China's Economy - News and Projects III

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Tu stresses financial center goals
(Shanghai Daily, June 30)

Shanghai Vice Mayor Tu Guangshao yesterday unveiled the city's ambition of establishing a global yuan cross-border clearing center, saying the financial system will take the city closer to its goal of being a global financial center.

Tu said at the Lujiazui Forum in Shanghai that infrastructure construction such as establishing clearing systems is important to the city's development in the financial sector.

"The city government wishes to set up a cross-border yuan clearing center in Shanghai. The request was sent to Beijing, and it has received a positive response from the People's Bank of China. To achieve this objective, of course we need to do more work of providing ancillary services," he said.

"Shanghai has made progress in establishing payment and settlement systems. China UnionPay has achieved wider business coverage in the city in recent years. Now they have a new plan - setting up CUP International in Shanghai, pushing forward global coverage of their services. The Shanghai Clearing House, which serves the inter-bank market, has also played a very important role in the city's clearing system."

In addition to building a powerful clearing system to process enormous amount of daily transactions, the establishment of a financial credibility system is also vital to the city's goal of becoming an international financial hub, Tu said.

"Two years ago, the credit information center of the People's Bank of China was set up in Shanghai. It is a nationwide, centralized and unified database of enterprise and individual credit information. At the moment it has collected credit information on about 810 million individuals and 18,030 enterprises and organizations. In 2011, it provided 241 million individual reports and 69.3 million company reports. We believe the credibility system is the key to the credit environment."

http://www.shanghaidaily.com/nsp/Bus...enter%2Bgoals/


Home investment
(Shanghai Daily/Xinhua, June 30)

CHINA yesterday issued a notice to lure investment into the construction of low-income homes in the country, a move to further relax restrictions on private capital entering state-dominated sectors.

Private investors are encouraged to participate in the construction of low-rent, public-rent, affordable and price-capped housing, as well as the renovation of rundown houses, according to the notice jointly released by seven ministries, including the Ministry of Housing and Urban-Rural Development.

Under the notice, banks are asked to support private investors.

http://www.shanghaidaily.com/nsp/Bus...%2Binvestment/


Shanghai, Macau ink cooperation memo
(Shanghai Daily, June 30)

Macau will help companies from Shanghai to explore the markets in Portuguese-speaking countries and assist in Shanghai's financial cooperation with those countries.

The Shanghai Financial Services Office and the Monetary Authority of Macau yesterday signed a financial cooperation memorandum in Shanghai during the Lujiazui Forum.

"Ties between Macau and the (Chinese) mainland are getting stronger, and this agreement will promote tighter financial and economic cooperation between the cities," said Francis Tam, secretary for economy and finance of Macau's government. "Shanghai is among the most financially advanced cities in China. Macau has maintained rapid growth and improved people's livelihood with the central government's support. Cooperation between Macau and Shanghai has gradually strengthened. This agreement allows Macau to participate in the process of Shanghai becoming an global financial center."

Shanghai Vice Mayor Tu Guangshao said he was delighted to see issues that he had discussed with the Macau government during his visit to the city earlier this year had been included in the cooperation memorandum.

"To strengthen financial cooperation between the two cities has great significance. After the global financial crisis, the global financial structure is experiencing profound adjustments and more intensive competition," Tu said.

"Closer relations between Shanghai and Macau will help the cities handle new challenges and enhance China's strength and influence in the global financial system."

http://www.shanghaidaily.com/nsp/Bus...ration%2Bmemo/

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Financial forum told of sectors for reform
(Shanghai Daily, June 30)

CHINA is to deepen reform in the currency, insurance, banking and securities sectors as the country seeks to rebalance and maintain economic growth, top financial authorities said yesterday.

"We will forcefully push ahead financial reforms and innovations to promote cohesive development in the economy and the financial industry," Zhou Xiaochuan, governor of the People's Bank of China, said at the annual Lujiazui Forum in Shanghai.

Zhou said the central bank will "stick to the reforms in interest rates, currency rate and cross-border use of yuan" and the central bank would stick to a prudent monetary policy and fine-tune it when necessary.

Hu Xiaolian, deputy governor of the central bank, said China had a clear goal to combine internationalization of the yuan with domestic reforms.

Banks have been under the spotlight recently both for their massive profit growth last year and on concerns for future losses due to the economic slowdown and possible bad loans stemming from China's 4 trillion yuan (US$629.6 billion) stimulus initiated in 2009.

"The banking industry has many deep-rooted conflicts and problems," Shang Fulin, chairman of the China Banking Regulatory Commission, said. "Chinese banks should change their business model and increase service to economic growth."

Shang said banks should be less obsessed with expansion, and a multi-level banking sector should be developed to suit the needs of rural areas and small private businesses.

China will also expand financing channels available to banks, allowing them to raise funds overseas and retain higher levels of profit.

Concerning the securities sector, China Securities Regulatory Commission Chairman Guo Shuqing said recent reforming goals include solidifying rules to delist companies from the stock market, diversifying the capital market, tightening inspection on listed companies, and encouraging more institutional investors into the market.

Xiang Junbo, chairman of the China Insurance Regulatory Commission, said insurers should improve their asset management abilities and develop more insurance products to serve the needs of an aging population, agricultural businesses, environmental protection, and health care.

http://www.shanghaidaily.com/nsp/Bus...Bfor%2Breform/



Q2 economic growth may hit 7.6%
(China Daily Europe, June 29)

China's economic growth is expected to fall to 7.6 percent in the second quarter before rebounding to 8.2 percent three months later, Bank of China Ltd forecast in a quarterly report on Thursday.

"Currently the economy is struggling at a dividing line between 'somewhat cold' and 'too cold'," said Zhou Jingtong, a senior economist at the bank's Institute of International Finance.


He said a "comfortable" zone for Chinese economic growth is between 8.5 percent and 9.5 percent, where the economy operates well with sound employment.


Although growth will rebound, "the short-term economic rebound may only be a result of policy stimulus" and does not imply there is independent growth in China's economy, the bank said in the report.


Growth in China's economy slowed to 8.1 percent in the first quarter, the weakest in nearly three years. And the HSBC Purchasing Managers' Index fell to a 39-month low in June, indicating that the economy is still contracting.


The official PMI may drop to 49.8 this month, falling below the dividing line of 50 between expansion and contraction, according to a survey conducted by Bloomberg. The figure is scheduled to be released on July 1.


Market fears increased on Thursday as the Shanghai Composite Index fell for a seventh day, losing 1 percent to 2,195.84 at the close and adding to a 7.4 percent loss for June.



"It would be normal in the future for China to witness insufficient demand, and the annual economic growth rate will fall to about 8 percent from the double-digit rate of previous years," Zhou said.


"Eight percent GDP growth was considered necessary to create enough jobs. However, with China's shifting demographics, that benchmark should shift as well," said Louis Kuijs, a Hong Kong-based project director at Fung Global Institute, noting that the mainland's working age population is growing at an annual rate of 0.5 percent, one-third of what it was a decade ago.


While GDP growth loses steam, the inflation rate will continue to fall as CPI declines to around 2 percent in the third quarter, leaving more room for loosening measures to shore up the economy, the bank's report said.


But it said the possibility of a stimulus package, on par with the 4-trillion-yuan ($586 billion at the exchange rate then)program in 2009, is "very small".


It said the stabilization of growth should put more emphasis on tax abatement. "For example, the taxation threshold for individuals should be increased to 5,000 yuan ($793) from the current 3,000 yuan, and measures should be taken to accelerate the pace of replacing the sales tax with a value-added tax.


"Until a month or so ago, the government largely resisted calls for major policy easing or a new stimulus. It did so because the deceleration of growth in China's economy was gradual, with no signs of a hard landing. However, following the release of especially weak economic data for April, the government has started to shift course," Kuijs said.


The government has already pledged to make "stabilizing economic growth" its top priority and cut interest rates for the first time since 2008. It has lowered reserve requirements for banks on three occasions since the fourth quarter of last year to improve market liquidity. The bank forecast there would be one or two additional reserve ratio cuts in the coming months.


And banks have been encouraged to lend more. Commercial lenders are likely to extend 650 billion yuan per month on average in the third quarter, and throughout the year new yuan lending will probably stand at 8.2 trillion yuan, the Bank of China report forecast.


The government has also started to speed up its approvals of investment projects, including infrastructure and large new steel plants, and introduced subsidies to stimulate the consumption of energy-saving household products.


"The future is inherently uncertain, and the outcome may well turn out to be weaker than the forecasts. For instance, the eurozone crisis may intensify further. But such risks call for flexibility and readiness to act when needed rather than an upfront expansionary policy," Kuijs said, adding that if growth supporting measures are deemed necessary, pure fiscal measures financed by central government debt are preferable to another stimulus based on bank lending.


Contact with wangxiaotian@chinadaily.com.cn

http://europe.chinadaily.com.cn/busi...t_15533547.htm

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MERCOSUR welcomes Venezuela, focuses on China
(SHanghai Daily/Xinhua, June 30)

MENDOZA, Argentina, June 29 (Xinhua) -- The 43rd summit of Mercosur ended Friday in the western Argentine city of Mendoza after member nations agreed to accept Venezuela as a new member of the bloc and to promote cooperation with China in economic and trade.

The summit also suspended Paraguay's membership because the country's parliament impeached and ousted president Fernando Lugo following bloody clashes between police and landless farmers that left 17 people dead.

The current three member countries, Brazil, Argentina and Uruguay, announced that Venezuela will officially become the fifth full member of the region's largest trade organization at a special summit which will be held in Brazil's Rio de Janeiro on July 31.

Venezuela had been provisionally admitted into Mercosur in 2006, but its entry had not been formalized because Paraguay's parliament refused to ratify it.

The suspension of Paraguay's membership paved the way for Venezuela to enter the bloc.

Argentina's President Cristina Fernandez said Venezuela's entry into the bloc could help promote regional economic integration and strengthen resistance against another international financial crisis.

Mercosur stressed the importance to promote relations with China and other Asian economies, as Chinese Ambassador to Argentina Yin Hengmin was invited to take part in the summit on behalf of the Chinese government. This is the first time that China was invited to attend a Mercosur summit.

In a joint statement, China and Mercosur vowed to continue to augment economic cooperation and trade so as to lift bilateral trade to 200 billion U.S. dollars in 2016.

On Paraguay, the summit decided to keep its membership on hold, but not to slap sanctions on the landlocked country so as to avoid possible damage to the Paraguayan people.

The bloc will consider restoring its membership after the country holds presidential elections next April.

http://www.shanghaidaily.com/article...a.asp?id=80208

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Kia breaks ground on third plant in China
(Joongang Daily, June 30)

Kia Motors held a groundbreaking ceremony yesterday for its plant in China’s Jiangsu Province, the automaker’s third in China.

The production base in Yancheng city represents another platform for Korea’s second-largest automaker to boost sales in the world’s biggest auto market.

Kia said its joint venture in China, Dongfeng Yueda Kia Motors, has officially started construction on the plant, which will be able to produce 300,000 vehicles a year. It is scheduled to be completed in the first half of 2014, giving Kia the capacity to produce a total of 740,000 vehicles annually in the country.

“Today is a significant day as Dongfeng Yueda Kia Motors builds on its foundation to make a great leap forward in China,” Hyundai Motor Group Chairman Chung Mong-koo said at the ceremony, which 1,000 people attended.

He said the plant will help improve product quality and increase Kia’s brand credibility in China.

The third plant is located along with the other two owned by Kia at the city’s economic development zone. It is just five kilometers (3.1 miles) from the second plant, creating potential for a strong synergy effect by cross-utilizing existing facilities, the carmaker said.

The third plant will also include a research center and a 1.96-kilometer-long test-drive facility. Small and midsized vehicles are set to be produced there, Kia said.

Yancheng welcomed the new plant, saying it will help the development of its regional economy. The municipal city government provided the site for free and gave other advantages to the company, such as a reduced income tax, according to Kia.

“When Dongfeng Yueda Kia Motors first started operating here, not many people thought it would succeed, but now the company has become the representative automobile company in Jiangsu,” said Luo Zhijun, party secretary of Jiangsu Province. “We will keep supporting the company to successfully run the third plant.”

According to China’s State Information Center (SIC), the nation will have 13 million registered vehicles this year, up nine percent from last year’s 11.9 million. The size will increase to 16.6 million in 2014 and 18.2 million in 2015, it said.

Shanghai Volkswagen plans to increase its annual production from 1.5 million vehicles to 1.97 million by 2015, while Shanghai General Motors is reported to be expanding its production capacity from one million to 1.6 million by the same deadline.

Kia has been growing annually since it entered China in 2002. With models like the K2, Forte and Sportage R proving big hits, it sold 185,543 vehicles from January to May, up 16.7 percent from the same period last year.

The company owned 1.9 percent of the Chinese passenger car market in 2007 to rank 18th, but climbed to eighth last year by clinching a 3.6 percent stake.

Kia said that without the third plant, it expected to see its share plunge to 2.6 percent in 2014.

http://koreajoongangdaily.joinsmsn.c...px?aid=2955351

[everywhere]

Kia breaks ground on third plant in China
(Joongang Daily, June 30)

Kia Motors held a groundbreaking ceremony yesterday for its plant in China’s Jiangsu Province, the automaker’s third in China.

The production base in Yancheng city represents another platform for Korea’s second-largest automaker to boost sales in the world’s biggest auto market.

Kia said its joint venture in China, Dongfeng Yueda Kia Motors, has officially started construction on the plant, which will be able to produce 300,000 vehicles a year. It is scheduled to be completed in the first half of 2014, giving Kia the capacity to produce a total of 740,000 vehicles annually in the country.

“Today is a significant day as Dongfeng Yueda Kia Motors builds on its foundation to make a great leap forward in China,” Hyundai Motor Group Chairman Chung Mong-koo said at the ceremony, which 1,000 people attended.

He said the plant will help improve product quality and increase Kia’s brand credibility in China.

The third plant is located along with the other two owned by Kia at the city’s economic development zone. It is just five kilometers (3.1 miles) from the second plant, creating potential for a strong synergy effect by cross-utilizing existing facilities, the carmaker said.

The third plant will also include a research center and a 1.96-kilometer-long test-drive facility. Small and midsized vehicles are set to be produced there, Kia said.

Yancheng welcomed the new plant, saying it will help the development of its regional economy. The municipal city government provided the site for free and gave other advantages to the company, such as a reduced income tax, according to Kia.

“When Dongfeng Yueda Kia Motors first started operating here, not many people thought it would succeed, but now the company has become the representative automobile company in Jiangsu,” said Luo Zhijun, party secretary of Jiangsu Province. “We will keep supporting the company to successfully run the third plant.”

According to China’s State Information Center (SIC), the nation will have 13 million registered vehicles this year, up nine percent from last year’s 11.9 million. The size will increase to 16.6 million in 2014 and 18.2 million in 2015, it said.

Shanghai Volkswagen plans to increase its annual production from 1.5 million vehicles to 1.97 million by 2015, while Shanghai General Motors is reported to be expanding its production capacity from one million to 1.6 million by the same deadline.

Kia has been growing annually since it entered China in 2002. With models like the K2, Forte and Sportage R proving big hits, it sold 185,543 vehicles from January to May, up 16.7 percent from the same period last year.

The company owned 1.9 percent of the Chinese passenger car market in 2007 to rank 18th, but climbed to eighth last year by clinching a 3.6 percent stake.

Kia said that without the third plant, it expected to see its share plunge to 2.6 percent in 2014.

http://koreajoongangdaily.joinsmsn.c...px?aid=2955351

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Xinhua Insight: High stakes in China's dairy sector restructure
(Shanghai Daily/Xinhua, June 30)

BEIJING, June 30 (Xinhua) -- China is restructuring its dairy sector amid incessant tainted-milk scandals, but significantly more milk production likely puts colossal strains on the country's resources.

To meet a growing appetite for quality dairy products, the country's fast growing but fragmented sector faces many challenges, such as a shortage of high-caliber dairy workers, dairy companies and insiders said.

Although China is the third largest milk producer in the world, two-thirds of its dairy products come from aboad. The country aims to expand its raw milk production to 50 billion liters by 2015 from 36.56 billion liters in 2011.

With the country's per capita milk consumption a fourth of the global average, dairy demand is expected to grow as residential incomes rise.

But dairy production efficiency in China is much lower than that of many other countries, it may take 20 to 30 years for the industry to reach maturity, Nan Qingxian, executive director of the China Dairy Industry Association (CDIA), said.


HIGH DEMAND, BIG INVESTMENT

Despite quality issues, the big producers are gambling that better-off Chinese will increasingly recognize benefits of dairy nutrition.

"Dairy demand in China is expected to double in the next eight years, meaning the country will be consuming more than 70 billion liters of milk by 2020," Kate Hao, a Fonterra communications manager, said.

Both overseas and domestic dairy firms are increasing their presence in the country.

China's dairy giant Mengniu Dairy Company announced recently it would spend 3.5 billion yuan (556 million U.S. dollars) to expand its farming operations, after inking a deal with Arla Foods that gave the Danish-Swedish dairy group a 5.9-percent stake in the enterprise.

The move, aimed at ensuring all milk of the Inner Mongolia-based company is self-supplied by 2015, came after its products were found tainted with carcinogen aflatoxin late last year.

Fonterra announced in April that it would invest 557 million yuan in two more feedlots in China, which will take its number of farms to five with around 15,000 cows.

In Guangdong, where dairy output can only meet one-third of local demand, enterprises are setting up farms in surrounding regions to capitalize on the southern province's hunger from dairy products.


RESOURCES STRAINED, COWS SHIPPED IN

While there is considerable optimism that the surging dairy demand can be met through robust breeding strategies, resource constraints remain a major concern.

Dairy companies generally recognize less-trained workforce is the biggest challenge, while feed, genetics as well as pharmaceutical and transportation support are also issues.

more: http://www.shanghaidaily.com/article...a.asp?id=80207

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52.6 mln ride Beijing-Shanghai high-speed trains
(Shanghai Daily/Xinhua, June 30)

BEIJING, June 30 (Xinhua) -- Some 52.6 million passengers have travelled on the Beijing-Shanghai high-speed railway since it opened to the public a year ago, latest data showed Saturday.

More than 56,000 trains traversed the railway in the first year of its operation, Beijing-Shanghai High-Speed Railway Company said.

After three years of construction, the 1,318-km railway linking Beijing and Shanghai went into operation in June last year.

Trains were initially allowed to travel at a maximum speed of 350 km per hour, which was later adjusted to 300 km per hour to allegedly reduce operation costs.

Built with an investment of 217.6 billion yuan (34.5 billion U.S. dollars), the railway has shortened travel time between the two cities to about five hours.

http://www.shanghaidaily.com/article...a.asp?id=80217


China textile industry grows slower, profits down
(Shanghai Daily/Xinhua, June 30)

BEIJING, June 30 (Xinhua) -- The growth of China's textile industry slowed in the first five months of the year, as domestic and external demand continued to drop amid a sluggish economy, according to data from the country's top economic planner.

The gross output value of the textile industry increased 11.81 percent year on year to 2.14 trillion yuan (340.5 billion U.S. dollars) from January to May, down 18.34 percent year on year, the National Development and Reform Commission (NDRC) data showed.

The sector's sales went up 11.35 percent year on year to 2.09 trillion yuan during the period, the data said.

In the first five months, the value of textile exports totaled 90.64 billion U.S. dollars, up 2.06 percent year on year. The rate pulled back 24.47 percentage points from that of the same period last year.

After adjusting for inflation, actual exports saw decrease during the period, the NDRC said.

The slowing growth has dragged down profits in the sector. During the January-April period, profits of textile manufacturers dropped 2.31 percent year on year to 72.12 billion yuan, down 45.15 percentage points from a year earlier.

The profit margin for the sector shed 0.62 percentage point from the same period last year to 4.46 percent during the period.

http://www.shanghaidaily.com/article...a.asp?id=80217

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$10M Argentine farming deal mulled
(China Daily Europe, June 30)

Chongqing Grain Group Co Ltd, one of China's largest State-owned grain companies, is in talks with Molino Canuelas SA, a major agribusiness group in Argentina, about joint investments totaling $10 million in a soybean farm and dairy farms in the South American country.



This marks the beginning of a series of plans the Chinese group is about to carry out in Argentina.



It also follows its investment in a soybean production base in Brazil last year, as it steps up its effort to meet the country's growing appetite for agricultural products through investments in South America.



Agreements on the investments in Argentina - split 50-50 between the two companies - are expected to be signed "within this year", Claudio Canepa, industrial manager of the Argentine company, said in Buenos Aires on Wednesday.
The two companies plan to rent a 10,000-hectare soybean farm in central Argentina's agricultural Cordoba province, with an expected annual output of more than 30,000 metric tons of soybeans, and ship all the beans back to China.



According to the current farmland rental price in Argentina, investment in the soybean farm would amount to around $6 million, and the remaining $4 million will be invested in dairy farms owned by the Argentine company to produce dairy products for export to China, Canepa said.



"This is just the first step (in cooperation) for the two companies," Canepa said, adding that they will also jointly invest in Chongqing in the near future.



The southwestern China-based group has emerged as a major overseas investor in recent years. It said in November that it will invest $500 million to build a soybean production base, equipped with oil-crunching, refinery and processing plants, in Brazil's northeastern state of Bahia.



The group also announced plans early this year to invest $1.2 billion in Argentina to grow corn, cotton and soybeans, according to Chinese media reports.



Overseas investments in South American countries' agricultural sector could provide Chinese companies with cheap and reliable supplies, all the more important as the country has grown steadily more dependent on the international food market in recent years, said Chinese agricultural analysts.



Most Chinese companies currently buy soybeans from international traders such as Bunge Ltd and Cargill Ltd. Direct purchases from the producers could cut costs by around 20 percent, analysts said.



In the meantime, closer ties with South American countries could also reduce China's reliance on soybeans grown in the United States, they added.



China is the largest overseas market for US soybean farmers. It imported 52.6 million metric tons of soybeans last year, nearly half of which came from the US, accounting for 60 percent of total US soybean exports last year.



During the first five months of this year, China's soybean imports jumped 20.7 percent year-on-year to 23.4 million tons, according to the General Administration of Customs.



zhousiyu@chinadaily.com.cn

http://europe.chinadaily.com.cn/busi...t_15538539.htm

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BYD to cut salaries due to lower profits
(China Daily Europe, June 28)

Chinese battery and vehicle maker BYD Co plans to cut salaries due to sharply lower profits amid lackluster market performance.


According to an internal document, BYD will cut bonuses between June and September by 18 percent, which will make the total earnings of employees in the Shenzhen-based company slide by 14 percent during that period.


The move is expected to reduce by about 240 million yuan ($38 million) the human resource costs for the Warren Buffett-backed company. BYD reported a net profit of 1.39 billion yuan in 2011.


In the first quarter, BYD sold 110,000 vehicles, down 8 percent from the previous year.


China's automobile market slowed down in 2011, after two strong years. The continued slowdown of the domestic market brings challenges for China's homegrown auto brands, including BYD.


The market share of domestic auto brands has dropped for three consecutive months. The downturn trend is expected to continue as the market is seen stagnating.


lifangfang@chinadaily.com.cn

China-Malaysia park gets $8.5B fund
(China Daily Europe, June 30)

NANNING -- The China Development Bank (CDB), one of the country's three policy banks, will provide 54 billion yuan ($8.5 billion) in funding for the China-Malaysia Qinzhou Industrial Park, a bank official said Friday.


The funding will cover 81 construction projects within the park, according to Bai Yingfu, head of the CDB's regional branch in South China's Guangxi Zhuang autonomous region.


The CDB has already issued 5.3 billion yuan in loans to cover some of the projects, including construction on the Qinzhou Port and Qinzhou-Chongzuo highway, he said.


Construction on the China-Malaysia Qinzhou Industrial Park, located in the coastal city of Qinzhou in Guangxi, began in October 2011. The park will focus on manufacturing, information technology and the service industry after going into operation.


The park is the third of its kind to be developed by China and foreign countries, with two other parks jointly built by China and Singapore.

http://europe.chinadaily.com.cn/busi...t_15538804.htm


Guangdong targets at liberalization of trade in services with HK, Macao by 2014
(Shanghai Daily/Xinhua, June 30)

HONG KONG, June 30 (Xinhua) -- Governor of China's southern Guangdong Province Zhu Xiaodan said here Saturday that the economic powerhouse is working to achieve liberalization of trade in services with neighboring Hong Kong and Macao by 2014, one year ahead of the other provinces in the mainland.

Guangdong will soon work out an action plan and unveil detailed measures to realize the goal, Zhu told a press conference.

Chinese Vice Premier Li Keqiang during his visit to Hong Kong last August said that by implementing the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), liberalization of trade in services would be basically achieved between Hong Kong and the entire mainland by the end of China's 12th five-year development plan for 2011-2015.

http://www.shanghaidaily.com/article...a.asp?id=80222

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Social media now moves into the corporate world
(China Daily USA, July 2)

Internet platform plays a growing importance in the business sector

A series of numbers demonstrates the importance of social websites or social media including weibo, bulletin boards and blogs in China.


In 2001, there were 392 million urban Chinese using social websites and half of them were active on more than one platform. A netizen made 30 new friends via social media on average in China, while 30 percent of social website users made or reviewed comments about companies or their brands.


Meanwhile, users of Sina Weibo, the first and now most popular Twitter-like platform in China, numbered 300 million. Eighty percent of urban youths watch videos online and more than 356 million Chinese people use smartphones to surf the Internet.


Social media has created a new channel for corporate marketing and is booming, a report by Ipsos, the world's third-largest market research company by staff numbers, states.


According to Albert Cai, digital research director of Ipsos China, in the new digital era, which highlights interactivity and free opinion, the influence of straightforward promotion or traditional advertisements in printed media, Internet portals, outdoor facilities and TV is shrinking.


Moreover, social media's influence on brand reputation and purchasing decisions has caught up with traditional channels. Official websites of companies with interactive functions and social websites with links to companies' official websites are more effective at brand promotion.


Ipsos' online survey was carried out early this year and received responses from 1,050 netizens in China. It showed that 29.2 percent of respondents knew of brands or companies via newspapers, 27.2 percent were made aware of them through blogs and bulletin board comments, 26.9 percent through micro blogs and 37.6 percent via the companies' official websites or social websites with links to the companies' websites.



Regarding the influence on purchasing intentions, 32.8 percent of the surveyed netizens said they were very driven by advertisements in shopping malls and shops as well as LED video ads in buildings, a total of 30.4 percent said their major motivation came from comments on blogs and bulletin boards, 24.5 percent were moved by weibo comments and 47.5 percent were guided by companies' official websites or social websites with links to companies' websites.


The numbers do not add up to 100 percent because some respondents cited more than one source.



Cai said he believes the accuracy, interactivity and word-of-mouth publicity are the main reasons that increase and consolidate the influence of social media.



"‘Birds of a feather flock together' is the most fundamental characteristic of social media," he said. "People get together in line with their common interests, hobbies, favorite activities or most serious problems. It facilitates companies in finding and targeting customers and increases the accuracy of communication."


Moreover, interactivity builds a high-speed and efficient communications bridge between brands and customers.


Internet "opinion leaders" — usually bulletin board moderators and micro blog first-hand posters — are regarded as more reliable and trustworthy by netizens than "one-way" advertisements, which are regarded as nothing more than company messages.


A micro-blogger named bingxiyut said, as the mother of a nine-month-old baby, she surfs the Internet to choose and buy almost everything for her family. "Weibo is the tool I use most often when shopping. On it, I can find company and discount information, share opinions with other people, especially young mothers, and chat with some famous micro-bloggers," she said.


The Beijing resident said that through weibo she has encountered a group of parents with babies of a similar age and they often get together for group outings.
"We have created a platform for our babies to play together. It's important for our children, given there is usually only one child in a family with six adults in China.


"I have found we have generally been using the same brands, such as Abbott dairy powder, Huggies nappies and Liushen Florida Water."



The blogger added that they even buy clothes for their babies from the same shops on Taobao — the largest online shopping platform operator in China.



China's two pioneer portal providers, Sina Corp and Sohu.com Inc, are both keen on social media development to lure more corporate clients.
Sina invested $150 million on micro-blog development last year and allocated $160 million to it this year.


It has just promoted its 2.0 version company weibo, which strengthens brand display and offers statistical analysis and a third-party appliance platform for corporate users.


Micro blogs also created access for small and medium-sized enterprises to take full use of interactive Internet resources to promote their brands. Social media marketing is more economical and more flexible and therefore more convenient and more practical for small and medium-sized companies compared with traditional advertising channels, said Sina Chief Executive Officer Charles Chao at a news conference in April.


Sohu is seeking a breakthrough in the video sector. It span off its video advertising business from its advertising department at the beginning of this year and plans to invest $31 million in the independent sector this year.



The sales of Sohu's video advertisements increased 90 percent year-on-year during the first quarter.


"Unlike traditional Internet marketing, which focuses on offering content and integration, social media marketing requires companies to not only deliver their message to their targeted customers but also to establish sound communications with them — quick responses and reasonable solutions to any challenge," said Wang Ying, an analyst from research company Analysys International.



Contact the writer at liujie@chinadaily.com.cn

[everywhere]

Post-90s play greater role in consumption
(China Daily USA, July 2)

A recent survey found that urban Chinese born in the 1990s are playing a significant role in buying things because they have more disposable money and a greater say in family spending.

The pocket money for a middle school student averaged 382.3 yuan ($61) a month in 2010, five times more than the 67.7 yuan a month found in the pockets of this demographic in a similar survey conducted 10 years ago, according to a report from Sinomonitor Marketing Research Co, a Beijing-based independent research firm.


Post-1990s youths also received an average of 1,923 yuan during the 2010 Spring Festival, the report said.


The survey was conducted among 2,099 university and middle school students sampled from China's five largest cities - Beijing, Shanghai, Guangzhou, Wuhan and Chengdu - from October 2010 to June 2011. These young people have authority regarding their own expenses. According to the survey, 84.3 percent of those surveyed said they would decide which clothes to buy.


They also have a significant say in family purchases, although they still depend on their parents for money. Nearly one third said they made decisions about major purchases, including houses and cars, with their parents.


A substantial 63.5 percent had credit cards.


Although being portrayed as the spoiled children of one-child families, the survey showed that the post-1990s generation maintained a realistic attitude about consumption.


According to the survey, style and design, brand, type, color, size and price were the top six factors that influenced their decisions.


Only 13.3 percent of those surveyed reported that a brand was the first factor they considered while shopping and 65.2 percent took both brand and practicality into consideration when making a purchase.


According to the survey, 70 percent said they considered both quality and price in shopping decisions.


They also pay a lot of attention to being stylish. The survey showed 47.3 percent considered a product's style and design to be the most important factors in personal purchases.


The survey also showed that 42.4 percent have shopped online at least once, spending 193 yuan more each month than those who did not.


Xinhua

[everywhere]

Haier aims for Europe and "Made in China" upgrade
(Japan Today/AFP, July 2)

QINGDAO, China (AFP) — Chinese appliance and electronics giant Haier is aiming to expand into Europe with higher-end products, helping to upgrade China’s reputation for churning out mostly cheap, low-quality goods.


However, experts say that even if Haier succeeds the country still has much to do before it emulates the transformation by neighbours Japan and South Korea over recent decades so that their top brands are now synonymous with class.


Haier already has the biggest share of the world’s appliances and electronic goods market. Its revenues were 150.9 billion yuan ($23.7 billion) last year, giving it a 7.8 percent share of the global market in that sector.


But 70 percent of its sales were in Asia, where a low cost is often the key selling point. And it is now looking to take on competing brands such as South Korean giants Samsung and LG in becoming a household name in Europe.


To showcase its products and technology, the firm, which has 70,000 employees in 165 countries, recently invited European journalists to visit its headquarters and factories in the eastern port city of Qingdao.


Haier is seeking a five-percent market share for washing machines and refrigerators in Europe by 2015, up from three percent today.


To get this it needs to “develop products that speak to European tastes”, said Rene Aubertin, who heads Haier’s European office.


To help do this, he said the firm had opened up a research and development operation in Nuremberg, Germany.


Among the innovations Haier is hoping will attract European customers are fridges equipped with an external camera and tactile screen to record what goes on in the kitchen. The video can then be sent over e-mail.


Haier has also started to introduce European-standard sales and marketing techniques in China, so that the company is set for the new market, according to Yannig Gourmelon, a Shanghai-based business consultant with Roland Berger.


Gourmelon said one of these standards was a promise to deliver products in China within 24 hours of purchase.


He said Haier’s business practices were already being noticed in Europe.


“Five or six years ago we knew nothing about Haier in Europe but today when I give a class (at the prestigious French Business School HEC), everyone knows what I’m talking about,” Gourmelon said.


With China yet to develop consumer brands with reputations for making top-quality goods, Haier is still cautious of promoting the “Made in China” label.


“We never emphasise that point,” said Li Pan, managing director of Haier’s overseas division. But, he added: “We don’t deny it. We don’t believe ‘Made in China’ will bring any negative impact to our business.”


Haier’s rise to become a global player began from the ashes of a badly managed, state-run business in Qingdao that made fridges for the Chinese market in the dour mid-1980s.


The company says some of its success can be attributed to its philosophy of “innovate or die”. Noticeboards in its headquarters proudly list the names of staff who have contributed fresh ideas to improve its products.


However, Michael Pettis, a professor at Peking University’s Guanghua School of Management, said the Chinese economic system did not generally encourage such innovation.


Pettis said Chinese companies typically succeeded because they had good relations with government officials and could get favourable bank loans, not because they were great innovators.


“(In China) there are companies that have climbed up the value chain, but it’s really been driven by cheap capital, not by innovation,” Pettis said.


“Of course, every manager in the world will tell you that he wants to be innovative and move up the value chain and create higher value-added products, but not everybody does so.”


Without the conditions that promote innovation, Chinese firms will continue to struggle in making higher-end products for the global market, according to Pettis.

[everywhere]

Industry slows but data better than feared
(Shanghai Daily/Xinhua, July 2)

CHINA'S manufacturing activities grew at their slowest pace in seven months in June but the results were better than many observers had feared.

The official Purchasing Managers' Index, a comprehensive gauge of operational conditions in manufacturing, fell to 50.2 last month from May's 50.4 and April's 53.3, the China Federation of Logistics and Purchasing said yesterday.

A reading above 50 indicates expansion. There had been concern that the gauge would drop below 50 into contraction.

Zhang Liqun, a federation economist, said China's economy was still slowing but ''there are signs of a moderating slowdown, which indicates the economy is stabilizing.''

Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd, said it was fortunate China's manufacturing sector was still expanding.

''Although the data fell to a seven-month low, they are better than market expectations and help bolster people's confidence when the government has strengthened efforts to spur growth,'' Zhou said.

Component indices showed that new export orders fell 2.9 points from a month earlier to 47.5 in June, dragging new orders down to 49.2.


Continued growth

Production lost 0.9 points to 52, staying above the expansion threshold thanks to the textile, furniture, transport equipment and food sectors, which continued to grow.

China's economy rose 8.1 percent annually in the first quarter, the slowest in nearly three years. Some economists estimated growth may fall below 7.5 percent in the second quarter.

To stimulate growth, China has unveiled measures, including cuts in interest rates and the reserve requirement ratio, subsidies for energy-efficient consumption, faster approval for new investment projects and wider access for private capital into previously state-dominated fields.

But China is moving cautiously with the measures, mindful of the painful hangover of inflation and debt from its 4 trillion yuan stimulus to cushion the impact of the 2008 global crisis.

Zhou predicted a relatively strong rebound in China's economy soon amid the enhanced measures, including one more reserve ratio cut that would pump more liquidity in the banking system.

[everywhere]

Global growth slowdown could spur broad-range monetary easing
(Shanghai Daily/Citigroup Research, July 2)

GLOBAL growth prospects are worsening, reflecting the euro-area crisis and emerging market slowdown. This month, we are cutting our global growth forecasts for both 2012 and 2013, and remain well below consensus and IMF forecasts for both years.

We now expect global growth of 2.6 percent this year and 2.7 percent in 2013, down by 0.1 percent for 2012 and down by 0.2 percent for 2013 from last month. This is the second consecutive downgrade to our 2013 global growth forecast and the first for 2012.

A broad-based emerging market slowdown is now underway, and we are making substantial downgrades this month to our 2012-13 growth forecasts for Brazil, China, India, Indonesia, Hungary, Korea and South Africa.

The European Monetary Union crisis is likely to worsen, with widespread recessions, banking sector strains and deficit overshoots.

We expect the upcoming EU Summit will produce a political commitment to move towards a "banking union" for euro-area countries over time, but do not expect this will resolve the crisis.

Bailouts for Cyprus and the Spanish banks are likely to be agreed soon, and both Italy and Spain are likely to enter some form of Troika bailout for the sovereign before end-2012.

Near term (next 2-3 quarters), we continue to expect at least one sovereign rating downgrade by one major agency for Italy, Spain, Greece, Ireland and Portugal. Over the next 2-3 years, we expect a wider range of sovereign downgrades, including the US, Japan, France and the Netherlands.


Economic weakness

Over the next 2-3 years, we expect that a combination of fiscal and economic weakness, high market yields, and the need for some form of sovereign bailout will see Italy and Spain reduced below investment grade by at least one major agency.

We expect further widespread monetary policy loosening in coming months.

The European Central Bank is likely to cut rates by 0.25 percent at the July meeting, and will probably resume its multiyear Long-term refinancing operations program soon after. The UK is likely to restart quantitative easing at the July meeting.

For China, additional policy measures this year could include two more rate cuts to boost demand and two more reserve requirement ratio cuts to bring money growth to 14 percent. The other BRIC countries are also likely to loosen monetary policy in the second half of 2012.

For the US, the Federal Reserve's decision to extend Operation Twist may not be the last easing step, and extra QE will be likely if recovery appears threatened or the outlook deteriorates significantly further.


The article is an abstract of the Global Economic Outlook and Strategy report issued by Citigroup's research unit on June 27.

[everywhere]

Sales in high-end sector propels new home buying
(Shanghai Daily, July 2)

NEW home purchases in Shanghai soared to their highest level in 17 months in June amid robust sales of mid to high-end properties, according to the latest market research.

Sales of new homes, excluding government-funded affordable housing, rose 26.6 percent from May to 1.02 million square meters last month, the highest since February 2011, a Shanghai Uwin Real Estate Information Services Co report said.

New homes were selling at an average of 24,070 yuan (US$3,808) per square meter, up 7.2 percent compared to May.

"The monthly volume was rather unexpected, mainly driven by notable improvement in the mid to high-end segments," said Huang Zhijian, chief analyst at Uwin. "The secret to booming sales remained unchanged as developers trimmed profits to trigger buyers' sentiment and the strategy just worked as usual."

More than 400,000 square meters of new residential properties costing between 20,000 yuan and 40,000 yuan a square meter were sold last month in the city, a surge of 53 percent from May, whereas those costing more than 40,000 yuan per square meter also jumped 46 percent to nearly 100,000 square meters. In contrast, new houses asking for under 20,000 yuan per square meter only gained 9.2 percent to 519,000 square meters during the same period, the report said.

A China Overseas Property development near Changfeng Park in Putuo District became the city's bestseller last month, with 199 apartments selling at an average 38,135 yuan per square meter. In the luxury segment, a Greenland project in Longhua, Xuhui District, sold 72 units in June for a discounted price of 63,970 yuan per square meter.

About 905,900 square meters of new residential properties were released to the local market in May, a rise of 13.5 percent from May, Uwin data showed.

[everywhere]

China's real estate turning some important corners
Stephen Green and Lan Shen, Standard Chartered Bank
(Shanghai Daily, July 2)

WE hate to puncture the commonly held view that China's real-estate sector is a gigantic bubble in the midst of popping horribly, but we think the worst is probably over.

This is not to say that apartment prices will now start to rise (the short-term outlook for prices in most cities is flat to lower), or to say that developers' cash pressures are ending (there are indications that trust companies are seeing a deterioration in their real-estate loan portfolios).

The good times are probably a year or more away as it will take time to absorb inventory, particularly in some Tier 2 and Tier 3 cities. But the drivers of the current downturn are now turning.

Year-on-year growth in national floor space at various stages of development has three apparent turning points:

1. Growth in completed housing is decelerating and is back below 20 percent year on year. This suggests that the boom in new housing supply growth will end at some point soon.

2. The fall in the growth rate of floor space sold has bottomed out, apparently at a more shallow level than in 2008-09. This suggests that buyers are coming back into the market to take advantage of discounted prices offered by developers. This is significant, and suggests that the return of buyers to Tier 1 and 2 cities that began in the first quarter is continuing and is spreading nationwide.

3. The collapse in growth in floor space under construction suggests that the boom in new supply will end in the foreseeable future.

Tough times

China's housing sector is clearly in for continued tough times. In the last few months a big disparity has opened up between floor space completed and sold, so we are still looking at high inventory levels. Moreover, completed floor space is still growing and sales are down on last year, so inventories do not appear to be falling. But their rate of growth is now likely decelerating.

These trends will take time to work through before inventories return to a normal level - probably at least a year, possibly more. In this environment, small and medium-sized developers - and large leveraged players - will continue to experience tough operating conditions.

Weaker construction will hit GDP. Housing investment accounts for some 8 percent of GDP and has wide-ranging secondary impacts on commodity demand and the products that fill living rooms and kitchens. It will continue to drag on growth.

But the good news is that so far, apartment prices are coming down in a controlled fashion - and attracting buyers who are being encouraged by quiet policy loosening by city governments.

Rising volume

We are now seeing an actual uptick in apartment sales in the top cities. The People's Bank of China's 25-basis-point interest rate cut on June 8 helped. Sentiment has turned as developers have cut prices for many projects, banks have made first-time mortgages easier to get, and city governments have offered various incentives for buyers - ranging from lower transaction taxes to residency permits and even direct subsidies in a few places. Such policy loosening has to be done quietly. A number of newspapers have reported that Henan Province had launched a 30 percent discount on the mortgage rate for first-time home buyers, among other supportive policies.

The 21st Century Business Herald later reported that the Zhengzhou City Finance Office denied such a policy was introduced (suggesting that the central government intervened). We do not expect overall purchase restrictions to be relaxed before year-end, but the central government is likely to tolerate measured, quiet easing by local governments that is focused on "real" (rather than speculative) demand. Higher sales volumes mean more cash flow for developers.

more

[everywhere]

Ma Xulun: Airlines facing intense pressure; improvement expected in H2 2012
(WCARN.com, June 30)

Amid the European debt crisis and the Chinese economy slowdown, Chinese airlines that used to profit fully from the flourishing domestic market are currently under great operation pressures.

"Chinese airlines have been facing great operation pressures in 2012 while the situation is expected to improve in the second half of the year", said China Eastern Airlines Corporation Limited General Manager Ma Xulun during an interview on the sidelines of China Eastern annual general meeting.



Ma revealed that China Eastern will reasonably deploy its capacity, vigorously promote the air-railway combined transportation system and accelerate the transformations of passenger and cargo businesses to cope with the challenges.


According to Ma, China Eastern's main operation pressures in 2012 stem from the following aspects: Firstly, the decreased volume of business travelers has lowered the fare price level. Secondly, despite of the slight drop recently, the overall fuel price in the first quarter was much higher compared to the same period a year earlier. Thirdly, the less than ideal export situation is negatively affecting the air cargo business. Last but not the least, the slow appreciation (even depreciation in some months) of RMB has substantially reduced the foreign exchange gains of the airlines compared to 2011.


In fact, the grimness that China Eastern has been facing is not unique. During May, Chinese airlines once again reversed from profiting to loss-making with a total loss of 1.37 billion yuan (US$216 million).



The under-performance was mainly caused by the exchange loss due to the depreciation of RMB against U.S. dollar as well as the slacking passenger & cargo demand in the aviation market.


However, Ma also pointed out that the business situation is expected to improve in the second half of the year amid the coming traditional peak season of Chinese aviation industry from July to September, coupled with the continuously declining jet fuel price. Therefore, China Eastern will be deploying its capacity precisely based on the changing market with the main strategy of "Westward Expansion; Northward Extension".



In other words, the Shanghai-based carrier will preferentially deploy large aircraft and increase flights in Western China and Northern China regions. In addition, the Chinese government has approved that the Chinese airlines can restart fuel hedging though the hedge amount is limited to 20 percent of the total fuel consumption.



At the meantime, China Eastern is also watching closely the trend of fuel price and looking forward to restarting fuel hedging at an appropriate time.
As for the annual performance of Chinese airlines in 2012, Li Jun, an analyst with Huatai United Securities said that, after the business performance of Chinese aviation industry peaked in 2011 in the current circle, the industry profitability in 2012 will decline compared to a year ago amid the sharply reducing exchange gains and the slightly decreasing gross margin of domestic flights (in consequence of the lower passenger load factor caused by the sagging economy and the impact from the rising average jet fuel price).



However, the aviation industry is expected to be more profitable in 2013 compared with 2012 since the business of domestic routes will remain relatively stable while the performances of international routes and cargo routes are expected to firm up and rebound.



Ma further expressed that China Eastern will be focusing on a few areas of development. The first is the fast development of the air-railway combined transportation system. Since the initiation on May 5, there has been significant effect on the air-railway combined transportation system, where a continuous upward trend of passenger volume has been observed.



The second is the full expansion of the air travel tourism products. A high pace of increase in air travel demand can be foreseen from the future tourism consumptions. The third is the transformations of passenger and cargo businesses.



The passenger transportation will be gradually converted from the traditional air carrier base to the modern service provider base. The cargo business will be drifted from simple freight delivery handler to logistics integrated service provider.


Meanwhile, China Eastern has been reducing the financing costs and optimizing its debt structure through expanding financing methods. The shareholders meeting held on Jun. 28 passed China Eastern's proposals of issuing up to 10 billion yuan SCP (Super Short-term Commercial Paper) with limited period of 270 days as well as issuing up to 8.8 billion yuan corporate bonds with a time limit of 10 years. The capital raised will be mainly used for aircraft purchase and bank loan refinance.


Moreover, the shareholders meeting approved the airline's another proposal of introducing 20 Boeing 777-300ER aircraft and selling five Airbus A340-600 aircraft. In regard to the proposal, China Eastern Chairman Liu Shaoyong elaborated that, Boeing 777-300ER has been proved to be the best aircraft for transoceanic routes given its outstanding economic efficiency and safety.



Thus, it is the best choice for China Eastern to operate the international flights connecting Shanghai and America. Liu also said, "China Eastern's expansion of international routes will not stall. On the contrary, the expansion will be carried out positively, reliably and selectively."

[everywhere]

China implements energy-saving pricing system
(Shanghai Daily/Xinhua, July 2)

BEIJING, July 2 (Xinhua) -- China implemented a new multi-tier electricity pricing system on Monday to tackle the increasing pressure of supplying power to the world's most populous country.

Under the new system, the residential electricity rate increases as the electricity consumption base amount increases.

For example, Beijing has set three price brackets for residential users and will keep the current electricity rate unchanged for residents consuming 240 kwh of electricity or less a month.

Households whose monthly electricity consumption falls between 241 kwh and 400 kwh will have to pay 50 yuan (7.9 U.S. dollars) more for every 1,000 kwh of electricity, while those consuming more than 400 kwh a month will pay 300 yuan more for every 1,000 kwh of power.

The current electricity rate for Beijing households remains at 48.83 yuan for every 100 kwh of consumption.

Different provinces have set up their own price brackets. In east China's Zhejiang province, households whose yearly electricity consumption falls under 2,760 kwh will enjoy the current price of 0.538 yuan per kwh. Those who consume between 2,761 to 4,800 kwh a year will pay 50 yuan more for every 1,000 kwh of electricity, while those consuming more than 4,800 kwh a year will pay 300 yuan more for every 1,000 kwh of power.

The new pricing system has been designed to have minimal impact on the poor. Households consuming less than 480 kwh per month can save at least 16 yuan a month, according to a calculation by the Zhejiang Provincial Price Bureau.

China has been pushing for reform in its pricing of resources and energy as part of efforts to better reflect market demand and save energy as power shortages are reported almost every summer.

[everywhere]

HSBC PMI dips for eighth straight month
(Shanghai Daily/Xinhua, July 2)

CHINA'S private and export-oriented manufacturers reported a decrease in activity for an eighth consecutive month in June, an HSBC survey showed this morning.

In contrast, big state-owned enterprises saw their business expand although it grew at the slowest pace in seven months.

The HSBC Purchasing Managers Index, a composite indicator of operating conditions in China's industrial sector which is slanted towards private and export-oriented companies, inched lower to 48.2 last month from May's 48.4.

A reading under 50 means contraction while the opposite points to expansion.

For the second quarter as a whole, the index averaged its lowest quarterly value in more than three years.

Qu Hongbin, chief economist for China at HSBC, said it is all about growth and employment.

"As external demand has weakened and domestic demand has not shown a meaningful improvement in response to earlier easing measures, growth is likely to further slow, which weighs on the job market," Qu said.

"But as inflation eases sharply, China has plenty of room and policy ammunition to avoid a hard landing," he added.

Qu said he expected more monetary policy easing measures to be announced in the coming months.

But the official PMI data, compiled by the China Federation of Logistics and Purchasing and weighted towards big state-owned enterprises, showed businesses continued to expand.

The official PMI fell to 50.2 in June from May's 50.4, the federation said on Sunday.

Chinese ship manufacturers' orders drop drastically
(Shanghai Daily/Xinhua, July 2)

NANJING, July 2 (Xinhua) -- Jiangsu, the dominant province in Chinese ship manufacturing, received 61.7 percent fewer orders for ships in the first five months than in the same period of 2011, due to a slump in the global shipping market, new official figures have indicated.

Jiangsu produced 183 ships with a deadweight capacity of 7.62 million tonnes between the start of January and the end of May, 10 percent fewer than last year, according to data released on Monday by the provincial commission of economy and information technology.

It received only 72 ship-building orders with a deadweight capacity of 1.64 million tonnes in the first five months, 61.7 percent lower than last year.

The sluggish world market and excess of transportation capacity contributed to the drop in orders, according to the commission.

Jiangsu plans to account for 35 percent of the Chinese market and 15 percent of the global market in terms of ship building by 2015.

[everywhere]

Coal inventories in major Chinese ports facing oversupply
(Shanghai Daily/Xinhua, July 2)

SHIJIAZHUANG, July 2 (Xinhua) -- Coal inventories in Qinhuangdao, Tangshan and Huanghua, China's major coal ports, have reached record highs in recent days, sparking safety concerns for the Chinese energy market.

According to the latest figures, coal supplies among the three ports totaled 18.3 million tonnes on June 30, or 8.6, 8.4 and 1.3 million tonnes, respectively.

Qinhuangdao Port, located in north China's Hebei province, is the world's largest coal loading port, and it handles half of China's coal needs.

On June 25, the coal inventory in storage at Qinhuangdao totaled 9.08 million tonnes, while the designed volume for pile is 10.18 million tonnes.

The pile at Qinhuangdao was started in May. On June 18, coal inventories at this port hit 9.46 tonnes, the highest level since November 2008, according to official statistics.

At the port of Tangshan, which is also strategically located in Hebei in order to transport coal from northern to southern China, the coal inventory on June 25 totaled 8.1 million tonnes, just shy of the maximum volume of 8.7 million tonnes.

"China's coal stocks are estimated at about 300 million tonnes, equivalent to the entire country's coal consumption in one month," said Li Xin, a senior official with the China Coal Transportation and Distribution Association.

Industry insiders say that the slowdown in domestic economic growth reduced demand for thermal coal in China, which was caused by overcapacity in coal's downstream industries, including the steel, cement, electricity and real estate industries.

Moreover, China imported 86.55 million tonnes of coal in the first four months, up nearly 70 percent year on year.

"The increase of imported coal affected the price of domestic coal, as well as the domestic coal market," said Song Xinting, vice president of the Coal Transportation and Distribution Association of Hebei province.

According to statistics from the National Energy Administration, China's power consumption in the first five months of this year was 1.96 trillion kilowatt hours, up 5.8 percent year on year, but the growth rate fell 6.2 percentage points from the same period of last year.

As the southern parts of China have seen plentiful rainfall this year, hydropower generation output has increased. Meanwhile, in the eastern areas of China, natural gas has been used for generating electricity this year, another factor trimming thermal coal demand, Song added.

Due to these factors, the price of 5,500 Kcal thermal coal, part of the Bohai-Rim Steam-Coal Price Index, dropped to 729 yuan (115 U.S. dollars) on June 25, resulting in the biggest weekly decrease since the index was launched.

In light of slowing economic growth and waning coal demand, a slowdown trend for coal supply and demand in the third quarter, or the second half of this year, will continue, industry insiders say.

Although thermal coal demand will increase over the peak power consumption period that runs from July to August, the massive coal inventories in power plants and ports won't change, industry insiders say.

So far, there has been no concrete action to cope with the problem.

Coal industry associations at all levels are currently urging relevant enterprises to reach consensus, work together, strengthen industrial self-discipline and avoid vicious competition.