its highest level in 11 years on rising food prices, official figures released on Tuesday showed, increasing the possibility for the sixth interest rate hike this year.

The Consumer Price Index (CPI) rose 6.5 percent in October from a year earlier, the National Bureau of Statistics said in a statement on its website. The gauge eased to 6.2 percent in September from 6.5 percent in August.

Food prices were the biggest driver of the accelerating inflation, jumping 17.6 percent. Nonfood items posted an increase of 1.1 percent.

The CPI increase for the first 10 months was 4.4 percent from the same period last year, above the official target of three percent. For the whole of 2007, the figure might be around 4.5 percent, the People’s Bank of China (PBOC) said in a report last week.

Another indicator of inflation, the Producer Price Index (PPI) increased 3.2 percent in October from the same period last year, the fastest growth in nine months, the NBS said on Monday.

That indicated a spillover of price pressure from the food sector to other areas of the economy, according to analysts.

The accelerating inflation might force the central bank to raise the interest rates for the sixth time this year. The latest rate hike happened on September 15, when the one-year savings rate rose to 3.87 percent.

However, the rate of return from bank deposits is still less than the inflation rate, suggesting an erosion of purchasing power for consumers. That sparked an exodus of money from banks to the stock market, whose index has almost doubled so far this year, even after a major correction in the past month.

Another factor that added to the pressure of another interest rate increase was the runaway growth in money supply and bank loans.

In October, the country's broad measure of money supply, or M2, increased by 18.5 percent, while the banks offered 136.1 billion yuan in new renminbi loans.

In theory, a rate hike could help curb the demand for loans as it increases the cost of capital, and in turn reduce the money supply.

The rapid increase in money supply is due in part to the surging trade surplus, which forced the PBOC to issue more yuan to buy the foreign currency.

China's trade surplus in October jumped to an all-time high of US$27.05 billion, the General Administration of Customs said on Monday, bringing the total in the first 10 months to $212.37 billion. The previous monthly record of $26.9 billion was set in June.

To mop up the liquidity, the central bank announced during the weekend the commercial banks must put 13.5 percent of their deposits in the PBOC as reserves. That marked the highest level ever and the ninth increase this year.

The ratio might reach 15 percent in 2008, the Industrial and Commercial Bank of China (ICBC) said in a recent report.

In addition to increasing the liquidity pressure, the booming trade surplus also gave more ammunition to other countries demanding faster appreciation of the Chinese currency.

The European financial ministers urged China to allow the yuan value to rise faster in a meeting on Monday in Brussels, earlier reports said. They would raise the case during the European Union-China Summit in Beijing scheduled for November 28.

Source (http://www.chinadaily.com.cn/bizchina/2007-11/13/content_6250745.htm)

Exports Slow But Surplus Up
By Jiang Wei (China Daily)
Updated: 2007-11-13 07:58

China's trade surplus rose 13.5 percent year-on-year in October while growth in exports slowed down and growth in imports sped up on the back of macro controls, according to Customs figures.

The country reported a trade surplus of $27.05 billion last month, the General Administration of Customs said on its website Monday. Exports increased to $107.73 billion last month, up 22.3 percent from a year earlier, while imports hit $80.67 billion, up 25.5 percent, the fastest in three months.

Growth in exports dropped 0.5 percentage points compared with September while growth in imports increased by 9.4 percentage points.

It indicated macro-control measures in foreign trade are taking effect, the Customs said. Earlier statistics had shown growth in exports of products, affected by the country's tax rebate reduction in July, largely declined in September from previous months.

Experts attributed rising imports to the surging global oil and commodity prices as well as the rising demand at home. Crude oil crossed $98 a barrel for the first time last week and has gained 57 percent so far this year.

"The US slowdown has contributed to relatively weak exports from China since August," said Shen Minggao, a researcher with Citigroup.

China's exports to the US weakened from 18 percent in the first seven months to 9-10 percent in August and September. Trade surplus growth also dropped sharply during the same period, from 19 percent to 8-9 percent.

The figures took the country's imports and exports from January to October to $1.76 trillion, approaching the total of the whole of last year.

The European Union, the United States and Japan remained China's top trading partners in the past 10 months.

China's actual foreign direct investment (FDI) increased 11.15 percent year-on-year to $53.99 billion in these 10 months, according to the Ministry of Commerce.

Source (http://www.chinadaily.com.cn/bizchina/2007-11/13/content_6249915.htm)

China's Retail Sales Grow at Fastest Pace Since 1999 (Update4)


Nov. 14 (Bloomberg) -- China's retail sales rose at the fastest pace in eight years as consumers in the world's fastest- growing major economy got richer and inflation accelerated.

The 18.1 percent increase in October from a year earlier to 826.3 billion yuan ($111 billion) topped 17 percent growth in September, the statistics bureau said today. It was the biggest gain since 1999, when the government started releasing the data. The median forecast of 21 economists was for unchanged growth.

Cars, Clothes, Shoes

Automobile sales jumped 36.1 percent and jewelry sales climbed 37.5 percent. Spending on clothes and shoes increased 32.6 percent and furniture sales rose 41.7 percent.

``This growth has a lot to do with inflation but demand is also strong,'' said Chen Xingdong, chief China economist at BNP Paribas SA in Beijing. ``Looking ahead, consumption should keep improving and that will be accompanied by inflation -- you can't expect to only have good things.''

Sales of meat, poultry, eggs, grain and edible oil surged more than 45 percent in October from a year earlier. Spending on clothing and shoes jumped 33 percent. Automobile sales climbed 36 percent. For household electronics, the gain was 31 percent.

Inflation's `Major Role'

``Inflation played a major role in increasing retail sales in recent months,'' said Henry Li, an economist at Core Pacific- Yamaichi International Ltd. in Hong Kong. ``Consumer demand is also rising steadily on the back of surging stock prices and government policies to boost incomes.''

Li estimated inflation contributed about a quarter of the increase in retail sales, mainly because of higher food costs. October's rise in consumer prices from a year earlier matched August's decade high of 6.5 percent. Consumer prices for non-food goods increased only 1.1 percent last month.

Property and stock-price gains encourage spending.

The CSI 300 Index of shares has soared more than 150 percent this year, climbing 4.2 percent today in the biggest gain since August. House prices in 70 major cities rose 9.5 percent from a year earlier in October, the fastest pace since 2005, the government said today.

Wal-Mart's China revenue rose 45 percent in the third quarter from a year earlier as the company added six stores, the Bentonville, Arkansas-based retailer said yesterday. Wal-Mart said in July that it plans to double its outlets in China, where the economy has grown more than 11 percent for the past three quarters.

Fatter Wallets

China has boosted minimum wages, expanded welfare payments and reduced interest-income tax to fatten consumers' wallets. For the first 10 months, retail sales climbed 16.1 percent from a year earlier to 7.2 trillion yuan.

Disposable incomes among urban households, after adjusting for inflation, rose 13.2 percent in the first nine months from a year earlier to 10,346 yuan ($1,390). Earnings in rural areas climbed 14.8 percent to 3,321 yuan.

At the twice-a-decade Communist Party congress last month, President Hu Jintao pledged to increase incomes among rural poor and boost the role of consumption in the economy.

Spending in towns and cities jumped 18.6 percent in October from a year earlier while rural sales increased 17.1 percent, the statistics bureau said.

http://www.bloomberg.com/apps/news?pid=20601089&sid=awoG21l4AEB8&refer=china

Industrial output rises 17.9% in October
(Agencies)
Updated: 2007-11-15 17:03


China's industrial production grew 17.9 percent in October as automobile and electronics output accelerated, underscoring government concern that the world's fastest-growing major economy risks overheating.

The increase was less than September's 18.9 percent, according to figures released by the statistics bureau Thursday, and compares with the 18.5 percent median estimate of 22 economists surveyed by Bloomberg News.

The slowdown may be insufficient to deter the central bank from raising a one-year lending rate that's already climbed 1.17 percentage points this year to a nine-year high of 7.29 percent.

Premier Wen Jiabao Wednesday pledged to tighten economic controls after inflation accelerated to the fastest in a decade and the trade surplus widened to a record.

"Beijing knows that we are on the verge of overheating and interest rates need to rise very soon," said Stephen Green, senior economist at Standard Chartered Bank Plc in Shanghai.

The key rate compares with 4.5 percent in the US, 5.75 percent in the UK and 0.5 percent in Japan.

China should raise interest rates and allow more currency appreciation, the World Bank said Thursday. Bigger yuan gains would staunch money inflows by pushing up export prices. The currency has climbed 11 percent versus the dollar since a fixed exchange rate ended in July 2007.

Production growth was higher than the 14.7 percent gain a year earlier and the 16.6 percent expansion for all of 2006. Output rose 18.5 percent for the year through October.

Automobiles, Computers

Automobile output rose 24.3 percent in October from a year earlier. Computer, telecommunications and electronic equipment production climbed 18.9 percent.

SAIC Motor Corp., China's largest carmaker, plans a 12 percent increase in production this year to 1.5 million vehicles, Chairman Hu Maoyuan said Oct. 16.

China's economy, the world's fourth largest, expanded 11.5 percent in the third quarter from a year earlier. Inflation accelerated to 6.5 percent in October, matching August's rate. The monthly trade surplus was $27 billion.

Spending on factories and property probably climbed 26.2 percent in the first 10 months, according to a Bloomberg News survey of economists. That figure, the last in this round of data, is due at 10 a.m. Friday.

"Data released this week has shown increased risks of overheating and the central bank has little excuse not to raise interest rates," said Wang Tao, head of economics and strategy for Greater China at Bank of America Corp. in Beijing.

Pollution, Energy

China is trying to curb investment in industries that have overcapacity, consume too much energy and produce excessive pollution. The premier said last month that the government will limit land use, tighten investment-project approvals and guide bank lending.

"Policy tightening" has cooled factory output, said Ben Simpfendorfer, a strategist at Royal Bank of Scotland Plc in Hong Kong. "It will moderate further in the early part of next year as exports slow on weaker global demand."

While the trade surplus reached a record on Christmas shipments, the 22.3 percent gain in exports from a year earlier was the smallest increase in seven months. Retail sales in the US rose 0.2 percent in October from the previous month after gaining 0.7 percent in September, the Commerce Department said Wednesday.

Export Demand

Weaker growth in demand for exports "may be a factor behind the moderation in industrial production growth," said Liang Hong, senior economist at Goldman Sachs Group Inc in Hong Kong. Inflation leaves the government "with little choice but to tighten monetary policy further," she said.

Besides rate increases, the People's Bank of China is boosting the proportion of deposits that lenders must set aside as reserves to 13.5 percent, the highest level since at least 1987. That's up from 9 percent at the start of the year.

China's banking regulator met with the five biggest state- owned banks on Nov. 13, asking them to slow lending, the Shanghai Securities News reported.

http://www.chinadaily.com.cn/china/2007-11/15/content_6257411.htm

World Bank: China's Economy To Grow 10.8% Next Year
by Ding Tao of China Daily
www.chinaview.cn
2007-11-16 10:53:20



BEIJING, Nov. 16 -- East Asian economies are likely to remain healthy next year despite the impact of the widening subprime lending crisis in the U.S. and the renewed increase in crude oil prices, the World Bank said Thursday. The region's rapid growth is also reducing poverty, although income inequality is expanding.

Led by domestic demand, growth in emerging East Asia, which excludes Japan, is expected to exceed 8 percent this year for a second year in a row, and to moderate slightly next year, the bank said in its half-yearly update on the region's outlook. Japan is likely to grow about 2 percent this year and 1.8 percent in 2008, it said.

Growth in China is now projected to reach 11.3 percent in 2007, up a little from 11.1 percent last year. The bank forecast China's growth to slow slightly to 10.8 percent next year.

Growth in the middle income economies of Southeast Asia is also expected to gain momentum this year, with faster growth in the Philippines and Indonesia in the 6 percent to 7 percent range, and continued solid growth in a 5 percent to 6 percent range in Malaysia, driven by stronger personal consumption and investment growth.

The bank warned, however, that the problems posed by the US subprime mortgage crisis, the related credit crisis as well as rising oil prices could hinder East Asia's growth.

The report said the region's financial institutions have relatively limited direct exposures to US subprime mortgages made to borrowers with poor credit histories.

The report said among the economies, China is the largest overseas holder of US mortgage-backed securities -- around $260 billion -- mostly through its international reserve holdings and through holdings of commercial banks. But most of these holdings are backed by US government agencies such as Fannie Mae, the largest US buyer and backer of home mortgages, the report said.

Rather, it said that impact of the crisis on East Asia has instead been heightened uncertainty and a reassessment of risk, reflected in stock market declines.

"Frequent and large reassessments of risk and high volatility in asset prices are likely to remain a part of the scene for some time," the bank said.

Still, if the difficulties in credit markets create a more substantial downturn in the developed world, particularly the US, it would lead to a significant cyclical slowdown in East Asia, the Washington-based institution said. But the impact is likely to be limited given the region's strong macroeconomic fundamentals, the report said.

It predicted that a theoretical decline in US growth to zero in 2008 -- a decline of 2 percentage points -- would be met with a 1 percentage point drop in median East Asian economic growth, to 5 percent from about 6 percent.

"Significant, but no disaster," the report said, referring to the impact of a US recession on the region. "A review of the region's performance in previous global downturns suggests that the impact on East Asia is unlikely to be especially severe or protracted."

East Asian growth was seriously affected during the 2001 US recession that was accompanied by a severe cyclical contraction in global demand for electronic goods. But the bank said there were few signs of such a cycle now.

Record high oil prices, meanwhile, will test the resilience of the region's economies next year, the bank said. Amid surging global demand and supply tightness, average crude oil prices have risen from about $53 a barrel in January to more than $90 in early November.

At $90 a barrel, the price of oil would be linked to an income loss in the region of about 1.1 percent of gross domestic product in 2008, according to the bank's calculations.

The report also said the strong economic growth has reduced the number of people living below $2 a day in the region to about 27 percent -- about 500 million people -- in 2007, down from 29.5 percent in 2006 and 69 percent in 1990.

But poverty is now overwhelmingly a rural problem, and it is resulting in widening income inequality, the report said.

"Even as poverty continues to fall in the aggregate, it is often the case that lower income groups experience slower income growth than higher income ones," it said.

The World Bank defines East Asia as comprising bigger economies as the Chinese mainland, Indonesia, Japan, Malaysia, the Philipppines, Thailand, Vietnam, China's Hong Kong, South Korea, Singapore, China's Taiwan and some smaller economies such as Cambodia, Fiji, Lao and Timor-Leste.

Source (http://http://news.xinhuanet.com/english/2007-11/16/content_7087241.htm)

China warns of weak int'l demand amid global slowdown
(Xinhua)
Updated: 2007-11-17 14:12


In its latest economic outlook, China's Ministry of Commerce warned of a possible slide in international demand with an anticipated global slowdown.

Sheng Baofu, a senior researcher with the ministry and author of the report, said the next stage of China's economic growth would be tied to international demand. Sheng said the government should develop flexible macroeconomic policies to respond to the uncertainty of global trends.

The report said the world economy would slow due to the dimming outlook for the US economy, which would cause a sharp decline in China's exports.

In mid-2007, the United Nations forecast that the growth of world gross product would slow to 3.4 percent for 2007 as a whole, from 4.0 percent in 2006.

If the US economy weakened, US demand would fall. Regions with close links to the US, such as the European Union and East Asia, would immediately feel an impact, the researcher said.

The US remained China's second largest export destination, ministry statistics show. China's exports to the US in the first quarter of 2007 rose 20.4 percent year-on-year. However, export growth slowed to 15.6 percent in the second quarter and even further, to 12.4 percent, in the third quarter, according to the ministry's statistics.

In the first three quarters of the year, exports to the US accounted for 19.4 percent of China's total, closely behind those to the European Union. According to China's central bank, when US economic growth slows by one percentage point, China's exports decline by six percentage points.

Further, US and Chinese interest rates are moving in opposite directions, which could cause disruptions in China's financial markets and offset the Chinese government's efforts to rein in inflation, the report said

Consumption growth remained sluggish in the first ten months of the year and failed to drive economic growth, said the report.

Ha Jiming, chief economist with China International Capital Corporation Limited, said that real domestic consumption has been flat for the past two and a half years.

China's trade surplus hit a new monthly record of 27 billion US dollars in October, putting the nation under intense pressure to allow its currency to strengthen to ease tension with its major trading partners.

The report said the government should maintain a stable foreign trade policy and prevent a sharp decline in exports.

http://www.chinadaily.com.cn/china/2007-11/17/content_6261502.htm

China's GDP unlikely to top Germany in 2007
By Dong Zhixin (chinadaily.com.cn)
Updated: 2007-11-22 14:02


China is unlikely to surpass Germany in Gross Domestic Product (GDP) this year to become the world's third largest economy, a senior statistician said Wednesday.

In 2006, China's GDP stood at US$2.7 trillion, compared with Germany's $2.86 trillion.

The Chinese economy is expected to grow 11.5 percent this year, while Germany's growth is estimated to be less than three percent, which prompted analysts to predict China would replace Germany as the No. 3 economy in the world after the United States and Japan.

However, Zheng Jingping, chief engineer of the National Bureau of Statistics (NBS), dampened the optimism at a financial forum in Beijing, according to the China Securities Journal.

In addition to economic growth, changes in the value of the yuan and the euro, and the price movements within the two countries should also be taken into consideration when calculating dollar-denominated GDP, Zheng said.

"The main reason is that the euro is appreciating relatively faster [than the yuan]," Zheng was quoted as saying. "Taking various factors into consideration, China's GDP can't surpass Germany this year."

So far this year, the euro has appreciated 11 percent against the greenback, far more than the yuan's five percent growth against the US dollar.

On Wednesday, the People's Bank of China set the yuan central parity rate against the euro at 10.9916, marking a depreciation of seven percent against the European single currency since the end of 2006.

http://www.chinadaily.com.cn/china/2007-11/22/content_6272469.htm

^^good news, still china will eventually top the world's largest economy list

^^

I think Europe will realize soon on how they are hurting with their high currency. I will not be surprise if they will devaluate their currency soon.

^^

I think Europe will realize soon on how they are hurting with their high currency. I will not be surprise if they will devaluate their currency soon.

Germany is not and will be not hurt by high currency except that some big country will challenge their very competitive industry.

europe is hurt by high exchange rate against dollar when they transact in dollar denominated assets or transactions. i say ditch the dollar use euro as standard currency for all transactions with european union nations not only its biggest economy i.e. germany.
due to low dollar value when they sell IN dollar european firms lose such as airbus, but if they switch to using euros/accepting euros only this problem will be solved.

NBS: China's Fiscal Revenue Expected to Top 5 Trillion Yuan (675.7 U.S. Billion Dollars)


BEIJING, Nov. 26 (Xinhua) -- Solid economic expansion will lift China's fiscal revenue to more than 5 trillion yuan *(about 675.7 billion U.S. dollars) this year, a rise of 27.23 percent compared with 3.93 trillion yuan last year, the chief economist with the National Bureau of Statistics (NBS) Yao Jingyuan has predicted.

The projections are quite conservative as the rise in the first three quarters stood at 31.4 percent, up 6.8 percentage points from the same period of last year. The growth for the first half was 30.6 percent. The abolishment of agricultural tax cost the government roughly 125 billion yuan (about 16.9 billion U.S. dollars) in fiscal revenue last year.

"Fundamentally speaking, current taxation levy and overall scale have revealed the positive growth of the Chinese economy," said Yao at the 10th China Summit for Growth in Beijing.

He identified the year's marked economic achievements as a solid growth in grain crops output which would hit 500 billion kilograms, possibly the fourth high since 2004, across-the-board profits in all 39 industrial sectors as well as rising individual income and better employment prospects.

Citing NBS figures, Yao said that from January to August, the profits of all China's 39 industrial sectors have grown 37 percent on average over the same period last year.

The official maintained that current consumer price rises led by foodstuffs were only structural rather than across-the-board. As the Engel's coefficient -- the share of income spent on food --was high in the less developed interior, northwestern Qinghai Province was worst affected by the price rises, followed by southwestern Guizhou Province.

The price hikes in metropolis like Beijing, Shanghai and Guangzhou were relative low, Yao said.

To remedy the situation, the Ministry of Finance has offered stipends directly to farmers while local governments were required to subsidize the expenditure of school canteens and residential users of liquified gas. The figures, however, are yet to be disclosed.

The biggest problems facing China's economy, Yao said, remain the excess growth in fixed assets investment, credit and loan as well as trade surplus.

On a separate occasion, top statistician Xie Fuzhan of the NBS has predicted that China's consumer price index was expected to rise 4.5 percent to 4.6 percent for the whole of 2007, indicating a moderate and tolerable inflation.

Both of the two agreed that China's economy was able to maintain a steady growth. Yao said the year's GDP growth could stay above 11.5 percent, a double-digit growth for the fifth year in a row.

Another latest report released by the Economic Research Institute of the Renmin University of China said that there was still room for the Chinese economy to advance as consumption, investment and growth still have potential to grow.

China's GDP growth is expected to stay double-digit, ranging from 10-11 percent for three years, said the report.

Source (http://news.xinhuanet.com/english/2007-11/26/content_7148697.htm)


* The website source mentioned "67.57 U.S. Million Dollars" so I made a big correction. Somebody needs to tell Chinaview or Xinhuanet that their calculations of 5 Trillion Yuan to 67.57 million US dollars is totally wrong. That's a big mistake.

Quite conservative is somewhat of an understatement. 27% growth predicted for the whole year even if the growth for the first three quarters was 31%? But we're used to these ridiculous conservative predictions from the authorities anyway.

Quite conservative is somewhat of an understatement. 27% growth predicted for the whole year even if the growth for the first three quarters was 31%? But we're used to these ridiculous conservative predictions from the authorities anyway.

I think the interpretation means the government is conservative enough to implement the economic or tax system by putting no taxes on the rural farmers and implementing a higher interest by the Central Bank. I think the short way of interpretation is moderate and balance economic piscal policy or tax system to aggressive economic growth. However, It's just a theory. I really don't know what's going inside and the only one knows is the Central Bank and the Government.

China's GDP unlikely to top Germany in 2007
By Dong Zhixin (chinadaily.com.cn)
Updated: 2007-11-22 14:02


China is unlikely to surpass Germany in Gross Domestic Product (GDP) this year to become the world's third largest economy, a senior statistician said Wednesday.

In 2006, China's GDP stood at US$2.7 trillion, compared with Germany's $2.86 trillion.

The Chinese economy is expected to grow 11.5 percent this year, while Germany's growth is estimated to be less than three percent, which prompted analysts to predict China would replace Germany as the No. 3 economy in the world after the United States and Japan.

However, Zheng Jingping, chief engineer of the National Bureau of Statistics (NBS), dampened the optimism at a financial forum in Beijing, according to the China Securities Journal.

In addition to economic growth, changes in the value of the yuan and the euro, and the price movements within the two countries should also be taken into consideration when calculating dollar-denominated GDP, Zheng said.

"The main reason is that the euro is appreciating relatively faster [than the yuan]," Zheng was quoted as saying. "Taking various factors into consideration, China's GDP can't surpass Germany this year."

So far this year, the euro has appreciated 11 percent against the greenback, far more than the yuan's five percent growth against the US dollar.

On Wednesday, the People's Bank of China set the yuan central parity rate against the euro at 10.9916, marking a depreciation of seven percent against the European single currency since the end of 2006.

http://www.chinadaily.com.cn/china/2007-11/22/content_6272469.htm

I don't think those numbers are too meaningful. It highly depends on the exchange rate.
I spent 200 Euro per day for a room in a three or four star hotel in Germany. Additionally the hotel charged me 10 Euro per hour for internet connection service. One 500 ml mineral water cost me 6 Euro. I paid less than 50 Euro for hotel room of better condition with unlimited internet connection service and free water in China.

Knowing the price difference is so huge, I am not surprised at all that EU has 20 million US$ trade deficit per hour with China.

So it's not a Chinese problem on why the deficit is so high. It's the europe's problem. Why can't europe follow United States if they want to survive the incoming recession? That's right. It's a recession and it may last for a year or 2 years. The average GDP growth of European countries is around 1 - 3% and that is bad. Who will buy their products if its way too expensive? The only good news is the developing countries will grow more while european countries are not. They will realize soon that they have no choice and will follow United States Dollars. Great Britain will follow as well with their Pound.

I don't think those numbers are too meaningful. It highly depends on the exchange ratio.
I spent 200 Euro per day for a room in a three or four star hotel in Germany. Additionally the hotel charged me 10 Euro per hour for internet connection service. One 500 ml mineral water cost me 6 Euro. I paid less than 50 Euro for hotel room of better condition with unlimited internet connection service and free water in China.

Knowing the price difference is so huge, I am not surprised at all that EU has 20 million US$ trade deficit per hour with China.

I had the same experience in Milan, Italy, just a little bit lower than Germany. The internet connection fee is ridiculously expensive. In the US, internet connection in motels or hotels is basically free. The cost of a bottle of water in the hotel can buy you more than two dozen bottles of water in the US. A 12 oz steak can cost you more than 20 Euros, with the money you can invite 10 people to have a very good dinner in China. I wonder why Euro is appreciating with so weak purchasing power.

China's Richest Province Wants More
By Olivia Chung
11/22/2007

HONG KONG - South China's Guangdong province, one of the country's economic powerhouses, has made another step toward its goal of economically overtaking "the four little dragons of Asia" - Hong Kong, Taiwan, Singapore and South Korea, as its gross domestic product (GDP) will overtake Taiwan's this year.

The wealthiest province on the mainland overtook Singapore and Hong Kong in terms of GDP a few years ago. However, in terms of yearly per capita GDP, Guangdong is still far behind compared with any of the four "little dragons".

Since Deng Xiaoping launched the reform and open-door policy in than 40 per cent in Shenzhen this year alone. The average price of homes in downtown areas is more than 22,000 yuan (US$2,840) per square meter, fast catching up with Hong Kong’s New Territories next door. This in turn is helping to drive up the cost of non-residential land.

Among businesses looking to cut costs by moving out is Huawei, one of China’s largest telecommunications companies. It is building a production facility on a 500,000 square meter technology park site in neighboring Dongguan city. Huawei, which has 4,000 employees in Shenzhen alone, is investing 4 billion yuan in the project, scheduled to be finished by the end of the year.

Jia Xin Da Printing is also on the move, relocating its seven-year-old factory to Guanlan Industrial Zone just outside the Shenzhen SEZ, driven away by rising rentals, according to general manager and cofounder Guo Danze.

"When we first rented our place in 2000 the rent was 20 yuan per square meter," Guo said. "Now it has doubled to 40 yuan. The rent for our new place in Guanlan will cost us only 15 yuan per square meter."

Guanlan, though outside the SEZ, is still only 26 kilometers from Shenzhen's international airport and is under the jurisdiction of Shenzhen municipality, a factor Guo appreciates. The whole area is part of Guangdong province.

"We don’t want to leave Shenzhen entirely," Guo said. "We have built very good relations with the government and we can easily find all our supplies here."What hurt, he said, was the prospect of some of the company's 800 workers being unwilling or unable to make the transfer. "I don’t even want to talk about how many people we will lose when we move,"he said.

Even tax breaks are failing hold some businesses in the SEZ. Taiwanese-invested Guangdong Nai Li Shoes has moved its factory to Dongguan, about 70 kilometers from Shenzhen.

"We had tax privileges for five years,"s aid the owner who wanted to be identified only as Mr Li. "Then we realized that Shenzhen was getting so expensive, so we have moved our 30,000 square meter factory with 4,000 workers to Dongguan."

Shenzhen authorities play down the loss. The city’s Communist Party chief Li Hongzhong told the Nanfang Daily - the official newspaper of the Guangdong provincial party committee: "We don’t have a large-scale exodus of enterprises. There are some transferring to other places, but those that have moved out only account for 0.1% of our total.

"We have more new enterprises registering than those that have cancelled. Since 2005, there have been more than 110,000 newly registered enterprises, of which 20,000 were incorporated in the first half of this year. That compares with the 40,000 that have moved out.'' Adding to the net gain, the new enterprises "are mostly high-tech, logistics and financial businesses'', he said.

Even so, high-tech outfits such as Di Ma Digital Facilities are among those responding to the pressure to move. General manager Liu Ping plans to relocate its factory to Huidong city, still in Guangdong province but with more space to spare than Shenzhen.

"We have a 30,000 square meter factory in Shenzhen now but we are expanding so we need at least another 100,000 square meter workshop. We’ve bought equipment from other countries but haven’t been able to find a suitable place in Shenzhen for it. We had to rent space," he told the South Metropolitan News, a sister publication of the Nanfang Daily.

While the Shenzhen government plays down the drift out of the SEZ, it sees benefits in losing labor-intensive, land-hungry manufacturing plants, freeing up space for more more value-added businesses in the high-tech and services sector.

It recently signed a regional cooperation agreement with Guangdong's neighboring provinces of Hunan and Jiangxi and with Chongqing municipality in the center of the country, to assist manufacturing enterprises to move out of the Shenzhen SEZ. In return, the Shenzhen government receives unspecified fees. The conditions of the removal aid also depend on "guanxi”, according to a city official who did not want to be identified. Guanxi is a term for mutual back-scratching or reciprocal personal or business connections.

ZhaoYong, the general manager of Mei Sheng Holding Co, which specializes in natural gas related products, told Asia Times Online that there was little Shenzhen could or should do to retain companies. Instead, it should bring fully into play its advantage of having a large concentration of talented professionals and high-tech operations.

Even so, that is not enough to keep Mei Sheng in Shenzhen. Zhao is relocating the company to Henan province in the north of the country early next year to take advantage of the area’s lower costs.

Catherine Jiang is a freelance writer based in Shenzhen, China.

(Copyright 2007 Asia Times Online Ltd. All rights reserved.)

Source (http://www.atimes.com/atimes/China_Business/IK22Cb01.html)

UBS: China's economy is not overheated
(Xinhua)
Updated: 2007-12-01 16:26


Investors' concerns over a growth "hangover" from domestic over-investment are unwarranted, said a UBS report released earlier this week about China's macroeconomic trends in 2008.

Jonathan Anderson, UBS' senior analyst on global emerging markets, made this comment in "The 2008 China Macro Almanac" amid worries that the country's economy is set to overheat, with its double-digit gross domestic product (GDP) and a monthly consumer price index (CPI) of more than six percent.

"The current high headline CPI inflation rate is mostly due to temporary supply-related spikes in a few goods categories," said the report, adding that the CPI would fall throughout the first half of 2008.

The optimism of the report comes from the buoyant margins in most industrial and service sectors. While profits dropped sharply in heavy industrial firms between 2004 and 2006, they have already recovered visibly over the past 12 months, the report said.

The report anticipated the country would continue its double-digit growth despite a tiny slowdown of 0.6 percent in 2008 from more than 11 percent this year, which mainly came from falling net exports.

A potential recession in the United States could be a major external risk for Chinese economy, but past experience has shown that domestic growth is "insulated from even the most aggressive export shocks", said the report.

http://www.chinadaily.com.cn/china/2007-12/01/content_6292339.htm

Chinese Vice Premier: China To Improve Investment Environment For Japanese Firms
www.chinaview.cn
12-01-2007 18:04:32

BEIJING, Dec. 1 (Xinhua) -- China is willing to create sound conditions for Japanese firms to invest in China, Chinese Vice Premier Zeng Peiyan said at the ongoing first China-Japan high-level economic dialogue held here on Saturday.

According to Zeng, four major problems exist in Sino-Japanese economic ties: a slowdown in the growth rate of bilateral trade, unsatisfactory business environment, obstacles in technological cooperation and fluctuations of Japanese investment in China.

China also hopes Japan considers China's concerns on the status of market economy, trade conditions, export of high and new technologies and personnel exchanges, he said.

"China and Japan share expanding mutual interests and new opportunities for cooperation under new historical conditions," said Zeng, who called for both sides to enhance economic and trade cooperation.

"We should create a new pattern of economic and trade cooperation, putting emphasis on both commodities and services," Zeng said.

The vice premier also urged the two sides to improve technological exchanges on energy-saving and environmental protection and work together more on global and regional economic issues.

"As the two biggest economies in Asia, China and Japan shoulder great responsibility for global economic stability and the prosperity of east Asia," Zeng said.

The meeting was co-chaired by Chinese Vice Premier Zeng Peiyan and Japanese Foreign Minister Masahiko Komura.

The China-Japan high-level economic dialogue mechanism was jointly launched by Chinese Premier Wen Jiabao and then Prime Minister Shinzo Abe of Japan during Wen's trip to Japan in April.

Japan is China's third largest trade partner and the second largest source of foreign direct investment.

China is Japan's largest trade partner and one of Japan's fastest growing export markets

Source (http://http://news.xinhuanet.com/english/2007-12/01/content_7180459.htm)

China Railway Makes Strong Market Debut
by Du Guodong
www.chinaview.cn
2007-12-03 18:49:07

BEIJING, Dec. 3 (Xinhua) -- China Railway Group made a strong debut on the Shanghai Stock Exchange Monday as its shares closed 68.54 percent up over its initial public offering (IPO) price on a day of mixed trading.

Railway shares closed at 8.09 yuan (1.09 U.S. dollars), 3.29 yuan or 68.54 percent higher than the IPO price of 4.8 yuan. It had a price-earnings ratio at 51.43 times.


The IPO raised 22.4 billion yuan on the Chinese mainland.

The railway group will also offer 3.326 billion H-shares in Hong Kong Friday at 5.03 Hong Kong dollars (64 U.S. cents) to 5.78 Hong Kong dollars. It was aiming to raise an additional 19 billion Hong Kong dollars.

Chinese share prices were mixed Monday with heavyweight PetroChina driving down the major index in Shanghai. The benchmark Shanghai Composite Index slipped 3.17 points, or 0.07 percent, to close at 4,868.61.

The Shenzhen Component Index on the smaller Shenzhen Stock Exchange closed at 15,832.98 points, up 195.33 points, or 1.25 percent.

The combined turnover of the two bourses fell to 97.82 billion yuan from 100.47 billion yuan Friday.

Gains outnumbered losses by 620 to 250 in Shanghai, and by 484 to 174 in Shenzhen.

PetroChina, the country's largest oil producer accounting for approximately 25 percent of all counters for the major Shanghai index, plummeted 3.43 percent to 30.44 yuan.

Sinopec, the nation's biggest oil refiner, dropped 0.57 percent to 21 yuan.

Other heavyweights, those in the financial sector in particular, managed to recover more or less.

China Life, the country's largest life insurer, rose 4.54 percent to 57.32 yuan, while the Industrial and Commercial Bank of China went up 1.13 percent to 8.08 yuan. Bank of China closed up 0.62 percent to 6.49 yuan, and China Construction Bank increased 0.98 percent to 10.3 yuan.

Hushen 300 index, which tracked one-fifth of both A and B shares on Shanghai and Shenzhen bourses, closed at 4,772.67 points, up 35.26 points, or 0.74 percent, from the previous trading day.

Source (http://news.xinhuanet.com/english/2007-12/03/content_7193844.htm#)

Economic Planner: China To Adopt Tight Monetary Policy
By Duo Goudong
www.chinaview.cn
2007-12-03 19:38:21


BEIJING, Dec. 3 (Xinhua) -- China Development and Reform Commission Minister Ma Kai said over the weekend that the country will adopt a tight monetary policy while continuing a prudent fiscal policy.

Ma made the remarks at the first high-profile economic dialog between China and Japan held Saturday in Beijing.

Observers here said over the past few years, China had adhered to a moderately tight monetary policy. This time, Ma, head of the country's top economic planning agency, took off the word "moderately."

Also at the Sino-Japanese economic dialog, Finance Minister Xie Xuren said China would make use of various monetary instruments to intensify credit control.

China's central bank has this year raised the reserve-requirement ratio for commercial banks nine times and interest rates five times.

Observers reckoned a sixth rate hike for the year was around the corner.

China has paid growing attention to the mounting inflationary pressure after the country's consumer price index (CPI) recorded a10-year-high rise of 6.5 percent in October.

In addition, the Political Bureau of the Central Committee of the Communist Party of China convened a meeting last week and said next year's top macroeconomic priorities would be in preventing the economy from overheating and the current price increases from evolving into "evident inflation."

The observers believed China would continue to face high inflationary pressure next year. In international markets, oil prices would continue their exposure to high volatility and grain prices would keep rising.

In the domestic market, high food prices would likely give rise to the price of labor and then the production cost in different sectors.

Yu Yongding at the research institute of world economy and politics under the Chinese Academy of Social Sciences said that four percent was the CPI ceiling that China could tolerate. If the inflation indicator increased higher it would send a signal to the central bank that a tight monetary policy was necessary.

Zhuang Jian, chief economist of the Asian Development Bank in China, said the monetary policy had played an important role in China's macroeconomic control and it would be indispensable for the country's future economic regulation.

Source (http://news.xinhuanet.com/english/2007-12/03/content_7192781.htm)

Economic catchphrases across China for 2007
(Xinhua)
Updated: 2007-12-04 09:48


BEIJING - Chinese officials held a high-profile meeting here on Monday to review economic strategies for the next year. The primary concerns of Chinese people with the future economy are reflected in the following catchphrases:

-- CPI

China's consumer price index, an inflation indicator, was pushed up to 4.4 percent in the first ten months by high-flying food prices led by pork and edible oil. Monthly CPI was above 6 percent for three straight months from to August to October, high above the country's 3 percent alert threshold. But the current figure paled in comparison to inflation that hit China during the 90s, when CPI soared 27.4 percent year-on-year in September 1994. The National Bureau of Statistics has forecast the annual CPI at 4.5 to 4.6 percent this year.

-- Energy conservation and emission reduction

China earmarked 23.5 billion yuan (about US$3.18 billion) to save energy and reduce emission. Both economic and political measures were put in place as China cut down the export rebates on high-polluting, high-consumption and resources products, and urged its local officials to meet national emission-reduction target. Those who fail to do so would be held accountable and exempted from promotion. These concrete measures are paying off, as the energy consumption per GDP unit fell by 3 percent in first three quarters. For the first time, the country's sulphur dioxide emission and the water's chemical oxygen demand both dropped.

-- Low rent housing

The housing prices of 70 large and middle-sized cities in China surged 9.5 percent year-on-year in October alone. To provide accommodation for the low-income city dwellers who cannot afford to buy a house, China has spent tens of billions of yuan to build low-rent houses. China also urged local governments to reserve at least 70 percent of the land designated for residential construction for low-rent units or smaller, cheaper commercial homes.

-- Interest rate rises

China raised the benchmark interest rates by 27 basis points to 3.87 percent and 7.29 percent respectively for deposit and loan from September 15, the fifth time the country has done so this year, in a bid to curb rising inflation and tighten control over excessive liquidity. The move did not end China's negative real interest rate, but it helped to offset the influence of high inflation on people's money in bank.

-- Yuan appreciation

The Chinese yuan hit a new high of 7.3872 against the US dollar on November 27, the fourth consecutive day that China's currency stayed above the 7.4-yuan mark. The accumulative appreciation since July 21, 2005, when China discontinued the yuan's peg to the greenback, is approaching 9 percent. China's central bank governor Zhou Xiaochuan said on November 18 that if necessary, the nation will consider widening the yuan's trading band.

-- Shanghai Composite Index

China's benchmark Shanghai Composite Index rocketed to over 6,000 points by October this year from below 3,000 points in January. Investors were caught up in a buying frenzy in stock and bond sale before the market slumped to below 5,000 points in November. Attracted by the soaring stock market, a large number of the country's general public became deeply involved in portfolio investment.

-- Property income

"Conditions would be created to enable citizens to have property income so as to increase the income of the urban and rural residents," Hu Jintao said in his keynote speech at the 17th National Congress of the Communist Party of China on October 15. Property income refers to the capital gains from bank deposits, securities, real estate, automobiles and collections. Currently, China's per capita property income contributed only two percent to the country's per capita disposable income on average after it rose 26.5 percent to 240 yuan (about US$32 ) last year.

-- Unified company income rate

The enterprise income tax law, adopted by Chinese legislature on March 16, set unified income tax rate for domestic and foreign companies at 25 percent. The income tax burden on foreign companies used to be 15 percent under the country's preference policies to encourage foreign investment. The dual-tax mechanism was criticized for forcing domestic businesses to face tougher competition since China's accession to the World Trade Organization (WTO) in 2001. The new tax on foreign firms is still a moderate one compared with many other countries.

http://www.chinadaily.com.cn/china/2007-12/04/content_6297086.htm

Economy to grow 11.6%, CPI seen at 4.5%
By Xin Zhiming (China Daily)
Updated: 2007-12-04 16:35


China's gross domestic product (GDP) growth is expected to be close to 11 percent next year but inflation will remain a major concern, said a top Chinese think tank.

The economy will grow by 11.6 percent this year, the fifth consecutive year for the country to achieve double-digit GDP growth since 2003, according to the annual "blue book" on economic forecasts by the Chinese Academy of Social Sciences (CASS), which was released yesterday.

China's consumer price index (CPI), the main gauge of inflation, rose strongly in recent months, reaching a decade high of 6.5 percent in both October and August.

The CASS forecast it may be 4.5 percent this year and four percent next year.

"The first priority for China's macro controls in 2008 should be to contain overly fast rises in consumer and asset prices, to ease inflationary pressure and stabilize price levels," the book said.

China's trade surplus is expected to expand to $290 billion next year from $260 billion this year, but export growth will slow down to 20.5 percent from 25.1 percent thanks to the rising value of yuan and the government's efforts to rebalance trade, such as cutting export rebates.

The CASS predicted import growth will increase to 22.9 percent from 20.3 percent.

China's fixed-asset investment will expand by 25.6 percent year-on-year this year, the book said. Next year it could fall slightly to 24.2 percent.

The macroeconomic growth figures show the economy may become overheated if the trend continues, said Chen Jiagui, deputy head of CASS.

The combination of the rising prices of grain and food, ample liquidity and the real negative interest rate has pushed up asset prices, Chen said. "It is becoming harder to apply macroeconomic regulations."

He said it is best for China to keep the economic growth at about 9 percent next year, but according to the book, economists forecast it will be around 11 percent next year.

The think tank suggested the government should slow down economic growth next year through tightening measures. Apart from tightening controls on credit, the government can promote saving energy and cutting pollutant emissions to make economic growth more efficient. The government should also spend less on infrastructure and more on social security, build more affordable apartments and increase agricultural subsidies, the book said.

http://www.chinadaily.com.cn/china/2007-12/04/content_6297908.htm

China Aims To Prevent Overheated Economy, Curb Inflation in 2008
by Gao Ying
www.chinaview.cn
2007-12-05 19:32:56

BEIJING, Dec. 5 (Xinhua) -- The primary task of China's 2008 economic work has been set "to prevent the economy from becoming overheated and to guard against a shift from structural price rises to evident inflation," a key economic meeting said here Wednesday.

The annual Central Economic Work Conference concluded that the key for next year's macro-economic control was to keep in check "economic gross value, price stabilization, structural adjustment and to promote balance".

The meeting said the country would rationalize fiscal expenditure to boost structural adjustments. Expenditures on social security, health care, education and housing would be increased significantly.

Credit growth would also be strictly checked to accommodate social demand and to promote a balance between foreign spending and earnings. New projects would go through rigorous examination.

The government would take "forceful measures" to curb price increases and "intensify" production of necessities, including grain, edible oil, meat and other products in short supply.

It would also continue to "improve the reserve system, improve price forecasts, keep a close watch on price movements, step up market supervision and offer allowances to low-income people".

The meeting stressed that China's industrialization and modernization process is now at a critical point. The incidence of many problems is, to a great extent, a reflection of the fundamental realities of the country and its current development phase.

In October, the 17th National Congress of the Communist Party of China (CPC) pointed out that consumption should play a more important role in the country's economic growth to relieve its reliance on investment and export.

Primary and tertiary industries, along with secondary industries, should have a "concerted effect" on the country's economic development. China should also rely more on technological innovation, advances in human resource qualities and managerial levels to boost its economy, rather than mainly depending on consumption of material resources, according to the CPC Congress.


Source (http://news.xinhuanet.com/english/2007-12/05/content_7205331.htm)

China's Central Government To Increase Investment Budget
by Yan Liang
www.chinaview.cn
2007-12-07 23:51:43

BEIJING, Dec. 7 (Xinhua) -- China's Central Government will increase its overall investment budget and continue to adjust investment structure, the nation's top economic planning agency said on Friday.

Ma Kai, head of the National Development and Reform Commission, said at a national development and reform meeting that after "continuous and rapid" increase in fiscal revenue in recent years, China will mainly use its fiscal expenditure to improve people's livelihood and boost economic and social development in weak and backward areas.

He didn't disclose the specific figures for 2008, noting a relevant ministry is working at the budget.

The fiscal budget for 2007 reached 2.687 trillion yuan (358.2 billion U.S. dollars), up 14.4 percent year on year.

Ma said the larger investment will be mainly used in construction of rural regions and the western areas, energy-saving and emission reduction projects, innovation, social welfare and on major infrastructure projects.

Ma said that the central government planned to issue smaller amounts of long-term construction debts next year.

The 2007 Central Economic Work Conference, which finished on Wednesday, said China will maintain a "prudent" fiscal policy for the coming year.


Source (http://news.xinhuanet.com/english/2007-12/07/content_7217109.htm)

China, Iran Sign $2 Billion Oil Production Agreement (Update2)

By Wang Ying and Dinakar Sethuraman

Dec. 10 (Bloomberg) -- China Petrochemical Corp. signed a $2 billion agreement to develop Iran's Yadavaran oil field, advancing prospects for a contract on the sale of liquefied natural gas to the world's fastest-growing major economy.

The field will produce 85,000 barrels a day in four years and a further 100,000 barrels a day three years after that, China's official Xinhua news agency cited Iranian Oil Minister Gholam Hossein Nozari as saying yesterday. Under an initial agreement in 2004, China would pay Iran as much as $100 billion over 25 years for LNG and oil and 51 percent stake in Yadavaran.

Sinopec Group, as China Petrochemical is known, hopes to talk about liquefied natural gas supplies ``later,'' Iran's state news agency IRNA said today, citing Zhou Baixiu, president of Sinopec Group's international exploration and production unit. China is ``willing'' to buy LNG from Iran, Zhou said.

China, a veto-holding member of the United Nations Security Council, has resisted pressure from the U.S. to isolate Iran and impose a third round of international sanctions over the country's nuclear program. The Chinese government wants its oil and gas producers to step up their global search for energy resources to meet rising consumption, spurred by an economy that surged 11.5 percent in the third quarter.

``This is a commercial deal, I don't think China will worry about the political tensions between the U.S. and Iran,'' said Victor Shum, senior principal at energy consultant Purvin & Gertz Inc. in Singapore. ``News that Iran probably stopped its nuclear weapon program in 2003 is a good sign that it poses no imminent threat to the U.S.''

Initial Agreement

Sinopec signed an initial agreement to buy 250 million metric tons of LNG from Iran over 30 years, National Iranian Oil Co.'s Senior Vice President of Development S.M. Hosseini told reporters in Beijing on Oct. 29, 2004.

The agreement yesterday is the largest energy contract between China and Iran, said Ying Xiaodong, an oil analyst with Citic Securities Co.

Zhang Zheng, spokesman for overseas affairs at Sinopec Group, as China Petrochemical is known, today said from Beijing he is ``not authorized to disclose information about the Iran project.''

Defense Secretary Robert Gates Dec. 8 called on U.S. allies to ``intensify'' economic and diplomatic pressure on Iran to suspend non-nuclear weapons uranium enrichment and allow verification that it doesn't resume a nuclear weapons program.

Nuclear Technology

Iran hasn't proven to the world that it has been developing nuclear technology exclusively for peaceful purposes, United Nations Secretary-General Ban Ki-moon said Dec. 7.

The agreement with Sinopec shows that U.S. claims that international companies are not willing to invest in Iran are baseless, IRNA said, citing the oil minister. The accord with Sinopec was delayed by ``tough commercial negotiations'' instead of the U.S. threat of sanctions, the agency said.

Talks on Yadavaran were delayed because Sinopec asked for a higher rate of return from the field, Agence France-Presse said in a report on its Web site, citing Nozari.

Sinopec's period of reimbursement has been halved to four years in the final contract, the report said, without giving details. Iran's constitution bars the sale of equity in the nation's oil and gas fields. Investors are compensated for their spending in oil and gas, a method known as ``buyback.''

Recoverable Reserves

According to Iranian estimates, the Yadavaran field has ``in-place'' reserves of 18.3 billion barrels of oil and 12.5 trillion cubic feet of gas, of which 3.2 billion barrels oil and 2.7 trillion cubic feet of gas are recoverable, Xinhua said.

Iran was China's third-biggest supplier of crude oil through the first 10 months of this year, according to the Beijing-based Customs General Administration. China's oil demand will increase 5.4 percent to 7.5 million barrels a day this year, the International Energy Agency said in its November forecast.

``The Chinese government is interested in diversifying sources of crude oil production and its national oil companies have more flexibility in going to places that the international oil companies can't,'' said Shum. ``China has been importing crude oil and fuel oil from Iran so Sinopec is keen to complete the deal.''

Earlier Deals

Sinopec Group in June 2006 agreed to buy OAO Udmurtneft, an affiliate of BP Plc, to produce oil in Russia for the first time. China National Petroleum Corp., the nation's biggest oil producer, bought PetroKazakhstan, which accounts for about 12 percent of Kazakhstan's oil output, for $4.18 billion in October 2005.

Cnooc Ltd., the country's biggest offshore oil company, paid $2.7 billion for a 45 percent stake in Nigeria's OML 130 oil area, also known as the Akpo deposit, from privately owned Nigerian company South Atlantic Petroleum Ltd.

Sinopec Group is the parent of China Petroleum & Chemical Co., known as Sinopec Corp., which is listed on stock markets in Hong Kong, New York, London and Shanghai.

http://www.bloomberg.com/apps/news?pid=20601080&sid=akKRGh8SSyMI&refer=asia

^^

That's going to be a problem for the US side and may have put them in the edge. After the intelligence found out that Iran stop developing their Nuclear Weapons Program, China took advantage of it and made a quick deal. They know US cannot do anything. We also wanted oil from Iran but that may seem to be a difficult process. The Bush Administration may need to reform their foreign policies.

Chinese Companies Take Center Stage: Consulting Firm
By Hu Yuanyuan (China Daily)
Updated: 2007-12-08 10:06


Chinese companies dominate a top 100 list of firms that are growing fast, globalizing aggressively and reshaping world industries, the Boston Consulting Group (BCG) said on Friday.

A total of 41 Chinese firms appeared on the BCG New Global Challengers list, with combined revenue of $14.5 billion last year and a compound annual growth rate (CAGR) of 26 percent from 2004 to 2006 - much higher than the average 11 percent of the S&P 500.

"Never before have so many potential competitors and customers arisen so quickly on a global scale," said David Michael, managing director of BCG Greater China. "Yet it is essential for every executive to develop clear strategies to deal with this group of huge and ambitious companies."

As well as the 41 Chinese firms on BCG's list, 20 are from India, 13 from Brazil, and the rest from 11 other rapidly developing economies (RDEs).

Of the Chinese companies, 34 are publicly traded and their total shareholder return grew at a CAGR of 27.7 percent from January 2002 to June this year. In addition, the international sales of the 41 Chinese firms accounted for 17 percent of their total revenue last year, up slightly from 16 percent in 2005.

"Most Chinese firms on the list are State-controlled enterprises. We would like to see more family enterprises appearing on the next report," said Michael. "Meanwhile, due to Chinese banks' strengthened efforts in exploring the overseas market, financial institutions also made their debut on the list."

The report also outlines how these companies are succeeding: by using low costs to their advantage, by going beyond cost-based competition through investment in research and development (R&D) and branding; by actively engaging in mergers and acquisition; by attracting and retaining top talents; and by effectively managing risk.

"To maintain those advantages, companies should invest more in R&D and try to be more innovative and differentiated," said Michael.

Source (http://www.chinadaily.com.cn/bizchina/2007-12/08/content_6307126.htm)

=====================
IMO,
If Chinese companies tops in this list, I wonder what is the figures of Global Fortune 500 or Forbes 1000 on their biggest companies rankings. I am pretty sure PetroChina will be on the top 5, probably #1.

^^

That's going to be a problem for the US side and may have put them in the edge. After the intelligence found out that Iran stop developing their Nuclear Weapons Program, China took advantage of it and made a quick deal. They know US cannot do anything. We also wanted oil from Iran but that may seem to be a difficult process. The Bush Administration may need to reform their foreign policies.

Yes we Americans are only hurting ourselves by creating conflict with Iran over nothing, we need to make friends quick with Iran and start investing in their energy sectors. China sees the big picture, therefore they are friends with Iran.

^^

Well, that's the problem. Change strategy and be quick friends after the harsh criticism? I don't think Iran will do that and might as well the Bush Administration or our government as a whole. With its Hezbollah still the hard ones in the Middle East and its Nuclear Enrichment Program that may lead to Nuclear Weapons Programs once its completed.

The whole point is Iran's administration still cannot be trusted. They bow for the destruction of Israel and hate for United States. It is very complicated issue and will never be solve (probably impossible to solve).

^^

Well, that's the problem. Change strategy and be quick friends after the harsh criticism? I don't think Iran will do that and might as well the Bush Administration or our government as a whole. With its Hezbollah still the hard ones in the Middle East and its Nuclear Enrichment Program that may lead to Nuclear Weapons Programs once its completed.

The whole point is Iran's administration still cannot be trusted. They bow for the destruction of Israel and hate for United States. It is very complicated issue and will never be solve (probably impossible to solve).
No country should make friends with a government like that, but it doesn't mean we shouldn't have economic cooperation with Iran. China uses to separate economic and politic relations, which is quite pragmatic as history proves that economic boycotts against "evil governments" is catastrophic for the people and doesn't have many negative effects against the government. In fact, such boycotts benefit the governments as they get a lot of extra support from the people raising nationalism.

The best way to avoid the world to have governments which seek to wipe countries off the map is boosting wealth and education, and that means economic cooperation, free trade, etc.

The problem is that we (Western countries) pretend boycotting any government which is opposed to our ideology as we try to get economic and politic relations very closed. Then we make friends with Saudi Arabia, etc, where women are treated like shit, etc. That's very hypocrite.

We should separate economy from politics, so we can stop practising double standards all the time.

China Nov trade surplus 26.28 bln usd, up 14.7 pct yr-on-yr

BEIJING (XFN-ASIA) - China recorded a trade surplus of 26.28 bln usd in November, up 14.7 pct year-on-year, the General Administration of Customs said.

Exports in November rose 22.8 pct year-on-year to 117.62 bln usd, while imports were up 25.3 pct at 91.34 bln usd, it said.

In the 11 months to November, the trade surplus stood at 238.13 bln usd, up 52.2 pct.

Exports rose 26.1 pct in the first 11 months to 1.1036 trln usd, while imports were up 20.5 pct at 865.48 bln usd.

In the 11 months to November, steel product exports rose 54.5 pct year-on-year to 57.86 mln tons, while November steel exports were down 11.4 pct year-on-year at 4.1 mln tons.

China exported mechanical and electrical products worth 634.06 bln usd in the first 11 months, up 27.8 pct year-on-year, and of which high-tech products made up 314.39 bln usd of the total - a rise of 23.9 pct year-on-year.

During the first 11 months, imports of mechanical and electrical products amounted to 452.7 bln usd, up 16.8 pct year-on-year. Imports of primary products totaled 217.79 bln usd, up 27 pct.

China imported 15.54 mln tons of steel products during the January to November period, down 8.6 pct from a year ago.

Iron ore fines imports rose 17.3 pct year-on-year to 349 mln tons during the first 11 months.

China also imported 276,000 vehicles in the 11 months to November, up 37.5 pct from a year earlier.

http://www.forbes.com/markets/feeds/afx/2007/12/10/afx4424603.html

Trade surplus is growing 14.7% y/y now, down from 60%+ just a few months ago. I wouldn't be surprised if the GDP growth for Q4 slows at least 1 point from Q3.

China also imported 276,000 vehicles in the 11 months to November, up 37.5 pct from a year earlier.

China's car industry is one of the least competitive ones of major industries.:ohno:

Trade surplus is growing 14.7% y/y now, down from 60%+ just a few months ago. I wouldn't be surprised if the GDP growth for Q4 slows at least 1 point from Q3.

I would not be so sure 'cause China's domestic consumption is growing faster in Q4 than in Q3

China's car industry is one of the least competitive ones of major industries.:ohno:

Those imports must be luxury cars but importing 276,000 cars while producing 8 million cars in china is not bad.

So about 3% of the cars are imported to China while 97% are produced in China.

In America about 60% of the cars are produced here while the rest are imported.

Those imports must be luxury cars but importing 276,000 cars while producing 8 million cars in china is not bad.

So about 3% of the cars are imported to China while 97% are produced in China.

In America about 60% of the cars are produced here while the rest are imported.

^^If the export-import is a balanced intra-industrial,there's no problem,but like you said,China imports luxury cars and never exports them,thus this is a imbalanced intra-industrial trade which is quite disadvantageable to Chinese economy.

^^If the export-import is a balanced intra-industrial,there's no problem,but like you said,China imports luxury cars and never exports them,thus this is a imbalanced intra-industrial trade which is quite disadvantageable to Chinese economy.

China has a large surplus and also exporting alot of cars, that last thing China should be worried about is producing luxury cars in China.

China has a large surplus and also exporting alot of cars, that last thing China should be worried about is producing luxury cars in China.

China has a trade deficit on car.

The growth in private consumption is still way to slow to make any meaningful increase in it's share of GDP. It would also be better if China started reporting real private consumption growth.

China Retail Sales Grow at Fastest Pace Since 1999 (Update3)

Dec. 12 (Bloomberg) -- China's retail sales increased at the quickest pace in at least eight years on rising incomes, aiding government efforts to curb the economy's dependence on exports and investment for growth.

Sales climbed 18.8 percent to 810.5 billion yuan ($110 billion) in November from a year earlier, the statistics bureau said today, after rising 18.1 percent in October. That was the biggest gain since 1999, according to Bloomberg data.

Stronger domestic consumption may help China weather weaker demand for exports in a global slowdown. The jump in sales also reflects inflation that accelerated to an 11-year high in November, underscoring the risk that the world's fourth-largest economy may overheat.

``There is strong growth in household demand,'' said Stephen Green, senior economist at Standard Chartered Bank Plc in Shanghai. ``This can help pick up some of the slack as export growth slows next year.''

Sales growth topped the 18 percent median estimate of 21 economists in a Bloomberg News survey. Consumer prices rose 6.9 percent last month.

Household spending accounted for 36 percent of China's gross domestic product last year compared with more than 50 percent in the U.S., Japan and India.

Export Slowdown

China's economic growth is likely to slow to 10.7 percent in 2008 from 11.4 percent this year on reduced demand for exports, according to the Organization for Economic Co-operation and Development.

A significant global slowdown may reduce the need for economic tightening in China, ``creating a healthier environment that would foster the needed shift toward more sustainable, domestically-driven growth,'' said Frank Gong, chief China economist at JPMorgan Chase & Co. in Hong Kong.

Zhou Xiaochuan, the central bank governor, said today that China should focus on boosting domestic consumption. Increased demand for imports would help narrow the trade surplus that is fueling tension with the U.S. and Europe.

Automobile sales climbed 35 percent, a boost for companies such as Geely Automobile Holdings Ltd., and furniture spending soared almost 60 percent.

Cosmetics sales rose 33 percent. Avon Products Inc., the world's largest door-to-door cosmetics seller, said sales of skin cream and lipstick in China helped to boost third-quarter profit.

For the first 11 months, retail sales rose 16.4 percent from a year earlier to 8.02 trillion yuan, the statistics bureau said. Sales in urban areas jumped 19.2 percent in November from a year earlier, while rural spending climbed 18 percent.

Inflation's Role

A ``large part'' of this month's spending growth was due to inflation, said Kevin Lai, senior economist at Daiwa Institute of Research in Hong Kong.

Food and fuel costs are driving consumer-price gains. Spending on meat, poultry and eggs jumped 45 percent in November from a year earlier. For grains and edible oils, the gain was 48 percent. Spending on petroleum products climbed 22 percent.

China has raised minimum wages and reduced a tax on interest income to fatten consumers' wallets. Disposable incomes among urban households, after adjusting for inflation, rose 13.2 percent to 10,346 yuan in the first nine months from the same period a year earlier.

Earnings in rural areas climbed 14.8 percent to 3,321 yuan.

Wal-Mart Stores Inc., the world's biggest retailer, this week said it had won approval to open its 100th store in the Asian nation.

http://www.bloomberg.com/apps/news?pid=20601089&sid=amBtoqyrA1aM&refer=china

^^ If that had been real private consumption growth, there would be reason to celebrate. Of course, when the inflation is higher, more money is being spent. Unfortunately, in real terms, the share of consumption is still flat as a share of GDP.

^^ What's the real private consumption growth currently?

China Retail Sales Grow at Fastest Pace Since 1999 (Update3)

......
Wal-Mart Stores Inc., the world's biggest retailer, this week said it had won approval to open its 100th store in the Asian nation.

http://www.bloomberg.com/apps/news?pid=20601089&sid=amBtoqyrA1aM&refer=china

Wal-Mart has opened 100 stores in China? Geez. Still remember it opened first store in Shenzhen not long before.

How many McDonald's are there in China? 1000?

^^ If that had been real private consumption growth, there would be reason to celebrate. Of course, when the inflation is higher, more money is being spent. Unfortunately, in real terms, the share of consumption is still flat as a share of GDP.

What I learned is most of the inflation are mainly from the Food sector specifically the meat industry or mainly pork industry. It seems the average Chinese eat more porks than Americans so that drives the demand of that industry. Other sectors were not infected by the inflation at all. Or it seems not yet. Gas prices is another driven factor yet it is not affecting other sectors.

Foreign investment up 14%
By Diao Ying (China Daily)
Updated: 2007-12-14 07:05


The nation received $61.67 billion of foreign capital for the first 11 months this year, up 13.66 percent compared with the same period last year, the commerce ministry said Thursday.

The government approved over 34,000 foreign-invested enterprises during the same period, down by 7.02 percent.

China adjusted its foreign investment policy at the beginning of this month.

Under new guidelines, China will further open the service and hi-tech industries and tighten the control on energy-consuming sectors.

A new directive for the first time allows foreign investment in the futures market, grid construction and operation. It also encourages foreign capital in service outsourcing and logistics sectors.

China will continue to provide favorable tax policies to encourage foreign investment in certain sectors, Vice-Minister of Commerce Ma Xiuhong, said.

"China will keep its foreign investment policy stable and continuous," Ma said.

"So that foreign investment will continue to play an active role in China's innovation, help upgrade industries and boost the development of different regions."

However, foreign investment in some export-driven industries will no longer be encouraged under the new policy, according to a spokesman for the National Development and Reform Commission (NDRC).

"We will no longer run the export-driven policies as we are faced with new situations such as a tremendous trade surplus and fast increase in foreign reserves," the NDRC spokesman said Thursday.

High profile government officials recently reiterated China's policy of opening up to foreign investment. Vice-Premier Wu Yi said earlier this week that China would not change its stance in expanding the use of foreign capital.

"China's door has been and will be resolutely open to the outside world," she said during the opening ceremony of the 18th Sino-US Joint Commission on Commerce and Trade, on Tuesday.

China received $69 billion in foreign direct investment in 2006.

It was the world's third-largest FDI recipient after the US and UK, according to a report by the United Nations Conference on Trade and Development.

http://www.chinadaily.com.cn/china/2007-12/14/content_6320775.htm

How much FDI, then, did the U.K. and the U.S. get at the same period last year?

How much FDI, then, did the U.K. and the U.S. get at the same period last year?

with respect to your question, i hope this article will answer your question

http://business.timesonline.co.uk/tol/business/economics/article1095140.ece

that is the most updated info i can find.

China becomes Canada's 2nd-largest trade partner
(Xinhua)
Updated: 2007-12-15 09:16



Canada's total merchandise trade with China soared in the last decade, hitting 42.1 billion Canadian dollars (US$41.7 billion) in 2006, federal agency Statistics Canada reported Friday.

China now accounts for five percent of Canada's total world trade. Since 2003, China has emerged as Canada's second largest trading partner, passing Britain and Japan, the report says.

In 2006, imports from China were five times higher than 1997 figures and exports to China tripled.

Leading commodities in the trade between Canada and China include chemicals, metals, industrial and agricultural machinery and equipment, wood products, fish products and other products.

"The growth in Canada's merchandise trade with China reflects the emergence of China as a global economic force over the past decade," says the report.

http://www.chinadaily.com.cn/bizchina/2007-12/15/content_6323535.htm

New hi-tech trade bases approved to boost exports
(Xinhua)
Updated: 2007-12-17 23:31


China announced approval for 20 national hi-tech trade bases on Monday to boost exports of hi-tech products and improve competitiveness in international markets.

The new bases, mostly hi-tech development zones in such major cities as Shanghai, Chongqing, Wuhan and Xiamen, have more than 300 national scientific research institutes each, according to the Ministry of Commerce (MOC) and Ministry of Science and Technology.

They included the information technology, biological medicine, manufacturing, fine chemicals, new materials and new energy sources sectors.

With 18 bases approved last year, the move brings the number of national hi-tech trade bases to 38.

The MOC would help these bases develop products for overseas markets by providing support in research funding, personnel training, export credit, commercial information and protection of intellectual property rights, said MOC official Zhang Ji.

Official figures said China's exports of hi-tech products jumped 31.8 percent year-on-year to $314.4 billion in the first 11 months.

http://www.chinadaily.com.cn/china/2007-12/17/content_6327851.htm

Govt urged to spend extra revenue on livelihood
(Xinhua)
Updated: 2007-12-17 17:33


BEIJING-- A senior Chinese legislator has urged the government to use the extra fiscal revenue beyond this year's budget to finance public services, improve people's livelihood and reduce the fiscal deficit.

"The government must make a special budget for these extra money ranging from 700 billion (US$95 billion) to 800 billion yuan and implement it upon the legislature's approval, " said Jiang Zhenghua, deputy chairman of the National People's Congress Standing Committee.

The government could take advantage of drastic rises in fiscal revenue to increase the capital input in public services such as social securities, reemployment, medicare, sanitation and housing subsidies and bankroll primary education in rural areas, Jiang was quoted as saying by Monday's China Securities Journal.

Jia Kang, director of the Research Institute for Fiscal Science under the Ministry of Finance, predicted earlier this month that this year's fiscal revenue might reach 5.1 trillion yuan, up 1.2 trillion, or 31 percent over the previous year.
The 2007 fiscal revenue was budgeted at 4.4 trillion yuan (US$598 billion) compared with an expenditure of 4.65 trillion yuan (US$631 billion).

The government has adopted a prudent fiscal policy since 2003, with the country's fiscal deficit rate continuously falling from 2.9 percent in 2003 to nearly 1.1 percent this year. Meanwhile, the country's national fiscal revenue more than doubled from two trillion yuan in 2003 to four trillion yuan in 2006.

This year, the central government channeled 31.276 billion yuan into health expenditures, up 86.8 percent over the previous year. A new rural cooperative medical insurance system, aimed at helping farmers fund visits to the doctor, will expand to more than 80 percent of the nation's counties.

In addition, the government put 223.5 billion yuan into compulsory education in the rural areas this year, up 39.5 percent from last year. All children will be entitled to 9-year free compulsory education in rural China by the end of 2007.

The Chinese Ministry of Finance (MOF) decided to issue 1.55 trillion yuan of special T-bond this June, but officials with MOF said the issue did not mean an increase in fiscal deficit because the money would be used for the funding of the China Investment Corporation, aimed at increasing revenue.

"More promising large-scale enterprises will be encouraged to list on the capital market," Jiang, the deputy chairman. He added, " The capital market system construction will be advanced and the financial channels of enterprises will be expanded to prevent big fluctuations in the stock market."

http://www.chinadaily.com.cn/china/2007-12/17/content_6327293.htm

China's Economic Muscle 'Shrinks'

China's economy, the world's second largest, is not as big as was thought, a report by the World Bank has claimed.

According to the bank, previous calculations have overestimated the size of China's economy by about 40%.

The revelation came after the bank updated the way it calculated the country's gross domestic product (GDP).

The bank said the findings meant China would not become the world's biggest economy in 2012 as forecast. It also meant China was poorer than estimated.

This in turn would influence future aid and investment plans, the World Bank said.

China gains extra aid from international institutions and has asked for help in climate change talks because of its status as a developing country.

Adjusting figures


BIGGEST ECONOMIES
US
China
Japan
Germany
India

Source: World Bank

Based on the World Bank's new research, China's economy is now worth some $5.33 trillion (£2.64trillion). Despite the drop in size, the economy was still the world's second largest, the bank said.

The US, at $12 trillion, is the world's largest economy.

The method used for the calculations is called "purchasing power parity", and corrects for differences in prices, which are lower in China than in Western countries, for the same goods.

However, the figures show that average incomes in China are still just 10% of those in the US. China averages $4,091 per person, while average income in the US is $41,000.


MOST EXPENSIVE NATIONS
Iceland
Denmark
Switzerland
Norway
Ireland

Source: World Bank

Based on current exchange rates, China's economy is only half as big, at $2.24 trillion.

In previous years, economists have tried to adjust their figures to take into account local prices in developing nations because they were often significantly lower than those in more industrialised countries.

However, the bank said that many of the prices which were being used were out of date and gave distorted GDP figures.

This time it has used updated prices to create more accurate figures.

Global Shift

In its report, the World Bank found that five nations - the US, China, Japan, Germany and India - accounted for nearly half of the world's total GDP.

But they were not amongst the five most expensive places to live, with that honour going to Iceland, Denmark, Switzerland, Norway and Ireland.

In Africa, the main drivers of growth were South Africa, Egypt, Nigeria, Morocco and Sudan, which accounted for almost two-thirds of the continent's output.


Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7148695.stm


Published: 2007/12/17 18:27:56 GMT

© BBC MMVII

Fiscal revenue grows rapidly on economic strength
(Xinhua)
Updated: 2007-12-19 19:20


China's central and local governments recorded 4.82 trillion yuan ($654 billion) in fiscal revenue during the first 11 months of this year, up 33.5 percent from the same period of last year.

Revenue was 9.3 percent higher than the annual budget, Finance Minister Xie Xuren said Wednesday.

However, revenue and spending patterns diverged at the central and local levels. While central government revenue grew faster, local government spending expanded more rapidly. The 11-month revenue total was 2.69 trillion yuan for the central government, up 37 percent, and 2.13 trillion yuan for local governments, up 29.4 percent, Xie added.

He forecasted the revenue for the whole year of 2007 would surge 31 percent year-on-year to hit 5.1 trillion yuan.

Xie attributed the higher revenue to the rapid, stable growth of the economy, favorable conditions for the structure and efficiency of the economy, and better collection practices.

According to Xie, the first 11 months saw fiscal expenditure amount to 3.71 trillion yuan, up 25.2 percent. The total included 886 billion yuan by the central government, up 16.2 percent, and 2.82 trillion yuan by local governments, up 28.4 percent.

By expenditure category, 236 billion yuan was used for agricultural, forestry and water supply projects, up 31.4 percent, 557.8 billion yuan for education, up 32.7 percent, and 141.9 billion yuan for health and medical care, up 40.6 percent. Another 412.8 billion yuan went to social welfare projects, up 28.6 percent and 117.4 billion yuan to scientific research, up 33 percent.

The government will spread free nine-year compulsory education currently enjoyed by 150 million rural children to their urban counterpart in the coming 2008.

China will maintain its prudent fiscal policy next year, according to the key Central Economic Work Conference held in early December.

Xie told a national financial work conference held Wednesday that fiscal policy was an important means of macroeconomic control.

He said that economic forecasting, monitoring and analysis should be improved and that fiscal policy should be guided by trends in economic development. He added that a variety of tools -- taxation, budgeting, treasury bonds and government procurement -- should be used to stabilize economic growth.

According to Xie, next year China will narrow its fiscal deficit and cut the volume of treasury bonds issued for long-term construction projects. Central government capital spending will focus on improving production and living conditions in rural areas, environmental protection and support for social projects.

The central fiscal deficit was set at 245 billion yuan for 2007, down 50 billion yuan from 2006, and treasury bond issues intended for long-term construction projects were set at 50 billion yuan, down 10 billion yuan.

http://www.chinadaily.com.cn/china/2007-12/19/content_6333674.htm

US: China not manipulating currency
(Xinhua)
Updated: 2007-12-20 06:57


WASHINGTON -- China is not manipulating its currency to gain unfair trade advantage, the US Treasury Department said Wednesday in a semiannual report to Congress.

"Treasury concluded that neither China nor any other major trading partner of the US met the requirements for designation" as a manipulator of their currency, the report said.

However, the report said the Chinese yuan remains severely undervalued against the US dollar, claiming the recent movement of the yuan had been "too limited and modest."

The Treasury issues the report twice a year according to a 1988 law, which requires the department to analyze trading partners' foreign exchange policies and determine whether currency manipulation to gain unfair trade advantage is occurring.

Under the law, economic sanctions can be imposed on countries found in violation.

The report acknowledged that the yuan, also known as the renminbi, appreciated against the dollar by 12.1 percent since a new currency regime was imposed in July 2005 that allowed it to trade in a wider range.

The Chinese currency rose by 2.5 percent in the first half of 2007 and another 3.2 percent in the second half through December 11. Against a broader range of currencies, the gain has been 3.8 percent since 2005.

http://www.chinadaily.com.cn/china/2007-12/20/content_6333989.htm

300m yuan of lottery funds earmarked for poor students
(Xinhua)
Updated: 2007-12-21 20:46


China has decided to draw 300 million yuan ($40 million) of lottery funds to support 300,000 poor senior high school students in 22 western and central provinces and regions, sources with the Ministry of Education said here Friday.

"It is the first program in which the Chinese government gives financial support to senior high school students," said Zhang Baoqing, former vice minister of Education and executive director of the China Education Development Foundation.

The foundation, a non-profitable organization, was entrusted to implement the program.

Each student to receive subsidy will undergo a strict approval procedure to ensure they are qualified and the final name list will be made public to ensure the transparency of the program, Zhang said.

The fund will go directly to the schools and be handed over to each student.

The Ministry of Education will strive to enable each eligible student to get their money at the Spring Festival, a traditional Chinese festival which falls on February 7 next year.

China has made unprecedented efforts to boost education at all levels in the past year, as the central government put in more than 30 billion yuan to financially support four million college students and 16 million occupational school students.

China exempted rural students in western regions from compulsory education fees in 2006 and the exemption policy was expanded to the central and eastern regions in 2007. A total of 150 million rural Chinese students in primary and junior high schools nationwide have benefited from this policy.

The government will exempt all students in urban areas from tuition fees for their nine years of compulsory education from next year

Sun Guangqi, a senior official with the Ministry of Finance, said the program will open up new channels to allocate money to support poor students.

Statistics showed that China has 25 million high school students, among whom 16.86 million live in western and central China.

Chen also said the central government will increase educational input to increase accommodation subsidies for needy students and to repair ramshackle classrooms in central and western areas.

Earlier this year, China's Ministry of Finance said it would allocate a further 47 billion yuan ($6.27 billion) to support rural education in the next three years until 2009.

http://www.chinadaily.com.cn/china/2007-12/21/content_6340399.htm

SOEs smaller but stronger
(Xinhua)
Updated: 2007-12-22 13:48


China's state-owned enterprises (SOEs) reported a year of prosperity. Annual profits were forecast to surge 30 percent to nearly a trillion yuan ($135.8 billion) this year, however, it was evident many still had a long way to go to become internationally competitive.

China currently has 152 centrally administered SOEs, all under the supervision of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC). They embrace many leading enterprises in key sectors such as energy, mineral resources, transport, telecom, machinery manufacturing and defence, among others.

Reforms lead to growth

The SOEs saw their combined assets climb to 14.6 trillion yuan in the January-November period, an increase of 21 percent over the same period a year earlier. Their number fell from 159 at the beginning of the year as a result of mergers and the sale of some aimed to improve the structure of state assets.

[B]Meanwhile, the SOEs recorded gross profits totaling 918.66 billion yuan in the January-November period, up 31.7 percent from the same period last year. Net profits surged 33 percent to 552.21billion yuan.
Earlier statistics revealed that the total assets of central SOEs had already jumped 146 percent. In addition, profits increased two-fold when the number of SOEs dropped to about 160 last year from 196 in 2002.

Reforms were at the core of these impressive improvements of the SOEs, previously known for their "plump size and slack performance".

After China's SOEs were separated from administrative government bodies to exist as independent enterprises, a major shift from the planned economy, these enterprises went through further shareholder reforms to build themselves into real corporate entities.

Full article here

http://www.chinadaily.com.cn/bizchina/2007-12/22/content_6341239.htm

Quality competitiveness continues to rise
By Xie Chuanjiao (China Daily)
Updated: 2007-12-22 09:14


An annual report that measures the quality competitiveness of China's manufacturing industry has shown an increase for the eighth year in a row.

The national quality competitiveness index (QCI) for the country's manufacturing sectors was 79.98 last year, one point higher than in 2005, according to a press release issued on Friday by the General Administration of Quality Supervision, Inspection and Quarantine, the country's quality agency.

The steady increase in quality competitiveness effectively supports the development of the national economy and foreign trade, Pu Changcheng, the administration's vice-minister said.

The figure was derived from the collected data of more than 250,000 large and medium-sized enterprises from 29 manufacturing sectors, provided by the administration and the National Bureau of Statistics.

"The calculation indicates that the quality competitiveness of a number of manufacturing sectors has made significant improvements," Pu said.

Thirteen industrial sectors, six more than 2005, made significant gains to a QCI level above 80.

The top five sectors were: Communications equipment, computers and other electronics equipment, with a score of 85.04; measuring instruments and machinery for cultural activities and office work, 84.53; electrical machinery and equipment, 84.01; rubber products, 83.34; and smelting and pressing of ferrous metals, 82.98.

The QCI of 13 provinces, municipalities and autonomous regions, including Beijing, Tianjin, Shanghai, Jiangsu and Shandong, surpassed the 80 mark.

East China areas have continued to take a leading role in QCI growth, Pu said.

He said 2006 had witnessed many successful gains because of the implementation of proactive State strategies to grow businesses through quality products.

There were also crackdowns on fake and poor-quality products.

"The efficiency of our quality control and food safety inspections has also boosted the overall quality increases recorded for the year," Pu said.

However, despite all the improvements, problems and weak links still need fixing.

"We still have a long way to go," he said.

"There is an obvious gap between different industries and regions, due to various factors such as technical innovation, new product research and development, facility upgrades and the building of quality capacity."

The lowest QCI recorded last year was 70.88, and the highest of 85.04.

The competitiveness of some sectors was not stable because of various influences including the changing face of the domestic and foreign markets, Pu said.

Competitiveness is still comparatively low in sectors that are labor intensive.


http://www.chinadaily.com.cn/bizchina/2007-12/22/content_6341053.htm

China promises to subsidize farmers for household appliance purchase


www.chinaview.cn 2007-12-22 23:25:42 Print

BEIJING, Dec. 22 (Xinhua) -- China is promising to give farmers subsidies for purchasing household electric appliances in a bid to stimulate the sluggish rural consumption and reduce the rising trade surplus.

A pilot program will initially be launched in the three major agricultural provinces of Shandong, Henan and Sichuan, where farmers who buy color TV sets, refrigerators and mobile phones can get subsidies worth 13 percent of the prices, the Ministry of Finance (MOF) said Saturday.

A total of 197 types of the three categories, especially produced for the rural markets, would be available from December 2007 through May next year and air conditioners and washing machines would be included in the future, Zeng Xiaoan, an official with the ministry, said.

So far, the government has signed cooperative agreements with 15 household appliance makers, including Haier, Hisense and Changhong, and 21 dealers.

"The move is meant to give farmers more benefits and divert more government expenditure into the consumer sector from fixed asset investment and the export industry," Zeng said.

Though consumer spending is playing an increasing role in China's economic growth, investment and export remain much bigger contributors to growth and the country's vast countryside, with a population of 800 million, still has huge market potential.

In China, rural areas lag nearly 20 years behind urban areas in terms of popularity of major home appliance such as TV sets, refrigerators and washing machines, according to official figures.

By 2010, the subsidy program is expected to narrow the gap to 10 years and increase rural consumption by 100 billion yuan (13.6 billion U.S. dollars) a year, said Zeng. "If one more percent of the rural families buy TV sets priced at 1,000 yuan each, it means2.5 billion yuan."

The program is essential to expanding the domestic consumption as "raising farmers' income remains difficult and the gap between rural and urban areas is large," he said.

To improve farmers' livelihood and expand rural consumption, China is also spending hundreds of billions of yuan to extend the country's electricity grid to every remote village by 2010.

China, the world's largest producer and exporter of household appliances, sold half of its production abroad every year, said Zeng.

Color TV sets, refrigerators, washing machines, air conditioners and mobile phones combined contributed 50 billion U.S. dollars, or 28 percent, to China's trade surplus in 2006, up 45 percent from a year earlier.

Selling more household appliances to rural families would help China reduce trade surplus and frictions, and ease the problem of overcapacity in many manufacturers, he said.

By 2010, the program would divert 20 percent of the exports to rural markets and reduce trade surplus by 10 billion U.S. dollars annually, he added.


http://news.xinhuanet.com/english/2007-12/22/content_7296515.htm

Hey guys

Since we are discussing the Chinese economy, how do things look for construction in the next few years? Any slow-down? The economy in USA appears to be slowing down, aside from the continued-spending by Americans (fueled by credit, not cash....credit must be paid at some point).

Just wondering what the China outlook is, if it is still as "hot" as claimed for the future.

Thanks and Merry X-Mas

Hey guys

Since we are discussing the Chinese economy, how do things look for construction in the next few years? Any slow-down? The economy in USA appears to be slowing down, aside from the continued-spending by Americans (fueled by credit, not cash....credit must be paid at some point).

Just wondering what the China outlook is, if it is still as "hot" as claimed for the future.

Thanks and Merry X-Mas

Real estate investment is growing 40% y/y right now

http://news.xinhuanet.com/english/2007-12/18/content_7273873.htm

Chinese gov't backs 2 bln yuan venture capital fund in N economic zone


www.chinaview.cn 2007-12-24 14:54:14 Print

BEIJING, Dec. 24 (Xinhua) -- The China Development Bank (CDB) and the Tianjin Binhai New Area (TBNA) signed an agreement to set up a venture capital fund to boost high-technologies start-ups in the fastest-growing economic zone in north China.

The Ministry of Science and Technology (MOST) website, www.most.gov.cn, released Monday the joint efforts to kick off the first government-backed venture capital worth two billion yuan (270 million U.S. dollars) with equal contributions from the CDB and the TBNA.

The government venture capital corporation is organized within the prevailing corporate framework of Western countries, with a stakeholders' meeting, a board of directors and a supervisors committee, the website said. It also has an investment decision committee and a risk management committee which are expected to try to reach sound investment decisions and control business risks.

Pi Qiansheng, a vice-ministerial official who heads the TBNA administration, said the government funded and operated venture capital would primarily perform as fund of funds, an investment fund that uses an investment strategy of holding a portfolio of other investment funds rather than investing tangible projects.

Pi said that the fund of funds will choose both domestic and overseas outstanding venture capital funds, including private equity funds, to invest. Those selected venture capital funds in partnership will be asked to prioritize their investment portfolioin high-technologies start-ups based in the TBNA. The preferred business areas would be electronics, bio-engineering, new materials, new energy, environmental protection and automated manufacturing.

Pi said the venture capital corporation has a full strategy, including entry and exit plans, for future investment, the website said.

"Our ultimate goal is to push the most competitive start-ups in the area to get a public listing either in home or overseas stock exchanges," Pi said.

The TBNA, consisting of the major ports and tariff-free warehouse areas in Tianjin, has more than 6,300 companies, including over 70 joint ventures with the world's top 500 companies.

The CDB, a policy bank founded by the central government in 1994, is now active in providing venture capital funds in the most rapid growing cities in China. It provides funds for other venture capitals which are interested in investing in rising industries in Beijing, Shanghai, Suzhou, Wuhan and Xi'an.

The Chinese government encourages companies, both state-owned and private-owned, to become the primary forces of innovation. The government dishes out more and more funds of funds and seed funds, which are provided to help a business develop an idea, create the first product, and market the product for the first time.

The MOST is now organizing a nationwide survey on innovation capabilities and competitiveness of start-up businesses. The survey, according to MOST officials, is expected to help understand more precisely how much those fund-thirsty start-ups need.

http://news.xinhuanet.com/english/2007-12/24/content_7303992.htm

Ban targets processing trade items
By Jiang Wei (China Daily)
Updated: 2007-12-26 06:56


China will ban almost 600 additional items from the processing trade in a bid to curb exports of low value-added products and lift businesses up the industrial chain.

Exports of 589 items will be banned in order to stop processing firms from importing raw materials and re-exporting finished products duty-free, according to a new Prohibited List for Processing Trade released on Monday by the Ministry of Commerce and the General Administration of Customs.

Some steel, petrochemical, aluminum and mineral products are among the list which will take effect from January 21, bringing the total number of prohibited items to 1,729.

The new blacklist follows a similar one in April this year, which banned processing trade of fuel oil and heavy diesel as well as some metals.

Given most items in the new ban are primary goods, the move aims to curb exports with low added value and low-end technologies, the commerce ministry said in a statement.

The ministry said it anticipates the ban will spur processing enterprises to develop into sectors with higher technologies and add more value to their finished products.

The list shows that the government is highlighting the protection of resources, too, said Mei Xinyu, a researcher with the Chinese Academy of International Trade and Economic Cooperation, a think tank affiliated to the commerce ministry.

He described the new list as "environment-oriented", as it contains items made from endangered animals or plants.

Many also entail polluting and energy-intensive chemical and steel products.

China previously encouraged processing as part of its export-led growth policy. But it is now trying to limit export industries that are energy-intensive, heavily polluting, or likely to cause trade frictions with other countries.

Processing trade increased 18.7 percent year-on-year to $894.6 billion in the first 11 months, accounting for nearly half of the country's total imports and exports. It is also a major source of China's widening trade surplus.

http://www.chinadaily.com.cn/china/2007-12/26/content_6348019.htm

Middle class does not feel rich - poll
By Wang Zhuoqiong (China Daily)
Updated: 2007-12-26 07:04


China's middle class may be booming, but a majority of respondents to a recent survey said they do not feel so wealthy.

Only 12.7 percent of a poll conducted by China Youth Daily and Sina.com said they think they are living a middle-class life.

The poll, entitled "Who will become the middle class in 10 years?" found that about 83 percent of the 7,313 people interviewed think a typical middle class Chinese needs to have a good and steady income, a house and a car.
Nearly 70 percent think the middle class needs higher education and good manners. About 60 percent think a decent profession is a crucial feature that defines the middle class.

The survey follows a similar study released earlier this month by HSBC, Fudan University and MasterCard Worldwide.

That survey, which interviewed 1,736 people in Beijing, Shanghai and Guangzhou from February to May, researched spending patterns of the country's increasingly affluent middle class.

It found that the number of middle-class consumers in the country is expected to nearly triple to 100 million in the 10 years from 2006.

A Chinese middle class is defined by the survey as someone whose annual income ranges from $7,500 to $25,000 and who is between 20 to 49 years of age.

However, the latest survey found that only 2.2 percent of respondents agree with that definition.

Still, nearly half of the respondents think it is very likely they will join the middle class in 10 years.

More than 30 percent of those surveyed chose investment and finance as the best paths to becoming middle class.

Nearly 20 percent think a good collection of social networks and resources will make people richer and 15 percent believe in diligence at work.

The speed at which people join the middle class varies between professions.

The survey found Chinese think those in the science and technology and IT industries are the quickest to get rich, followed by those in the banking, finance and investment industries.

http://www.chinadaily.com.cn/china/2007-12/26/content_6348103.htm

Salary size set for white-collar jobs
By Xie Chuanjiao (China Daily)
Updated: 2007-11-05 07:15


So how much do you think someone has to make to be categorized a white-collar employee?

Depends on where he or she lives; and the difference can be substantial.

It could be as high as 18,500 yuan ($2,481) per month in Hong Kong or a mere 900 yuan ($120) in Lhasa, capital of the Tibet Autonomous Region, with about 5,000 yuan ($670) making the cut in Beijing.

The Chinese Academy of Social Sciences (CASS) released its findings over the weekend in the 2007 White-collar Workers Salary Standard in Major Chinese Cities - the first of its kind.

The benchmarks in some major cities at the upper end are: 8,900 yuan ($1,194) in Macao, 5,350 yuan ($717) in Shanghai, 5,280 yuan ($708) in Shenzhen of Guangdong Province, 4,980 yuan ($668) in Hangzhou of Zhejiang Province and 4,750 yuan ($637) in Guangzhou of Guangdong Province.

At the lower end are: 1,300 yuan ($174) in Nanning of the Guangxi Zhuang Autonomous Region, 1,100 yuan ($148) in Yinchuan of the Ningxia Hui Autonomous Region and Xining of Qinghai Province.

The report was based on a comprehensive calculation of many local factors including commodity prices, living expenses, transportation costs and urbanization level.

But for some people, the income levels are only an academic exercise.

"The 5,000-yuan standard is vastly different for people who have to pay monthly mortgages and for those who don't," said Liu Meiyu, a 28-year-old architect who works for Beijing Design and Research Institute and bought a two-bedroom apartment a few months ago with bank loans.

"A monthly salary of 10,000 yuan ($1,341) might be just right for a white-collar benchmark," she told China Daily.

Lhasa's low figure has also raised some doubts.

"The 900-yuan level is far too low as the cost of living is not low at all," said Lei Wenzheng, a local tourist guide.

A manager at a local department store can earn an average of 2,000 to 3,000 yuan ($402) a month, while public servants are paid higher there than those in eastern provinces as the central government provides extra subsidies, according to Lei.

Xia Xueluan, a professor in social sciences of Peking University, said income alone is not the determining factor.

"White-collar' or 'middle-class' means a combination of factors such as wealth, power and prestige, not simply income or property, Xia said.

http://www.chinadaily.com.cn/china/2007-11/05/content_6229638.htm

I'm back after a long vacation. :banana:

Here is an interview of a legendary investor Jim Rogers regarding China.

======================================================


Hog Wild For China

Legendary investor Jim Rogers made a bundle by anticipating a boom in commodities. Now he's focusing on the People's Republic.

By Brian O'Keefe of Fortune Magazine
December 24, 2007


(Fortune Magazine) -- This is the China century," says Jim Rogers, standing amid moving boxes in his opulent Manhattan townhouse. "It's time for them to rule the roost." In fact, the 65-year-old former investment partner of George Soros and globe-circling author of Investment Biker is such a believer in the capitalist momentum of the People's Republic that he recently agreed to sell his beloved home and relocate full-time to Singapore - not quite Shanghai, but close enough to the action. It's something he's been considering at least since 2004, when Fortune last wrote about his remarkable prescience in championing a China-driven, worldwide commodities boom. His new book, A Bull in China: Investing Profitably in the World's Greatest Market (Random House, $26.95), is a how-to guide for investors interested in following him to the Far East. Fortune interrupted his packing for a chat about China, commodities, and the teetering U.S. economy.

You invested in China some time ago. But the market is up 300% over the past three years - why should other investors jump in now?

In the book I specifically make the point two or three times that people need to be careful because there may be a bubble developing in China. Obviously if a bubble develops you don't want to buy anything. But you need to understand that there are gigantic opportunities in China and gigantic changes taking place there. So the book is designed to help people understand in simple language what's happening and where there may be opportunities for one who does his homework. It's not a catalog of hot tips. I'm not yet convinced that there is a bubble, by the way. The Chinese government is doing its best to prevent a bubble. They've raised interest rates five or six times in the past year. But even if a bubble develops and it pops, it's not the end of the Chinese story. China is still going to continue to develop.

Why has the Chinese stock market taken off?

The Chinese have done a very good job [with the economy] over the past 20 years. But the one mistake they've made is they have continued to block the currency and made it nonconvertible. That's causing huge liquidity to develop in the country, and that's causing trouble. It has really intensified in the past two or three years. They've got all this money sloshing around that's been flowing into China and can't get out. It's going into the mainland stock market and driving up prices. It's going into commodities. And it's going into real estate.

How are you investing in China now? Are you buying shares of companies? Indexes? Real estate?

I own the currency. I own commodities. I do not own real estate. I have not bought any indexes. Rightly or wrongly, I think I can pick shares better than the index. All the studies show that most people can't do that. I haven't bought any new shares lately, but if I did, I would buy them in Hong Kong or Singapore or London or New York, because they're cheaper than on the mainland.

Three years ago you were saying that one good way to invest in oil would be to buy sugar, because the high price of oil had driven up demand for ethanol in Brazil. Sugar went up but has pulled back. Where are the best opportunities in commodities right now?

Sugar doubled from there, but then it corrected. I would say the same thing again now: If you want to buy oil, you should buy sugar. Cotton is also a good way to buy oil - hear me out. Much apparel has been made from synthetics. Synthetics come from oil. So many textile makers are converting back to natural fibers because oil is at an all-time high. So if you want to buy oil, buy sugar or buy cotton. What I'm buying right now is agriculture. I'm bullish on all commodities, though. I wouldn't buy oil at $95, but I'm sure I said that at $55. I have never sold a drop of oil. And I don't intend to until 2020 or something.

So you're convinced that commodities still have a long way to go?

Absolutely. There will be corrections, of course. Nickel is correcting right now. But the commodities bull market still has years to go. I just don't see anything on the horizon that can stop it. An economic collapse could. But if that happens, everything else is going to be a much, much worse investment. Even in the Great Depression, commodities went down less and stayed down for a shorter amount of time than stocks, because the shortages were in commodities. In 2001, after 9/11, commodities went down less and stayed down a shorter period of time, because that's where the imbalances in the world are right now. There are guys in the garage on their computers starting companies right now that the bankers are going to bring public next month. You can't go in the garage and start a zinc mine or a lead mine. It takes ten years to bring a new mine online, on average. So that's why the commodities bull market is not over.

You mention the possibility that we might go into a depression. What is your assessment of the U.S. economy right now?

In my view, the U.S. economy is in recession. I know the government says we're not. But as I look around, we know that automobiles are in worse than recession. The same thing is true for homebuilders. Much of the financial sector is in worse than recession. So many parts of America are in worse than recession, and yet the government says we're not in a recession. I don't know what's so strong that it's offsetting these major weaknesses in the American economy. I just assume that the government is lying.

A few months ago you said if Fed Chairman Ben Bernanke cut interest rates in response to the credit crunch, it would be "pure madness" and "a disaster." He did. What do you think now?

We have terrible inflation in America, not according to the government but according to people who buy things. We have the dollar under terrible duress. What I said was, If they cut interest rates it's going to be a signal to the rest of the world that we don't care about the dollar, that we want the dollar to go down. That is what has happened. The rest of the world has read the signal very clearly. Inflation, of course, is going up. Commodities prices go higher in this kind of scenario. I think it's a terrible mistake. It may be good for Wall Street. It may bail a few people out. But it's not good for America. I will tell you that I was terrified recently when I saw Bernanke testifying before Congress, and he said that if an American buys only American products in American currency he is not affected by the decline in the U.S. dollar. I couldn't believe the man said that! I was looking at him to see - Is he lying? Is he just using government propaganda? Or does the man just not know? He's supposed to be an economist, and he doesn't know how the economy works! Let's say you only buy American tires. Well, if the price of foreign tires goes up because the dollar goes down, the price of American tires is going to go up too. American companies are going to raise the prices if the competition goes higher. And if the dollar goes down, the price of the rubber in the tires is going to go higher. The price of oil, wheat, copper, everything is going to go higher if the dollar goes down. So it's another signal to get out of the dollar.

You've been betting against U.S. commercial and investment banks for some time. Are you still shorting their stocks? Are you making other moves?

I am still short Citigroup. I'm still short Fannie Mae. I'm still short homebuilders. And I just increased my short positions on the investment banks last week, because that's where the excesses have been in the U.S. economy. There have not been excesses in sugar farming in the past 30 years. There have not been excesses in silver mining. The excesses have been on Wall Street. That's why I'm shorting Wall Street. You see 29-year-old kids making $10 million or $20 million a year and thinking, "This is the way the world is. This is normal." Well, I don't think it's normal.

Why move to Singapore and not Shanghai or Beijing?

Well, we would like to move to China, but the air is so terrible, the pollution is so bad, that we can't bring ourselves to do it. Everything works in Singapore. It's an astonishing place. It's got the best education system in the world. It's got the best health care in the world. And it's Chinese-speaking. Our 4-year-old daughter, Happy, goes to a school where they only speak Chinese. One of our motivations was that she continue to speak Chinese. It may not be as exciting as Shanghai or New York, but it's exciting enough for me.

You mention the terrible pollution in China. Do environmental and political issues give you pause as you call this the Chinese century?

First of all, the environmental problems are a huge opportunity. Somebody's going to make a fortune on that. I talk about that in the book and mention some of the companies that will be trying to address the problems. Can they solve their problems? There are going to be horrible setbacks along the way. There certainly were in America as we grew and boomed. In 1907 our whole system collapsed and went bankrupt. Turns out that was a good time to buy. That's going to happen in China too. They will probably have political setbacks, environmental setbacks. I don't know when they're going to be, but take advantage of them.

You've long been known for spotting exotic investment opportunities in your travels. Have you come across anything exciting off the beaten path recently?
I've sold out of all emerging markets except China because there are so many people right now trying to exploit emerging markets. There are 30,000 MBAs flying around the world looking to invest in them. Some of my investments I owned for 20 years. But I'm not looking for new opportunities, I'm getting out - places like Botswana, Ivory Coast, and Ghana. Botswana I hated to sell. Peru has been hot as a firecracker for a while. Uruguay I sold. All of it. But I'm keeping my money in China.

Source (http://money.cnn.com/magazines/fortune/fortune_archive/2007/12/24/101935724/index.htm)

===============

^^
See. This guy thinks that environmental problem in China can be a huge investment or opportunity. I wonder what companies will be pick to tackle this problem?

This is a video of CNN International Edition regarding China spending money overseas. That includes a probable full aquisition of Rio Tinto for $150 billion US dollars next year.

http://www.cnn.com/video/#/video/world/2007/12/20/stevens.china.big.spender.cnn

Industrial profits climb 37% in first 11 months
(Xinhua)
Updated: 2007-12-27 14:17


Chinese industrial firms saw net profits soar 36.7 percent year-on-year in the first 11 months of 2007, driven by the nation's double-digit economic growth and strong consumer spending.

Combined profits at the industrial companies with annual sales of at least five million yuan reached 2.295 trillion yuan (US$314 billion) in the January-November period, the National Bureau of Statistics said on Thursday.

Total sales of the companies rose 27.6 percent to 35.452 trillion yuan (US$4.85 trillion).

The State-owned companies earned 966.2 billion yuan in profits during the period, up 29.6 percent from the previous year.

Profits at overseas-funded firms, including those invested by Hong Kong, Macao and Taiwan business people, jumped 34.3 percent to 612.6 billion yuan. Private businesses profit surged 50.9 percent to 400 billion yuan.

Transport vehicle manufacturing sector profits climbed 68.7 percent, and those with the steel, construction materials and power generation were up 47.2 percent, 63.1 percent and 39 percent, respectively.

The petroleum processing and coking industry earned 23 billion yuan in profits during the period, compared with 41.7 billion yuan in losses during the same period last year.

http://www.chinadaily.com.cn/bizchina/2007-12/27/content_6353075.htm

Industrial profits climb 37% in first 11 months
(Xinhua)
Updated: 2007-12-27 14:17

Total sales of the companies rose 27.6 percent to 35.452 trillion yuan (US$4.85 trillion).

http://www.chinadaily.com.cn/bizchina/2007-12/27/content_6353075.htm

So the total sales is greater than the Chinese economy?
How is it breakdown? Foreign and Chinese companies and actual sales or future sales that need to be fulfilled in the future?
Interesting news..

^^
It seems like they made a mistake with the calculation again. Probably, right amount should have been 3.5452 billion Yuan ($484 billion US dollars). They always made a mistake. Last time, they did the same thing with the total tax income. They put $60 million on their website. The right amount should have been $600 billion dollars. :ohno: They need a better translator.

Export duties raised to save resources
By Xin Zhiming (China Daily)
Updated: 2007-12-28 10:22


The government will adjust the import and export duties on some products from January 1 to save domestic resources and ensure better trade balance.


Import duties on alumina, refined copper and coal will be removed, and the export taxes on some steel products, coking coal and coke will be raised, the Ministry of Finance said on Wednesday.

The import duty on alumina is currently three percent, and the import tax on refined copper, two percent. Taxes on coal products range from three to six percent.

Also, the government will cut import tariff on gasoline, diesel and jet kerosene from two to one percent, a statement on the ministry's website said. The tariff on the two products was reduced from between five and six percent to two percent on November 1, 2006.


In addition, the three percent import tax on anthracite and coking coal will be lifted.


The export tax on semi-finished steel products will be raised to 25 percent, and that on some stainless steel, welded pipes and other steel products to 15 percent.


The export tariff on crude oil, however, will remain at five percent, the ministry said.


But analysts said the move might not have much impact on the country's surplus growth.


Mei Xinyu, a researcher with the Chinese Academy of International Trade and Economic Cooperation, affiliated to the Ministry of Commerce, said: "The move won't have a significant impact on China's trade surplus growth."


The country's trade surplus is expected to increase to more than $250 billion for the whole of this year.


And it could touch $300 billion next year, although its yearly growth will slow down significantly, analysts have said.


"The adjustment is basically aimed to facilitate the country's drive to save energy and resources," Zhang Peisen, a senior researcher with the taxation research institute, under the State Administration of Taxation, said.


China's exports include huge quantities of high energy-consuming products, which also pose a serious challenge to the country's environment, the analysts said.


"We should not export refined and finished products while increasing the pollution at home to make them," Mei said.


"The adjustment (to reduce trade surplus) should not be one-sided."


China Galaxy Securities chief economist Zuo Xiaolei said it is necessary for the country to adjust the duties and taxes because "many resources are not renewable and unlimited export will endanger China's economic sustainability".

http://www.chinadaily.com.cn/bizchina/2007-12/28/content_6355626.htm

Futures market turnover records 40 trillion yuan
(Xinhua)
Updated: 2007-12-29 17:43


Chinese futures market witnessed breakneck growth in 2007, with total turnover surpassing gross domestic product (GDP) for the first time.

The combined turnover of China's three domestic futures exchanges hit 40.974 trillion yuan (US$5.612 trillion) in 2007, up 95 percent over 2006, according to the northeastern Dalian Commodity Exchange.

The aggregate trading volume of the three exchanges -- Dalian Commodity Exchange, Shanghai Futures Exchange and Zhengzhou Commodity Exchange -- was 728.46 million contracts, up 62 percent over the previous year.

More than half of the transactions were completed on the Dalian exchange, while the turnover of the Shanghai exchange reached 23 trillion yuan, making up over 50 percent of the total.

Ma Wensheng, president of China International Futures Co Ltd, said the industry's rapid development should be attributed to China's economic performance and better market regulation.

In 2007, there were four new contracts: Shanghai-traded zinc, Zhengzhou-traded rapeseed oil, and Dalian-listed polyethylene and palm oil.

Industry sources said that Spring 2008 might be a landmark season for the futures market, as gold is expected to be listed in Shanghai and the long-awaited stock index futures may be rolled out.

http://www.chinadaily.com.cn/bizchina/2007-12/29/content_6359795.htm

More fiscal revenue goes to social undertakings
(Xinhua)
Updated: 2007-12-29 21:42


BEIJING -- Strong economic growth means that fiscal revenues for 2007 will far exceed forecasts made at the beginning of the year, according to a report by the State Council to the top legislature here on Saturday .

The extra money will be used to improve people's livelihood with education, health care, social security on top of the government work agenda, the report said.

Central government fiscal revenue is expected to total 2.84 trillion yuan (about 389.5 billion U.S. dollars), or 401.1 billion yuan above the budget forecast.

In the first 11 months, central government fiscal revenue was 2.68 trillion yuan, up 37 percent over the same period last year, statistics from the Ministry of Finance showed.

Local governments will get a windfall too, with their extra fiscal revenue expected to reach 300 billion yuan, the report said.

"The huge extra fiscal revenue reflects China's stable, rapid economic growth," the report said.

By the end of the third quarter, most major economic indicators had already outstripped 2007 targets: industrial output, total fixed asset investment, retail sales, realized company profits and foreign trade.

Tax revenues derived from those activities also expanded rapidly in the first nine months. Value-added tax, import tax and individual income tax collections rose 9.9, 10.8 and 12.9 percentage points, respectively.

Corporate income tax, business tax and deed tax collections were up 39.2 percent, 29.7 percent and 38.4 percent year-on-year, respectively. Those gains were 24.2 percentage points, 16.7 percentage points and 28.9 percentage points above target, respectively.

According to the State Council, the extra fiscal revenue will be used to improve people's livelihood with education, health care, social security to top the agenda.

The central government will use 40 billion yuan to subsidize farmers to raise fine breeds of livestock and plant improved variety of crops, and to renovate agriculture infrastructure such as roads, bridges and reservoirs, the report said.

The central government will give 21 billion yuan to subsidize the compulsory education, 40 billion yuan to social security, 31.8 billion yuan to medical care, 29 billion yuan to scientific and technological development and 1.1 billion yuan for cultural causes, the report said.

The central government will use the extra revenue to offset fiscal deficit by 45 billion yuan and keep the deficit of this year at 200 billion yuan.

The State Council required the local governments to focus the use of their 300 billion extra revenue on improving people's livelihood too.


http://www.chinadaily.com.cn/china/2007-12/29/content_6359943.htm

China auto maker to develop hydrous ethanol engines

Dongfeng Motor Corporation, one of China's largest auto makers, has completed its initial research of using hydrous ethanol in automobiles.

The new technology could produce combustible gas, mainly hydrogen, from hydrous ethanol that contained 65 percent ethanol. The present ethanol-fueled vehicles needed pure ethanol blended with gas, the China Association of Automobile Manufacturers said.

Experts said producing 65 percent ethanol could save up to 60 percent of energy compared with producing the same amount of pure ethanol, as dehydration was energy-consuming.

The use of hydrous ethanol, unlike some synthetic fuels that required adapted engines, only needed an additional device to be fixed on present engines. Thus, it was more likely to be accepted by consumers.

The company planned to set up an ethanol-fueled car production plant by the end of 2008. This included a design and test center, as well as an assembly plant for ethanol engines.

The plant was expected to produce a small amount of ethanol cars by year-end.


http://chinadaily.com.cn/bizchina/2008-01/01/content_6362904.htm

China auto maker to develop hydrous ethanol engines

Dongfeng Motor Corporation, one of China's largest auto makers, has completed its initial research of using hydrous ethanol in automobiles.

The new technology could produce combustible gas, mainly hydrogen, from hydrous ethanol that contained 65 percent ethanol. The present ethanol-fueled vehicles needed pure ethanol blended with gas, the China Association of Automobile Manufacturers said.

Experts said producing 65 percent ethanol could save up to 60 percent of energy compared with producing the same amount of pure ethanol, as dehydration was energy-consuming.

The use of hydrous ethanol, unlike some synthetic fuels that required adapted engines, only needed an additional device to be fixed on present engines. Thus, it was more likely to be accepted by consumers.

The company planned to set up an ethanol-fueled car production plant by the end of 2008. This included a design and test center, as well as an assembly plant for ethanol engines.

The plant was expected to produce a small amount of ethanol cars by year-end.


http://chinadaily.com.cn/bizchina/2008-01/01/content_6362904.htm


This has nothing to do with economy, does it ?

China to readjust export tariffs in 2008

01-01-2008 15:31
2008 will see China stepping up efforts to fulfill promises made when it signed up as a full-fledged member of the World Trade Organization six years ago. The Ministry of Finance is announcing big changes to duties for certain categories of imports and exports, in order to curb expansions in high-energy-consuming and polluting sectors.


China will further adjust export and import duties starting January the first, 2008. This will focus on several categories, the most-favored-nation rate of duty, the annual interim duty rate, as well as conventional and preferential tariffs. China has adjusted import and export duties at the start of each year for the past decade.

Following adjustment, the average tariff level for China in 2008 will stand at 9.8 percent, with farm produce hitting 15.2 percent, and industrial products reaching 8.9 percent. The list of items that will be subject to import and export taxes will also be increased to 7,758.

In the agricultural sector, China will continue to fulfill its commitment to the World Trade Organization. It will further cut import tariffs on 45 commodities such as fresh strawberries. It will also continue to manage tariff quotas for 7 agricultural products, including wheat and cotton.

In the meantime, China will further restrict the export of products from polluting industries with high energy consumption. Export taxes on wood pulp, coke, alloy steel, steel billets, and some finished steel products will go up from 15 to 25 percent. While import tariffs for gasoline, diesel and jet kerosene will be slashed from 2 to 1 percent. The government says tariff adjustments should help ensure domestic supplies and could also lead to better protection of the environment.

In the meantime, 39 developing countries in Africa, the Middle East, and Southeast Asia will continue to enjoy existing special preferential tariffs on their exports into China.

http://www.cctv.com/program/bizchina/20080101/101363.shtml

http://economictimes.indiatimes.com/News/International__Business/China_2007_tax_revenues_up_almost_one_third/articleshow/2666356.cms

BEIJING: China's tax revenue last year rose 31.4 per cent compared with the previous year to 4.94 trillion yuan ($676.4 billion), the State Administration of Taxation said on Tuesday.

That figure does not include revenue from customs duties, tax on contracts or arable land use taxes, it said in a brief statement on its Web site. It gave no further details.

The country's new corporate income tax law goes into effect on Jan 1, setting a unified rate of 25 per cent and ending decades of preferential rates for many foreign companies.

That measure is expected to hit tax revenue in the first years of its implementation, since domestic firms will pay less tax from that date, while foreign firms will see their lower rates phased out over time.

http://economictimes.indiatimes.com/News/International__Business/China_2007_tax_revenues_up_almost_one_third/articleshow/2666356.cms

http://www.chinadaily.com.cn/china/2008-01/01/content_6362943.htm

Shanghai nets revenue of $28b
By Wang Zhenghua (China Daily)
Updated: 2008-01-02 10:41


The Shanghai municipal government's income rose to more than 210 billion yuan ($28.7 billion) last year, up 31 percent on 2006, official figures for the city have shown.

The municipal taxation department reported yesterday that the financial hub generated 210.3 billion yuan - twice the figure for 2004 - on the back of a robust economy.

The increase is the second-fastest spike in government income recorded in the past decade and has helped Shanghai achieve the financial goal it set earlier last year, municipal officials said.

The tax department said the city generated a total of 731 billion yuan, up more than 52 percent on 2006, including both State and local taxes.

About 525 billion yuan was collected by the taxation bureau, providing strong financial support for the city and the nation's economic and social development, officials said.

Income tax paid by companies and individuals rose by 53 percent and 29 percent, respectively, while sales tax paid by business owners increased 28 percent year on year.

The bureau said the city's increased tax income reflected companies' greater levels of competitiveness and an improving income distribution system.

The city also attracted record contracted foreign investment of $14.86 billion, a year-on-year increase of more than 2 percent, while its international cargo trade grew 23 percent to $280 billion.

Newly approved investment in overseas areas was $630 million, up 19 percent.

It estimated $7.9 billion in real foreign investment was realized, up 11 percent on 2006. About $2.3 billion was pumped into the modern services industry, up 50 percent.

http://www.chinadaily.com.cn/bizchina/2008-01/02/content_6364650.htm

The Economist has published a very insightful article on China today:


An old Chinese myth
Jan 3rd 2008
From The Economist print edition

Contrary to popular wisdom, China's rapid growth is not hugely dependent on exports

MOST people suppose that China's economic success depends on exporting cheap goods to the rich world. If so, its growth would be seriously dented by a stuttering American economy. Headline figures show that China's exports surged from 20% of GDP in 2001 to almost 40% in 2007, which seems to suggest not only that exports are the main driver of growth, but also that China's economy would be hit much harder by an American downturn than it was during the previous recession in 2001. If exports are measured correctly, however, they account for a surprisingly modest share of China's economic growth.

The headline ratio of exports to GDP is very misleading. It compares apples and oranges: exports are measured as gross revenue while GDP is measured in value-added terms. Jonathan Anderson, an economist at UBS, a bank, has tried to estimate exports in value-added terms by stripping out imported components, and then converting the remaining domestic content into value-added terms by subtracting inputs purchased from other domestic sectors. At first glance, that second step seems odd: surely the materials which exporters buy from the rest of the economy should be included in any assessment of the importance of exports? But if purchases of domestic inputs were left in for exporters, the same thing would need to be done for all other sectors. That would make the denominator for the export ratio much bigger than GDP.

Once these adjustments are made, Mr Anderson reckons that the "true" export share is just under 10% of GDP. That makes China slightly more exposed to exports than Japan, but nowhere near as export-led as Taiwan or Singapore (which on January 2nd reported an unexpected contraction in GDP in the fourth quarter of 2007, thanks in part to weakness in export markets). Indeed, China's economic performance during the global IT slump in 2001 showed that a collapse in exports is not the end of the world. The annual rate of growth in its exports fell by a massive 35 percentage points from peak to trough during 2000-01, yet China's overall GDP growth slowed by less than one percentage point. Employment figures also confirm that exports' share of the economy is relatively small. Surveys suggest that one-third of manufacturing workers are in export-oriented sectors, which is equivalent to only 6% of the total workforce.

Even if the true export share of GDP is smaller than generally believed, surely the dramatic increase in China's exports implies that they are contributing a rising share of GDP growth? Mr Anderson's work again counsels caution. Although the headline exports-to-GDP ratio has almost doubled since 2000, the value-added share of exports in GDP has been surprisingly stable over the same period (see left-hand chart). This is explained by China's shift from exports with a high domestic content, such as toys, to new export sectors that use more imported components. Electronic products accounted for 42% of total manufactured exports in 2006, for example, up from 18% in 1995. But the domestic content of electronics is only a third to a half that of traditional light-manufacturing sectors. So in value-added terms exports have risen by far less than gross export revenues have.


http://www.economist.com/images/20080105/CFN913.gif


Many of China's foreign critics remain sceptical. They argue that China's massive current-account surplus (estimated at 11% of GDP in 2007) proves that it produces far more than it consumes and relies on foreign demand to buy the excess. In the six years to 2004, net exports (ie, exports minus imports) accounted for only 5% of China's GDP growth; 95% came from domestic demand. But since 2005, net exports have contributed more than 20% of growth (see right-hand chart).

This is due not to faster export growth, however, but to a sharp slowdown in imports. And even if the contribution from net exports fell to zero, China's GDP growth would still be close to 9% thanks to strong domestic demand. The boost from net exports is in any case unlikely to vanish, even if America does sink into recession, because exports to other emerging economies, where demand is more robust, are bigger than those to America. According to Standard Chartered Bank, Asia and the Middle East accounted for more than 40% of China's export growth in the first ten months of 2007, North America for less than 10%.

Multiplier effects

China's economy is driven not by exports but by investment, which accounts for over 40% of GDP. This raises an additional concern: that weaker exports could lead to a sharp drop in investment because exporters would need to add less capacity. But Arthur Kroeber at Dragonomics, a Beijing-based research firm, argues that investment is not as closely tied to exports as is often assumed: over half of all investment is in infrastructure and property. Mr Kroeber estimates that only 7% of total investment is directly linked to export production. Adding in the capital spending of local firms that produce inputs sold to exporters, he reckons that a still-modest 14% of investment is dependent on exports. Total investment is unlikely to collapse while investment in infrastructure and residential construction remains firm.

An American downturn will cause China's economy to slow. But the likely impact is hugely exaggerated by the headline figures of exports as a share of GDP. Dragonomics forecasts that in 2008 the contribution of net exports to China's growth will shrink by half. If the impact on investment is also included, GDP growth will slow to about 10% from 11.5% in 2007. This is hardly catastrophic. Indeed, given Beijing's worries about the economy overheating, it would be welcome.

The American government frequently accuses China of relying excessively on exports. But David Carbon, an economist at DBS, a Singaporean bank, suggests that America is starting to look like the pot that called the kettle black. In the year to September, net exports accounted for more than 30% of America's total GDP growth in 2007. Another popular belief looks ripe for reappraisal: it seems that domestic demand is a bigger driver of China's growth than it is of America's.


Source: http://www.economist.com/displayStory.cfm?story_id=10429271



Unfortunately though, the article seems to confirm that consumption remains a major weak point...

http://www.economist.com/images/20080105/CFN913.gif
^^

Great article, but the share of consumption in GDP growth looks still modest. This chart is very interesting too:

http://www.economist.com/images/20061021/CSF420.gif

I'd like to check the share of consumption in GDP growth for industrialized countries, that should be the target.

Unfortunately though, the article seems to confirm that consumption remains a major weak point...

This is basically because in China property consumption is not included in the domestic consumption calculation while the individual property consumption is about 26% of domestic consumption that we can see!

If we add property consumption into the whole domestic consumption of China,the share of domestic consumption in China's GDP will up to approximately 50%!

nice article. It reveals two long time wrong perception on China's economy:

1. China's export is just toys, clothes etc.

Acually about 2 years ago, machinery has made up to 59% of total chinese export values.

2. Chinese economy is export driven.
As a matter of fact investment and consumption have been the driving force of the Chinese GDP growth.

nice article. It reveals two long time wrong perception on China's economy:

1. China's export is just toys, clothes etc.

Acually about 2 years ago, machinery has made up to 59% of total chinese export values.

2. Chinese economy is export driven.
As a matter of fact investment and consumption have been the driving force of the Chinese GDP growth.

The article also mentioned that China import less so China net-export is becoming better. China is importing fewer component from Europe, Japan and USA for PC, telephone, machinery since China can build most of those component in China..
China seem to import mostly raw material and fuel from abroad.

from FT.com

Not surprisingly, in the last part, the author believes Chinese people are mostly under tough oppression:lol:. An interesting one to read though.


by Victor Mallet, January 04, 2008

As 2008 draws near, very few educated people can still be unaware of the rising economic and strategic power of Asia.

Consider 2007. The year began with China firing a ballistic missile to destroy a weather satellite in orbit, a successful test of space warfare that sent shockwaves through the US. In November, PetroChina overtook Exxon Mobil as the world's top company by market value. This time the tremors were felt on Wall Street.

In the months between, Chinese and Indian corporations went on a shopping spree for international assets, from Australian mines and a Scotch whisky producer to British and African banks. Mark Renton, Citigroup's head of investment banking for Asia Pacific, told the Financial Times: "There is a fundamental shift occurring in the world's centre of gravity."

The impact of Asia's rapid economic ascent has been felt first in business and finance. China now has more than 100 billionaires in dollars, second only to the US. It is not only the world's largest oil company that is Chinese; the same is true of the biggest bank, airline, insurer and telecoms company.

Yet Asia's impending return to the global economic dominance it enjoyed before the industrial revolution is not merely a matter of finance. Beijing has quickly expanded its political and cultural influence in Latin America, Africa, the Middle East and central Asia.

Not all of this influence is beneficial. By their very success, China and India, each with more than 1bn inhabitants and a thirst for resources, threaten the planet's environment. China is about to become - or has already become - the world's biggest emitter of the carbon dioxide gas that contributes to global warming. This year alone, China has built 90,000MW of new electricity-generating capacity, more than the entire capacity of the UK grid.

Such awe-inspiring statistics make it tempting to see 2008 - the year of China's "coming-out party", the Beijing Olympics - as a turning-point in world affairs. "We are now entering one of the most plastic moments of world history," writes Kishore Mahbubani in his forthcoming book, The New Asian Hemisphere: the Irresistible Shift of Global Power to the East (Public Affairs).

History, pace Francis Fukuyama, is not at an end, but moving faster than ever. Changes in the relative power of nations and continents are accelerating because of leverage provided by new technologies and previously unimaginable rates of economic growth and flows of capital.

But is the rise of Asia unstoppable? And should the rest of the world be sad or glad about it, given the lack of democracy in China, Asia's greatest power?

The first question is quickly answered with a Yes: Asia's rise will continue. Of course there can be no "decoupling" of Asia from the world economy - the region's success is built on foreign trade and investment - and exporters would suffer from a US recession in 2008. But Asian economies are now sufficiently robust to sustain themselves through a slowdown in global demand.

The answer to the second question, on optimism and pessimism, is only slightly more complicated. It is true a few misguided US and European politicians see Asia's rise as part of a zero-sum competition in which China is stealing western jobs. But others recognise the contribution that Asia makes to global well-being through increased trade and lower prices for consumer goods.

Asians and westerners alike should also applaud the stabilising effects of Asia's new prosperity. Instability and danger in Asia are found in precisely those places where development has failed to take hold: North Korea, Burma, Afghanistan, rural Pakistan and the parts of India overrun by Maoist rebels. Although the killing on Thursday of Benazir Bhutto, the Pakistani opposition leader, shows how unstable these places are, there is no reason why even they should not eventually share in Asia's success.

As for politics, westerners harbour overblown fears - and Asian dictators have overblown hopes - that the Chinese Communist party will guide China to its inevitable place as the world's largest economy while keeping freedom and democracy at bay.

This ignores the quiet revolution, the gradual de facto liberalisation of the world's most populous nation, that is happening right now under the noses of Hu Jintao, Wen Jiabao and the rest of the Chinese leadership. "The Chinese people have never been freer," writes Mr Mahbubani, a former Singapore diplomat.

Many Chinese, it is true, are woefully ignorant about events in their own country and abroad because of a highly effective system of state censorship that deadens all media, including the internet and text messages on mobile phones. But as Chinese citizens become richer and more closely connected to the global economy, they travel, they meet people and they talk.

They also demonstrate. Previous protests, with the exception of the student-led Tiananmen Square demonstrations of 1989, mostly involved migrant factory workers complaining about unpaid wages or peasant farmers enraged by the corruption of local officials. Nowadays, urban Chinese stage protests too, defending the value of their property and protecting their health, most recently in Xiamen and Shanghai where they rejected plans respectively for a chemical plant and a high-speed rail link. It is hard to get more middle-class than that.

Asian leaders, successful as they are at managing economies, often have a blind spot about this kind of political and social modernisation.

BOC: China's economic growth to slow down in 2008
(Xinhua)
Updated: 2008-01-10 21:31


BEIJING -- China's economic growth is estimated to be 10.5 percent in 2008, slightly lower than in 2007, a report released by Bank of China said on Thursday.

Inflation pressures would still exist in 2008, but would gradually flatten over the year, said the report

The annual consumer price index would stay somewhere between 4.5 percent, down from the figure in 2007, which is estimated at 4.7 percent.
Imports and exports would continue to grow rapidly, but the fast pace in exports would slow. With a stable rise in imports, the growth in trade surplus would gradually narrow.

The Chinese yuan was expected to appreciate faster against the US dollar in the first half of the year compared with the latter half, the report said.

It warned the appreciation would have more negative impacts on the profits of export-oriented companies, and suggested the government should be careful with exchange rate policies to avoid a cooling effect on the domestic economy of a possible decline in exports.

The growth of bank loans would be controlled by the newly adopted tightening monetary policy, and absorbing excess liquidity would still top the government agenda with regards to monetary policy.

http://www.chinadaily.com.cn/china/2008-01/10/content_6385505.htm

China '07 Trade Surplus Surges to Record

http://ap.google.com/article/ALeqM5go_fvEZzwRs0sWLADbucTzdCsS8QD8U3GLA80

By JOE McDONALD – 1 hour ago

BEIJING (AP) — China's trade surplus soared nearly 50 percent in 2007 to a record, despite safety worries about Chinese products and a slowdown in export growth late in the year, according to government data released Friday.

The sharp rise could add to pressure on Beijing to act on currency controls and import barriers, possibly giving ammunition to U.S. lawmakers who are calling for trade sanctions.

The country's annual trade surplus ballooned to $262.2 billion, up 47.7 percent from 2006, the General Administration of Customs said.

That was below the $300 billion figure forecast by some economists but reflected strong demand for low-cost Chinese exports at a time of concern about the safety of products, ranging from toothpaste and seafood to tires and toys.

China's politically-sensitive trade surplus with the United States rose 19 percent to $163.3 billion, according to customs data.

The United States reported a $232.5 billion trade deficit with China in 2006 and last year's gap is on track to pass that. That figure is higher because the two governments count and compile trade data differently.

The 2007 trade gap with the European Union rose faster, expanding by 46 percent to $134.3 billion, according to Chinese customs data.

The United States and other trading partners are pressing Beijing to ease controls that they say keep its currency, the yuan, undervalued and give Chinese exporters an unfair price advantage, adding to China's trade gap.

Beijing has allowed the yuan to rise gradually against the dollar but some American lawmakers are pushing for punitive tariffs on imported Chinese goods unless it takes quicker action.

The communist government says it is not intentionally pursuing a large trade surplus, and the flood of cash pouring into the economy from export revenues is straining the central bank's ability to control pressure for prices to rise.

December's monthly surplus was $22.7 billion, the customs agency reported on its Web site. That was up 9.5 percent from the same month of 2006 but well below October's record monthly high of $27 billion.

"The country's soaring trade surplus eased a bit in the fourth quarter last year, with imports catching up and exports slowing down," said a customs agency statement quoted by the official Xinhua News Agency.

In 2007, exports rose 25.7 percent to $1.2 trillion, while imports rose 20.8 percent to $955.8 billion dollars, the agency said. It gave no monthly breakdown.

China forex reserves at 1.53 trln usd at end of 2007

BEIJING (XFN-ASIA) - China's foreign exchange reserves reached 1.53 trln usd at the end of last year, the central bank said.

That was up 43.3 pct from the 1.0663 trln usd recorded at the end of 2006.

In a statement on its website, the People's Bank (nasdaq: PBCT - news - people ) of China said that the nation's foreign exchange reserves rose 31.3 bln usd in December alone.

Speculative capital inflows may have been a significant contributor to the growth of China's foreign exchange reserves during 2007 as US interest rates fell, Chinese asset prices rose and the pace of yuan appreciation tempted investors worldwide.

The data also suggest that the China Investment Corporation, the country's new sovereign wealth fund, has not yet received the bulk of its 200 bln usd start-up capital from the central bank.

Foreign exchange reserves in the fourth quarter grew by 94.6 bln usd, the slowest growth in headline reserves this year, down from 101.0 bln usd in the third quarter, 130.6 bln usd in the second and 135.7 bln usd in the first.

This brought total foreign exchange reserve growth in 2007 to 461.9 bln usd, up strongly from 247.5 bln usd in 2006.

Total Chinese foreign exchange reserves were 1.528 trln usd at the end of 2007, securing its position as the biggest holder globally.

Foreign exchange reserves in the fourth quarter were 'supposed' to be around 115 bln usd, including 76 bln usd in trade surpluses, around 22 bln usd in foreign direct investment, and around 16-18 bln usd in interest income on existing foreign exchange reserves.

The headline number had been expected to have been around 130 bln usd lower than trade surpluses estimates, FDI, and interest income, as a result of transfers of foreign exchange reserves to the CIC, in exchange for 950 bln yuan in special MOF bonds.

Based on the steady growth in reserves, it is likely that these transfers have either not occurred yet or were phased in evenly throughout the last three months of the year.

Based on the spreadsheets attached to the PBOC data release, October foreign exchange reserves grew 21.3 bln usd in October, 42.0 bln usd in November, and 31.3 bln usd in December.

Lou Jiwei, the head of the CIC and former vice-finance minister, has said on more than one occasion since the fund's launch in September that the foreign exchange reserves have been received from the PBOC.

Also, an unspecified proportion of the three reserve hikes in the fourth quarter totaling 200 basis points were supposedly met with foreign exchange, according to media reports last month.

The measures would require banks to hold onto dollars acquired from exporters for longer periods of time, in order to deposit them with the central bank to meet higher reserve requirements.

In the event that a bank lacks sufficient quantities of foreign exchange to meet the higher reserve requirement, the central bank has apparently offered to sell some banks the foreign exchange from the PBOC's ample reserves.

The net effect of these measures is that fewer dollars are sold to the central bank in the spot market, reducing market-based pressure on the yuan to appreciate.

In addition, commercial banks are now assuming the foreign currency risk of dollars depreciating against the yuan, rather than the central bank.

The dollars placed at the central bank are not deposits, but reflect an increase in commercial banks' net foreign currency positions. As a result, central bank foreign exchange reserves should not rise as quickly.

However, each bank has reportedly received these instructions independently, so the extent to which these measures apply throughout the banking system also remains unclear.

Previous assumptions that around 80 pct of the reserve hikes in the fourth quarter required dollar payments, which would translate into around a 80 bln usd reduction in headline reserves if all 200 basis points of the fourth quarter reserve hikes required dollar settlement.

Hot money may also be pushing up foreign exchange reserve figures again, as analyses of the data have indicated that hot money flows have not been particularly volatile over the past two years.

With Chinese interest rates now higher than those in the United States, and faster rates of yuan appreciation widely expected in the market, it seems logical that hot money inflows into China may be accelerating.

However, measuring the extent of hot money inflows requires knowledge of the magnitude of both transfers to the CIC and dollar settlement of reserve hikes, as well as other factors such as unwinding swaps.

bjburo@xfn.com

-

http://www.forbes.com/markets/feeds/afx/2008/01/11/afx4520451.html

China forex reserves at 1.53 trln usd at end of 2007

BEIJING (XFN-ASIA) - China's foreign exchange reserves reached 1.53 trln usd at the end of last year, the central bank said.

That was up 43.3 pct from the 1.0663 trln usd recorded at the end of 2006.

In a statement on its website, the People's Bank (nasdaq: PBCT - news - people ) of China said that the nation's foreign exchange reserves rose 31.3 bln usd in December alone.

Speculative capital inflows may have been a significant contributor to the growth of China's foreign exchange reserves during 2007 as US interest rates fell, Chinese asset prices rose and the pace of yuan appreciation tempted investors worldwide.

The data also suggest that the China Investment Corporation, the country's new sovereign wealth fund, has not yet received the bulk of its 200 bln usd start-up capital from the central bank.

Foreign exchange reserves in the fourth quarter grew by 94.6 bln usd, the slowest growth in headline reserves this year, down from 101.0 bln usd in the third quarter, 130.6 bln usd in the second and 135.7 bln usd in the first.

This brought total foreign exchange reserve growth in 2007 to 461.9 bln usd, up strongly from 247.5 bln usd in 2006.

Total Chinese foreign exchange reserves were 1.528 trln usd at the end of 2007, securing its position as the biggest holder globally.

Foreign exchange reserves in the fourth quarter were 'supposed' to be around 115 bln usd, including 76 bln usd in trade surpluses, around 22 bln usd in foreign direct investment, and around 16-18 bln usd in interest income on existing foreign exchange reserves.

The headline number had been expected to have been around 130 bln usd lower than trade surpluses estimates, FDI, and interest income, as a result of transfers of foreign exchange reserves to the CIC, in exchange for 950 bln yuan in special MOF bonds.

Based on the steady growth in reserves, it is likely that these transfers have either not occurred yet or were phased in evenly throughout the last three months of the year.

Based on the spreadsheets attached to the PBOC data release, October foreign exchange reserves grew 21.3 bln usd in October, 42.0 bln usd in November, and 31.3 bln usd in December.

Lou Jiwei, the head of the CIC and former vice-finance minister, has said on more than one occasion since the fund's launch in September that the foreign exchange reserves have been received from the PBOC.

Also, an unspecified proportion of the three reserve hikes in the fourth quarter totaling 200 basis points were supposedly met with foreign exchange, according to media reports last month.

The measures would require banks to hold onto dollars acquired from exporters for longer periods of time, in order to deposit them with the central bank to meet higher reserve requirements.

In the event that a bank lacks sufficient quantities of foreign exchange to meet the higher reserve requirement, the central bank has apparently offered to sell some banks the foreign exchange from the PBOC's ample reserves.

The net effect of these measures is that fewer dollars are sold to the central bank in the spot market, reducing market-based pressure on the yuan to appreciate.

In addition, commercial banks are now assuming the foreign currency risk of dollars depreciating against the yuan, rather than the central bank.

The dollars placed at the central bank are not deposits, but reflect an increase in commercial banks' net foreign currency positions. As a result, central bank foreign exchange reserves should not rise as quickly.

However, each bank has reportedly received these instructions independently, so the extent to which these measures apply throughout the banking system also remains unclear.

Previous assumptions that around 80 pct of the reserve hikes in the fourth quarter required dollar payments, which would translate into around a 80 bln usd reduction in headline reserves if all 200 basis points of the fourth quarter reserve hikes required dollar settlement.

Hot money may also be pushing up foreign exchange reserve figures again, as analyses of the data have indicated that hot money flows have not been particularly volatile over the past two years.

With Chinese interest rates now higher than those in the United States, and faster rates of yuan appreciation widely expected in the market, it seems logical that hot money inflows into China may be accelerating.

However, measuring the extent of hot money inflows requires knowledge of the magnitude of both transfers to the CIC and dollar settlement of reserve hikes, as well as other factors such as unwinding swaps.

bjburo@xfn.com

-

http://www.forbes.com/markets/feeds/afx/2008/01/11/afx4520451.html



Damn it Zorg, you're faster than me :D

But anyway I still have something here. Another prediction.


Think tank: GDP to grow by 10.2%, CPI 4.4%
(Xinhua)
Updated: 2008-01-11 22:55

Think tank: GDP to grow by 10.2%, CPI 4.4%
(Xinhua)
Updated: 2008-01-11 22:55


BEIJING -- China's Gross Domestic Product (GDP) is projected to grow by 10.2 percent to reach 27.93 trillion yuan (US$3.88 trillion) in 2008, and the consumer price index (CPI) is to jump by 4.4 percent, according to a report by the country's major think tank.

The report, issued on Friday by the Chinese Academy of Sciences (CAS), predicted China's economy would continue to enjoy strong growth, driven by the favorable economic environment.
However, the report said, the growth would be slowed down by the fluctuating prices of resource commodities in the global and domestic markets, as well as long-standing systematic problems of China's economy.

Yao Jingyuan, the chief economist of the National Bureau of Statistics (NBS), said that China's GDP is to grow by 11.5 percent in 2007.

The CAS report echoed previous predictions that the world's fastest growing major economy is likely to expand at a slower rate in 2008 than it did the previous year.

The State Information Center (SIC) predicted a week ago that China's GDP growth would slow to 10.8 percent in 2008.

The academy also predicted a 4.4 percent rise of the consumer price index (CPI) for this year with economic tightening measures taking effect.

But it warned the index could rise to 5.8 percent if the government fails to work out effective control policies.

In 2008, the inflation pressure will continue to mount up, said the report issued by the Center for Forecasting Science of Chinese Academy of Science (CAS) here Friday.


In the first 11 months of 2007, the CPI grew 4.6 percent, according to the National Bureau of Statistics (NBS).

And the annual figure is estimated to stand at 4.7 percent, far higher than the government-set alarm level of 3 percent.

The report attributed the risks to huge demand of capital goods fueled by fast economic growth, the expanding imbalance of international payments, high prices of natural resource commodities in the domestic and international markets, increasing money supply and soaring housing price.

The CAS experts suggested that, besides the macroeconomic policies already in operation, the country should ensure the food supply to deal with the price hikes at the source.

It should be done to improve the state stock of commodities and speed up tax reform policies on natural resource commodities such as oil and natural gas, the report said.

A healthy real estate market will also contribute, it said.

With effective measures, the CPI growth is likely to slow down in June or July, according to the report.

Taming inflation has been a red hot issue in recent months. The country announced in late December a tight monetary policy for the first time in the past ten years and the central bank increased the interest rates six times last year.

The CAS report also predicted that the primary, secondary and tertiary industries will expand at 4.1 percent, 12 percent and 11.5 percent, respectively.

http://www.chinadaily.com.cn/china/2008-01/11/content_6388599.htm

Job market demand varies, responsible workers welcomed
(Xinhua)
Updated: 2008-01-11 22:00


BEIJING -- Chinese college students have graduated to find the job market vary from when they entered school and those so-called "hot courses" might fail to land them good jobs.

Graduates with different majors have very different experiences in the job market. But degrees in finance, economics and a few other fields often guarantee good jobs.

"I have applied to 15 companies online, and most of them show interest in hiring me," said Wang Ming, a postgraduate of Labor Economics at Southwest University of Finance and Economics in Chengdu, Sichuan Province.

He said that all the students of economics, finance and accounting in his university had received at least two job offers.
Students of mining and materials science which were not popular before, however, have observed more employment opportunities than before. The employment rate of graduates from the two courses was 100 percent at Guizhou University in southwestern Guizhou Province.

"Many companies would come straight to our school to find employees," said Wang Hua with the university's employment guide center.

On the contrary, some so-called "hot courses" including law, journalism and computer science which have received large groups of students, failed them in the job market.

Experts said high tuition fee of those courses led to blind enrollment expansion, which causes a surplus of supply in the job market.


To solve this problem, Guizhou University has decided to adjust its enrollment arrangement if the employment rate of a major drops below 70 percent.

"The law school recruited around 600 students in 2004, but we only took about 100 last year, raising employment rate from 70 percent to 90 percent,"said Wang Hua.

Another problem which makes it difficult for graduates to find jobs is the gap between school-learned-knowledge and requirements of real career.

In 2007, merely 60 percent of computer science graduates were employed. Meanwhile, job vacancies in IT industry exceeded one million.

IT companies complained about the large amount of money they spend on pre-career training of new employees. They hope universities adjust their courses to better prepare students for their future work.
In addition to academic background, employers are looking for college graduates with a good sense of responsibility. This merit is followed by a sense of team work, ambition, flexibility, eloquence, independence, confidence, pressure-bearing ability, communication skills and professional excellency on a list of merits which help college graduates land jobs, according to a survey conducted among human resource managers of 200 companies by Shandong Talent Resource Web site.

The competition in the country's job market has become more fierce with a growing number of college students.

Statistics show about 5.6 million students will graduate from higher education institutions in 2008, an increase of 640,000 over 2007, according to China Daily.

Last year, nearly 1.4 million college graduates, or one third of the total, failed to find jobs, the newspaper said.

http://www.chinadaily.com.cn/china/2008-01/11/content_6388562_2.htm

Migrant workers' income rises in 2007
(Xinhua)
Updated: 2008-01-11 18:56


BEIJING -- China's migrant workers' income rose in 2007, according to a report released by Shanghai-based Fudan University on Friday.

The average monthly income of migrant workers reached 1,200 yuan (US$165) in 2007 with an increase of 200 yuan over the previous year, said the report.
The report, surveyed 10,734 companies in over 40 cities, revealed that migrant workers in Beijing, Tianjin and Shanghai had relatively higher incomes.

About 44.6 percent migrant workers hoped to continue to work in cities and 17 percent hoped to find jobs in Beijing or its surrounding areas, the report said.

The report also revealed 22.2 percent migrant workers were unable to save money as their incomes were just enough for their living.

China has about 200 million migrant workers across the country.


http://www.chinadaily.com.cn/china/2008-01/11/content_6388427.htm

China to invest 300b yuan in railway in '08
(Xinhua)
Updated: 2008-01-11 23:29


BEIJING -- China plans to invest 300 billion yuan (US$41 billion) to lay 7,820 kilometers of railway in 2008, the Ministry of Railways said on Friday.

"A batch of new projects will start construction this year, and the building of the high-speed railway linking Beijing and Shanghai is the most important one," said Railway Minister Liu Zhijun at a national work conference.

Earlier reports said the construction of the multi-billion-dollar Beijing-Shanghai railway could be underway as soon as the middle of January after six companies were confirmed to have won the tender.

Liu said the new railways should use state-of-the-art technologies and meet the world's highest standards.

China will have 15,000 kilometers of new railways built and put into operation in the following three years, with 7,000 kilometers being passenger-only high-speed tracks. The total railway length will reach 120,000 kilometers by 2020.

From 2003 to 2007, China invested a total of 522 billion yuan (US$71.5 billion) in railway construction.

Liu predicted that passengers would make more than 1.4 billion rail journeys in 2008 and the cargo transported on railway would exceed 3.3 billion tons, generating a total revenue of 361 billion yuan (US$49.5 billion).

He said priority must be given to the transport of coal, grain, fertilizer, cotton, disaster-relief materials and people's daily necessities.

He also said China would strengthen international cooperation in the railway sector, including the construction of the pan-Asian railway network and technical cooperation with developed countries.


http://www.chinadaily.com.cn/china/2008-01/11/content_6388613.htm

Yuan hits new high against US dollar
(Xinhua)
Updated: 2008-01-11 11:45


China's currency, the yuan, hit a new high against the US dollar on Friday, according to China Foreign Exchange Trade System.

The yuan, also known as the renminbi, reached 7.2672 yuan to one US dollar on Friday, up 133 basis points from the 7.2805 yuan to one dollar on the previous trading day.

This was the fourth time the local currency hit a new record high in the 10 days since the beginning of the new year.

The Chinese currency had appreciated against the greenback by about 12 percent since a new currency regime was imposed in July 2005 to discontinue yuan's peg to the US dollar.

It had climbed 6.9 percent against the dollar last year, but some US critics had said it remained severely undervalued. This gave Chinese exporters an unfair advantage and resulted in the massive trade imbalance between the two countries.

China's trade surplus soared 52.2 percent in the first 11 months of 2007 to $238.13 billion against the same period a year earlier, according to the General Administration of Customs.

The trade surplus is estimated to surpass $260 billion for the whole year, up 47 percent over the previous year. The General Administration of Customs is expected to unveil the annual surplus figure on Friday.

Observers said the yuan's rise would help China reduce its massive trade surplus, mop up excess liquidity and curb inflation.

US Treasury Secretary Henry Paulson recognized last month at the bilateral strategic economic dialogue held in Beijing that "the pace of appreciation has increased over the past year".

China was not against revaluation, but opposed "excessively rapid" appreciation that was inappropriate to its national conditions, Minister of Commerce Chen Deming said last month.

Premier Wen Jiabao said China would improve the yuan's exchange rate mechanism in a controllable and gradual manner, let the market play a bigger role in the mechanism and enhance the currency's flexibility.

He said the exchange rate wasn't the only factor leading to the trade surplus. The appreciation had not forced down Chinese exports because of the world's industrial division of labor and the competitiveness of the country's products.

http://www.chinadaily.com.cn/bizchina/2008-01/11/content_6387731.htm

Textile exporters prepare for quota-free trade


Source: CCTV.com
01-11-2008 10:34
According to an agreement between China and the EU, exports of China's textile products to the EU countries will not be subject to any quantity limits starting this year. And textile export quotas to the US will be abolished in 2009.

Beijing Topnew Group is one of the municipality's largest textile exporters. The company earned 73 million US dollars in export revenue last year through its manufacturing for established international brands, like H&M and Columbia.

EU is Topnew Group's largest export market, accounting for 60 percent of its export revenue. The Chinese manufacturer predicts a 50 percent increase in its exports to the area this year, as a result of the scrapping of the export quotas.

Ma Hui, Vice GM of Beijing Topnew Import & Export Co. said "The situation has already begun to change. We have received more orders from H&M, one of Europe's largest apparel companies, for pullovers - a category that was previously subject to quota restrictions."

According to a new agreement reached by China and the EU last October, a joint import surveillance system will replace the previous quota arrangement this year. The goals is to ensure a smooth transition to free trade in textiles.

The new international trade landscape and the ever increasing domestic labor costs in the past few years have pushed many Chinese textile manufacturers to re-think the direction of their development. Shifting to more technology intensive production with higher added-value is the answer for many large, capital-rich manufacturers.

Topnew Group poured some ten million US dollars into upgrading its manufacturing facilities over the past two years. Improving the quality of its products was the main goal.

Ma Hui said "It's imperative for us to streamline our product structure. We would not be able to survive if we stuck to low-end production. We must move towards middle- to high-end manufacturing."

The China Chamber of Commerce for Import and Export of Textiles says domestic manufacturers have matured. That's why it predicts the scenario of explosive growth in 2005 will not take place again this year.

And despite the expiration of quotas between China and the US in 2009, experts have warned domestic enterprises not to be overly optimistic.

Wang Yu, Vice Chairman of China Chamber of Commerce for Import & Export of Textiles said "It will not be impossible for the US to adopt anti-dumping and anti-subsidy measures after the quotas system expires next year. So the prospect is still unclear in terms of Sino-US textile trade."

In addition, the anticipated appreciation of the yuan, export tax rebate reductions, and increases in labor and other manufacturing costs will further squeeze the already slim profit margins of Chinese textile manufacturers. For domestic textile exporters, both opportunities and challenges lie ahead.

http://www.cctv.com/program/bizchina/20080111/102186.shtml

China´s logistics flow grows 25.5% in 2007
Source: China Daily
01-11-2008 10:03

China's total logistics flow in 2007 grew 25.5 percent year-on-year to 74.8 trillion yuan (10.27 trillion U.S. dollars), according to the estimates of the China Federation of Logistics and Purchasing (CFLP).

China's demand for modern logistics continued to increase due to fast economic growth, with the logistics demand elastic coefficient (GDP to total logistics flow) in 2007 rising to 3.2 from 2.8 in 2006.

"Although the industry maintained stable development in 2007, competition from foreign peers will mount in 2008 and the domestic logistics sector will see increasing openness," said Lu Jiang, chairman of the CFLP at a forum on international logistics cooperation in Beijing Thursday.

Lu also pointed out challenges facing domestic logistics enterprises, including insufficient information technology support and unadvanced transportation methods.

http://www.cctv.com/program/bizchina/20080111/101819.shtml

BEIJING -- China's Gross Domestic Product (GDP) is projected to grow by 10.2 percent to reach 27.93 trillion yuan (US$3.88 trillion) in 2008[/url]

3.88 trillion is far above Germany's GDP. Are they including RMB revaluation? Otherwise China should catch up with Japan as soon as 2009.

Can somebody explain this to me? Hu set these goals in 2005. :nuts:


President: China targets US$4 trillion GDP by 2020
(chinadaily.com.cn/Xinhua)
Updated: 2005-05-16 20:55

Chinese President Hu Jintao said that Asia's fastst growing country is planning to quadruple its GDP to US$4 trillion by 2020, with the per capita GDP reaching US$3,000.

Hu promised to continue pursuing the scientific approach in achieving economic and social progress of China, and always "put the people first" while striking economic attainments.

http://www.chinadaily.com.cn/english/doc/2005-05/16/content_442681.htm


These goals can be comfortably reached by 2009, maybe even this year, since the Renminbi is now appreciating quicker than originally anticipated.

China Lets Currency Appreciate a Bit Faster

By KEITH BRADSHER
Published: December 29, 2007
HONG KONG — China’s currency rose steeply against the dollar this week, feeding speculation that Chinese authorities, yielding to international pressure and economic realities at home, were allowing their currency to appreciate more rapidly.

The currency, known as the yuan or renminbi, rose 0.9 percent this week — faster than over any week since China stopped pegging it to the dollar on July 21, 2005. Thursday, the yuan rose 0.37 percent, the largest one-day increase since the peg ended. On Friday, it rose 0.18 percent, to close at 7.3041 to the dollar in Shanghai trading.

Yao Jingyuan, the chief economist of the National Bureau of Statistics in China, said Chinese officials were trying to figure out their next currency move.

“It is certain that the yuan will appreciate — the time frame and magnitude of the adjustment is difficult to confirm at the current time. We are busy studying this issue right now,” he said in a telephone interview. “What I can say is that it will be dependent on China’s overall economic environment and outlook.”

Yu Yongding, the director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences and until last year a member of the monetary policy committee of China’s central bank, said that rising inflation at home was making it much easier for the Chinese government to accept a stronger yuan.

Until recently, the government worried that allowing the currency to rise would let in more imports and stifle exports, leading to deflation. But China’s consumer price index was up 6.9 percent in November compared with a year earlier, led by an 18.2 percent rise in food prices.

A sustained appreciation of the yuan could ease frictions somewhat with the United States, the European Union and Japan, all of which have criticized China for not allowing faster appreciation.

To be sure, trade tensions could still increase if economies around the globe slow next year. And China has periodically allowed bursts of yuan appreciation in the past — although not on the scale of this week’s move — only to pull the yuan down slightly or hold it nearly level for weeks afterward.

But the comments by Mr. Yao and Mr. Yu are the latest in a series of hints from current and former officials that suggest the country’s leadership is beginning to see some advantages to a stronger currency.

On Thursday, the newspaper China Securities Journal reported that Ba Shusong, a deputy director at the government’s elite State Council Development and Research Center, had called for yuan appreciation to slow the rise of food and fuel prices. China imports half of its oil, but relatively little of its food. And on Monday, a newspaper in Shenzhen reported that central bank officials had suggested to the State Council, China’s cabinet, a one-time increase in the yuan’s value.

The central bank has long favored a stronger yuan, but the commerce ministry and interest groups have blocked it. Mr. Yu, like most of his Western counterparts, said the government is less likely to opt for a one-time revaluation and more likely to choose a faster pace of daily appreciation.

The danger of allowing a steady rise in the yuan’s value, instead of a quick jump, is that it may encourage speculators to pour more money into China in an effort to ride the increasing value. The country’s foreign exchange reserves are already rising by roughly $1 billion a day, mainly because of a trade surplus that has continued to grow despite a 7 percent increase in the yuan against the dollar this year.

By comparison, the yuan rose just 3.3 percent against the dollar in 2006.

Mr. Yu said that China has become less attractive to speculators. He pointed to the ranking of China’s stock markets as among the world’s costliest in terms of price-to-earnings ratios; limits on foreign investments in already high-priced real estate markets; and restrictions on foreign money entering domestic money markets.

Hong Liang, a Goldman Sachs economist based in Hong Kong, expects faster appreciation next year but not a one-time revaluation.

Bloomberg News found that the median estimate of 28 analysts was for the yuan to reach 6.88 to the dollar next year; that would mean a further increase of 6.2 percent from the close Friday.

http://www.nytimes.com/2007/12/29/business/worldbusiness/29yuan.html?_r=3&pagewanted=1&oref=slogin

China Passes South Korea in 2007 in New Ship Orders (Update2)

By Lee Spears

Jan. 11 (Bloomberg) -- China surpassed South Korea to become the world's biggest shipbuilder by new orders in 2007, according to data compiled by Clarkson Plc, the world's largest shipbroker.

Chinese shipbuilders booked orders for 103.6 million deadweight tons of ships, compared with South Korea's 94.8 million, according to data from London-based Clarksons.

Shipyards in China booked orders at historically high prices last year, more than tripling order backlogs at the nation's shipyards. Demand for vessels to carry Chinese imports of raw materials and exports of consumer goods is fueling earnings growth at shipbuilders including China State Shipbuilding Co., the nation's biggest.

The nation remained behind South Korea in new orders measured by compensated gross tons. Deadweight tonnage measures a finished ship's carrying capacity and doesn't reflect the cost of building a vessel or its sale price. Compensated gross tonnage is a measure that accounts for ship size and the time required and materials used for production.

China booked 29.2 million gross compensated tons of new orders last year, compared with South Korea's 32 million, Clarkson said.

Surging orders helped China's order backlog more than triple to 51 million compensated gross tons as South Korea's backlog doubled to 64.5 million compensated gross tons, according to Clarkson.

Japan booked about 20 percent as many new orders as China and South Korea, Clarkson said. IHI Corp., Japan's third-biggest heavy-machinery maker, today said it's in talks with JFE Holdings Inc., the nation's second-biggest steelmaker, to create the biggest Japanese shipbuilder to compete against Asian rivals.

http://www.bloomberg.com/apps/news?pid=20601089&sid=aOaMjnLIPUVI&refer=china

Can somebody explain this to me? Hu set these goals in 2005. :nuts:


President: China targets US$4 trillion GDP by 2020
(chinadaily.com.cn/Xinhua)
Updated: 2005-05-16 20:55

Chinese President Hu Jintao said that Asia's fastst growing country is planning to quadruple its GDP to US$4 trillion by 2020, with the per capita GDP reaching US$3,000.

Hu promised to continue pursuing the scientific approach in achieving economic and social progress of China, and always "put the people first" while striking economic attainments.

http://www.chinadaily.com.cn/english/doc/2005-05/16/content_442681.htm


These goals can be comfortably reached by 2009, maybe even this year, since the Renminbi is now appreciating quicker than originally anticipated.

The yuan GDP increases in two ways: economic growth and inflation. 11% GDP growth + 4% inflation (measured as GDP deflator not consumer price index) equals 15% growth in the yuan GDP from one year to the next.

Then you divide the yuan GDP by the dollar exchange rate to get the dollar GDP. Yuan GDP will be 27900 billion according to forecast for 2008, it will be higher if the inflation is higher or the economic growth is higher than forecasted. And then there is the expected yuan appreciation for 2008, so the 2008 dollar GDP will be somewhere between 4,1-4,2 trillion dollars.

If China grows 10% + 3% inflation from 2008 -2020, and the exchange rate is set constant at 6,8 yuan for the dollar (no more appreciation after 2008), China will have a GDP in 2020 of 17800 billion dollars. What Hu really said was that he wanted to see GDP in constant 2005 prices and ex rates at 4000 billion dollars by 2020.

If China grows 10% + 3% inflation from 2008 -2020, and the exchange rate is set constant at 6,8 yuan for the dollar (no more appreciation after 2008), China will have a GDP in 2020 of 17800 billion dollars. What Hu really said was that he wanted to see GDP in constant 2005 prices and ex rates at 4000 billion dollars by 2020.

In any cases, I think stagnant currency appreciation is not possible.

The yuan GDP increases in two ways: economic growth and inflation. 11% GDP growth + 4% inflation (measured as GDP deflator not consumer price index) equals 15% growth in the yuan GDP from one year to the next.

Then you divide the yuan GDP by the dollar exchange rate to get the dollar GDP. Yuan GDP will be 27900 billion according to forecast for 2008, it will be higher if the inflation is higher or the economic growth is higher than forecasted. And then there is the expected yuan appreciation for 2008, so the 2008 dollar GDP will be somewhere between 4,1-4,2 trillion dollars.

China's forecast is always under-estimating its growth rate, deliberately. Part of the reason is the Chinese characteristics. And the Chinese leaders hate to set some target with some risk to hit (or surpass).

The 4 trillion target for 2020 is a big joke. The GDP can easily reach 4 tln in 2010.

China's forecast is always under-estimating its growth rate, deliberately. Part of the reason is the Chinese characteristics. And the Chinese leaders hate to set some target with some risk to hit (or surpass).

The 4 trillion target for 2020 is a big joke. The GDP can easily reach 4 tln in 2010.

Thats true. They also underestimate to prevent heat from the US (peaceful rise).

I would be very surprised if the GDP doesnt reach $4 trillion this year. The $3.88 trillion forecast is with current dollar exchange rate. The yuan will appreciate in 2008 not remain as today.

Efforts to rejuvenate northeast China pay off
(Xinhua)
Updated: 2008-01-13 09:33


SHENYANG - China's efforts to rejuvenate its northeastern rust belt have yielded positive results as Liaoning Province's gross domestic product (GDP) exceeded one trillion yuan in 2007.

Liaoning's GDP is estimated to have grown by a record high of 14.5 percent to hit 1.09 trillion yuan (about US$149.32 billion) last year, and the province is the eighth in the country to have a GDP above one trillion yuan, said acting governor Chen Zhenggao at the 5th plenary session of the Liaoning Provincial Committee of the Communist Party of China (CPC) and the economic work meeting held on Friday.

Seven other regions already with a GDP above one trillion yuan in 2006 were Guangdong, Shandong, Jiangsu, Zhejiang, Henan, Hebei provinces and Shanghai Municipality.

Liaoning also saw a growth of 32.3 percent in general budget revenue which reached 108.2 billion yuan (about US$14.82 billion).

"Both achievements symbolize the fact that Liaoning has entered a new stage thanks to the campaign to rejuvenate the rust belt," said Chen.

Liaoning, which used to serve as an important industrial base under the country's planned economy, slipped into the doldrums when the country began to adopt a reform and opening-up drive about three decades ago and gradually endorse a market economy.

With a legion of old industrial workshops and backward production lines, Liaoning was overshadowed by other Chinese regions on the coast, such as Guangdong and Zhejiang.

The central Chinese government put forward a strategy to invigorate the northeast China in September 2003.

The northeastern region, including the provinces of Liaoning, Jilin, Heilongjiang and eastern Inner Mongolia, has an area of 1.45 million square kilometers and a population of 120 million.

Under that strategy, Liaoning will be built into an advanced equipment manufacturing base of international competitiveness and a processing base of new materials.

With the support of the central government, Liaoning has seen fast expansion in the equipment manufacturing business characterized by machine tools and shipbuilding.

http://www.chinadaily.com.cn/china/2008-01/13/content_6389926.htm

Auto production, sales hit record 8.8m units
(Xinhua)
Updated: 2008-01-13 17:45


Auto production and sales in China both surged more than 20 percent to a record 8.8 million units in 2007, despite slackening sales in global markets, an industry group said Sunday.

China's automakers rolled out 8.88 million motor vehicles last year, up 22.02 percent from a year earlier, according to the China Association of Automobile Manufacturers.

Total vehicle sales jumped 21.84 percent year-on-year to 8.79 million units in the world's second largest car market after the United States, twice the figure in 2003.

Both the output and sales beat the prediction of 8.5 million made at the beginning of last year.

Sales of sedans, or passenger vehicles excluding sport utility vehicles and minivans, accounted for 53.76 percent of the total sales.

http://www.chinadaily.com.cn/bizchina/2008-01/13/content_6390234.htm

Tianjin free trade zone sees robust growth
(Xinhua)
Updated: 2008-01-13 09:05


The Tianjian port free trade zone, the largest in north China, reported a robust economic growth of 46.5 percent year-on-year in 2007, local authorities said.

The zone's gross domestic product (GDP) reached a record high of 30 billion yuan ($4.1 billion) last year, said Feng Zhijiang, the zone administrative commission's director.

The total industrial output value hit 39.6 billion yuan, up 55 percent.

Covering an area of five square kilometers at the Tianjin port, the free trade zone has currently 2,000 registered trade companies and 300 logistics firms.

Feng said the zone would strive for a 42 billion yuan GDP this year.

China has about 15 free trade zones along its east-south coastal areas. They enjoy a number of preferential polices in tariffs and investment opportunities.


http://www.chinadaily.com.cn/bizchina/2008-01/13/content_6389853.htm

China Plans to Align Policies, Cut Trade Surplus

http://www.bloomberg.com/apps/news?pid=20601087&sid=aeeYsRvB1aPk&refer=home

By Zhang Dingmin and Zhang Shidong

Jan. 13 (Bloomberg) -- China plans to better coordinate fiscal and monetary policies in 2008 to help reduce its trade surplus and mop up excessive liquidity, Vice Finance Minister Li Yong said today.

China's money supply grew at the slowest pace in seven months in December, the central bank said yesterday, after it took measures to cool inflation and prevent the economy from overheating. China may face pressure from Europe and the U.S. to allow faster gains by its currency after the nation's trade surplus surged 48 percent to a record $262.2 billion last year.

``This year's fiscal policy will focus on structural adjustments and help essentially solve the problem of excess liquidity,'' Li said at a conference in Beijing. ``Monetary policies should focus on quantitative controls to win more time for structural reforms.'' China also needs to use administrative measures to tackle these issues, he said, without being specific.

The government will adjust resource prices this year to rectify a distorted energy-pricing system and boost domestic spending as its top priority, Li said. Weakness in the U.S. dollar will limit China's ability to raise interest rates and reserve ratios further, he added.

``Fiscal policy can play a bigger role,'' said San Feng, an economist at the State Information Center in Beijing. ``The government this year needs to cut its fiscal deficit and debt issuance for long-term construction projects, and it should lower taxes on sectors affected most by price controls.''

Budget Deficit

China will cut the budget deficit ``modestly'' this year, the finance ministry said last month. The ministry started this year to tax exports of grain at a rate up to 20 percent to boost the domestic supply. China's total tax revenue jumped 31.4 percent to 4.94 trillion yuan ($680.2 billion) last year, according to the taxation administration.

China's central bank has pledged a ``tight'' monetary policy this year, after six interest-rate increases in 2007, to curb lending and prevent escalating asset prices.

``We will decisively fight against inflation and implement tight monetary policies,'' said Yi Gang, vice governor of the People's Bank of China, at the same conference today. ``But we will do it prudently to ensure economic stability.''

Consumer prices jumped to an 11-year high of 6.9 percent in November, prompting Premier Wen Jiabao to announce on Jan. 9 a freeze on energy and utility price gains in the ``near term.''

Preliminary Target

``The government needs to avoid high inflation expectations,'' said Xu Lin, head of the fiscal and financial department of the National Development and Reform Commission, at today's conference. ``If price increases slow down, the temporary measures to curb prices can be eased.''

China has set a preliminary target for the full-year inflation rate at 4.6 percent in 2008 and that for annual economic growth at 8 percent, Xu said. Both targets need to be officially set at the sessions of the National People's Congress, or the country's parliament, which are scheduled to be convened in March, he added.

The yuan rose for a fifth week, reaching the strongest level since China scrapped a fixed exchange rate to the dollar in 2005, on speculation China is seeking faster gains to cool the economy. The U.S. and Europe say the yuan, even after recent advances, is still at a level that gives local companies an unfair advantage in overseas markets.

The December trade surplus shrank to $22.7 billion from $26.2 billion in November, as exports grew at the slowest pace in two years, indicating recent yuan gains, the cooling global expansion and cuts to export-tax rebates on polluting industries are beginning to bite.

The banking regulator last quarter banned Agricultural Bank of China and six other banks from making new loans, according to the official Shanghai Securities News.

China's economy probably expanded 11.5 percent in 2007, the fastest pace in 13 years, according to government forecasts.

first let's make out how fast China's GDP grow these years　 　 　 　 　 　

year GDP(RMB)　GDP per Head 　 　 　
2001 109655.2 8622
2002 120332.7 9398
2003 135822.8 10542
2004 159878.3 12336
2005 183084.8 14040
2006 209407.0 15931
2007 233698.2 17970

China's economy has been grown at double-digit rate for 4 years ,
and 07's growth rate is 11.6%, predication from most institutions wolrd-wide say china's economy will grow at 10.8% in 2008,

since the econmy is still at a low level, the infrastructure investment is huge,domestic demand and export are both at good state .additional,there is 2008BeijingOlympic and 2010shanghai EXPO,i think the economy will keep growing at a high speed for at least 4-5 years
just as there may be lots of unforeseen factors, i can only conclude it in near future

my forecast:
2008 259405 11%
2009 286200 10.5%
2010 314814 10% (bubble comes out)
2011 349444 11.2%(bubble accumulate)
2012-2014 4%-6%(probably world wide eco crisis)
2015-2020 5%-7%

ｏｎ　ｎｏｍｉｎａｌ　ＧＤＰ growth, RMB　ｉｓ　appreciatiｎｇ，　currently exchange rate is 1: 7.28 (USD:RMB)
ＲＭＢ expectant appreciation　ｂｅｆｏｒｅ　２０１０:
1:6.5---1:5 (11%--31.3% up)

my predication is conservative, the central bank said at the end of 2008 RMB　
ｅｘｃｈａｎｇ　ｒａｔｅ　ｗｉｌｌ　ｂｅ　６．６１（１０％　ｕｐ），ｉｆ　ｔｈｅｙ　ａｒｅ　ｒｉｇｈｔ，　ｔｈｅｎ　ＧＤＰ per ppl will be 259400/6.61/13.2==2973USD

first let's make out how fast China's GDP grow these years　 　 　 　 　 　

year GDP(RMB)　GDP per Head 　 　 　
2001 109655.2 8622
2002 120332.7 9398
2003 135822.8 10542
2004 159878.3 12336
2005 183084.8 14040
2006 209407.0 15931
2007 233698.2 17970





Where did you get these figures ? The column for GDP per head is in what currency ? And what does it mean exactly by GDP per head ? Does it mean GDP per capita ? GDP (RMB) in millions or billions ? Sorry I don't understand your table. I think you need to state things much more clearly.

Alert mechanism for financial risks to establish in China
Source: CCTV.com | 01-13-2008 13:01
China's securities regulator will establish a risk-alert mechanism in a bid to improve monitoring and protect against possible financial crises. The chairman of the Securities Regulatory Commission says the aim is to prepare for potential ramifications on China's capital market from last year's subprime mortgage crisis in the

US.Shang Fulin adds that under a global background of fluidity surplus, international capital moves faster, hedge funds are more active, and there will be more transnational investment and acquisition. All of that can impact China's capital market. Shang says China will encourage more companies to sell shares on domestic stock markets and increase the proportion of free float for traded companies.

http://www.cctv.com/english/20080113/101239.shtml

Beijing's GDP expected to hit new high
(Xinhua)
Updated: 2008-01-14 19:10


Beijing's gross domestic product (GDP) was expected to grow 12.5 percent year-on-year to reach 900 billion yuan (US$124 billion) last year, indicating a double-digit economic growth for nine years in a row, a local development official has said.

The fast growth was achieved with energy consumption and pollutants emission reduced last year, said Zhang Gong, director of the Beijing Municipal Development and Reform Commission.

The per capital GDP was predicted to reach an all-time high of US$7,000 in 2007.

"Beijing's economic and social development demonstrated a good momentum of sound and rapid growth in 2007, a critical year for Beijing when it has been busy preparing for the Olympic Games," Zhang said.

The fixed asset investment rose 17 percent to reach 395 billion yuan (US$54 billion) in 2007, and retail sales surged 15 percent to reach 377 billion yuan (US$52 billion), he said.

The Consumer Price Index (CPI), a measure of inflation, rose to 2.4 percent in Beijing last year, he said.

"While achieving a fast and steady economic development, Beijing further reduced its energy consumption and pollutants emission last year," Zhang said.

In 2006, the Chinese central government decided to cut energy consumption for every 10,000 yuan (US$1,377) of GDP by 20 percent and pollutants by 10 percent for the 2006-2010 period.

Statistics show that Beijing had cut energy consumption for every 10,000 yuan of GDP by more than five percent in the past two years.

In 2007, the per capita disposable income grew by 10 percent for urban residents to 22,000 yuan (US$3,030), and eight percent for rural residents to 9,500 yuan (US$1,308).


http://www.chinadaily.com.cn/china/2008-01/14/content_6393222.htm

Govt to fund subsidies for rural household appliance purchase
(Xinhua)
Updated: 2008-01-15 09:50


BEIJING - China is giving farmers a 13 percent subsidy for home appliance purchase in effort to stimulate sluggish rural consumption and reduce the increasing trade surplus.

The central and local governments will pay 80 and 20 percent respectively of the subsidy, the Ministry of Finance (MOF) said Monday.

Recently, a pilot program was initiated in three major agricultural provinces - eastern Shandong, central Henan and southwestern Sichuan - where farmers who bought televisions, refrigerators and mobile phones could receive such a subsidy, the MOF said on its website.

China currently gives a 13 percent tax rebate to household electrical appliance exporters. Now, the government will give farmers this benefit to improve their life quality.

Though consumption is playing an increasing role in China's economic growth, investment and export remains a much bigger contributor. Despite this, the country's vast countryside has huge market potential.

Around the country, rural areas have lagged nearly 20 years behind urban areas in terms of popularity of major home appliances, such as TV sets, refrigerators and washing machines, according to official figures.

A total of 197 types of appliances in three categories were available for the subsidies through the end of May for the nation's 800 million farmers.

To date, the government has signed cooperative agreements with 15 household appliance makers, including Haier, Hisense and Changhong, and 21 dealers.

The ministry said rural households could purchase two items from each category and could receive the subsidies at their local township finance governmental agencies after the purchase.

http://www.chinadaily.com.cn/china/2008-01/15/content_6394932.htm

FACTBOX-African relations with China

Jan 14 (Reuters) - Malawi has cut diplomatic ties with Taiwan after 41 years and established links with China, which has become a major economic power in Africa.

China's government and its state-controlled companies have invested billions of dollars in Africa in a bid to tap natural resources for the Asian giant's growing economy and build Beijing's political influence in the developing world.

Trade links between China and Africa took a leap forward after President Hu Jintao's 2004 visit when he announced a drive to strengthen relations with the continent.

China is now seriously challenging Europe's historical influence there and has become the continent's third biggest trading partner.

Here are some key details:

* SOME NUMBERS:

-- China's total trade with Africa hit $58.72 billion in the first 10 months of 2007, up 30.3 percent from a year earlier, of which:

-- Exports are $30.05 billion, up 40.7 percent from a year earlier, but accounting for only 3 percent of China's total exports in the same period.

-- Imports are $28.66 billion, up 20.9 percent from a year earlier and accounting for 3.7 percent of China's total imports in the same period.

-- The following are China's top 10 African traders in the first 10 months (in billion of dollars):


Country Trade Export Import
1) South Africa 11.67 6.13 5.54
2) Angola 10.34 0.98 9.36
3) Sudan 4.70 1.26 3.44
4) Egypt 3.76 3.55 0.21
5) Nigeria 3.51 2.98 0.53
6) Algeria 2.97 2.19 0.78
7) Congo 2.63 0.34 2.29
8) Morocco 2.18 1.83 0.35
9) Libya 2.01 0.72 1.29
10) Equatorial Guinea 1.70 0.08 1.62

* TIMELINE OF RECENT TRADE DEALS:

Jan 2006 - China's top offshore oil producer CNOOC agrees to pay $2.3 billion for a stake in a Nigerian oil and gas field, its largest ever overseas acquisition.

April 2006 - Hu wraps up an Africa tour by concluding an offshore exploration deal with Kenya. The pact allows CNOOC to explore in six blocks covering 115,343 sq km (44,500 sq miles) in the north and south of Kenya. Two days earlier Beijing strikes a $4 billion deal for drilling licences in Nigeria, including grants for economic and technical cooperation, anti-malarial medicine and rice.

Nov 2006 - China and Africa sign 16 agreements worth a total of $1.9 billion. The deals between 12 Chinese firms and 11 African governments and companies, followed Hu's pledge offering $5 billion in loans and credit, and doubling aid by 2009.

Feb 2007 - Hu begins an eight-nation tour of Africa, signing multimillion-dollar accords with Cameroon, Liberia, Sudan, Zambia, Namibia, South Africa, Mozambique and the Seychelles, and cancelling debt in several countries.

Sept 2007 - Shenzhen Energy Investment announces plans to team up with an Africa development fund set up by China to build a 200-megawatt gas-fired plant in Ghana costing 1.03 billion yuan ($137.2 million). China launched the fund in June with initial capital of $1 billion.

Sept 2007 - China offers the Democratic Republic of Congo a $5 billion loan and infrastructure development package, which includes $3 billion for strategic highway and railroad projects linking DRC's mineral-rich interior to its southern neighbours and Atlantic shipping routes. The remaining $2 billion was to go to revive the country's mining sector.

Oct 2007 - China's biggest lender, Industrial and Commercial Bank of China, agrees to pay $5.6 billion for 20 percent of South Africa's Standard Bank, the biggest foreign purchase by a Chinese commercial bank. (Writing by David Cutler, London Editorial Reference Unit)

China overtakes U.S. as global electro-mechanical exporter


www.chinaview.cn 2008-01-16 14:47:09 Print

BEIJING, Jan. 16 (Xinhua) -- China's total trade in mechanical and electrical products increased 22.2 percent year-on-year in 2007, to 1.2 trillion U.S. dollars, and the sector accounted for 55.3 percent of the country's trade.

"China is expected to replace the U.S. as the world's second-largest exporter of mechanical and electrical goods," the Beijing-based China Chamber of Commerce for Import and Export of Machinery and Electronic Products said on its web site on Wednesday.

The absolute leader is Germany, which is the world's largest trader and exporter of mechanical and electronic products

Statistics from China and elsewhere show a global industry in continued transition, in terms of volume, trade patterns and product mix. China is exporting more electro-mechanical products but also importing more.

The sector's trade surplus was 202.2 billion U.S. dollars, up 66.2 percent, with exports up 27.6 percent to 701.2 billion U.S. dollars and imports up 16.7 percent to 499 billion U.S. dollars.

China's total trade set a record of 2.17 trillion U.S. dollars last year, with a surplus that surged to 262.2 billion U.S. dollars, up 47.7 percent year-on-year, according to the General Administration of Customs.

The United States has long been the world's top importer of mechanical and electrical products, but China last year became the third-largest destination for U.S. exports of these products.

According to U.S. Customs data, the United States exported 15.8 million U.S. dollars worth of mechanical and electrical products to China during the first half of 2007, compared with 15.7 million U.S. dollars to Japan.

Experts noted that household electrical appliances and light industrial products made in China had an absolute advantage over American goods in price and product range, but the United States maintained its advantage in high-technology items.


http://news.xinhuanet.com/english/2008-01/16/content_7431773.htm

China earmarks $2 billion to raise pension

(Xinhua)
Updated: 2008-01-16 21:15


The Chinese Ministry of Finance (MOF) announced Wednesday that it had earmarked 14.92 billion yuan (US$2.06 billion) as special subsidy for the nation's underdeveloped areas to ensure the retirees in companies to get an increased pension from this month on.

The sum of subsidy will be distributed to the country's needy central and western regions, old industrial bases and the Xinjiang Production and Construction Corps., a former military troop, said the MOF on its website.

After raising retirement pension by an average of 240 yuan per month for three consecutive years ending 2007, the Chinese government promised to continue raising the basic pension for the retired for another three years from 2008.

To ensure that the local governments have enough fund to cover the increased pension for the retired, the MOF has allocated a total special subsidies of 49.92 billion yuan for 2008, said the official.

The MOF said the purpose of adjusting retirement pension is to narrow the pension gap among the the retired from different types of units, such as government units and companies, with the latter getting a lower pension.

To improve the basic old-age pension levels of retired people from companies, the Chinese government has increased the retirement pension five times since 2003, with the annual national average pension up from 7,728 yuan in 2003 to 11,500 yuan in 2007.

http://www.chinadaily.com.cn/china/2008-01/16/content_6399608.htm

Think tank: GDP to grow by 10.2%, CPI 4.4% in 2008

http://www.chinadaily.com.cn/bizchina/2008-01/11/content_6388982.htm

(Xinhua)
Updated: 2008-01-11 22:55


China's gross domestic product (GDP) is projected to grow by 10.2 percent to reach 27.93 trillion yuan (US$3.88 trillion) in 2008, and the consumer price index (CPI) is to jump by 4.4 percent, according to a report by the country's major think tank.

The report, issued on Friday by the Chinese Academy of Sciences (CAS), predicted China's economy would continue to enjoy strong growth, driven by the favorable economic environment.
However, the report said, the growth would be slowed down by the fluctuating prices of resource commodities in the global and domestic markets, as well as long-standing systematic problems of China's economy.

Yao Jingyuan, the chief economist of the National Bureau of Statistics (NBS), said that China's GDP is to grow by 11.5 percent in 2007.

The CAS report echoed previous predictions that the world's fastest growing major economy is likely to expand at a slower rate in 2008 than it did the previous year.

The State Information Center (SIC) predicted a week ago that China's GDP growth would slow to 10.8 percent in 2008.

The academy also predicted a 4.4 percent rise of the consumer price index (CPI) for this year with economic tightening measures taking effect.

But it warned the index could rise to 5.8 percent if the government fails to work out effective control policies.

In 2008, the inflation pressure will continue to mount up, said the report.


In the first 11 months of 2007, the CPI grew 4.6 percent, according to the NBS.

And the annual figure is estimated to stand at 4.7 percent, far higher than the government-set alarm level of three percent.

The report attributed the risks to huge demand of capital goods fueled by fast economic growth, the expanding imbalance of international payments, high prices of natural resource commodities in the domestic and international markets, increasing money supply and soaring housing price.

The CAS experts suggested that, besides the macroeconomic policies already in operation, the country should ensure the food supply to deal with the price hikes at the source.

It should be done to improve the State stock of commodities and speed up tax reform policies on natural resource commodities such as oil and natural gas, the report said.

A healthy real estate market will also contribute, it said.

With effective measures, the CPI growth is likely to slow down in June or July, according to the report.

Taming inflation has been a red hot issue in recent months. The country announced in late December a tight monetary policy for the first time in the past ten years and the central bank increased the interest rates six times last year.

The CAS report also predicted that the primary, secondary and tertiary industries will expand at 4.1 percent, 12 percent and 11.5 percent, respectively.

China's per capita GDP to hit US$3,000 by 2010

http://www.chinadaily.com.cn/china/2008-01/04/content_6371868.htm

(Xinhua)
Updated: 2008-01-04 15:53


BEIJING -- China's per capita GDP will reach 3,000 US dollars by 2010, a decade ahead of the schedule set by the 2002 Communist Party National Congress, a government think tank expert said.

Lu Xueyi, an expert with the Chinese Academy of Social Sciences (CASS), said the figure would reach 6,000 US dollars in 2020 if it maintained the current growth rate. It was also aided by the Chinese currency's continued appreciation against the US dollar.

The country's per capita GDP had grown by about 200 US dollars annually in the last two years to 2,200 US dollars in 2007, he estimated.

China had been in the fast lane in recent years as the nation took two years to raise its per capita GDP to 1,000 US dollars from 800 US dollars in 2000. It took another four years to reach 2,000 dollars.

"The day (of 3,000 US dollar per capita GDP) will come sooner than expected, as the current economic growth is faster than the annual average of 7.2 percent necessary for the realization of this goal," Zhuang Jian, an Asian Development Bank economist, said.

China's economy was forecast to have expanded by about 11.5 percent last year.

Li Peilin, director of the CASS's Institute of Sociology, warned, however, that China should "prevent the mean value from covering up the problems the majority (of people) have" as the country's rich-poor, urban-rural divide was widening.

Attention should be paid to "how different social stratums feel about their life," he said.

Last year, the incomes of China's rural residents increased by eight percent -- the fastest pace in 11 years. The growth was still short of those in the cities by five percentage points, according to the CASS 2008 Society Bluebook report.

China's per capita GDP to hit US$3,000 by 2010

http://www.chinadaily.com.cn/china/2008-01/04/content_6371868.htm


There is a good chance that this goal might be already obtained this year. According to the Economist, China will reach a GDP per capita (nominal) of 2,960 $ this year. Naturally, the forecast is a bit conservative and the rising value of the Renminbi probably has been underestimated. The state media is nutoriously wrong on economic data.


China is also likely to become the third largest economy in the world this year (nominal GDP):

USA: 14.4 trillion $
Japan: 4.96 trillion $
China: 3.94 trillion $
Germany: 3.43 trillion $

source: http://www.economist.com/theworldin/forecasts/COUNTRY_PAGES_2008.pdf


@Adams Thank you for your explanation!

China is also likely to become the third largest economy in the world this year (nominal GDP):

USA: 14.4 trillion $
Japan: 4.96 trillion $
China: 3.94 trillion $
Germany: 3.43 trillion $

source: http://www.economist.com/theworldin/forecasts/COUNTRY_PAGES_2008.pdf

China is not likely to surpass Germany this year as the 3rd largest GDP by report. This is due to the faster appreciation of EURO in 2007 (double digit appreciation). But China will reach this goal by this year.

China is India's largest trade ally

http://timesofindia.indiatimes.com/China_is_Indias_largest_trade_ally/articleshow/2706372.cms

17 Jan 2008, 0132 hrs IST,Saibal Dasgupta,TNN

BEIJING: China has become India's biggest trade partner surpassing US, which has held that position for a long time. India-China bilateral trade reached $38.6 billion in calendar 2007. During this period, India-US bilateral trade was just $34.6 billion, according to Indian government sources.

The Sino-Indian bilateral trade has increased 53% over $24.9 billion in 2006, adding $13.7 billion in one year. The prime ministers of the two countries have revised their existing target for 2010 from $40 billion to $60 billion.
However, China might face severe pressure in maintaining its No.1 position if the first tranche of payment for the proposed aircraft purchases is sent out to US in 2008. India is awaiting the supply of Boeing aircraft from the US this year and is likely to send out some payment soon.

“It is difficult to says that China will lose its position, India-China trade would grow even faster if the discussions during the recent visit of Prime Minister bears fruit in 2008,” an official said.

The two countries have just signed a protocol on tobacco and are in discussions for enhanced trade in vegetables and fruits produced in India. If flows of these commodities begin and Beijing continues its expected growth in exports to India, US might it difficult to unseat China in 2008, sources said.

“China is a big market for tobacco. They buy from different places in the world. We are able to supply good quality tobacco at very competitive prices. I am sure India will get a piece of the Chinese market of this product,” commerce minister Kamal Nath told TNN in Beijing recently.

The main difference in the two trade segments is the story of Indian surplus and deficit. With US, India managed a surplus of $7 billion out of total trade of $33 billion in the 2006-07. The surplus is believed to be $7.8 billion in the calendar year 2007.

However, The situation is opposite in the case of India-China trade where India suffered a deficit of $9.6 billion in calendar year 2007.

Move to spur Indian imports

http://www.chinadaily.com.cn/bizchina/2008-01/15/content_6394819.htm

By Jiang Wei (China Daily)
Updated: 2008-01-15 09:35

http://www.chinadaily.com.cn/bizchina/images/attachement/jpg/site1/20080115/001320d123b908f647470a.jpg

The government will send buying missions to India this year to try to boost imports from its Asian neighbor.

So said Assistant Minister of Commerce Chen Jian at the China-India Economic, Trade and Investment Cooperation Summit in Beijing yesterday.

Chen said the government would try to increase Chinese imports from Indian companies through exhibitions and promotions.

Indian officials also said they wanted to narrow the trade gap between the two countries.

China's exports to India stood at $21.61 billion in the first 11 months last year, while imports hit $12.58 billion, the Ministry of Commerce said. The imbalance has raised concerns in India.

"The challenge before us is to diversify our export basket to China," visiting Indian Prime Minister Manmohan Singh said.

"I would urge Indian businesses to vigorously pursue opportunities for expanding non-traditional exports," he said.

The Indian Union Minister of Commerce and Industry Kamal Nath, accompanying the prime minister, said he's asked industry associations to "host these promised (Chinese) missions and find suitable areas where Indian companies have core competencies with a globally competitive edge."

He said India wants to diversify its exports to China to include fruits and vegetables.

Chen said the two countries, which account for one-third of the global population, could also cooperate in other areas.

"Down the track, the two sides can look at cooperation in the hydropower, tourism, finance, education and medical sectors," he said.

The two governments should encourage two-way investment and the exchange of skilled professionals, he said.

The summit, held by China's international trade council, drew 600 company representatives from the two nations, including Sinosteel, Tata Group and ArcelorMittal SA.

China is the second largest trade partner of India, while India is China's 10th largest. Investment between the two countries is increasing, with more contracted projects.

"We are making efforts to expand and deepen economic and trade ties between China and India. We also hope to develop new ways of cooperating," Vice-Premier Hui Liangyu said.

That would benefit not only the 2.4 billion people in the two countries, but also contribute to Asian and world peace, Hui said.

Note from big-dog: from the last news I posted, China is already India's largest trading partner by the end of 2007.

China absorbs $74.7 bln in overseas investment in 2007

2008-01-19 21:13:30

BEIJING, Jan. 19 (Xinhua) -- China absorbed 74.7 U.S. billion dollars of overseas investment last year, official data released here on Saturday said.

The country's trade volume jumped from 620.8 billion U.S. dollars in 2002 to 2.17 trillion U.S. dollars in 2007, official sources said at a national commerce work conference.

Custom tariffs hit 758.5 billion yuan (about 104.5 billion U.S. dollars) in 2007 compared with 259.1 billion yuan in 2002.

Foreign-funded enterprises paid 990 billion yuan in taxes last year, accounting for about 20 percent of national tax revenues.

China's overseas' investment is expected to reach 20 billion U.S. dollars in 2007, a seven-fold increase from 2.5 billion U.S. dollars in 2002.

To date, the number of overseas Chinese-funded enterprises is about 120,000, double the 2002 number.

http://news.xinhuanet.com/english/2008-01/19/content_7452396.htm

China signs new FTA agreement

http://news.xinhuanet.com/english/2008-01/19/content_7452545.htm

www.chinaview.cn 2008-01-19 23:04:34

BEIJING, Jan. 19 (Xinhua) -- China has signed a new free trade area (FTA) agreement, sources with the Ministry of Commerce disclosed here at a national commerce working conference on Saturday.

Commerce Minister Chen Deming said that China has so far signed and implemented agreements on establishment of six FTAs.

Sources with the ministry told Xinhua that China did sign a new FTA agreement but decline to elaborate.

Previously, China has established five FTAs with Chinese Hong Kong, Chinese Macao, Chile, Pakistan and the Association of Southeast Asian Nations (ASEAN).

The country was also in talks on establishment of FTAs with Southern African Customs Union, Gulf Cooperation Council, New Zealand, Australia, Singapore, Iceland and Peru.

The 13 FTAs involves 29 countries and regions. The trade between China and the countries and regions accounts for about one-fourth of the country's total, said Chen.

China is constantly showing more and more impressive figures.

USA: 14.4 trillion $
Japan: 4.96 trillion $
China: 3.94 trillion $
Germany: 3.43 trillion $

How long to surpass Japan?? 4 years?

Mainland sees deficit of $70b with Taiwan trade
(Xinhua)
Updated: 2007-12-19 20:26


The Chinese mainland registered a trade deficit of more than $70 billion with Taiwan in the first 11 months this year, official statistics show here on Wednesday.

From January to November 2007, trade volume between the mainland and Taiwan reached $112.79 billion, up 14.9 percent year on year, statistics from the Ministry of Commerce (MOC) show.

The mainland's exports to Taiwan reached $21.18 billion and imports from the island reached $91.61 billion during the first 11 months.

During the same period, the mainland approved 2,993 projects with Taiwan investment and the actual use of Taiwan investment reached $1.43 billion, down 9.8 percent and 25.9 percent respectively year on year.

By the end of November, 2007, direct investment from Taiwan in the mainland has totaled $45.33 billion since figures first began in 1988 with the opening up of trade between the mainland and Taiwan.

The actual use of Taiwan's direct investment in the mainland ranked the fifth among all actually used overseas direct investment.

http://www.chinadaily.com.cn/china/2007-12/19/content_6333752.htm

China Retail Sales Rise 17 Percent to 8.9 Trillion Yuan in 2007

By Helen Yuan

Jan. 20 (Bloomberg) -- China's retail sales grew at a faster pace of 17 percent in 2007, aiding government efforts to curb the economy's dependence on exports and investment for growth.

Sales climbed to 8.9 trillion yuan ($1.2 trillion) last year, beating a 13.7 percent gain in 2006 to 7.6 trillion yuan, the official Xinhua News Agency reported late yesterday, citing a working conference of the Ministry of Commerce.

Stronger domestic consumption may help China weather weaker demand for exports in a global slowdown. The jump in sales also reflects inflation that accelerated to an 11-year high in November, underscoring the risk that the world's fourth-largest economy may overheat.

China is seeking to tame inflation by imposing temporary curbs on price increases for some staple foods and liquefied petroleum gas. The government can revoke price increases and will punish companies that fail to report price changes, give fake information or manipulate prices, the government has said.

Edible oil prices in China's 36 large and medium-sized cities surged 58 percent early this month from a year earlier, pork rose 43 percent and beef gained 46 percent, Xinhua said.

China's retail sales have grown by average 13.1 percent annually from 4.8 trillion yuan in 2002, the Xinhua reported.

Household spending accounted for 36 percent of China's gross domestic product in 2006, compared with more than 50 percent in the U.S., Japan and India.

To contact the reporter on this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

http://www.bloomberg.com/apps/news?pid=20601089&sid=aPQzFvYZ.uFA&refer=china

Rural residents go on buying spree
(Xinhua)
Updated: 2008-01-20 21:38


BEIJING -- News of the government's recent offer to grant a 13 percent subsidy for household appliances has thrown Chinese farmers into a crazy scramble for televisions, refrigerators and mobile phones -- the three product categories on the preferential policy list.

Crazy buying

"I bought a 29-inch color TV set made by Sichuan Changhong Electric Company. It cost me only 1,499 yuan ($207)," said Li Yuanhong, a 57-year-old farmer in Yongxing, a townhip in the southeastern Sichuan Province. "I hope the government would also grant subsidies to LCD TV."

In front of home appliance shops, clusters of farmers crowd about the shop assistants. Some were discussing with their spouse while others were carefully taking out the money but still grasping it in their rough hands before giving it to the assistant.

"The TV sets are great. Sharp images make them worth the money. Look, I just bought one for only 668 yuan," said 72-year-old Xu Guiling excitedly. "It will be easier for me to kill time when my children are making their living in big cities."

Wang Xiaoming, owner of a small appliance shop named Minghong, called the government's plan to stimulate rural spending "inspiring". "Six televisions, four refrigerators and one icebox sold out within half a day. It was common to have no appliances sell out for several days before the subsidy policy was introduced."

Sales figures for Sichuan Changhong Electric Company revealed more than 2,500 appliances were sold to farmers on January 15 -- the first day on which the province started to implement the preferential policy.

"The sales figures of our more than 1,000 distributors are on the rise. The purchasing power of the rural population is amazing, " said Deng Xiaohui, the company's marketing manager.
Special presents

For farmers living in rural areas, the rebate offer was considered a surprise and a special present from the government with the Spring Festival, the country's most important traditional holiday, approaching.

The Ministry of Finance declared last month it would offer farmers a 13 percent subsidy on the prices of home appliances. This was done to stimulate sluggish rural consumption and improve their life quality.

Huge foreign direct investment and fast-growing exports have long been major contributors to China's economic development. As the negative impact of the U.S. subprime mortgage crisis overshadows the global economy, the Chinese government has started to attach more importance to tapping the domestic consumption, especially in the unexploited rural markets.

China's Minister of Agriculture Sun Zhengcai said recently in a report to the country's top legislature that per capita net income for the 900 million rural residents was expected to surge by seven percent to stand at 4,000 yuan in 2007.

"The urban market for household appliances has been saturated. Continuous price wars in cities are tragic. It is the time for us to cast eyes to the rural markets, where farmers want high quality products," said an expert with China Agricultural University on Sunday who preferred to remain anonymous.

"China has more than 50,000 townships and the number of rural households account for 68 percent of the total families. As of this month, the rural areas have a total purchasing power of 250 billion yuan for home appliance.

Such potential spending power was obviously not lost on the government as its subsidy offer touched the pulse of the market.

A pilot program to test this was initiated in three major agricultural provinces of eastern Shandong, central Henan and southwestern Sichuan. Color TV sets, refrigerators and mobile phones were the three categories of appliances on the preferential policy list and each rural household could purchase two items from each category.

In the pilot, China had signed cooperative agreements with 15 leading household appliance makers, including Haier, Hisense and Changhong.

The three listed manufacturers all saw their share index rise recently. The government's subsidy policy was considered to be the direct driving force behind the booming business.

"The government subsidies give rural residents great incentives to buy and it also provides appliance makers excellent opportunities to make breakthroughs in rural areas," said Wang Zhen, a Guotai Junan Securities analyst.
Customized design and guaranteed after-sale service
The major concern of the farmers before the pilot was implemented were after-sale service and whether the appliances were out-of-date.
Their worries, however, proved unnecessary.
"All the goods have just rolled off the production lines. Actually, we promote the performance of products to make sure the images on the televisions will not fluctuate even when the voltage is unstable," said Deng Xiaohui, Sichuan Changhong Electric Company marketing manager.

Like Changhong, Meiling Co. Ltd has also made some considerations to better its customers' lives.

"They made a mouse guard on the back cover of refrigerators so that mice can not build nests there. It's a subtle change but it will extend the life of the refrigerators in rural places where there are more mice than in cities," said a shop assistant surnamed Wu.

Zhang Xing, Qingdao Aucma Group general manager, said his company was reaching out to rural areas and had so far established more than 10,000 sale terminals in country areas of the three pilot provinces. "Aucma will send not only products but also fashion, energy saving and the best services to the countryside."

The Ministry of Finance said the central and local governments would pay 80 and 20 percent of the subsidy, respectively. An insider said recently that the central and local governments' budget of the pilot had reached 10 billion yuan.

In Shangdong, one of the pilot provinces, 178 million yuan in subsidies from the the central and provincial government had been allocated to counties and townships in advance. A villager in the city of Zhangqiu who bought his first refrigerator received a 241 yuan subsidy.

"Money is not a problem. The more villagers who buy, the more subsidies we would like to pay," said Yu Guoan, Shangdong Provincial Department of Finance deputy director.

The pilot ends on May 31. If it continues to sail smoothly, it will be spread throughout the country as all the rural population and more appliance makers are expected to benefit from the preferential agricultural policy.

http://www.chinadaily.com.cn/china/2008-01/20/content_6407120.htm

^^ During last year's rapid internet growth, rural internet users played a big role. Great to see the rural population starts to contribute more and more to the economy, after all China's urbanization is still a long process.

Chinese stocks nosedive over 5%

By Li Zengxin (chinadaily.com.cn)
Updated: 2008-01-21 16:44


Chinese stocks plunged 5.14 percent on Monday after 1.7 trillion yuan in market value evaporated in last week's turmoil. The news of Ping An Insurance's 160 billion yuan additional share and bond issue triggered panic selling. Other depressive factors included heightened expectations of an economic recession in the US and possible diversions of capital influx to a second stock trading board.

Ping An Insurance Group, the nation's second largest life insurer, will seek shareholders' approval on issuing 1.2 billion A-shares traded on the Shanghai Stock Exchange at a par value of 1 yuan each. Based on its previous closing price, or 98.21 yuan apiece, the 1.2 billion A-shares will soak up 118 billion yuan from the market.

The Shenzhen-based company will also issue no more than 41.2 billion yuan worth of convertible bonds with warrants which entitle the purchase of its shares. The bonds will have a term of six years.

The 160 billion yuan will be the largest amount in a re-financing share issuance in the history of China's A-share market, and too big for the market to handle smoothly, said analysts. As a result, investors panicked and dumped their holdings. Ping An fell the maximum of 10 percent to close at 88.39 yuan. But the negative sentiment did not stop there. The other two listed insurers, China Life and China Pacific Insurance Group, dropped 8.76 percent and 8.82 percent respectively. Then the whole financial sector collapsed as heavyweight bank shares and securities brokers were dragged down.


The Shanghai Composite Index plummeted 5.14 percent or 266.08 points to 4,914.44, the biggest single-day drop in over half a year since the May 30 period last year. Turnover was 132.2 billion yuan, slighter higher than last Friday. Of the A shares listed in Shanghai, only 86 moved up and 61 had little change, while 703 fell.

The Shenzhen Component Index dropped 920.46 points or 5.08 percent to 17210.93. Turnover was 69.5 billion yuan. Of the A shares, 532 ended lower, 64 climbed up and 83 remained unchanged.

A one-and-half year bull run in the stock market is set to slow down, if not turning into a sluggish bear, said analysts. According to fourth-quarter reports from 277 mutual funds managed by China's 40 fund companies, a majority of the stock funds have reduced their holdings in A shares. When the market tumbled last week, dumping of shares by these mutual funds was more apparent, sources said.


In addition, although not a major cause of today's plunge, the expected second stock trading board may add more pressure for falling prices. Cheng Siwei, vice chairman of the Standing Committee of the National People's Congress, said at a financial forum over the weekend that the preparation work for the launch of stock index futures and a growth market have been completed. The news is actually no surprise and neutral to investors, but may be interpreted the wrong way in the midst of market turmoil like this, said analysts.


It seemed there was discouraging news from every corner of the world, said a sad retail investor. The US economy is closer to a recession as economists believe California and Florida, the biggest and fourth-biggest states of the US, have slowed down. Wall Street investment bank Merrill Lynch last week announced a loss of US$10 billion in the fourth quarter last year, its biggest quarterly loss since 1994.

http://www.chinadaily.com.cn/bizchina/2008-01/21/content_6409762_2.htm

China says foreign direct investment rose to US$83billion in 2007


THE ASSOCIATED PRESS

January 21, 2008

BEIJING - Foreign investment in China rose 13.8 per cent last year to US$82.7 billion, despite curbs meant to cool a boom in spending on real estate and other assets, data released Monday showed.
Foreign investment outside the financial sector rose 13.6 per cent to US$74.8 billion, while investment in banks and securities totalled US$7.9 billion, the Commerce Ministry reported on its website.

Beijing is trying to slow surging spending on real estate and in industries such as auto manufacturing where supplies of factories and other assets exceed demand. Regulators worry the boom might ignite a debt crisis if projects fail and companies default on loans.
But investors are racing to cash in on the rapid growth in China's consumer spending, demand for housing and export-driven manufacturing industries.

http://finance.sympatico.msn.ca/investing/news/businessnews/article.aspx?cp-documentid=6049745

'Moderate' outlook for Guangxi
By Zhao Huanxin (China Daily)
Updated: 2008-01-21 11:32


Guangxi is set to become an engine of growth for Southwest China with the central government's endorsement of an economic zone last week, but the region will develop at a "moderate" pace this year, officials have said.

Excited at the opportunities presented by the State Council's approval of the Beibu Gulf Economic Zone development strategy, Ma Biao, acting chairman of the Guangxi Zhuang Autonomous Region, said the region will start up a new round of development and construction.

At the same time, Ma said the region's gross domestic product (GDP) is set to expand by 11 percent this year, nearly 4 percentage points lower than the estimated level for last year's figure.

"On the precondition of optimizing economic structure, improving benefits, lowering consumption and protecting the environment, we expect the region's GDP growth to expand by 11 percent, with per unit GDP energy use down by 3.5 percent," Ma told the Guangxi people's congress, which convened its annual session on Saturday. The meeting will last till Sunday.

"We can never pursue development at the cost of the ecology and environment," he said.

The Beibu Gulf strategy integrates the regional capital Nanning with five cities around the gulf - Beihai, Qinzhou, Fangchenggang, Chongzuo and Yulin.

The zone covers about a third of the region's area, which stretches 236,700 sq km, and contains 42 percent of Guangxi's total population, which reached 49.61 million at the end of 2006.

Under the new development strategy, Guangxi will develop the zone into a base for coastal industries and for cooperative ventures in logistics, commerce and trade, as well as in information exchange, between China and the Association of Southeast Asian Nations (ASEAN).

In addition to becoming a platform for economic exchange with ASEAN members, the zone is expected to become another engine fueling domestic growth, following the Pearl River Delta in the south, the Yangtze River Delta in the east and the Bohai Sea Rim area in the north.

Ma said Guangxi will open up further to ASEAN members, Japan, South Korea, Europe and the United States, as well as the Hong Kong and Macao special administrative regions and Taiwan Province.

He said the region will speed up infrastructure construction and develop the economy by striking a balance between investment, consumption and export.

Asked if petrochemicals, paper pulp manufacturing and other heavy industries in the zone would threaten the environment, Guo Shengkun, Party secretary of the region, said the industries in the zone had been distributed on a "scientific basis".

"What we are pursuing is development in a sound and rapid fashion," Guo told China Daily.

"We have mandated adequate environmental impact assessment and other scientific data to ensure development will not mess up environment."

Liang Bin, director of Guangxi environmental protection bureau said the seemingly lower GDP growth rate indicated that the region was trying to reconcile development with energy conservation and environmental protection.

"Apart from keeping pace with national development, the 11 percent rate of Guangxi is also based on calculations to ensure the region can meet its energy-saving and pollution reduction targets," he told China Daily.

Wen Ming, a top official of the Yulin municipality, said the city used to welcome foreign funds indiscriminately. Now it chooses only those that will fund plants that do not pollute the air, water or otherwise ruin the environment in what he described as one of the top tourist attractions in Guangxi.

For example, Yulin has just approved investment that helps transform its ceramic plants from a reliance on dirty coal to gas and electricity, he said.

Lian Younong, mayor of Beihai, said that as part of the Beibu Gulf Economic Zone, Beihai will continue to keep printing and dyeing, fireworks and fish meal plants at bay, while vigorously developing information technology and tourism.

A bio-fuel plant, capable of producing 200,000 tons of ethanol a year, has just been put into operation. It will expand its capacity this year, Lian said.

http://www.chinadaily.com.cn/bizchina/2008-01/21/content_6409027.htm

Shandong to achieve GDP of $552b in five years
(China Daily)
Updated: 2008-01-21 07:57


The province of Shandong is targeting a gross domestic product (GDP) of 4 trillion yuan ($552 billion) by 2012, with per capita GDP up to $5,000, acting governor Jiang Daming said yesterday.

In his report to the first session of the 11th Shandong people's congress, Jiang said the province is aiming for an average GDP growth rate of 10 percent in the coming five years.

Last year, its GDP rose to 2.6 trillion yuan, with a per capita GDP of more than $3,866 - both 2.5 times those of 2002

Based on official figures for 2006, Shandong's GDP last year is expected to account for 10.6 percent of the national total, following behind Guangdong and Taiwan provinces.

To transform Shandong from being a "large" economic province to a "strong" one, the province still needs to focus its efforts on creating new advantages for itself, the official said.

Such efforts include converting economic growth that is mainly reliant on investment and exports into one where there is a coordinated motivation of consumption, investment and exports.

There are also plans to move from a reliance on secondary industries to a combination of the primary, secondary and tertiary industries.

Shandong is also striving for the science and technology sector to contribute 55 percent to economic growth by 2012 - with improvements in science and technology development, workers' comprehensive capacities and management innovation.

"Realizing such a goal will need independent innovation," the official said.

The province will encourage technology research and development in key areas including electronic information, biotechnologies, oceanic technologies and new materials.

It will also establish and improve all kinds of technology innovation platforms, including the construction of the National Information and Technology Innovation Park, the State Software Export and Innovation New Base and the State Outsourcing Base City in Jinan.

It is also working towards the setting up of the National Bio-industries Base and the National Oceanic Science Research Center in the city of Qingdao.

"We will pay close attention to the fostering of medium- and small-sized, new and hi-tech enterprises...

"We will also intensify the construction of pilot and demonstration bases in the region to help transfer advanced scientific and technological results into practical productivity," Jiang said.

Considered one of the country's major agricultural provinces, Shandong is also focusing on speeding up development of the sector.

"Shandong adheres to the most stringent protective regulations for arable land and aims to maintain yearly grain production at 40 billion kg and above," Jiang said.

He added that the authorities will grant more assistance and implement preferential policies to support farmers, improve their income and reduce their burdens.

Road construction in the province is also targeted to reach 5,000 km of expressway, which will be opened to traffic by 2012.

At the same time, the province plans to foster 100 large enterprises with annual sales of 10 billion yuan each in areas like iron and steel, petroleum, mining and construction materials.

The province will also produce more desalted sea water for direct use and put more resources into developing solar power, biomass energy, wind power and terrestrial heat energy.

It will also look to further boost the nuclear power project in Haiyang county in the city of Yantai in the coastal area, officials said.

Shandong's goals for the year


GDP: 10 percent growth

Loca government revenue: 15 percent growth

Per unit GDP energy consumption: Down 4.5 percent

SO2 and chemical oxygen demand: Both down 4 percent

Population growth: Within 0.6 percent

Urban unemployment rate: Within 3.8 percent

Average disposable income of urban residents: Up 8 percent

Average disposable income of rural residents: Up 8 percent

China created 12 million jobs in '07, keeps unemployment at 4%

http://www.chinadaily.com.cn/china/2008-01/22/content_6410638.htm

By Wu Jiao (China Daily)
Updated: 2008-01-22 07:30

http://www.chinadaily.com.cn/china/images/attachement/jpg/site1/20080122/0013729ece6b08ff6ea218.jpg

The national urban and township unemployment rate was reduced to 4 percent last year, thanks to the creation of more than 12 million jobs and despite more people entering the workforce, a top labor official said yesterday.

The number of jobs created exceeded the target of 9 million set at the beginning of last year, Zhai Yanli, vice-minister of Labor and Social Security, said at a press conference.

Zhai said that by the end of the year, 99.9 percent of the country's 869,000 former "zero employment" families had succeeded in finding work for at least one member.

Last year saw the total urban and township unemployment rate fall by 0.1 percentage points for the third year in a row.

During the period of economic restructuring in the late 1990s, the rate rose to a high of 6 percent.

Zhai attributed the decline to the country's economic growth and measures to stabilize employment. He said the rate will be held within 4.5 percent this year.

Every year for the past decade, China has posted double-digit GDP growth. Between 1978 and 2006, the number of urban and township jobs rose from 95.14 million to 283.1 million.

But the country continues to face employment pressure, with 10 million people entering the workforce every year between now and 2010, according to official figures.

At the same time, the move away from labor-intensive industries in line with efforts to upgrade the economy and improve productivity will also mean fewer jobs being created in those industries, Chen Liangwen, an economics researcher at Peking University, said.

Research by the Chinese Academy of Social Sciences has suggested the government look to create more jobs in the country's tertiary, or service, industries.

While these already account for about 39 percent of the country's total jobs, the ratio in many developed countries is between 50 and 60 percent.

Zhai also said the ministry is mulling over a new salary regulation, to guarantee steady pay rises.

"The regulation has been drafted and is now soliciting advice. It will be submitted to the State Council for deliberation after certain legislative procedures," he said.

Labor experts have said the new regulation, together with the newly implemented Labor Contract Law, have helped China enter a new era of employer-employee relations by offering more protection for workers.

Wen Yueran, an expert in labor relations from Beijing's Renmin University of China, said low salaries were a major factor in accelerating China's economic growth over the past two decades.

The country's total wage payments fell to 41.4 percent of GDP in 2005, compared with 53.4 percent in 1990, according to figures from the National Bureau of Statistics.

Workers will need some hefty pay rises if China is to increase its wages-to-GDP ratio to the 55 percent level of most developed countries, Wen told the 21 Century Business Herald.

Low wages and slow pay increases have had a negative impact on society and cooled consumption, Chen said.

Steady and rational pay rises will help stimulate domestic consumption, which fell to a record low of 51.1 percent of GDP in 2006, Chen said.

Consumers to be armed with quality codes(Xinhua)
Updated: 2008-01-22 06:58


BEIJING - Chinese consumers will be able to check the authenticity of products with new quality codes to come into effect before the end of June.

The measure, beginning with 69 kinds of major commodities, will allow the identification of fake and substandard items through free phone number, the Internet or special enquiry terminals in shops and supermarkets, said the country's quality watchdog on Monday.

The commodities included food products, home appliances, power/cable lines, agricultural tools, gas burners, work safety equipment, electric blankets and cosmetics, said the General Administration for Quality Supervision, Inspection and Quarantine.

Consumers would be able to acquire information, including the name of producers and production and expiry dates, by free inquiry calls, by tapping in a series of digits.

Once unqualified products were detected, information would be transmitted to a supervisory network, which would inform other distributors of the same batch of products and stop sales.

Chen Xiaoying, an official in charge of the promotion of the supervisory network, said 30,299 producers were registered with the network and 700 million products had been labeled with codes by January 16.

She said large supermarkets in Beijing such as the Wu-Mart were testing the network.

Chinese authorities had been frustrated by substandard China-made products both on domestic and overseas markets.

The quality watchdog said on Wednesday it had arrested more than 1,480 people in a four-month nationwide crackdown on substandard goods, part of ongoing efforts to calm international worries over the quality of the country's products.

It said the arrests were the result of 1,187 criminal investigations nationwide into the manufacture and sale of fake or substandard food, medicine or agricultural products that started in August.

Sixty-four people were arrested in 13 major cases, including fake drug albumin from human plasma and substandard vaccines for blue ear pig disease.

During the campaign, the authorities closed more than 300 drug manufacturers, and destroyed or returned 168 batches of illegally imported or substandard pork, fruit and materials. It also set up quality files covering 33,000 consumer goods producers and put more than 10,000 enterprises into the country's quality-monitoring network.

http://www.chinadaily.com.cn/bizchina/2008-01/22/content_6410854.htm

China's Internet shopping taking off fast: report
(Xinhua)
Updated: 2008-01-22 17:31


China's Internet shopping, though constituting less than one percent of the country's total retail sales, is taking off fast, as 55 million of China's 210 million Internet users have tried the shopping mode, said an industry report.

Transactions via Internet topped 59.4 billion yuan ($8 billion) in China in 2007, with the per-capita spending surpassing 1,080 yuan ($146), according to the report jointly made by China Internet Research Center (or iResearch) and taobao.com, China's largest online shopping portal.
The iResearch's annual report forecast that online sales would be increasing by leaps and bounds in the next few years.

"Revenues of the Internet shopping would exceed 1 trillion yuan before 2012, when the Internet would handle five to eight percent of China's retail sales," the report says.

China's commercial hub of Shanghai saw the fastest growth in Internet shopping, which was followed by Guangdong, Zhejiang, Jiangsu provinces and Beijing, according to the report.

Transactions via taobao.com achieved 43.3 billion yuan ($5.8 billion) in 2007, equivalent to the 2006 revenue of China's biggest retail enterprise, Hualian Group, says the report.

http://www.chinadaily.com.cn/bizchina/2008-01/22/content_6412983.htm

90% domestic economists expect drop in exports(Xinhua)
Updated: 2008-01-21 21:23


Nearly 90 percent of Chinese domestic experts and market practitioners believe that the country will see a drop in exports this year in the wake of the United States subprime mortgage crisis.

A bi-annual survey of economists' opinions on China's macro-economy was recently conducted by First Finance Daily, one of the country's leading financial newspapers. The survey covered 60 famous economists from the government, research institutes, universities and financial institutions and 23 fund managers on the market.

The survey report released by First Finance Daily on Monday said 70 percent of the respondents forecast a slight fall in exports while 16.7 percent expected a sharp drop. Only 13.3 percent held that the bull run of exports would continue in 2008.

The majority of the experts believed the abolition of export tax rebates, the appreciation of the Renminbi, the rise in labor cost and sluggish consumption in the US would exert negative impacts on the country's economy.

China's trade surplus surged to a record US$262.2 billion in 2007 with exports climbing 25.7 percent to US$1.22 trillion and import rising 20.8 percent to US$955.8 billion. The export growth was 1.5 percentage points lower than in 2006, while the import growth posted a gain of 0.9 percentage points.

But 80 percent of experts held that China's trade surplus would stand at US$200 billion. However, this is not contradictory with the fall in exports, they said. That is because processing trade, which accounts for a large proportion of China's foreign trade, will also see a decline in imports.

It is noteworthy that the Ministry of Commerce gave top priorities to "keep the consumer price stable" on the national commerce work conference held earlier this month compared to the main task of "curb trade surplus" in 2007.

In addition, 73.4 percent of the respondents forecast a 10-plus percent growth in China's GDP and 43.3 percent believed that the Consumer Price Index rise would be between five to six percent this year.

http://www.chinadaily.com.cn/bizchina/2008-01/21/content_6411027.htm

A drop in exports? Surely they are talking about a drop in export growth?

^^ A drop in trade surplus I think, since export growth has been slowing for years:

80 percent of experts held that China's trade surplus would stand at US$200 billion.

Prices to keep growing, rate to slow
(China Daily)
Updated: 2008-01-23 08:06


Prices of consumer goods will continue to rise but at a slower rate, a top official said Tuesday.

"The growth momentum of overall prices will gradually ease," Zhu Xiaoliang, deputy head of the Ministry of Commerce's department of market operation regulation, said during an interview broadcast live online.

He vowed the ministry will ensure adequate supplies of major food products such as meat and vegetables, to stabilize prices during the upcoming Spring Festival holidays.

The ministry is analyzing the price trends of about 600 consumer goods in the first half of the year. Preliminary results show most of them are in oversupply or at balanced supply-demand levels, Zhu said.

However, the rising costs of labor, land and raw materials will increase pressure on overall price levels in the first half of the year, he said.

China has been battling fast-rising prices for the past year, with the consumer price index (CPI), a bellwether of inflation, at 6.9 percent in November, an 11-year high.

It was the fourth consecutive month the index exceeded 6 percent.

Analysts expect CPI figures for December, due for release tomorrow, to be about 6 percent.

"The ministry's view is in line with market trends," Zhu Baoliang, a senior economist with the State Information Center (SIC), said.

Hikes in food prices, which account for a third of the CPI basket, are seen as the main contributor to the exceptional CPI growth, he said.

"The cost of services such as electricity and property rents also drive the index," he said.

Food prices have remained high in recent months but they will not continue to rise at such a fast rate, he said.

"This will help stabilize overall prices."

Zhu from the Ministry of Commerce said the price of pork will continue to rise as the cost of pig breeding remains high. Prices of vegetables and flour have also been rising recently because unfavorable weather conditions have hindered their transportation and reduced the supply.

The price of cooking oil will continue to go up because of the high cost of soybean and rising prices on the international market, he said.

"In the coming months, domestic cooking oil prices will run at high levels, but supply will be sufficient to meet demand," Zhu said.

Last week, the central government launched a number of temporary interventionist measures to control prices of several staples such as grain and meat.

http://www.chinadaily.com.cn/china/2008-01/23/content_6413855.htm

China replaces US as Japan's biggest export market

http://www.reuters.com/article/economicNews/idUST9307620080124

TOKYO, Jan 24 (Reuters) - China overtook the United States as Japan's biggest export destination in 2007 for the first time in modern history, a symbolic move that has softened the impact of a deepening U.S. slowdown on the Japanese economy.

But many of the goods shipped to China are assembled into products that are then exported to the United States, and economists say the world's largest economy still holds the key to Japan's economic outlook.

"As the U.S. economy slows down further, Japanese exports will likely slow but only moderately as emerging economies and oil-rich countries will help support Japanese shipments abroad," said Yasuo Yamamoto, senior economist at Mizuho Research Institute.

Exports to China, which has already replaced the United States as Japan's largest trading partner, totalled 17.4 trillion yen last year, data from Japan's Ministry of Finance showed on Thursday. This includes exports to Hong Kong.

Shipments of electronic devices and organic compounds were brisk.

"Japan's basic materials industry has been robust recently, and demand for their products is stronger in China than in industrialised nations," said Takeshi Minami, chief economist at Norinchukin Research Institute.

Shipments to the United States declined 0.2 percent to 16.9 trillion yen in 2007, falling for the first time in four years.

In December, U.S.-bound exports fell 4.5 percent from a year earlier, marking the fourth straight month of decline.

The data met a muted reaction from market players, who were preoccupied with recent market upheaval triggered by the U.S. housing market mess.

Despite recent sluggishness in exports to the United States, overall exports have been resilient and supported the nation's growth thanks to strong shipments to Asia and other emerging economies.

But fears of a U.S. recession, market mayhem and weak housing investment at home due to tighter building rules have almost wiped out expectations for a rate hike in Japan this year, and markets are now pricing in a possible rate cut instead.

The Bank of Japan held rates steady at 0.5 percent on Tuesday, but a Reuters poll of analysts and traders showed about a third of them expect the BOJ's next move to be a rate cut. [ID:nTKB002913]

Adding to the gloom, sentiment among Japanese manufacturers dipped to a two-year low in January due to rising raw materials prices, slack consumer spending and fallout from the credit crisis, a Reuters survey showed. [ID:nTKF002960]

In December, overall Japanese exports rose a smaller-than-expected 6.9 percent, while imports rose 12.1 percent, basically in line with a market forecast.

As a result, the December trade surplus decreased 20.9 percent from a year earlier to 877.9 billion yen. (Reporting by Yoko Nishikawa; Editing by Mike Miller)

Official release: China's GDP grows 11.4 percent in 2007, CPI 4.8%

http://english.people.com.cn/90001/90776/90884/6344376.html

January 24, 2008

China's gross domestic product (GDP) reached 24.6619 trillion yuan (3.43 trillion U.S. dollars) in 2007, up 11.4 percent year on year, said the National Bureau of Statistics (NBS) Thursday.

The growth rate was 0.3 percentage points higher than the 2006 level revised at 11.1 percent.

It was the fifth consecutive year in which the nation's GDP grew at a pace of more than 10 percent, NBS head Xie Fuzhan told a press conference held in Beijing.

The growth was also a record high over the past 13 years, observers said.

The GDP growth rate was 11.1 percent in the first quarter, 11.9percent in the second quarter, 11.5 percent in the third quarter and 11.2 percent in the fourth.

Xie said both the United States and China had served as powerful engines for the current cycle of global economic growth. The mounting possibility for the U.S. economy to plunge into recession is bound to have negative effect on the world economy.

However, Xie showed confidence in China's economic growth, saying the growth will be "steady" this year.

Last year, China's primary sector realized 2.89 trillion yuan in added value, up 3.7 percent, the secondary sector, 12.14 trillion yuan, up 13.4 percent, and the tertiary sector, 9.63 trillion yuan, up 11.4 percent.

The growth rate for the primary sector was 1.3 percentage points slower, while the paces for the secondary and tertiary sectors were 0.4 percentage points and 0.6 percentage points higher respectively.

According to Xie, 2007 became the fourth straight year in which China recorded a growth in grain production.

The year saw the nation yield 501.5 million tons of grain, an increment of 3.5 million tons, or 0.7 percent, over the 2006 level.

Major industrial enterprises each with an annual sale income of more than five million yuan chalked up a year-on-year growth of 18.5 percent in value added output, 1.9 percentage points quicker.

They garnered 22.95 trillion yuan in combined profits, up 36.7 percent. The growth rate was six percentage points higher.

Last year also witnessed an accelerated growth in fixed-asset investment nationwide, with the real estate sector leading the way.

China pumped 13.72 trillion yuan in fixed assets, up 24.8 percent, 0.9 percentage points quicker. The total included 11.74 trillion yuan in urban areas, up 25.8 percent, and 1.98 trillion yuan in rural areas, up 19.2 percent. The growth rate for urban areas was 1.5 percentage points higher.

Property development absorbed 2.53 trillion yuan in investment nationwide, up 30.2 percent, 8.4 percentage points higher.

Source:Xinhua

^^ now my concern is if China's GDP can jump to $4.5 trillion by the end of this year (2008). It is achievable imo. Here's my calculation:

2008 GDP prediction: (after inflation)

$3.43
+10% * $3.43 (minimum GDP growth)
+ 15% * $3.43 (after 2008 economic survey)
= $4.28 trillion
+ 7% * $4.28 (currency appreciation as of this year)
= $4.58 trillion

Am I too optimistic?

^^ now my concern is if China's GDP can jump to $4.5 trillion by the end of this year (2008). It is achievable imo. Here's my calculation:

2008 GDP prediction: (after inflation)

$3.43
+10% * $3.43 (minimum GDP growth)
+ 15% * $3.43 (after 2008 economic survey)
= $4.28 trillion
+ 7% * $4.28 (currency appreciation as of this year)
= $4.58 trillion

Am I too optimistic?

Yes you are, you forgot the US recession, never aim too high though.


In 2006, China's GDP nominal was just $2.6 trillions but in 2007, it is $3.4 trillions, so is it a 30% growth ?

Slowdown may help China


http://i224.photobucket.com/albums/dd175/02bigbaby/chart.jpg

By Wang Lan (China Daily)
Updated: 2008-01-24 09:30


A significant US economic slowdown could help China become consumer-driven rather than export-oriented, economists said.

But they warned it would be a difficult process, as domestic demand could drive up prices - especially in areas where markets are less efficient.

Wang Qian, an economist at JPMorgan Chase Bank, said domestic consumption is becoming a bigger factor in the nation's economic growth.

"Though a possible US recession would drag down other economies, China would be the exception, as a US-led economic slowdown would pressure the nation to expedite economic restructuring," Wang said. "Of course, without a US slowdown, China would also be on the way toward balanced economic growth, but the process could take much longer," she said.

But increased domestic demand for a wide range of goods and services may not be met by a less-than-efficient supply system that is sometimes distorted by bottlenecks. This would lead to the irrational price increases that cause CPI fluctuations.

"If China's exports to the US and other European countries start falling, domestic consumption will become a major force to sustain the nation's economic growth," said Shen Minggao, an economist at Citibank China in Beijing.

"A transparent market is needed to ensure supply is not easily disrupted by profiteering and to get CPI growth back to an acceptable level," Shen said.

"Taking effective measures to rein in inflation should be the government's prime focus in 2008."

Many economists are calling for an efficient supply and distribution system to match higher domestic demand.

Zhao Xijun, a finance professor at Beijing's Renmin University of China, said more effort was needed to structure consumer products to cater for wide domestic demand.

Economists said a smaller trade surplus resulting from lower export growth to the US would also help alleviate pressure on renminbi appreciation in 2008.

Stephen Green, head of research at Standard Chartered China, told China Daily: "A more severe US slowdown, which drags export growth below 15 percent year-on-year, would increase the chances of a slower renminbi appreciation rate."

Jonathan Anderson, UBS Securities' chief economist for Asia, doesn't expect China's trade balance to fall this year, but said the surplus will peak in the next few quarters. That would mean a long-awaited slowdown in headline GDP growth, as rising net exports contributed more than 2 percentage points to real growth in 2006 and 2007.

http://www.chinadaily.com.cn/china/2008-01/24/content_6417774.htm

Yes you are, you forgot the US recession, never aim too high though.
US recession may only affect the GDP growth (as I listed as 10%), but will further push higher Chineses Yuan (then may above 7%). So overall it won't affect too much of the total nominal GDP number.

In 2006, China's GDP nominal was just $2.6 trillions but in 2007, it is $3.4 trillions, so is it a 30% growth ?
Good question but I can't get your point. The reason of the GDP rapid rise might be, first China's 2006 GDP is nearly $2.7 trillion not $2.6, then China's currency appreciates over 7% in 2007, last, remember China adjusted the GDP values in mid-year for last 5 years? any other reasons?

US recession may only affect the GDP growth (as I listed as 10%), but will further push higher Chineses Yuan (then may above 7%). So overall it won't affect too much of the total nominal GDP number.


Good question but I can't get your point. The reason of the GDP rapid rise might be, first China's 2006 GDP is nearly $2.7 trillion not $2.6, then China's currency appreciates over 7% in 2007, last, remember China adjusted the GDP values in mid-year for last 5 years? any other reasons?

I am no economic expert but that figure is what my calculation shows me.

Btw if you read the article above, you see that a lower trade surplus mean less appreciation for the Yuan.

I am no economic expert but that figure is what my calculation shows me.

Btw if you read the article above, you see that a lower trade surplus mean less appreciation for the Yuan.

Dear, I have listed some of the reasons for your calculation figure question.

Of sourse lower trade surplus can ease the pressure of Yuan appreciation, economically and politically. But 10% and 7% are all the bottomline in respective sector. And China's export only contributes 2% of the total GDP growth. Its linkage to investment and consumption is only 7%. So i don't think US recession has too much impact to China's GDP in 2008.

So how's my prediction below?

2008 GDP prediction: (after inflation)

$3.43
+10% * $3.43 (minimum GDP growth)
+ 15% * $3.43 (after 2008 economic survey)
= $4.28 trillion
+ 7% * $4.28 (currency appreciation as of this year)
= $4.58 trillion

Economic survey result is a big X factor. last time the adjustment is up 16.8%. This time the voices from different provinces say up 15% to 20%. (nobody knnows though).

Of sourse lower trade surplus can ease the pressure of Yuan appreciation, economically and politically. But anything wrong with my prediction?

I don't really know, I can't judge really but increase by more than $1 trillion in just 1 year sounds a bit crazy to me.

I know China's economy was injected with an extra of 700/800 billions in just 1 year from 2006-2007, so maybe your number is correct for this year, but I can see that a heavy currency appreciation is needed.

China's industiral output up 18.5% last year(Xinhua)
Updated: 2008-01-24 10:36


Industrial output jumped 18.5 percent last year, or 1.9 percentage points more than in 2006, Xie Fuzhan, director of the National Bureau of Statistics, said on Thursday.

Output at companies with annual revenue of at least 5 million yuan ($691,600) expanded 17.4 percent in December, compared with 17.3 percent in November.

Industrial output and gross domestic product (GDP) could both expand more slowly this year as the sub-prime crisis and a potential recession in the United States could reduce demand for Chinese exports, according to Zhang Liqun, a researcher at the Development Research Center of the State Council.

Industrial output growth decelerated from September onward, as the government's tightening measures took effect. The year-on-year growth figures for September and October were 18.9 percent and 17.9 percent, respectively.

Output growth rates were 13.8 percent for state-owned enterprises and organizations in which the state holds controlling stakes and 17.5 percent for foreign-, Hong Kong-, Macao- and Taiwan-invested businesses, Xie told a press conference in Beijing.

The rates for heavy and light industry were 19.6 percent and 16.3 percent, respectively.

Other statistics released on Thursday:

-- Companies sold 98.1 percent of their production last year.

-- Profit grew by 36.7 percent year-on-year during the first 11 months of last year, six percentage points more than a year earlier, to 2.295 trillion yuan, Xie added. This growth came as the economy expanded 11.4 percent for the whole year, the fifth year of double-digit growth.

-- Vehicle producers' profit soared 68.7 percent, the highest rate among all sectors. The rates for the chemicals, coal and steel industries were 51.5 percent, 49.1 percent, and 47.2 percent, respectively.

http://www.chinadaily.com.cn/bizchina/2008-01/24/content_6418243.htm

China's fixed asset investment up 24.8% in 2007
(Xinhua)
Updated: 2008-01-24 10:17

China's fixed-asset investment rose 24.8 percent year-on-year in 2007, up 0.9 percentage points from 2006, the National Bureau of Statistics (NBS) said on Thursday.

The overall investment in assets last year stood at 13.7 trillion yuan ($1.9 trillion).

The urban fixed-asset investment was 11.7 trillion yuan, representing an annual increase of 25.8 percent and up 1.5 percentage points from the previous year, NBS head Xie Fuzhan told a press conference in Beijing.


Wang Tongsan, a researcher with the Chinese Academy of Social Sciences (CASS) observed that investment in construction, factories and other urban fixed assets was still growing "at a fast pace".

The sizzling investment growth was achieved despite the government's cooling measures. China's central bank last year raised the deposit reserve requirement ratio ten times and the benchmark interest rate six times in a bid to curb loan growth.

However, the central bank said earlier this month that the growth of renminbi loans began to slow down in the last two months of 2007, thanks to the tightening measures.

Correspondingly, the urban fixed-asset investment figure for December alone was 19.6 percent, which had helped bring the annual figure down from 26.8 percent for the first 11 months.

Xie also commented on the effect of the country's macro control measures citing a declining trend of investment growth in the second half.

Investment growth for the third quarter was 25.3 percent, down 1.6 percentage points from the second quarter, and for the fourth quarter 23 percent, down 2.3 percentage points from the previous three months, according to Xie.

However, he also noted that "investment in the real estate sector continued to grow rapidly".

It scored a growth of 30.2 percent in 2007, up 8.4 percentage points from a year earlier, Xie said. Total investment in the sector was 2.5 trillion yuan.

Wang Xiaoguang, a senior economist with the research institute under the National Development and Reform Commission, said he believed that the impressive growth in real estate spending reflected, at least in part, rising government spending on low-income housing.

He said real estate developers should have restrained their investment in the second half following a series of tightening measures to cool the property market, including new housing loan policies to check the purchase of a second apartment in addition to repeated interest rate rises.

As part of its tight monetary policy, the central bank raised the reserve requirement ratio for commercial banks to a record 15 percent last week, up from 14.5 percent, the first such move in 2008.

The central bank said the move aimed to draw back the excess liquidity on the market and control the possible bounce of the suppressed bank loans.

CASS's Wang believed spending on investment could be expected to slow down a bit this year, as the country had listed the preventing of the national economy from overheating as one of its top macroeconomic priorities in 2008.

http://www.chinadaily.com.cn/bizchina/2008-01/24/content_6418132_2.htm

Chinese yuan sets new record high after Federal rate cut
(Xinhua)
Updated: 2008-01-24 11:45


China's currency, the yuan, hit another record high of 7.2293 against the US dollars on Thursday after a key interest rate cut in the United States.

The central parity rate of the yuan, known as renminbi, jumped by 57 basis points from 7.2350 yuan Wednesday against one US dollar, according to China Foreign Exchange Trading System.
Chinese shares rebounded by more than 3 percent on Wednesday after the earlier-than-expected US rate cut overnight eased concerns about a declining US economy. The Shanghai and Shenzhen bourses opened more than one percent higher on Thursday, but went down to around previous close prices after a while.

The US Federal Reserve slashed the benchmark federal funds rate by 0.75 percentage point to 3.5 percent, in an emergency attempt to ward off rising fears of US recession.

The rate cut has prompted the US dollar to fall sharply against other major world currencies.

To date, Chinese yuan has appreciated more than 12 percent against the greenback after it was revalued with the ending of its peg to the US dollar in July 2005.

http://www.chinadaily.com.cn/bizchina/2008-01/24/content_6418446.htm


The Yuan is rising really fast, I think it's going to set a record this year.