world growth

world growth

Friday, February 27, 2009

China's trade of electronics, information products total $885 blnin 2008

China's imports and exports of electronics and information products reached 885.4 billion U.S. dollars in value last year, said the Ministry of Industry and Information Technology here Wednesday.

The figure represented a 10 percent growth from 804.7 billion U.S. dollars in 2007. The growth rate was less than 23.5 percent in 2007.

Among the total, exports rose 13.6 percent to 521.8 billion U.S. dollars, which accounted for more than a third of China's total exports last year. Imports of these products expanded by 5.4 percent to 363.7 billion U.S. dollars, accounting for 32.1 percent of the country's total.

A big proportion of exports, or more than 75 percent last year, continued to be telecommunication products, computers and home audio and video products.

But more than 80 percent of the exports in terms of value were only processed or assembled in China with materials supplied by overseas clients, said the ministry.

Meanwhile, on the domestic market, China's electronics and information industry raked in 6.3 trillion yuan (950.3 billion U.S. dollars) of revenue from the sector's major operations, up 12.5 percent year on year.

The ministry said the sector experienced shocks from the global financial crisis as foreign-funded firms in the sector began to report slower growth in revenue, profits and export values in the second half of last year.

Large foreign-funded firms in the sector saw their revenue up 9.6 percent in the second half last year, profits down two percent and exports up 12 percent, which were 15.7 percent, 22.8 percent and 9.6 percent lower than those of domestic firms, respectively, according to the ministry.

In addition, growth in revenue of foreign-funded firm slowed down by 8.9 percent from the first half, while domestic firms decelerated by 3.8 percent.

The ministry predicted that exports of China's electronics and information products may continue to slow down amid weakening overseas demand.

It also said the industry's growth would more rely on domestic demands this year with huge investment pouring into the country's 3G (third-generation) mobile communication services.

The ministry expected revenue of the industry to grow by 12 percent year on year on the domestic market this year, the same as in 2008.

China approved Wednesday a support plan for the sector to boost innovation, increase financial input and promote the use of information technologies in various fields over the next three years.

The government said without elaboration that investment would focus on boosting the progress of the 3G services and promoting the use of digital TVs.

Saturday, February 21, 2009

Taiwan, China Negotiating a Free-Trade Agreement

BEIJING, Feb. 20 -- Taiwan and China are negotiating a wide-ranging free-trade agreement that represents an important step toward the possibility of unification of the longtime adversaries.

The Comprehensive Economic Cooperation Agreement would allow the free flow of goods, services and capital across the Taiwan Strait at a time when the economies of the mainland and the democratic self-ruled island are increasingly interdependent. While Taiwanese groups have tried to play down the political implications of the economic pact, those on the mainland are already talking about the eventual union of the two.

Li Fei, deputy director of the Taiwan Studies Center at Xiamen University on the mainland, said the agreement would be a significant milestone in gradually warming relations between the antagonists. "It's a start toward full cross-strait economic integration and a necessary condition for marching forward toward final unification," Li said.

Taiwan and China have been governed separately since 1949, when Nationalist forces fled the communist takeover. China insists that Taiwan has and always will be an inseparable extension of the mainland, while Taiwan has maintained that it is a self-governing democracy.

The United States, under the 1979 Taiwan Relations Act, has pledged to defend the island if China launches a military attack, but the nature of that commitment is vague. The U.S. sale of military equipment to Taiwan has long angered China, which has more than 1,000 missiles pointed toward the island. Analysts are paying careful attention to Chinese statements and maneuvers that involve the missile program for indications of a genuine easing of tensions.

Taiwanese President Ma Ying-jeou took office in May on a platform of improved relations with China, which was a turnabout from his predecessor, Chen Shui-bian, a strong backer of Taiwan's independence who routinely provoked China and irritated the United States.

Ma quickly delivered on his campaign promises: beginning regularly scheduled direct flights for passengers, shipments and mail between China and Taiwan and committing to high-level talks with counterparts on the mainland every six months. Although many business and industry groups in Taiwan have enthusiastically backed Ma's approach, it has drawn passionate criticism from opposition parties and some scholars.

Kenneth Lin, an economics professor at National Taiwan University, said the agreement would be tantamount to "de facto unification" despite its name. Hong Tsai-lung, an associate research fellow at the Taiwan Institute of Economic Research, describes the agreement as "a rose with thorns" that "will deepen Taiwan's dependence on China."

In an interview with the Taipei Times published Friday, Ma seemed to imply that the agreement is a certainty, but he hesitated to respond directly to questions about whether signing it would be tantamount to acknowledging that Taiwan belongs to China.

"As to how the international community perceives the issue, it depends on the stances of different countries," Ma said. "Some countries agree with us, and our allies won't think Taiwan becomes part of communist China when it signs an agreement."

Pressed by the reporter, Ma responded: "We will take economic measures to solve economic problems with less politics and ideology. So far we have not seen any attempts by communist China to force Taiwan to do things we cannot accept, and we wouldn't have to accept it if they did so."

While Ma and other officials have spoken in recent days as if the agreement is a done deal, Hsu Chun-fang, a spokeswoman for the Bureau of Foreign Trade in Taiwan's Ministry of Economic Affairs, was more cautious in a telephone interview.

"It's hard to say when it will come out. Currently, there are a lot of opposing voices in Taiwan. Since Taiwan is a democratic and free country, the government cannot step further before people making consensus," Hsu said.

Despite the political antagonism between Taiwan and China, their economies have become increasingly entwined over the years, and until recently, most of the money flowed to the mainland. Taiwanese businesses now own large numbers of factories in China's manufacturing centers. Until Ma's more relaxed regulations, people were sometimes forced to take elaborate measures to conduct business across the strait. For example, a traveler could not fly directly from Shanghai to Taipei, a flight of a little more than an hour. Instead, travelers had to switch planes in Hong Kong, doubling their travel time.

But with Taiwan's economy in recession -- its gross domestic product shrank a record 8.36 percent in the last quarter of 2008 -- Ma's administration is hoping that investment from the mainland may provide a boost. In addition, with China set to begin a free-trade agreement with the 10 members of the Association of Southeast Asian Nations in 2010, Taiwan is under pressure not to be left out.

"Taiwan needs the help of the mainland," said Sun Shengliang, director of the economic studies center of the Institute of Taiwan Studies at the Chinese Academy of Social Sciences. "If the agreement can be signed, it will bring bigger benefit to Taiwan than to the mainland."

Tsai Lien-sheng, secretary general of the Chinese National Federation of Industries, a trade group in Taiwan, said that if Taiwan does not sign a free-trade agreement with the mainland, "we are going to be marginalized." Although Taiwan and China in recent years dropped most discriminatory tariffs on each other's exports, industry groups believe that eliminating such barriers entirely would be in the best interest of both, especially since China has already signed similar agreements with Taiwan's neighbors and competitors in Asia.

"We cannot compete with paying a much higher duty when other countries have agreed to much lower or zero duties," Tsai said. "The exports of Taiwan will be harmed severely, and foreign capital will be less interested in investing in Taiwan."

Hsieh Jun-hsiung, executive manager of the Petrochemical Industry Association of Taiwan, pointed out that Taiwan now sells about half its petrochemical products to the mainland. China imposes a tariff of about 6.5 percent on imports of petrochemical products from Taiwan and a 6 percent tariff on those from South Korea. But South Korea's tariff will soon be eliminated, putting Taiwanese s companies at a disadvantage.

"The sooner, the better. We just sent an urgent letter to the government to push them to do it quicker," Hsieh said. "Our requirement is quite simple: Right now our treatment is unequal compared with other countries. We need equal treatment. If Taiwan keeps the status quo on this, about half of our products will be unsellable soon."

Monday, February 16, 2009

China's January fiscal revenue down 17.1% as economic growth slows

BEIJING -- China's fiscal revenue fell 17.1 percent in January from a year earlier to 613.16 billion yuan (89.77 billion U.S. dollars), the Ministry of Finance (MOF) said Monday.

The ministry attributed the decline to slowing economic growth,which affected business profitability, and wide-ranging tax cuts to boost the economy.

Another reason for the steep decrease was that the number of working days was 5 less than the same month last year because of the Spring Festival holiday, the MOF said.

The country's tax revenue dropped by 16.7 percent from January 2008 to 563.9 billion yuan last month.

Duty revenue declined 19.3 percent while takings from stock stamp tax shrank 95.7 percent.

In an effort to boost the equities market, the government cut the share trading stamp tax from 0.3 percent to 0.1 percent in April last year and scrapped the stamp tax on stock purchases in September.

China's fiscal revenue reached 6.13 trillion yuan for the wholeof 2008, up 19.5 percent from the previous year, according to preliminary statistics released by the MOF.

Tuesday, February 10, 2009

China gets rail project in Mecca, worth $1.77 billion

This is a major deal, while Hu is visiting Saudi Arabia.

China gets rail project in Mecca

China is to sign a deal with Saudi Arabia to build a light rail system in Mecca to help transport millions of pilgrims, a senior diplomat said.

Yang Honglin, Chinese ambassador to Saudi Arabia, told China Daily the deal will be signed "soon" but he didn't confirm whether it would be done during President Hu Jintao's three-day visit to the country, which started yesterday.

"China Railway Construction Corporation (CRCC) is now talking with the Saudi Arabian authorities about the deal," Yang said.

CRCC, along with a Saudi Arabian company and a French transport company, will finish the project in 2013, International Islamic News Agency reported.

A source with the Foreign Ministry said CRCC's deal is worth $1.77 billion. But the company yesterday refused to confirm that figure.

With a speed of 360 km p h the rail line will be able to take pilgrims from Mecca to Medina, the two holiest sites in Islam, in just half an hour, it said.

It will be able to "rapidly evacuate the crowd at the peak of the Hajj pilgrimage", Yang said.

According to Yang, Saudi Arabia entrusted the Chinese government to designate a Chinese enterprise for the project last month. It was the first inter-governmental project between the two countries after they agreed to consolidate cooperation on infrastructure construction last summer.

Saudi media reported last October that their government intended to invest $5.3 billion in five light rail systems linking key locations of the annual Hajj pilgrimage in west Saudi Arabia, including Mecca, Mina and the Hill of Arafat.

The lines will reportedly be able to carry 5 million pilgrims.

Visit of cooperation

Hu's ongoing visit to the country is his second in three years and is the first trip overseas he has made this year.

"This reflects that the Chinese leadership highly values the strategic friendly relations with Saudi Arabia," Yang said.

It was reported China Petroleum & Chemical Corp, Asia's biggest oil processor, and Saudi Aramco, the world's largest oil exporter, may sign crude supply and refinery service accords during Hu's visit.

Saudi Arabia has been the largest overseas supplier of crude oil to China.

Wednesday, February 4, 2009

China's Auto Sales Surpass the U.S. in January

It's no breaking news that the U.S. auto industry hasn't had the best couple of months. This January auto sales hit their lowest level in 26 years, dropping 37 percent to selling only about 650,000 vehicles. But that doesn't mean every nation is having a severe slump in car sales.

While official numbers won't be out until next week, many estimate that 790,000 cars were sold in China during the same month, indicating the first time in history that the number of car sales in China topped those in the U.S.

This month's results weren't just a fluke, however. Mike DiGiovanni, the executive director of General Motors predicts that China's auto sales will be about 10.7 million, versus just 9.8 million within the U.S.

China's growing auto market presents a strong opportunity for struggling U.S. automakers like GM, which sold 1.09 million vehicles last year in China, and expects to see strong China sales next year, even in the struggling economy.

With a population topping 1.3 billion, and millions of aspiring car owners, there's huge potential to see growing car sales in China. The bailout package proposed in late 2008 has billions allocated to infrastructure development, including constructing many roads, potentially expanding the number of citizens who would benefit from car ownership.

The government has also invested about $1.5 billion dollars into improving car technology, in order to make vehicles more fuel efficient, and is now providing tax incentives to those who plan to purchase vehicles.

At the same time, a slowing economy, excessive traffic in many major cities, and severe pollution concerns still deter many potential car owners.

Despite these issues, the potential for future automotive sales in China remains very bright in the long term, as millions look forward to owning their own car.