China's Economy - News and Projects III

[snow is red]

May be people will find this interesting.

http://www.marketoracle.co.uk/index....ticle&sid=8712

[Whiteeclipse]

China's largest wind power facility R&D center to be established in Xi'an

China Northern Locomotive and Rolling Stock Industry (Group) Corporation would invest another six billion yuan (about 882.4 million U.S. dollars) in western China's Xi'an city to build the largest wind power facility research center, the company has said.

According to the agreement between the company and the municipal government of Xi'an of Shaanxi Province, four billion yuan will be invested first in six wind power product manufacturing projects, which are scheduled to be completed in 2011.

The second phase involves an investment of two billion yuan to build railway transportation and develop wind power system by 2015,according to the agreement.

The company has invested one billion yuan and developed six projects in the city since 2000, said the company.

http://news.xinhuanet.com/english/20...t_10784454.htm

[snow is red]

China to create 775,000 jobs via rural retailing

2009-02-09

BEIJING -- China will establish 250,000 rural retail stores by next year to create 775,000 jobs for migrant workers who have lost their jobs as a result of the global economic crisis, a Ministry of Commerce official said Monday.

Vice Commerce Minister Jiang Zengwei said this year the ministry would set up 150,000 stores. This and the building of ancillary services, including delivery centers and post offices, which would create "a large amount of jobs" for migrant workers.

He said that since the government started the "Thousands of Villages Project," which encouraged village retail store development, the ministry had established 260,000 such stores, with one store offering about three jobs on average for rural residents. These stores helped ensure product quality in the rural market as well.

Jiang said the ministry had strict criteria for rural retail stores in terms of finance. For instance, companies based in the relatively developed eastern region must have registered capital of at least 3 million yuan (about US$428,571) and those based in the central and western regions must have no less than 2 million yuan.

"The core problem we face this year is to support the establishment of delivery centers for village retail chain stores, " he added.

About 20 million migrant workers had returned home after losing their jobs as the global financial crisis took a toll on the economy, said Chen Xiwen, director of the office of the Central Leading Group on Rural Work last week.

http://www.chinadaily.com.cn/china/2...nt_7458264.htm

[snow is red]

Coupons for the needy effective in boosting demand

2009-02-09

BEIJING -- Coupons issued by local governments to low-income families over the Spring Festival holidays in China are playing positive role in stimulating domestic demand, China's Ministry of Commerce (MOC) said here on Monday.

Vice minister Jiang Zengwei said the action is "practical" and "effective" in the current situation, adding that a comprehensive social security system will also boost consumption.

Municipal governments of southern Hangzhou and southwestern Chengdu issued coupons valued at 1000 million yuan (US$146.3 million) and 37.91 million yuan respectively for local registered low-income families before Chinese Lunar New Year holiday, following earlier government calls to extend subsidies for the needy. More cities are expected to follow the lead.

An estimated total of 380,000 residents in Chengdu were to receive coupons. Hangzhou reported a higher figure of about 580,000 that included the region's 260,000 primary school and middle school students.

The coupons, 100 to 200 yuan, can be used in local stores and supermarkets. People in Hangzhou can also use them to see movies and buy books.

Both cities reported a surge of customers in local markets during the new year holiday. Specific statistics are yet to be collected.

While specifying that coupon issuance is a temporary measure to spur domestic consumption, Jiang Zengwei with MOC stressed the importance of increasing earnings for the country's low-income families.

Long-term solutions to stimulate consumer confidence are tied to the establishment of a sound social security system, according to Jiang.

"We have been preparing for reforms in China's health care system and education scheme. Once implemented, both will help enhance consumption," Jiang said.

On January 21, China's State Council, or Cabinet, passed a long-waited medical reform plan that promises to spend 850 billion yuan by 2011 to provide universal medical service to the country's population of 1.3 billion.

http://www.chinadaily.com.cn/china/2...nt_7457326.htm

[snow is red]

China aims for its own Silicon Valley

February 9, 2009

Like the 'Asian tigers' before it, China is pushing into higher-end manufacturing and innovation.

Shenzhen, China

The land of Nike shoes and plastic Christmas trees – and 40 percent of China’s factories – has been battered by falling foreign demand. But that doesn’t mean Guangdong Province is sitting idle. A pioneer in China’s capitalist experiments, it’s using the country’s worst slowdown in seven years to push ahead with a complete economic makeover.

Like Japan and the Asian tigers before it, China is moving to loosen the grip of high-volume, low-end manufacturing on its economy – and transform itself into a corner-office innovator that can dream up an idea and build it to exacting specifications.

Instead of just assembling iPods, in other words, China wants to invent the next “it” music player.
In an unusual silver lining, the economic crisis may be helping: By shaking out low-profit companies, it’s making room for more advanced ones.

The policy is known as “emptying the cage, removing the bird,” says Mei Xinyu, a senior researcher at the Ministry of Commerce in Beijing. The slowdown “sped up the process.”

China’s Silicon Valley?

Last month, the National Development and Reform Commission announced revised plans to transform Guangdong and neighboring Hong Kong and Macau into a “significant innovation center” by 2020.

One hundred R&D labs will be set up over the next three years. By 2012, per-capita output in the region should jump 50 percent from 2007, to 80,000 yuan ($11,700) And by 2020, the study predicts, 30 percent of all industrial output should come from high-tech manufacturing.

“While some traditional competitive industries such as household appliances, textiles and garments, papermaking, and Chinese herbal medicine will be upgraded to increase competence, inefficient energy-consuming sectors will gradually be phased out,” the plan states.

Low-end factories will have to relocate to cheaper provinces or countries.

For provincial officials, whose standing rises with Guangdong’s economic performance, that’s the only way forward. As global recession hit Chinese exports last year, growth in this region dropped to 10.1 percent, from 14.7 percent in 2007.

“Restarting outdated capacities for the sake of growth would just be like drinking poison to quench thirst,” Guangdong’s Communist Party boss Wang Yang, an advocate of upgrading, wrote in a recent opinion piece.

Still, the economic crisis has forced some compromise. To stem the troubling tide of millions of layoffs, officials decided to prop up the struggling companies they’ve sought to run into the ground, by reinstating an export tax rebate to help them cut costs.

“They’re trying to provide enough benefits to companies so they don’t go out of business, while at the same time not backtracking too much,” says Arthur Kroeber, head of Dragonomics, a consultancy based in Beijing.

Stimulus measures aim to balance spurring the economy with not sacrificing hi-tech upgrading. The elimination last month of the value-added tax for capital equipment is a case in point, says Mr. Kroeber.

Greener autos

Another example is an auto-industry aid package that halves sales tax on certain cars and subsidizes owners of high-emission vehicles who exchange them for more fuel-efficient, cleaner ones. It also includes a 10 billion yuan ($1.5 billion) fund to promote new technology, including the mass production of electric vehicles.

The Chinese government has deep pockets to help push manufacturing up the value chain, says the Commerce Ministry’s Mr. Mei – tapping an array of perks from subsidized infrastructure, tax breaks, investment, and generous government contracts.

Favored companies, like Huawei Technologies, China’s leading telecommunications equipmentmaker, got free or low-cost land and utilities, says Kroeber.

It also enjoyed liberal policies on resident permits for workers who had the right skills.

From Beijing’s perspective, the returns are worth the investment. The auto stimulus will benefit companies like BYD (“Build Your Dream”), a battery manufacturer-turned-carmaker that has advanced China’s green-car prospects and won it prestige as a globally recognized brand.

Already the world’s No. 2 batterymaker, it’s now the first company to have mass-produced hybrid, plug-in vehicles; it has also made an electric car.

“BYD is a key player in the world market,” says Duan Chengwu, an auto industry analyst with Global Insight, based in Shanghai.

The company’s international profile soared even higher last September when Warren Buffett bought a 10 percent stake in the company. At the Detroit Auto Show in January, BYD models got space on the main show floor – until then, Chinese carmakers had always been relegated to a basement or foyer.

Needed: workforce upgrade

In addition to putting massive resources into developing the infrastructure of high-tech upgrades, China needs to upgrade its workforce, says Liu Kaiming, head of the Shenzhen-based Institute for Contemporary Observation.

A lavish science park in Dongguan, a nearby factory city, illustrates the mismatch. The expansive campus – complete with apartments, hospital, school, mall, KFC, and a Hyatt hotel, all built around a natural lake and dotted with saplings and flower beds – is meant to impress.

But actually upgrading the “software” of manufacturing takes time. While some A-list companies like Huawei are setting up shop, many of the buildings remain uninhabited.

There are many “empty cages” these days, especially due to the economic crisis, says Mr. Liu. “But they are still waiting for the birds to come.”

http://features.csmonitor.com/econom...ilicon-valley/

[snow is red]

China sets limit on executive pay

2009-02-10

Compensation caps for China's State-sector financial companies will be set at 2.8 million yuan (pre-tax revenue), the Economic Observer Online reported yesterday.

The Ministry of Finance has drafted a salary management circular for executives with State-sector enterprises. The annual salary of top executives would be limited within 2.8 million yuan, the online newspaper said, citing sources with an unnamed State-sector enterprise.

According to the draft, the caps of pay packages for executives are four times their annual salary, which ranges between 50,000 yuan and 700,000 yuan.

While the nation's stock investors incurred losses of around 200,000 yuan each on average in 2008, some executives in financial institutions enjoyed huge pay packages.

According to a survey by Shanghai Securities News, 44 brokerage and financial companies spent roughly 20.9 billion yuan in compensation last year, with some firms paying their staff 400,000 yuan each on average.

"The compensation caps in the US are set at $500,000, which is about five times that of a university professor's annual income. In China, the limit can be set at 500,000 yuan, since it's already five times higher than the income of a professor," said Yi Xianrong, a researcher with the financial research center under the Chinese Academy of Social Sciences, the government thinktank.

Meanwhile, the State Assets Supervision and Administration Commission (SASAC) has conducted salary self-review activities among 230,000 executives with State-owned enterprises.

Those executives are required to review their shares on hand, investment and income last year and refund their illegal shares and income. About 56 top executives in 19 companies reported 13.49 million yuan in illegal shares, Xinhua News Agency reported yesterday.

Through this review, about 6,990 people with 96 companies have cleared their illegal shares, while 338 middle-level executives with 61 companies reported 13.02 million yuan in income from part-time jobs. Most executives have refunded the income, the report said.

http://www.chinadaily.com.cn/china/2...nt_7460583.htm

[snow is red]

China's online shopping jumps 128.5% in 2008

2009-02-10

The trade volume of China's online shopping last year increased by 128.5 percent to 120 billion yuan ($17.56 billion), according to a report released on Tuesday.

The number of online shopping registers increased by 185 percent from a year earlier to 120 million, according to the report, jointly released by research firm iResearch and China's largest C2C platform Taobao.com.

More than 70 percent of the online shoppers are from secondary and tertiary cities, which will become the major boost to the online shopping industry in 2009, the report said.

The report said China's online shopping will continue to grow fast in 2009 as more export enterprises turn to the domestic market due to declining overseas demand.

http://www.chinadaily.com.cn/bizchin...nt_7462219.htm

[snow is red]

Consumer price index up 1.0% in Jan

2009-02-10

China's consumer price index (CPI), a major gauge of inflation, went up 1.0 percent year-on-year in January this year, the National Bureau of Statistics said on Tuesday.

The rate was 0.2 percentage points lower than the previous month.

In January, the producer price index (PPI), another measure of inflation at the wholesale level, went down 3.3 percent. The decline rate was 2.2 percentage points above the month-earlier level.

The statistical bureau said CPI was up 0.7 percent in urban areas and up 1.5 percent in rural areas last month.

Food prices, which account for around one third of CPI, went up 4.2 percent, while non-food prices were down 0.6 percent.

Meat and related products were priced 2.8 percent lower, fresh vegetables priced 19.6 percent higher, and eggs, 1.3 percent higher.

On monthly base, CPI was up 0.9 percent from the December level, with food prices up 3.3 percent on the previous month.

In terms of PPI, prices of production materials were down 4.4 percent from a year ago, but living materials prices up 0.1 percent.

Crude oil prices at factory gate slumped 49.9 percent, with prices of diesel down 4.8 percent and those of gasoline and kerosene up 2.1 percent and 3.1 percent respectively.

But prices of coal mining went up 22.7 percent, and raw coal prices up 12.3 percent.

http://www.chinadaily.com.cn/bizchin...nt_7460735.htm

[snow is red]

Source: Plan to stimulate property sector submitted to State Council

2009-02-10

A plan to revitalize China's property sector has been submitted to the State Council, or China's Cabinet, for discussion and approval, a source confirmed with China Daily on Tuesday.

According to Nie Meisheng, president of China Real Estate Chamber of Commerce, the Ministry of Housing and Urban Construction convened a meeting before the Spring Festival, seeking suggestions on a long-term development scheme for the real estate sector.

"The draft plan includes suggestions for affordable housing construction, more policy support on giving out loans to property developers, and more innovative financial products to meet real estate firms' financing demand," Nie told China Daily, adding that should the plan pass, the country's property market may warm up in the second half of the year.

To ensure China's GDP growth stays well above eight percent, the State Council is working on a package of plans to revitalize pillar industries. So far, the government has passed such plans for the textile, steel and auto sectors.

http://www.chinadaily.com.cn/bizchin...nt_7462291.htm

[big-dog]

Thanks to Taobao, Alibaba, Baidu, dangdang ... , I feel China's online shopping development is faster than many more advanced countries. I have very good experience shopping on taobao (online auction) and cnet.com (hotel reservation).

Originally Posted by snow is red

China's online shopping jumps 128.5% in 2008

2009-02-10

The trade volume of China's online shopping last year increased by 128.5 percent to 120 billion yuan ($17.56 billion), according to a report released on Tuesday.

The number of online shopping registers increased by 185 percent from a year earlier to 120 million, according to the report, jointly released by research firm iResearch and China's largest C2C platform Taobao.com.

More than 70 percent of the online shoppers are from secondary and tertiary cities, which will become the major boost to the online shopping industry in 2009, the report said.

The report said China's online shopping will continue to grow fast in 2009 as more export enterprises turn to the domestic market due to declining overseas demand.

http://www.chinadaily.com.cn/bizchin...nt_7462219.htm

[big-dog]

some views on Chinese currency

Why It's Wrong to Accuse China of Manipulating Its Currency

Calla Wiemer is a visiting scholar at the UCLA Center for Chinese Studies, a research associate at the National University of Singapore East Asian Institute and a consultant to the Asian Development Bank. This op-ed was recently published in the Wall Street Journal Asia.


Wiemer will be giving a talk on this subject Monday, April 13, for the center. For more information, go here.

UCLA Today

China has taken a certain amount of heat from outgoing Treasury Secretary Henry Paulson for helping bring on the global financial crisis. But his newly sworn-in successor has just raised the temperature a notch. In written testimony to the Senate on Jan. 22, Timothy Geithner invoked the dreaded "currency manipulator" label intimating that China is deliberately undervaluing its currency, the yuan.

This is a heavily loaded term that the Bush administration for some years managed to dance around. Currency manipulation is prohibited under the International Monetary Fund Charter and can be taken as grounds for retaliatory trade sanctions.

The attention to the exchange rate is misplaced. A coherent story of global payments, imbalances and the financial crisis can be told without recourse to charges of an undervalued yuan. Likewise, an agenda for getting out of the crisis and setting the global economy on a more balanced path does not depend on the yuan. The policy focus should be on stimulating consumption in China. The need for that predated the financial crisis but is now magnified by it.

Both China and the U.S. pursued macroeconomic policies from 2001 to 2007 that were successful in achieving high growth with low inflation. Just how successful in China's case is only revealed when real growth figures are derived, following standard international practice, by subtracting the inflation rate from the nominal growth rate.

This approach shows that from a slowdown that bottomed out in 2000, with growth at just 2.3 percent, the pace soared to robust double digits and stayed there for seven years. The year 2001 was pivotal due to China's World Trade Organization entry, although the foundation for sustained growth had been laid in the late 1990s with state sector downsizing, housing privatization and liberalization of labor migration.

In a pattern typical of developing countries in their take-off phases, China's surging growth brought a rise in the national saving rate. What makes China's case stand out is that the saving rate started from an already high 38 percent in 2000. An inexorable climb from then onward elevated the rate to 51 percent in 2007.

A litany of factors is routinely cited for why China's saving rate is high: the need to provide for one's own retirement; the need to self-insure against risks of illness, injury or job loss; the need to meet children's education expenses; and the need to accumulate funds to support lumpy expenditures on consumer durables or business start-ups in the absence of credit markets that function to do so. Although these factors explain a high level of saving, they do not offer insight as to why the saving rate rose so dramatically during a time when, if anything, life became less precarious and the financial system became more functional.

A standard economic theory of saving – the late MIT economist Franco Modigliani's renowned "life-cycle hypothesis" – explains the rise in saving. The hypothesis holds that current income is apportioned to consumption over a lifetime. This means, first, that any income growth above the norm will be disproportionately saved in the current period to be meted out for consumption purposes in future years. Because only those in their working years benefit from faster income growth, only this segment increases its consumption while those in retirement consume based on the lower income of an earlier time.

The hypothesis implies, second, that a rising share of population in the workforce will also result in an increase in the saving rate. On both counts – unusually rapid income growth and a demographic bulge moving into working ages – China's rising saving rate is as the theory predicts. In other words, it has nothing to do with the exchange rate.


A rising saving rate has implications for China's external accounts. National saving that isn't used for domestic investment is invested abroad. To fund that capital outflow, exports must exceed imports. In China's case, a rise in saving was paralleled by a rise in domestic investment from 2000 to 2004, leaving the saving surplus and hence the trade surplus constant as a share of GDP at a modest 2.0-2.5 percent.

In 2004, fearing the economy was overheating, the Chinese government clamped down on investment spending and the saving-investment gap began to widen. With investment held in check over the next few years against a continued increase in saving, the trade surplus boomed.

On the U.S. side, the capital inflow – not just from China but from the developing world as a whole plus the oil exporting countries – had an incipient deflationary impact. Upward pressure on the dollar from the demand for U.S. assets made U.S. goods less competitive, and without countervailing action this would have caused the economy to falter. Expansionary monetary policy kept that from happening, however, as the Federal Reserve under former Treasury Secretary Alan Greenspan kept interest rates very low for a very long time. The liquidity boost from a credit expansion triggered by innovative new financial instruments also contributed. This combination fueled wealth gains that stimulated U.S. consumer demand and kept the economy going.

Both the U.S. and China thus enjoyed strong growth with low inflation for a nice, long stretch. The U.S. propagated this trend with low interest rates and financial innovation, while China propagated it with a stable exchange rate and ongoing reform of its economic system.

China is no different from most emerging market economies in adopting policies of foreign exchange market intervention, capital controls and interest rate regulation. It takes very sophisticated economic institutions to pull off liberalized foreign exchange and financial markets, and even then there are no guarantees of immunity against crisis. In the emerging market context, the exchange rate is an important macroeconomic policy lever. Currency appreciation reins in an economy that is overheating; depreciation stimulates an economy that is flagging. China's course of gradual yuan appreciation since 2005 proved effective in allowing the economy to grow at high speed while still keeping inflation in check.

China's growth, however, has relied too much on exports and not enough on domestic consumption – a problem for long term, sustainable economic growth. The remedy is to direct fiscal spending toward consumption, in particular for health care and education where China is notably lacking. Given the sagging state of external demand, strong domestic stimulus can be exercised without danger of the overheating that might call for currency appreciation as an offset.

The exchange rate, then, can stay where it is. A fiscal stimulus that succeeded in restoring consumption to the share of GDP witnessed as recently as 2003, given a maintained investment share at the 2004-07 level, would cause China's trade surplus to disappear.

Geithner, to his credit, emphasized in his written testimony the importance of consumption stimulus in China. He would do well to stick to that argument going forward and exclude further pronouncements on the exchange rate. Meanwhile, rising health care and education spending in China present the prospect of greater demand for medical equipment and educational aids.

This suggests the U.S. might do well to pursue a negotiating strategy focused on intellectual property rights and a freer market for ideas the better to exploit its comparative advantage – instead of a trade war rooted in a wrong-headed assessment of the yuan.

[Whiteeclipse]

BOC promises RMB 200 bln to finance projects in Shandong
Bank of China Ltd (BOC), the country's fourth-biggest bank by assets, yesterday signed a strategic cooperation memorandum of understanding (MOU) with the Shandong provincial government on providing the latter with up to RMB 200 billion, the official Xinhua News Agency reported.
BOC plans to provide financing for infrastructure, key livelihood projects, environmental protection, innovation and industrial modernization.
According to the MOU, BOC will extend up to RMB 20 billion in loans to the finance company designated by Shandong Province. Moreover, BOC will provide package financing in the form of corporate bonds, trust management and financial consultancy to the enterprises in the province.

China's exports and imports dive in Jan
hinese exports in January fell 17.5% year on year while imports dived 43.1% compared with the same period last year, both sliding downward for three consecutive months, according to the statistics by General Administration of Customs (GAC) today.
The total value of both exports and imports in January went down 29% year on year, a 17.9% larger fall than that of last December.
The total trade surplus hit US$ 39.1 trillion in January, up 102% year on year, US$120 million more than that of last December.
GAC earlier reported a 2.8% drop in exports and a 21.3% drop in imports year on year last December.

Liaoning to set up RMB 20 bln industry fund
China's northeastern Liaoning Province has won the approval from the National Development and Reform Commission (NDRC) to set up a fund worth RMB 20 billion in a bid to boost the equipment manufacturing industry in the province, the 21st Century Business Herald reported, citing a provincial government official.
The fund, to be raised in several tranches, will be invested in the industry in the form of private equity, said the official.
The Liaoning provincial government and the Shenyang municipal government jointly drafted the proposal to set up such a fund as early as in 2007. This fund is one of the three trial fund that the central government has approved to facilitate industrial development.
In 2008, the value added of Liaoning's equipment manufacturing industry rose 22.3% to RMB 189.4 billion.

Shanghai Chem park targets US$3.5 bln in investment
The Shanghai Chemical Industry Park (SCIP), an industrial zone specializing in the development of chemical and petrochemical businesses, wants to attract investment of US$3.5 billion and increase sales revenue to RMB 57 billion in 2009, sources reported.
China Petroleum and Chemical Corporation (Sinopec) will probably obtain permission for oil refining projects in SCIP worth US$2.5 billion. Meanwhile, U.S.-based Dow Chemical Co, Ertisa SA of Spain and Germany's Evonik Degussa have shown interest in investing in projects in the zone.
The statistics show that SCIP attracted investment worth around US$3.74 billion last year and finished fixed-asset investment totaling RMB 8.1 billion, a 35% increase over the original plan.

China Travel Int'l Inv't HK to build 10 tourism resorts
China Travel International Investment Hong Kong is working hard on the feasibility plan for building ten tourism and leisure bases in mainland China, in locations including Chengdu, Beijing and Hainan Province.
The company plans to seek business in Hong Kong, mainland China, and in the overseas tourism market. The company hopes to become the largest tourism conglomerate in China within the next three to five years.
In fact, the company invested in three tourism projects in Zhuhai, Xianyang and Qingdao, in 2004, 2007 and 2008, respectively.
From 2005 to 2007, the company's sales revenue climbed to RMB 31.1 billion from RMB 20 billion. Its total profit and total assets increased to RMB 3.86 billion and RMB 36.98 billion from the previous RMB 2.49 billion and RMB 27.24 billion, respectively.
The fact that Chinese citizens in 49 cities can now access Hong Kong and Macao by a simple procedure is expected to benefit the tourism industry and increase business opportunities for the related enterprises.

http://www.chinaknowledge.com/Newswires/Newswires.aspx

[big-dog]

China's export value down 17.5% in Jan

Updated: 2009-02-11

China's export volume went down 17.5 percent year-on-year to $90.45 billion in January, the General Administration of Customs said on Wednesday.

The import volume, however, fell by a much larger degree of 43.1 percent to $51.34 billion.

The total foreign trade was $141.8 billion, with the trade surplus up 102 percent over the same month of last year to $39.1 billion.

However, the customs administration said, after deducting the effect of the week-long Spring Festival holiday, the year-on-year export growth was 6.8 percent and the import decline was 26.4 percent on real term. On monthly basis, the export volume was up 10.1 percent from December and the import value down 3.8 percent.

Of the total January external trade, foreign-funded companies accounted for 52.2 percent, or $74.05 billion, down 32.3 percent from a year ago, and State-owned businesses made up 22.3 percent, or $31.65 billion, down 34.8 percent.

The total included $27.93 billion in trade between China and the European Union, down 18.7 percent, $22.25 billion in trade between China and the United States, down 15.2 percent, and $14.5 billion in trade between China and Japan, down 28 percent.

In January China sold abroad $10.51 billion worth of clothing, up 5.7 percent on the same month of last year, and $2.91 billion worth of shoes, up 10.6 percent.

Meanwhile, export value of machines and electronics, which accounted for 54.3 percent of China's total exports, fell 20.9 percent to $49.14 billion, and export volume of new- and high-tech products dropped 28 percent to $21.66 billion.

According to the customs administration, in January China bought from abroad 32.65 million tons of iron ores, down 11.2 percent from a year earlier, 12.82 million tons of crude oil, down 8 percent, 2.39 million tons of refined oil, down 26.2 percent. Arrivals of finished industrial products were $37.49 billion worth, down 39.9 percent.

[snow is red]

China shipbuilders to get a leg-up

2009-02-11

China's State Council, or the Cabinet, on Wednesday approved a stimulus package for the country's shipbuilding industry in a bid to help the emerging sector weather the global economic downturn.

The government will encourage financial institutions to expand financing to purchasers of ships and extend fiscal support for domestic buyers of long-range ships until 2012. The country will also support the industry in technology upgrade, the State Council said.

Guo Yalin, an analyst with CITIC Securities, said the stimulus package gives a boost to an industry that has been facing difficulties in getting new orders and retaining old ones.

New orders for domestic shipbuilders are expected to drop to 20-30 million deadweight tons in 2009, compared to 58.18 million deadweight tons in 2008, the China Association of National Shipbuilding Industry had said earlier this week.

Buyers' defaults and requests to delay deliveries are both increasing, the association said. Cancellation of orders and delays in payment will also be on the rise this year if the market remains grim, the association predicted.

"The supportive measures in financing will help cut cancellations by buyers," Guo said.

The stimulus plan came after similar packages were green-lighted for the auto, steel, textile and equipment manufacturing sectors.

http://www.chinadaily.com.cn/bizchin...nt_7467270.htm

[tiger]

Chinalco Agrees to Invest $19.5 Billion in Rio Tinto

Feb. 12 (Bloomberg) -- Aluminum Corp. of China agreed to invest $19.5 billion in debt-laden Rio Tinto Group, gaining access to copper and iron ore resources in the nation’s largest overseas acquisition.

Chinalco, as the state-owned company is known, will buy $7.2 billion of convertible bonds and acquire stakes in projects for $12.3 billion in Chile, Australia and the U.S., London-based Rio said in a statement. Chinalco will own 18 percent of Rio should it convert the debt.

Rio Chief Executive Officer Tom Albanese, who rejected BHP Billiton Ltd.’s $66 billion hostile bid last year, will cut debt that grew 19-fold after the acquisition in 2007 of Alcan Inc. China is securing supplies to sustain economic growth after metal prices plunged 56 percent from a July high, ending a six-year commodity boom and slashing mine values.

“It’s a good strategy to buy copper and iron ore assets from Rio now, to take advantage of slashed valuations,” said Li Zhuiyang, analyst at Citic Securities Co. by phone from Shanghai today. “Only with strong Chinese government support can Chinalco make such a huge deal.”

Rio, the world’s third-largest miner, has slumped 67 percent in London trading since Melbourne-based BHP in November abandoned its bid, which was valued at its peak at $194 billion. Rio, in a trading halt in Sydney and New York, is now valued at $44 billion, and last traded at A$52 in Sydney. The company today reported a 50 percent decline in full-year net income after taking a one- time charge for writing down the value of its aluminum assets.

‘No Engagement’

“Rio management did not engage with BHP at what one could argue was the top of the cycle,” said Prasad Patkar, who helps manage the equivalent of $800 million at Sydney-based Platypus Asset Management. “Now they want to engage Chinalco at what could be the bottom of the commodity price cycle, while excluding current shareholders from the deal.”

Beijing-based Chinalco, China’s largest aluminum producer, and New York-based Alcoa Inc. jointly bought a 9 percent stake in Rio last February. Rio shares are listed in both London and Sydney and the company has one-third of its assets in Australia. Rio’s London shares are trading at a 67 percent discount to the 6,000 pence a share price that Chinalco and Alcoa paid.

Rio has sold assets, announced plans to cut 14,000 jobs and spending in a bid to lower its $38.9 billion of debt by $10 billion this year. On Jan. 28, Rio said it was considering a rights offer. Rio’s Chairman-elect Jim Leng quit because of a disagreement over how to cut debt, he said Feb. 9.

The deal “raises funds at a time when financial markets are distressed, materially reducing Rio Tinto’s indebtedness, strengthening its balance sheet and increasing its flexibility to pursue attractive investment opportunities throughout the cycle,” Rio said in today’s statement.

BHP Counter-Bid?

BHP is preparing to counter-bid for some of Rio’s assets if the agreed price with Chinalco is too low, the Times reported on its Web site today, without citing anyone. If BHP’s offer is rejected by the Rio board, BHP may approach shareholders, the newspaper said.

“We don’t comment on market speculation,” Peter Ogden, spokesman for BHP, said from Melbourne.

China International Capital Corp., Blackstone Group LP, JPMorgan Chase & Co. and Nomura Holdings Inc. are advising Chinalco. Credit Suisse Group AG and Morgan Stanley are advising Rio Tinto.

Rio will pay Chinalco a coupon rate of 9 percent to 9.5 percent for the 60-year debt, which it can buy back after seven years, Rio said in the statement. Should Chinalco convert the debt, its stake in the London-listed entity will increase to 19 percent and it will have a 14.9 percent stake in Australia, Rio said.

Global Buying

“Undoubtedly Chinalco is getting a good price” for Rio’s assets, said Andrew Sekely, head of Australian equities at Intersuise Ltd. “If you have the money then you hold all the cards.”

Chinese companies offered at least $18 billion last year to buy mining assets globally, taking advantage of the financial crisis that slashed valuations. China, the world’s third-largest economy, has been scouring the globe for resources. Chinalco had as much as 60 billion yuan ($8.8 billion) of cash, Vice President Lu Youqing said in November.

Sale Blocked

Still, the sale of more stock to Chinalco may be blocked by the Australian government, UBS AG analysts led by Glyn Lawcock said earlier this week. Australia limits ownership under the Foreign Investment Review Board regime to 15 percent. Chinalco got approval from Australian treasurer Wayne Swan in August to raise its stake in Rio to 11 percent.

The government will change the Foreign Acquisitions and Takeovers Act so that any investment, including convertible notes, will be treated as equity from today, Swan said in an e-mailed statement before the Rio announcement.

“I don’t speculate about possible applications under legislation I am responsible for,” Swan earlier told the Australian Broadcasting Corp. “They will be examined in a responsible way, under guidelines we put out at the beginning of last year.”

Rio may face an “arduous task” winning approval for Chinalco to take a stake above 15 percent, Merrill Lynch & Co. analysts led by Olivia Ker said in a report yesterday. The transaction needs approval from Rio shareholders, governments and other regulators, Rio said. It is expected the deal may be completed by July 31.

New Chairman

“We welcome the Treasurer’s announcement,” Chinalco’s Lu said in a statement today. “It was always our commercial intention to seek approval” from Australian authorities, he said.

This may be the last acquisition made by Chinalco Chairman Xiao Yaqing, 49, who had also led the earlier 9 percent stake purchase in Rio. Xiao, who had helmed Chinalco since 2004, will be replaced by former executive Xiong Weiping, an industry official said Feb. 9.

During his tenure, Xiao had pushed Chinalco to diversify into other commodities, buying China’s third-largest copper smelter and the Rio Tinto stake. Chinalco controls listed unit Aluminum Corp. of China Ltd., known as Chalco, and also owns copper, titanium, molybdenum and rare earth assets.

[snow is red]

Software exports hit $14.2b in 2008

2009-02-12

China's software export soared 39 percent last year to $14.2 billion from 2007, despite the international financial crisis, according to the Ministry of Industry and Information Technology (MIIT) Wednesday.

The export included $1.59 billion from outsourcing services, up 54.3 percent year on year.

MIIT said the software industry maintained a rapid growth last year, with the business revenue increasing by 29.8 percent to 757.3 billion yuan ($110.8 billion). The growth rate was 8.3 percentage points higher than a year earlier.

But, the growth slowed down in December. The sector's revenue went up 19.2 percent to 59.6 billion yuan in December, 9.3 percentage points lower than November and 11.7 percentage points lower than the same period of a year earlier.

The sales of software products hit 316.6 billion yuan last year, up 32 percent year-on-year, It made up 41.8 percent of the sector's total revenue.


http://www.chinadaily.com.cn/bizchin...nt_7467672.htm

[Mercutio]

China’s Economy Shows Signs of Recovery on Stimulus
By Kevin Hamlin

Feb. 13 (Bloomberg) -- China’s economy is showing signs that a 4 trillion yuan ($585 billion) stimulus package is taking effect.

The world’s third-biggest economy may expand 6.6 percent in the second quarter after slowing to 6.3 percent in the three months to March 31, the weakest pace since 1999, according to the median estimates of 14 economists surveyed by Bloomberg News.

China is trying to reverse an economic slide that has already cost 20 million jobs, raising the risk of social unrest as exports plunge and the property market sags. Spending on roads railways and housing has increased prices for iron ore, put a floor under industrial output and helped to drive a record $237 billion of new loans in January.

“China looks set to be the first major economy to recover from the current global meltdown,” said Lu Ting, an economist with Merrill Lynch & Co. in Hong Kong. “China is the only economy in the world to see significant growth in credit to corporate and household sectors after September 2008, when the financial crisis worsened to a near collapse.”

The government’s stimulus plan, announced in November, is beginning to gather momentum. Projects such as the building of 3.5 billion yuan of public houses in Shaanxi province and Shanghai began in December, while Shandong province started work on three new railway lines the same month.

China is committing about 1.2 trillion yuan of central government funds to the plan, which means banks’ willingness to fund projects is crucial. So far they are responding.

Toxic Assets

The value of new loans in January was more than double the record set a year earlier, according to figures released by the People’s Bank of China yesterday.

The lending multiplies the effect of the government’s spending in ways that wouldn’t be possible in the U.S. and Europe, where banks are burdened by toxic assets, said Dwyfor Evans, a strategist with State Street Global Markets in Hong Kong.

While China is the only one of the world’s three biggest economies still growing, the expansion has slowed from 13 percent in 2007 and 9 percent last year.

Growth will accelerate from the current pace to 7.2 percent for the full year, according to Wang Qian, an economist with JPMorgan Chase & Co. in Hong Kong. Her calculation is that consumption will contribute 4.4 percentage points and investment 4 percentage points. The collapse in exports will slice off 1.2 percentage points.

Stimulus spending will contribute up to 3 percentage points of the total, she estimates.

Global Recession

Even if the global recession is protracted, China has the ammunition to maintain growth, said Merrill Lynch’s Lu. It has public debt of only 18.5 percent of gross domestic product -- compared with 75 percent in India -- foreign currency reserves of $1.95 trillion, and a balanced budget.

“China has perhaps the deepest pockets in the world,” said Lu. “It can relentlessly ramp up spending to create jobs and meet its growth target.”

The government-backed Purchasing Managers Index, a measure of manufacturing, showed a second monthly increase in January after a record low in November.

“The economy is bottoming,” said Tao Dong, chief Asia economist at Credit Suisse AG in Hong Kong, citing the PMI, the surge in bank lending, and spending on construction and machinery because of the infrastructure projects.

Some commodity prices signal a tentative recovery may be under way, as Chinese companies rebuild inventories.

[...]

Even if stimulus spending creates 8 percent growth this year, meeting the government’s target, “it will unlikely be healthy, job-creating growth” because mostly it will boost demand for steel and cement and provide little support for consumption, said Green.

The World Bank said yesterday that China had made little progress in rebalancing the economy toward consumption and services from industry and investment.

http://www.bloomberg.com/apps/news?p...PpU&refer=home

[z0rg]

More "good news"...


China Stocks Are World’s Most Attractive, Morgan Stanley Says

China stocks will probably outperform emerging-markets worldwide, according to Morgan Stanley, which recommended investors increase their “overweight” positions.

[...]

http://www.bloomberg.com/apps/news?p...cg&refer=china


China’s Stocks Gain for Fifth Week on Stimulus Plan Optimism

China’s stocks advanced, driving the benchmark index higher for a fifth week, on optimism government spending plans will revive growth and bolster corporate earnings. Trading surged to the highest in at least three years.


The Shanghai Composite rose 3.2 percent to 2,320.79 at the close, the highest since Sept. 1. The measure gained 6.4 percent this week, capping the longest weekly winning streak since October 2007

Stock trading volume on the Shanghai and Shenzhen exchanges rose to 32.96 billion, the highest since Bloomberg began compiling the data on Jan. 3, 2006, according to preliminary figures. An average 18.3 billion shares have changed hands daily this year, up from 15 billion in 2007, when the Shanghai Composite doubled.

[...]

http://www.bloomberg.com/apps/quote?...=SVCNTVO%3AIND


China's bank loans see striking rise in Jan

Chinese banks issued 1.62 trillion yuan ($237 billion) in new loans in January, up 101 percent year-on-year, prompting some economists to say the government might not cut interest rates for the time being to boost the economy.



[...]

http://news.xinhuanet.com/english/20...t_10811918.htm

[Matchut]

Well, that's better news than what my friend's been hearing on the news. I'm not sure exactly what the news stories he heard said, but they mentioned phrases such as "will only grow as much as its population", "2%", "all export-driven", "no domestic consumption", etc.

[z0rg]

Originally Posted by Matchut

Well, that's better news than what my friend's been hearing on the news. I'm not sure exactly what the news stories he heard said, but they mentioned phrases such as "will only grow as much as its population", "2%", "all export-driven", "no domestic consumption", etc.

You know good news about China are mostly banned in many countries, right?