world growth

world growth

Monday, December 28, 2009

China's GDP per capita to reach $4,000 next year

China's GDP per capita is expected to climb to 4,000 U.S. dollars by the end of next year, according to the 2010 social blue book issued Monday.

According to Li Peilin, director of the Sociology Institute of the Chinese Academy of Social Sciences, which compiled the book, GDP per capita has been growing rapidly in recent years.

"From 1978 to 2000, GDP per capita in China increased from $400 to $800, which took 20 years. When we set the goal in 2000 to build up a well-off society by 2020, the forecast was to double the GDP per capita within 20 years, jumping to more than $3,000 in 2020," he said.

The report, Society of China: Analysis and Forecast 2010, said rapid economic growth, decline in the new population and appreciation of the renminbi contributed to the acceleration of the growth rate.

The GDP per capita refers to the average value of goods produced per person in a given country.

GDP per capita exceeded $1,000 in 2003 and jumped to $3,000 in 2008, so it will approach $4,000 next year, achieving the target ahead of time.

"A $4,000 GDP per capita means an increased strength of domestic capital, which will help the employment of migrant workers and college students," Chen Yan, chief writer at Economy magazine, told the Global Times Monday.

The blue book also pointed out that the annual income of urban residents could increase by 10 percent this year but rural residents' income will only increase by 6 percent to 7 percent.

"The income of people in rural areas reduced under the influence of financial crisis in 2009. The income gap between urban and rural residents will widen," Li said.

During the first three quarters, the employment situation remained stable, with 8.15 million more people in urban areas getting jobs. The number is expected to reach 11 million this year.

There are 9.15 million registered unemployed urban residents, with an unemployment rate of 4.3 percent.

Thanks to government efforts, college graduates' employment rate reached 74 percent by September 1 but the average salary for graduates fell.

However, nearly 83 percent of the population said they were optimistic about the employment situation in 2010 and the confidence index jumped by 1.3 percent compared with last year, according to a survey conducted recently by Beijing-based China Mainland Marketing Research Company.

http://news.xinhuanet.com/english/2009-12/22/content_12686203.htm

Sunday, December 20, 2009

Time Sees ‘Chinese Worker’as Economic Savior

The reasons Time magazine gave for naming Ben Bernanke its Person of the Year centered on the Fed chairman helping to “ensure that 2009 was a period of weak recovery rather than catastrophic depression.”

For similar reasons the magazine listed on its list of runners-up “the Chinese worker,” a nod to another factor – or rather tens of millions of them — in keeping the world from tipping into the economic abyss.

In its motivation, Time mentioned the term baoba, or “maintain eight”, a reference to China’s 8% growth targets and said, “A year ago, many thought hitting such a figure in 2009 was a pipe dream. But China has done it, and this year it remains the world’s fastest-growing major economy — and an economic stimulus for everyone else. Who deserves the credit? Above all, the tens of millions of workers who have left their homes, and often their families, to find work in the factories of China’s booming coastal cities.”

The nomination might have seemed weirdly anonymous, lumping together under one label millions of individuals who might have little in common except as a symbol, but Time accompanied the entry with eight (ba!) photos of workers at an LED factory in Shenzhen, an apparent attempt at giving “the Chinese worker” a face (though it’s still not clear who would have been invited to the awards ceremony if there is such a thing).

But as heroic as the Chinese worker is, it deserves to be said that without massive stimulus efforts by the Chinese government that started late last year, he or she might not have a job to go to. Indeed, in the early months of this year, jobs were lost to the tune of 20 million-plus. Also, workers in the coastal factories, which make many of the goods China exports, are dependent on global demand rather than a driver of it.

Still, China has certainly driven much of the economic discourse this year. On the list of Time’s “People Who Mattered” was People’s Bank of China Governor Zhou Xiaochuan. Motivation: “Even with China’s growing international economic clout, the mandarins who run the rapidly growing economy tend be faceless — and cautious to the extreme. That’s why when Zhou Xiaochuan publicly called in March for the U.S. dollar to be eventually replaced as the globe’s reserve currency, the world took note.”

The March proposal, which is still widely discussed, brought home the image of China as an increasingly assertive participant on the world economic stage, one calling for a global economic order less dominated by the U.S. and other wealthy nations.

In a poll on Time’s Web site to let readers weigh in on who they think was the most influential person in 2009, Zhou was in ninth place at last look (the list was topped by Chesley B. (Sully) Sullenberger, the pilot who successfully landed a US Airways plane on the Hudson River last January), showing that while non-Chinese still dominate Time’s influential-people lists, at least China’s equivalent to Bernanke has acquired name recognition.

http://blogs.wsj.com/chinarealtime/2009/12/17/time-sees-%E2%80%98chinese-worker%E2%80%99-as-economic-savior/

Sunday, December 13, 2009

Nearly 13 million cars will be sold in China in 2009

Chinese car market overtakes that of United States

SHANGHAI — China has overtaken the U.S. as the world's biggest market for automobiles, the first time any other country has bought more vehicles than the nation that produced Henry Ford, the Cadillac and the minivan.

Now that the Chinese buy more cars and trucks than Americans, the shift could produce ripples for the environment, gas prices and even the kinds of cars automakers design.

More than 12.7 million cars and trucks will be sold in China this year, up 44 percent from the previous year and surpassing the 10.3 million forecast in the U.S., according to J.D. Power and Associates.

China has long been expected to overtake the U.S. since its population of 1.3 billion is more than quadruple that of the United States. But the increase in sales happened much faster than anyone expected because of China's tax cuts, its stimulus program and a depressed American market.

Two years ago, J.D. Power predicted China would pass the U.S. in 2025. Earlier this year, it forecast 2009 sales of just 9 million vehicles for China.

After a sharp slowdown in auto sales late last year, the Chinese government cut taxes on small cars and spent $730 million on subsidies to encourage sales of SUVs, pickups and minivans. A big stimulus program also boosted truck sales by pumping money into construction.

Auto sales were expected to rise with China's stimulus, but they have far exceeded expectations, said Jeff Schuster, J.D. Power's executive director of automotive forecasting.

Most experts think the top-sales title will shift back and forth between China and the United States for the next several years, with China ultimately prevailing.

Improving sales of autos and other big-ticket items is key to Beijing's strategy to promote stronger domestic consumption and lower dependence on exports.

"The government has sent a very clear message that they will not let the auto industry weaken, especially in 2010," say Jia Xinguang, chief analyst at China National Automotive Industry Consulting & Developing Corp.

Meanwhile, U.S. sales hit a 26-year low in early 2009 and remain well below the 17 million average from earlier this decade.

China's growing auto market is sure to affect the industry worldwide. Some key factors are:

_ CHINA'S CAR POLLUTION: It's gotten worse. China's fleet is newer, and big cities have imposed emissions standards that exceed those in the U.S., but lax enforcement of standards is a major problem. Vehicles may meet standards at first but then degrade over time.

On top of that, the number of vehicles on China's roads is soaring, although it's still a fraction of the U.S.

_ FUEL DEMAND: Global demand for oil is rising, fueled by China and India. Most energy experts agree that demand for crude has peaked in the U.S. Meanwhile, China's demand for oil used in transportation could more than double between 2007 and 2020, according to the World Energy Outlook, a joint study by the Organization for Economic Cooperation and Development and the International Energy Agency.

At home, China struggles both with the amount and quality of its fuel supply. A study by Harvard researchers found that refiners were not supplying fuel that was good enough to meet the country's rising emissions standards.

The cost of oil is prompting China to encourage a shift to cars and trucks that are more fuel efficient or run on batteries and alternative fuels. The government has raised taxes on gas guzzlers. China is the world's No. 3 net importer after the U.S. and Japan.

_ VEHICLE DESIGN: The Chinese will have more influence over vehicle design as they buy more cars. GM had its Chinese team design the 2010 Buick LaCrosse because the brand sells better in China than in the U.S. Buick is considered a luxury car in China.

The designers included sumptuous back seats for executives with drivers. They also used Feng shui principles and swooping designs based on Chinese art.

Chinese automakers will emerge stronger from the sales boom. BYD Co. aims to overtake Toyota as the global auto leader by 2030. Among BYD's backers is billionaire investor Warren Buffett.

China's sales may grow so large that cars designed for Chinese tastes are sold globally, the way U.S. vehicles are now. But some experts doubt that will happen until Chinese automakers become competitive on style and quality.

Meanwhile, as China's middle class expands, Chinese car shoppers are developing tastes similar to those of drivers in the U.S. and other wealthy nations.

"I talk to my friends in Beijing," says Crystal Jiang, a professor at Bryant University in Smithfield, R.I., who studies globalization. "I drive a Subaru, they also drive a Subaru."

http://www.google.com/hostednews/ap/article/ALeqM5ilh7yx-ziJaWxDxgxh2rsPfekaqwD9CGN3JO2

Sunday, December 6, 2009

China becomes Colombia's second-largest trading partner

Looks like China is making more inroads in South America.

China has replaced Venezuela as Colombia's second-largest trading partner, as Colombia's oil exports to China have multiplied more than 50-fold over the last year.

Colombian exports of crude, fuels and derivatives to China totaled $235 million in the first 10 months of 2009, up from $4.5 million in the same period in 2008, according to data from Colombia's national statistics agency, or DANE, released Thursday.

"China is investing heavily in Latin America looking to get hold of commodities, which is likely to continue," said Bertrand Delgado, a New York-based research analyst for emerging markets and Latin America at RGE Monitor. "The problem is that Colombia's exports to Venezuela are mainly value-added, while exporting oil is just raw materials. When you try to advance as an economy you try to export as many value-added products as you can."

Colombia's exports to China were valued at $115 million in October, up from $15 million in October 2008. Most of the rise is due to increased exports of crude and oil derivatives, a DANE spokesperson said.

"This year we have shipped 6 cargoes of 1 million barrels [of heavy crude mixed with naphtha] each to China," said Mauricio Tellez, a spokesman for Colombia's state-controlled oil company Ecopetrol SA (ECOPETROL.BO).

Venezuela is traditionally Colombia's second-largest trading partner, after the U.S., but trade between the two neighbors slumped in the third quarter due a diplomatic dispute over the U.S. military presence in Colombia.

Colombian exports to Venezuela in October fell 70% to $195 million on October 2008, after Venezuelan President Hugo Chavez said his country will substitute Colombian imports with products from other countries.

Colombian President Alvaro Uribe Wednesday said Venezuela is currently enforcing an embargo against Colombia and other Latin American countries are taking advantage to substitute Colombian products on the Venezuelan market.

http://online.wsj.com/article/BT-CO-20091204-713862.html

Sunday, November 29, 2009

China 2010 GDP growth could be around 8 percent

Looks like China will be able to maintain a steady growth rate in next few years.

- China's economy could grow at around 8 percent in 2010, after healthy growth this year, Trade Minister Chen Deming said on Friday.

"There is a possibility that it will be maintained at around 8 percent," he said referring to next year's GDP growth.

He said 2009 growth was good and would provide a sound basis for next year as long as there were no upsets in the world economy.

Earlier this month, China's key government think tank, the State Information Centre, estimated the economy's growth next year at 8.5 percent.

http://www.reuters.com/article/hotStocksNews/idUSWEA333120091127

Friday, November 20, 2009

India or China: whose household is wealthier?



Plenty of research has been done on the inequality of per capita income between countries and also on income inequality within a country. The Gini coefficient is often used to measure the level of inequality, with a low number indicating low inequality while a high number indicates a high degree of inequality.

The index lies between 0 and 100 with 0 denoting absolute equality and 100 absolute inequality. The United Nation’s latest Human Development Report, for instance, puts the Gini index for India in 2007 at 36.8, better than China’s 41.5. The richest 10% of the Indian population gets 31.1% of the country’s income, while the poorest 10% get 3.6%. But economists such as Pranab Bardhan, professor at the University of California at Berkeley, have for long pointed out that while income inequality may be comparatively low in India, inequalities in wealth are far harsher. But data on wealth are much harder to get.

...

For China, wealth per adult was estimated at $19,056 in 2000. That makes an average Chinese one a half times as wealthy as an average Indian. But if we take gross domestic product (GDP) per adult instead of per adult wealth, then the income of an average Chinese was only 1.18 times as much as that of an average Indian in 2000. The study says that India’s share of global GDP was 5.9% in 2000, while its share of global wealth was 4.2%.

Even more interesting are the estimates of wealth inequalities within countries. In India, for example, the top 10% of the population had 52.9% of the country’s wealth in 2002-03, while the top 1% had 15.7%. China was more egalitarian, with the top 10% owning 41.4% of the nation’s wealth. The Gini coefficient for wealth in India is 0.669, against 0.550 for China. Wealth is distributed very unevenly in the US, with the top 10% getting 69.8% of the country’s wealth and the top 1% own 32.7%. The Gini index for the US is a very high 0.801.

...


http://www.livemint.com/2009/11/20213827/India-or-China-whose-househol.html?h=B

Sunday, November 15, 2009

China wins a 2.3 billion dollar rail project in Malaysia

Kuala Lumpur - Malaysia announced Wednesday it would award a 2.3-billion-dollar rail project to China, as leaders of both nations pledged to increase bilateral trade.

Government officials earlier this year estimated the tracks, which are to connect the southern city of Johor Baru with Gemas in the neighbouring state of Negeri Sembilan, would cover 250 kilometres and cost more than 8 billion ringgit (2.3 billion dollars).

Apart from the rail project, Malaysia also committed to grant Chinese companies contracts to construct one of the country's biggest dams and an aluminium smelting plant, Prime Minister Najib Razak said after a meeting with Chinese President Hu Jintao in the administrative capital of Putrajaya.

'Both nations agree that there is enormous hope for our bilateral relations and we are agreed that we should work together to increase bilateral trade and investment,' Najib said.

China became Malaysia's biggest trading partner this year, surpassing Singapore, the United States and Japan. ' ... We hope that trade and investment will increase with China,' Najib said.

From January to September, bilateral trade reached 89 billion ringgit (25.5 billion dollars), accounting for nearly 13 per cent of Malaysia's total trade during that period.

Hu, who arrived in Kuala Lumpur Tuesday with a 140-member delegation, is the first Chinese leader to visit Malaysia in 15 years.

'China and Malaysia's relationship is embracing a new era of all-around development. We will work with Malaysia to usher in an even brighter future,' Hu said.

Both countries also signed a memorandum of understanding to deepen cooperation between their banking regulatory authorities.

Hu is scheduled to leave for Singapore later Wednesday, where he is due to attend the Asia-Pacific Economic Cooperation summit.

http://www.monstersandcritics.com/news/business/news/printer_1512630.php

Monday, November 9, 2009

China pledges 10 billion dollars for Africa

SHARM EL-SHEIKH, Egypt — China's pledge of 10 billion dollars in concessional loans to African states and enhanced trade was warmly received by African delegates as a two-day summit in Egypt ended on Monday.

Chinese Prime Minister Wen Jiabao's aid promise was welcomed despite some lingering suspicions that Beijing is interested in Africa only for its resources, including oil, to fuel a booming economy.

The Forum on China-Africa Cooperation, or FOCAC, began on Sunday with Wen announcing the 10 billion dollars in loans among a series of measures to be implemented before the next forum, due in 2012.

FOCAC meets every three years.

At a news conference at the end of the gathering in Egypt's resort town of Sharm el-Sheikh, China's Commerce Minister Chen Deming also promised to open Chinese markets to African exports and help Africa adapt to climate change.

Chinese companies will be directed to "assume more social responsibility in Africa and create job opportunities in African countries so the people of Africa can get the benefits from Sino-African cooperation," he said.

In an earlier speech, Chen said Beijing was "committed to... going all out to assist African countries in improving their agricultural production and infrastructure."

Wen said on Sunday China's package of assistance and investment in the African continent would focus on reducing poverty and aid for infrastructure and agriculture.

China is also promising to remove tariffs on most goods from the least developed African countries.

On Monday Chen said Beijing's aid was "selfless and unconditional."

The Asian giant's pledges have received an enthusiastic reception from African delegations, despite some accusations that China's interest in Africa focuses on its abundant natural resources, including oil.

Throughout the gathering, Chinese officials repeatedly addressed such accusations, with Wen on Sunday calling them "untenable."

"Our assistance towards Africa is based on improving people's lives and protecting the environment," Chen told Monday's news conference.

China has also been accused of throwing a lifeline to African regimes accused of human rights violations and creating further debt among nations on the continent.

But Chen said that China would exempt heavily indebted countries from paying low interest loans due this year.

African officials have welcomed the pledges, and insisted that they have the independence to choose what aid they receive from Beijing.

"You don't take what the Chinese offer you 100 percent, you take what suits you," Zainab Bangura, Sierra Leone's foreign minister, told AFP.

Bangura said China has built hospitals and roads in the poverty-ridden country.

Kenyan Foreign Minister Moses Wetangula defended the burgeoning relationship between Nairobi and Beijing, saying Africa was a victim of European double standards.

"Africa is hungry for development. Africa has lagged behind for too long (and) has always been treated and judged with very, very lopsided standards," Wetangula told AFP.

"The standards that Europe has been imposing on Africa are not the same standards Europe imposes on Eastern Europe, for example," he said.

"And here the Chinese are coming and saying: 'You want a railway line? We have the money and the technology to build it for you.' Who will not take that?"

Wetangula also said Kenya would not take sides between China and the United States in competing for influence in the continent.

"We are not abandoning our traditional friends for China. We will not engage any contact that discards old friends for new friends."

Both Wetangula and Bangura said they also wanted to see more trade between African countries themselves, which Wetangula said stood only at only 10 percent of the continent's trade.

http://www.google.com/hostednews/afp/article/ALeqM5gudkkaLv-FfP_kNzhTWTTOF0VnXw

Monday, November 2, 2009

China second only to US in scientific research

Chinese researchers have more than doubled their output of scientific papers and now are second only to the United States in terms of volume, according to a report from Thomson Reuters released on Monday.

The research is heavily focused on materials and technology and shows China is poised to dominate several areas of industry, the report finds.

"China's comparative growth is striking, far outstripping that of the rest of the world," reads the report, available here

"And the curve seems to be showing only marginal signs of slowing, still heading to overtake the USA itself within the next decade."

Chinese researchers published 20,000 research papers in 1998. This ballooned to nearly 112,000 in 2008, the report found, with China passing Japan, Britain and Germany in terms of annual output.

During the same time U.S. researchers increased output from 265,000 to 340,000 publications a year, a gain of around 30 percent.

Chinese research is concentrated in the physical sciences and technology, especially materials science, chemistry and physics.

"China's grip on innovative materials is likely to have far-reaching effects. It is difficult to see developments in industrial sectors that draw on these technologies that will not directly or indirectly depend on the knowledge coming out of China's research," the report reads.

"If China's research growth remains this rapid and substantial, European and North American institutions will want to be part of it," Jonathan Adams, director of research evaluation at Thomson Reuters, added in a statement.

The report, based on 10,500 journals monitored by Thomson Reuters, parent company of Reuters, notes that China has more than 1,700 standard institutions of higher education.

"Since the Chinese economic reform started in 1978, China has emerged from a poor developing country to become the second-largest economy in the world after the United States of America," the report reads.

"Already, more than half of the nation's technologies, including atomic energy, space science, high-energy physics, biology, computer science, and information technology, have reached or are close to a recognizable international level of achievement."

Other high-growth areas for China, according to the report, include agricultural sciences, immunology, microbiology, and molecular biology and genetics.

The United States is the biggest international collaborator with China, with 39,000 Chinese papers suggesting collaboration with U.S. researchers, or 8.9 percent of China's total. Japanese collaborations came next with 3 percent.

http://www.reuters.com/article/marketsNews/idUSN0246142320091102

Monday, October 26, 2009

Africa heading for 2009 growth due to China



All African economies bar South Africa will grow this year because of China's demand for their raw materials, a leading South African analyst said on Monday.

Out of 53 African states only the continent's biggest economy, South Africa, will not grow this year, Martyn Davies, executive director of Stellenbosch University's Centre for Chinese Studies, told a conference.

"Chinese demand is underpinning African growth," he told the conference on China, organised by the International Centre for Trade and Sustainable Development (ICTSD).

Africa is already exporting 1 million barrels per day of oil to China, accounting for 25 percent of China's foreign energy supplies, said Davies, who is also chief executive of emerging market investment strategist Frontier Advisory.

These links are based on strong support by African leaders for Chinese investment in extractive industries -- in contrast to objections raised to Chinese investment in sensitive sectors in developed countries, he said.

China's engagement in Africa -- where it is the biggest trading partner -- reflects both state enterprises benefiting from preferential capital from state banks, and private entrepreneurs, of whom around 1 million may now be in Africa, he said.

China's export prowess has so far failed to provoke much protectionism in Africa, except, again, in South Africa, where sensitive labour-intensive sectors such as textiles and light industry compete with Chinese firms.

Chinese imports from Africa come in at an average tariff of 0.64 percent -- almost the duty-free level sought by developing countries in rich markets -- because of China's eagerness to facilitate imports of African energy and commodities.

Conversely, China faces considerable protectionist sentiment outside Africa, said Simon Evenett co-director of St Gallen University's Centre for Economic Policy Research.

According to Global Trade Alert, a website run by academics that Evenett co-founded, China is now the most targeted country for trade measures such as anti-dumping duties and safeguards, a trend likely to increase as the global economy and international trade recover, Evenett told the conference.

"They can expect to be targeted even more. Now that world trade flows are increasing is perversely going to make it easier to demonstrate that Chinese imports are causing injury," he said.

http://www.reuters.com/article/mergersNews/idUSLQ42332020091026

Monday, October 19, 2009

China GDP grows more than 7 percent in first nine months 2009

SHANGHAI — China's economy expanded more than 7 percent in the first nine months of the year and will certainly surpass the 2009 growth target of 8 percent, a top economic official said Monday.

China is due to release official third quarter economic data on Thursday. But in a briefing Monday in Beijing, Xiong Bilin, a top economic planner, told reporters the growth rate for January-September would be a bit above 7 percent.

"Achieving a growth rate of 8 percent for the year is basically no problem," Xiong, a deputy director of the National Development and Reform Commission, told reporters.

Statistics for September showed improving trade, housing sales, manufacturing and car sales. The data suggest that resilience in retail sales and industrial production are helping offset the blow from falling exports to China's economy.

Separately, Yu Bin, a senior researcher with the Cabinet-affiliated Development Research Center told a conference over the weekend that growth was forecast to exceed 9 percent in the second half of the year, the financial magazine Caijing reported Monday.

"The internal and external environment for China's economic growth will be better next year," Yu said.

The upbeat comments helped push China's main share benchmark, the Shanghai Composite Index, to a one-month high on Monday of 3,038.27, up 61.64 points or 2.1 percent.

"All the data released were better-than expected, so investors are optimistic that Chinese economy has gathered pace in the third quarter," said Zhou Lin, an analyst for Huatai Securities in the eastern city of Nanjing.

Xiong, of the NDRC, pointed to the government's 4 trillion yuan ($586 billion) stimulus package, announced late last year, as a key factor in helping the economy bounce back from the global financial crisis.

But he noted that the stimulus package, which is focused mainly on construction projects, had also worsened China's chronic problems with overcapacity in important industries such as cement and steelmaking.

"The economic rebound is at a critical stage and our focus must be on stable growth and structural adjustments," said Xiong, whose remarks were posted on the government's Web site.

The government issued a notice Monday ordering tighter curbs on six industries following an initial announcement in late September. The industries include steel, cement, flat glass, coal chemicals, polysilicon and wind power equipment production. In a move to cut off financing for redundant projects, the country's mostly state-controlled banks were ordered not to lend to projects that violate government guidelines.

Such projects also are forbidden to raise funding by issuing bonds, shares or other financial instruments, the NDRC said in a statement.

"Many sectors are still reporting serious problems of overcapacity and redundant construction, and some problems are even getting worse," said the statement by 10 government ministries led by the NDRC.

The aluminum and soybean crushing industries are also under scrutiny but are not yet included among the industries facing the strictest curbs, it said.

http://www.google.com/hostednews/ap/article/ALeqM5j1FZRNA_nf7XY7YePH-Od-tdunFAD9BE42280

Tuesday, October 13, 2009

China's September Car Sales Rise 84%, Top 1 Million

Oct. 13 - China’s monthly passenger-car sales passed 1 million units for the first time, signaling that the government may ease stimulus measures in the world’s largest auto market so far this year.

September sales of cars, sport-utility vehicles and multipurpose vehicles climbed 84 percent to 1.015 million, the China Association of Automobile Manufacturers said in an e- mailed statement today. Overall vehicle sales, including trucks and busses, rose 78 percent to 1.33 million units.

General Motors Co. Chief Executive Officer Fritz Henderson said today that China’s auto sales will continue growing at “a very significant pace” as the nation’s recovering economy spurs demand. The pace of growth may prompt the government to halt tax cuts and subsidies to prevent overcapacity.

“It may end them to prevent the industry from growing too quickly,” said Chen Liang, Nanjing-based analyst of Huatai Securities Co. The government is “probably worried that strong auto demand would put pressure on energy and raw-material supplies.”

The government cut vehicle taxes and introduced auto subsidies in rural areas earlier this year after demand plunged on the global recession. Industrywide car sales have now risen more than 35 percent for six straight months, including a 90 percent jump in August.

GM Sales Double

GM, the largest overseas automaker in China, more than doubled September sales from a year earlier to 181,148 vehicles. In the first nine months, it sold 1.29 million, surpassing the tally for the whole of 2008.

“I don’t think for a second that it’s a blip,” Henderson told reporters today in Shanghai, referring to the overall market growth. “China will continue to grow at a very significant pace.”

Bayerische Motoren Werke AG’s sales in China rose 32 percent to 62,394 during January-September, with the BMW brand’s deliveries reaching 59,400 and the Mini division’s sales reaching 2,934, according to a company statement. China is now BMW’s biggest market after Germany, the U.S. and the U.K., it added.

A credit boom and a 4 trillion-yuan ($586 billion) stimulus package helped China’s economy grow at a 7.9 percent annual rate in the second quarter. The country will stick to a “moderately loose” monetary policy and guide reasonable loan growth to further cement its economic recovery, the People’s Bank of China said in a Sept. 29 statement. It will also continue to implement stimulus measures to boost domestic demand, the bank said.

Full-year vehicle sales may rise 28 percent to 12 million, based on a forecast made by Chen Bin, chief director of the industry coordination department at the National Development and Reform Commission, last month.

Chen also said that carmakers should “keep their heads” to prevent overcapacity as it was unclear whether growth was sustainable in the longer term.

For the first nine months, China’s passenger-vehicle sales rose 42 percent to 7.2 million units, while industrywide vehicle sales rose 34 percent to 9.7 million. By contrast, U.S. sales fell 27 percent to 7.8 million vehicles.

http://www.bloomberg.com/apps/news?pid=20601080&sid=aOiQ7Idu9Apk#

Wednesday, October 7, 2009

Amid the global economic crisis, China rises

BEIJING — The auto-parts maker Delphi Corp. is headquartered in Troy, Mich., in the heart of the region that made the United States the car capital of the world. It's a place where the phrase "buy American" is right at home.

Now the 3,000 employees of Delphi's brake and suspension unit are getting a new boss. Battered by weak sales, Delphi is selling the unit to investors led by a company named Shougang Corp.

Shougang is a steel maker owned by the government of China — a government that calls itself communist but espouses a "socialist market economy" as it marches down globalization's road toward a capitalistic future.

"Everyone's so desperate for cash that the Chinese show up with a checkbook and people say, `Yes, please'," says Arthur Kroeber, managing director of Dragonomics, a Beijing research firm.

Explosive growth in China and India, coupled with Japan's clout as the world's No. 2 economy, has long been expected to shift economic power from the United States to Asia as this century progresses. The financial crisis and resulting Great Recession are accelerating that process.

"China certainly comes out of the crisis stronger rather than weaker, and it's the opposite for the United States," says Stephen Roach, chairman of Morgan Stanley Asia.

Even some Americans have begun declaring this the "Chinese century" since it began nearly a decade ago. But while they and others fear the rise of China in international relations and the global economy, the reality is less dramatic: Beijing is still getting its own sprawling, chaotic house in order and is in no position to supplant the United States as global leader in the near future.

At the same time, Beijing's power remains undefined: On an unfamiliar global stage, it is unsure what role it wants to play.

For decades, China followed the dictum of its late supreme leader, Deng Xiaoping, to keep its head down abroad and focus on development at home. But earlier this decade, emboldened by success and mindful that their globalized economy needs stability, communist leaders started pressing for a place among the nations that manage world affairs.

These days, Beijing is claiming a bigger voice in global economic forums such as the Group of 20 and is getting more deference in the United Nations, which could mean protection for friends such as Iran and Myanmar. Its military spending is the world's second-highest, behind that of the United States.

"China is very likely to be the second-most-powerful country — if it isn't now, then within a decade," says Kenneth Lieberthal, director of the Brookings Institution's John L. Thornton China Center in Washington.

For the United States, it's a mixed blessing. The American and Chinese economies are intertwined, and the success of one depends on the health of the other.

The United States is China's biggest trade partner. China sent $338 billion in goods here last year. Beijing is Washington's biggest creditor, with more than $800 billion invested in government debt. American automakers look to China's growing market to propel future sales.

The financial crisis set back U.S. growth by years and will add trillions to the federal debt over the next decade. But China avoided the worst of the crisis. Its banks are healthy and, with the help of a 4 trillion yuan ($586 billion) stimulus, this year's economic growth is on track to top 8 percent.

Already, demand from China can affect oil prices, and it is starting to influence what products are available worldwide. Western jobs are tied to Chinese spending, from British auto factories to Australian iron mines. Chinese money is financing development of oil fields from Venezuela to Central Asia.

And China's role as Washington's lender-in-chief is altering the dynamic of the countries' relationship.

At a meeting in London in April, President Barack Obama assured his Chinese counterpart, Hu Jintao, that Washington would cut its budget deficit — a promise no American leader ever had to make to a Soviet leader.

Washington's three-year-old strategic dialogue with Beijing has long been dominated by U.S. trade grievances. But the latest round in July, overshadowed by America's need for China to keep buying its debt, became a discussion between equals.

China, a major destination for foreign investment, was starting to reverse the flow and invest abroad before the financial crisis. The crisis accelerated that and has led to a flurry of deals. In some cases, Chinese companies have stepped in to save Western jobs — a notion unthinkable a decade ago.

In Britain, China's Nanjing Automobile Group plans to reopen the Longbridge factory idled by the collapse of MG Rover to make limited-edition MGTF sports cars. And in Sweden, Beijing Automotive is joining a bid to buy Saab from General Motors, while Geely Automobile wants to acquire Ford's Volvo unit.

"It's better to be part of the race than to watch it from the stands," says Paul Akerlund, a union representative at Saab. "We see advantages in gaining access to the Chinese market, which is the fastest-growing auto market in the world."

In diplomacy, China is only starting to stake out positions on a wide array of global issues. It has used its influence in the United Nations to help allies such as Sri Lanka resist Western pressure on human rights. But Chinese leaders have yet to decide what overall political and military role they want abroad.

"They clearly want to be a country of some gravitas both regionally and globally," Lieberthal says. "But there are a lot of aspects of the American approach — too ready to interfere, to tell others what to do — that the Chinese criticize as `hegemonic.'"

Even as it is on track to overtake the American economy in size as early as 2030, China is burdened by enormous problems of corruption, poverty and pollution. Measured by income per person, China ranked 130th out of 210 economies in a World Bank survey last year, behind most of Latin America and parts of Africa.

"China's foreign currency reserves are huge. But that does not mean we are a rich country," says Cho Tak Wong, chairman of Fuyao Group, which produces glass for Chinese and global automakers. "We are about 100 years behind the United States."

China also has become a fast-growing market, and the financial crisis has only increased its importance to global companies. Chinese demand affects everything from global steel prices to the design of consumer goods. Cadillac created its 2008 CTS with China in mind, adding a deeper back seat for Chinese buyers driven by chauffeurs.

Other countries' urgent need for cash has created opportunities for Beijing to make deals for resources to drive its booming economy. State companies have struck oil deals in Brazil, Venezuela, Russia and Africa and bought stakes in Australian and Canadian miners.

Delphi turned to Chinese buyers for its remaining brake and suspension operations after it sought bankruptcy court protection four years ago. The buyers are Shougang and two partners — the Beijing city government and an auto-parts maker, Tempo Group. Delphi says the $90 million sale should close in November, seven months after it was announced.

Contrast that with 2005, when Chinese oil company CNOOC Ltd. tried to acquired Unocal Corp. CNOOC offered to pay more than a rival American bidder but withdrew after critics in Washington said the sale might threaten U.S. energy security.

Still, the United States has many strengths that China lacks. The U.S. remains the world center for innovation in many areas and a magnet for smart, ambitious immigrants.

"Europeans may hope that the U.S. has been knocked down a peg or two, but even if that is so, they could be in for a nasty surprise," says Howard Wheeldon, senior strategist at BGC Partners, a London brokerage. "Never underestimate the ability of the American people to rise to a challenge."

http://www.google.com/hostednews/ap/article/ALeqM5iQbkYh1Hh_k7OK6wm8DDyHh9ofswD9B6D6FG0

Wednesday, September 30, 2009

China's economic ties with Iran

China’s Ties With Iran Complicate Diplomacy



President Mahmoud Ahmadinejad of Iran, center, with Chinese workers at a highway tunnel project northwest of Tehran in June.

BEIJING — Leaders of the House Foreign Affairs Committee swept into Beijing last month to meet with Chinese officials, carrying a plea from Washington: if Iran were to be kept from developing nuclear weapons, China would have to throw more diplomatic weight behind the cause.

In fact, the appeal had been largely answered even before the legislators arrived.

In June, China National Petroleum signed a $5 billion deal to develop the South Pars natural gas field in Iran. In July, Iran invited Chinese companies to join a $42.8 billion project to build seven oil refineries and a 1,019-mile trans-Iran pipeline. And in August, almost as the Americans arrived in China, Tehran and Beijing struck another deal, this time for $3 billion, that will pave the way for China to help Iran expand two more oil refineries.

The string of energy deals appalled the Democratic chairman of the Foreign Affairs Committee, Representative Howard L. Berman of California, who called them “exactly the wrong message” to send to an Iran that seemed determined to flout international nuclear rules.

But some analysts see another message: as the United States issues new calls to punish Iran for secretly expanding its nuclear program, it is not at all clear that Washington’s interests are the same as Beijing’s.

That will make it doubly difficult, these analysts say, to push meaningful sanctions against Iran through the United Nations Security Council, where China not only holds a veto but has also been one of Iran’s more reliable defenders.

“Their threat perception on this issue is different from ours,” said Zalmay Khalilzad, who as the American ambassador to the United Nations under President George W. Bush helped persuade China to approve limited sanctions against Iran. “They don’t see Iran in the same way as we do.”

François Godement, a prominent China scholar and the president of the Paris-based Asia Center, put it more bluntly. “Basically,” he said, “the rise of Iran is not bad news for China.”

To be sure, China and the United States, leading members of the club of nuclear nations, share a practical interest in halting the spread of nuclear weapons to volatile areas like the Middle East. And it is in China’s interest to avoid alienating the United States, its economic and, increasingly, diplomatic partner on matters of global importance.

But beyond that, many experts say, their differences over Iran are not only economic but also ideological and strategic.

The United States has almost no financial ties with Iran, regards its government as a threat to global stability and worries that a rising Tehran would threaten American alliances and energy agreements in the Persian Gulf.

In contrast, China’s economic links to Tehran are growing rapidly, and China’s leaders see Iran not as a threat but as a potential ally. Nor would the Chinese be distressed, the reasoning goes, should a nuclear-armed Iran sap American influence in the region and drain the Pentagon’s resources in more Middle East maneuvering.

“Chinese leaders view Iran as a country of great potential power, perhaps already the economic and, maybe, militarily dominant power in that region,” said John W. Garver, a professor of international relations at Georgia Tech and the author of “China and Iran: Ancient Partners in a Post-Imperial World.”

An alliance with Tehran, he said, would be a bulwark against what China suspects is an American plan to maintain global dominance by controlling Middle Eastern energy supplies.

Beyond that, China relies heavily on Iran’s vast energy reserves — perhaps 15 percent of the world’s natural gas deposits and a tenth of its oil — to offset its own shortages. The Chinese are estimated to have $120 billion committed to Iranian gas and oil projects, and China has been Iran’s biggest oil export market for the past five years. In return, Iran has loaded up on imported Chinese machine tools, factory equipment, locomotives and other heavy goods, building China into one of its largest trading partners.

China scholars say that the relationship is anything but one-sided. Iran has skillfully parceled out its oil and gas reserves to Chinese companies, holding exploration and development as a sort of insurance policy to retain Chinese diplomatic backing in the United Nations.

For its part, China has opposed stiff sanctions against Iran’s nuclear program, acceding mostly to restrictions on trade in nuclear-related materials and orders to freeze the overseas assets of some Iranian companies.

Many experts question how much more punishment Beijing would agree to support. Iran has already been cited three times by the Security Council, with Beijing’s backing, for flouting prohibitions against its nuclear program.

In each case, Beijing agreed to measures only after stronger American proposals had been watered down and after Russia, the Council’s other critic of stiff sanctions and a close ally of Iran, had signed off on the proposal.

One noted Chinese analyst, Shi Yinhong of People’s University in Beijing, said in a telephone interview this week that China would probably follow much the same course should a new sanctions proposal reach the Security Council.

“China will do its utmost to find a balance” between Iran and the United States, Mr. Shi said. If Russia joins the other Council members in supporting a new sanctions resolution, he said, “China will do its best to try to dilute it, to make it limited, rather than veto it.”

But it is unlikely to do so happily. Supporting stronger sanctions might elevate China’s image as a global diplomatic leader, but the United States, not China, would reap the real benefits.

“China is not anxious to jump on this American train,” said one Chinese analyst, who spoke on the condition of anonymity in order to freely assess China’s foreign policy.

Wednesday, September 23, 2009

China's Pig Farmers Amass Copper, Nickel

Private investors in China, the world’s largest metals user, have stockpiled “substantial” quantities of copper as the government ramps up stimulus spending to spur the economy, according to Sucden Financial Ltd.

Pig farmers and other speculators may have amassed more than 50,000 metric tons, Jeremy Goldwyn, who oversees business development in Asia for London-based Sucden, wrote in an e- mailed report after a visit to China. That’s about half the level of inventories tallied by the Shanghai Futures Exchange, which stood last week at a two-year high of 97,396 tons.

Sucden’s estimate underscores the difficulty analysts face in gauging metals demand in China amid increased speculation by retail investors, whose holdings remain outside the reporting framework undertaken by exchanges. Private investors in China also had as much as 20,000 tons of nickel, Goldwyn wrote.

“People who have nothing at all to do with the copper trade have been buying copper as a store of value, much like they would with gold,” said Jiang Mingjun, an analyst at Shanghai Oriental Futures Co.

Copper on the London Metal Exchange has more than doubled this year as China’s 4 trillion yuan ($586 billion) stimulus plan and record $1.1 trillion of lending in the first half spurred purchases of the metal used in construction and autos. The metal traded today at $6,470 a ton, which would value a holding of 50,000 tons at $324 million.

‘Private Stockpiles’

“Private stockpiles, built by many including the much- vaunted, pig-farming speculators, have clearly absorbed substantial quantities of metal,” Sucden’s Goldwyn said. “Much of this metal will remain out of the normal market place.”

Scotia Capital Inc. analyst Liu Na highlighted the role of Chinese pig farmers and other private speculators in the metals markets in an Aug. 17 note that cited reports from state-owned China Central Television. These speculators may become “quick sellers” if sentiment turned, Liu said in that note.

To be sure, Sucden’s Goldwyn wrote that the stockpiles of copper and nickel held by farmers and others in China may “not be ‘dumped’ back in the foreseeable future as some have recently suggested, wherever prices go.” Goldwyn didn’t give a reason.

The metals holdings by pig-farmer investors and other private speculators give “the impression that there is strong demand in China,” said Jiang at Shanghai Oriental. “But it is actually those who take a pessimistic view of the economy and are looking to preserve their wealth who are buying.”

Rising Imports

China’s imports of refined copper rose to a record 2.1 million tons in the first seven months, driven by purchases by the State Reserve Bureau and other consumers, and shortages of scrap. The State Reserve Bureau had contracted to take 300,000 to 400,000 tons of refined copper into its stockpiles from overseas this year, according to Macquarie Group Ltd.

“Restocking continues, though it seems to have moved further downstream, including manufacturers building end-product stocks,” Goldwyn wrote. In some industries, such as the makers of copper tubes for air-conditioners “demand is back to pre- crash levels stimulated by government incentives, and will show significant year-on-year gains in the coming weeks and months.”

http://www.bloomberg.com/apps/news?pid=20601109&sid=a1B_ZBQfii8Q

Thursday, September 17, 2009

China and Venezuela sign $16 billion oil deal

China is going around the globe to grab oil resources.

Venezuela says signs new $16 billion China oil deal

CARACAS (Reuters) - President Hugo Chavez said on Wednesday Venezuela signed a $16 billion investment deal with China over three years to raise oil output by several hundred thousand barrels per day in the OPEC member's Orinoco belt.

Chavez gave few details of the deal he said was signed on Tuesday. But he appeared to be talking about a new investment, separate from a similar amount China has promised Venezuela in return for future shipments of fuel oil.

"We have struck an agreement with China for the Orinoco belt over the next three years for $16 billion more," Chavez said on state television. He said that between a recently signed Russian project and the Chinese deal, output would rise by 900,000 bpd.

Last week, Venezuela and Russia formed a joint venture to develop the Junin 6 field with a $20 billion investment. Venezuela says the project will produce up to 450,000 bpd.

Thursday, September 10, 2009

US firm to build world's largest solar plant in China



NEW YORK — First Solar Inc. said Tuesday it has received initial approval from the Chinese government to build what may become the largest solar field in the world.

First Solar, which makes more solar cells than any other company, said it struck a tentative 10-year deal to build in China's vast desert north of the Great Wall. The project would eventually blanket 25 square miles of Inner Mongolia — slightly larger than the size of Manhattan — with a sea of black, light-absorbing glass.

The solar field would dwarf anything in operation in the U.S. or Europe. At 2 gigawatts, or 2 billion watts, the solar plant could pump as much energy onto China's grid as two coal-fired plants, enough to light up three million homes. Like most solar plants, however, it wouldn't produce electricity at night.

"The potential is enormous" for projects like this in China, CEO Mike Ahearn told The Associated Press before the announcement. "The Chinese government is further along in its thinking about solar than we've imagined."

Ahearn said it would be nearly impossible to install a solar field of this size in the United States. There's plenty of land, but there's not enough near transmission lines, Ahearn said.

And efforts to build new power lines are regularly stymied by competing interests from government agencies, environmental groups and disgruntled residents.

"In the U.S., energy policy is made on the state level," Ahearn said. "Every state has a different approach."

In contrast, Ahearn said China has designated a region within the country for renewable energy production and transmission. It also has promised to guide First Solar through the approval process and make it profitable.

Tempe, Ariz.-based First Solar announced the deal Tuesday after signing a "memorandum of understanding" with Wu Bangguo, chairman of the Standing Committee of the Chinese National People's Congress.

The agreement outlines broad aspects of the project, including deadlines for a feasibility study and the government's role in helping with construction permits. But Ahearn said much of the deal hasn't been worked out yet, including how much First Solar would get paid.

Ahearn said a system like this would cost $5 billion to $6 billion if it were built in the U.S., though it likely would be cheaper using lower-cost Chinese labor.

First Solar plans to make money by selling the plant to a local operator, but it won't be able to estimate its profit until China determines the size of its subsidy for solar energy. The country is expected to offer a "feed-in tariff," which would require utilities to buy solar energy at a fixed price for a set number of years.

Industry experts say they're not sure when that will happen.

"We've been kind of in a holding pattern for six months or so," Mark Bachman, an analyst with PacificCrest, said.

Bachman said announcements of smaller solar farms have been popping up "all over the place" in China. But investors so far have been unimpressed because of the uncertainty surrounding its subsidy program.

First Solar stock added $8.33, nearly 7 percent, to $129.80 a share after the announcement.

For several years, solar panels have been rapidly spreading around the world as an alternative power source, appearing on rooftops of homes and businesses in most major countries. The solar industry has focused on a handful of European countries that offer the best incentives, but companies are starting to look elsewhere for longer-term projects that can keep their factories occupied for several years.

Ahearn said First Solar spent the past few months searching for partners in China, culminating with its 2-gigawatt deal in Inner Mongolia. Like the U.S., China has taken aggressive steps to move away from fossil fuels. It located the First Solar plant in Ordos, a gritty industrial city of 1.4 million people that is the main production base for China's largest coal company.

The project hasn't been given an exact location yet, but the agreement said it will be located within a massive development zone that is expected to eventually offer nearly 12 gigawatts of renewable energy from wind, solar, biomass and hydroelectric power. First Solar will provide most of the solar, with the first 30 megawatts installed by June 1, 2010. The company will expand the plant over the next decade, installing about 27 million thin-film panels by 2019.

Li Rong, director of the new energy department of the Ordos city government, said First Solar's project still faces a number of hurdles, including acceptance by the government's National Development and Reform Commission.

"It's hard to guarantee when exactly it will start or finish as the project hasn't been approved," Rong told the AP.

First Solar said the Ordos project will be the largest solar farm ever. But there are other projects that may provide stiff competition for that distinction.

The Clinton Climate Initiative said it is working with the Energy Resources Institute in India on a possible solar development that would be even larger. The project could install two solar farms — one in Gujarat and one in Rajasthan — that are larger than First Solar's. But CCI officials said the project is in an extremely early stage and most details haven't been worked out yet.

BrightSource Energy is developing one of the largest U.S.-based solar projects. The Oakland, Calif. company has power-purchase agreements with two California utilities to build 14 solar plants with a combined capacity of 2.6 gigawatts. BrightSource may spread the plants across California, Nevada and Arizona.

First Solar also is building solar farms in California and New Mexico, but Ahearn said he expects Asia to be home to the biggest solar plants for some time.

"There's an advantage to planning this from the top," Ahearn said. "The speed and execution advantage is in China."

http://www.google.com/hostednews/ap/article/ALeqM5jP2R_aHLdu8wST0soQ8obEBvfyMgD9AJ9FA80

Friday, September 4, 2009

China to buy $50 billion of first IMF bonds

BEIJING — China has agreed to buy $50 billion of the International Monetary Fund's first bond issue in a move that will help to strengthen the body's lending ability and diversify Beijing's foreign holdings.

The agreement announced Wednesday by the Washington-based IMF comes as the body tries to raise money to finance lending, especially to developing countries, to help economies weather the global downturn.

"The agreement offers China a safe investment instrument," said an IMF statement. "It will also boost the Fund's capacity to help its membership — particularly the developing and emerging market countries — the global financial crisis, and facilitate an early recovery of the global economy."

The purchase also would give China a new investment vehicle to help diversify its foreign holdings beyond U.S. Treasury bills, in which it keeps a large share of its reserves.

Brazil and Russia have indicated they will buy up to $10 billion of the bonds, the IMF said.

http://www.google.com/hostednews/ap/article/ALeqM5ik7nh6JJy2v-PB2q3H6FUg7aL6QQD9AFK2IG1

Sunday, August 30, 2009

GM invests $293 million in China to make light trucks

GM China, China's FAW launch joint venture

SHANGHAI — General Motors China and state-owned automaker FAW Group Corp. launched a 2 billion yuan ($293 million) joint venture Sunday to make light-duty trucks and vans, initially for the fast-growing Chinese market.

GM said the joint venture will use two existing factories affiliated with FAW and have a capacity of over 100,000 vehicles. That is expected to double by the end of 2010, GM China Group President Kevin Wale told reporters in a conference call.

Plans call for building a new assembly plant in Harbin, he said.

China is a key growth market for GM, which is expanding here despite its difficulties in the U.S. market.

"Light trucks and vans have a significant role in China and other parts of the world," Wale said. "Adding trucks rounds out our vehicle portfolio in China. It's really a key focus for future growth."

The 50-50 joint venture, based in the northeastern Chinese city of Changchun, where FAW is also based, will make FAW-branded vehicles for the Chinese market, GM said in a statement. The venture might make GM-branded vehicles for export later, but the focus for now is on meeting demand in China, Wale said.

Production will be at the existing factories in southwestern China's Yunnan province, a facility owned by FAW-affiliate Hongta Yunnan Automobile Manufacturing Co. Ltd., and at Harbin Light Vehicle Co. Ltd. in the northeastern city of Harbin, GM said.

It said the two companies will conduct research and development, exports and after-sales support as well as vehicle production.

"Our new joint venture combines the expertise of two industry leaders in a partnership that benefits both," Nick Reilly, GM executive vice president, said in a statement.

"It will address demand in China and other markets for high-quality, affordable products in one of the industry's most robust segments, while complementing the portfolio of products that GM and FAW currently offer," Reilly said.

Discussions on the venture began in early 2007 and it obtained regulatory approval in July, GM said.

FAW, originally known as First Auto Works, was founded in 1953 and began production in 1956. It sold 1.53 million vehicles, including sedans, vans and trucks, in 2008.

GM's sales in China jumped 38 percent in the first half of this year, helped by strong demand for its minivans and other small vehicles. The automaker sold more than 100,000 vehicles a month in China from January to June for a total of 814,442, a record for any half year, the company said. That compares with sales of 1,094,561 GM vehicles in China for all of 2008.

Adding truck production will help expand the company's exposure in one of the few major markets that continues to grow.

"These are quite different customers and quite different products," Wale said.

He said he expected GM's commercial vehicle sales to reach 80,000 to 90,000 this year and to rise further next year.

http://www.google.com/hostednews/ap/article/ALeqM5ge-omd3Vre_gXjdLDjlAtuW8JHkwD9AD14T00

Monday, August 24, 2009

China's Huawei ranked 3rd worldwide in the telecommunication equipment industry

Huawei Technologies Co., China’s biggest telecommunications equipment maker, has garnered a 10 percent market share in Europe and expects to gain more ground this year, a company executive said.

The Shenzhen, China-based company is targeting a “huge improvement” in Europe this year with a focus on wireless equipment, Tim Watkins, Huawei’s vice president for western Europe, said in an interview in London.

The company won $3 billion in contracts out of the $30 billion awarded in Europe last year, a 20 percent gain from a year earlier, with sales to “all major operators,” including Vodafone Group Plc and Telefonica SA, Watkins said. Closely held Huawei also made a “significant breakthrough” in the U.S., with a contract that is “by the nature of the customer and scale of network a very strong statement that Huawei is now entering the U.S. market,” he said, declining to elaborate.

Huawei’s gains defy the trend in the telecommunications- equipment industry that’s been hurt by falling demand and intensifying price competition. The Chinese company’s net income rose 20 percent to $1.15 billion in 2008, while its major rivals Ericsson AB and Nokia Siemens Networks both suffered an almost 50 percent drop in annual profit, and Alcatel-Lucent SA’s full- year loss widened by 48 percent.

Aided by its lower cost-base, Huawei now ranks third in the industry with a global market share of 14 percent, behind Ericsson with a 35 percent share and Nokia Siemens with 20 percent, according to Kulbinder Garcha, a London-based analyst at Credit Suisse Group AG.

U.S. Entry

“For Huawei, the only market left is North America, which could be more challenging, but I don’t see why it can’t have a long-term 18 to 20 percent share there,” said Garcha.

Huawei has been stymied in North America by security concerns. The company’s $2.2 billion joint bid with Bain Capital LLC for the computer-gear maker 3Com Corp. was withdrawn amid U.S. government concern that China would gain access to 3Com’s anti-hacking technology used by the U.S. Defense Department.

It’s a “misconception” that Huawei is linked to the Chinese government, said Watkins.

Huawei won more than five contracts in North America this year, according to Watkins, including a three-year fourth- generation wireless contract this month from the Kirkland, U.S.- based Clearwire Corp.

“It doesn’t mean all of a sudden the gate is flying open and everybody’s happy with Huawei, but the important thing is we are moving in,” he said.

Pricing Advantage

Telecommunications operators wanting to develop fourth- generation may get easier access to funding from Chinese banks working with Huawei, Watkins said. Huawei said it this year won trials to build the fourth-generation network infrastructure for T-Mobile International AG in Austria, and Vodafone in Germany.

The Chinese company also maintains a pricing advantage over its rivals, said Credit Suisse’s Garcha. Huawei had a net margin of 6 percent in 2008, which it plans to improve this year, while its competitors are “struggling to keep theirs above zero,” Watkins said. “This advantage enables us to invest more in R&D and gain further market share,” he added.

The cost of engineering for Huawei is between 15 to 16 percent lower than Ericsson or Nokia Siemens, Garcha said.

“Huawei has been very successful at expanding outside China, first emerging and now developed markets because they’ve got significant pricing advantages,” he said.

Huawei employs, mostly in China, about 40,000 engineers, almost double the number at Ericsson. That enables it to innovate faster than its rivals, Watkins said.

“It will take a long time for Huawei to reach the top because market shares in infrastructure don’t change that quickly,” Garcha said, “but it’s possible that within three to five years it’ll become the number two player.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aTGMh0rzqkM0

Tuesday, August 18, 2009

China signs $41 billion energy deal with Australia

SYDNEY — Australia has signed a record 41.3 billion US dollar deal to supply Chinese energy giant PetroChina with liquefied natural gas, officials said.

The agreement, which represents the biggest foreign investment in Australia, is for PetroChina to buy 2.25 million tonnes a year over the next two decades from ExxonMobil's Gorgon gas field.

"This agreement has enormous value for the Australian economy and society, generating the wealth we need to continue to develop our resources and technology, and sustain our communities," Resources and Energy Minister Martin Ferguson said late on Tuesday.

The deal comes a week after ExxonMobil signed a 25 billion dollar contract with India's Petronet, and despite troubled recent relations between Australia and China over the detention of a mining executive.

Foreign Minister Stephen Smith also told parliament on Tuesday that a "most unhappy" China had downgraded an official visit in anger at Australia's move to let exiled Uighur leader Rebiya Kadeer into the country.

However, Ferguson said the liquefied gas deal was a "landmark in our relationship with China."

"We are a country built on foreign investment and we continue to welcome investments that develop our resources for the benefit of all Australians," he said.

"PetroChina is an increasingly important partner in the Australian LNG industry and I hope the relationship will be long and successful."

http://www.google.com/hostednews/afp/article/ALeqM5gQgQmepMXjh2J4zkw2tQWmKgLD1Q

Thursday, August 13, 2009

iPhone finally goes on sale in China, Apple's profit should soar

I am sure there are plenty iPhone knockoffs in the Chinese market already.

China Unicom is banking on an iPhone frenzy this September, as the mobile service provider has bought five million of the handsets from Apple, according to IB Times. The $1.46 billion (about 10 billion yuan) inventory buy comes just about two weeks after the companies reportedly signed a three-year deal that gave China Unicom exclusive rights to sell the iPhone in China.

While full terms of the deal are still unclear, the consensus is that the China Unicom arrangement won't be nearly as profitable for Apple as its partnerships with cell phone companies in other countries, since it doesn't include sales subsidies.

China Unicom will sell the 8G iPhone for about $350 (2,400 yuan) and the 16G for about $700 (4,800 yuan); IB Times' source estimates that Apple will generate roughly $100 per unit in profit, a sharp contrast from the $400+ it has been estimated that Apple gets from AT&T (NYSE: T) (including monthly kick-backs over each 2-year contract) per iPhone sold here in the U.S.

But given the competition the iPhone will have in China (from established smartphones, fake iPhone clones, and Dell's rumored phone with China Mobile), Apple likely had to concede in some areas so that it could take its first crack at the Chinese market.

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/13/AR2009081302607.html

Saturday, August 8, 2009

China's industrial production may overtake US faster than expected

A nice analysis from WSJ, by their prediction, China should over take US in industrial output by 2015.

China's Gains in Manufacturing Stir Friction Across the Pacific

By TIMOTHY AEPPEL

China is on its way to surpassing the U.S. as the world's largest manufacturer far sooner than expected. The question is, does that matter?

In terms of actual size, the answer is, no. But if size is a proxy for relative health of each nation's sector, the answer is yes.

Anyone who walks the aisles of a U.S. retailer might think China already is the world's largest manufacturer. But, in fact, the U.S. retains that distinction by a wide margin. In 2007, the latest year for which data are available, the U.S. accounted for 20% of global manufacturing; China was 12%.

The gap, though, is closing rapidly. According to IHS/Global Insight, an economic-forecasting firm in Lexington, Mass., China will produce more in terms of real value-added by 2015. Using value-added as a measure avoids the problem of double-counting by tallying the value created at each step of an extended production process.

As recently as two years ago, Global Insight's estimate was that China would surpass the U.S. as the world's top manufacturer by 2020. Last year, it pulled the date forward to 2016 or 2017.

"The recent deep recession in U.S. manufacturing does mean that China's catch-up is occurring a few years earlier than would have been the case if there had been no recession," says Nariman Behravesh, the group's chief economist.

U.S. manufacturing is shrinking, shedding jobs and, in the wake of this deep recession, producing and exporting far fewer goods, while China's factories keep expanding. If manufacturers on both sides of the Pacific were thriving, there would be little reason to butt heads. But given the massive trade gap between the two nations and uncertainty in the U.S. over when and to what degree manufacturing will recover, China's ascent has become a point of growing friction.

Chinese manufacturing activity continued to tick up in July from the previous month, data from the China Federation of Logistics and Purchasing showed Saturday. The Purchasing Managers Index edged up to 53.3 in July, from 53.2 in June and 53.1 in May.

A separate CLSA China Purchasing Managers Index rose to a 12-month high of 52.8 in July from 51.8 in June, CLSA Asia-Pacific Markets said Monday. July was the fourth consecutive month the CLSA PMI was above 50 after hovering below the key level for eight months.

Many economists argue that the shrinking of U.S. manufacturing -- both in terms of jobs and share of gross domestic product -- is a normal economic evolution that started long before China emerged as a manufacturing powerhouse. From their point of view, the shrinking would happen regardless and is actually a sign of health that the sector doesn't need to be big to be productive and is shedding low-skill jobs and creating select higher-skill ones.

Global Insight's Mr. Behravesh is one of those who views China's rise as normal, even healthy. "In the natural course, countries go from agriculture to manufacturing to services," he says. "To subsidize manufacturing pushes [the U.S.] backwards down that curve."

But another school of thought -- one known by the somewhat backhanded label of "manufacturing fundamentalists" -- contends the U.S. decline isn't natural and must be reversed to retain America's economic power. From their perspective, that necessitates fighting Chinese policies that fuel low-cost exports, swamping a variety of industries from textiles to tires.

"The notion that we can be a nonmanufacturing society is folly," says Peter Morici, an economist at the University of Maryland. "It's pseudo-science that gives rise to the collapse of civilizations."

...

http://online.wsj.com/article/SB124927488392500809.html?mod=googlenews_wsj

Saturday, August 1, 2009

China and Venezuela sign $7.5 bln railway deal

$7.5 Billion dollars used to be a lot of money, but China now is giving out billion dollar loans on weekly basis.

CARACAS, July 30 (Reuters) - Venezuela and China formed a joint venture on Thursday worth $7.5 billion to build a railway that will link farm and oil regions in the South American country, a senior official said.
The China Railways Engineering Corporation (CREC) will hold a 40 percent stake and the Venezuelan state will own the rest, said Infrastructure Minister Diosdado Cabello.
The 468 km (290 miles) of railway are to link grain and cattle production in southwestern Cojedes state with oil fields in eastern Anzoategui state.
"Now the (farmers) will have a railway to help them with their crops," Cabello was quoted as saying in a government statement.
The project will generate 7,500 jobs and is to be completed in 2011, he added, after signing the agreement with Bai Zhong Ren, vice president of CREC.
Venezuela, which depends heavily on trucks to transport cargo domestically, has begun construction of several railway lines to link regional production centers.
The government intends to build thousands of homes for workers who will develop the Orinoco field of extra-heavy oil.
Some investment plans that have been highly publicized by President Hugo Chavez's socialist government are held up by red tape, a shortage of funds or technical difficulties.

http://in.reuters.com/article/oilRpt/idINN3034671820090730

Monday, July 27, 2009

Merrill Lynch raises China's GDP growth to 8.7% for 2009

Looks like China's growth will accelerate in the second half of 2009

NEW YORK (MarketWatch) -- Bank of America Merrill Lynch Monday raised its forecast for this year's China economic growth rate to 8.7% from 8.0%. Recent economic data "convinced the market that China's recovery is real," said Merrill economist Ting Lu in a note. Merrill expects China's economy to grow 9.2% in the third quarter and 11.3% in the fourth quarter. It also raised next year's growth rate to 10.1% from 9.6%. Earlier this month, China reported its economy increased by 7.9% in the second quarter.

http://www.marketwatch.com/story/chinas-growth-forecast-raised-to-87-by-merrill-2009-07-27

Tuesday, July 21, 2009

China's stock market 2nd largest in the world, surpassing Japan

A man operates a stock trading terminal at a securities exchange firm in Shanghai. The Shanghai Composite Index rose 1.4 percent this month, sending the value of China's domestic stock market to $3.21 trillion.

China overtook Japan as the world's second-largest stock market by value for the first time in 18 months.

This month's change was attributed to government stimulus spending and record bank lending that boosted share prices this year.

The Shanghai Composite Index rose 1.4 percent this month, sending the value of China's domestic stock market to $3.21 trillion, compared with Japan's $3.20 trillion, according to data compiled by Bloomberg.

The Shanghai index has gained 75 percent this year, the best-performing major market, against a 7 percent advance in the Nikkei 225 Stock Average.

The US has the biggest equities market worth $10.8 trillion.

"China is just entering its stride and is still very much in a growth phase, while Japan is already a developed economy," said Daphne Roth, Singapore-based head of Asian equity research at ABN Amro Private Banking, which oversees about $14 billion.

China last surpassed Japan in stock market capitalization from Jan 4 to Jan 24, 2008, data compiled by Bloomberg show.

The Shanghai Composite tripled in the two years leading to its record on Oct 16, 2007, before tumbling 72 percent to its trough the following November.

A government-led 4 trillion yuan stimulus package and record bank lending have shielded the Chinese economy against a plunge in exports.

Foreign-exchange reserves topped $2 trillion for the first time, while its money supply rose a record 28.5 percent in June, the central bank said on July 15.

The economy expanded 7.9 percent in the second quarter, the statistics bureau said in Beijing, more than the 7.8 percent median estimate from 20 economists surveyed by Bloomberg News.

New loans rose fivefold in June from a year earlier to 1.53 trillion yuan, increasing concern that attempts to revive the world's third-largest economy will lead to bad debts and asset bubbles.

Rapid credit growth poses risks for lenders and the financial system, Wang Huaqing, the disciplinary secretary of the China Banking Regulatory Commission, said on July 7.

BNP Paribas Securities (Asia) Ltd last month cut its rating on China to "neutral" from "overweight", citing valuations.

Stocks on the benchmark index are trading at 33.2 times earnings. That's almost triple the 12.9 multiple on Nov 4, when the measure dropped to its lowest since the financial crisis.

Earnings per share declined 7 percent last year and will probably remain "flat" this year, the brokerage said.

Some Chinese shares have soared by "1,000 percent from the bottom, so they're pricing in a very strong rebound in earnings", he said.

In Japan, nagging deflation and an aging population have sapped strength from what was once the world's largest market by capitalization.

During the 1990s, Japan spent 135 trillion yen on 10 economic stimulus plans and lowered interest rates to zero, none of which succeeded in promoting sustainable growth.

Japan's economy shrank at a 14.2 percent annual rate in the first quarter, the most since data began in 1955.

The country's gross domestic output will shrink 3.4 percent in the year ending March 2010, the central bank predicted.

The contraction coincided with a drop to a more-than 25-year low by the Topix index.

"Japan has two main problems. The enormous public debt handicaps the government's ability to spend additional money to boost the economy, and we are too reliant on exports," said Takashi Kamiya, chief economist at T&D Asset Management Co in Tokyo, which helps oversee some $16 billion.

Chinese companies account for four of the 10 biggest companies when measured by market value, according to Bloomberg data.

Toyota Motor Corp is the top-ranked Japanese company, at 25th, worth about one-third the capitalization of PetroChina Co, ranked No 1.

http://www.chinadaily.com.cn/bizchina/2009-07/20/content_8447558.htm

Wednesday, July 15, 2009

43 Chinese companies are in Fortune 500 list

China's Great March up the Fortune 500 List

Financial crisis or no financial crisis, companies in Greater China are moving up in the world. The just released Fortune 500 list for 2009 says so, with Chinese companies taking 43 places, 8 more than last year’s 35, and rankings are also rising.

Shagang Group, a steel company, is the only private Chinese company to make the list. The other China new listings are all state-owned enterprises. Lenovo, which ranked 499th on last year’s list, failed to make the cut this year.

Chinese company rankings have benefited from RMB’s appreciation against other main currencies over the last year. A comparatively stable domestic market has also supported these companies.

Sinopec, with $20.7815 billion in annual sales, moved up this year to 9th from 16th, taking the Chinese honors, while PetroChina climbed from 25th to 13th. Both benefited from last year’s high oil prices.

The Industrial and Commercial Bank of China, with income of about $15.95 billion, was China’s earningest company. China Construction Bank, the Bank of China, and the Agricultural Bank of China are also among the 50 most profitable companies.

Steel companies have seen the most dramatic rise among the Chinese Fortune 500 companies. Baosteel, with $35.5166 billion in 2008 sales, lifted its ranking 39 notches this year to 220th, and has been on the list for the past five years, while Heibei Steel Group and Shagang Group rank 375th and 444th, respectively. The world recession has had its effect on China’s steel industry, but it has also served as a gateway onto the Fortune 500 list. As China’s economic stimulus has boosted steel demand, China has become the world’s only safe haven for the industry. China’s steel production has hit new highs in the recent months as most of the rest of the world’s other steel companies are still cutting production by 20% to 30%. Even at last year’s end, the industry’s most difficult time, Chinese steel makers’ production was cut by only 10% at most.

Other companies entering the list for the first time include Citic Group, China Unicom, Huaneng Group, and Aviation Industry Corporation of China.

China Unicom made the list as a result of the restructuring of China’s telecoms industry. Its operations income last year grew 70.4% over the previous year, one of the highest growth totals among all enterprises.

China’s three telecom operators all enjoyed good performance last year. China Mobile, with $65.015 billion in sales ranks 99th, 49 places above last year’s ranking. China Telecom also moved up from 288th last year to 263rd.

Lenovo, which ranked 499th last year, is the only Chinese company to be dropped from the club this year. During its fiscal 2008, ending March 31, the company’s losses reached over $200 million, the highest in the company’s history. Other PC companies also saw losses. Taiwan-based Asus dropped from 363rd last year to 436th.

Aviation Industry Corporation of China is the only Chinese military enterprise on the list, and ranks 426th, with annual sales of $21.738 billion and a net profit of $568 million. It ranks 11th in the world’s aviation industry.

http://www.chinastakes.com/2009/7/chinas-great-march-up-the-fortune-500-list.html

Saturday, July 11, 2009

China is the top trade partner in Latin America, overtakes US

RIO DE JANEIRO, Brazil — All but invisible in Latin America a decade ago, China now is building cars in Uruguay, donating a soccer stadium to Costa Rica and lending $10 billion to Brazil's biggest oil company.It's supplanted the United States to become the biggest trading partner with Brazil, South America's biggest economy.
China has moved aggressively to fill a vacuum left by the United States in recent years, as the U.S. focused on wars in Afghanistan and Iraq and the global economic crisis sapped its economy."China is rising while the U.S. is declining in Latin America," Riordan Roett, a professor of international relations at Johns Hopkins University, said by telephone while visiting Sao Paulo. "China is all over this region. They are following a state-driven policy to expand their peaceful presence."

China is beefing up its embassies throughout Latin America, opening Confucian centers to expand Chinese culture, sending high-level trade delegations throughout the region and opening the door for ordinary Chinese to visit Machu Picchu, Rio and
other tourism hot spots.Aiping Yuan came to Rio de Janeiro from Beijing in 1997 on a lark, fell in love with the city and decided to stay. She studied Portuguese, and when Brazilian President Luiz Inacio Lula da Silva made his first visit to China in 2004, she opened a small school in Rio to teach Mandarin.She began with six students and today has 300, including senior executives at Petrobras, the country's biggest oil company, and Vale do Rio Doce, the biggest mineral producer. Both have growing business with China."Chinese is the language of the future for Brazil," Yuan said with a big smile.China has forged a strategic alliance with Brazil that's allowed the two countries to partner with India and Russia in the so-called BRIC grouping, which is demanding a greater voice in global political and economic affairs. Indeed, China is making inroads with developing countries worldwide.
Beijing's main interest in Latin America has been guaranteeing access to the region's raw materials — principally oil, iron ore, soybeans and copper — to fuel its continued rapid growth. For many countries, there's a downside in the China trade,
through which cheap imports have displaced local textiles.
China's growing role has alarmed policymakers in Washington. However, China has been careful not to establish a military presence in the region, since doing so would antagonize Washington. The U.S. has considered Latin America to be in its sphere of influence since the Monroe Doctrine of 1823.
China "treats (Hugo) Chavez as they do (Alvaro) Uribe and Lula," said Alexandre Barbosa, a consultant to the Sao Paulo-based consulting firm Prospectiva, referring to the presidents of Venezuela, Colombia and Brazil, respectively. "They're interested in business."

And what a voracious interest in business they've shown. Trade between Latin America and China rocketed from $10 billion in 2000 to $140 billion in 2008. China is buying zinc from Peru, copper from Chile and iron ore from Brazil. It's shipping
electronic equipment to Brazil, buses to Cuba, clothes to Mexico and cars to Peru.
Peruvian President Alan Garcia is trying to position his country as a major commercial hub for China in South America. He's hoping to capitalize not only on Peru's ports in the center of South America but also on a shared history: Thousands of Chinese emigrated to Peru in the 19th and early 20th centuries to do manual labor. These immigrants have left a legacy of the so-called "chifa" restaurants, which offer Chinese food throughout Peru.
Today, China's biggest appetite is for Peru's plentiful minerals.
Two Chinese companies are moving forward with major mining projects in Peru while companies from other countries are suspending or canceling theirs, said John Youle, the executive president of ConsultAndes, a Lima-based firm.China generally has been investing little money in Latin America, however. This has prompted criticism that it's simply tapping into the region's vast raw minerals, just as colonial powers did for centuries.Although China has become a major player over the past decade, trade between the United States and Latin America still dwarfs China's trade with Latin America.
Beyond trade, China suddenly is rivaling the World Bank and the Inter-American Development Bank as a major lender to Latin America, at a time when China is flush with cash and many companies can't get access to bank loans.
Petrobras is borrowing $10 billion from China, to be paid off by shipping 150,000 barrels of crude per day to China this year and 200,000 barrels per day for the next nine years, said Erico Monte, a Petrobras spokesman.Ecuador is borrowing $1 billion from China to finance investments by its state oil company and another $1.7 billion to build what would be the country's largest hydropower dam.
Venezuela is buying high-tech oil-drilling platforms from China and is sending some 380,000 barrels of oil there per day as Chavez diversifies Venezuelan exports away from the United States, his chief nemesis.
"But China has shown little enthusiasm in becoming entangled in Chavez's larger goal of counterbalancing U.S. influence in the hemisphere," Dan Erikson, a Latin American expert at the Inter-American Dialogue, a nonpartisan research center on Western Hemisphere affairs, wrote recently.Erikson said China was especially attractive to Latin American leaders because of its no-questions-asked foreign policy."The United States talks about the need for a battle against corruption, the need for transparency and improved human rights," Erikson told McClatchy. "China is less ideological in its approach to Latin America than the U.S. is."
Still, China uses its aid as a strategic tool to get countries to shift their diplomatic ties from Taiwan to the communist nation.
After Costa Rica became the first Central American country to establish ties with China, the communist country bought $300
million in Costa Rican bonds. More important to average Costa Ricans, China is spending $74 million to build a new national
soccer stadium in San Jose. It's scheduled to open in 2011.
Not everyone in Latin America welcomes China's growing presence.
Chinese companies are taking business away from Mexican firms that exported clothes to the United States.
Peruvians have tried to block the expansion of a Chinese mining project near the border with Ecuador that they say would pollute local rivers.
China has angered Brazilian companies by taking their place as the biggest exporter of clothing and textiles to Argentina.
Whether it's seen as a friendly uncle or a ruthless competitor, China's continued expansion in Latin America seems inevitable.
EBX is expanding its port in Rio de Janeiro state to handle Brazil's iron ore exports to China and has signed an agreement with China's Wuhan Iron and Steel to build a mammoth steel plant next to the port.
In May, Lula made his third trip to China, spotlighting the fact that China has become Brazil's biggest trade partner.The development surprised Rodrigo Maciel, the executive secretary of the Brazil-China Business Council, based in Rio."We weren't expecting China to pass the U.S. as China's biggest trading partner until 2011 or 2012," Maciel said.

http://www.mcclatchydc.com/turmoil/story/71510.html

Monday, July 6, 2009

China Begins Pilot Program to Settle Trade in Yuan (Renminbi)

(from New York Times)

SHANGHAI — China has officially opened a pilot program to allow companies to settle imports and exports in renminbi in selected regions, marking a major step toward eventually internationalizing the Chinese currency.

Three pairs of Shanghai companies with their Hong Kong and Indonesian counterparts signed contracts on Monday to be the first to settle business deals in the Chinese currency. Executives said the move would save costs and avoid exchange rate risks.

Bank of China and Bank of Communications were the first lenders to clear transactions in renminbi, considered a lucrative business given China’s expanding economy and huge presence in international trade.

Hong Kong also kicked off the long-awaited yuan settlement program on Monday.

HSBC said it completed its first renminbi trade settlement with Shanghai and its first cross-border credit transaction.

“Trade settlement in yuan will make it more convenient for both Chinese and foreign firms who conduct China-related exports and imports,” said Xu Weimin, chairman of Shanghai Silk Group, who sold goods to China Products Holdings, a Hong Kong company, in one of the contracts signed on Monday.

“It will help both of them save costs,” Mr. Xu told Reuters on the sidelines of a ceremony to mark the start of renminbi settlements. “For Chinese companies, it also has the function to avert exchange rate risks.”

Caught off guard and partly lacking the skills to hedge against foreign exchange volatility, many small Chinese exporters have closed after China revalued the renminbi by 2.1 percent against the dollar in July 2005. The renminbi has appreciated by a further 19 percent against the dollar since then.

In announcing the renminbi settlement program in April, Beijing said it would initially be confined to certain areas, including Hong Kong and Macau, outside mainland China, and to Shanghai and China’s key export province of Guangdong in the south.

The program would also be used between the Association of South East Asian Nations and Yunnan and Guangxi regions in southern China before it is launched elsewhere.

Although the total amount in the first batch of deals signed on Monday was small, less than 14 million renminbi, or $2 million, state media said around 400 Chinese companies had already won approval to conduct renminbi business and predicted that the program would have huge potential.

http://www.nytimes.com/2009/07/07/business/global/07yuan.html?ref=global-home

Monday, June 29, 2009

World Bank raises China 2009 GDP growth to 7.2 percent

BEIJING (AP) — The World Bank raised its 2009 economic growth forecast for China from 6.5 percent to 7.2 percent due to its stimulus-driven investment boom but cautioned Thursday it was too soon to say a sustained recovery was on the way.

The stimulus impact is bigger than expected and will "strongly support growth," said Ardo Hansson, the bank's lead China economist. The 4 trillion yuan ($586 billion) plan is aimed at shielding China from the global slump by pumping money into the economy through spending on building airports and other public works.

"Growth in China should remain respectable this year and next, although it is too early to say a robust recovery is on the way," Hansson said at a news conference.

Trade and private investment will remain weak, consumption will slow and a full-fledged recovery has to wait for the global economy and export demand to rebound, the Washington-based lender said in a quarterly report.

China's economy grew 6.1 percent in the first quarter from the same time last year, the strongest rate of any major country but below the government's 2009 target of 8 percent and far from 2007's explosive 13 percent.

Thursday was the first time the bank has raised its outlook for China since November, when it slashed its 2009 forecast from 9.2 percent to 7.5 percent. The bank cut that again in March to 6.5 percent. The bank said the growth rate should rise slightly in 2010 to 7.7 percent.

Hansson expressed surprise at Beijing's "Buy China" order, reported this week by state media, for stimulus projects to use domestically made goods. Foreign business groups appealed to the government Wednesday to avoid protectionism, warning it might hurt Chinese and foreign companies at a time when cooperation is needed to revive global growth.

"China had earned an enormous amount of goodwill and was leading the charge globally to make sure protectionism did not take off," Hansson said. "I think that position, that leadership reflected an understanding that China, relative to many other economies, has a lot more to lose from protectionism given the importance of the export sector."

The World Bank report highlighted China's dependence on government spending to support growth.

The stimulus will supply up to 6 percentage points of this year's expansion, with private activity producing 3.6 percentage points, according to Louis Kuijs, a World Bank economist. He said the contraction in exports will be severe that trade will subtract 2.4 percentage points from this year's growth, resulting in the forecast total of 7.2 percent.

"We see very little growth coming out of the market-based economy in 2009," Kuijs said. "We do expect a nice pickup in exports next year, so that will help."

Government spending boosted domestic investment in factories, real estate and other fixed assets by 32.9 percent in the first five months of the year.

The World Bank cautioned there was a limit to how much China could buck global trends through stimulus spending while exports are weak.

May retail sales rose 15.2 percent from a year earlier, but the growth rate is falling, indicating Beijing has yet to spur a rebound in private spending. May exports plunged by a record 26.4 percent from the same month of 2008.

"We think that this surge in government-influenced investment is unlikely to lead to rapid growth and a recovery in China in the current global environment," Kuijs said.

The World Bank estimates each percentage point of lost growth in China's non-agricultural gross domestic product growth means 5.4 million fewer jobs.

Nevertheless, Kuijs said the bank sees no need for more stimulus plans this year because Beijing already has spent so heavily.

"It would be good to have some fiscal firepower left next year," Kuijs said.

http://www.google.com/hostednews/ap/article/ALeqM5jsPylib13jwRax2SNZ0RDblXiMagD98SVUPG0

Tuesday, June 23, 2009

Asia's biggest iron ore mine (3 billion tons) found in Benxi China

Benxi - A huge iron ore resource with more than three billion tons of proven reserves has been found in China's Benxi, Benxi Municipal Government said on Tuesday, making it one of the biggest iron ore mines in Asia.

It’s reported that this iron was found during the second exploration of the city, which is based on the city's fifteen years of geological data. After it was reported to the China Geological Survey, it was perambulated by a team of geologists.

The team made 17 exploratory holes to explore the mine. Iron ore was found in 12 of the holes, covering an area of four kilometers long, three kilometers wide.

According to antecedent survey, a complete core of iron ore has been detected 1,100 to 1860 meters. High-grade resources can even be found underground 2015 meters. The bottom and border zones haven’t been reached, said the team. The identified reserves available are more than three billion tons.

Meanwhile, the Dataigou mine has features of deep-buried depth, wide-spread ore body, steep obliquity and big scale of ore body. The iron deposit is a giant mixture of magnetite and hematite, with iron ore grade between 25% to 62%.

Shaoshi Xu, head of Minister of Land and Resources, paid a site visit there, urging the local government to do their best to make full use of Asia's largest iron ore mine for the nation and local as soon as possible.

http://www.ibtimes.com/articles/20090623/huge-iron-ore-resource-with-more-than-three-billion-tons-rsquo-proven-reserves-has-been-found-china-.htm