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Old July 17th, 2008, 07:43 PM   #2981
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Subsidy may be on the table to warm up China's industry

July 16, 2008

The government is said to be considering providing subsidies to users and manufacturers of energy-efficient air conditioners as part of efforts to save energy and protect the environment.

Details of the policy, widely speculated in the Chinese press, have yet to be announced.

The National Development and Reform Commission has reportedly begun drafting a subsidy scheme and invite suggestions from manufacturers on ways to effectively promote the use of more energy-saving air conditioners.

The national standard classifies air conditioners into five grades from 1 to 5 according to the level of their energy consumption. A smaller number indicates higher efficiency. The standard took effect on March 1, 2005.

In the domestic electrical appliances market, most air conditioners on sale are graded between 3 and 5, indicating there is room for improvement in efficiency.

Ji Guangfei, a salesman in a home electrical appliances shop in Beijing, said: "Around 80 percent of air conditioners in our shop are graded from 3 to 5. Their prices are much lower than those in grade 1 or 2."

Ji added that his shop has to cater to consumers' needs and sell the cheaper products that most prefer. "It isn't realistic to stock too many energy-efficient air conditioners as they don't sell as well as the traditional ones."

According to Ji, energy-efficient air conditioners are usually priced double or even higher than the traditional ones. A grade 5 unit retails for about 1,700 yuan while a grade 2 unit from the same company could sell for more than 4,000 yuan.

At Dazhong electronics shop in Beijing's Chaoyang district, a buyer surnamed Wu, who just bought six large-capacity air conditioners for her company, told China Daily: "Fair price and durability are our No. 1 concern when choosing an air conditioner. Our company has a fixed budget, and our priority is meeting the budget, not worry about energy consumption."

Another buyer surnamed Deng, who has just bought three air conditioners for his new apartment, said: "Of course I would prefer to buy energy-efficient units if I could afford them, but they are too expensive."

The State Information Center recently forecast the total domestic sales of air conditioners in 2008 will reach 27 to 30 million, up 5 to 7 percent from the year before.

http://english.people.com.cn/90001/9...4/6451447.html
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Old July 18th, 2008, 01:40 AM   #2982
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China not likely to suffer sharp fall in growth in H2

CHINA won't see a sharp drop in its economic growth in the second half as investment and consumption are likely to rise to partly offset weaker export expansion, economists said yesterday.

The central government is not likely to loosen its tight monetary policies in the short term but is expected to refrain from raising interest rates, they said.

Besides, the country may push forward fiscal policies, including raising tax rebates, to bolster exports, they added.

Investments on China's mainland are on track to rebound as rebuilding efforts in the regions that have been hit hard by the devastating earthquake in May have started.

Urban fixed-asset investments jumped 29.5 percent in June after climbing 25.6 percent in the first five months, the National Bureau of Statistics said yesterday. For the first half of this year, urban investment jumped 26.3 percent, up 0.4 percentage point from the same period in 2007.

"Investment is still the main key for the government to counter changes in external demand," said Huang Yiping, chief Asia economist at Citigroup Inc in Hong Kong. "The government has probably already increased spending on earthquake rebuilding in Sichuan Province during June."

While a weakening external demand should slow investment in manufacturing, spending on infrastructure, urbanization, resource development and environmental protection could hold up well, Huang said.

Consumption also grew rapidly in the first half of this year with retail sales rising 21.4 percent in the six-month period, a 6-percentage-point climb from the same period last year, the statistics bureau said yesterday.

The growth rate in June reached 23 percent, the fastest pace since the bureau began compiling the figure in 1999.

Urban disposable incomes advanced 14.4 percent to 8,065 yuan (US$1,200) for the first half from a year earlier.

Lower forecasts

However, major investment banks, including Goldman Sachs Group Inc and JPMorgan Chase & Co, yesterday lowered their forecasts for China's economic growth this year as they predicted the nation's exports may further falter.

China's exports expanded 21.9 percent in the first half of this year, down 5.7 percentage points from the same period in 2007, due to a global economic slowdown and the appreciation of the yuan.

"The contribution of net exports growth is expected to fall to 1.2 percentage points in 2008 and further to nil in 2009, compared with 1.6 percentage points in our previous forecast for 2008 and 3.2 percentage points in 2007," Goldman said in a note.

Goldman revised down its estimate for China's economic growth to 10.1 percent in 2008 from an earlier forecast of 10.5 percent. JPMorgan slashed its projection to 10.2 percent from 10.5 percent previously.

Goldman no longer expects the People's Bank of China to raise the benchmark interest rates this year. Standard Chartered Bank yesterday also drastically cut back its outlook of a four-rate hike for 2008 to zero.

Monetary policies in the second half will likely include continued curbs over commercial banks' lending and backing the yuan's appreciation at a slower pace, economists said.

Stagflation risks

"Loosening the monetary policy will run the risks of stagflation, so there will be no easing for the rest of this year," said China Galaxy Securities Co in a note yesterday. "The potential policy change may include adjusting tax rebates for struggling exporters in East China."

Goldman argued that the government should cut import value-added tax rates, slash VAT tax for fixed asset investments, and further reduce and rationalize personal taxes.

"We are expecting some of these measures, and other supportive fiscal policies to be adopted likely early next year, after inflation pressures subside," Goldman said.

http://www.shanghaidaily.com/article...usiness&page=2
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Old July 18th, 2008, 01:40 AM   #2983
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Dual success on China economic front

2008-7-18

CHINA'S economic growth moderated in the first half of this year, while the inflation rate also eased.

Both moves were the result of hard work and wise policy, the National Bureau of Statistics said yesterday.

They were two major challenges - to keep a lid on fast-increasing consumer prices and China's macro-economic policies must remain stable and consistent - said Li Xiaochao, spokesman of the bureau.

Gross domestic product grew 10.4 percent in the first half to 13.06 trillion yuan (US$1.91 trillion), down 1.8 percentage points from the same period last year. It slowed from 10.6 percent in the first quarter of this year and last year's 11.9 percent.

The Consumer Price Index, the main gauge of inflation, settled at 7.9 percent in the first half. In June alone, it eased to 7.1 percent from 7.7 percent in May.

"China's economy is moving away from the risk of overheating and the growth rate falls within an expected range thanks to effective macroeconomic policies," Li said. "The growth of consumer prices has shown a slowdown trend, although the inflation rate is still staying at a relatively high level. Macroeconomic policies will remain stable."

He stressed the first-half economic outcome was hard-earned because China had to weather the challenges of surging commodity prices on the global market, natural disasters, including the catastrophic earthquake in Sichuan Province, and big fluctuations in global stock, foreign-exchange and futures markets.

The August Beijing Olympics would play a positive fiscal role for China, but its influence would not be massive, given the size of China's overall economy, Li said.

Huang Yiping, an economist with Citigroup, said yesterday the moderation of both GDP growth and inflation was expected and elevated consumer prices confirmed that tightening policies were likely to continue.

"As growth is still staying at above 10 percent, it is too early to call for an explicit relaxation of policy controls," the economist said.

China's central bank increased the reserve-requirement ratio to a 23-year high of 17.5 percent in June. But interest rates have not been adjusted so far this year.

Meanwhile, the yuan has risen about 6.5 percent in the first half against the greenback, the fastest pace since China ended a United States dollar link in 2005.

Among data released yesterday, national retail sales jumped 23 percent in June, while investment expanded 29.5 percent due to demand created after the May 12 earthquake.

Export growth eased 5.7 percentage points to 21.9 percent in the first half to reduce the trade surplus to US$99 billion through June.

http://www.shanghaidaily.com/article...usiness&page=2
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Old July 18th, 2008, 02:09 AM   #2984
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Chinese Economy

China auctions lavish building

Thursday, 17 July 2008


Officials in the Chinese province of Sichuan have announced plans to auction a lavish government building, the cost of which has prompted public anger.

The proceeds of the sale will go to the relief effort for victims of the huge earthquake in the region in May.

The building was built using public funds, but no expense was spared.

It was designed by French architect Paul Andreu - who also designed the new terminal at Charles de Gaulle airport and Beijing's new national theatre.

Public anger

The new local government building in Chengdu consists of a giant glass dome with six spurs around it, resembling the leaves of a lotus flower.

The complex and the landscaped gardens surrounding it are reported to have cost nearly $180m (£90m).

When rumours began to spread on the internet that city officials had moved into the building just three days after the earthquake that killed nearly 70,000 people, there was an angry public reaction.

The internet forums - which are the focus for much criticism of the Chinese authorities - were bombarded with messages.

Analysts say the Chengdu government now seems to have taken these comments to heart.

According to state media, the building will be auctioned to the highest bidder and the proceeds will go towards rehousing earthquake victims and rebuilding the parts of Sichuan province that were destroyed.

The gleaming new structure itself survived the earthquake unscathed.

http://news.bbc.co.uk/2/hi/asia-pacific/7512267.stm
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Old July 18th, 2008, 10:32 PM   #2985
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Shortage of talent pushes up salaries in China

2008-07-18

Employers on the Chinese mainland are facing the highest salary inflation in Asia due to the country's rising demand for professionals, according to a human resources report released in Shanghai Thursday

Hudson Recruitment, a Nasdaq-listed headhunting firm, asked more than 2,600 multinational organizations on the Chinese mainland, Hong Kong, Japan and Singapore about their hiring intentions over the next three months.
Of the 708 respondents from the mainland, only 8 percent of employers said they could negotiate lower salaries for new managerial hires, the lowest proportion in Asia.

In Singapore, about 10 percent said they were able to negotiate. The figure was 11 percent in Japan and 13 percent in Hong Kong.

"The lowest figure in Asia indicates that employers have little scope to negotiate lower new hire salaries and salary inflation is the most prevalent issue for them," said Angie Eagan, Hudson's general manager in Shanghai.

"The Chinese mainland is still a talent-short market, the ongoing competition for strong candidates means that employers are not able to effectively combat the increases in asking salaries for new hires," Eagan said.

The mainland is the only region in Asia surveyed which reported an increased hiring expectation. The survey reported that about 55 percent employers were planning to add to their headcount in the next three months, compared with the 52 percent in the second quarter this year.

Expansion in the retail, tourism and hospitality segments and the approaching Beijing Olympics was driving the growth, analysts said.


Chinese employers are still suffering from the highest turnover rates, with 71 percent respondents in mainland and Hong Kong reporting an equal or even higher turnover rate over the past year.

Survey respondents said performance-related bonuses, training and development programs as well as substantial pay increases were the most effective measures companies could take to retain staff.

http://www.chinadaily.com.cn/china/2..._6860108_2.htm
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Old July 19th, 2008, 01:08 AM   #2986
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Bank reserve hike caveat

2008-07-18

The banking regulator has told policymakers that forcing banks to increase reserves has hurt the industry's ability to repay debt, according to a source.


The People's Bank of China raised its reserve ratio requirement to a record 17.5 percent last month to rein in loan growth and inflation. The China Banking Regulatory Commission (CBRC) has warned against ordering further increases, said the source, who declined to be identified.


China's push to remove funds from the banking system resulted in the slowest loan growth in more than two years last month. The risk is that more banks will fall below the minimum requirement for short-term financial strength, the source said.


"While helping to control liquidity, further reserve requirement ratio hikes run the risk of repressing the financial system," wrote Sun Mingchun, a Hong Kong-based economist at Lehman Brothers Holdings Inc, in a July 15 note to clients. China may be approaching "the limit where further hikes do more harm than good", he said.


CBRC's recommendations were sent to the State Council, the source said. The State radio said on Tuesday that the nation needs a "tight" monetary policy, citing the legislature's Financial and Economic Affairs Committee.


The central bank has boosted the reserve ratio requirement by 3 percentage points this year, freezing up an estimated 1.3 trillion yuan of bank funds. It has left interest rates unchanged after six increases in 2007.


Lehman's Sun forecast the reserve ratio will rise by another 2.5 percentage points this year.


The number of Chinese banking institutions whose liquidity ratio, a measure of ability to meet short-term funding needs, had dropped below the 25 percent regulatory minimum increased by 85 to 392 in the five months to May 31, the source said.


The so-called excess reserve ratio - the share of bank deposits that lenders voluntarily lodge with the central bank in addition to required reserves - dropped to 1.95 percent in June, the lowest since at least 2001, reflecting the strain on banks' finances, according to Sun.


In addition, China's export-driven economic expansion is cooling as weaker US and European economies curtails demand. Gross domestic product rose 10.1 percent in the second quarter, the slowest since 2005, the statistics bureau said.

http://www.chinadaily.com.cn/bizchin...nt_6859066.htm
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Old July 19th, 2008, 01:20 AM   #2987
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China to invest 12.7b yuan on farmland

2008-07-17

Chinese government will spend 12.7 billion yuan ($1.85 billion) on upgrading lower-yield farmland this year, the State Office for Comprehensive Agricultural Development said on Wednesday.
The money, which is 10.27 percent more than last year, will transform 1.77 million hectares of lower-yield farmland into high-yield. As a result, three billion kilograms will be added to China's total annual grain production capacity.

Around 7.69 billion yuan, or more than 60 percent of the funds, will go to the 13 major grain producing regions of Heibei, Henan, Heilongjiang, Jilin, Liaoning, Hubei, Hunan, Jiangsu, Jiangxi, Shandong, Sichuan and Anhui provinces and the Inner Mongolia Autonomous Region.

Lower-yield farmland is farmland that has an output less than 20 percent of the regional average, calculated on a three-year base.

The measures to upgrade lower-yield farmland varies from different places and the major means includes:

-- to improve the irrigation system and road system;

-- to transform mountainous farmland into terraces, making it easier for the machines to work;

-- improve the soil quality by increasing organic matter content in the soil;

-- to improve farming efficiency by training the farmers.

Altogether 35 water-efficient projects for the medium-scale irrigated regions will be initiated this year with an investment of 301 million yuan, said the office.

The rush in modern China to turn traditional farming areas into industrial zones or residential areas for expanding cities has caused continuous shrinkage of China's farmland in recent years. So the nation has drawn a critical line of 120 million hectares as the official minimum of arable land to feed the world's largest population. But statistics reported the amount of arable land fell to 121.73 million hectares last year.

From 1988 to 2007, China invested 320.3 billion yuan in comprehensive development of agriculture, including 99.2 billion yuan by the central government and 76.8 billion by local governments. Of the total, 34.3 billion yuan was bank loans, and 110 billion yuan was raised by farmers and other sectors.

This year, the country could see the fifth consecutive bumper harvest of summer grain, the first such run of harvests since 1949, the Ministry of Agriculture has said.

Summer crops, which usually account for about 23 percent of the total annual grain output, would surpass the 115.34 billion kilograms produced in 2007, the ministry said.

China yielded approximately 500 billion kilograms of grain last year.

http://www.chinadaily.com.cn/bizchin...nt_6854546.htm
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Old July 19th, 2008, 11:32 AM   #2988
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No major letup expected in tightening policy: economists

2008-07-19

Economists do not see major changes in existing measures that tighten monetary policy even as the Chinese economy cools down in the first half of the year.

"A fine-tuning of policies is possible," said Wei Weixian, an economist from the University of International Business and Economics. "But the overall orientation of those policies is unlikely to change."

Since last year, when the Chinese economy was witnessing growth of up to 11.9 percent, the authorities have resolutely tightened monetary policy to prevent the economy from overheating and to curb rising prices.

Lenders have subsequently been forced to tighten credit through interest rate and reserve requirement ratio hikes.
These moves have resulted in GDP growth slowing down to 10.1 percent in the second quarter, down from the first quarter, which saw a 10.6 percent growth in GDP.

Industrial output has also weakened, while corporate profitability dropped by a wide margin of 21.2 percentage points year-on-year in the first five months.

Meanwhile, export growth has slowed by 5.7 percentage points to 21.9 percent, making it difficult for traders and small export-oriented enterprises in the coastal regions, many of which have subsequently gone out of business.

Currently taking effect, tightening policies will almost certainly not be intensified, said Sun Lijian, economist with Fudan University.

"But it is not possible to substantially relax the policies either," he said.

At the same time, top national policymakers have visited major economic regions to sound out local opinion, while Zhejiang province - which hosts large numbers of capital intensive small enterprises - previously banned microcredit companies will be liberalized on a trial basis.

"Trade-related policies may change in the coming months, especially in the trade sector," said Wei, adding that the export rebate, which has been cut substantially or scrapped for some products, may be resumed as demand grows.

Fudan University's Sun Lijian said that inflationary pressure remains severe.

Indeed, the country's consumer inflation rose to 7.9 percent year-on-year in the first half of 2008, much higher than last year's 4.8 percent. It is expected to hover around 7 percent for this year.

Xu Xiaonian, senior economist with the China-Europe International Business College, opposes a relaxed macroeconomic regulation.

The decreased foreign demand as a result of the global economic slowdown is the major cause for Chinese exporters' woes, while the "defective financial system", which favors big companies, is to blame for small enterprises' thirst for capital, Xu wrote in a recent article. While loosened macroeconomic regulation will fuel inflation, it will not help traders and small enterprises, he said.


http://www.chinadaily.com.cn/china/2...nt_6860757.htm
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Old July 20th, 2008, 02:57 AM   #2989
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City proves a strategic site for investment

2008-7-19


SHANGHAI has received stable foreign investment so far this year, with the service sector expanding faster and more foreign companies choosing Shanghai as their strategic location for development.

The city attracted contracted foreign investment valued at US$8.29 billion in the first half of this year, increasing 22.3 percent from the same period last year, the Shanghai Foreign Economic Relations & Trade Commission said yesterday.

Foreign investment in the city's service industry jumped 53.9 percent to US$6.15 billion, accounting for 74.2 percent of the total.

Finance, transport, logistics, software and information technology were among the most-invested service sectors.

Meanwhile, 33 foreign companies set up their key branches in Shanghai during the first six months. Among them were 17 regional headquarters, 10 research and development centers and six investment arms.

By the end of June, 626 foreign companies have made Shanghai the foothold of their development in China or Asia Pacific.

Sales of foreign companies in Shanghai gained 25.6 percent in the first half, with profit swelling 35.7 percent and tax rising 24 percent.

"Shanghai's foreign-participated economy has grown steadily thanks to an improved investment environment," said Chen Zhangyuan, deputy director of the commission. "The growth of trade also increased moderately due to the efforts to upgrade the level of exports."

From January to June, Shanghai's trade rose 23.17 percent to US$157.6 billion. Exports accelerated 25.12 percent to US$80.4 billion and imports gained 21.19 percent to US$77.1 billion.

The growth of exports to the United States slowed significantly but foreign sales in East Asia and other emerging markets have been very active, the commission said.

In the first half, local firms invested US$235.3 million in foreign countries. The overseas sales expanded 41.57 percent to US$2.46 billion.

http://www.shanghaidaily.com/article...&type=Business
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Old July 22nd, 2008, 01:40 AM   #2990
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Tianjin and Beijing getting closer, to the benefit of both cities

2008-07-21

The planned over-the-counter (OTC) market and the Beijing-Tianjin express railway are upgrading the importance of Tianjin and spurring the economic integration of the cities.

The State Council released "Suggestions on Promoting Development and Opening-up of Tianjin Binhai Development Zone" in June 2006, in hopes of turning Tianjin into a new engine similar to the Shenzhen Special Economic Zone and Shanghai Pudong New Area to boost the economy, especially in the Bohai ring.

To realize the goal, the central government and Tianjin municipal government have provided policy and money support to improve its financial system and infrastructure.

And Airbus has invested 7 billion euros to build A320 aircraft final assembly lines in the Binhai Development Zone and plans to produce 300 A320 aircraft by the year 2016 to meet the needs of the Chinese market.

The OTC market

Tianjin is now planning to establish an OTC market in the Binhai Development Zone according to "Overall Planning of Coordinated Reforms in Binhai Development Zone of Tianjin" approved by the State Council during the Chinese People's Political Consultative Conference (CPPCC) and National People's Congress (NPC) this year.

Although a detailed schedule has not been released so far, measures are being taken actively.

OTC market refers to stock transactions outside the main stock exchange boards. It is mainly open to small- and medium-sized enterprises unqualified for listings on the main board.

The flow of stock ownership is not strictly restricted by assets scale or the profit-making ability of the enterprise in the OTC market. It usually requires comparatively lower listing fees and easier procedures.

For small- and medium-sized enterprises, the OTC market provides a more convenient financing channel.

"A large number of domestic enterprises have raised a considerable amount of money in the OTCBB (Over the Counter Bulletin Board, a form of OTC market) market in the United States," says He Xiaofeng, a member of the Research Center on Finance and Industry of Peking University.

"Shenzhen Bak Battery Co Ltd got listed in the US OTCBB market in January, 2005 and altogether has raised $77 million; Fushi International (Dalian) Bimetallic Cable Co Ltd, $12 million; Shanxi Puda Co Ltd, $10 million; and Far-east Energy, $10 million," says He.

As a component to improve Chinese capital market, the proposed OTC market would meet the various needs for capital at different levels. For example, nearly 1,000 venture investment funds have been registered in Tianjin. The establishment of an OTC market will provide them with a new opportunity to find investment channels.

Express railway

While the OTC market would increase financial importance of Tianjin, the Beijing-Tianjin express railway is strengthening communications between Tianjin and Beijing.

The State Council approved "Planning of Intercity Communications System among Beijing, Tianjin and Hebei in the Bohai-ring" in 2005, and the Beijing-Tianjin express railway began construction in June the same year.

Costing about 7 billion yuan, the express railway began test runs on July 1, 2008 and will run regularly beginning August 1. The shuttle train covers the 120-km distance within 30 minutes, and is the first Chinese passenger train reaching 300 km an hour. Depending on the schedule, a conventional train takes two hours for the journey.

Shorter travel or commuting time isn't the only benefit. Tianjin's larger society is being influenced one way or another by the high-speed train; the most obvious and direct impact is on its real estate market.

Housing prices in Beijing are much higher than in Tianjin and the faster intercity express railway, would make it easier to live in Tianjin and work in Beijing. For Tianjin natives, "it will be more convenient to enjoy roast duck and Beijing opera".

And as China's real estate market teeters on the edge of a depression there are hopes for a revival in Tianjin where housing firms such as the Singyaoo Group from Kunming has already bought a 734 hectare piece of land in the southwest part of the city.

Singyaoo is planning to build a "new downtown" in Jiahu district consisting of living and recreational facilities such as an enormous indoor ski run, swimming and surfing pool, a pedestrian mall and a seven-star hotel designed by Richard Mayer, a leading US architect.

China CITIC Bank will provide a loan of 20 billion yuan for the mammoth construction project.

"We are building a new world here - a world for world-level entertainment and relaxation, " says Yan Yu, chairman of Singyaoo Group.

China Business Weekly

http://www.chinadaily.com.cn/china/2...nt_6863532.htm
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Old July 22nd, 2008, 01:51 AM   #2991
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Memories for sale

2008-07-21






However the factor of inflation is weighed, retailers of all sorts have had a good time in the last three decades, with the country's total retail volume swelling almost 50 times.


Back in 1978, around the time when our photographer Wang Wenlan took the black-and-white picture, China's national retail volume was 155.86 billion yuan ($22.81 billion). Or, by rough estimate, each Chinese had an average of some 150 yuan to spend for a whole year on food, clothes, travel, books, magazines, and movie and theater tickets.


That was a time when half a yuan could go a long way, one may argue. But even if everything cost only half a yuan in the shops, how many items could one afford?


Notice how carefully the old farmer is opening up his new pack of cigarettes - which would have cost him more or less half a yuan. One might not even open the box of a newly purchased laptop with so much care.


He was using his fingernail to open a little hole on the top of the pack to prevent the cigarettes from spilling out and getting broken or twisted. And obviously that was an indication that the 20 cigarettes would go a long way, perhaps his next week's smoke budget - with the rest of his supply from the cheaper dry tobacco leaves sold at village fairs.


In 2006, by contrast, the nation's total retail exceeded 7.6 trillion yuan. In 2007, the figure rose to 8.9 trillion yuan. In 2008, as business observers generally predict, the figure will again rise more than 10 percent year-on-year.


Based on the 2007 figure, each Chinese would had some 6,500 yuan to spend in a year. In the current dollar term, that would be very close to, if not exceeding, $1,000 per person - not as total income, but just to spend on the retail market.


That is why the sales of petroleum-related products, most importantly fuel, has already replaced food, beverages and tobacco to become the top selling category of retail goods in China.


Accordingly, the sales of automobiles (not including farm machinery and farm vehicles) has exceeded that of all garments.


But the golden time for roadside vendors is perhaps already over, as one can see from the color photo. They not only tend to occupy every street corner. They can also virtually form streets - with hundreds of stalls lined up from one end of a street to the other. There are times when there seems to be more vendors on a street than shoppers.



http://www.chinadaily.com.cn/bizchin...nt_6863774.htm
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Old July 22nd, 2008, 04:11 AM   #2992
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Retail growth is an important indicator of people's real wealth accumulation. Year 2008 will see the largest retail growth (1st Half 21.3%). The total retail can reach 10,000 billion yuan ($1.5 trillion) easily.
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Old July 23rd, 2008, 02:15 AM   #2993
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H1 tax revenues up 30% on surge in corporate profits

2008-07-22

China's tax revenues grew 30.5 percent year-on-year to 3.26 trillion yuan ($472 billion) in the first half of 2008, the State Administration of Taxation (SAT) said on Tuesday.

SAT officials said the surge largely reflected a dramatic rise in company profits in 2007, which drove up corporate income tax receipts by 200 billion yuan in the first half.

Almost half of the tax revenue came from value-added, consumption and turnover taxes, which rose 22.4 percent, 18.5 percent and 25.7 percent, respectively.

Import tariffs showed the fastest growth, rising 34.9 percent to 395.6 billion yuan, followed by stamp tax on securities trading, which rose 34.2 percent to 83.7 billion yuan.

http://www.chinadaily.com.cn/bizchin...nt_6867773.htm
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Old July 23rd, 2008, 02:23 AM   #2994
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Social security fund pursues value-oriented investment

2008-07-22

The nation’s 500-billion-yuan pension fund will stick to a long-term, value-oriented investment strategy and stabilize its stock-asset proportion despite recent fluctuations of the capital market, said Dai Xianglong, chairman of the National Council for Social Security Fund, in an interview with the People’s Daily.

The remark may help to solidify investors’ confidence in the weak stock market, which has lost nearly half of its total value since the beginning of this year.

During eight years of operation, the nation’s social security fund has formed its own investment strategy and style: long-term, value-oriented and responsible investment, Dai said.

“The social security fund doesn’t have the so-called ‘insider information’,” he said. “Instead, all its investment decisions are based on analysis of the financial market.”

The fund’s investment should not only focus on retaining and increasing the fund's value, but also maintaining the stability of the financial market and improving the economic development, he added.

At the end of last year, total assets of the national social security fund topped 500 billion yuan ($73.31 billion). Its average investment returns in the last five years were 10.7 percent.

The fund benefited from the domestic stock boom last year with investment gains increasing almost six fold year-on-year to 112.9 billion yuan in 2007, as returns from its stock holdings more than tripled.

However, as the benchmark Shanghai Composite Index fell from above 6,000 points and declined by nearly 50 percent this year, analysts believe the pension fund, which holds a large portfolio of blue-chip stocks, also suffered some losses.

“Although stocks held by the social security fund declined far less than the index so far this year, the shrinkage of the fund’s stock assets still surpassed its realised gains in the first half of this year,” Dai said.

However, a long term view is needed in assessing the performance of the fund’s investment, Dai noted. In the face of the volatile stock market, the fund will pursue its investment strategy and make no major changes in its asset allocations. Moreover, while maintaining the proportion of the stock investment, the fund will increase investment on fixed-income products as well as private equity funds in order to ward off market fluctuations, Dai added.

Last month, the pension fund received approval to invest no more than 20 percent of its total assets into industrial and commercial enterprises and 10 percent in private equity funds.

http://www.chinadaily.com.cn/bizchin...nt_6867288.htm
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Old July 23rd, 2008, 02:26 AM   #2995
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China can afford a 'mild slowdown'

2008-07-22


Editor's note: As China's economic growth slowed to 10.4 percent in the first half of this year from 11.9 percent last year, people have been increasingly concerned about the country's economic prospects this year and the next. China Daily has conducted a series of interviews with domestic economists on different facades of the economy to find out how it will fare and what the policymakers should do to tackle the impending challenges. The following is the first in the series, which is based on an interview of Dong Yuping, a senior economist with the Chinese Academy of Social Sciences, by Xin Zhiming.


Q: The Chinese economy has shown some signs of slowdown in the first half of this year. How do you view this?

A: The Chinese economy, on the whole, has been stable. Although it slowed down to 10.4 percent (in the first six months of this year), it is acceptable. Actually so long as it remains in the 8 to 10 percent growth band, it is fine. The scale of the Chinese economy has become very large while the population growth is slowing. Therefore, we can afford a mild slowdown in economic growth.


Q: Although consumer inflation is coming down, many fear it may surge again. Will it rebound in the coming months?




A: The consumer inflation, which dropped to 7.1 percent in June, is showing a downturn. It is attributed to economic fundamentals (such as the stabilizing of food prices) and the relatively high inflation base last June. But we noticed that the producer price index is going up continually. In theory, the rising momentum will gradually spill over to push up consumer inflation, but actually the impact would not be as serious as expected.


China still controls prices of many products. The oil product prices and those of many public goods are under control.


Regarding agriculture, input prices, such as fertilizer costs, have been rising fast in recent months, policymakers have increased subsidies, which prevents the price rises from spilling over into the agricultural product zone.


Moreover, the market competition for durable goods, such as cars and electrical household appliances, is fierce, which means it is almost impossible for prices to rise.


Q: A large number of enterprises in the coastal regions have plunged into the red as costs are rising and the yuan is appreciating. How should China tackle such a challenge?


A: Indeed, returns of those companies, especially those original equipment manufacturers, have been low. Some of them cannot survive the rising costs and are shaken out of business. What may have been neglected, however, is that some capacities have merged into other companies with technological and managerial advantages and the losses for the whole economy may not be as big as expected. It is in a sense industrial updating.


What the government should do is use lending, fiscal or industrial policy support to shorten the process and minimize the costs of such friction. Policies should be flexible.


Q: As the economy slows down, small enterprises may suffer a bigger impact than the big ones. How should policymakers help them get out of the difficulty?


A: China's financial system is defective since it favors big companies. Zhejiang province has recently started to pilot microcredit companies, which shows the authorities are making efforts to change the scenario. But it may not be in line with market demand. The market must be taken into consideration.


Moreover, the regulation of small financial institutions must be flexible and it should be different from those big banks. We should have systematic arrangements that cater to the small banks targeting small enterprises.


Q: The top national leaders have toured many economic powerhouses, which has been interpreted as a sign of worry about the country's economic growth. How do you view such visits by the leaders?


A: We should not overreact to such visits. They visit local places every year, although each year they have a different focus or agenda. Of course, their inspection tours are not without cause and there must be new things (in the economy) that demand further study. Different people may think of the tours differently, however, it is unnecessary to think that there would be any major policy change in macroeconomic regulation.


Q: The US economy is suffering new problems as Fannie Mae and Freddie Mac are triggering worries that the economic adjustment would last longer, which will affect the global and Chinese economy. How will the Chinese economy go next year?


A: After Fannie Mae and Freddie Mac were dragged into crisis, the US subprime crisis has become a real estate crisis. It will not last for only one or two years. It will be very lucky if the market starts to recover from the end of next year. From a historical perspective, the US housing market correction may last for a decade under the trend.


US financial and economic woes would affect China's economy. Moreover, the surfacing housing market correction in China will drag down the country's economic growth, just as it has contributed greatly to its strong growth in the past years.


Moreover, the stock market has slumped, which has weakened investor confidence and forced enterprises to adjust their financing plans. Their economic activities would have to change accordingly.


All those events would make next year very difficult for the Chinese economy.

http://www.chinadaily.com.cn/bizchin...nt_6867420.htm
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Old July 23rd, 2008, 03:29 AM   #2996
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Outlook of China foreign trade positive, Vice Minister of Commerce

http://news.xinhuanet.com/english/20...nt_8750441.htm

Quote:
BEIJING, July 22 (Xinhua) -- The outlook of China's foreign trade in the second half of 2008 would be positive despite a sharp decline in first half trade surplus, Vice Minister of Commerce Gao Hucheng said at a press conference here on Tuesday.

The country's trade surplus fell to 99.03 billion U.S. dollars in the first six months, down 11.8 percent from the same period last year, according to customs statistics.

Imports rose 30.6 percent year-on-year to 567.57 billion U.S. dollars, while exports jumped 21.9 percent to 666.6 billion U.S. dollars.

Export growth in the first half was 5.7 percentage points lower from a year earlier, which further slowed in June by 10.5 percentage points from May.

Gao said a main reason for the export fall was the government policies to cut exports of high-polluting and energy-consuming items.

The slowing export growth, however, reflected weaker global demand and could cool the country's economy growth, analysts said.

Gao said the ministry would further study the difficulties in some export industries and aid them "at a proper time."

He also announced at the conference the China Import and Export Fair, or the "Canton fair," would run between Oct. 15 and Nov. 6 in Guangzhou in the southern Guangdong Province. The fair was considered a "barometer" of the country's foreign trade.

The country's gross domestic product (GDP) grew 10.4 percent in the first half. The growth rate was 1.8 percentage points lower than the first half last year, or 0.2 percentage points lower than the first quarter of this year.
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Old July 23rd, 2008, 11:05 AM   #2997
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Govt unmoved by slow exports

2008-07-23

The Ministry of Commerce remains optimistic about trade for the rest of the year and will maintain the policies adopted in the beginning of the year despite widespread concerns over the export slowdown, according to the vice-minister of commerce.



The current trade figures are within the government's expectations, and the export slowdown is the result of trade policy adjustments initiated earlier this year, Vice-Minister of Commerce Gao Hucheng said.

The growth rate of exports slowed to 21.9 percent for the first half, compared with the 27.6 percent increase over the same period last year. Exports for June alone went up only by 17.6 percent, much slower than the 28.1 percent rise in May.

Despite these figures, Gao said the Ministry of Commerce remains optimistic about the outlook in the second half of the year. "We estimate exports will maintain reasonable growth," said Gao. "The trade balance has improved, in accordance with our goals at the beginning of the year."
Trade balance and a structural adjustment of exports have been on the agenda of macro control measures initiated this year, and the recent trade data show these measures have started to work, said Gao.

Figures of the first half show imports rose rapidly and composition of the export basket changed. In contrast with the export slowdown, imports went up 30.6 percent. Export of electronic and machinery products, which takes up over half of the overall exports, jumped 25.3 percent to $389 billion. Export of hi-tech products also increased rapidly, up 21.8 percent, to $196 billion.

Export growth of products of energy-intensive and heavily polluting industries, by contrast, slowed down 16 percent.

Although export slowdown in some sectors have raised the specter of bankruptcy and rising unemployment, Gao said the trade policy would remain stable and the government's stance of reining in energy-intensive and heavily polluting enterprises would not change.

In June, export of garment and accessories slowed down by 15 percent to $9.8 billion, the lowest monthly increase this year. Export of garments for the whole year went up by only 3.4 percent to $49 billion.

Apart from the tightening policies, causes for the slowdown also include a faster appreciation of the yuan against the US dollar, which has made Chinese products more expensive, and the rising raw material and labor costs.

A US-led slowdown of the global economy has also cost Chinese exporters dear.

As a result, over two-thirds of textile enterprises are suffering losses. The average profit rate in the industry for the first five months of the year was only 1.1 percent, according to the Ministry of Commerce.

Enterprises are therefore seeking favorable government policies in these sectors. Some suggest a slower yuan appreciation or increased export tax rebate. A proposal by China National Textile & Apparel Council to the State Council reportedly seeks more export tax rebate on some textile products.

Top leaders, including Premier Wen Jiabao and Commerce Minister Chen Deming, have visited enterprises in Zhejiang and Jiangsu, both major textile export bases. Many see in these visits seeds of a possible policy change for the rest of the year.

"We'll continue to clamp down on energy-intensive and highly polluting industries, and will further investigate and evaluate the difficulties faced by some industries," said Gao when asked whether the tax rebate would be increased.

http://www.chinadaily.com.cn/china/2...nt_6869586.htm
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Old July 23rd, 2008, 11:49 AM   #2998
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2008 First Half Chinese Province GDP ranking

(sorry only Chinese version is available)


(beijingupdates.com)
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Old July 23rd, 2008, 03:50 PM   #2999
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Nation's foreign trade is on track, says economist

2008-07-23

Editor's note: The latest trade figures show that China's export growth has been slowing down in recent months, thanks to rising costs and shrinking overseas demand. Meanwhile, some exporters are complaining about falling profit margins due to yuan appreciation. Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, gives China Daily reporter Wang Xu his opinion on China's international trade.

Q: What do you think about the overall foreign trade situation in the first half?

A: As a whole, the foreign trade sector is developing on track as we expected. First of all, exports maintained a brisk growth, although slowing down a bit. Meanwhile, the growth of trade surplus has declined, just as we expected. At the same time, there are several key issues, which need to be noted. First, the profit margin of some export enterprises have been falling due to the rising yuan and labor cost. Meanwhile, weakening US market has been a serious test for some export companies.

In the second half of the year, we need to keep an eye on the difficulties faced by exporting enterprises. And the government could be prepared to offer a helping hand.

Q: Which measures could the government take to help exporters? Do you think it's necessary to slow down the appreciation of the renminbi?

A: One solution is to increase the refund rate of export taxes. As for renminbi appreciation, the government could interfere in the foreign exchange market in a short spell. The central bank could use renminbi to buy US dollars, but such a move would increase liquidity at home, which is contradictory to the aim of its macro-control measures.

Q: There are concerns that the current export slowdown will put many export-oriented enterprises out of business. Do you think so?

A: Indeed, many export-oriented enterprises are now suffering from shrinking orders and have problems getting loans. But we should not overestimate the difficulties they are facing.

For some sectors, such as toys, Chinese enterprises are already accounting for 80-90 percent of the global market, thanks to their cost advantage. There was little growth space in these industries even before the subprime crisis and the macro-control measures. We actually had expected such a slowdown in the past years. Moreover, some slowdown is due to the government's efforts to curb the exports of highly polluting and energy-intensive sectors. So if we carve out these factors, the real impact of the weakening overseas demand is smaller. So is the impact from the tightening measures.

Q: In the long run, what other measures do you think the government could take to boost the development of export-oriented enterprises?

A: In the long run, these enterprises need to move up the value chain. Their dependence on cheap labor is unsustainable. To survive, they need to establish their own brands, marketing and R&D capacity and even distribution networks, especially in overseas market.

One shortcut to achieve these goals is acquiring established companies. And a strong renminbi is making it easier. The government could offer convenience and incentives for local companies for their overseas acquisitions.

As for export-oriented enterprises, they could also look for overseas partners, especially private equity funds, for acquisitions. After the subprime crisis, capital for investment opportunities is abundant. Some are also looking at China for potential deals. The latest case is the failed trial by Huawei and Bain Capital to buy US-based 3Com.

Q: Do you think it's necessary to relax the tightening measures that have been adopted since last year?

A: If the macroeconomic situation worsens, there might be a need. But even if such a move comes, the government should continue its policy to encourage the domestic industry to upgrade and move up from the low-end area.

Q: You just mentioned the government might increase export tax refunds. Which industries are most likely to benefit?

A: Textile and clothing. These two industries create job opportunities for more than 15 million people. As for energy-intensive and highly polluting sectors such as chemical and coke, there is little possibility.

Q: Due to rising cost, many plants and factories are moving from the coastal areas to the inland. And it seems that even more of them are moving to other Asian countries such as Vietnam and the Philippines. Do you think China is losing its competitive edge in manufacturing?

A: China is now the fourth largest economy in the world. Such scale of economy is an important advantage: It has stronger capacity on the face of external economic turmoil. Now we are seeing economic turmoil in Vietnam and some other neighboring nations, while China's economy is relatively stable, although we are also dealing with rising fuel and food prices.

http://www.chinadaily.com.cn/china/2...nt_6869056.htm
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Old July 23rd, 2008, 08:21 PM   #3000
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State companies' sales revenue up 25.7% in H1

2008-07-23

The sales revenue of China's centrally-administered State-owned enterprises (SOEs) jumped 25.7 percent to 5.77 trillion yuan ($844 billion) in the first half of 2008, the State assets regulator said on Tuesday.

The growth was 5.4 percentage points higher than the same period a year earlier, according to State-owned Assets Supervision and Administration Commission (SASAC) statistics.

Profit of these SOEs, however, was down 10.3 percent year on year to 425.6 billion yuan during the same period.

Petroleum, petrochemical and power industries suffered the heaviest losses with coal and crude oil prices surging on the global market. Prices for electricity and oil products were capped by the government.

With these industries deducted, profit of State companies would mark a year-on-year increase of 22.6 percent in the first six months, SASAC said.

Some sectors reported a more than 30 percent increase in profit in the first half, including auto manufacturers, coal producers and the military industry, whose profit surged 70.3 percent, 44.4 percent and 33.8 percent respectively.

http://www.chinadaily.com.cn/bizchin...nt_6870517.htm
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