China's Economy - News and Projects III

[snow is red]

Beijing to unveil revitalization plan for shipbuilding sector soon

Monday, Feb 02, 2009

It is reported that China's shipbuilding industry's revitalization plan has been drafted following the release of support plan for auto industry and is to submit to the State Council for approval.

One principal in Zhejiang Development and Reform Commission said that it will strictly control the approval of new ship units and expanding projects in light of the current market downturn.

Mr Zhang Guangqin chairman of China Shipbuilding Association said that the revitalization plan for the sector covers a series of policies arranging from interior demand expanding, finance, tax and scientific research and mapped out a detailed development trend for China's ship industry in the coming 3 years.

China will establish development fund and financing & chartering company for the sector to ensure key shipbuilders orders completion and delivery. More Science and technology investments would be earmarked to help key enterprises' industrial upgrading and encourage mergers & acquisitions.

As the third largest shipbuilding country in the world, China is suffering the huge orders losses, leaving the ship producers into the hardest time in the history. Shipyards in Zhoushan, renowned as the City of Shipbuilding in China, are quiet with many ships unfinished at the moment, the traditional hot time for the sector.

An official said that domestic shipbuilding mills can hardly secure new orders after 2011 due to the contract suspension of European shipping industry impacted by the world financial crisis. So far, most Chinese shipbuilders have seen their delivery time extending to 2010. That means the international competition will be fiercer in days to come and the strong one will survive from the competition, while those inefficient ship-makers are set to be washed out.

According to the statistics from Singapore Pacific Basin Shipping Limited in early 2009, there are 382 new ship orders have been cancelled worldwide and China takes up half of the contract default, or 20 million DWT. Zhoushan COSCO, the subsidiary of Singapore COSCO Corporation has received cancellation for four ships and delaying requests for delivery for 12 vessels within one month.

A senior insider said that China's shipbuilding industry has expanded blindly before 2008 and the market downturn has helped squeezing out the bubbles in the sector. Only in Zhejiang province, there are nearly 2,000 private shipbuilding mills and the repeated construction can be seen everywhere with shrinking profits.

Compared with Japan and Korea, China owns cheap but high quality labors and rich land resources. Besides, the industry also enjoys the 17% export tax rebates, which help ensure the profit margin in the sector. As per the relevant surveyed statistics, the market shares of Chinese ship completion, new contracting tonnage and new building order books account for 19%, 42% and 28% of the world's total volume respectively in the first half of 2008, ranking the second all over the world.

http://www.yourshipbuildingnews.com/...oon_22740.html

[tiger]

Originally Posted by Whiteeclipse

Don't migrant workers go home for the holidays around this time? Maybe they quite as I understand because when coming back to the city they hope to find better jobs with higher wage while new migrants from the countryside fill in the lower wage old jobs?

I watched an interview with the head who charges of rural work on CCTV last night. It was definitely like what you said. Every year the time before the lunar new year the jobless rate of migrant workers is the highest because they expect to find better jobs after the vacation or the employment contract often finalizes there. The jobless rate of migrant workers will usually go back to normal level in about two months after the lunar new year.

[Whiteeclipse]

China's festival tourism heats up despite global economic cooldown

- The global financial crisis failed to dampen tourism in China during the weeklong lunar New Year holiday as lower travel costs persuaded people to spend.

According to statistics released by the National Tourism Administration on Sunday, the country recorded 109 million visits during the holiday, up 24.7 percent from the previous New Year period.

Tourism revenue hit 50.93 billion yuan (7.45 billion U.S. dollars), up 23.1 percent. Air transport made 3.8 billion yuan and railway transport made 2.26 billion yuan. 39 major tourism cities, including Beijing, Tianjin and Shanghai, earned 21.88 billion yuan and other cities and tourist sites earned 22.99 billion yuan.

During the holiday, 177 retail firms in the 39 cities reported a total sales income of 5.84 billion yuan, up 6.5 percent year on year. Another 172 restaurants posted a combined business revenue of 580 million yuan, up 11.9 percent.

The administration statistics released on Saturday showed 19 major tourism cities including Beijing recorded a more than 15 percent increase in both the number of tourists and revenue during the holiday from Jan. 25 to 31.

Analysts noted local governments and tourism bureaus sought to attract tourists in attempt to stimulate consumption during the golden week. Measures included cutting prices of tickets to tourist attractions and lowering prices of travel packages.

"The economic turmoil compelled airlines to cut fuel surcharges, while restaurants and tourist sites provided discounts. These contributed to the booming domestic tourism market," said Qi Xinyuan, head of marketing section of China International Travel Service.

Beijing received 3.24 million travelers during the holiday, up 20 percent from the same holiday last year. Revenue hit 2.16 billion yuan, up 32.6 percent year on year.

The festival brought 7.13 million people to the eastern Shandong Province, up 16.3 percent. Tourism revenue totaled 4.58 billion yuan, up 19.6 percent.

The quake-hit Sichuan Province also posted impressive results, with the number of tourists climbing 21.9 percent to about 16.57 million and total revenue up 32.8 percent to 4.725 billion yuan.

Statistics also showed the number of tourists visiting Japan, ROK, south Asian countries, and Australia increased. However, no specific figures were available for these regions.

With warmer relations between the Chinese mainland and Taiwan, tours to Taiwan turned out to be popular, with more than 13,000 mainland travelers visiting the island during the seven-day holiday.

The administration said the tourism boom at the beginning of the year set a good start for the whole year.

In the eventful 2008, global tourism market was dragged into a slump by the financial crisis. China was also affected, with the number of foreign tourists falling 6.8 percent to 24.3 million from the previous year.

Tourism revenue totaled 1.16 trillion yuan last year, up 5.8 percent year-on-year. It included 874.9 billion yuan earned from local travelers and 283.9 billion yuan from overseas tourists. The two figures for 2007 were 777.1 billion yuan and 312.9 billion yuan, respectively.

Data showed domestic tourism still held up while inbound tourism declined.

The tourism administration's chief, Shao Qiwei, said in the 2009 national tourism work conference on Jan. 7 that the country would seek to stimulate domestic tourism and create new outlets for tourism growth. He expected rising domestic and outbound travels and a rebound in inbound tourism this year.

According to a survey conducted by China Tourism Academy and Beijing-based Tsinghua University, 92 percent of respondents were willing to travel this year.

http://news.xinhuanet.com/english/20...t_10745551.htm

[Whiteeclipse]

"Tourism revenue totaled 1.16 trillion yuan last year, up 5.8 percent year-on-year. It included 874.9 billion yuan earned from local travelers and 283.9 billion yuan from overseas tourists. The two figures for 2007 were 777.1 billion yuan and 312.9 billion yuan, respectively."

Looks like the internal economy is growing stronger.

[Whiteeclipse]

Chinese festive spending remains robust, retail sales up 13.8%
China's spending enthusiasm over the Lunar New Year holiday seemed undimmed by the global financial crisis, figures from the Ministry of Commerce showed Saturday.

Retail sales rose 13.8 percent to 290 billion yuan (42.4 billion U.S. dollars), from 255 billion yuan over last year's week-long Lunar New Year holiday, or Spring Festival.

The robust spending was helped by sales promotions in major cities as well as government subsidies for farmers to purchase home appliances.

Guangzhou, capital of south China's Guangdong Province, organized a shopping campaign with about 10,000 companies offering discounts that added up to 400 million yuan, the ministry said.

Shopping malls in Beijing, Shanghai, Jiangsu and Shandong had promotions, free gifts and lucky draws to lure customers, who were willing to spend for the China's major holiday despite the economic downturn.

"There are more customers than usual. That's totally unexpected. I feel shorthanded on my own," said a salesgirl surnamed Yang, on duty Saturday at Sogo department story in Beijing.

A sample survey by Beijing Commercial Information and Consultation Center of the Municipal Bureau of Commerce showed 100catering, supermarket and department store companies in the city reported total sales up by 150 million yuan, an average of 8 percent, over the past week.

Sales of home appliances in rural areas surged as a result of government subsidies.

The government began in 2007 to grant a 13-percent subsidy to farmers to buy color TVs, refrigerators, mobile phones, washing machines and freezers. The program is in effect in 12 provinces.

The ministry said leading home appliance producers supporting the program saw sales rise 25.6 percent during the week-long holiday.

Traditional purchases of food, cigarettes, liquor and wine, fireworks continued to grow, the ministry said.

Food sales at major retailers rose 23 percent, while beverage sales increased 17.5 percent and combined sales of cigarettes, liquor and wine were up 14.7 percent.

Meanwhile, China's three major telecom operators estimated that a record 18 billion text messages were sent from Jan. 25 to 31.

http://news.xinhuanet.com/english/20...t_10741652.htm

[snow is red]

China considering new stimulus - report

2009-02-03

China is considering new steps to boost cooling growth, Premier Wen Jiabao said in comments published Monday, as new data showed manufacturing shrinking further.

"We may take further new, timely and decisive measures. All these measures have to be taken pre-emptively before an economic retreat," The Financial Times quoted the Chinese premier as saying in an interview in London.

The report gave no details of possible new steps. The government is rolling out a 4 trillion yuan ($586 billion) package unveiled in November in hopes of shielding China from the global crisis through heavy spending on public works projects.

Wen said last month there were signs the stimulus was having an effect. However the latest data suggest the country's economy faces other pain, including a government report Monday that some 20 million workers have lost their jobs due to the global crisis.

Also Monday, brokerage CLSA said its purchasing managers index, based on a survey of some 400 companies, showed manufacturing shrank in January for a sixth month. The PMI stood at 42.2 on a 100-point index where numbers below 50 show activity contracting. That was up from December's 41.2 but the third-worst month on record.

"The fact that the PMI has bottomed is encouraging but should not be taken as evidence of recovery," CLSA economist Eric Fishwick in a statement. "Without an early move in the PMI back above 50 a further fall in China's headline growth indicators looks inevitable for the current quarter."

Economic growth fell in the fourth quarter to 6.8 percent compared with a year earlier, down from 9 percent the previous quarter.

The economy got a boost from spending on shopping and travel during last week's Lunar New Year festivities, the country's biggest family holiday and a period when retailers, airlines and others make a big share of annual sales.

Retail spending during the weeklong holiday rose 13.8 percent over the same period last year， against a 17.4 percent growth in December year-on-year. Holiday sales in 2008 were dampened by severe winter storms, setting a low base for this year's growth.

Consumer spending should weaken further in coming months, said Xu Xiaofang, an analyst for Guotai Jun'an Securites in Beijing.

"No matter what, people spend a lot on the Lunar New Year. They would rather be frugal after the festival instead," Xu said.

The plunge in global consumer demand has battered Chinese exporters, causing a wave of factory closures and layoffs.

An estimated 20 million people, or 15 percent of China's 130 million migrant workers, have lost their jobs, said Chen Xiwen, director of the Central Rural Work Leading Group, at a news conference on Monday.

Wen, the premier, said Beijing will try to keep growth at about 8 percent this year, the Financial Times reported.

Economists say Beijing's strong finances and low debt give it leeway to spend still more to reverse the economic slump.

Spending on the stimulus and relief work for last year's devastating earthquake in China's southwest caused the national budget to slip into deficit, the Finance Ministry said Monday.

The 2008 deficit was 111 billion yuan ($16.2 billion) as spending soared to 22.6 percent above the budgeted level, the ministry said. That gap was modest compared with deficits in the United States and other major economies.

Wen was on a European tour that included stops in Germany, Spain and at European Union headquarters in Brussels.

http://www.chinadaily.com.cn/china/2...nt_7441169.htm

[snow is red]

China to discuss machinery, textile plans

2009-02-03

BEIJING - Support plans for the machinery and textile industries have been drafted and will be submitted to the State Council, the Chinese cabinet, for discussion, according to a media report.

The Shanghai Securities News reported Tuesday that the machinery part of the plans aims to reduce reliance on imported parts.

Yang Liping, an analyst with the Beijing-based Dongxing Securities, said China should scrap tariff exemptions for imported machinery parts that China could produce on its own.

According to the newspaper, the textile industry support plan may include increasing export rebates for textile producers to 15 percent from the current rate of 14 percent, which was implemented on November 1.

It also includes a special textile-industry fund for structural adjustment and technological upgrading.

http://www.chinadaily.com.cn/china/2...nt_7442289.htm

[z0rg]

STRONGLY RECOMENDED:
http://www.marketskeptics.com/2009/0...und-world.html

[z0rg]

IMF: China 8% growth 'challenging but possible'

By John Sexton

Speaking at a press conference in Washington today, IMF Managing Director Dominique Strauss-Kahn said that while the Fund expected Chinese growth to come in below 7 percent in 2009, the government target of 8 percent was achievable. He said Asia as a whole would likely stage a strong recovery in 2010 but warned that regional performance depended on an overall recovery in the global economy.

Mt Strauss-Kahn said that while Asia was not the epicenter of the 2008 crisis it had been hit hard by the decline in world trade and capital flows. He said that the idea of decoupling of the Asian economies had been proved wrong by experience, and ruled out the idea of a separate regional recovery saying that given the extent of linkages "no player can play alone." He added that given the dynamism of the region's economies "once the world economy regains its footing Asian recovery will be rapid."

The IMF is forecasting overall Asian GDP growth of 2.7 percent in 2009, with developing Asia growing at 5.5 percent. The Fund's Asia growth forecast for 2010 is over 5 percent. The IMF official forecast for China is 2009 growth of 6.7 percent, but Mr Strauss-Kahn did not rule out a higher figure, saying that the Chinese government's target of 8 percent was "challenging, but possible." In December last year Mr Strauss-Kahn had suggested China's GDP might grow by as little 5 percent in 2009.

Mr Strauss-Kahn applauded the fiscal stimulus measures already taken by the Chinese government but added that China had considerable leeway to take additional measures and welcomed signs that the government was planning to do so.

Asked about the value of the Chinese currency, Strauss-Kahn said that all sides, including the Chinese government agreed that the yuan was overvalued, but he played down the significance of the issue in the current context. "It might be the main problem in a quiet period but today we need to concentrate on recovery," he said.

(China.org.cn February 3, 2009)

http://www.china.org.cn/business/new...t_17215680.htm

[big-dog]

China central gov't cashes in another $19 bln for stimulus plan

·Central gov't has launched a new stimulus plan totaling 130 bln yuan to boost its economy.
·China's economic growth slowed to 6.8 percent in the fourth quarter of 2008.
·The gov't is hoping to bolster the slowing economy with huge investment from central gov't.

BEIJING, Feb. 3 (Xinhua) -- China's central government has launched a new stimulus plan totaling 130 billion yuan (19 billion U.S. dollars) to boost its economy, an official of the National Development and Reform Commission (NDRC) said on Tuesday.

The fund is the second batch of investment from the central budget following a 100 billion yuan allocated in the fourth quarter of 2008. Both were included in the country's 4 trillion yuan economic stimulus package announced in November.

Chinese Premier Wen Jiabao said Tuesday the 130 billion yuan had been put in place in terms of real funds and on what projects the money will be spent during an interview with the London-based Financial Times.

China's economic growth slowed to 6.8 percent in the fourth quarter of 2008, dragging down the annual rate to a seven-year low of 9 percent, as the global financial crisis takes a toll on the national economy.

The government is hoping to bolster the slowing economy with huge investment from central government, followed by more from local governments and non-governmental sectors.

The NDRC official, who spoke to Xinhua Tuesday morning on condition of anonymity, confirmed the latest 130 billion yuan investment, but declined to unveil detailed plans of the investment before the commission's official announcement.

However, Tuesday morning's 21st Century Business Herald rolled out specific plans with 28 billion yuan to provide housing for low-income earners and 31.5 billion yuan for public facilities, such as electricity, water and road construction in rural areas, citing an unidentified source.

The paper also said 17 billion yuan would go to health and education sectors, 11 billion to environmental protection projects, 15 billion to economic restructuring, and the remaining 27.5 billion yuan to unspecified big infrastructure projects.

Of the earlier 100 billion yuan, 10 billion yuan will be spent on housing projects for low-income families, 34 billion on rural infrastructure projects, 25 billion on large infrastructure projects such as railways, roads and airports, 13 billion on grassroots health, education and cultural projects, 12 billion on energy conservation and environment protection projects, and the remaining 6 billion on innovation and industrial restructuring, according to the NDRC.

The commission, or the country's economic planner, said in November that 1.18 trillion yuan would be arranged for investment from the central budget by the end of 2010, which it said would mobilize a total of 4 trillion yuan in investment across the country within two years.

[snow is red]

Manufacturing contracts for 4th month in a row

2009-02-04

China's manufacturing activity contracted for a fourth straight month in January as the global economic downturn takes a toll on the country's economy.

But the manufacturing also showed improvement for a second consecutive month following a series of government policies to support the weakening economy.

The Purchasing Managers' Index (PMI) of China's manufacturing sector rose to 45.3 percent from 41.2 percent in December and a record low of 38.8 percent in November, the China Federation of Logistics and Purchasing (CFLP) said Wednesday.

A reading above 50 percent suggests expansion, while one below 50 percent indicates contraction.

http://www.chinadaily.com.cn/bizchin...nt_7444521.htm

[snow is red]

'Financial city' is taking shape

2009-02-04

Shanghai's recent plan to further escalate the role of its Lujiazui financial and trade zone is good news for financial talents from home and abroad, but a prudent approach and adequate screening is "especially necessary", warned an economist yesterday.

In a working report to the Shanghai local people's congress last month, Mayor Han Zheng said the city will "enhance the construction of Lujiazui financial city" as part of its plan to build itself into a world financial center like New York and London.

Analysts said the concept of "Lujiazui financial city" conveys the clear message of the city's determination in its march toward a world financial hub, instead of terming Lujiazui as a "financial and trade zone" as in the past.

Lujiazui will house over 600 financial institutions, such as banks, securities and insurance firms, with the total number of financial professionals exceeding 200,000 by the end of 2010, two and a half times the current 80,000 workforce, according to the 11th Five-year Plan (2006-10) stipulated by the Pudong district government.

The plan says that by 2010, Lujiazui will become a key cluster of financial institutions, funds and talents, and will serve as China's pilot area for financial innovation and standard-setting.

This will create ample working opportunities for domestic and overseas professionals, especially during a time when many are losing their jobs due to the global financial crisis.

However, "Shanghai should seek its own mode in obtaining its goal and absorb talents that we really need, especially at the time that the global economic recession hasn't yet bottomed out," professor Lu Hongjun, president of Shanghai Institute of International Finance, told China Daily yesterday.

Lu, who first raised the idea of "Lujiazui financial city" with the municipal government in 2004, said Shanghai is currently thirsty for such talents as banking liquidity and risk controllers, IT professionals for the banking sector, and those in the private equity (PE) sector.

"There is no point in simply following the mode of Wall Street in the US, where a lot of employees in investment banks such as Lehman Brothers were laid off due to bankruptcy," said Lu.

Since late last year, Pudong has mapped out a series of preferential policies to lure more financial talents, including a personal income tax cut, and a plan to build 10,000 apartments for banking professionals aged between 22 and 30.

Wang Kairong, vice-director of Pudong's personnel department, told Shanghai-based China Business News recently that such policies will exert some temporary effect in luring high-end talents, and called for a comprehensive policy support to help them solve problems such as the high cost of living and the lack of adequate education for their kids in Shanghai.

Finance has long been a pillar sector in Pudong. Statistics show that last year, total added-value from the financial sector in Pudong surpassed 50 billion yuan, accounting for 17 percent of Pudong's gross domestic product.

http://www.chinadaily.com.cn/bizchin...nt_7444389.htm

[snow is red]

China may enact refining, chemicals stimulus by March

2009-02-04

China, the world's second-biggest energy consumer, may enact a stimulus plan for the oil refining and petrochemicals industry before a gathering of the country's legislature to help spur the slowing economy, an official said.

Government departments are currently discussing the stimulus proposal, an official at the China Petroleum and Chemical Industry Association said today. The plan may be unveiled before the annual meeting of the National People's Congress next month, said the official, who declined to be identified.

China's economy expanded at the slowest pace in seven years in the fourth quarter of 2008, cutting consumption of fuels and petrochemicals. Refineries posted a loss of 149.3 billion yuan ($22 billion) in the first 11 months of last year, the Ministry of Industry and Information Technology said Tuesday.

The stimulus package, to cover three years of project spending, needs to have an "immediate effect" to bolster the industry, the official said. The planned expenditure may include 100 billion yuan to upgrade refineries and 400 billion yuan for petrochemical projects, the Shanghai Securities News reported today, without saying where it got the information.

"It is good for the industry because the plan will mean a coordinated effort in project construction, avoiding wasteful investments," Yin Xiaodong, an analyst with Citic Securities Co., said by telephone in Beijing.

Stimulus measures

China is considering additional measures beyond a 4 trillion-yuan spending plan to support its economy amid the global recession, the Financial Times reported Tuesday, citing an interview with Premier Wen Jiabao in London. The steps have to be taken preemptively before an economic retreat, Wen said, according to the newspaper.

"Some taxation incentives are also likely to be included in the stimulus package to help boost domestic demand," Yin said.

China Petroleum & Chemical Corp., the nation's biggest oil refiner, gained 1.5 percent to close at HK$4.17 in Hong Kong trading today.

The National People's Congress convenes every March, with almost 3,000 lawmakers congregating at the Great Hall of the People in Beijing. Last year's conference ran from March 5 to March 15.

http://www.chinadaily.com.cn/china/2...nt_7445871.htm

[snow is red]

Garment, textile export tax rebate raised to aid textile sector

2009-02-04

BEIJING -- China will increase the tax rebate rate for textile and garment exports from 14 percent to 15 percent, an executive meeting of the State Council (Cabinet) announced Wednesday.

The move would reduce exporters' costs and support the textile industry, the Council said. The effective date of the new rate wasn't specified.

In a national plan to invigorate China's textile industry adopted by the State Council Wednesday, the government would allocate funds for companies that produce textiles or fibers, or operate in the textile printing and dyeing sector, to upgrade technology and develop domestic brands.

Government departments were told to provide financial support and insurance services to small and medium-sized textile plants.

The government would also announce steps intended to phase out obsolete capacity, eliminate energy-intensive, polluting equipment and technology, and encourage textile and garment makers to relocate from southeastern parts of China to central and western areas.

According to the plan, the government will take a proactive attitude to enlarge domestic consumption, innovate new production, expand rural markets and promote the use of textile products in relevant industries, while expanding export destinations to stablize the share in international market.

The textile sector is the country's traditional pillar industry and enjoys an advantage in international competition.

However, textile industry suffered severe difficulties since last year.

Statistics from the country's customs showed textile and garment export of China was US$185.17 billion in 2008, up 8.2 percent year on year, but the growth rate was 10.7 percentage points lower than in 2007.

Experts from the Commerce Ministry (MOC) attributed the downturn to appreciation of the currency, or yuan, industry liquidity shortage and production material costs surge.

China has raised the export tax rebate rate for textiles three times since last August. The previous increase in November took the rate from 13 percent to 14 percent.

http://www.chinadaily.com.cn/china/2...nt_7446380.htm

[big-dog]

China's economy set to power up in 3rd quarter

By Wan Zhihong (China Daily)
Updated: 2009-02-05

The first power project that China Huaneng Group invested in Anhui province starts generating electricity, Dec 9, 2008. The country's power demand is expected to pick up in the 3rd quarter of 2009.[Xinhua]

The country's power demand, a barometer of its economy, will continue to fall in the first half of this year before picking up in the third quarter, according to an industry association.

"Power demand is likely to see a continuous decline in the first half. The first two quarters will be the most difficult time for the industry," China Electricity Council (CEC) forecast Wednesday.

From the end of the second quarter, power demand may start to increase, compared with last year, in north and east China as well as the southern coastal regions. That should in turn drive up demand in the central and western regions in the fourth quarter, it said.

The sharp decline in power consumption from high electricity consuming industries is the main reason behind the declining demand for power, senior CEC executive Xue Jing said.

"In the fourth quarter of last year, power consumption from the chemicals, building materials and metals sectors all experienced negative growth."

In the first half of 2008, growth in power demand was high, making it difficult for the growth rate in 2009 to be outstanding, Xue added.

Overall, China's power consumption will grow by 5 percent in 2009, according to the CEC.

"Such a growth in power can supply the need for 8 percent growth in GDP," CEC's secretary-general Wang Yonggan said.

Since last October, China's power generation fell for three consecutive months compared with the corresponding period in the previous year, indicating a slowdown in industrial activities nationwide.

China's power generation has become an important indicator of the vitality of its economy in the past few years, because so much of the country's growth relies on power-intensive industries such as steel, aluminum and chemicals.

Some analysts even said the country's power demand would begin to recover as early as the second quarter.

"The manufacturing industry has seen some recovery, that will ensure the power demand to increase in the second quarter," said Dong Xian'an, macroeconomic analyst of China Southwest Securities.

The Purchasing Managers' Index (PMI) of China's manufacturing sector rose to 45.3 percent in January, from 41.2 percent in December and a record low of 38.8 percent in November, according to the China Federation of Logistics and Purchasing yesterday.

The improved data fueled hopes that an economic decline might be bottoming out following a series of government policies.

Some experts suggest China's GDP growth will be V-shaped in 2009, with the bottom already being reached in the fourth quarter of 2008.

[big-dog]

Nuke power capacity set to increase

By Si Tingting (China Daily)
Updated: 2009-02-04

Construction of Yangjiang nuclear plant, China's largest nuke power project, starts in Guangdong province, Dec 16, 2008.[Xinhua]

The country is poised to revise its energy development plans by nearly doubling its nuclear power capacity in the next decade, energy authorities have said.

The revision is still awaiting approval from the State Council, the Chinese-language 21st Century Business Herald yesterday cited sources close to the National Energy Administration (NEA) as saying.

There are currently 11 nuclear reactors in operation in the country with a combined capacity of about 9 gigawatts (GW), supplying more than 1 percent of the country's energy needs.

NEA head Zhang Guobao last year said the country would raise the share of nuclear power in the national energy mix for 2020 from 4 percent, as set in 2006, to 5 percent. The target capacity for nuclear power was set at 40 GW by 2020.

The latest energy revision aims for nuclear power to generate 70 GW for the country by 2020.

The country would have to produce at least 60 GW of nuclear power to meet its 5 percent goal, the China Electricity Council (CEC) has said.

"We have the ability to raise our nuclear power capacity to at least 60 GW 70 GW is not unthinkable," Fu Manchang, secretary-general of the Chinese Nuclear Society, told China Daily yesterday.

The authorities would also "start building eight more nuclear power plants in the next three years, with 16 reactors whose total installed capacity will surpass 10 GW", the NEA sources were quoted as saying.

Officials could not be immediately reached for comment on the specific locations of the new nuclear energy projects, but they may involve Sanmen of Zhejiang province, Yaogu in Guangdong province and Haiyang and Rongcheng in Shandong province, as indicated by Zhang.

The authorities will begin construction of nuclear power plants with a total capacity of 8.4 GW this year alone, State broadcaster China Central Television (CCTV) cited participants in a national energy conference held in Beijing yesterday as saying.

The country will also invest 580 billion yuan ($84.8 billion) in the power industry this year and will accelerate its development of nuclear power plants and wind farms, CCTV reported.



Oil reserves

Similarly, China's four strategic oil reserve bases have reportedly begun operating and the country will start building eight more of such reserves this year, including those in Huangdao, Shandong province, and Jinzhou, Liaoning province.

China currently relies on coal power plants to supply about 80 percent of its total energy needs. However, transporting coal can often be problematic, as shown by the damage sustained by the nation's railway system in snowstorms last year, Fu said.

The authorities were then forced to shut many coal-fired power plants, leading to blackouts in many cities, he said.

"China is in dire need of more nuclear power plants, especially in its southern provinces that are more economically developed but have a more acute need for local energy reserves," Fu said.

The need to control carbon emissions also means the country has to increase its nuclear power generation, he said.

"Third-generation nuclear power technologies, such as the AP1000 developed by the United States-based Westinghouse Electric Co, will be the main feature of our future nuclear power plants," Fu said.

[Huhu]

From Bloomberg:

Ford Said to Be in Talks to Sell Volvo Unit to Geely

By Cathy Chan and Keith Naughton

Feb. 5 (Bloomberg) -- Ford Motor Co., seeking to raise cash to avoid a federal bailout, is in preliminary talks to sell its Volvo Car unit to Geely Automobile Holdings Ltd., according to three people familiar with the discussions.

Ford will likely get less than the $6.4 billion it paid for Volvo in 1999, said one of the people, who declined to be identified because the talks are ongoing. Ford has also approached Chery Automobile Co. and Chongqing Changan Automobile Co., the people said.

Dearborn, Michigan-based Ford lost a record $14.6 billion last year and is trying to avoid asking for government loans to survive as U.S. auto sales plunge to the lowest level in almost 27 years. A purchase of Ford’s last European luxury brand would help Geely founder Li Shufu meet his ambition of overseas expansion, even as the Swedish unit’s sales plummet.

“Li has an entrepreneurial spirit and no fear,” said Asian automotive analyst Tim Dunne of J.D. Power and Associates in Westlake Village, California. “He just goes and gets stuff done.”

Ford spokesman Mark Truby and Geely spokesman Zhang Xiaodong declined to comment. Zhou Qin, a Changan Auto spokesman did not answer a call to his mobile phone and Chery spokesman Jin Yibo did not answer a call to his office phone.

Geely’s Approach

Geely, a maker of $6,000 compacts, first approached Ford about buying Volvo a year ago, before the U.S. automaker had decided to sell its Swedish auto unit, two of the people said. Preliminary talks began in December after Ford said it would consider selling the unit.

Geely has received permission from China’s National Development and Reform Commission to study the acquisition, said the people. The government agency must sign off on any major merger and acquisition talks before a company can enter into them.

Geely has already received commitments from Export-Import Bank of China to provide the necessary financing for the acquisition, the people said.

“Chinese automakers want to tap foreign rivals’ resources in technical development,” said Zhang Xin, an analyst at Guotai Junan Securities Co. in Beijing. “To catch up with foreign automakers by themselves takes a lot of both time and capital. Acquisitions could help them.”

Sales documents will be sent to prospective buyers in the middle of February, a person familiar with the plans said last month.

Volvo’s Struggles

Volvo, based in Gothenburg, Sweden, has struggled as the global auto market declines and other automakers make gains in safety technology, a long-time strength for the automaker. Volvo’s U.S. sales fell 64 percent last year. Ford said Volvo had a pretax loss of $736 million in the fourth quarter.

Volvo, the maker of S80 sedans and C70 coupes, was once central to a failed strategy by Ford to reap a third of its profits from luxury autos. The automaker has been shedding European brands under Chief Executive Officer Alan Mulally, recruited from Boeing Co. in 2006.

Last June, Ford sold Jaguar and Land Rover to India’s Tata Motors Ltd. for $2.4 billion. It sold its Aston Martin luxury line for $931 million in May of 2007 to a group of investors.

Geely’s Goal

Geely was founded two decades ago by Li, a former farmer who amassed a net worth of $220 million, according to Forbes magazine. Last year, Geely’s sales in China fell 1 percent while the total market increased 7 percent, according to J.D. Power and Associates. At the economic forum in Davos last month, Li said Geely’s sales will rise 25 percent this year.

Ford provides engines to some Volvo cars and the two automakers share mechanical underpinnings on several models. Any buyer would have to be assured that Ford will remain healthy enough to provide those key components to Volvo, the people said.

Geely would likely seek to buy Ford’s entire equity stake in Volvo rather than negotiate with the Swedish unit over purchases of specific assets, the people said.

Ford creditors are likely to receive some, or even all, of the proceeds from any sale of Volvo. Ford pledged Volvo as part of the collateral it put up for $23 billion in loans it secured in 2006.

Great opportunity or horrible investment? Either way this could make or break Geely.

[big-dog]

China shows recovery signs

SHANGHAI - CHINA'S manufacturing activity showed signs of recovering in January, data indicated on Wednesday, in a rare piece of optimistic news for the world's third-largest economy.

Some economists said the data could signal that China's manufacturers had overcome the worst of the economic crisis, with companies exhausting their old stock and placing new orders.

'Manufacturing in China is still contracting, but the bottom is now in sight,' said Sherman Chan, an analyst with Moody's Economy.com.

The government's purchasing managers' index, or PMI, rose to 45.3 per cent in January, up from 41.2 per cent in December and a record low of 38.8 per cent in November, the official Xinhua news agency reported. A reading above 50 means the manufacturing economy is expanding, while a reading below 50 indicates an overall decline.

'The accelerated rise of manufacturing PMI undoubtedly points to a recovery in China,' Merrill Lynch said in a research note.

However, Citigroup economist Ken Peng cautioned that talk of a recovery could be premature. 'Being 'less bad' is not the same as 'recovery',' he said.

Indeed, January's figure was the sixth consecutive month that the PMI was below 50 per cent. And a similar survey by CLSA Asia-Pacific Markets, a leading independent brokerage, released on Monday gave less optimistic results.

The CLSA China Purchasing Managers Index, stood at 42.2 in January, up only slightly from 41.2 in December.

China's manufacturing sector accounts for more than 40 per cent of the nation's economy.

-- AFP

[Gaeus]

OK, don't get me banned or something but this doesn't make any sense at all. We know that the recovery of this global recession will not last until the end of 2010 (unless if Obama can do some miracle and I do believe he can do it!). However, I will not be surprise if the first one that will recover is China. Their GDP is still over 6.8% anyways while the rest of the developed countries GDP are under 2% or even in negative territory.

[z0rg]

In case China starts recovering early it wont be due to the global situation but domestic factors (consumption and investment). Also, you should notice that China's stimulus plans have started to boost the economy even before most Western countries have managed to approve their own plans.

I'm getting really worried about the bureaucratic nightmare in our (Euro) countries. Govs are needed to play fast in times of crisis, but it seems like they will discuss for ages before doing anything big to help the economy while unemployment keeps booming. Enjoy "pluralism"

Anyway, it is not only that China's stimulus plans have been set up the earliest. China's 'recession" cycle started earlier either as the economy has been slowing since mid 2007. It should be the first major economy to start recovering for this reason too, and it is likely to do so in mid 2009 unless the global situation goes too crazy so that it takes a bit longer.